Automated Forex Grail by www.TheForexGrail.com - 2009 Forex Software Review Winner!

EveryForex Robot promises to make you lots of money - and almost every robot can given the right conditions. But where some robots are stuck following rules that made money in 2008, Automated Forex Grail is actively working hard to make you money in 2009. How so?



For Automated Forex Grail the key difference is it’s real time optimizing engine. This means that it’s not stuck in 2008 - that there’s no fixed rules that could cost you dearly. This is incredibly important because, as the last 6 months have shown, the market is always changing.




Automated Forex Grail has been designed to adapt to the market at every turn. This is how they describe it :



Click here for a new video of a customer account with Automated Forex Grail



The real time optimizing engine will monitor your trades every second watching for market fluctuations, spikes and reversals and adapt itself automatically to the situation closing out the trade at exactly the right time and actually changing its formula to compensate for market changes before opening a new trade.
Automated Forex Grail - The Good, The Bad




There’s a lot of good things about Automated Forex Grail :

• Lowers your risk by using very strict stop loss orders


• Easy for you to install and setup


• You can run it in DEMO MODE until you’re comfortable to try it with real money

Our only question mark is that by only trading on one currency pair (EUR/GBP) it potentially limits your profitability in the long term. However the EUR/GBP currency pair has seen a lot of movement in recent times and there has never been a better time to profit on these currencies - so in the current times, it’s not a concern at all.

Automated Forex Grail Review - Should You Buy It?



Yes. In our opinion, Automated Forex Grail address all the concerns of today’s tough trading environment. What’s more it’s demonstrated real profitability. We’ve given it 4.5 stars.

Click Here to buy Automated Forex Grail and give it a try. %20 Off!

Click to Read more!

Automated Forex Grail Video Demo - www.TheForexGrail.com

Here is a Video that shows live trading with the number 1 rated Automated Forex System Software, Automated Forex Grail.






Click here for a new video of a customer account with Automated Forex Grail

Click to Read more!

Automated Forex Grail Review: www.TheForexGrail.com

How many times have you purchased a forex system and always ended up being frustrated? Because of the easy-money that you can get from the forex market, there are hundreds of forex systems claiming that they can make you earn thousands of cash when in fact it is all just a scam.


Click here for a new video of a customer account with Automated Forex Grail

When looking for an effective and a reliable forex system that would really help you earn extra cash, there is no doubt that the forex grail system is the right tool for people like you. It was created by a computer programmer named Robert Johnson.


Today, he is not only known in the computer industry but Robert Johnson is also now popular to those who are in the forex industry at the same time. Because of the efficiency of the automated forex grail, Robert Johnson is now considered as one of the most popular gurus in the forex market.

You don’t have to acquire knowledge or background in forex marketing to use the automated forex grail software. As long as you have a computer that works and an internet connection, just download automated forex grail and you are in for a start. If you are wondering about the platform that the forex grail system is using, don’t worry because it actually runs on a platform called Metatrader 4. You will be given all the essential details and a link where you can download the platform without an extra charge.





Thanks to the forex grail robot, the forex grail system no longer requires you to be in front of the computer the whole day. After downloading the system, you can immediately leave it and let the system do the work. In this way, you can still work on your real job and just wait for your money to grow.
Have you read a forex grail review lately? All of the reviews came from real clients who have used the system before and find it very effective. See to it that you would never fall for forex grail scam by buying only from the site of Robert Johnson.
If you still thinking twice about the efficiency of the automated forex grail, you can always use the demo account to see how the forex grail system really works. Once that you realized that there is a consistent profit in using the forex grail system, then can start running a real account!
Once again Autmoated Forex Grail by www.TheForexGrail.com takes the number 1 slot!

Click to Read more!

TOP Automated Forex Products - Automated Forex Grail #1 Again

There are many Forex Trading Software,Forex Trading Videos,Books and Forex Training Courses out there.I have purchased many of them,and tested them out to find the Best Ones,and pass My Results on to You.

Once again Autmoated Forex Grail by www.TheForexGrail.com takes the number 1 slot!

Click here for a new video of a customer account with Automated Forex Grail


1. Automated Forex Grail - automated forex robot - $127.00

2. Forex Maestro - automated forex robot - $197.00

3. Forex Ambush 2.0 - forex trading signals - $195.00

4. Forex Fantasy - automated forex robot - $197.00

5. Forex Autopilot - automated forex robot - $99.50

6. Forex HitMAN - automated forex robot - $177.00

7. Forex Confidante - forex system - $97.00

8. Forex Profit Farm - forex system - $97.00

9. Forex Killer - automated forex signals - $89.00

10. Forex Vengeance - automated forex robot - $97.00

Click to Read more!

How to Profit while in a Recession

Ive just got my hands on this new automated grail
forex system and have been running it through some
backtests... I must say it looks amazing, it certainly seems
to live up to the claims on the website.

Forex Grail

There is video proof of a clients bank account which has over
$150,000 in it, and also forward testing results which look
equally as impressive, take a look with the link below.

The results show a staggering $7 million pure profit has been
made using the automated grail forex system over the last 9
years, and the equity curve is very, very smooth.



It uses small stop losses and as far as I can tell seems to
be a very safe and smart system, people really do
actually seem to be making a staggering amount of money
using this.


We have been told that sales will be suspended once
Dr Robert Johnsons quota has been reached, dont miss out
on your copy !!



Thanks

Click to Read more!

$150,000 forex bank account (video proof) - $7 million automated forex system

Ive just got my hands on this new automated grail
forex system and have been running it through some
backtests... I must say it looks amazing, it certainly seems
to live up to the claims on the website.


There is video proof of a clients bank account which has over
$150,000 in it, and also forward testing results which look
equally as impressive, take a look with the link below.

The results show a staggering $7 million pure profit has been
made using the automated grail forex system over the last 9
years, and the equity curve is very, very smooth.


It uses small stop losses and as far as I can tell seems to
be a very safe and smart system, people really do
actually seem to be making a staggering amount of money
using this.


We have been told that sales will be suspended once
Dr Robert Johnsons quota has been reached, dont miss out
on your copy !!

Give it a try: Here

Thanks

forex trading system
forex currency trading system
forex day trading system
forex trading systems
forex systems
institutional forex system
forex online system trading
best forex system
trend forex system
5 emas forex system
best forex trading system
foreign exchange system
automated forex trading system
profitable trend forex system
forex hedging system
forex system review
automated forex system
trade forex system
5emas forex system
simple forex system
stealth forex trading system
forex system reviews
universal forex system
g7 forex system
day trade forex system
stealth forex system
automated forex trading systems
forex scalping system
free forex trading systems
5 emas forex trading system
free forex trading system
5emas forex trading system
forex signal system trading
forex signal system
forex enterprise system
forex currency trading systems
china foreign exchange trade system
foreign exchange trading system
free forex system
forex trading system software
amazing forex system
forex trading system reviews
cotl forex trading system
foreign exchange systems
cotl forex system
automated forex systems
5 ema forex system
forex trading system review
forex hedge system
forex trading systems review
online forex trading broker system
the best intraday forex trading system ever
the 5 emas forex system
forex marketing system
forex trading system course
my forex marketing system
best forex trading systems
easy forex system
forex software system
best forex systems
free forex systems
automatic forex system
g7 forex trading system
smart forex system
forex profit system
5emas forex trading system com
foreign exchange rate system
institutional forex system review
simple forex trading system
forex news trading system
forex system scam
easy forex trading system
the forex system
forex trading systems reviews
forex enterprise income system
china foreign exchange trading system
strategic forex support system
automatic forex trading system
forex pivot system
day forex online system trading
automatic forex trading systems
forex systems research company
5 emas forex system review
foreign exchange trading systems
the best forex trading system
easy trade forex system
mechanical forex system
5ema forex system
profitable forex system
the best intraday forex trading system
ema forex system
intraday forex trading system
forex system pdf
currency system
currency trading system
forex online system
currency systems
forex day trading
forex trading signals
forex signals
forex strategy
forex currency trading
forex trading software
forex training
forex trading
forex trading strategy
forex trading strategies
forex strategies
forex software
learn forex
currency trading
how to trade forex
managed forex
currency trading software
forex made easy
forex
forex trading course
managed forex account
making money online
forex charting
forex trade
forex forecasts
automated forex trading
forex education
forex signal
forex trader
forex training course
forex market
automated forex
online forex trading
forex investing
forex course
forex mentor
forex courses
forex broker
forex charts
forex trading training
global forex trading
what is forex
learning forex
forex tips
foreign currency trading
forex trading education
learn forex trading
fx trading
trading system
learn to trade forex
forex managed accounts
forex online
learn to trade the forex
forex currency
day trading
forex tutorial
forex alerts
forex traders
forex book
currency trading systems
forex trading mentor
mini forex trading
forex seminar
forex ebook
forex trade signals
forex brokers
forex enterprise
forex help
forex trading platform
forex trading machine
online currency trading
forex chart
forex secrets
currency trading strategy
automated trading
foreign exchange trading
make money
forex exchange
forex trades
fx trading system
forex technical analysis
forex mini
forex platform
forex method
currency trading course
forex forum
forex trading signal
forex how to
day trade forex
forex indicator
forex news
make money with forex
forex advice
forex hedging
forex capital
learn forex trading online
easy forex
currency forex learn online trading
investment
forex daytrading
managed forex trading
learn currency trading

Click to Read more!

New FOREX review site

www.ForexReviews.com has officially luanched, making it the most un-biased free forex review site onthe internet! Forex Reviews



Forex Reviews

Forex Broker Review

Easy-Forex Review

Forex Strategy Reviews

Forex Signal Reviews

Netpicks Review

Click to Read more!

Investing Forum Now Open!

I have opened the investing forum, so all the questions you have you can simply ask me and other traders in the forum. It features many topics, which includes a trading for begginers forum.

Investing Forum

Click to Read more!

NEW: Live news feed

Click to Read more!

Stock Market Reactions to Economic News

The markets often anticipate the release of key economic news and data. However, when economic news are released that have not been anticipated, the markets often respond by adjusting to the new data and revised outlook.

Keep in mind that each economic report must be considered as part of the total economic picture comprising numerous reports, indicators, and other data measuring economic activity. Investors should not overreact to any particular item of news.

Should the market react to certain economic news, how significant these news are in the overall economic outlook? You should know that any one report has limited significance and that economic activity is measured by the review of numerous reports in their totality.

The market reacts differently to the same news in bull and bear markets!

In bull markets negative news surprises create short and sharp sell-offs that are immediately followed by strong rallies.

In bear markets negative news usually accentuates the downward trend without the subsequent recovery in prices.

Positive news surprises accentuate bull market advances and do little to alleviate bear market declines.

Because economic data provides clues to the strength of the economy, investors study each report for a better understanding of the health of the economy.

If the economy is perceived as overheated with a risk of inflation, bond prices fall and yields rise anticipating future monetary tightening by the Central Bank. During periods of economic weakness and low inflationary pressures, bond prices rise and yields fall as traders expect eventual easing of monetary policy.

The stock market usually responds to changes in interest rate yields and the economic outlook. Rising rates during expansion eventually cause economic slowdown and lower stock prices. Declining rates during contraction eventually lead to increased economic activity and higher stock prices.

Investors must be concerned with the position of the economy within the overall business cycle.

That will allow greater certainty and provide some guidance for timely accumulation of stocks in industry groups and sectors that perform well under a variety of economic conditions.

Click to Read more!

Video Lesson: MACD Step by step.

Video is courtesy of Brian Shannon, at Alpha trends.

In this lesson I have provided a video explaining the very famous technical indicator, MACD.

MACD is A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

There are three common methods used to interpret the MACD:

1. Crossovers - As shown in the chart above, when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting getting "faked out" or entering into a position too early, as shown by the first arrow.

2. Divergence - When the security price diverges from the MACD. It signals the end of the current trend.

3. Dramatic rise - When the MACD rises dramatically - that is, the shorter moving average pulls away from the longer-term moving average - it is a signal that the security is overbought and will soon return to normal levels.

Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. As you can see from the chart above, the zero line often acts as an area of support and resistance for the indicator.

Click to Read more!

Featured Trading Firm: COBRA TRADING, INC.

In this post we review direct access broker, Cobra Trading, Inc. Cobra Trading offers stock, option and Forex trading through a choice of software systems. Cobra Trading’s equity and options trading platforms include; InstaQuote, TradeStream and OmniPro. Forex trading is offered through GFT and their DealBook FX2 platform.

The big difference I noticed between Cobra Trading, Inc. and most online trading firms is that we were able to talk to a member of their staff immediately without any phone queues or hold times. When trouble arises with their systems or we need to place an order via the phone this is an extremely critical point to keep in mind. They also don’t have any additional fees for phoned in orders.
















I looked at Cobra’s InstaQuote offering for equities and options, and I looked at GFT’s DealBook FX2 platform for Forex Trading. Cobra Trading, Inc. offers free demo’s of all their systems through their website at www.cobratrading.com. A brief flash demo highlighting the InstaQuote platform can be found at the following link:

Click here for the Cobra DEMO

Cobra’s commissions are posted on their website, but in conversations with Cobra Trading representatives, they are very aggressive in matching or beating competitors offers. This is maybe the best broker I have tested.
Cobra’s toll-free phone number is 877-792-6272.

Worth a look if you’re tired of being just another account number or want to check out their first rate software’s.

I give this broker a 10 out of 10.

Click to Read more!

Lesson: What are warrants?

A warrant, like an option, gives the holder the right but not the obligation to buy an underlying security at a certain price, quantity and future time. However, unlike an option, an instrument of the stock exchange, a warrant is issued by a company. The security represented in the warrant (usually share equity) is delivered by the issuing company instead of an investor holding the shares.

Companies will often include warrants as part of a new-issue offering to entice investors into buying the new security. A warrant can also increase a shareholder's confidence in a stock, if the underlying value of the security actually does increase overtime.

There are two different types of warrants: a call warrant and a put warrant. A call warrant represents a specific number of shares that can be purchased from the issuer at a specific price, on or before a certain date. A put warrant represents a certain amount of equity that can be sold back to the issuer at a specified price, on or before a stated date.


Characteristics of a Warrant
Warrant certificates have stated particulars regarding the investment tool they represent. All warrants have a specified expiry date, the last day the rights of a warrant can be executed. Warrants are classified by their exercise style: an American warrant, for instance, can be exercised anytime before or on the stated expiry date, and a European warrant, on the other hand, can be carried out only on the day of expiration.

The underlying instrument the warrant represents is also stated on warrant certificates. A warrant typically corresponds to a specific number of shares, but it can also represent a commodity, index or a currency.

The exercise or strike price is the amount that must be paid in order to either buy the call warrant or sell the put warrant. The payment of the strike price results in a transfer of the specified amount of the underlying instrument.

The conversion ratio is the number of warrants needed in order to buy (or sell) one investment tool. Therefore, if the conversion ratio to buy stock XYZ is 3:1, this means that the holder needs three warrants in order to purchase one share. Usually, if the conversion ratio is high, the price of the share will be low, and vice versa. (In the case of an index warrant, an index multiplier would be stated instead. This figure would be used to determine the amount payable to the holder upon the exercise date.)

Investing In Warrants
Warrants are transferable, quoted certificates, and they tend to be more attractive for medium-term to long-term investment schemes. Tending to be high risk, high return investment tools that remain largely unexploited in investment strategies, warrants are also an attractive option for speculators and hedgers. Transparency is high and warrants offer a viable option for private investors as well. This is because the cost of a warrant is commonly low, and the initial investment needed to command a large amount of equity is actually quite small.

Advantages
Let us look at an example that illustrates one of the potential benefits of warrants. Say that XYZ shares are currently priced on the market for $1.50 per share. In order to purchase 1,000 shares, an investor would need $1,500. However, if the investor opted to buy a warrant (representing one share) that was going for $0.50 per warrant, with the same $1,500, he or she would be in possession of 3,000 shares instead!

Because the prices of warrants are low, the leverage and gearing they offer is high. This means that there is a potential for larger capital gains and losses. While it is common for both a share price and a warrant price to move in parallel (in absolute terms) the percentage gain (or loss), will be significantly varied because of the initial difference in price. Warrants generally exaggerate share price movements in terms of percentage change.

Let us look at another example to illustrate these points. Say that share XYZ gains $0.30 per share from $1.50, to close at $1.80. The percentage gain would be 20%. However, with a $0.30 gain in the warrant, from $0.50 to $0.80, the percentage gain would be 60%.

In this example, the gearing factor is calculated by dividing the original share price by the original warrant price: $1.50 / $0.50 = 3. The '3' is the gearing factor, and the higher the number, the larger the potential for capital gains (or losses).

Warrants can offer significant gains to an investor during a bull market. They can also offer some protection to an investor during a bear market. This is because as the price of an underlying share begins to drop, the warrant may not realize as much loss because the price, in relation to the actual share, is already low.

Disadvantages
Like any other type of investment, warrants also have their drawbacks and risks. As mentioned above, the leverage and gearing warrants offer can be high. But these can also work to the disadvantage of the investor. If we reverse the outcome of the example from above and realize a drop in absolute price by $0.30, the percentage loss for the share price would be 20%, while the loss on the warrant would be 60%!

Another disadvantage and risk to the warrant investor is that the value of the certificate can drop to zero. If that were to happen before it is exercised, the warrant would lose any redemption value.

Finally, a holder of a warrant does not have any voting, shareholding or dividend rights. The investor can therefore have no say in the functioning of the company, even though he or she is affected by any decisions made.

Click to Read more!

Video: How to buy the dip in an uptrend.

This video is a prime example of how to buy the dip in an uptrend. Thank you ChartTv for providing me wit this video to use in my blog.
ChartTv made this call in October of last year and it turned out to be spot on. They picked the bottom of a dip in an uptrend. This market quickly reversed immediately after this call was made and continued to rally on to new highs for many months afterwards. In this video They make use of percentrage retracements, candlestick, moving average and MACD analysis to come to the conclusion that this pullback was over and it was time for the uptrend to resume

Click to Read more!

*Hot Topic* - Uranium Investing

Uranium Prices May Reach “Unbelievable Highs”

Toronto-based Sprott Asset Management research analyst, Kevin Bambrough, told STOCKINTERVIEW.COM, “There is a good possibility of a supply crunch that could drive uranium prices to unbelievable highs.” Various analysts predict price targets for spot uranium, in the near-term, above $40. Canadian Augen Capital Corp’s managing director David Mason speculated, “$100 (US) a pound is within reason within the next year or two.” Sydney-based Resource Capital Research is half as generous, forecasting $50/pound by 2007, explaining another 40 percent jump in spot uranium prices will be “driven by end users in the power generation market which is urgently trying to secure supply into the future.”


The uranium market is hot. Uranium prices have reached landmark numbers recently. Now that Australia and China have an agreement for Australia to sell uranium for power generation, restrictions on Australian uranium mining should be lifted, according to uranium mining industry leaders.
Before the agreement was announced, uranium stocks haved surged over 30% in recent weeks. News of the agreement being official could set uranium stocks soaring.
The uranium market, like all commodity markets, has a history of volatility, moving not only with the standard forces of supply and demand, but also to whims of geopolitics. It has also evolved particularities of its own in response to the unique nature and use of this material.
The only significant commercial use for uranium is to fuel nuclear reactors for the generation of electricity. There are 440 reactors operating worldwide, and a total of 69 new reactors that are under construction or planned for completion within the next 10 years (as of January 2006)

For a complete guide to Uranium and anything uranium related, check out this site:

Uranium 101

Click to Read more!

*Hot Topic* - Alternative Energy Investments

The oil market is not the only one looking up. Alternative fuel stocks are also attracting many investors. Because oil and gas are expensive, Americans are looking for cheaper nonfossil fuel and that demand is boosting the alternative fuel stocks as well. This is especially good for anyone who cares for the environment -- the greens. If you consider yourself an environmentalist or a preservationist, this is perfect for you, for you are now able to support efforts to preserve the environment while at the same time profiting from those efforts. It's a win-win situation. Consider this: Pacific Ethanol Inc., a small ethanol-producing company started in 2003 by Bill Jones, the former secretary of state for the state of California, has trebled its stock price on NASDAQ to about $30 a share within a year of going public in March of 2005. Like many other similar renewable fuel start-ups, millions of dollars in private equity money are being thrown at Pacific Ethanol like the world is coming to an end. Billionaire Bill Gates, the chairman of Microsoft, is one of those investing in renewable fuel stocks. Gates' investment company, Cascade Investment, has agreed to pump $84 million in Pacific Ethanol.

The U.S. government has recognized alternative fuel as the fuel for the future and has included a number of tax incentives in the Energy Policy Act of 2005, the energy law signed in the summer of 2005, to spur growth in the alternative fuel sector. If you haven't already, you should give alternative stocks a try as it will make you feel morally stronger. It's been nearly three decades since efforts to promote alternative fuel floundered after the 1973 oil crisis, but it's making a comeback. Still, alternative fuel remains a small industry, with small cap companies dominating. Since 2005, 15 of the 36 companies in the WilderHill Clean Energy index have made huge profits. That includes hydroelectric power and wind energy, solar energy, and fuel cells.

Some of the most successful companies in the renewable fuel sector are huge conglomerates, like General Electric and Germany's Siemens, and also big oil companies, like BP, that are hedging their bets. Investing in these companies offers a chance to own a clean energy stock. Here's some information about GE worth knowing: It made close to $2 billion in sales from production of wind-powered turbines in 2005, treble what it made from that business unit in 2002. However, that's only 1 percent of GE's revenues.

There's a lot of hope that alternative fuel technologies developed by some of the smaller companies will become commercially viable and help support the sector. As a result, stocks for these companies are expected to soar. WilderHill Clean Energy Index gained 26 percent in the past 12 months alone, compared with 50 percent for oil. That's not bad, considering this is not an established sector in the United States.

Moreover, since continued oil supply is uncertain, a lot more consumers are going to turn to coal, which is abundantly available in the United States, China, and India. Coal used to be frowned upon because of its dirt, but technology has improved enough to make it just as clean as other fuels. Shrewd investors could buy shares in U.S. coal producers, including the two biggest, Peabody Energy Corp. and Arch Coal Inc., both based in St. Louis, Missouri. Coal companies have profited from the current oil boom.

Investing in coal doesn't mean that Big Oil isn't safe anymore. It only means that you are on much firmer ground when you have a diversified portfolio. If you look at both types of stocks, the difference isn't large. Exxon Mobil, for instance, returned 36 percent to its shareholders in market appreciation and dividends in 2005 and BP returned 21 percent. Peabody Energy stockholders, meanwhile, did far better in the same time period. They more than doubled their money, and Peabody shares have risen more than three and a half times since the company's initial public offering in 2001. Arch Coal stock returned 65 percent in 2005 as well.

Coal producers have benefited from increased demand from power plants and steelmakers in the United States, China, and India. Massey Energy Co. of Richmond, Virginia, for instance, said its average selling price for coal used in steel-making jumped 38 percent in 2005. Consol Energy, Inc. of Pittsburgh, the third largest U.S. producer, plans a $500 million mine expansion to keep up with orders.

Soaring prices for natural gas have given coal demand another lift. Many electric power plants have switched from gas to coal, which costs about half as much. In the spring of 2006, Duke Energy Corp. closed on a deal purchasing Cinergy Corp. for about $9 billion, in large part because of Cinergy's coal-fired plants.

Back to oil, we've also seen that the market has been good to minnows as well. In fact, some smaller oil companies also have outperformed the giants. For instance, Apache Corp. of Houston produced a 12-month total return of 51 percent for its stockholders, helped by increased first-quarter selling prices of 51 percent for crude oil and 11 percent for natural gas. Apache recently bought property from Shell, BP, and Exxon Mobil and its profit rose tremendously in 2005. Oil transport companies have not been left behind. Overseas Shipholding Group of New York made an acquisition in 2005 that made it the world's second-largest oil tanker company. The bigger fleet, combined with higher tanker rates, boosted the company's 2005 earnings by about 40 percent. The world's biggest owner of oil tankers, Teekay Shipping Corp. of Vancouver, Canada, capitalized on high energy prices in yet another way. In the fall of 2005, Teekay raised $132 million through the public sale of a 20 percent interest in Teekay LNG Partners LP, whose ships carry liquefied natural gas and crude oil.

Is it too late to buy energy stocks, large or small? BlackRock, Inc., which manages $391 billion, doesn't seem to think so. It reported to the SEC in late summer of 2005 that after $870 million in purchases, it owned stakes in Peabody, Arch, Consol, and Massey ranging from 3.3 to 8.8 percent. The money manager also has a 4.7 percent stake in Newfield Exploration Co., an oil-and-gas company that returned 49 percent to its shareholders in 2005.

The bottom line is this: The world needs a lot of energy, but supply is getting tighter; an "überspike" in oil prices is in the making and the potential rewards for the savvy energy investor are huge.

Click to Read more!

Video Lesson: FOREX step by step trade

Watch the video I have provided and watch the 7 minute trading tutorial featuring the FXCM trading platform. FXCM is one of the top forex trading firms, and is increasing their popularity each and every day.

The FXCM video tutorial walks you through from start to finish on how to make your first trade. Please take a look, try out their demo and see why FXCM is becomming one of the top forex brokers. If you have any questions please feel free to contact me via Email. baker_316@hotmail.com

Have fun,
-A. Baker

Click to Read more!

Lesson: Pivot Points

What is a Pivot Point and why should investors focus on them ?

A Pivot Point resides near the top of a trading range as a stock is developing a Handle. The proper time to buy a stock is when it begins to break above its Pivot Point and is accompanied by increasing volume.

Here are some Examples

EBAY formed a 1 year Cup and then developed a 6 week Handle with a trading range between $65 and $71. The top of the trading range was near $71 which acted as the Pivot Point for EBAY. EBAY eventually broke above its Pivot Point in early January accompanied by an in increase in volume (point A).



Another example is shown by ERES which formed a 1 1/2 year Cup followed by the development of an 8 week Handle with a trading range between $10 and $11. In this case the top of the trading range was near $11 which served as the Pivot Point. ERES broke above its Pivot Point in April of 2002 accompanied by very strong volume (point B).



Another example is of HITK which formed a 1 1/2 year Cup followed by a 5 week Handle (point C) with a trading range between $9 and $11. In this example the top of the trading range was near $11 which served as the Pivot Point. HITK eventually broke above its Pivot Point in November of 2002 accompanied by an increasing in volume as well (point D).



As you can see the best time to purchase a stock is when it begins to break out of a favorable chart pattern such as the "Cup and Handle" and above its Pivot Point accompanied by increasing volume.

Click to Read more!

Featured charting software - QuoteTracker

In this post I will now show you a charting program I use that you can download for free which is becoming the standard for charting software programs, called Medved QuoteTracker. I have used many charting platforms, some averaging over $50.00 a month, and not one of them compare to QuoteTracker, which is completely free. I have a few screenshots to show you, which is just a small sample of what QuoteTracker is capable of, but it will give you an idea of how powerful this program can be.



All you have to do is download Medved quote tracker and supply it with a data feed (Email me for the feed, or use whatever broker you trade with) and explore the features this program provides. I don't think I could name every single feature of QT because simply there are too many. Some of the main features are; level II quotes, alerts, news monitoring, research, historical charts, and the charting they provide is amazing. You can pick from any type of chart including OHLC, TICK, VOLUME, Renko, Heikin-Ashi-style intraday charts and many more. I tend to stick with candle stick charts, with the technical indicators they provide.

If you have an account with one of the sites listed in the QuoteTracker SITES dropdown list, you can select that site and enter the login info when prompted. All brokers on their list provide real-time quotes for free to their clients. If you do not have a brokerage account with one of the sites, look for sites with "...(FREE w/Registration)" or "...(registration NOT Needed) in the SITES list for the exchanges you are interested in. For example, Scottrade.

QuoteTracker can be used to track and trade any type of securities - Stocks, Options, Indices, Futures, FOREX/Currencies, Bonds, etc., and supports markets all over the world, including (but not limited to): US, Canada, UK, France, Australia, Zurich, Germany, Hong Kong, Brussels, Italy, Amsterdam, South Africa, Jakarta, India, Sweden and others. QuoteTracker integrates with various datafeeds. Best of all
- it's FREE!


The great thing is you can just download it for free and play around with it, getting used to all the features it has. If you need any help setting it up, and for help with a free data feed, either Email me, or post it in the comments section. QuoteTracker also has a great FORUM with experienced members that could answer any questions that may arise. Take care, and have fun!
-A. Baker

Click to Read more!

Lesson: Limiting losses

Like I have said .before, risk management is the key to having a successful career in trading. In this post I will show you how you can limit your .losses, which is the number one killer of trading accounts.

A common level of acceptable loss for one's trading account is 2% of equity in the trading account. The capital in your trading account is your risk capital, the capital that you employ (that you risk) on a day-to-day basis to try to garner profits for your enterprise.

The loss-limit system can even be implemented before entering a trade. When you are deciding how much of a particular trading instrument to purchase, you would simultaneously calculate how much in losses you could sustain on that trade without breaching your 2% rule. When establishing your position, you would also place a stop order within a maximum of 2% loss of the total equity in your account. Of course, your stop can be anywhere from a 0% to 2% total loss. A lower level of risk is perfectly acceptable if the individual trade or philosophy demands it.

Every trader has a different reaction to the 2% rule of thumb. Many traders think that a 2% risk limit is too small and that it stifles their ability to engage in riskier trading decisions with a larger portion of their trading accounts. On the other hand, most professionals think that 2% is a ridiculously high level of risk and prefer losses to be limited to around 0.5-0.25% of their portfolios. Granted, the pros would naturally be more risk averse than those with smaller accounts - a 2% loss on a large portfolio is a devastating blow. Regardless of the size of your capital, it is wise to be conservative rather than aggressive when first devising your trading strategy.

A useful rule of thumb for overall monthly losses is a maximum of 6% of your portfolio. As soon as your account equity dips to 6% below that which it registered on the last day of the previous month, stop trading! Yes, you heard me correctly. When you have hit your 6% loss limit, cease trading entirely for the rest of the month. In fact, when your 6% circuit breaker is tripped, go even further and close all of your outstanding positions, and spend the rest of the month on the sidelines. Take the last days of the month to regroup, analyze the problems, observe the markets and prepare for re-entry when you are confident that you can prevent a similar occurrence in the following month.

How do you go about instituting the 6% loss-limiting system? You have to calculate your equity each and every day. This includes all of the cash in your trading account, cash equivalents and the current market value of all open positions in your account. Compare this daily total with your equity total on the last trading day of the previous month and, if you are approaching the 6% threshold, prepare to cease trading.

If you can stick to this, the first years of trading might not be so painful, but if you get in the habit of breaking your own risk management plan, you might be in a world of hurt.
I hope this help, and please stay tuned for Monday, for I will have 2 new video tutorials up and running.

Click to Read more!

The Four Advantages Of Options

Exchange-traded options first started trading back in 1973. That's long enough ago to beg the question, "Why are options so buzzworthy now?" If you don't believe that they are, consider this: at the time of this article's writing (March 2006), options were a hot topic on TV, in print and among brokerage firm clients. On CNBC, "Mad Money"'s own Jim Cramer delivered one of his little tirades, stating that options are the hottest and fastest growing segment of the market. The popular market publication Barron's talked about a move among baby boomers toward options as a way to gain added income and to aid their sagging retirement portfolios. A major online brokerage firm recently polled its clients, asking what investment topics they wanted to learn about; learning more about options was the No.1 answer! With six topics to choose from, options drew a whopping 62% of the votes from survey respondents.


Although they have a reputation for being risky investments that only expert traders can understand, options can be useful to the individual investor. Here we'll look at the advantages offered by options and the value they can add to your portfolio.

The Advantages of Options
They have been around for more than 30 years, but options are just now starting to get the attention they deserve. Many investors have avoided options, believing them to be sophisticated and, therefore, too difficult to understand. Many more have had bad initial experiences with options because neither they nor their brokers were properly trained in how to use them. The improper use of options, like that of any powerful tool, can lead to major problems.

Finally, words like "risky" or "dangerous" have been incorrectly attached to options by the financial media and certain popular figures in the market. It is important for the individual investor to get both sides of the story before making a decision about the value of options.

These are the main advantages (in no particular order) that options may give an investor: they may provide increased cost efficiency; they may be less risky than equities; they have the potential to deliver higher percentage returns; and they offer a number of strategic alternatives. With advantages like these, you can see how those who have been using options for a while would be at a loss to explain options' lack of popularity in the past. Let's look into these advantages one by one. (If you need a refresher on options, see our Options Basics Tutorial.)

Cost Efficiency
Options have great leveraging power. An investor can obtain an option position that will mimic a stock position almost identically, but at a huge cost savings. For example, in order to purchase 200 shares of an $80 stock, an investor must pay out $16,000. However, if the investor were to purchase two $20 calls (with each contract representing 100 shares), the total outlay would be only $4,000 (2 contracts X 100 shares/contract X $20 market price). The investor would then have an additional $12,000 to use at his or her discretion. Obviously, it is not quite as simple as that. The investor has to pick the right call to purchase (a topic for another discussion) in order to mimic the stock position properly. However, this strategy, known as stock replacement, is not only viable but also practical and cost efficient.

Example
Say you wish to purchase Schlumberger (SLB) because you think it will be going up over the next several months. You want to buy 200 shares while SLB is trading at $131; this would cost you a total of $26,200. Instead of putting up that much money, you could have gone into the options market, picked the proper option that mimics the stock closely and bought the August call option, with a strike price of $100, for $34. In order to acquire a position equivalent in size to the 200 shares mentioned above, you would need to buy two contracts. This would bring your total investment to $6,800 (2 contracts X 100 shares/contract X $34 market price), as opposed to $26,200. The difference could be left in your account to gain interest or applied to another opportunity - which provides better diversification potential, among other things.

Less Risky - Depending on How You Use Them
There are situations in which buying options is riskier than owning equities, but there are also times when options can be used to reduce risk. It really depends on how you use them. Options can be less risky for investors because they require less financial commitment than equities, and they can also be less risky due to their relative imperviousness to the potentially catastrophic effects of gap openings. (To learn more about gaps, see Do stop or limit orders protect you against gaps in a stock's price?)

Options are the most dependable form of hedge, and this also makes them safer than stocks. When an investor purchases stock, a stop-loss order is frequently placed to protect the position. The stop order is designed to "stop" losses below a predetermined price identified by the investor. The problem with these orders lies in the nature of the order itself. A stop order is executed when the stock trades at or below the limit as indicated in the order.

For example, let's say you buy a stock at $50. You do not wish to lose any more than 10% of your investment, so you place a $45 stop order. This order will become a market order to sell once the stock trades at or below $45. This order works during the day, but it may lead to problems at night. Say you go to bed with the stock having closed at $51. The next morning, when you wake up and turn on CNBC, you hear that there is breaking news on your stock. It seems that the company's CEO has been lying about the earnings reports for quite some time now, and there are also rumors of embezzlement. The stock is indicated to open down around $20. When that happens, $20 will be the first trade below your stop order's $45 limit price. So, when the stock opens, you sell at $20, locking in a considerable loss. The stop-loss order was not there for you when you needed it most.

Had you purchased a put option for protection, you would not have had to suffer the catastrophic loss. Unlike stop-loss orders, options do not shut down when the market closes. They give you insurance 24 hours a day, seven days a week. This is something that stop orders can't do. This is why options are considered a dependable form of hedging.

Furthermore, as an alternative to purchasing the stock, you could have employed the strategy mentioned above (stock replacement), where you purchase an in-the-money call instead of purchasing the stock. There are options that will mimic up to 85% of a stock's performance, but cost one-quarter the price of the stock. If you had purchased the $45 strike call instead of the stock, your loss would be limited to what you spent on the option. If you paid $6 for the option, you would have lost only that $6, not the $31 you lost if you owned the stock. The effectiveness of stop orders pales in comparison to the natural, full-time stop offered by options.

Higher Potential Returns
You don't need a calculator to figure out that if you spend much less money and make almost the same profit, then you have a higher percentage return. When they pay off, that's what options typically offer to investors.

For example, using the scenario from above, let's compare the percentage returns of the stock (purchased for $50) and the option (purchased at $6). Let us also say that the option has a delta of 80, meaning that the option's price will change 80% of the stock's price change. If the stock were to go up $5, your stock position would provide a 10% return. Your option position would gain 80% of the stock movement (due to its 80 delta), or $4. A $4 gain on a $6 investment amounts to a 67% return - much better than the 10% return on the stock. Of course, we must point out that, when the trade doesn't go your way, options can exact a heavy toll - there is the possibility that you will lose 100% of your investment.

More Strategic Alternatives
The final major advantage of options is that they offer more investment alternatives. Options are a very flexible tool. There are many ways to use options to recreate other positions. We call these positions synthetics.

Synthetic positions present investors with multiple ways to attain the same investment goals, and this can be very, very useful. While synthetic positions are considered an advanced option topic, there are many other examples of how options offer strategic alternatives. For example, many investors use brokers that charge a margin when an investor wants to short a stock. The cost of this margin requirement can be quite prohibitive. Other investors use brokers that simply do not allow for the shorting of stocks, period. The inability to play the downside when needed virtually handcuffs investors and forces them into a black and white world while the market trades in color. But no broker has any rule against investors purchasing puts to play the downside, and this is a definite benefit of options trading.

The use of options also allows the investor to trade the market's "third dimension", if you will: no direction. Options allow the investor to trade not only stock movements, but also the passage of time and movements in volatility. Most stocks don't have large moves most of the time. Only a few stocks actually move significantly, and then they do it rarely. Your ability to take advantage of stagnation could turn out to be the factor that decides whether your financial goals are reached or whether they remain simply a pipe dream. Only options offer the strategic alternatives necessary to profit in every type of market.

Conclusion
Having reviewed the primary advantages of options, it's evident why they seem to be the center of attention in financial circles today. With online brokerages providing direct access to the options markets through the internet and insanely low commission costs, the average retail investor now has the ability to use the most powerful tool in the investment industry just like the pros do. So, take the initiative and dedicate some time to learning how to use options properly. Remember, options can provide these advantages to your portfolio:
Greater Cost Efficiency
Less Risk
Higher Potential Returns
More Strategic Alternatives

It is the dawn of a new era for individual investors. Don't get left behind!

Click to Read more!

Head and Shoulders Patterns

A head and shoulders pattern consists of a peak followed by a higher peak and then a lower peak with a break below the neckline. The neckline is drawn through the lowest points of the two intervening troughs and may slope upward or downward. A downward sloping neckline is more reliable as a signal.

The extent of the breakout move can be estimated by measuring from the top of the middle peak down to the neckline. This target is then projected downwards from the point of breakout.




Volume Confirmation
High volume on the first peak,

Moderate volume on the middle peak,

Low volume on the third peak, and

A sharp increase in volume on the break below the neckline.

Trading Signals
Go short at breakout below the neckline.
Place a stop-loss just above the last peak.

After the breakout, price often rallies back to the neckline which then acts as a resistance level. Go short on a reversal signal and place a stop-loss one tick above the resistance level.

Never trust a head and shoulders pattern where the neckline is clearly ascending (the second trough being higher than the first). Also, the more level the neckline, the more reliable the pattern.

Inverted Head and Shoulders
With inverted head and shoulders the neckline is drawn through the highest points of the two intervening peaks. A downward sloping neckline signals continuing weakness and is less reliable as a reversal signal.

The extent of the breakout move can be estimated by measuring from the top of the middle trough up to the neckline. This target is then projected upwards from the point of breakout.



Volume Confirmation
High volume on the first trough,

Moderate volume on the second trough,

High volume on the second peak,

Low volume on the third trough, and

A sharp increase in volume at the breakout.

Trading Signals
Go long at breakout above the neckline.
Place a stop-loss one tick below the last trough.

There is frequently a correction back to the neckline, which then acts as a support level. Go long on a reversal signal and place a stop-loss one tick below the support level.



Never trust an inverted head and shoulders pattern where the neckline is clearly descending (the second peak being lower than the first). The more level the neckline, the more reliable the pattern.

Click to Read more!

Tax Tips For The Individual Investor

As the old saying goes, there are only two certainties in life: death and taxes. While we have yet to find a way to successfully avoid either, there are a few tricks of the trade that can minimize the impact the taxman has on your pocketbook.


After all, nobody likes taxes, but we all have to deal with them, so we might as well handle them in the best way possible. When the end of the year approaches, many investors' thoughts turn to how they can avoid paying tax. (Notice we said avoid, not evade.) Although a lot depends on your personal situation, there are a few simple tax principles that apply to most investors and can help you save money (We also recommend talking to a tax planner.) In this article, we'll look at the tax benefits of making smart investment decisions, writing off expenses, effectively managing your capital gains and more.

Dividends
Are you an invester who ends up paying too much capital gains tax on the sale of your mutual fund shares because you've overlooked dividends that were automatically reinvested in the fund over the years? Reinvested dividends increase your investment in a fund and thus reduce your taxable gain (or increase your capital loss). For example, say you originally invested $5,000 in a mutual fund and had $1,000 in dividends reinvested in additional shares over the years. If you then sold your stake in the fund for $7,500, your taxable gain would be the result of subtracting from the $7,500 both the original $5,000 investment and the $1,000 reinvested dividends. Thus, your taxable gain would be $1,500. Many people would forget to deduct their reinvested dividends and end up paying tax on $2,500.

While the reduction in taxable income in this example may not seem like a big difference, failing to take advantage of this rule could cost you significantly in the long run. By missing out on tax savings today, you lose the compounded growth potential those extra dollars would have earned well into the future, and if you forget to consider reinvested dividends year after year, your tax-adjusted returns will suffer considerably in the long term. Keep accurate records of your reinvested dividends and review the tax rules applicable to your situation every time tax season comes around. Doing this will serve as a reminder of the details you need to use to your advantage again and will hopefully make you aware of new tax avoidance opportunities at your disposal.

Bonds
When the stock markets perform badly, investors make the flight to quality and look elsewhere for places to put their money. Many find a safe haven in bonds. When you are calculating your taxes, remember to report the interest income on your tax return: you may not have to pay tax on all the interest you received. If you bought the bond in between interest payments (most bonds pay semiannual interest), you usually won't pay tax on interest accrued prior to your purchase. You must still report the entire amount of interest you received, but you'll be able to subtract the accrued amount on a separate line.

Many investors also find short-term government debt a convenient safe harbor for their money when the equity markets are less than robust. Municipal bonds are often issued by local governments or similar entities in order to finance a particular project, such as the construction of a school or a hospital, or to meet specific operating expenses. For the retail investor, municipal bonds, or munis, can offer significant tax advantages. Most munis are issued with tax-exempt status, meaning the returns they generate do not need to be claimed when you file your tax return. Combined with the added safety of the low-risk nature of municipal bonds, they can be very attractive investments when stock market expectations are weak. (For further reading, see Weighing the Tax Benefits of Municipal Securities.)

Write-Offs
Did you buy a home computer last year? If you did, you can possibly write off a portion of the cost if you used the computer to place trades or to help manage your portfolio. The portion of the computer's cost that is deductible depends on how much you use the computer to monitor your investments. For example, if you paid $1,500 for a computer, and you use it to keep tabs on your investments 20% of the time, $300 of the computer's cost is eligible to be written off as an expense.

For investors who invest in small business ventures or are self-employed, there are many operating expenses that can be written off. For example, if you take any business trips during the year that require you to obtain accommodations, the cost of your lodging and meals can be written off as a business expense, within specified limits dependent upon where you travel. If you travel frequently, forgetting to include these types of seemingly personal expenses can cost you sizeable dollars in lost tax savings.

For homeowners who have moved and sold their home during the year, an important consideration when reporting the capital gain on the sale is the actual cost basis of the purchase of the home. If your home has undergone renovations or similar improvements having a useful life of more than one year, you will likely be able to include the cost of such improvements into the adjusted cost base of your home, thus reducing your capital gain incurred on the sale and the resultant taxes.

Tax-Deferred Programs Are Like Free Money
Every time you trade a stock, you are vulnerable to capital gains tax. Making your purchases through a tax-deferred account can save you a pile of money. Tax-deferred accounts come in many shapes and sizes. The most well known are Individual Retirement Account (IRA) and Simplified Employment Pension (SEP) plans. The basic idea is that you are not taxed on the funds until you withdraw, at which point you are taxed at the rate of your income tax bracket. Waiting to cash in until after you retire will save you even more because your income will likely be lower when you are no longer working and earning a steady income.

Also, while the benefits of tax-deferred accounts are substantial on their own, they provide an additional benefit of flexibility, as investors need not be concerned with the usual tax implications when making trade decisions. Provided you keep your funds inside the tax-deferred account, you have the freedom to close out of positions early if they have experienced strong price appreciation, without regard to the higher tax rate applied to short-term capital gains.

Match Your Profits and Losses in the Same Year
In many cases, it is a good idea to match the sale of a profitable investment with the sale of a losing one within the same year. Capital losses can be used against capital gains, and short-term losses can be deducted from short-term gains. Also, if you have a particularly bad year, you can carry $3,000 of your loss over to future years. This may seem like a counterintuitive method, but it works very well in reality. The key is that capital gains (or losses) are only applied to your tax return when they are realized. So-called paper gains and losses do not count - since you have not actually sold your investments, there is no guarantee that your investments will not change in value before you close out your position. However, by actively choosing to close out (perhaps temporarily) of losing investments, you can successfully match your capital gains with offsetting losses, significantly reducing your tax burden. (Learn more about tax-loss harvesting in Selling Losing Securities for a Tax Advantage.)

Add Broker Fees to the Cost of Your Stocks
Buying stocks isn't free. You always pay commissions and may also pay transferring fees if you change brokerages. These expenses should be added to the amount you paid for a stock when determining your cost basis. When you sell the shares, subtract the commission from the sale price of the stocks. Think of these costs as a write-off because they are direct expenses incurred to help you make your money grow.

After all, brokerage fees and transaction costs represent money that comes directly out of your pocket as an expense incurred while undertaking an investment, and although modern discount brokerages often charge relatively low fees that do not usually have a material effect on an investor's returns, there is no reason to avoid claiming every expense possible when filing your taxes. Many small brokerage fees incurred over the course of an entire year can add up to hundreds of dollars, and for active traders who place hundreds or even thousands of trades every year, the impact of brokerage fees can be substantial.

Try To Hold On to Your Stocks for At Least 12 Months
Here is another good argument for the buy-and-hold strategy: short-term capital gains (less than one year) are always taxed at a higher rate than long-term ones. The difference between the tax rates of long-term and short-term capital gains can be 13% or more in some states and countries, and when you consider the long-term effects of compounding on reduced income taxes incurred today, it can prove very beneficial to hold onto your stocks for at least one year.

Most investors plan to take part in the equity markets for decades, perhaps moving from stock to stock as the years pass, but still keeping their money actively working for them in the market for the duration of their capital accumulation phase. If you fit this description, take a moment to consider the tax advantages of using a longer-term buy-and-hold strategy if you are not doing so already - the savings can be worth more than you think.

Conclusion
It seems there are almost as many intricacies embedded into tax laws as there are investors who pay taxes. Part of a successful financial plan is astute tax management: ensuring you are actively taking advantage of tax avoidance opportunities that apply to your situation and also making sure you do not overlook any expenses or other income-reduction techniques that can reduce your taxable earnings.

While many investors are eager to read about the next investment opportunity that holds potential for market-beating returns, few put in the same amount of effort to minimize their taxes. Do yourself a favor when tax season rolls around this year and take the time to ensure you're doing all you can to keep your money in your pocket - the savings you uncover may make for a healthy boost to your annual return.

Click to Read more!

Market Reversals And How To Spot Them

Traders have an expression for attempting to pick a market top or bottom - they call it trying to catch a falling knife. As the expression implies, it can be downright dangerous and is not normally recommended. But here is a method that may help lower the risk.


Sushi Roll Anyone?
In his book, "The Logical Trader", author Mark Fisher discusses techniques for identifying potential market tops and bottoms. While they serve the same purpose as the head and shoulders or double top/bottom or triple top/bottom chart patterns discussed in Bulkowski's seminal work "Encyclopedia of Chart Patterns", Fisher's techniques give signals sooner, providing an early warning alert to possible changes in the direction of the current trend.

One technique that Fisher calls the "sushi roll" has nothing to do with food, except that it was conceived over lunch where a number of traders were discussing market set-ups. He defines it as a period of 10 bars where the first five (inside bars) are confined within a narrow range of highs and lows and the second five (outside bars) engulf the first with both a higher high and lower low. (The pattern is similar to a bearish or bullish engulfing pattern except that instead of a pattern of two single bars, it is composed of multiple bars.) In his example, Fisher uses 10-minute bars.



When the sushi roll pattern shows up in a downtrend, it warns of a possible trend reversal, showing that it's a good time to look to buy or at the very least, exit a short position. If it occurs during an uptrend, the trader gets ready to sell. While Fisher discusses five-bar patterns, the number or duration of bars is not set in stone. The trick is to identify a pattern consisting of the number of both inside and outside bars that are the best fit with the chosen stock or commodity using a time frame that matches the overall desired time in the trade.

The second trend reversal pattern that Fisher recommends is for the longer-term trader and is called the outside reversal week. Basically, it is a sushi roll except that it uses daily data starting on a Monday and ending on a Friday. It takes a total of 10 days and occurs when a five-day trading inside week is immediately followed by an outside or engulfing week with a higher high and lower low.

Testing Testing….
With this idea in mind, we examined a chart of the Nasdaq Composite Index (IXIC) to see if the pattern would have helped identify turning points during the last 14 years (1990-2004). In the doubling of the period of the outside reversal week to two 10-daily bar sequences, signals were less frequent but proved more reliable. Constructing the chart consisted of using two trading weeks back to back so that our pattern started on a Monday and took an average of four weeks to complete (see Figure 1). We called this pattern the rolling inside/outside reversal (RIOR).

In Figure 1, each 10-bar part of the pattern is outlined by a blue rectangle. Note the magenta trend lines showing the dominant trend. The pattern often acts as a good confirmation that the trend has changed and will be followed shortly after by a trend line break. As you can see, the first 10-bar rectangle fits inside the upper and lower boundaries of the second. Also note the horizontal line on the right side of the chart showing the low of the outside rectangle, which is a good place for a stop loss.




To test the system, we must determine how the trader using the rolling inside/outside reversal (RIOR) to enter and exit long positions would have done compared to an investor using a buy-and-hold strategy. Even though the Nasdaq composite topped out at 5132 in Mar 2000, due to the nearly 80% correction that followed, buying on Jan 2, 1990 and holding until the end of our test period on January 30, 2004, would still have earned the buy-and-hold (BaH) investor 1585 points over 3,567 trading days (14.1 years). At a slow and steady rate of an average 0.44 points per day, the investor would have earned an average annual return of 10.66%.

The trader who entered a long position on the open of the day following a RIOR buy signal (day 21 of the pattern) and who sold at the open on the day following a sell signal, would have entered his or her first trade on Jan 29, 1991, and exited the last trade on Jan 30, 2004 (with the termination of our test). This trader would have made a total of 11 trades and been in the market for 1,977 trading days (7.9 years) or 55.4% of the time. The trader, however, would have done substantially better, capturing a total of 3,531.94 points or 225% of the BaH strategy. When time in the market is considered, the RIOR trader's annual return would have been 29.31%, not including the cost of commissions. That's quite a significant difference.

It is interesting to note that, had the buy-and-hold investor used a simple stop loss or trend line break to exit after the market had retraced 10% from its Mar 2000 high of 5132, he or she would have been in the market 10.25 years and enjoyed an annual return of 22.73%, or more than double the 14-year test results. Timing really is everything, and this exercise demonstrates the power behind combining fundamentals with technicals. As we can see, ignoring market direction can be very costly.



Confirmation
Regardless of whether we used 10-minute or weekly bars, the trend reversal trading system worked well in our tests. But, it is important to remember that any indicator used independently can get the trader into trouble. One pillar of technical analysis is the importance of confirmation. A trading technique is far more reliable when there is a back up in the way of a secondary indicator. Given the risk in trying to pick a top or bottom of the market, it is essential that at a minimum, the trader use a trend line break to confirm a signal and always employ a stop loss in case he or she is wrong. In our tests, the relative strength index (RSI) gave good confirmation at many of the reversal points in the way of negative divergence (see Figure 4).

As an aside, it is interesting to note that the RIOR daily gave a sell signal on the Nasdaq, which would have gotten the trader out of the market at the open on February 10, 2004, had the test not been terminated on January 30th.



Wrapping It Up
Timing trades to enter at market bottoms and exit at tops will always involve risk, no matter which way you slice it. But techniques like the sushi roll, outside reversal week and rolling inside/outside reversal, when used in conjunction with a confirmation indicator, can be very useful trading strategies to help the trader maximize and protect his or her hard-won earnings.
This is featured by Matt Blackman

Click to Read more!

Junk Bonds: Everything You Need to Know

For many investors, the term "junk bond" evokes thoughts of investment scams and high-flying financiers of the 1980s such as Ivan Boesky and Michael Milken, who were known as "junk bond kings". But don't let the term fool you - if you own a bond fund, these worthless-sounding investments may have already found their way into your portfolio. Here's what you need to know about junk bonds.


What Is a Junk Bond?
From a technical point of view, a junk bond is exactly the same as a regular bond. Junk bonds are an IOU from a corporation or organization that states the amount it will pay you back (principal), the date it will pay you back (maturity date) and the interest (coupon) it will pay you on the borrowed money.

Junk bonds differ because of the credit quality of their issuers. All bonds are characterized according to this credit quality and therefore fall into one of two categories of bonds:

Investment Grade - These are bonds are issued by low- to medium-risk lenders. A bond rating on investment grade debt usually ranges from AAA to BBB. Investment grade bonds might not offer huge returns, but the risk of the borrower defaulting on interest payments is much smaller.

Junk Bonds - These are the bonds that pay high yields to bondholders because the borrowers don't have any other option. Their credit ratings are less than pristine, making it difficult for them to acquire capital at an inexpensive cost. Junk bonds are typically rated at BB/Ba or less.
Think of a bond rating as the report card for a company's credit rating. Blue-chip firms that are a safer investment have a high rating while risky companies have a low rating. The chart below illustrates the different bond rating scales from the two major rating agencies, Moody's and Standard and Poor's:



Also, there comes a point in time when the rewards of junk bonds don't justify the risks. Any individual investor can determine this by looking at the yield spread between junk bonds and U.S. Treasuries. As we already mentioned the yield on junk is historically between 4 and 6% above Treasuries. If you notice the yield spread shrinking below 4%, then it probably isn't the best time to invest in junk bonds. Another thing to look for is the default rate on junk bonds. An easy way to track this is by checking out the Moody's website.

The final warning is that junk bonds are not much different than equities in that they follow boom and bust cycles. In the early 1990s, many bond funds earned upwards of 30% annual returns, but a flood of defaults can cause these funds to produce stunning negative returns.

Although junk bonds pay high yields, they also carry higher than average risk of the company defaulting on the bond. Historically, average yields on junk bonds have been between four and six percentage points above those on comparable U.S. Treasuries.

Junk bonds can be broken down into two other categories:

Fallen Angels - This is a bond that was once investment grade but has since been reduced to junk bond status because of the issuing company's poor credit quality.

Rising Stars - The opposite of a fallen angel, this is a bond whose rating has been increased because of the issuing company's improving credit quality. A rising star may still be a junk bond but on its way to being investment quality.
Who Should Buy Junk Bonds?
There are a few things you should know before you run out and tell your broker to buy all the junk bonds he can get a hold of. The obvious caveat is that junk bonds are high risk. With this type of bond, you risk the chance that you will never get back your money. Secondly, investing in junk bonds requires a high degree of analytical skills, particularly knowledge of specialized credit. Short and sweet, investing directly in junk is mainly for rich and motivated individuals. This market is overwhelmingly dominated by institutional investors.

This isn't to say that junk-bond investing is strictly for the wealthy. For many individual investors, using a high-yield bond fund makes a lot of sense. Not only do these funds allow you to take advantage of professionals who spend their entire day researching junk, but these funds also lower your risk by diversifying your investments across different types of assets. One important note: know how long you can commit your cash before you decide to buy a junk fund. Many junk bond funds do not allow investors can cash out and see a payoff before a minimum of one to two years.

Click to Read more!

Lesson - Candlestick charts

Candlestick charts have been around for hundreds of years. They are often referred to as "Japanese candles" because the Japanese would use them to analyze the price of rice contracts.

Similar to a bar chart, candlestick charts also display the open, close, daily high and daily low. The difference is the use of color to show if the stock went up or down over the day.

The chart below is an example of a candlestick chart for AT&T (T). Green bars indicate the stock price rose, red indicates a decline:


Investors seem to have a "love/hate" relationship with candlestick charts. People either love them and use them frequently, or they are completely turned off by them. There are several patterns to look for with candlestick charts - here are a few of the popular ones and what they mean:


This is a bullish pattern - the stock opened at (or near) its low and closed near its high.






The opposite of the pattern above, this is a bearish pattern. It indicates that the stock opened at (or near) its high and dropped substantially to close near its low.







Known as "the hammer", this is a bullish pattern only if it occurs after the stock price has dropped for several days. A hammer is identified by a small body along with a large range. The theory is that this pattern can indicate that a reversal in the downtrend is in the works.





Known as a "star", this pattern is used in other patterns such as the "doji star". For the most part, stars typically indicate a reversal and or indecision. There is a possibility that after seeing a star there will be a reversal or change in the current trend.

So this is the basics of candle stick charting. Of course there are many other patterns, but this should get you started. If you have any questions, feel free to ask.
Take care,
A.Baker

Click to Read more!

Retirement Savings Made Easy

The golden years of retirement. We all look forward to it. Sitting on the porch overlooking the beach or traveling the world, we all strive for a retirement full of wonderful times and enjoyment. But, the reality is that most Americans will retire broke and will have to rely on social security to support you. In most cases it takes a lot of hard work and dedication and even sometimes a little luck along the way to reach the esteemed millionaire status at retirement.

Retirement planning begins early, but it is never to late to begin. Finance News Today provides a Retirement Savings Calculator that provides you a wonderful tool to plan your retirement whether you are just beginning or have been saving for years.

The retirement savings calculator is designed to help you plan your track to a comfortable retirement by showing you what you will need to save based on what you want to withdraw on a monthly basis during your retirement. In less than one minute, you can see the the exact dollar amount you will need to save either in an IRA, 401k, or through other investments to withdraw the funds you need to maintain your standard of living.

Visit the retirement section of Finance News Today for tips on investing for retirement and living a fuller life during your golden years.

Click to Read more!

Video lesson - MACD

Video is courtesy of Brian Shannon, at Alpha trends.

In this lesson I have provided a video explaining the very famous technical indicator, MACD.

MACD is A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

There are three common methods used to interpret the MACD:

1. Crossovers - As shown in the chart above, when the MACD falls below the signal line, it is a bearish signal, which indicates that it may be time to sell. Conversely, when the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting getting "faked out" or entering into a position too early, as shown by the first arrow.

2. Divergence - When the security price diverges from the MACD. It signals the end of the current trend.

3. Dramatic rise - When the MACD rises dramatically - that is, the shorter moving average pulls away from the longer-term moving average - it is a signal that the security is overbought and will soon return to normal levels.

Traders also watch for a move above or below the zero line because this signals the position of the short-term average relative to the long-term average. When the MACD is above zero, the short-term average is above the long-term average, which signals upward momentum. The opposite is true when the MACD is below zero. As you can see from the chart above, the zero line often acts as an area of support and resistance for the indicator.

Click to Read more!

Lesson - Elliot Wave Theory

Elliott was able to spot unique characteristics of wave patterns and make detailed market predictions based on the patterns he identified. Fractals are mathematical structures, which on an ever-smaller scale infinitely repeat themselves. The patterns that Elliott discovered are built in the same way. An impulsive wave, which goes with the main trend, always shows five waves in its pattern. On a smaller scale, within each of the impulsive waves of the before-mentioned impulse, five waves can again be found. In this smaller pattern, the same pattern repeats itself ad infinitum. These ever-smaller patterns are labeled as different wave degrees in the Elliott Wave Principle. Only much later were fractals recognized by scientists.

In the financial markets we know that "every action creates an equal and opposite reaction" as a price movement up or down must be followed by a contrary movement. Price action is divided into trends and corrections or sideways movements. Trends show the main direction of prices while corrections move against the trend. Elliot labeled these "impulsive waves" and "corrective waves".

The interpretation of the Elliot Wave Theory is as follows:
Every action is followed by a reaction.
There are five waves in the direction of the main trend followed by three corrective waves (a "5-3" move).
A 5-3 move completes a cycle.
This 5-3 move then becomes two subdivisions of the next higher 5-3 wave.
The underlying 5-3 pattern remains constant, though the time span of each may vary.
Let's have a look at the following chart made up of eight waves (five up and three down) which are labeled 1, 2, 3, 4, 5, a, b and c.


You can see that the three waves in the direction of the trend are impulses, so these waves also have five waves. The waves against the trend are corrections and are composed of three waves.


The corrective wave formation normally has three, in some cases five or more, distinct price movements, two in the direction of the main correction (A and C) and one against it (B). Waves 2 and 4 in the above picture are corrections. These waves have the following structure:

Note that the waves A and C go in the direction of the shorter-term trend, and therefore are impulsive and composed of five waves, which is shown in the picture above.

An impulse-wave formation followed by a corrective wave, form an Elliott wave degree, consisting of trends and countertrends. Although the patterns pictured above are bullish, the same applies for bear markets, where the main trend is down.

The Elliott Wave Theory has assigned a series of categories to the waves in order of the largest to the smallest. They are:
Grand Supercycle
Supercycle
Cycle
Primary
Intermediate
Minor
Minute
Minuette
Sub-Minuette
To use the theory in everyday trading, the trader determines the main wave, or supercycle, goes long and then sells or shorts the position as the pattern runs out of steam and a reversal is eminent.

Click to Read more!

Video Lesson - Bollinger bands

Courtesy of Chart TV

I hope you have all enjoyed the previous video tutorials and lessons. I will be updating and making new videos and lesson each week, so stay tuned.

In this video I will step into a very popular technical indicator called Bollinger bands. The video just gives an idea of what it would look like, and how they change when prices move up or down.



Bollinger bands are a technical tool used by many in which lines are plotted two standard deviations above and below a moving average, and at the moving average itself. Because standard deviation measures volatility, these bands will be wider during increased volatility and narrower during decreased volatility. Some technical analysts consider a market which approaches the upper band to be overbought, and a market which approaches the lower band to be oversold. The closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.

When using Bollinger Bands, designate the upper and lower bands as price targets. If the price deflects off the lower band and crosses above the 20-day average (which is the middle line), the upper band comes to represent the upper price target. In a strong uptrend, prices usually fluctuate between the upper band and the 20-day moving average. When that happens, a crossing below the 20-day moving average warns of a trend reversal to the downside.

Setup: The default settings for Bollinger bands are 2.0 standard deviations around a 20 day exponential moving average.

If you have any questions related to Bollinger bands, please feel free to ask.
Take care,
-A.Baker

Click to Read more!

Video Tutorial - Moving average

Chart TV

Have a look at this well done moving average video tutorial.

Moving averages (MAs) are very simple, yet extremely useful tools for investors. A moving average is simply the average of a series of numbers over a period of time which is constantly updated by dropping the oldest value and then adding the newest value and recalculating the average. So a 5-day moving average of stock prices would add up the closing prices for the last 5 days and then divide that total by 5. After the next trading day, we would drop the oldest day and calculate the average with the latest days' price in its place. So over time the average moves as new data is added and old data is dropped. There are other, more complex, types of MAs (exponential, triangular, variable, and weighted are some of the more popular ones ) but for this discussion we'll focus on the type I just described, which are called 'simple (a.k.a. arithmetic) moving averages'.


If you have any questions, please feel free to Email me.
Take care.

Click to Read more!

Trading Options - The basics

Leader in futures/options trading

Option is a legal agreement between buyer and seller to buy or sell security at an agreed price in a certain period of time. It is quite similar to insurance that you pay an amount of money in order that your property is protected by the insurance company. The difference between these two is option can be traded whereas, insurance policy cannot be traded. There are two types of option contracts; call options and put options. We buy call option when we expect the security price will go up and buy put option when we expect the security price will go down. We also can sell call option if we expect the security price will go down and vice versa if we sell put option. Usually, option is counted by contract, one contract equivalent to 100 unit options. 1 unit option protects 1 unit share. So, one contract protects 100 unit shares.

Before learning how to trade option, terminologies that you need to know are as follow:

a) Strike price: Strike price is the price that is agreed by both buyer and seller of the option to deal with. That means if the strike price of the call option is 35, seller of this option obligates to sell security at this price to the buyer of this option even though the market price of the security is higher than 35 if the buyer exercises the option. Buyer of this option can buy a security with a price that is lower than the market price. If the current market price is $39, the buyer will earn $4. If the security price is lower than the strike price, buyer will hold the option and leave the option to expire worthless. For put option strike price, buyer of the option has the right to sell the security at the strike price to the seller of the option. That means if the put option strike price is 30, seller of this option obligates to buy the security at this price from the buyer if he or she exercises the option even though the market price is lower than this price.

If the market is $25, the option buyer will earn $5. It looks like a lot of transactions have been involved; but actually, seller of the option will not buy a security and sell it to the buyer. The broker firm will do all the transaction but the extra money that has used to buy the security has to be paid by the seller. This means, if the seller loss $4, the buyer will earn $4.

b) Out of the money, in the money and near/at the money option: Option price comprises of time value and intrinsic price.

Time Value + Intrinsic Value = Option Price

Time value is the amount of money that the option worth due to the time the option has until its expiration date. Longer the time the option has until its expiration date, higher the time value of this option. Time value of an option will become zero if the option has expired. Intrinsic value for in the money call option is the difference between current market security price and option strike price. Conversely, in the money put option’s intrinsic value is the difference between option strike price and current market security price. If the current security price is lower than the call option strike price, this option is an out of the money option. It only has time value. Call option with strike price that is lower than the current market security price is an in the money option. This option has time value and also intrinsic value. Near or at the money option is the option, which strike price is close to the current market security price.

c) Delta value: Delta value shows the amount of the option price will change when the security price changes by $1.00. It is a positive value for call option and negative value for put option. It ranges from 0.1 to 1.0. Delta value for in the money option is more than 0.5 and out of the money option is less than 0.5. Delta value for deep in the money option usually is more than 0.9. If the option delta value is 0.6, meaning that when the security price goes up $1, option price will go up $0.60. If the security price goes up $0.10, the option price will goes up $0.06. Usually, $0.06 will round up to $0.10.

d) Theta value: Theta value is a negative value, which shows the decay of the option time value. Option, which has longer time to expiry, has lower absolute theta value than option, which has shorter time to expiry. High absolute theta value means the option time value decays more than the low absolute theta value option. A theta value of -0.0188 means that the option will lose $0.0188 in its premium after passage of seven days. Options with a low absolute theta value are more preferable for purchase than those with high absolute theta value.

e) Gamma value: Gamma value shows the change of the delta value of an option when the security price increases or decreases. For an example, gamma value of 0.03 indicates that the delta value of this option will increase 0.03 when the security price goes up $1. Option, which has longer time to expiry, has lower value of gamma than option, which has shorter time to expiry. The gamma value also changes significantly when the security price moves near the option strike price.

f) Implied volatility: Implied volatility is a theoretical value, which is used to represent the volatility of a security price. It is calculated by substituting actual option price, security price, option strike price and the option expiration date into the Black-Scholes equation. Options with a high volatility stocks are cost more than those with low volatility. This is because high volatility stock option has a greater chance to become in the money option before its expiration date. Most purchasers prefer high volatility stock options than the low volatility stock options.

Actually, there are twenty-one option trading strategies, which most of the option investors and traders use in their daily trading. However, I’m only introducing four strategies as follow:

a) Call or put spread
b) Straddle
c) Covered call
d) Butterfly spread

Call and put spread is established by buying in the money or near the money option and selling out of the money option. When the security price goes up, in the money call option that you buy will generate profit and the out of the money option that you sell will loss money. However, due to the difference of the delta value, when the security price goes up, in the money call option price goes up with a higher rate compared to the out of the money call option. When you deduce the profit from the loss, you still earn money. The purpose of selling the out of the money option is to protect the depreciation of time value of in the money call option, if the security price goes down. However, if the security price continuously goes down, this will cause an unlimited loss. Therefore, stop loss has to be set at certain level. This strategy also has a maximum profit that is when security price has crossed over in the money option strike price.

Straddle can earn money no matter the security price goes up or down. This strategy is established by buying near the money call and put option at the same strike price. The disadvantage of this strategy is the high breakeven level. The sum of the call and put option ask price is the breakeven level of this strategy. You only generate profit when the security price has gone up or down more than the breakeven level. If the security price fluctuates within the upside and downside breakeven level, you still loss money. The money that you loss is due to the depreciation of the option time value. This strategy is usually applied for the security, which has high volatility or before the release of the earning report. The maximum loss of this strategy is the total amount of call and put option price. This strategy can generate unlimited profit at either side of the market direction.

Covered call is established by buying a security at the current market ask price and selling out of the money call option. Selling out of the money option has limited the profit that generated from this strategy. If security price continuously goes down, it will cause an unlimited loss. Therefore, stop loss must be set. When the option has comes to its expiry, if the security price is not moving up significantly, you still earn the total option premium that you have received. If the security price goes up, sure you will earn a limited profit. If the stock price continuously goes down, it will cause an unlimited loss. Therefore, stop loss must be set. Usually, stop loss is set at the security ask price after subtracting by the option bid price. If this security price goes down and passes over the price that you set as stop loss, the loss that is incurred to you is about half of the total option premium that you have received. This is because the delta value of the out of the money call option that you have sold is about 0.4 - 0.5. The out of the money call option strike price must be the closest strike price to the entering security price.

Butterfly spread strategy is quite similar to the condor strategy. It has also four combinations that are long at the money call and put butterfly spread and short at the money call and put butterfly spread. Long at the money call and put butterfly spread are for stationary market and short at the money call and put butterfly spread are for volatile market. Steps that involve in long at the money call butterfly spread are buying in the money and out of the money call option and following selling at the money call option. At the money option means the strike price of this option is quite close to the current market security price. Number of contract of the at the money call option must double the number of contract of in and out of the money option. Profit can be generated as long as the security price does not move out from the upside and downside breakeven range. The upside breakeven level is calculated by adding the total pay out of this position to the highest strike price. The downside breakeven level is calculated by subtracting the lowest strike price with the total pay out of this position. The short at the money call butterfly spread is established by selling in and out of the money call option and following by buying at the money call option. Number of contract of at the money option must be double the number of contract of in and out of the money option. As long as the security price has move out the upside and downside breakeven range, profit can be generated. This strategy generates limited profit and also cause limited loss if the security price does not go to the right direction.

With these four strategies, you can use to earn money from upside and downside market and also the market that trades sideway.

Click to Read more!

10 Golden Rules For Stock Trading

Your stock trading rules are your money. When you follow your rules you make money. However if you break your own stock trading rules the most likely outcome is that you will lose money.

Once you have a reliable set of stock trading rules it is important to keep them in mind. Here is one discipline that can reap rewards. Read these rules before your day starts and also read the rules when your day ends.

Rule 1: I must follow my rules.

Naturally if you develop a set of rules they are to be followed. It is human nature to want to vary or break rules and it takes discipline to continue to act in accordance with the established rules.


Rule 2: I will never risk more than 3% of my total portfolio on any one stock trade.

There are many old traders. There are many bold traders. But there are never any old bold traders. Protecting your capital base is fundamental to successful stock market trading over time.

Rule 3: I will cut my losses at 5% to 15% when I am wrong without question.

Some traders have an even lower tolerance for loss. The key point here is to have set points (stop loss) within the limits of your tolerance for loss. Stay informed about the performance of you stock and stick to your stop loss point.

Rule 4: Never set price targets.

This is a style that will allow me to get the most out of rising stocks. Simply let the profits run. Realistically, I can never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the hope of much bigger profits.

The big money is made from trading the really BIG moves that I can occasionally catch.

Rule 5: Master one style.

Keep learning and getting better at this one method of trading. Never jump from one trading style to another. Master one style rather than become average at implementing several styles.

Rule 6: Let price and volume be my guides.

Never listen to any opinion about the stock market or individual stocks you are considering trading or are already trading. Everything is reflected in the price and volume.

Rule 7: Take all valid signals that show up.

Don't make excuses. If an entry signal shows up you have no excuse not to take it.

Rule 8: Never trade from intra-day data. There is always stock price variation within the course of any trading day. Relying on this data for momentum trading can lead to some wrong decisions.

Rule 9: Take time out.

Successful stock trading isn't solely about trading. It's also about emotional strength and physical fitness. Reduce the stress every day by taking time off the computer and working on other areas. A stressful trader will not make it in the long term.

Rule 10: Be an above average trader.

In order to succeed in the stock market you don't need to do anything exceptional. You simply need to not do what the average trader does. The average trader is inconsistent and undisciplined. Ask yourself every day, "Did I follow my method today?" If your answer is no then you are in trouble and it's time to recommit yourself to your stock trading rules.

Click to Read more!

Direct Access Trading Systems

The leader in direct access trading
Online brokers are the most accessible, and often least expensive, trading system available today; after all, they are available to virtually anyone with a credit card and an internet connection. The problem with average, run-of-the-mill online brokers, however, is that they suffer from atrociously slow order execution. In fact, novice traders who are serious about their profession will soon recognize that speed can be a key factor in turning a profit. The system in which orders are placed and trades are executed is an essential tool for traders. This article will provide an overview of direct access trading systems (DATs).


By the nature of the business, the individual trader must compete against all of his or her fellow traders, whether they are individuals or professional traders employed by North America's largest financial institutions. Obviously, professional traders will always have access to the latest and best tools and training, including the fastest buy and sell orders. Therefore, individual traders need the absolute best system that they can afford in order to compete - anything less can put them at an immediate and perpetual disadvantage in respect to buy and sell orders.



The difference between the professional trader's order system and an online broker is that the trader's system eliminates the middleman (the human broker). Direct access trading systems allow traders to trade stock (or virtually any other financial instrument) directly with a market maker or a specialist on the floor of the exchange, or immediate order execution. The absence of a middleman can save a trader several seconds to several minutes of time. (For more on this, see Understanding Order Execution and Brokers And Online Trading Tutorial.)

Despite the inherent advantage of DATs as compared to lower level systems, not all order execution systems are created equal. Even amongst all of the existing direct access trading systems, there is considerable variety in speed and accuracy of execution, as well as in the commission price charged for each trade. As a result, traders must be careful to choose the system that most closely approximates their needs in terms of speed, performance and price.

Let's take a detailed look at how certain features of particular DATs might meet a trader's individual style and needs. Note that this discussion refers specifically to stocks - other financial instruments are traded using similar methods, but they may require slight modification in order to fall under the following general guidelines.

Level II Quotes
With a Level II screen, the trader will be able, for each individual stock that he or she is watching, to see a complete list of bid and ask prices at a single glance, as well as the sizes of these orders. The trader will decide at which price the order will be placed and needs to click only once on that price in order to commence the trade. The only other decision the trader will then have to make is the number of shares for the order. The order size is entered in a window that pops up on the DAT immediately after the chosen price is clicked on. Some direct access systems allow a default value to be pasted automatically into this space, thereby enabling the trader to order, say, 1,000 shares without actually inputting the extra four keystrokes. Many traders will have a "typical" order size, and the default value can be a significant convenience and time saver.

Electronic Communication Networks (ECNs)
Direct access trading systems also give traders the ability to trade on the electronic communication networks (ECNs). The simplest way to describe an ECN is to think of a completely electronic stock exchange: buyers and sellers are matched by computer without the need for a human middleman. Orders are executed directly from the trader's DAT and transmitted electronically to the ECN almost instantaneously - within a fraction of a second. (To learn more, check out Electronic Trading Tutorial.)

Market Makers
Even if the order is not routed through an ECN, the direct access system also gives the trader direct access to market maker orders. Many of the orders floating around on quote screens everywhere are placed by market makers, either from their own firm's trading accounts or on behalf of their clients, who are often large financial institutions. Surprisingly, online brokers may also be clients of market makers; certain market makers may give online brokers a rebate for routing the market makers' trades (a practice called "payment for order flow"). This is another major advantage of using a DAT over an online broker. With an online broker, the trader has no influence over where the order is sent. By using a DAT, the trader can choose the market maker who will give the best price. (For further reading, see What's the difference between a Nasdaq market maker and a NYSE specialist?)

Fees and Commissions
Some traders may be surprised to learn that their DAT will cost them more than using an online broker. The higher cost of DATs comes from the probability that any online broker is receiving payment for order flow from the market maker, which allows online brokers to keep their commissions at rock-bottom rates. Commissions for direct access trades, by contrast, are based on a scale which depends on the number of trades that a trader executes over a given period of time. Commissions typically range from $15 to $25 per trade, plus an additional fee levied by the ECN should the trader place his or her order with an ECN. Total fees for each trade might then fall between $15 and $35. Finally, most DATs would levy a certain charge for the use of their software, which tend to fall between $250 and $300 per month. This charge is often waived if a trader makes a minimum number of trades, perhaps in the range of 50 to 300 trades per month. Obviously, the trader's choice among particular DATs should be made based on an overall consideration of cost, which must take personal levels of activity into consideration in this decision. (To read more, check out Don't Let Brokerage Fees Undermine Your Returns.)

Click to Read more!

First Steps In Real Estate Investing

With all the stories of people making tremendous amounts of money in real estate it's no wonder why so many are looking at real estate as an investment vehicle. It offers more security than the stock market, provides great potential returns, offers tax benefits and let's not forget; it sounds cool to be 'in real estate'. Everybody can buy and sell stocks from their phone or computer these days. But real estate, now that's something else.

One of the challenges that many are faced with is putting up the money to acquire a piece of property. Although in reality this is usually not the biggest obstacle. You might say "Hey, what do you mean, not an obstacle. I would love to invest in real estate, but I just can't afford to!" The point is that hardly anyone who buys a piece of real estate has enough money in their account to pay for it. That's where your banker comes in. Let's face it. Do you know anyone that owns their own home? I mean truly own it? Probably not. Sure, you know a lot of people that have a house to their name, but wait until they get behind on their monthly mortgage payments and you will soon find out who really owns their house. That's right, the bank. So if these people can use the bank's money to buy a house, why can't you?

Now 'owning' your own home may sound like a somewhat obvious way to get started in real estate, but it is also a very good way to do so. You might say "Duh..." But apparently this little step is overlooked by a lot of people. Just take a look at how many people are still renting a property instead of buying one. Now of course the relation between rent and housing prices varies from country to country and even from area to area. But wherever you go you will still find people renting, because in their mind "they don't have enough money to buy a house." In reality it would be much cheaper for them to buy!

When you rent, you are pretty much flushing your money down the toilet. Of course you are getting the pleasure of living, but the point is you're not building anything long term. Every dollar you spend on rent is a dollar you will never see again. Whereas if you own your own home, instead of paying rent you would be paying for your mortgage. Even though there is a lot of variety in mortgages these days, the basics of practically all mortgages are more or less the same. Every month you make a payment which consists of two parts: interest and principle. The interest part can be compared to rent. Those dollars are gone with the wind and you will never hear from them again. However, the part of the payment that goes to the principle is money you keep. Every dollar that is used to pay off the principal is a dollar you put in your own pocket.

So if you're thinking about getting started in real estate and you don't 'own' your own house yet... Change it, and get some experience. It's a great first step towards building your capital and in many cases, it just makes more sense financially. It can also supply a range of opportunities for accelerating the process of building your net worth. When real estate prices go up, so does the value of your property. Whereas the money you owe the bank, your mortgage, remains the same. In other words this helps you build your net worth. Compare this to people that are paying rent... Their net worth does nothing. However their landlord's net worth is doing very nicely in this scenario and he or she will probably love you for it. So if you get a warm fuzzy feeling about making somebody else rich at your own expense... Keep renting. If you would rather build your own capital instead... Buy your own house!

Many home owners have accumulated more money through appreciation of their property than by working a full time job for many years. Now before you go out and buy the first property you lay eyes on, don't forget that some security measures are in order here. As you may or may not know, real estate prices do not always go up, and certainly not in a straight line. Yep, this can be shocker to some people, as well as an ugly reminder for those who overlooked this minor detail in the past. If for some reason you would have to sell your home in a down market, it can be a costly adventure. You wouldn't be the first to end up with a house worth considerably less than the mortgage resting on it. So make sure to keep some slack. In the long run real estate prices have always been on the rise, but in any cycle there are down periods. By keeping some slack and being patient you will be able to sit through these times and profit from the long term up-trend.

Click to Read more!

5 Tips For Successful Trading

There are lots of people who aspire to become profitable traders in today’s market environment. Many people who come to trade stocks, options, and other securities are attracted to the potential of making a lot of money but, often, aren’t aware of what it takes to be able to make money consistently, position yourself to make windfall profits, and all the while doing this while protecting your account from excessive and/or unnecessary losses.

The good news is that there is a wealth of resources to help you but the bad news is that often a beginning trader doesn’t know where to start. It is the focus of this article to give you direction on what areas to focus your efforts into in order to improve and trade successfully.

The first step is to focus on is learning the language of the industry. Learn what a stop limit order is or what a "handle" means and how they relate to your trading. If you run into a term that you don’t understand, just "google" it, then study the meaning. It is extremely hard for you to know what an article is saying or a veteran trader is talking about if you don’t know the basic terms of stock orders, option definitions, or how the futures market works if you ever hope to trade them.

The second step is to learn is how to read price action. Price action is basically the language of a stock or a given market. It tells you what the stock or market has done and is likely to do again. Know how to read trends on a chart. Is the stock in a long term bullish trend? Are oil prices in an intermediate bear market? Is there evidence of a possible trend change in oil futures from an intermediate bear market to a long term bull market? Learn how to read price action and it will make you rich.

The third step to successful trading is learning how to control your risk. Almost every successful trader that has survived long term and made money long term knows how to control his risk to the markets. I personally know a professional hedge fund manager that was short the German mark when the Berlin Wall came down but survived to make record returns on his funds that year. The same trader was long the Dow futures when the 9-11 terrorist attacks happened and went on to beat the returns on the S&P 500 that year. I was personally long a lot of oil and refinery stocks when Hurricane Rita hit Texas but I still made money as those stocks plummeted because I know how to manage my trades. Learn how to assess and control risk and you will increase your odds in becoming a master trader.

The fourth step is having an "edge" when you trade. An edge in trading is anything that gives you an advantage in trading. The more edges you can have, the better chances you have to make outstanding profits. An edge can be superior chart reading skills, successful stock selection, money management, etc. I know of a very famous and successful stock trader that use the 3 edges I just wrote to take an $11,000 stock account and made $48,000,000 in 23 months! He has been interviewed in almost all major financial publications and has set a world record in the greatest returns in the briefest time category. Study the great traders and you will get a glimpse of the edges they use to become trading legends.

The fifth step is having mental discipline and emotional balance. Most of trading is mental. You can give two traders the same exact trading system for stocks, futures, or options but, invariably, they will end up with different results. Why? There mental and emotional states may not support them in being successful with system they were given. One trader may experience nervousness and anxiety which causes him to exit his trades to early, hesitate in taking entry signals, or taking profits too early and missing the big moves. The other trader may have the discipline and control to take each trade as it comes with no other focus other than to follow the system as it should knowing that the losses he may experience are just part of the game and that he will make his greatest profits over time using this system. In my opinion, learn how to use your mental discipline and emotional control to support you in becoming a successful trader and not work against you.

These five steps that have been outlined will go a long way in helping you become more skillful and profitable. In time, you may want to come back and begin with the "basics" of this lesson to keep your focus and help you stay on the path of being the best trader that you can be.

Good trading.

Click to Read more!

Interested in Forex trading?

Click graphic for forex education

The Foreign Exchange Market (FOREX) has no central exchange location yet it is the largest financial market in the world. It is over 3x's the size of the stock and futures markets combined and operates via an electronic network of a banks, corporations and investors.

Foreign exchange consists of a simultaneous buying of one currency and selling of another. Currency is traded in pairs, in other words, one currency is traded for another. The major currencies are:

USD - United States Dollar
EUR - Euro members Euro
JPY - Japan Yen
GBP - Great Britian pound
CHF - Switzerland franc
CAD - Canadian dollar
AUD - Australia dollar
There are 2 types of investors involved in the FOREX market.The first type of investor is the hedger. The hedger is involved in International trades and utilizes FOREX trading to protect their interest in a transaction from adverse currency fluctuations. The 2nd type of investor is the speculator who invests in currency solely for profit.

Currency prices fluctuate due to a variety of economic and political factors. The major factors are:

Interest rates
International trade
Inflation
Political stability
There are many reasons investors take a great interest in FX trading Some of the major reasons are:

No fees
No middlemen
No fixed trade sizes
Low transaction cost
High liquidity
Instant transactions
Low margin / High leverage
24 hour market
Online access via online trading platforms
Always good opportunities to trade, unlike the stock market the market is never bullish or bearish.
No one entity can control the market
No insider trading can occur
To begin trading in the FOREX market, an investor only needs a computer, a high-speed internet connection and an online trading currency account. A mini account can be opened for as little as $100.

Click to Read more!

Day trading basics

A means to survive, an avenue to progress and vista to exchange thoughts, ideas and feelings' 'Trading' is perhaps as old as human existence on earth. It all began when the primeval man began swapping small useful items with each other in order to live and fulfill many of his needs. The time that followed saw a persistence and enhancement of this tradition. The current world runs on trading. It is a means to fetch bread and butter to many while for a large number of people trading business serves as toppings on a well-made cake. Trading therefore preserves an unparalleled significance across the globe.

This article will educate you about the various types and means of day trading, key terms and issues associated with it along with their benefits and shortcomings.

Types of Day Trading- depending on the time period for which the day trader retains the stocks with him or under his custody, different types of trading are classified.

' Basic Day Trading- Day trader commences the day by collecting stocks keeps them for sometime and endeavors his best to sell all of them at the end of the day. His primary work constitutes the sale and purchase of stocks. These transactions enable him to bag good short-term profits and mitigate the risk of sale of stocks in a fluster due to fluctuating price.

' Swing Day Trading- the day trader preserves the stocks for relatively longer period of time such as for few hours and few days to accrue big profits. But swing trading runs the risk of unstable market prices of the stocks.

' Position Trading- as the name suggests, the trader purchases the stocks and arrange the sales keeping in mind the position or the market value of the stocks. This may entail keeping the stocks for few weeks and even months, but good returns usually follow.

' Online trading- can be of any of the three aforementioned types but the sale and purchase of stocks is done via the Internet. Since this trading is through the medium of computer, an efficient computer with a 24-hour Internet connection is an essential requirement.

Issues behind S & P- When it comes to day trading, it is found that some particular stocks are good or beneficial than others. Primarily there are three factors that govern the sale and purchase of stocks-

1. Liquidity of the stock- Liquidity designates the amount of buyers and sellers for the stocks concerned. Liquidity of the stock is deemed to be directly proportional to profits ensued by it. Greater the liquidity of the stocks, higher is the comfort in vending them. But the liquidity value is never stagnant. It too depends on certain factors such number of share holders, outstanding shares, volume of transactions made and the number of market makers.

2. Volume- contributes to the liquidity factor. It can be conveniently evaluated. For instance a day trader's stock should trade a minimum of 500000 shares each day.

3. Volatility- stands for the ups and downs the stock experiences everyday. If the volatility is less or negligible then the stock does not undergo any fluctuations and is thus rendered bad for day trading. It is believed that stocks that are considered good go through at least a $2.00 variation per day of normal trading.

4. Price Transparency- is the term coined for the market depth and the potential of the trader to acquire knowledge about the order of the stock.

General Tips for successful day trading-

' Study the market carefully before proceeding with purchase of stocks. The market indicators displayed on television and announced on radio are the best means to know about the market trend for the day.

' Do not be motivated by profits always. Every transaction may not translate into profits. Adopt a strategy and stick to it. Don't flip your technique of working frequently.

' Be resolute and patient. If you are unable to incur spontaneous gains, profits may occur eventually.

Click to Read more!

Oil and gas investing

Oil and gas investing can come with a high risk if you are looking for high returns.

Oil and gas investing can give you huge returns - but it can also be a risk, depending on how you choose to invest. Make sure you know the risks associated with all the different types of oil and gas investments, and choose the one that is right for you.

One of the ways that you can invest in oil and gas is to invest in the exploration. This is probably one of the highest risk investments, however, if you have the money and are willing to accept the risk, it could have a high reward. Also, you will be helping to fund discoveries of new reserves of oil and gas that can be tapped when needed. The risk here, of course, is that it is not always possible to find new reserves. There might not be any oil or gas in the area, or there might not be enough to make it worth the costs of drilling the area.

Another choice if you are looking for something that has a lower risk, is to invest in oil or gas companies. These companies will likely be well established, will have enough oil to make sure that they turn a profit, and are likely to help you earn at least a little bit of money on your investments. You can also decide between investing in large corporations, or in small independent projects. Keep in mind, however, that the larger the risk, then the larger your possible gains could be, and vice versa.

If you want to be involved in oil and gas investing but you do not want to accept much risk, then your best bet is probably to invest in one of the large oil companies by buying stock.

If you are going to invest in oil and gas in any way besides through buying company stock or joining a mutual fund, then you will need to make sure that you know what you're doing. Investing in oil exploration requires a large amount of capital, and you should know what to expect from the area and the type of exploration that is being done. Also, remember, this is going to be a very high-risk, speculative investment, and you may lose most or all of your investment.

Click to Read more!

Bond investing

One of the safest ways to invest is in bonds. If you are thinking about investing in bonds, chances are you are making a very good decision. You should be able to make a little bit of money on your investments - and you are not very likely to lose any money in the deal. However, while the stock market is confusing, the bond market is too. Therefore, before you start investing in the bond market, you should do some research and make sure you can find out what you need to know about bonds.

There are several different bond markets. One of the most well known and easiest bond markets to get into is that of municipal securities. These bond markets are essentially based around the buying and selling of bonds in states or cities. Usually the money from these bonds are initially used to build new schools or other public systems. Therefore, not only will you be investing in bonds but you'll also be able to help your area build schools and other structures that it needs.

Bond investing does not have to be done on the local level. Another type of bonds you can buy are from the federal government. These bonds are usually pretty easy to buy and usually can be used for many years afterward. The treasury securities market, for instance, has bonds that will not mature for more than ten years.

Bond investing works the same way as most other types of investments. You put your money in, get your bond, and then you cannot get your money back until the bond matures. Therefore, bond investing is strictly a long-term investment market. However, there are several different time lengths that you can buy bonds for. Some of the shortest bonds will mature after one year. These are the shortest bond lengths, and usually will not allow you to earn very much money on the bond.

Other types of bonds are longer. If you invest in an extremely long term bond (ten or more years) then you'll stand a chance of making a fairly decent amount of money. Most bonds also have a fixed value that they are worth. Instead of deciding exactly how much money you would like to give to a school, bank, or other organization for bonds, you need to buy a certain number of bonds that have fixed prices at first.

Finally, if you are thinking about bond investing, realize that you can sell your bonds before the maturity date - but you will not get as much money as you would have, and might even end up losing money in a deal like that.

Click to Read more!

Penny Stock Investing

For anyone new to investing in penny stocks, you should first be made aware of the differences between these micro-cap stocks and the more conventional blue-chip and mid-cap investments. Unlike buying shares in a large, stable company like Ford or IBM, you are dealing with speculative investments.

Penny stocks literally trade for pennies per share, or for as much as a couple of dollars. The beauty of penny stocks, of course, is that sometimes they 'grow up' and become mid-cap stocks, multiplying in value hundreds of times over and making many people very wealthy.

With penny stocks, also called micro-caps or juniors, you will see much greater price volatility, and thus greater and quicker gains and losses in asset values. It is precisely this volatility which draws investors to the junior markets, as one good pick could make you hundreds of times what you could ever make on the larger markets.

Of course, there is more risk than buying bonds, blue chips or defensive stocks - but this added risk is tempered with the possibility of making the big gains.

Most penny stocks, but not all, are resource or technology companies who initially sold shares in an effort to raise money for exploration or product development programs. Many of the companies have large debt loads and are not necessarily making more money than they are losing.

However, it is the potential of a major, or even minor success in their quest that often incites dramatic price climbs, and this is where their value lies.

Profit Potential

Modern Strategies Inc. owner of http://www.pennystockinsider.com , has been in the business of researching penny stocks for many years, and has become effective at uncovering the best small cap investment opportunities and the most rewarding profit situations in the penny stock markets.

There are several ways to profit from penny stock investments. Modern Strategies Inc. has uncovered the most highly rewarding investment situations.

Promotional Stocks - These issues may or may not have much actual value. Promoters generate interest in these types of stocks in an attempt to drive share prices higher. The promoters own great amounts of shares and so they make more money the higher the share price travels. Eventually, they sell their holdings into the promotion and generate great personal profit. Then they move on to the next project, leaving the original stock and all its investors behind. Without the work of the promoter, the promotional issue soon comes crashing down.

These are the type of stock investor hear horror stories about, because many people often lose a good deal of money when they are naive about promotional ploys. However, getting in on a promotional stock early in its life cycle, and keeping an eye on the actions of the promoter can be very, very rewarding. It's like having a full time stock promoter doing everything in his power to get the share prices of the stocks you own to go through the roof, and investors who get in early can go along for the ride!

Technical Precursors - Often technical analysis can reveal patterns in the trading cycles of penny stocks. Sometimes these patterns illustrate excellent buying opportunities, where the underlying stock has a high probability of moving up strongly, and only a low probability of declining in value.

In addition, there are sometimes situations where several positive technical indicators combine at once to reveal that an issue is very likely to increase strongly in price over a short time frame, indicating that the particular issue is has excellent investment potential.

Fundamental Strength - Fundamentals involve such criteria as earnings, debt load, assets, and many others. It was long thought that earnings were the major driving force behind share prices, but Modern Strategies Inc. has since disproved this theory as it applies to penny stock companies. Instead, uncovering the best medium to long term investment opportunities must be done through exhaustive analysis of company financial statements. Investors should get involved with the companies that are making the most money, have the most effective management, and have improving trends in all factors of their operations. As well, industry comparisons and the examination of key financial ratios present clues as to which companies are destined for higher share prices.

Proper fundamental analysis of penny stock companies will generally reveal that there are about 2 or 3 superior investment opportunities out of every 100 companies examined. These 2 or 3 excellent corporations often represent better investments than 90% of stocks on the large-cap markets like the NYSE.

Undervalued Situations - Sometimes companies see their share price slide dramatically. There are occasions where this decrease in price has very little to do with the underlying fundamentals, and more to do with factors such as overall market weakness, interest rate increases, or others.

Opportunity exists in such situations because the shares are often 'unfairly valued' and a return to more realistic prices is inevitable. There are often cases where companies have more cash on hand per share than their share price, or have price to earnings ratios as low as 5.0. Although there is much more to uncovering the best undervalued situations, this is the basis behind the concept.

Minimized Downside - Often the combination of technical analysis and undervalued situations can reveal penny stock companies that have tremendous upside potential, and have a very low probability of declining in value to any significant degree.

These type of investments are excellent choices for penny stock investors that are less risk adverse.

Special Notes About Penny Stock Companies

Penny stock companies change their names more commonly than other publicly traded companies, and are also subject to more stock-swaps and consolidations. In any of these events, your shares in your account will be automatically replaced with the appropriate stock by your broker and notice will be delivered to you.

For example, if you owned 5000 shares of EXO and for every 5 shares you were to receive 2 shares of LOR, you would find your account holdings re-adjusted to reflect 2000 LOR which can be traded as normal. You will no longer have the 5000 EXO.

On rare occasions, a penny stock company can become delisted. This means that the shares will no longer trade on the exchange, and if the company does not get listed on another exchange or re-instated at a future date, you may be subject to a loss of capital equal to 100% of the total investment. However, this is a very rare occurrence, and there are simple ways to protect yourself against it which are periodically discussed in Modern Strategies Inc. publications. Delisting generally becomes a greater concern for investors who intend to use a long-term (several years) buy and hold strategy with penny stocks.

Click to Read more!

Investing in the Stock Market

There are several factors an investor in the stock market should consider:

1. All stock purchases should be commission-free.

2. All stocks purchased should be from a company that has a history of raising their dividends every year.

3. The company should not only have a history of raising their dividend every year, but should also show price appreciation in the market place, on a year to year basis.

4. All dividends from the companies should be rolled-over into more shares of the company, until retirement. This should be done by the company, for the shareholder, commission- free.

5. The companies purchased should have staggered dividend pay-out dates so the income from 12 companies will provide the shareholder cash dividend income every week of the year. No more than 12 companies should be owned, otherwise, you're probably spreading your money too thin.

6. A systematic approach of dollar-cost averaging should be done on a quarterly basis. A savings plan should be adopted to add to your holdings every quarter, along with the dividend reinvestment.

7. Stocks purchased should pay a dividend yield of at least 2.0% or better. A low 2.0% dividend yield isn't necessarily bad because it means the company in question is using most of their profits too expand. In other words, it's a growth stock with business, profits and earnings growing. A growth stock makes up for the lower dividend yield because their stock prices will more than likely rise faster.

8. The company should have been in business at least eight years, showing dividend increases each year. This will eliminate the risk involved in putting money into a risky new start up company (the kind that is going to change the world - they are just too hard to find).

9. The company must have a stock dividend reinvestment plan (DRIP). If the dividend paid by the company is $2.63 for the quarter, all of that $2.63 will purchase a further percentage of shares (partial shares) and this should be done automatically for you by the company or their Transfer Agent.

10. The companies you purchase should be purchased with the intent of realizing ever-increasing cash dividends for you and your family for the rest of your lives.

Everything you would need to know to start an investment program which emphasizes the considerations above is explained to you in my book 'The Stockopoly Plan', soon to be published by American-Book Publishing.

Below is an excerpt from the book I would like to share with you!

Have you ever noticed how some words in the English language are so perfectly named for what they describe' And how some words seem to be, I guess you could say backwards' For instance, the word sunflower! How wonderfully aptly named is the sunflower, that beautiful yellow flower that follows the sun from sunrise to sunset. And then there are those words in the English language where there meaning appears to be backward, so to speak - like parkway and driveway. When my car is parked at home, I would think it would be parked on, well, a parkway - and when I'm on the road driving somewhere, I would think I'd be driving on a - a driveway.

In the stock market world, I think the word analyst is a perfect word in the English language and stockbroker sounds right to me, too. And this leads me to what I call the 'brainwashing mantras' of Wall Street.

The brainwashing mantras of Wall Street may take the form of a number, such as a stock rating of 1, 2, 3 etc. Or the mantras may be a star, 1 star, 2 stars etc. The mantras may be a word or a group of words- attractive, unattractive, neutral, market perform, market out-perform, market under-perform, market under-weight, market equal weight, market over-weight, sector perform, strong buy, buy, sell, strong sell.

These mantras are so ingrained in Wall Street and investor's minds that they have created multi-billion dollar industries. There are other types of mantras, such as RSI (relative strength index - a trading volume indicator), Bollinger Bands (named after its creator John Bollinger (he use to be a regular on CNBC) and the bands deal with the channels a stock trades in, in relation to its 'moving average'- another mantra), Stochastics (used to tell if a stock is 75 % overbought - too many people have been buying) or 25% oversold (too many people have been selling), Momentum, MACD (Moving Average Convergence/Divergence — price of the stock, up or down, in relation to its moving average), 50 day, 200 day moving averages, triple bottoms and tops, pendants, flags, bear and bull markets, head and shoulders formations, double bottoms, P/E ratios etc, etc, etc. All these mantras serve a purpose (and if you're inclined to trade in the market they are, I admit, useful tools) - they create commissions. And in my opinion, have no meaning what-so-ever for the long-term, dollar-cost averaging, buying investor of company's shares, free of commission charges, whose companies raise their dividend every year, with the investor's idea or purpose being to provide an 85% tax-free income, through ever-increasing dividends for the rest of their lives, no matter what the price of the stock at any given time in the market place may be. (Whew! What a sentence!)

Click to Read more!

RRSP Investing Mistakes To Avoid

So, you're ready to step up contributions to your Registered Retirement Savings Plan (RRSP). You are eager for the tax and compounding growth benefits. You think you are on your way to a blissful, carefree retirement, right? Maybe. But if you don't take the time to learn about this type of investment, you can make mistakes, cost yourself money and slow down your ability to build wealth.

Joanna Saar, a Mississauga, Ontario-based financial adviser with CIBC Imperial Service and certified financial planner (CFP), sites some of the most common mistakes people can make when investing in RRSPs.

Parking your money in money markets. When markets are volatile, investors often flock to the perceived security of short-term investments. People often "park" their capital in a safe low yielding investment such as money market funds until the markets settle down. But too often, they wait too long. "This is your hard-earned after-tax income," explains Saar. "You have earmarked it for retirement so why not get it working for you? By investing in money markets, you forego the potential returns that a well-developed investment plan and diversified portfolio can help deliver."

Investing in the current mutual fund 'stars'. "Often people will see a product that won Fund of the Year last year or they will see a fund that has received good coverage in the news and they will

invest based on a short-term history of performance," says Saar. "Yet if you look at the subsequent performance of funds such as these, you will see that this is not always a good strategy. In fact, the top-performing fund can change each year. A sure way to ensure you participate in market growth is to build a diversified portfolio including funds with different management styles, geographic mixes and asset classes."

Not sticking to your plan. The market has been up and down in recent years and this makes people very emotional with their investments and jittery about short-term losses, says Saar. The result for some has been to 'cash out' of poorly performing mutual funds. "If you established a proper, diversified plan when you invested, it is important to stick to it even through the dips in the market," says Saar. "The market may get bumpy but because the RRSP is a long-term investment, you should ride out these bumps. The plan accounts for fluctuations but should still reach its goal in the long run." Investors who contribute regularly to their plan are less impacted by swings in the market and can benefit from an investment strategy called dollar cost averaging.

To avoid falling into these and other RRSP investing traps, it is important to take the time to develop a good financial plan. Whether you use a financial adviser or invest on your own, planning and research are essential to creating a successful RRSP strategy for the long term.

Click to Read more!

What are mutual funds?

Mutual funds are very popular. In fact, they are the one of the most popular investments on the market today. What does that mean in numbers? There are over 10,000 different funds with over $4 trillion in investments!!

Why are they so popular? For some, it is because of their great returns. Others like funds because they are easy to buy and sell. Still others like them because they are diversified and less risky.

A mutual fund raises money from investors to invest in stocks, bonds, and other securities. It is a package made up of several individual investments. When those investments gain or lose value, you gain or lose as well. When they pay dividends, you get a share of them. Mutual funds also offer professional management and diversification. They do much of your investing work for you.

Mutual funds have been around since the 1800's, but didn't become what we know today until 1924. Even then, they did not become a household word until the 1990's, at which time the number of people owning them tripled. A recent survey shows that 88% of all investors have at least some of their money in mutual funds.

A mutual fund is a special type of company that pools together money from many investors and invests it on behalf of the group, in accordance with a stated set of objectives. Mutual funds raise the money by selling shares of the fund to the public, much like any other company can sell stock in itself to the public. Funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds, and money market instruments.

In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund.

Most investors pick mutual funds based on recent fund performance, the suggestion of a friend, and/or the praise bestowed on them by a financial magazine or fund-rating agency. While using these methods can lead one to selecting a quality fund, they can also lead you in the wrong direction and wondering what happened to that "great pick."

Despite the distinctive characteristics of mutual funds - performance, management philosophy, & investment objectives - your specific selections should be chosen within the context of your overall financial plan. Examining features such as past performance are not where your studies should begin. The point of departure is you; your financial priorities; your resources; your approach to investment diversification; your willingness (or lack thereof) to accept market volatility; and your time horizon for a particular investment.

Total Returns are fun to look at and brag about, but simply looking at a fund's total return for the past year is not necessarily a good measure of a fund's quality. For example, investors often talk about how well a specific fund did last year and how happy they are with that performance -- say a 16% return in an equity income fund. Well, in a given year that may or may not have been a good return for an equity income fund. That fund may have under-performed many or most other equity-income funds for the year. Returns should always be measured in context with how other similar "categorized" (e.g.. equity income funds, growth funds, small cap funds, etc.) funds have performed. So don't get overly excited by a funds total return until you see how it compares to other similar funds over the same period.

As it is often said, past performance can't predict future results. But when comparing performance of funds, it is also wise to look beyond the results of one or two years. Most experts suggest that a larger "window" of 5 to 10 years gives a clearer picture of historical performance. Has your fund or the one you are considering performed well over this longer time horizon? Any fund can have one good or one bad year, but if you are investing for the long term, you want a fund that has a consistent track record. While that record doesn't guarantee future results, it gives you an indicator that may be to your advantage.

Click to Read more!