Sunday 19 May 2013
Effects of a Yen Free Fall
The Japanese economy has been on life support since their stock market peaked in late 1989. This is also when they began to lose their productivity gains in manufacturing and technology against their neighbors. Their immigration policy and small family sizes have shrunken the labor pool to a point that even with consistent per capita GDP growth, they continue to fall behind fiscally. Their new Prime Minister, Shinzo Abe is attacking deflation in Japan in a way that makes Ben Bernanke look like a spendthrift. The obvious objective of deflating the currency is to make Japanese exports cheaper on the open market. This will grow GDP and spur new hiring thus, improving the domestic Japanese economy. The big questions are, how long can currency depreciation boost their economy, what are the side effects and lastly, will it work?
Japan is an interesting country in that they are a manufacturing country with very little in the way of raw materials or commodities to use in the production process. Therefore, Japan must import virtually, all of the raw materials they use. They're becoming a high tech assembly country as opposed to their classic vertical production model. Their days of making the steel that goes into the car is over and so are many of the old jobs. It has become cheaper to import Chinese steel than to make it their selves. Currency depreciation will provide an initial rise in Japanese exports, as the inventory that has already been produced will be cheaper on the open market. However, these gains will be offset by newly purchased production inputs paid for in depreciated Yen.
The export market has been the key to Japan's post WW2 growth. In fact, Japan's balance of trade (exports-imports) had been mostly positive for 25 years before the tsunami hit in March of 2011. Prior to the Tsunami, Japan generated about 30% of its energy from nuclear power. They are currently running only 3 nuclear reactors out of 54. Manufacturing countries require large energy inputs and Japan uses more than 25% of their gross revenues to import energy and they are third in global crude oil consumption and imports. Depreciating the Yen will severely impact their energy costs. For example, the Yen has declined by 30% since November. That would be the equivalent of paying around $5.00 per gallon of gasoline, right now. This is what Japan will be paying to fuel their manufacturing centers.
This leads us to the effects of a depreciating currency on the local population. The Japanese private citizens are the ones bearing the brunt of this policy in two ways. First of all, Japanese citizens will be forced to pay more for everything that isn't locally sourced and produced. This will trim their discretionary spending and put a crimp in local small businesses and service providers. Getting less for your money is never enjoyable. Secondly, the individual Japanese citizens are paying for the currency depreciation because the there is no international market for Japanese bonds selling at artificially low rates. The Japanese government is forcing their citizens with historically high savings to use it to buy underpriced Japanese Government Bonds. This transfers the debt from the government to the taxpayer.
I have no idea why the Japanese people haven't revolted. I'm sure much of it has to do with culture. We tend to speak out in protest while they tend to tow the party line. It will be very interesting to see how this turns out as pensions go unfunded and taxes rise to pay for the massive social programs Prime Minister Abe has in store. Japan's total debt (public + private) is now more than 500% of GDP according to The Economist (9/19/2012). The U.S. total debt to GDP ratio ranks 7th in the world at just under 300%.
The massive devaluation that is taking place will allow Japan to gain market share in the short term, especially against high quality German manufacturers. Continuation of this policy will put the European Union in a very uncomfortable spot. Germany is their economic leader and the country that would be hurt most in a competitive devaluation campaign. This may finally force the European Union to ease further in an attempt to remain competitive outside the Euro Zone. Easing euro Zone monetary policy may be the next link in the chain as the race to the currency bottom heats up. Finally, the pundits have coined a new phrase to help the guy on the street differentiate currency wars from fiscal policy. Welcome to, "coordinated global easing."
Andy Waldock
Saturday 11 May 2013
10 Market Estimates For 2013
In our last article we evaluated market estimates and predictions from 2012. As discussed in that article, attempting to forecast the direction of shares, currencies and interest rates is very difficult to do, especially with any accuracy or consistency. However, foretelling the future is a useful exercise for investment advisers and strategists, to create discussion and encourage some debate and thought.
On that note, how will the market perform in 2013 and what sort of themes should investors be thinking about? Here are ten predictions for the year ahead:
1. Returns from shares again beat fixed income and residential property
Shares were the best place to invest in 2012, and we think they will take first place again in 2013. Dividend yields remain much higher than interest rates, companies are in good financial shape, earnings are growing and investor sentiment is likely to move further in favour of shares.
2. Australian shares
For the last three years the NZ market has been a much stronger performer than Australia, although this could turn around over the coming year. Australia has cut interest rates aggressively, China is stabilising, so watch this space for Australian shares.
3. The Official Cash Rate (OCR) is unmoved all year
We can't see any reason for the Reserve Bank of New Zealand to increase interest rates until sometime in 2014. We might get a bit of a growth boost from the Christchurch rebuild, but it won't justify any movement in rates and investors looking for income won't get any reprieve from the current low interest rate environment. While many high-dividend companies have already performed well in the wake of low interest rates, others still look reasonable value and should continue to attract attention in 2013.
4. At least five new companies list on the NZX
With or without SOEs, activity (in terms of new listings and opportunities) should continue to build. The market is strong, sentiment is high and there is a lot of cash still sitting in low-return bank deposits. In 2013 we might have the best year for some time when it comes to new investment opportunities. A key beneficiary of this trend would be the NZ stock exchange.
5. China recovers
Chinese economic growth for the September quarter was 7.4%, having consistently slowed since the first quarter of 2010. This could well be a turning point and we might see growth in China start to reaccelerate over 2013.
6. Growth shares do better than high income shares
Over recent years the safe, defensive, high-yielding shares have been outstanding performers. They still look attractive and will hold up well, but next year we might see a continuing rebound for some of the more cyclical companies, such as those in the building sector, those exposed to equity markets or the retailers. Under such a scenario the midcaps and smaller companies may also continue to outperform their larger peers.
7. The Christchurch rebuild gets properly underway
After many delays, we are finally seeing signs of the rebuild process gathering some decent momentum. This should help economic growth as a whole, as well as benefit the construction sector and stocks.
8. A Good Year for top IT Companies
There is potential for large international IT companies to grow this year.
9. American house prices outpace Auckland house prices
Auckland house prices were great for property investors in 2012, rising over 10%. The Auckland market still has strong fundamentals, but even the most one-eyed property investor will concede that valuations are beginning to look pricey relative to rents and incomes. American houses are just starting to show some strength after many poor years, and the wealth effect this will have on sentiment and the US economy is significant.
10. The New Zealand dollar falls
If ever there was a contrarian call at the moment it would be for the NZ dollar to weaken (or the US dollar to strengthen). Like most economists, our view is that the currency remains around where it is over 2013, but it's worth raising as a scenario because if it does fall, many investors are very poorly positioned. Following the outstanding performance from the local market in 2012, investors have been driven even further into domestic assets.
New Zealand's currency is strong because the economy is strong, so we shouldn't be too eager to see it collapse. But a bit of weakness would help our exporters out and a better-than-expected US economic rebound would see the languishing US dollar recover. If nothing else, we should give some consideration to the possibility of international markets outpacing the local market over the coming year and use our strong currency to add some good quality global companies.
We have a positive view on local companies with offshore earnings, should we see some currency weakness, these companies would benefit even further.
We will report on market conditions over the coming months, and evaluate these 10 predictions this time next year.
Mark Lister is the Head of Private Wealth Research for Craigs Investment Partners, which is one of New Zealand's largest independent investment firms.
He joined Craigs Investment Partners in early 2004 as an equity analyst specialising in property and small cap research. In 2007, Mark was appointed Head of Private Wealth Research.
Investing 101: A Beginners' Guide to Investing Safely
What is an investment? Why do some people find investing easy while you find it a bit complicated? How do investors come up with money to invest? These are just some of the common questions people ask when they start venturing into investments. How easy or difficult is investing anyway? Let's find out.
Your savings are the most basic form of investment. If you can't save money, then you cannot invest. Investing is complicated. Many people are hesitant to get started because there is so much (often conflicting) information about investments, so many choices and so many risks. But it doesn't have to be that way.
Here is a crash course to get you started.
A typical investor
A typical investor has credit card debt under control. It makes no sense investing in stocks, bonds, or mutual funds if you have a lot of credit card debt and an interest rate of more than 10%. You don't have to be debt free to invest but make sure to pay each debt each month. You also should be paying low interest rates on that debt. A typical investor also has an emergency fund of at least three months' worth of basic living expenses. And finally, a typical investor has a 401(k) plan so he can maximize his contributions and diversify his investments.
Where to find the money to invest?
Plenty of stock mutual funds allow you to invest with $500 or less. Take advantage of your next bonus, your income tax refund, or your extra cash in your investments. If you can't come up with at least $500, there are funds which let you skip your initial sum of investment if you sign up for automatic monthly withdrawals of $25 to $50 from your checking account.
How to choose an investment?
The first step is knowing your investment goals. Are you saving for a college fund? Are you saving for a house? Retirement? The type of investment you choose will depend upon the amount of time available before you need the money. Stocks, for example, are long-term investments. It is best to hold stocks or stock mutual funds for more than five years. If you need the money sooner, then reduce your return by cashing in when the value is down.
What is risk tolerance?
If you hide your money in your room because you don't trust the bank, you probably will not feel comfortable when investing in stocks.
Where do I put my investments?
Most experts recommend spreading your money over different types of investments to reduce risk. This is because investments can go down or up depending on numerous factors. For example, when stock mutual funds or returns on stock are high, chances are returns on bonds will be low. If you have your money in both types of funds, you are likely to get a decent combined return even if one fund takes a downturn.
As a beginner, choose stock mutual funds over stocks in individual companies. This is because stock mutual funds have less risk than an individual stock. If a company does poorly, you will still have a good return but if a stock in one company goes poorly, you'll lose money.
3 Keys to Setting Up Relative Strength Investing
Configuring a relative strength investment strategy to produce profitable investment results requires more than simply picking a method and plugging in typical, common settings. Results that produce safe investing with regular profits, regular gains, requires settings that meet the needs of the group and your objectives.
Three keys to establishing and using relative strength investing include:
- Type of Relative Strength analysis
- Objectives of the Investments
- Testing and Setting
Type of Relative Strength
There are different types of relative strength momentum analysis (RSM) and these are often more suited to one type of investment or objective. For example, are your objectives aggressive or conservative or somewhere in-between; short-term or long-term; and are you investing from a group of stocks, ETFs or mutual funds.
Aggressiveness
Generally speaking an analysis based upon Alpha (a type of RSM) is more aggressive than one based upon the normal relative strength momentum, return or price oscillation. Yet, if you add Standard Deviation (SD) to Alpha so you have an Alpha/SD analysis the result is a conservative to moderate analysis strategy.
Aggressiveness, however, doesn't always produce the best results.
My testing has shown the best results are usually based on the type of the group from which you choose to invest:
for Mutual Funds:
alpha
alpha-C
rsm
alpha/sd
for ETFs:
rsm/sd
rsm
alpha
alpha-c
for stocks:
rsm
rsm/sd
alpha
alpha-C
Objectives
If your objective is conservative or moderate growth with minimal risk to your money, then an investment strategy method of analysis that also uses standard deviation coupled with a market exit signal will give you adequate growth while protecting you when the market declines.
Testing and Settings
How you test or back-test your groups of ticker symbols and different types of analysis is critical.
If you are more aggressive and willing to trade frequently, almost daily versus weekly or occasionally then you will want to test with shorter time periods. Shorter time periods will give you signals for every twist and turn of the markets and your holdings but result in frequent trading that may or may not produce greater gains than more moderate trading based on weekly or monthly analysis.
Using your investment software and back testing you can find strategies based upon gains coupled with drawdown (losses) that meet your goals.
For example:
An Alpha 10 strategy is based on analysis of 10 trading days on a continual basis will pick up every up and down as compared to an Alpha 60 based on analysis of 60 trading days (on a continual basis) which averages out the ups and down and so results in less frequent trading.
A relative strength momentum analysis set with a fast 10 and slow 30 will act like the Alpha 10 whereas settings of a fast 40 and slow 90 would be somewhat similar to the Alpha 60. (note that results between Alpha and RSM will be different because of how the different analysis themselves are computed).
Other factors in your strategy settings than also effect the results besides just the type of analysis. These include:
- Desired frequency of analysis - daily, weekly or monthly
- Desired minimum hold periods indicating your preference for how long you want to keep a position as a minimum
- Stops - are you going to set stops to force selling a position should it drop too much
The point is, just saying you are going to use relative strength investing is good, but only the beginning. Just as the same size shoe doesn't fit everyone, nor does the same shoe style work for everyone, there is not one-size fits all RSM setting. Only after knowing what your objectives are and what type of investments you want to make, can you then test to find the settings that will work best for your group, your 401k or any other group of funds, Etfs or stocks.
Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.
Key Points to Consider Before Making Investment Decisions
Earning maximum returns on his investment is all an investor wants. Given a chance, who wouldn't like to become another Warren Buffett? But Stock Investing has its own share of risks; rather we should say that risk is an inherent element of every investment decision. Though, there are risks but there are remedies too. Knowledge of some crucial and important points about Stock Investing can avoid mishaps and make your investment fruitful.
By now, you must be wondering as to what are those points, knowing which you can make your investment successful?
The three essential points about Stock Investing are described below:
1. Realistic Expectation
Stock Investing is no miracle. If you are expecting your money to be doubled in one month, then either you are being too ambitious or you live in an imaginary world. Being a successful investor needs you to be patient, a rational thinker and a continuous learner. In the beginning, 10 to 15% return is enough for paving your path to be a successful investor. The only thing, you need to ensure, is that the return should be continuous, year after year.
"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for." - Robert Kiyosaki
2. It's not just a stock that you are investing in; but the business
Before investing in any stock, most important thing to do is to analyze the business. When you buy a stock, it becomes your share in the ownership of that company. Your future depends on the company's future and company's future depends on its fundamentals, past performances and future projects. So, it becomes a must for every investor to evaluate and analyze the stock before putting his hard earned money into it. In other words, you must carry out Stock Analysis before investing. Two prominent methods of stock analysis are:
a) Fundamental Analysis
It is carried out by using actual data to evaluate a stock. This method involves measuring the intrinsic value of the stock by investigating relevant financial & economic factors. It is the method to study each and every factor, which can affect the business such as the overall economy, industry's conditions, financial conditions and the management of the company. For long term investors, carrying out fundamental analysis is beneficial.
b) Technical Analysis
This method works on the belief that the clue to the future performance of the stock relies into the past performance of the stock and the market. This method involves analyzing data & figures produced by market activities. In this method, charts and other tools are used to identify the patterns to predict the future activities. This method of stock analysis is beneficial for short term investors.
"When buying shares, ask yourself, would you buy the whole company?" - Rene Rivkin
3. Stick to the Margin of Safety
Even if you pick your stocks with great care; surprises happen sometimes. Using Margin of Safety, then, helps in lowering the losses significantly. It is actually the difference between the intrinsic value and the market price of a specific stock and helps protect the investment from downturns in the market.
"It takes twenty years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently. " - Warren Buffett
The money is yours. Only you know how much pain, you have gone through, to earn it & it's totally your responsibility to make your money pay for your pain.
To wrap up, I would like to mention this famous quote of Warren Buffett, that is:
"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."
Kevin is among other things.. a fan of old school fundamental analysis of stocks and is madly obsessed with finding the best stocks to invest. A keen giver of free advice, Kevin evangelizes long term investing and on occasion can be disparaging of pure technical analysis and its proponents.
Article Source: http://EzineArticles.com/7609591
Considering A High Value Investment In Diamonds
Considering investment in diamonds? Welcome to the exclusive club of diamond investors. It is a very high value investment as these are the most precious stones on earth. There are several reasons why you should considering putting your money in these.
Diamonds are universally acknowledged as precious stones. Their value does not diminish from one country to another. They are forever precious and you can always invest great returns when you are reselling your diamond. The prices of these precious stones do not fluctuate much according to inflation and deflation. They don't possess any shelf life and their value is retained for hundreds of years. These are the most precious possessions that you can pass on as an heirloom to the next generation.
These precious stones also do not require any maintenance and they remain unaffected by the vagaries of nature. Factors like environmental changes or pollution do not affect the diamonds. These precious stones have a global acceptance. You can sell diamonds in any country of the world, which is not possible in case of stocks, mutual funds, and bonds. The prices of these super precious stones do not fluctuate according to the market. The pricing of diamonds is set by a universal pricing report and the pricing is more or less in any country across the globe.
Diamonds are precious because they are very scarce. These are considered precious heirlooms and often people buy them to never sell it again, thus contributing to their scarcity. However, the demand for diamonds never ceases as people all over the world want diamonds for weddings and other special occasions. According to an estimate, the world's diamond stock is set to run out in the next forty years or so. Therefore, this high demand complemented by scarcity always causes the prices of diamonds to rise, making them a super valuable commodity for investment.
They are great sources of security in times of hyperinflation when the value of paper currency drastically falls. Although, hyperinflation is an extremely rare financial phenomenon, yet you should be prepared for it. You never know, when it may strike. Diamonds will give you the peace of mind that you have secured your future against hyperinflation.
The great portability of these precious stones and the fact that investors are not required to pay capital gains tax or possession tax on diamonds has contributed to its popularity as a favorable investment item for many high value investors.
In case you are worried about a hyperinflation hitting the economy, you should consider converting your cash to diamond investment. It protects you from any type of financial emergencies.
3 Cashflow Concepts For Doing Well Financially At the Times of Rapid Change
Aren't you tired of economic recessions, a never-ending inflation and double digit unemployment? Let's face it, the world's economic climate is constantly changing, and each new recession seems to last longer than the one before it. To survive and prosper, you need to be financially educated. That's why, in this article, I will look at certain concepts related to the US economic climate and provide a detailed description of how you can take advantage of constant economic recessions and continually rising prices. Let's get down to it.
Concept # 1: You should always improve and grow.
It is essential to stay frequently updated with the newest ideas and concepts in the area of investing rather than clinging to the old ways of doing things. Let's say you are about to get a job interview. You have no doubts about the positive result of the interview. You don't worry about the fact that the most recent computer class you had taken was almost twenty four years ago. How much do you think the things have changed since then? You probably know everything about floppy discs, dial-up modems, etc. You are confident in your knowledge! However, to your surprise, the company needs to know your skills in the field of things you've never heard before, such as social media, cloud technology and SEO. Uh-oh what???
Now, I want you to think in the same way about the field of investing and finance. The financial concepts that could be applied yesterday, last year, last month, are completely inadequate in today's economy. Never ending changes is the only thing you may be sure of in the modern financial climate. You need to keep your economic expertise current or the repercussions to your cashflow could be unpleasant at best or totally wrecking at worst! I hope you get the point. Keeping up to date could mean the difference between your economic life or death.
Concept # 2: Savings are absolutely crucial, but hoarding cash will bankrupt you in the long run.
Let's compare cash to milk. You always need to have some milk in the refrigerator, but it has a relatively short expiration date. Unfortunately, your money has an expiration date too! The US government is doing every little thing it can to slowly and steadily devalue the worth of the US dollar. Why slowly and steadily? Eroding the US dollar too quickly would lead to public unrest. However, as the value is gradually diminished, two great things happen: the US exports become cheaper in the global market and the U.S. debt becomes a lot more manageable. The US government could only pay the debt by devaluing (inflating) the US dollar.
What does this information give you? You should understand that while it's true that money savings may give you a certain level of monetary safety, you need to remember that cash is being constantly devalued due to an endlessly rising inflation. You have to put aside adequate amount of cash to help you get through the difficult times in case you lose your employment. However, as soon as you have your cash safety blanket in place, excess cash and non-inflation adjusted cashflow turn into LIABILITY because it is constantly going down in value.
While the US government is attempting to keep the rising cost of living at a certain level (typically 2-3 %), they need to increase the volume of cash in the economy during tough financial times when the companies are struggling to stay afloat and require added supply of cash to keep going. The next round of cash printing could be coming in the near future as the government will certainly try to shore up the value of real estate which may lead to increased prices and you will be required to pay more for food and other goods and services.
Without an adequate quantity of money in your savings account, it will be tough for you to survive in the times of emergency. However, if your major financial investment focuses on accumulating cash reserves in your savings accounts and CDs only, you will get financially destroyed by the upcoming inflation in the long run. I hope you get the point. Savings are good in moderation. You need some for emergencies but that's about all you need. The rest must be invested in other assets, preferably Real Estate and businesses.
Concept # 3: Create numerous sources of inflation adjusted cashflow.
Creating an inflation-resistant cashflow stream can offers you freedom, simplicity, and control over your financial resources. Investments that generate inflation-resistant cashflow can easily avoid the ups and downs that give heartburn to investors who are solely concentrated on building a high level of equity. If you own a functional lemonade making machine but it is not turned on, you might as well not even own it. You need to convert idle equity into a cashflow producing asset. You should turn the heaps of unproductive cash into the cash flow stream. There are a great deal of "affluent" individuals going bankrupt because they planned on liquidating assets to cover their cash flow needs. But your grocer will not accept a part of your equity as a form of payment; the grocer will only accept cash. You don't want to wind up in a scenario when you need to liquidate your asset just so that you can buy groceries. You only want to liquidate your equity at the top of the market when you are confident the price is good.
So, are you ready to take action and start acquiring positive cashflow generating assets? Many financial experts will agree that real estate investing is the best way to build wealth.
Why People Are Getting Apps Developed, And Why You Probably Should Too
There seems to be two mindsets when it comes to people who want to develop apps:
Person A Just wants to develop a bunch of apps to create an extra income of $500-$1,000 per week.
Person B Is willing to splash out $30,000-$50,000 and 6 months development time to develop an insane iOS game with the intentions of making $5,000,000+ in 6 months.
And let me start off by saying, both are very possible. People do it ALL THE TIME! But here's the thing: You have to decide who you want to be? A... or B?
Some people don't have the $30,000-$50,000 that it takes to develop a really awesome app and so they have to think like person A... and that's okay.
Others believe that 'the-days-of-yore' where you could develop an app and make millions are over. And so they settle for the next best thing, which is a $500-$1,000 a week income.
Truth be told, there are still people out there making squillions from mobile apps, especially games. And they are living the dream!
And as soon as an app takes off, it takes an entire team of professional mobile app developers just to ensure the app keeps doing well in terms of downloads and in app purchases, etc.
It requires listening to feedback, marketing (heavily), innovating and fleshing out and talking about ideas for future apps...
Your right, that does sound like fun, and it is!... for the most of it. And the best thing is: You can do it from almost ANYWHERE IN THE WORLD!
I have a client who's on an arbitrary holiday in Vietnam at the moment. He communicates with me via Skype on the irregular basis. And another client who is about to go to Europe for 3 months, just because... I think that's a pretty great reason, don't you?
There is a mixture of reasons why people employ us as their mobile app developer. Mainly, because it gives them so much more time, money and flexibility to live the lives that they always wanted to live. And I think also partly because they know we just love doing it!
So, "why are people getting mobile apps developed?" Take a deep breath, and quietly ask yourself, what would you do with all that extra time and money at your disposal? Where would you be and how would you feel?
Now do you understand? It's not just the lifestyle, the money, the adventures.
It's more than that. It's the feeling of being right at the head of something huge.
For the first time ever, this opportunity exists, but only to a brave few.
Who will it be? Will it be you?
3 Profitable Investing Tools
Fear of losing your money to such an extent that you don't invest in the stock market or manage your retirement account can actually be worse than investing. Just watching or hoping your retirement account will grow is like watching the weather or predicting who is going to win the World Series in two years.
The right tools are required for safe investing. It's natural to be afraid of losing; no one wants to lose anything, much less money or even a life's savings. But money under the mattress will be worth half if that much after 20 or 40 years. The answer is to invest safely and profitably. And no this is not easier said than done, but neither is it extremely difficult.
The first key to successful, safe and profitable investing is to know that anyone can do it. Anyone. You.
The second key is getting and using the right tools. Thanksgiving dinner requires the right tools, ingredients and recipes. Remodeling a home requires tools, materials and know-how. The same is required for successful investing.
The tools for safe profitable investing are:
- A computer
- An online broker account
- Investment software
Computer - just about any computer connected to the internet will enable you to manage your investments. Most investment software, however, works on PC's although they can run on Mac's.
Online Broker Account - there are many easy to use online brokers like Fidelity, Schwab, TD Ameritrade that let you open an account easily and with almost any amount of money. And you can easily move accounts from one broker to another.
Investment Software - you have many choices, I recommend software that is comprehensive, yet easy to learn and that doesn't require hours of time. By comprehensive I mean:
- Let's you work with all types - stocks, ETFs, mutual funds, bonds
- Gives precise buy-sell recommendations
- Provides charts to show individual analysis or progress
- Provides charts to show how a strategy is performing
- Provides a Market Exit signal that says is now the time to exit or enter the markets.
- Gives you the option of examining individual ticker symbol data and comparing the data with other tickers.
- Let's you set buy-sell rules that work best for you
- Gives you an easy to read screen or report of all your investment positions
- Provides the opportunity to back test different investment models or strategies to find what works best for your or the ticker symbols available to you in your retirement account.
Investment software that lets you analyze based on different types of relative strength investing is critical. Many books have been published and studies conducted that have proved relative strength momentum investing to provide successful profitable investing results for all types of investors.
Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.
How Forex Brokers Trick You - Playing the Spread
When it comes to making smart investments in these modern times, you'll find that one of the best options is Forex. This marketplace relies heavily on trading currency and matching up pairs that either rise or fall in value. This option differs from the traditional stock trading because it is open longer, can return greater yields on money put into the trades, and doesn't require a great deal of money to start moving forward. With a small amount of money, anyone can start to trade with this marketplace. There are a lot of different tips that you can get online for this type of investment, but you'll want to learn how Forex brokers can trick you by playing the spread, without you even knowing it, so that you are able to truly take advantage of the options that are available to you.
In order to understand how the spread works, you'll need to look into how the market works and is used to make money by people just like you. The process involves coupling two currencies together and wagering on whether or not it will shift up, down, or stay the same. This can be done in short term trading scenarios, or longer term options that are relatively safe. For those that are trying to turn a profit with relative ease, hiring a broker to spread money across several currencies and wait for the sales and value to shift ever so slightly can be beneficial.
A broker in the industry can easily slip under the radar if not monitored correctly. This is done by playing the various spreads, and then moving to posting losing funds while pocketing fees. This can be a difficult matter to understand, as the bid/ask rates for online investors change from time to time. Because there are so many changes within the system, a person could miss out on huge payouts due in large part to simple issues such as ping speed, slippage and more.
What makes matters somewhat difficult for the average trader to understand is the fact that there are several different factors that go into the spread. Not only that, there are several different types of spreads utilized in Forex Trading. Fixed, fixed with extension, and variable spreads can all be utilized to invest. This means that if there is a fluctuation in the numbers, and it reaches the bare minimum of fees for the broker, you will not get any money. In some instances a loss will be posted, even though the fee will get paid for the process of trading. This can definitely be infuriating, especially when dealing with a variety of issues that may be beyond control of the trader. It's with this in mind that it's important to understand each component of trades made.
There are a lot of different issues that can cause alarm when dealing with currencies, which is why it's important to watch out for broker tricks and instead try to invest with a platform that gives you more control.
Different Order Types Offered by Stock and Forex Brokers
Trading of financial instruments like stocks, bonds, currencies, commodities and futures have become more complex than just buying and selling. As the needs of traders diversified over the period and new financial instruments and execution procedures introduced, the need of different kinds of order executions and transactions become a necessity. So brokers and trading firms started to introduce different kinds of order types.
What are Orders?
Orders are instructions from the trader to the broker to do a transaction. It can be a buy order or sell order. They can be placed on phone or online through the trading platform. These are of different types enabling the trader to place restrictions for execution depending on price and time. The order execution involves a fee; which is charged by the brokerage firm. The fee can be flat or percentage or can be spread differences of ask and bid prices. The types available for a trader depends upon the brokerage firm, his/her account type and financial instrument. Below are some of the most popular types of trading orders offered by stock and forex brokers.
Market Orders: These are the simplest types of orders which tell the brokerage firm to enter or exit a trade at the available market price. The basic purpose is to carryout a trade. These are offered by all brokers and are the default order type on most of the trading platforms. While they offer fast trade executions they do not offer any additional benefits or tools to the trader.
Limit Orders: These are intrustions to buy or sell a stock, currency or commodity at a specified price or better price. Limit sell orders tell the broker to sell the instrument owned at a specified price or higher price. Similarly limit buy orders tell the broker to buy an instrument at a specified price or lower price. Thus the trader can get better trade executions, but many times the orders simply expire without any execution because the price may not touch the specified level at all.
Day Orders: These are time-bound orders which should be executed within the trading day or are cancelled automatically at the end of trading day. Many brokerage firms consider all trading orders as day orders unless the time-period is specified. Many trading systems also support short-life day orders with lifespan of a few minutes to hours.
Short Selling Orders: They are basically sell intrucions of financial instruments which the trader not actually own. The selling is effected through borrowing the instrument from the broker. Not all brokers and financial instrument have short-selling facility. And, short-selling require a margin account with the broker.
Stop Orders: These are one of the most popular order types which are used as stop-losses for limiting the trading risks. These tell the broker to execute the trade when the price reaches a specified level. On reaching the level they executed either as market or limit order. A sell intrucion for a long position is executed when the price drops to a specified level. Similarly a buy order for short position is executed when the price rises to a specified level. Many brokers also offer trailing stop orders which dynamically follow price trends, but are executed on reversal of trend by locking the profit.
Fill or Kill (FOK) Orders: These are placed for full execution or no execution. These orders do not allow any partial executions. If the execution is not done; the they are automatically cancelled.
Good Till Cancelled (GTC) Orders: These remain active until they are executed. But most brokers have a specified date period after which the they are cancelled automatically. There are also Good Till Date orders available which remain active until a specified date.
One Cancels the Other Order: These are intrucions for more than one number of trades placed simultaneously. When one of the orders is executed on meeting of specifications others are cancelled automatically.
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