Explaining the Money Market by William Smith

The Money Market is the financial market for short-term borrowing and lending, usually up to a time span of thirteen months. This contrasts with the capital market for longer-term funds that feature within the Market.

This is the place where banks lend to and borrow from each other, short-term financial instruments, for instance certificates of deposit or enter into agreements, repurchase agreements are taken place.

It provides short to medium term liquidity aspect element within the global financial system. Money Market derivatives include forward rate agreements and short-term interest rate futures.

The Market is a subsection of the fixed income market. We usually think of the term fixed income as being synonymous to bonds. In reality, a bond is just one sort of fixed income security.

The difference between the Money Market and the bond market is that the money market specializes in very short-term debt securities that is debts that mature in less than one year time span. Money investments can also be termed as the cash investments because of their short maturities.

Money Market securities are essentially IOUs issued by governments, financial institutions and large corporations. These instruments are very liquid and are considered unusually safe. As they are extremely conservative, Money Market securities offer significantly lower returns than most other securities.

Comparing the Money Market with the Stock market

The major difference between the Money Market and the stock market is that most Money Market securities trade in very high denominations. This, in turn restricts access for the individual investor.

Furthermore, the Money Market is also a dealer market, which means that firms buy and sell securities in their own accounts, at their own risk. Comparing this to the stock market where a broker receives commission to act as an agent, while the investor takes the risk of holding the stock.

Another characteristic of a dealer market is the lack of a central trading floor or exchange. Deals are transacted over the phone or through the use of electronic systems.

These accounts and funds pool together the assets of thousands of investors in order to buy the securities on their behalf. However, some Money Market instruments like the Treasury bills can be purchased directly and if you fail to acquire that, they can be acquired through other large financial institutions with direct access to these types of markets.

Understanding the Money Market better

There are tons of different instruments within the markets that are offering various returns at various risks, which is an aspect element within the sections that take a look at the major Money Market instruments.

Also a better-known place for large institutions and government to manage their short-term cash needs is the Money Market. However, individual investors have access to the market through a variety of different securities.

These types of markets specialize in debt securities that mostly mature in less than one year. These securities are very liquid, and are considered very safe and as a result, they often offer a lower return than other securities. The easiest way for consumers to gain access to the Money Market is through a mutual fund.

Some terms that are used in the this markets are the T-bills, which are short-term government securities that mature in one year or less from their issue date and are considered to be one of the leading safest investments - they do not provide a fantastic return.

Another term that is used in the Money Market is a certificate of deposit, which is a time deposit with a bank. Annual percentage yield takes into account compound interest, annual percentage rate does not.

Certificate Deposits are safe, but the returns aren't wonderful, and your money is tied up for the length of the deposit. Commercial paper is an unsecured, short-term loan issued by a corporation. In the Money Market returns are higher than T-bills because of the higher default risk.

The banker's acceptances are negotiable time draft for financing transactions in goods. They are new in international trade and are commonly only available to individuals through the funds.

The Eurodollars are U.S. dollar-denominated deposit at banks outside of the United States. The average Eurodollar deposit is very large and the only way for consumers to invest in this market is indirectly through a Money Market fund.

Hence, we can now understand that a Money Market can surely make a difference in the financial matters of a country.

About the Author

William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Money Market (All is Free)

Hedge funds - establishing a new frontier - by Tony Reed

It is difficult to provide a general definition of a hedge fund. Initially, hedge funds would sell short the stock market, thus providing a "hedge" against any stock market declines. Today the term is applied more broadly to any type of private investment partnership. There are thousands of different hedge funds globally. Their primary objective is to make lots of money, and to make money by investing in all sorts of different investments and investments strategies. Most of these strategies are more aggressive than than the investments made by mutual funds.

A hedge fund is thus a private investment fund, which invests in a variety of different investments. The general partner chooses the different investments and also handles all of the trading activity and day-to-day operations of the fund. The investor or the limited partners invest most of the money and participate in the gains of the fund. The general manager usually charges a small management fee and a large incentive bonus if they earn a high rate of return.

While this may sound a lot like a mutual fund, there are major differences between mutual fund and hedge fund:

1. Mutual funds are operated by mutual fund or investment companies and are heavily regulated. Hedge funds, as private funds, have far fewer restrictions and regulations.

2. Mutual fund companies invest their client's money, while hedge funds invest their client's money and their own money in the underlying investments.

3. Hedge funds charge a performance bonus: usually 20 percent of all the gains above a certain hurdle rate, which is in line with equity market returns. Some hedge funds have been able to generate annual rates of return of 50 percent or more, even during difficult market environments.

4. Mutual funds have disclosure and other requirements that prohibit a fund from investing in derivative products, using leverage, short selling, taking too large a position in one investment, or investing in commodities. Hedge funds are free to invest however they wish.

5. Hedge funds are not permitted to solicit investments, which is likely why you hear very little about these funds. During the previous five years some of these funds have doubled, tripled, quadrupled in value or more. However, hedge funds do incur large risks and just as many funds have disappeared after losing big.

About the Author

Tony Reed is the author of "Hedge funds - establishing a new frontier", please visit his website Hedge funds for more information.

How to trade in futures market? - by Tony Reed

The futures market offers the opportunistic investor the option of using small amounts of their own money to control large amounts of products, including gold, currencies, and agricultural commodities.

A futures contract is a legally binding contract to deliver, if you are selling, or to take delivery, if you are buying, of a specific commodity, index, bond, or currency at a predetermined date or price. A futures contract can include everything from a standard size amount of wheat, oil, or a country's currency. The amount and date of delivery of the contract are specified, though in almost all cases delivery is not taken as contracts are bought and sold for speculative or hedging purposes.

Futures are utilized by both those who use the actual commodity and by investors. For example, in May a farmer plants some corn, but doesn't know what corn will be selling for in November. He can sell a futures contract for November and "lock in" the future selling price today. On the other hand investors can buy a futures contract if they believe the price of a security is going to appreciate, or they can sell a futures contract if they believe the price of a security is going to decline.

Futures are often thought of in the same category as options. While they are both derivatives, in that they derive their value from some base security, there is one very important difference. While options give the right, but not the obligation to buy or sell the underlying security, a futures contract is a legally binding obligation to buy or sell that same commodity. Thus, while options limit your loss to the price paid for that option, futures trading could lead to a loss of your entire investment and more to meet that obligation.

Another difference between the futures and the equities markets involves the use of word margin. Although the contract sizes for currencies are large (often the equivalent of over $100,000 for a single contract), an investor does not have to buy or sell a full contract. Rather, a margin deposit on the contract is maintained, which is actually a "good faith" amount of money to ensure your obligations to the full amount of the futures contract. Minimum margin requirements vary by broker, but are typically only a fraction of the contract's total value, and are not related to the actual price of the contract involved.

Futures trades must be made through futures brokers, who operate both full-service and discount operations, and may be related to the stock brokerage that you already deal with. However, popular discount stockbrokers do not handle futures contracts.

About the Author

Tony Reed is the author of "How to trade in futures market?", please visit his website futures trading & futures market for more information.

Success in selling your web hosting company - by Eric Furlow

Steps owners of web hosting companies can take to increase the probability of selling their company for the highest price and under the most favorable terms. TO SELL OR NOT There are a number of reasons to sell. For most business owners their wealth is tied up in the business. People sell their companies or even divisions when they want to move on with life, want to focus on another venture, or they believe the market value is high for what they have.

Businesses are not liquid A share of Exxon stock can be sold in 5 seconds, while many businesses are not even sellable. Any interest expressed by a company in the acquisition mode is worth listening to. The only time owners are 100% ready to sell is when the business is in decline and rest assured, they don't like the valuation when that occurs. I know too many people who regret not selling when they had the opportunity and actually wanted to, but were too tough on price.

Companies seeking growth through acquisitions will almost always find something to buy. Whether it's your company they acquire or not, it's sometimes actually up to you. Many times sellers do their best to run buyers off, and don't even realize it. Buyers will acquire a company they believe is a good strategic fit. You can't control this aspect. However, with organized, timely, honest and decisive communication sellers can create a much more appealing deal.

Seller communication * It's ok to tell someone, "Yes, I would entertain offers for my company." This simply implies that it would be a good use of their time and money to explore your company further. It's not a sign of desperation. * Playing "hard to get" usually informs the buyer the opposite. * Be realistic with yourself regarding price. Potential buyers can be lost forever to unrealistic expectations of "home run" offers. * Bottom line ... buyers will not beg you to sell your company. There are simply too many other companies out there which are for sale.

BEING ORGANIZED

Business plans and business sales books There should not be a significant difference between a business plan used for internal management, raising money and planning, and a business sales book used to sell a business. Both of these documents should be 90% complete at all times. They give a wonderful first impression to a buyer. Never forget the buyer is the one with the cash and who is taking most of the risk. He is looking for any reason at all to walk away from the deal. Being organized and having the ability to give the buyer information in a timely manner is the MOST IMPORTANT and easiest thing you can do to increase the chance of selling your company for the highest price. Ideally, every time the buyer asks for information, it should be delivered in a timely manner, in electronic form, accurate and up to date. Try to refrain from providing 1990's dreamy type pro-formas. They're not in vogue anymore. One final point; buyers do realize that the last piece of due diligence information received is usually what the seller doesn't want anyone to focus on.

Preparing the company for sale: Run your business like you plan to keep it for the long term. When sellers attempt to prepare their company for sale, many times they avoid making needed investments in the company. If you invest cash into a project that has yet to pay off, then get credit for it in the valuation.

Other thoughts: * Would you be willing to sell parts of the company or just the whole? * Do you want to stay on with the buyer or leave after closing? And why? * It is more attractive to buyers if there is someone at your company who can run the show upon your post closing departure. * Stock vs. cash for consideration? There are way too many variables regarding stock to be covered here. However, keep in mind you may prefer $900,000 in cash and $300,000 in stock, as opposed to just $1,000,000 in cash. If treated correctly, stock deals can be beneficial in many ways. THE PROCESS

The initial communication with a prospective buyer: In the first or second communication, the seller should determine who the buyer is, what they are looking for, and basically how they value it. Don't pin the buyer down for exact valuations initially, because he doesn't know what you have. Every business is a little different. There is no harm in telling a prospective buyer what you have in regards to number of sites, domain names, servers, employees, etc ... after all it's not your customer list. Inquire about their business and don't forget many times the small fish eats the big fish.

Selecting an attorney: Find an attorney who has industry specific experience in mergers and acquisitions and understands the appropriate tax implications. Ask them how many deals they have done in the industry, how much they charge, etc. Please, don't use your brother in law who is a great divorce attorney. Deals get stalled and even cancelled because an inexperienced attorney delays the process. There is a fine line between being thorough, and taking so much time with documents the buyer walks from your deal and seeks another company to acquire.

THE DOCUMENTS

The letter of intent should be short and sweet. The purpose is not to map out every single issue, rather to come to a gentlemen's agreement on the very basic aspects of the proposed deal ... without spending too much time or money. The basics which should be covered are stock vs. asset purchase/merger, valuation, consideration, assets included or not, timelines, etc. If everyone agrees to the letter of intent then each party, at their own expense, should start working on the purchase and sale and other closing items. If both parties cannot agree on a 1-3 page letter of intent within a week they typically will never make it through the entire process.

The purchase and sale agreement will spell out every aspect of the deal. If both parties agree on the letter of intent, then they should work on the purchase and sale while all of the other aspects of the due diligence process and pre-closing issues are being handled. Most of these events can and should occur simultaneously. Don't forget, some variables are more important to the seller, while others are more important to the buyer.

Every once in a while there is a real "tough guy" on one side of the table or the other. This guy just has to have every variable to go his way or there's "no deal!". These guys kill mutually beneficial deals all the time and rarely accomplish anything. Hire "tough guys" for the collections department.

On a final note, always be honest and fair. This world is becoming smaller every day.

About the Author

Presently, Eric Furlow assists individuals and corporations both acquire, merge, divest and value technology companies. He has experience in over 150 transactions in the paging, SMR, cellular, tower, local phone, long distance, software, ASP, MSP, ISP and web hosting industries. He has a Masters in Finance from Bentley Graduate School of Business in Waltham, MA. Before heading up Furlow Consulting Corporation, he was the Mergers and Acquisition M

The First Step You Have to Take to Get Rich In the Stock Market! - by Dr. Scott Brown, Ph.D.

I am widely recognized as a leading expert in the stock market and especially at teaching you how to become your neighbor's millionaire next door. I didn't start out as knowledgeable and skilled as I am now. I started out knowing nearly nothing. I was so inexperienced in my early twenties that I could only stand by when a full service stock broker stole $85,000 from my eighty year old grandmother. I watched the nationwide stock brokerage protect the interests of the full service broker and my grandmother lost everything.

The pain of this was so intense that it drove me to complete my Ph.D. in finance -- less than a hundred of us graduate in this degree worldwide annually because it is so mathematically difficult. My frustration and anger at the big rich forces behind Wall Street drove me to become a modern day master of money. This is what you have to do -- wake up!!! Wake up to the fact that you can make it as a stock investor. Wake up to the fact that you control your destiny and that you can stop handing all of the control over to the Wall Street machine that could absolutely care less about your financial future. This is the first step -- take full responsibility for you earnings, savings and investment.

I learned years ago from a friend of mine, Dr. Van Tharp, Ph.D., that if I didn't take full responsibility for my investing that I would never progress -- I would simply break the fragile feedback loop that allows all of us to learn from our mistakes. Any time you blame anyone for a financial mistake you destroy the opportunity to learn and thrive from the situation. The simple decision you must make is to deeply, totally, firmly, and finally, say to your self, "I am the master of my universe -- I am in control -- Wall Street has no power over my mind" is the key critical change you must make in your thinking.

Some people will think that you are arrogant but just blow them off and laugh all the way to the bank. Stop listening to people -- are these nosy little bug a bugs in your life that so quickly nay say your investment dreams paying your bills or giving you money to move ahead -- no so blow them off! They just want to give you bad advice so that you fall into their same financial loser traps. In terms of investing become an island unto yourself and very carefully cultivate relationships with people who really do know what they are doing in investing. This is exactly what I did. I started seeking out people who really understand the markets. I found them over time and I asked them lots of questions.

Dr. Scott Brown, Ph.D. a.k.a. "The Wallet Doctor" holds a doctorate in finance and can teach you how saving the daily price of a cup of coffee at Starbucks can make you a millionaire in the stock market through long term stock investing. Dr. Brown's website is: http://www.walletdoctor.com/

About the Author

Dr. Scott Brown, Ph.D. a.k.a. "The Wallet Doctor" holds a doctorate in finance and can teach you how saving the daily price of a cup of coffee at Starbucks can make you a millionaire in the stock market through long term stock investing. Dr. Brown's website is: http://www.walletdoctor.com/

Stock Trading Psychology - by Tim Renolds

Many of today's highly successful traders will tell you that the general key to success in trading is to be able to comfortably take a loss. It is general knowledge among experts in the trading psychology field and among traders that the market is not predictable and it is safe to say that it never will be. In the world of trading, it is expected to take a loss; even those who are highly skilled traders know that it is inevitable. With that said, let us have a look at things you as a trader should be aware of, how you can take a loss effectively and use it towards the greater good of your trading world.

Trading psychology tells us that when a trader loses he begins to become somewhat of a perfectionist in his dealing. Many traders think that in trading, a good day will always be one that is profitable. Trading psychology experts tells us this is not true. A trader should define a good day as one where they have extensively researched and planned with discipline and focus, and have followed through to the entire extent of the plan. Yes, when a trader has mastered the art of accepting losses and working through them with a well thought out plan then good days will become profitable in time.

Because the art of trading in an unpredictable market fluctuates so greatly from one day to the next, experts in trading psychology believe that it is important that you concentrate on what you can control, instead of things that are beyond your control. Looking into the short-term you cannot expect to be able to control the profits of your trading. With that said, look at what you do you have ability to control.

You do have the ability to control the difference between good and bad days. You are able to control this factor by extensively researching the strategies you implement within your trading experiences. By learning to research your chosen strategies, thus controlling the amount of good and bad trading days you experience, you will, in the long-term begin to generate profits, which is the ultimate goal of every trader.

Trading psychology experts tell us that it is important to become realistic in trading instead of becoming a perfectionist. Perfectionist traders, relate a loss with failure, and will become obsessed with the failure, focusing only upon it. Realistic traders understand the unpredictability of the market and taking a loss is simply part of the art. The main key you must remember in trading psychology to be able to effectively limit your losses, instead of becoming obsessed with them. A common thing seen within the trading psychology world is that traders who are obsessed with their losses often have a hard time bouncing back from them, thus losing in the end.

Experts in trading psychology have organized three basic strategies you can use to effectively stop losses. These strategies are:

* Price Based * Time Based * Indicator Based

Stops that are priced based are generally used when the other two have not functioned. To make this work you will need to make hypothesis's about the trade and identify a low point in that particular market. Then you will set your trade entries near your points, thus making sure that losses will not be overly excessive if the hypothesis fails.

Time Based stops constitutes making use of your time. Designate a holding period you allow to capture a certain number of points. If you have no achieved your desired profit within that time limit, you should stop the trade. If effectively used you should stop even if the price stop limit has not been achieved.

The Indicator based stop makes use of market indicators. As a trader, you should be aware of these indicators and utilize them extensively within your trading experiences. Look at indicators such as, volume, advances, declines, and new highs and lows.

Experts in trading psychology say that setting stops and rehearsing them mentally is a good psychological tool to use and will help ensure that you follow through.

About the Author

Tim Renolds is a contributing author at our website where You can get a free Homeowner Loan Quote right now. Take a moment and see for yourself.

Can You Get Rich Investing? Yes, But Think Differently! - by Denson Kelley

Remember back in the 1990s when a lot of people either retired early or became wealthy? It was relatively simple. With stock prices going up, up, up, I knew a lot of people who simply invested part of their paychecks. They ended up with several hundred thousand dollars in profits from their constantly rising stocks.

I knew others who had already amassed several hundred thousand by the time the stock boom came along. They were millionaires by the time the 1990s ended.

Ah yes, those were the days. Today most people will tell you it's a lot harder. Stocks don't seem to do much any more. You have to invest in risky emerging countries to see much return. And that chance can evaporate overnight taking your money with it.

When the stock market won't bring you any return, most people turn to real estate. But housing prices have peaked in most cities, meaning you can't just buy a house and sit on it for several years to earn a fat nest egg.

So does that mean we have to give up on ever getting ahead and just learn to be satisfied living the "average" life our jobs can provide?

Not necessarily. These days you have to think differently to get ahead. For example, you've noticed how manufacturing and jobs are heading out of North America to foreign countries. That's bad news for many workers, but it's GREAT news for some segments of the Foreign Exchange Market.

You see, when we buy products from China, or Japan ships products to England, all kinds of currency has to change hands and be converted. There is BIG money in that process.

FOREX, the foreign exchange market, handles 2 TRILLION in transactions EVERY DAY. That's far more money than what Wall Street handles. Just about anybody can jump in and pull out quite a profit for themselves by participating in the FOREX process.

Does all this sound a bit new to you? Most North Americans have heard very little about FOREX. They've got BILLIONS of dollars sitting in savings accounts and low yield investments that could make them a LOT more money in the Foreign Exchange Industry.

If you're thinking helping all those millions get their money transferred to FOREX is a HUGE opportunity ripe for the picking, you're RIGHT!

I hope my article has opened your eyes to some of the terrific opportunities that are being created now. Rather than looking back to the good old days of the booming American stock market and waiting for those times to return, refocus your attention on what is really happening right now. Your fortune lies in seeing more clearly the awesome opportunities at hand.

About the Author

See Denson Kelley's online video presentations that explains FOREX and how you can profit from it.See http://freedomrocks.com/10543 Try his free demo system that lets you practice trading on FOREX without any risk. He also has a completely automated business opportunity. Reach Denson at DeKelAssoc@aol.com.

A Mini-Guide To The Managed Forex Account - by Dan Ho

A managed forex account is forex made easy. It is especially tailored for those investors who do not have the time or desire to monitor their own forex account. Many different companies offer these accounts to their clients. A managed forex account is often chosen by individuals who wish to take advantage of the high liquidity and high profitability of the forex market without taking the time to "learn" forex trading.

The world of forex trading is highly complicated and success requires education and familiarity with terms, charts, signals and indicators. With a managed forex account, the investor can rely on someone who is already familiar with and successful in the forex world.

One type of managed forex account utilizes robots to trade the investors account. To the investor, no human hand means that there will be no emotional trades. These automated systems are designed by experienced traders and take into account all the indicators and statistics of any good forex trading system to signal the robot to trade. This is really forex made easy.

Another type of managed forex account attempts to take the difficulty out of self-trading by allowing the investor to employ a professional trader to make the trades. These accounts remain solely in the individual investor's name, meaning that money can be withdrawn at any time, unlike conventional stock trading. In other words, a managed forex account is not merely combining one investor's money with numerous other investors' money to obtain results. These managed forex accounts are actively traded by individuals for individuals. Forex made easy for individuals.

Perhaps you are looking for forex, but you wish to trade your account yourself, for fun or as a hobby. Without a managed account, you must follow all the rules of successful forex trading. Forex education is absolutely necessary. There is no way to trade a forex account successfully without education because this is a complex financial undertaking. In fact, professional advice is highly recommended. Try a "demo" account, before you invest real money. Software, seminars, daily newsletters and much more is available for the new trader. If you are not looking for a managed forex account, you are not really looking for forex made easy. You are looking for the tools needed to maximize your chances of success.

Forex trading is a risky business. According to statistics, only 5-10% of new traders make it through their first six months with their initial investment intact. Even less make a profit. A managed forex account is a way to reduce the risk and increase the profit.

About the Author

More information about opening a forex account and other currency trading educational material can be found at http://www.forex-trading-reference.com

What Is Forex Signal Trading? - by Dan Ho

Designing a forex signal trading system requires technical analysis of market indicators, statistics or trends. Without a forex system, a trader tends to let his/her emotions get in the way. Forex signals are used to take the "emotion" out of the equation.

A new trader can design his own forex signal trading system after getting some education and practicing with a "demo" account. Most websites with trading platforms offer daily newsletters which they post on their sites or send to the traders e-mail address. These newsletters are generally from a professional trader, broker or market analyst and can prove very helpful, whether the trader has a forex system or not. The ultimate goal, of course, is to make successful (profitable) trades by using all available information.

The type of forex trading signal or strategy that a trader uses depends largely on the type of trades that he/she is interested in making. There are short, medium and long-term traders and each have advantages and disadvantages.

A short term or day trader capitalizes on very small changes in rates that they expect to happen each day. The forex system for the short term trader will focus on the study of daily charts, indicators and even time of day. A long term trader needs large amounts of capital to cover daily fluctuations and his forex system will focus on long-term fundamental factors. A long-term forex trading system will be quite different from a short term forex trading system and the indicators that signal each to make a trade will be quite different.

The majority of traders fall in the medium term trader category. These traders have the least risk and generally need less capital than the other types, but their trading opportunities are limited. Forex signal trading for the medium term trader involves all of the indicators used by the day trader and the use of additional indicators and studies to find the best entry and exit points. Generally the more indicators used in a forex system, the more reliable the system should be, but fewer trades will meet the traders criteria.

There is an enormous amount of information available on the web to help new traders design a forex system. There are seminars, newsletters written by pros that include entry and exit signal points, free charts, and much more. There are chat rooms and blogs to get an idea of what current traders are doing and to hear about their successes and failures. Reports say that 90-95% of all new traders will lose their initial investment in the three to six months following their first trade. To reduce that risk, new traders must educate, practice and use forex signal trading to take the emotion out of the equation.

About the Author

Get an edge with forex signal trading by learning about the best courses and newsletters written by professional currency traders at http://www.forex-trading-reference.com

What is Forex Trading? - by Richard Stranberg

FOREX, (FOReign EXchange market) or FX, is an international exchange market where stocks and shares are not traded, but currency. The return for the investor is not in the value of the currency per se, but rather the relative exchange value of one currency against another currency.

Therefore, Forex trading is always expressed in pairs such as Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

By simultaneously buying and selling pairs of currencies, the investor, or speculator, hopes to profit from a favorable exchange rate change. Unlike the American stock exchanges, the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ), Forex trading is more predictable than stocks.

One strategy that the Forex investor uses is a technique that stems from the assumption that all information about the market and a particular currency's future fluctuations is found in the price chain. In other words, an investor simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before. Another strategy for the Forex investor is to analyze the country of the currency's economy, political situation, and other possible rumors. The investor can also anticipate such things as political unrest or change that will also have an effect on the market. Forex is the largest financial market in the world handling between 1.5 and 1.9 trillion US dollars a day. The combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors. Because of the the liquidity of the market, unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.

What are the risks?

Because of the sheer scale of the Forex Market, it ensures greater price stability and greater leverage. Also, with built-in protections such as safety margins, automatic limits for buying and selling, and other risk protection measures, the likelihood of ending up in the red even when the Forex market is volatile is drastically reduced. Furthermore, because of its' size, it is near impossible for a single investor to significantly affect the price of a major currency.

However, all Forex traders should be aware that the market is one of the most liquid around and subject to strong currency trends. While leverage figures of up to100:1 are possible, without adequate risk protection in place the gap between profit and loss can be dramatic. Even veteran Forex traders can be caught out from time to time and take large hits. With this type of investor speculation, the golden rule must be: don't risk more than what you can afford to lose.

About the Author

Richard Stranberg is a contributing author to the Forex Trading Guide. Visit the Forex Trading Guide at http://www.forex-trading-guide.us

Do You Understand These Critical Aspects of FOREX - by Jimmy Cox

FOREX, also known as the FX market or the foreign exchange market, is largest and oldest financial market in the world. It is also the biggest and most liquid market in the world, a market that runs 24/5, circling the globe with financial transactions.

There has been some sort of foreign exchange for as long as people have needed to exchange currencies to do business. Technically, if you are a tourist travelling in a foreign country and you use a traveler`s check to pay for a transaction, you are engaging in foreign exchange. However, traders are not interested in that type of foreign exchange. They are concerned with trading foreign exchange, which occurs when one currency is traded for another on the market purely to make a profit.

In the past, foreign exchange trading was limited to banks, major currency dealers and occasionally to very large speculators. Only these groups were able to take advantage of the currency market`s fantastic liquidity and the strong trending nature of many of the world`s primary currency exchange rates. However, recent technological advancements and the development of various online trading platforms have made it possible for small traders to take advantage of the many benefits of FOREX trading.

Foreign exchange market brokers are now able to break down the larger sized inter-bank units and offer individual traders the opportunity to buy or sell any number of these smaller units. These brokers give any size trader, including individual speculators or smaller companies, the option to trade at the same rates and price movements as the big players who once dominated the market.

Transactions on the FOREX market are performed continuously by dealers at major banks or at FOREX brokerage companies around the world. FOREX is a part of a worldwide market, and it is active 24 hours a day. Dealers at major institutions work 24/5 in three different shifts. Traders may place orders with brokers for overnight execution, without waiting for the opening of any market.

Because of this continuous activity, price movements on the FOREX market are very smooth, without the gaps that occur on the stock market. The daily turnover on the FOREX market is somewhere around $1.2 trillion, so there is never any danger of an investor being unable to enter and exit positions whenever they want to. The fact is that the FOREX market never stops. Even on September 11, 2001, you could still get your hands on two-side quotes on currencies.

These currencies are on a floating exchange rate, and they are always traded in pairs such as Euro/Dollar, or Dollar/Yen. About 85% of all daily transactions involve trading of the major currencies. Four major currency pairs are usually used for investment purposes. They are: Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc. They appear on the market in this form: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. As a note, you should know that no dividends are paid on currencies.

If you feel one of the currencies in the pair you are trading in is undervalued, you can buy more of that currency (by selling the other). If everything goes as you expect, you later sell back the currency you bought (buying the currency you sold in the beginning) for a profit. Trading on FOREX utilizes margin in such a way that an individual trader is able to profit well from trades such as these. The market is one where high profits are accessible to all types of traders, and the market is also big enough to ensure that there will almost always be a good trading opportunity.

When you compare them, you will see that the currency futures market is only one per cent as big as FOREX. In addition, currency trading is not centered on an exchange, unlike the futures and stock markets. Trading moves from major banking centers of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S. it is truly a full circle trading game. As you can see, the foreign exchange market has come a long way. Being successful at it can be intimidating and difficult when you are new to the game. However, once you understand the market, you will be able to realize your potential to be a highly profitable trader.

About the Author

Who Else Wants To Learn A Simple, Step-By-Step System For Generating Quick & Easy Profits, Trading Forex? - FREE FOR A LIMITED TIME - http://www.forextradingstrategies.org

How to make $2m trading weekly stocks part-time - by Dr Alexander Chambers

Nicolas Darvas invented his Darvas Trading System back in the late 1950's and it still works today.

It's genius is in it's simplicity. Darvas was completing a travelling tour round the world as he was trading stocks and was only able to access volume and price data as he moved from location to location. Remember that there was no internet back then - Darvas had to rely on outdated information in the form of a newspaper and daily telegrams on selected stocks to acquire information for his trading system.

Darvas' broker mailed him a copy of Barrons newspaper each week which contained weekly prices of stocks together with volumes for the week. Darvas used a top down approach to investing - he only watched stocks from futuristic industries. In the 50's these were credit card industries and the jet age. Darvas realised that the expectation of earnings was one of the greatest lures to raise stock prices higher, and together with the futuristic industry screen, these were the only fundamental factors used in his Darvas Trading System.

Once he had satisfied his requirements for fundamentals, he tracked technical data in the stock. He liked stocks that were:

1) At or near their all-time high

2) Bouncing up and down in their Darvas Boxes

3) Had price patterns of boxes stacked on-top of each other like a pyramid

4) Showing an increase in volume with advancing prices

5) Priced greater than $10

He used a new method of tracking trading ranges called "Darvas Boxes" as a way of entering and exiting stock positions. A buy signal was created if the price just pushed through the top of a Darvas Box and the price reached a new all-time high. He created a simultaneous stop loss at the level of the previous box top.

I've been using this strategy to buy/sell stocks for a few years ... and it works brilliantly! In fact, I'm so passionate about it all that I've dedicated a website to Darvas' methods.

You can read more about it here.

About the Author

Alex Chambers is a UK medical doctor who likes to buy profitable shares. He also likes to read books, use the Internet, dance (although not professionally!) and lie in bed.

Is A Stock Market Investment Club Right for You? - by Jimmy Cox

Should you go it alone, or be part of a group? The stock market can be an intimidating and confusing environment for a beginning investor, and many people find stock market investment club to be an ideal place to start. But finding a club that is accepting members can be difficult. You may want to consider starting your own club. However, let`s consider whether a club is right for you. There are various personal and group benefits to being part of stock market investment club.

The first benefit is the ability to take advantage of combined stock market investment knowledge. When you work with a group of people who have a similar interest in the stock market you`ll have a large amount of combined knowledge working in your favour. Even complete newcomers to the stock market will have valuable opinions and pieces of information that can come in quite handy. With a democratic approach to decision making, a groups stock market investment choices will always be able to take advantage of this knowledge base. However, if you`re unable to function in a group atmosphere where the majority will rules whether or not your choice is in the majority, stock market investment club may not be for you.

Recent studies of stock market investment clubs have also shown that when a group of people make investment decisions after a series of discussions and debates, the potential for profit is greater than when individuals make their own decisions about where and how to invest their money.

Along with these combined knowledge resources comes reduced risk. Even though the money that your club has to invest can be quite large, your own personal contribution can be small, allowing you to learn how the stock market works with minimal risk. You can still make some great stock market investments but your loss factor will be more manageable. Keep in mind that when your club makes a profit, no matter how small, the amount will be distributed throughout the membership.

Investment clubs have the ability to invest in the stock market even when the market is dropping, or is slow. Because the money in spread out among a group of members the chances of a large personal loss is unlikely, as a part of a group of people you can also diversify your stock market investments, and not be limited to just one or two market choices. As well, since most members are part of stock market investment club as a learning opportunity, there will be more room for reinvesting the gains and dividends that are realized from successful investments. When you invest on your own, you often won`t be as willing to part with those profits.

While these are all positive aspects of belonging to stock market investment club, there are also some individual benefits you may want to consider. These can include:

++ Building your confidence. A stock market investment club is a safe place to get started. Being a part of a club ensures you will receive support from like-minded people, and a chance to learn the market with greatly reduced risk.

++ It keeps your stock market investments low. If you only have a small amount of money to invest each month, such as $25 to $60 dollars, then stock market investment club is perfect for you. You can invest small amounts of money, such as these, into the larger combined total of the entire club.

++ It`s fun and educational. A stock market investment club combines the all the social aspects of a good club with a chance to learn more about investing. The regular meetings will give you the structure to keep learning more, and the social aspect will keep it from being a classroom-like experience.

Investment clubs have been a fun and effective way for many investors to get started in the Stock Market. They have existed for many years, and their numbers keep growing. There is likely to a club close to you that will fit your stock market investment style. If not, consider starting one.

About the Author

Who Else Wants To Learn A Simple, Step-By-Step System For Generating Quick & Easy Profits, By Starting An Investment Club - FREE FOR A LIMITED TIME - http://www.clubinvestment.net

How To Find Top-Selling eBay Items - by Jason James

Unless you are willing to pay for software that finds top-selling ebay items, you will have to conduct your own research by hand. Luckily for you, there is a simple method you can use to perform market research for ebay.

If you are already selling on ebay, you probably have a general idea of what you want to sell. For instance, you might know you want to sell collectibles, jewelry, or consumer electronics. However, what you might not know is what you want to sell within those categories or what you should be selling within those categories to maximize your profits per sale.

Your goal should be to select products that have both a high demand (high search popularity) and a low supply (number and quality of sellers). In business, this is generally referred to as a "niche." If you want to maximize your profits, you should search out a number of niches within your ebay selling sub-category.

You can start this process by going to http://category-keyword.ebay.com/all_categories.html and clicking your current selling category and then sub- category. Drill down and build a list as you go of potential niches by recording the "commonly searched words" for each level.

Continue to drill down until you have the ebay search results for a given niche. For instance, if you continue to drill down for jewelry, you can eventually get results for "white gold rings" or "sapphire gold rings." Spend some time analyzing the raw amount of results (i.e. 4300 results for "white gold rings") you get for a given keyphrase, the quality of the sellers within the niche, and the prevailing market rates within the niche.

If supply is low and demand is high for that given ebay selling niche, prices will be inordinately high, allowing you to maintain high profit margins until your niche fills out with more sellers.

In order to assure consistent profits, you should select a number of profitable ebay selling niches and sell within each. When you pick a good niche, your sales will reflect it: your merchandise will move fast and you will consistently sell over the ebay market values.

If you find a good niche, but do not have sufficient stock to sell within that niche, you can simply find a dropshipper or an affiliate program to do all of the work for you. You can sign up at places like www.cj.com, www.linkshare.com, and http://www.megagoods.com for free and immediately start selling items as an affiliate.

About the Author

Jason James is a 10 year Internet marketing veteran and an eBay Power Seller of 4 years. His proven step-by-step system shows even users with no business experience how they can make huge profits selling products at online auctions. Claim Your Free eBook: "Top 10 eBay Secrets for Successful Selling" below: http://Auctionresource.Opportunity.com

Easy Tax-Free Income - by Paul D. McDonald, MBA

Municipal Bonds are bonds issued by cities, counties, and states. Currently, the federal government has declared that "dividend income" -- money paid to the owners of the bonds -- is free from federal income taxes.

Municipal Bond Funds are professionally managed collections of money that invest in these bonds. Therefore, the income from these mutual funds are also tax-free.

Consider this idea: place a portion of your money into municipal bonds to provide immediate tax-free income, and place the remainder into other investments that might provide a higher return. Any gains that come from your more aggressive investments can then be used to "feed" your secure municipal bond funds.

Congratulations! You have now achieved a growing base of secure, tax-free income and still have the ability to participate in any long-term market gains. Plus, because you have your secure income, you don't have to worry about the stock market fluctuating.

Mutual funds will fluctuate in value and the amount received when sold may be more or less than the original investment. Before investing in any mutual fund, please read the prospectus carefully regarding fees and expenses.

About the Author

Paul D. McDonald, MBA is a financial professional specializing in working with seniors and business owners. He assists people in making decisions on retirement planning, investing, insurance, budgeting, debt management, and many other critical financial decisions. Paul welcomes calls on the subject at the toll-free number 1-877-711-1264 or you can visit his website at http://seniorfinances.blogspot.com/.

A Luxurious Drive - by Pamela Hewitt

The 2006 Lincoln LS is only available in one trim only, and that is the V8 Sport. It is crafted under the Lincoln brand as a luxury sports sedan with four doors, and can accommodate a passenger capacity of five people maximum. It is equipped with the standard 3.9 liter V8 engine with 280 horsepower and this can achieve 18 mpg in the city and 25 mpg while driving on the highway. Also standard is a 5-speed automatic transmission with overdrive. This vehicle is a freshened version for this year.

During its first production, this was introduced as a midsize, rear wheel drive luxury car at entry-level. It has the Ford DEW98 platform that is also used by the Jaguar S-Type and the Ford Thunderbird. Its main competitors in the market include the BMW 3 series, the Lexus ES, the Mercedes Benz C-Class, the Acura TL, and the Cadillac CTS. This vehicle was first introduced in the early part of 1999 and this was the first Lincoln vehicle that offered a manual transmission. It was a definite attractive alternative to European and Japanese sports sedans. However, come 2006, the Lincoln LS model for this year had been moved from the entry-level luxury segment to the bottom of the mid-level luxury segment, thus having a change in competitors. This time, it had the Mercedes Benz E-class, the Cadillac STS, the BMW 5-Series, and the Lexus GS as its main competitors.

Even if the Lincoln LS shares the very same platform that the Jaguar S-Type and the Ford Thunderbird is using, this vehicle still differs in its styling and equipment. This vehicle comes with a 280-hp V8 engine with a 5-speed automatic transmission with manual-shift capability, ABS, traction control, and 17-inch wheels. What is also made standard are the front side airbags. It also features and has options like head-protecting curtain side airbags, an antiskid system, power-adjustable pedals, a rear-obstacle detection system, a navigation system, a THX sound system, an AM/FM radio with in-dash 6-disc CD changer, an upgraded sound system, a power sunroof, heated/cooled front seats, heated rear seats, a tri-coat paint, metallic paint, chrome alloy wheels, and xenon head lamps. Rumors have it, though, that this year could be the last time that the Lincoln LS would be rolling off the manufacturing plants.

As per its fuel economy, the Lincoln LS has averaged 17.7 to 19.0 mpg. Lincoln, thus recommends regular-grade fuel in this vehicle model. Although it is less composed than its European rivals, the Lincoln LS has a ride quality that is comfortable enough. Its expansion joints are fairly well-masked and hidden. It is also capable and balanced in aggressive cornering. Its steering and handling provides a good grip and steering feel. The brakes also have a moderate body lean and are strong. It is not really hushed up, however it could be quite enough for the only noise one could hear would be the low wind and minor tire roar on coarse pavements.

Lincoln Parts and Car Parts online store contains a stock of high quality and well-crafted Lincoln LS parts and accessories.

About the Author

Pamela Hewitt is marketing consultant of a successful auto body shop in Philadelphia, Pennsylvania. This 39 year old is also a prolific writer, contributing automotive related articles to various publications. She is also an offroad enthusiast.

Stocks double all the time - by Steve Hoven

Copyright 2006 Steve Hoven

Did you know that $1000 Invested one time, if it returns 100% a year would be worth over $1,000,000 in 10 years? Here is how it breaks down

Start $1,000

End of Year 1 $2,000

End of Year 2 $4,000

End of Year 3 $8,000

End of Year 4 $16,000

End of Year 5 $32,000

End of Year 6 $64,000

End of Year 7 $128,000

End of Year 8 $256,000

End of Year 9 $512,000

End of Year 10 $1,024,000

That is doubling your money every year.

Of course that scenario doesn't include taxes etc.. However if you had a 401K you wouldn't get taxed on it.

Maybe you have seen that before but that shows that the person with a Long term strategy can make a great deal of money from not a big investment. 100% a year isn't a lot when we are talking about HYIP investments but how many of those are going to last 10 years as well? NONE

Did you know a good percentage of Stocks double each year? I just did some quick research on this with the newspaper. I opened up the Stock Market section for the Nasdaq/AMEX. I decided to check the 52 week high and 52 week low for some stocks. What I was searching for is how many stocks under a certain letter were at least double from its 52 week low. In other words for a stock like "Hansen" (I have NO IDEA WHAT THEY DO OR ANY INFO ON THEM THIS IS JUST AN EXAMPLE) This company (Hansen) had a 52 week HIGH of $44.25 and 52 week Low of $8.51 and was trading above $44. So from the low of $8.51 to the high that is over 5x increase. Point being their are a LOT of stocks that move up 100% in a year, Hansen moved up 400%+!

I did research on a few different letters. (I only looked at letters that had a small # of companies just to show you the research. I didn't want to do like the letter "S" which would have hundreds of companies)

I did the letters "H", "J", "O", and "XYZ". In my paper the letter "H" had 33 companies listed for the Nasdaq/Amex of those 33 companies 16 of them had a 52 week hi/low difference of at least 90%. 17 of the companies did not.

The letter "J" had 9 companies that had a 52 week hi/low of 90% or better, and 5 companies that did not. The letter "O" had 27 companies that had a 52 week hi/low of 90% or better and only 15 companies that didn't. The letters "XYZ" had 17 companies with a 52 week hi/low of better than 90% and 6 that did not.

So of those 6 letters listed above companies under those letters had companies with a 52 week hi/low of 90% or better 69 times and not 43 times.

My point of this is MANY stocks each year double in value no matter what the overall stock market does. All you need is to find 1 a year that can double. That could go from .50 cents to $1. Or $5 to $10 or $20 to $40. You ONLY need 1 stock!

One stock I mentioned on our Alley Cat Trading Newsletter went from .26 cents back in late November to almost $1 in early January. That more than doubled in less than 2 months!The stock was CYGX. I am sure there are many stock trading newsletters online and off. Do some research on them and the companies they recommend. Remember you only need 1 good stock a year. You could very well have a situation like with CYGX where it doubled in a very short time You take your profits and go hunting for the next stock. You don't always have to be in a trade. If that trade took you 2 months you are 10 months ahead of schedule take your time to find the next stock that could turn. Maybe that stock ends up taking 14 months to double.

About the Author

Steve Hoven has had years of experience trading. check out his free newsletter at http://www.alleycatnews.net

The Rich are Making Big Money in Real Estate - by Mike Colpitts

The over-whelming majority of America's wealthiest families have made their fortunes in real estate, according to a new study.

The survey, conducted over a two-month period before the end of 2005, indicates those surveyed made their fortunes investing in real estate. The study was conducted by Real Estate Add, which is an information driven website.

Many start out investing in single family homes, par-lay their profits into other real estate and discover wealth in investment real estate. The stock market has produced many wealthy individuals, but not like real estate. Only eleven percent of the 500 respondents surveyed said they made their fortunes in stocks or other investments.

An over-whelming majority of 83% of the Nation's wealthiest families surveyed made their wealth investing in real estate. Only 11% made their first million dollars in the stock market or other investments. The full report may be read on the Real Estate Add.com website.

Fifty-one percent bought their first few investment properties and waited long enough for the real estate market to appreciate to make substantial profits. Nearly all got financing to start. Some 92% said long term planning was the key to their success.

Only 10% indicated they made great profits by buying fixer-uppers or other properties they made repairs to and sold quickly.

Flipping properties, which is buying real estate and making either repairs to the property or taking advantage of a rapidly appreciating market without making any changes and selling them for a great profit, is the exception to the rule rather than the norm, according to the study.

Most real estate investors who are in the investment real estate market for more than 5 years, which is considered a long term investor in real estate, make their profits over more than double the initial amount they invested. That's understandable when there are real estate markets like Portland, Oregon, which has tripled in price in the last 10 years.

Other places like Destin, Florida, which is a resort real estate market and as such is leading the real estate industry growth in the second home market, has seen property values double in the past five years. The Silicon Valley, home of the high tech industry in San Jose, California has seen prices increase at even higher levels.

There are many places like that in the Nation's real estate markets from coast to coast. However, there are still some great buyers markets where there are shortages of investment real estate for tenants to rent.

Real Estate economists compare the trend to other forms of investing, but caution investors to have a long term plan to cover expenses in case there are unexpected periods of vacancy. Some investors in today's real estate market have purchased properties without sufficient funds to cover expenses in case tenants suddenly move out.

About the Author

Mike Colpitts is the publisher of Real Estate Add. com, which provides up to date real estate market information on residential real estate for all 50 states at http://RealEstateAdd.com Mike has been counseling real estate investors since 1989.

FOREX Trading Strategies - by Terrence Tully

FOREX Trading Strategies

To be a successful FOREX trader you need to develop and adhere to a trading strategy. There are many different strategy's available and no particular one is good for all traders; rather, each trader needs to develop his or her individual approach to the FOREX. We each have special skills that separate us from others and the FOREX trader needs to find what works best for him/her. Some traders rely solely on technical analysis while others prefer fundamental analysis, but many successful FOREX traders use a combination of both to get a broad overview of the market and for plotting entry and exit points.

Technical analysis, or charting, relies on one key concept: Prices move by trends. The common saying in FOREX and stock trading is 'The trend is your friend.' If prices are moving in one direction, the strength of the move can be observed by looking at the chart. Market movements have identifiable patterns that have been studied for many years and a thorough understanding of these trends and how to use the trends to make FOREX trading decisions form the basis of a good trading strategy.

There are many analytical tools available to study market movements. FOREX traders can use computer software or even pen and paper to perform their own analysis. Books abound describing many of these strategies. The beginner FOREX trader should study each one well and acquire a working knowledge of the concepts. Study each method until it is mastered, then use itthe strategy to fully learn it. Once mastered, move on to the next strategy and repeat. It is a simple practice to "trade" FOREX simply on paper, without entering any actual trades. In fact, this method is highly recommended until the beginning FOREX trader builds some confidence.

Support and resistance levels are used in many FOREX trading strategies. 'Support' refers to the price level that is repeatedly seen as the bottom - when the price reaches this level it tends to rise. Prices will seldom fall below the "support" line. At the opposite spectrum is the Resistance levels. Resistance appears to be the peak that a price will reach when buyers and sellers seem to agree. At this apex prices will move up no further. The space in between "resistance" and "support" is known as the "trading range". Prices can move back and forth within this range for some time. The longer the time frame spent in this range, the more important the signal triggered when prices move outside of the range.

When currency prices break through either support or resistance levels, the prices are expected to continue in that same direction. As mentioned, the longer prices stayed in a trading range, the more significant the "breakout", if prices move above "resistance" or "breakdown", if prices fall below "support" For example, if the price rises above the previous resistance level, it is seen as bullish - the price should continue to rise. This signify's that more buyers have entered the market and this increased "buy" pressure will move prices higher. Conversely, when sellers are too many and buyers few, a "breakdown" could signify prices moving lower again until buyers and sellers once again reach equqlibrium. To find support and resistance levels, price charts need to be analyzed for unbroken support and resistance levels. Charts can be analyzed in any time frame; short term traders will study daily or even hourly charts while the long term trader will use weekly or monthly charts to easily see the long term trend. Traders can use support/resistance levels to determine when to enter or exit a transaction.

Moving averages are another common tool in FOREX trading strategies. If a trader only uses the closing price of a currency at the end of the day as a guide, it is hard to establish the true direction of the move. Moving averages "smooth" out the large moves and give us a much clearer look at the currency price. One average used is the simple moving average (SMA) shows the average price in a given period of time over a specified period of time. A 10 day SMA simply takes the past 10 day closing price of a currency and averages out the 10 day data. Another popular moving average is a weighted moving average. While similiar to the SMA, the WMA puts more emphasis on the last several days trading. So while still showing a 10 day average, more weight is added to the last couple of trading days to better reflect the true trend. When prices are above the MA, they will tend to stay above the MA line. When the MA is below the line, price decline can be expected as well.

These are examples of trading strategies that can be used individually or in combination. In practice, the FOREX trader should have a repertoire of trading tools to examine market conditions and to support the findings of one trading method or another. Experienced traders will rely on several, rather than one, key indicators to base their trading decisions on.

Similarly, fundamental analysis can be used to reinforce technical findings, or vice versa. The FOREX trader will study currency valuations, inflation rates, and other key financial indicators to decide whether a currency is "cheap" or "expensive" Ideally, the FOREX trader will use several indicators into account when plotting a trading strategy.

Every trading strategy should provide clear guidelines about when to enter a trade, what to expect in terms of market movement, when to exit a trade, and how much loss can be accepted in case the deal moves against the trader. Following these simple guidelines and learning about technical analysis can help you become a successful FOREX trader.

About the Author

Read more of this informative series designed for the beginning FOREX trader at http://www.informationisthekey.com/forex

Investing vs. Trading: Who Cares Anyway? - by Francis Kier

The mutual fund industry requires customers that buy their funds and never sell them. So naturally, they disseminate a lot of editorial decrying any trading, market-timing or re-allocating that includes selling their mutual funds. This non-selling concept gets more ridiculous and hypocritical every year as scandals continue to trickle into the news regarding brokerage firm and mutual fund behavior. It turns out that the professionals running the mutual funds do a lot of trading, market-timing and re-allocating everyday, but somehow if you do this on your own, you'll ruin your portfolio.

Since an unfortunate vestige of mutual fund sales material is: "you need to invest for the long-term." and "That it is OK if your investments are going down because these are long-term investments." These phrases and beliefs destroy portfolios and compounded returns.

To me, investing is simply day-trading in slow motion. In my view, when people don't have an investing plan they use the excuse, "I'm investing for the long-term." But, I find that all the successful trading rules that apply to a professional currency trader with a leveraged $250 million position also apply to someone with $25 in a mutual fund. If the mutual fund owner calls it investing, he thinks he is immune from all the decision-making required of all ownership; ignoring the fact that every structure require maintenance.

Let's take a closer look at maintenance; look at a home - everything but the dirt needs to be maintained. Time, weather, and events take their toll on the floors, appliances, roof, windows, landscaping, etc. The same rules apply to owning a rental home. And the same rules apply to owning a strip mall, or an airport or manufacturing plant. The same rules actually apply to every business; the building, the equipment, the employees, the vehicles, the marketing plan, the product design, and the websites. Now if investing or trading is a business (or you are trading or investing in businesses) what makes you think your portfolio doesn't need to be maintained just like everything else? I am here to tell you that it does need to be maintained. In spite of long-term investing theories and cautions from your stockbroker or magazine headlines, most of the time you spend on investing would be considered maintenance. More reference material for this article is available at http://investing.real-solution-center.com.

How I define maintenance is continued review, evaluation, and action in alignment with your investing goals. Now the maintenance that they need is continual review. Is it meeting your expectations? Maintenance means information review: changes to your market view, interest rates, inflation, recession, the industry, a new federal law, an inter-country trade dispute, etc. Maintenance also means portfolio review. For example, , if a run up in real estate has unbalanced your portfolio, you may want to sell off weaker real estate holdings or, instead, sell off the strongest real estate holdings if the market prices are starting to fall back. Maintenance is also the mechanics of setting up alerts if a stock has fallen too far and you want to place a stop-loss order to get out, or an alert for a profit target that is about to be reached. Maintenance could simply be a monthly review to evaluate whether the stock is still above its 200-day moving average price.

Whatever the manner you want to address investment and portfolio maintenance, you need to start building your own trading rules, checklists for what to do before you enter a trade, and what could possibly trigger your exit of a position. Keep a journal to see how your rules are growing your account to notice which of them needs to be changed, eliminated, or updated. All of this is the maintenance required for the $25 mutual fund investment - so that it doesn't become a $0.25 investment from neglect.

To the axiom: "A fool and his money are soon parted", I would add this corollary: "An amateur investor and his long-term investments are soon parted." Amateur investors that are not willing to perform the ongoing duties required to grow their investments rarely perform well. While a professional trader who carefully analyzes and executes his trading rules can count on the continued successful growth of their portfolio.

About the Author

Francis Kier has an MBA in finance and shares his two decades of experience with investing and personal finance. More of his articles are available at http://investing.real-solution-center.com.