Posts Tagged ‘Investing’

Long Term Investing, Is It Dead?

Mar 12, 2010 wealth building

Does long term investing still work? Over the last few years there have been many ups and downs and this has lead some people to believe that long term investing is dead. So is it? Does investing into a diversified portfolio still work over the long term?

Of course long term investing is still valid. Over the long term stocks tend to go up, just because the last couple of years have been crazy does not mean that it will continue to be that way in the future. All the evidence seems to say that over the long term, stocks go up and become very profitable.

1. Lots of Flat Times

People seems to be pretty eager to say something like, “we have been trending sideways for 5 years, looks like buy and hold is dead” Which if you look at the history of the stock market there have been plenty of times when stocks have been trending sideways for many years on end.

The investors who made money during sideways trends where those who simply looked for good investments and hung onto them until the market finally broke out of its sideways trend and went up.

2. History is a Good Indicator

The major market indexes such as the Dow Jones and the S&P have gone up consistently. In fact if you were able to hold a stock for 20 years or more it would have given you a great return overall. The only exception would have been if you bought stocks at the high right before the Great Depression hit.

3. Dividend Stocks

If you do take a look at the long term chart of the major indexes you are still not seeing the whole story. They also paid out dividends. These dividends alone can make them better investments then other similar securities like bonds or CDs.

All and all the stock market has been a profitable place to invest money over the long term and the last few years haven’t changed that. There is no way to tell for sure if the stock market will be a profitable place to buy and hold in the future, but history looks good. And in the end that is all we can really say.

For more on the Dow Jones Industrial Average History and it’s returns or for more information on how the stock market has done over the long term visit this Stock Market History page.

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Dragonfly & Gravestone Doji Candlestick Patterns- A Rare But Highly Profitable Patterns!

Mar 10, 2010 Uncategorized

Candlestick Charting is one of the most powerful tools in the trading arsenal of any trader. Candlestick Charts apply to any market no matter what you trade-stocks, forex, futures, options, ETFs, commodities, bonds and others. With one simple glance on the chart, you can figure out the sentiment of the buyers and sellers in the market. There are many candlestick patterns that are used as trading signals. Some are simple while others are complex. Doji Candlestick Pattern is a simple pattern that is very easy to spot. It has no body. It is formed when the opening and the closing prices are the same. So, this pattern is all wicks with no stick. It literally looks like a Cross on the chart. So you can easily spot it. But it is very rare as the security opening and closing prices are seldom equal! Doji has some variations. We will discuss these variations in this article!

In other words, the opening and the closing prices should be the same for a Doji to be formed. So for a Doji to be truly formed on a trading day, throughtout the trading day heavy buying or selling may take place but at the end of the day, the price should be where it had been at the start. In other words, the opening and the closing prices should be the same for a Doji to be formed.

It is a signal that the battle between the bulls and the bears had been a draw during the trading day when a Doji is formed with the opening and the closing prices equal. Soon, either the bulls or the bears are going to previal. In other words, a trend reversal is about to take place.

A Dragonfly Doji pattern is unique in the sense that the opening, closing and the high prices are all the same or equal. A Dragonfly Doji is formed when the stocks opens, trades down during first part of the day. During some part of the day, the price starts to climb again and eventually closing on the high which is the same as the open.

When a Dragonfly Doji is formed, bears initially decide to rule the market. But at some point the bulls step in and decide to buy again. When the bulls step in, they start pushing the price up. As the bulls dominate the trading day, the security price ends up right where it had started.

The low on this pattern can be taken as the support level because this was the level at which the bears entered the market and started buying. Dragonfly Doji is considered to be a bullish candlestick pattern.

A bearish Gravestone Doji Pattern is formed when the open and close of the day is equal to the low of the day. This is the most bearish of the Doji patterns. A bearish Gravestone Doji pattern signals the start of a prolonged downtrend in the security price.

As said before, this pattern is rare but very easy to spot on the chart. When it does form, get ready for a trend change!

Mr. Ahmad Hassam has done Masters from Harvard University. Master these Candlestick Patterns with this 82 page PDF FREE Candlestick Guide! Get this 49 page Quantum Swing Trading Report plus the shocking Profit Button Report that applies no matter what you trade-stocks, forex, futures or options FREE!

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Before Short Selling-Know These Shocking Facts

Mar 9, 2010 Uncategorized

Short Selling Stocks is one of the favorite day or swing trading strategy. Many traders short stocks. Now many stock brokers make it very easy for the investors and traders to short stocks. Now a days, most of the trading is being done online. When you sell a stock, a message will ask you whether you are selling stocks that you own or you are selling short. With one click, you tell the broker that you are short selling. The broker than goes about and arranges the shares for you to short sell. These shares are a loan to your account.

Now, you cannot always short a stock instantly. Most of the investors work on rumors. In some cases,a stock gets so much shorted that there are no more shares of that stock left for you or your broker to borrow anymore. In that case, you simple will have to cross your fingers and see how the other short sellers do on that stock while you search for another stock to short!

Now, shorting is one of the favorite strategies employed by day traders. A day trader may short stock on the mundane reason like its price had been going up for three days and it’s time to come down! Day traders are not fundamental traders. Day traders are simply interested in the daily volatility in the stock. Most even don’t do any financial or fundamental analysis of the companies whose stocks they are trading. Almost all are technicians or what you call technical analysis experts.

Now, you cannot straight away short a stock as there are mechanisms in place employed by msot of the stock exchanges that don’t want a massive shorting attack on a stock. There is the famous Uptick Rule that has been put in place to prevent that from happening. What the Uptick Rule means is that you cannot short a stock unless it moves up on the last trade. This rule has been placed to prevent a stock from being driven down to almost zero by short sellers. In simple words, once the stock starts to move down, you cannot short it. You will have to wait for its price to move up on the last trade, before your short selling order can be executed by the broker.

Now you have to be careful when shorting a stock as certain risks are involved. In theory, there is no limit on how high a stock price can go high. So when betting on something going wrong, if you yourself go wrong, the potential loss in case of a stock price going up can be immense.

There is something known as Short Squeeze. A short squeeze happens when the stock of the company that you have shorted has some good news that drives the stock prices high. Now if this happens, many short sellers might lose money and even get margin calls. When they get desperate to buy back the stock, its prices go even higher hurting them more.

If you have already shorted that stock, you might get a call from your broker to return that stock immediately. In such a case, you will have to immediately return the stock even if it doesn’t make any sense to you!As said before, companies, investors and many brokers hate short sellers. They think that short sellers had intentionally driven down the stock prices. So sometimes, they will spread rumors of good news to create a momentary short squeeze. Sometimes, a campaign will be started by the owners of a particular stock instructing their brokers not to loan out their stocks to short sellers.

Mr. Ahmad Hassam has done Masters from Harvard University. Get your FREE COPIES of the HVMM Ultimate Day Trading System and the Universal Risk & Money Management Tool just now!Read this 49 page Quantum Swing Trading FREE Report plus the shocking Profit Button Report that applies no matter what you trade-stocks,forex, futures or options!

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Candlestick Trading Patterns- The Hanging Man, the Hammer and the Spinning Top!

Mar 6, 2010 Uncategorized

Hanging Man and the Hammer are two different candlestick patterns. The patterns are not identical. Hanging Man is considered to be bearish and the Hammer is considered to be bullish.

How to spot the Hanging Man and the Hammer? These candlestick patterns are easy to spot on the chart. When you spot a very small candle body accompanied by a pretty long wick on the bottom, it is a Hanging Man if it appears at the top of the uptrend and it is a Hammer if it appears at the bottom of the downtrend.

Now, in most of the cases, you will also find a small wick on the top of the candle body. Now suppose, you find the Hammer or the Hanging Man. What you need is to look for the confirmation the next day!

Now suppose, you think that you have spotted the Hanging Man in an uptrend. Wait for the confirmation the next day with the opening price. If the opening price on the next day is less than the previous day’s close, you have a true Hanging Man. If not, then that was not a true Hanging Man.

Similarly, if you spot a Hammer at the bottom of a downtrend, you need to confirm it with the opening price on the following day. If the opening price on the next day is higher than the closing price on the last day, the Hammer formed was a true Hammer.

When you trade candlestick patterns, you need to look for the confirmation on the following day to confirm that the candlestick pattern formed was indeed true. Once you have the confirmation signal, you can safely trade on that candlestick pattern. If you cannot get the confirmation, you should ignore that pattern considering it to be false. Most of these candlestick patterns are ideally suited for the daily charts.

A Spinning Top is another candlestick pattern that reveals a tight battle between the bulls and the bears. Whenever, the battle between the bulls and the bears ends in a draw on a trading day, the following day, one side has to give in. When this happens an explosive move in one direction is highly likely.

Spinning tops appear much more frequently and are very easy to spot with a very small body in the middle of the candlestick and almost equal wicks on the two sides. A spinning top is a nice indication that the trend is about to change direction. Knowing about a trend change early is a highly profitable trading signal.

Mr. Ahmad Hassam has done Masters from Harvard University. Get this 49 page Quantum Swing Trading Report FREE. Master Candlestick Charting with this 82 page PDF FREE Candlestick Guide!

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Spot Trading Gold On Forex Shocking Secrets

Mar 5, 2010 Uncategorized

Have you ever given a gold ring to your friend as a token of your true love? Gold has been the most precious metal from the dawn of civilization. It is still considered to be the ultimate currency and the ultimate store of value in times of political uncertainity. For the last ten years, the gold market is in a secular uptrend with the spot prices having recently breached the historical barrier of $1,200 per troy ounce. After that there was a retracement and the prices did come down to around $1,100 per ounce but this uptrend is expected to continue for sometime.

In the last decade, many investors turned towards forex after the historic crash in the stock market. Many small investors lost more than 60-70% of their saving accounts in the stock market crash. Now, forex is a great money making opportunity. It is being said that forex trading will make many millionaires in this decade.

Many people don’t know this that you can trade gold on forex too. Many forex broker platforms that you use to trade forex, allow trading of gold and silver against the US Dollar (USD) from the same platform. Both these precious metals have high demand in the industrial sector and as the global economy recovers from the recession, the prices of gold and silver are expected to skyrockets as industrial production picks up and consumers start buying again. When you trade a currency pair, you go long on one currency and short on the other. In other words, you simply buy one and sell the other.

There are many currency pairs that you can trade like the GBPUSD, EURUSD, UADUSD, NZDUSD, JPYUSD. Spot trading gold on forex is almost similar with gold replacing one currency in the pair and the other currency is always USD. In case of spot gold trading on forex, you trade one ounce of gold in the spot market againt US Dollar (USD). So just like when you trade a currency pair, when you trade gold on forex, you are taking either a long or a short position in gold against USD.

Now, suppoe the price quote in the spot market is 1100 XAUUSD. What this means is that one troy ounce of gold in the spot market right now is equal to $1,100 USD. So, in spot gold trading on forex, you are trading one troy ounce of gold against USD. Interestingly the symbol for this is also XAUUSD with XAU representing one ounce of gold.

Just like any currency pairs, stock or for that matter any security, the price quote in the spot gold market has got a bid-ask spread. Suppose the price quote in the spot market is 1110/1115. This means is that you can buy one ounce of gold at a rate of $1,115 and sell one ounce at the rate of $1,110 to your broker. Now, spot gold trading on forex is a fast moving market. Due to the fast moving nature of the spot gold market, the spread keeps on changing throughout the day!

Now a standard lot in currency trading is equal to $100,000. But in case of gold on forex, a standard lot is equal to 10 troy ounces of gold. So, if you find the price quote to be 1112/1117 and you are interested in going long. In that case you will have to buy 1 lot of gold that is equal to $11,170. Spot gold market is a fast moving market and the price quotes keep on changing. So, suppose just after 60 minutes, you find the quote to be 1120/1126. You see a profit and decide to get out selling at $11,200 making a profit of $30. Now if you had used leverage, you would have needed a much lower initial investment to make a profit of $30 in just 60 minutes.

Gold and USD have an inverse correlation relationship. What this means is that the gold prices and USD move in opposite direction in the long term. This inverse relationship may not hold in the short term. But if you are a trend trader or a position trader, you can hedge your position in currency pairs that have correlation with gold prices by taking opposite positions in the spot gold on forex market.

Mr. Ahmad Hassam has done Masters from Harvard University. Download this 1 Minute Forex Trading System FREE. Get this Forex Swing Trading Forex-4 Pack Training Kit FREE!

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ETF Options Investing Secrets

Mar 1, 2010 wealth building

You must have traded ETFs. No, then let me first introduce you to ETFs. ETF is the short acronym for Exchange Traded Funds. ETF are a basket of stocks or other assets that have been designed to closely track a stock index, a market index, sector index or any other index. Now trading stock indexes is what many trader do. You can trade stock indexes with options. However, trading ETF Options can be a more profitable venture for you!

Now trading ETF Options is somewhat different than trading Index Options. Though both track almost similar indexes but Index Options are settled in cash at expiry. On the other hand, ETF Options are settled with the underlying instruments that is shares of ETFs. This gives you the chance to use various combination strategies with ETF Options that you cannot normally use with Index Options.

Index and ETFs both get affected by the dividends paid by the underlying stocks. So if you use options on them, these dividends on the underlying stocks should be incorporated into the puts and calls by using an options calculator.

Now, ETF Options are more flexible than the Index Options as you can use the underlying ETF as well in your options strategies. If you have already traded stock options, ETF options should not be difficult for you. You can hedge your ETF position with an option on the ETF.

Using Protective Put Strategy by combining long ETF with a long put can hedge against the downside risk limiting it to the put strike price with a slightly increased cost for the ETF.

In the same way, you can use the covered call on an ETF with a long ETF and a short call. The short call reduces the cost of the position and slightly reduces the risk as well. However, a covered call limits the upside profit potential to the call strike price.

How about a Collared Position. This is another combination strategy that you can use with an ETF is forming a Collared Position. A Collared Position is formed with a long ETF and a long put combined with a short call. The premium paid in taking a long put position is offset somewhat by the premium that you get by writing a call. A Collared Position limits the limited but high risk to a limited risk only. The downside risk is now only limited to the put strike price.

Options trading is risky in the sense that it has both time volatility as well as price volatility. Now, many traders trade options without getting good options trading education. What you need to do is first paper trade these strategies and master them. This way you will learn how to deal with unexpected risk.

An important fact that you need to know is that not all ETFs have options written on them. This should not surprise you as there are many stocks that don’t have options written on them. Another important fact that you should know is that ETF Options are always American Style. American Style options can be excercised anytime before expiry. You can even trade LEAP Options on ETFs. LEAP Options are long term options having expiry of more than nine months to less than two and a half years.

Mr. Ahmad Hassam has done Masters from Harvard University. Get this 52 page ETF Trading Guide FREE! Read this shocking FREE 49 page Quantum Swing Trading Report.

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A Beginner’s Guide to Short Selling Stocks

Feb 22, 2010 wealth building

A short sell is the promise to deliver a stock the seller does not possess at the time of sale. You must have access to the stock through a broker who will temporarily lend you the stock. The stocks you short come from many sources as they might be owned by your brokerage firm or by another client.

The money you make from the sale of your stock is only posted to your account once the sale is finalized. In time, you will stop selling unavailable stock and settle your accounts. To make the payback, you purchase the same number of shares you sold so you can give back the stock you borrowed from the broker. You may make money if you can buy back the stock for less than what you originally paid for it. There is always a risk to short selling if the stock rises and you have to buy it back for more than what you originally paid.

You need a broker if you are going to try to play with stocks, especially if you want to short sell. In order to use a broker for your stock dealings, you need to open an account with the firm from where the broker is located. If you open an account with cash, money is directly taken from your account to pay for any purchase. If you open a margin account, you do not need to pay for the purchase directly, and can borrow funds from the firm at the time of the transaction. The account is set up as a way to cover your activity.

In order to short sell, you had to borrow stocks to cover the sale. Whatever terms and benefits a stock may earn, belong to the original stockholder. You incur any activity on a stock, such as a split, and you must pay in full what is owed to the broker.

Short selling is a risky business and should only be undertaken by someone is very familiar with the way stocks work. There is no limit in the amount of money you could lose n short selling stocks. By comparison, with regular stock, the maximum you can lose is only what you put into the stock. For most people in the stock market, they always hope for a gain, but when short selling stock, sellers actually want the stock market to do poorly.

Please visit my website Stock Market For Dummies to learn more about investing in stocks.

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Finding The Best Online Commodity Trading

Feb 21, 2010 wealth building

Online commodity trading is an interesting also special offer for trading over the internet. Attention on the market is soaring not to mention that usually means greater trading sizes and better potential for earnings if you understand what you are doing. There are even schools which were began to help individuals get used to internet commodity trading. Many training last a few days plus train the basics from the market.

Whether you decide you need to enroll in a class, it is crucial that you simply know all there is certainly to understand pertaining to commodity trading before you decide to start out. You need to learn to place and also exactly how to control your own order placed in the commodity market. The requires learning how to utilize the newest software system. Mastering exactly how professionals generate profits by buying and also trading will offer you great examples of how you need to make yourself even though the investments you will be doing may be on a much lesser level.

You must master that internet commodity trading deals involve the most risk so that you can control your exposure to major losses. A bit of training will let you to reliably find out which investments will likely be profitable also which ought to be prevented as a result of risk elements. It is possible to utilize unique variations of contracts at the exact time raise your leverage.

This valuable tends to make the trading a lot more difficult, however when done correctly it can make it more lucrative and also less risky. You must have discipline as well as move very carefully through an proven plan plus solid information about the marketplace and furthermore the software system you are using if you hope to perform nicely in the internet commodity trading market.

If you put enough time in to learning the marketplace as well as make very carefully scripted choices, you may find that internet commodity trading is quite excellent. For many it turns into the full time career. The online world makes it flexible in order to get started slow and furthermore improve your trading volume while you obtain more comfortable. Soon you may be able to quit your day work!

That does not necessarily mean that online commodity trading is simple, however. It is not revenue for practically nothing. We will have to keep track of real time rates on all the commodities that you will be interested in buying or perhaps are currently holding not to mention have the ability to evaluate the data to make selections in respect of what direction these are going in. Technologies out there on the internet tends to make this achievable from your comfort of your own house. It can provide the data, but you still have to make the options.

Similar to almost any dealing, you’ll find natural perils associated with internet commodity trading. You are able to diminish these kind of risks by diversifying the portfolio of commodities you purchase. Doing this you’ll have a cushion next to fast fluctuations in the market. If you don’t have any knowledge about internet trading, it is always extremely helpful for you to take a class previous to starting or check out software that allows you to trade with imaginary funds with a real time marketplace so you can gauge how good you are doing while not risking any serious hard cash.

Her name is Angela Johnson, originally comes from CA. She has written several articles about Currency Trading . Check out her other guide on online mortgage broker tips, and stock price history guide!

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It Is Hard To Make Money With Low Interest Rates

Feb 18, 2010 wealth building

If you have spent any time this year looking for good interest rates, you probably know what a waste of time that is right now. Both certificate of deposit rates and money market rates are lower than most of us can ever remember. With the economy doing so poorly, things may not change for quite a while.

Right now it is difficult for anyone to make money. People with money rely on interest income to generate some of the money they earn. Right now, that is going to be very little with all interest rates so low. Everyone is buckling down for the long haul and keeping their wallet tight.

In order to find the best money market rates you have to have access to the Internet. The best rates may not be found in your city or even your state. They may be in a bank or institution way across the country and the only way to find that rate is through the web. Some people are still weary about doing business on the web and giving out their credit card. But if you want to get the best rates, deals, or prices for anything now days, you have to get over that fear and jump on the Internet. Money market accounts are no different and you need to look everywhere to find the best one.

The stock market has done poorly and depleted many people’s life savings and retirement accounts. Because of this they may have wanted to put what is left in a safer investment vehicle but anything that is truly safe earns close to only 1%. This is not much different than no interest at all and leaves one with few options.

Many people don’t care about interest rates because they have no money to invest. Those folks don’t care about the stock market or interest rates and don’t seem to understand how everything is intertwined and affects us all. Those people have never bothered to save (or have been unable to) and are depending on the government to pay them social security upon retirement. With things going so badly with all business and the government being in more debt than ever before, let’s hope they are able to collect that government social security when they come of age and need it.

Please go to my website if you are looking for more information about money market interest rates. You might also be looking for information on FDIC insurance limits.

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Early Retirement Planning…Have Clear Goals

Feb 13, 2010 wealth building

When you are doing early retirement planning, make sure you are not just retiring from work. You should be retiring to do something else…there is a big difference in the two statements.

It is easy to say I am going to do nothing when I retire. You will find if you do your retirement will be no different from work. Without firm, well thought out goals, you soon become bored and frustrated.

The first step in early retirement planning is a fun exercise. List what you never want to do again…ie, shovel snow, mow the lawn, etc. Make another list of what you want to do when you retire…learn a second language, read the great classics of literature, etc. It is very important for both spouses to make these lists. Compare the lists. They may have big differences that need to be addressed. One may want to live on Florida beach…the other to experience four seasons…better find out now than later.

Don’t retire to watching soap operas. The couch is no place to be retired for a long time. You know it is unhealthy. You want to be able to retire for many years. Staying healthy, should be on everyone’s list.

Your lists need to be specific. Be honest with yourself. If you never want to rake leaves again, a big house and yard in the Midwest is not for you. If you want to sail year round San Diego may be better than Omaha.

The more focused and clear your goals are the better. For instance learning to speak French as a goal is too broad. Instead stay I will be able to speak passable French 6 months after I retire. Then it is OK to go buy the language software.

Do not just look at early retirement planning from the money side…you will not be happy if you do. You will not hear of making lists of your retirement goals from your financial planner. That is not his or her job…that is your responsibility.

Do you need some prodding to get your retirement list building started? I have been retired 15 years, my two lists are 20 years old. Want to find out what I have done in regards to my list?

To find out what was on the authors lists for early retirement planning. If you are contemplating retirement, but do not think you can afford it you need frugal retirement living. Do not quit on retirement before going to this site.

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