Forex Trading, what's it all about then?

What is this, I ask myself. It is short for foreign exchange trading it would seem. It sounds complicated and deeply involved, and probably mathematical. No, I'm sure it is not so scary that I need scratch my head every time someone utters a mention of Forex.

Forex Is simply the abbreviated name for the market where currencies are traded between nations, since an Englishman will probably find it somewhat difficult to purchase a magazine or umbrella or tooth brush if all he carried in his pocket were South African Rands. So therefore a lot of the time money will move between countries as industry & commerce must function & thrive. So how much trading occurs within this market? The answer is a lot, as it is the biggest trading market in the world - one hundred times larger than the New York Stock Exchange. An estimated 1.5 Trillion United States Dollars get traded over the Forex market every day. There is no central governing or managing body that controls this mega entity; it occurs on a natural course all on its own. The forex market runs 24 hours a day - very nearly the entire week - simply because of the nature of the world's industrial & commercial fervency.

Trading on the forex market has proven preferable for many, for a series of reasons. It is easy to buy currency, and unlike most other markets, it is also very easy to sell currency. This immense fluency makes it incredibly safe to trade - and on top of this one can start trading with a very small amount of collateral. There is also the fact that brokers on the forex market don't take commission, the profit from the bid/ask spread. Since the selling of currency is not at all difficult, one can abandon ship on a falling market before the take on too much damage.

It's not as simple as counting beans, however, to trade and profit on the forex market. In order to make money, one must have formulated a trading plan, and tested it thoroughly, as to avoid losing a significant portion of ones trading capital. Also very important, a throughout understanding of the way the market works, flows and changes is absolutely essential to the success of an individual on the forex market.

Basically one can list the major currencies that are traded on the forex market. They are the US Dollar, the British Pound, the Australian Dollar, the Canadian Dollar, the Japanese Yen and the Swiss Franc. These are just the main ones - not all that are traded. It is easier to trade on the forex market than on the stock exchange, since one can focus on a small portion of the currencies at a time, as apposed to the thousands of stocks one must disperse their precious time and concentration on when playing the stock market. Just where do you invest in a situation like that? That is what I would like to know. Does it even make sense? Why do people even bother to learn the stock market when the Forex Market Is right there, inching it's nose around the corner, slowly, whispering into your ear, begging for you to go and catch it and ride it to financial completion.

So I hope this is a start to those who want to get more involved। I certainly learned something highly valuable in writing it, so good luck with your trading journey!

by Fanie McGreggor

The Investment That Always Gives You The Best Return

How would you like to find an investment that will consistently outperform every other investment you make? There is such an investment, but it’s not anything you’d expect.

In fact, it’s not real estate. It’s not the stock market. It’s not options. It’s not treasuries. And it’s not commodities.


The investment is giving to your church and other charities. If you don’t believe this investment will always outperform every other investment you make, let me share a story from Dr. Joe Morecraft, a pastor friend of mine.

Joe was on the board of directors for a fairly large company. At the annual board meeting, one of the board members, an elderly man who had amassed a sizable fortune, made a stunning announcement. He told the board that he had far more money than he could ever use and no heirs to give it to, so he was going to give away his entire fortune over the next year.

The rest of the board was stunned!

Well, one year later, the board came together again. But this time, there was a noticeable buzz in the air. Everyone wanted to know if the man was able to give away all those millions of dollars.

When the man entered, the room fell silent. Then came the announcement. A very red-faced board member had to tell all those influential people that he had failed in his task. But what he said was even more stunning than his original announcement.

He told the board that through the course of the last year, he gave away millions upon millions of dollars. He established a pace that, he thought, would enable him to quickly get rid of everything he owned.

Then something happened that he didn’t expect. He started making more money than he had ever made previously in his life. All of his investments were moving up faster than they ever had. The man had to tell the board that he was, in fact, far wealthier after that one year than he was when he made the original announcement. But what he said next was one of those lessons we all need to learn.

The last thing he said was, “What I learned this year is that I can’t out-give God.” As hard as he tried, he couldn’t get rid of his money faster than God was blessing him.

So if you’re looking for a way to get the best return on your money, give it away. The return won’t always be monetary. And there are times when you won’t see the rewards this side of heaven. But the reward will always be far greater than the investment.

By: Steve Kroening

Investment

Investment or investing[1] is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. Literally, the word means the "action of putting something in to somewhere else" (perhaps originally related to a person's garment or 'vestment').
Contents
[hide]

* 1 Types of investment
o 1.1 Business Management
o 1.2 Economics
o 1.3 Finance
o 1.4 Personal finance
o 1.5 Real estate
+ 1.5.1 Residential Real Estate
+ 1.5.2 Commercial Real Estate
* 2 See also
* 3 Notes
* 4 External links

[edit] Types of investment

The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset.

[edit] Business Management

The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.

[edit] Economics

In economics, investment is the production per unit time of goods which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment I is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX. I is divided into non-residential investment (such as factories) and residential investment (new houses). "Net" investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year.

Investment, as production over a period of time ("per year"), is not capital. The time dimension of investment makes it a flow. By contrast, capital is a stock, that is, an accumulation measurable at a point in time (say December 31st).

Investment is often modelled as a function of income and interest rates, given by the relation I = f(Y, r). An increase in income encourages higher investment, whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. Even if a firm chooses to use its own funds in an investment, the interest rate represents an opportunity cost of investing those funds rather than loaning them out for interest.

[edit] Finance

In finance, investment is buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing whether a potential investment is worth its price.

Types of financial investments include shares, other equity investment, and bonds (including bonds denominated in foreign currencies). These financial assets are then expected to provide income or positive future cash flows, and may increase or decrease in value giving the investor capital gains or losses.

Trades in contingent claims or derivative securities do not necessarily have future positive expected cash flows, and so are not considered assets, or strictly speaking, securities or investments. Nevertheless, since their cash flows are closely related to (or derived from) those of specific securities, they are often studied as or treated as investments.

Investments are often made indirectly through intermediaries, such as banks, mutual funds, pension funds, insurance companies, collective investment schemes, and investment clubs. Though their legal and procedural details differ, an intermediary generally makes an investment using money from many individuals, each of whom receives a claim on the intermediary.

[edit] Personal finance

Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized, unlike saving(s) where the more limited risk is cash devaluing due to inflation.

In many instances the terms saving and investment are used interchangeably, which confuses this distinction. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment.

[edit] Real estate

In real estate, investment is money used to purchase property for the sole purpose of holding or leasing for income and where there is an element of capital risk. Unlike other economic or financial investment, real estate is purchased. The seller is also called a Vendor and normally the purchaser is called a Buyer.

[edit] Residential Real Estate

The most common form of real estate investment as it includes the property purchased as peoples houses. In many cases the Buyer does not have the full purchase price for a property and must engage a lender such as a Bank, Finance company or Private Lender. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky.

[edit] Commercial Real Estate

Commercial real estate is the owning of a building small or large where a company rents from you so that it can conduct its business. Due to the higher risk of Commercial real estate, lending rates of banks and other lenders are lower and often fall in the range of 50-70%.

[edit] See also

* Appreciation
* Capital accumulation
* Capital (economics)
* Diversifying investment
* Divestment
* Financial economics
* Foreign direct investment
* Gold as an investment
* Investor profile
* Investor relations
* Investment-specific technological progress
* Kelly Criterion For Stock Market
* Market trends
* Megaproject
* Over-investing
* Philatelic investment



* Regulation Fair Disclosure
* Rate of return
* Saving
* Silver as an investment
* Speculation
* Stock trader
* Value investing
* List of marketing topics
* List of management topics
* List of economics topics
* List of accounting topics
* List of finance topics
* List of economists
* List of financial services companies (by country)

Trading Psychology Management

What trader has not heard the phrase trading psychology? What trader has not viewed, or been told that their trading problems are the result of trading psychology?

What trader does not need trading psychology management, if they are to become a profitable trader?

What an interesting combination of words: trading + psychology. When considered separately by definition, and especially by a 'non-trader', these words would appear to have nothing to do with each other. Trading is the buying and selling of an underlying contract through the execution and management of a trading method; psychology is the study of the brain and behavior, which is done in an attempt to help people understand why they feel and think the way they do, and/or help them make changes to their resulting behavior from these feelings and thoughts.

This list includes typically discussed trading psychology issues, but what do any of these have to do with trading by definition?

* You don't take a trade means you have a fear of losing * You over trade means that you have a fear of missing something * You don't take a stop means that you won't take responsibility * You hesitate taking a trade means you have a fear of being wrong * You trade with money that you can't afford to lose - TILT

The list comprises psychology issues, which then lead to an emotional response which occurs during trading; these issues do not have anything to do with trading method. These are fears and emotions, which would become a problem to the individual any time that they were 'tested' in a performance related activity.

Trading psychology management will involve the realization that any of the emotional problems that you have previously encountered in other stress related circumstances, will absolutely be an issue when trading, but that this is related to the 'emotional baggage' that you bring into trading, this is not isolated to trading.

Traders spend so much time searching for that perfect trading system, but they do so little to prepare mentally for trading - WHY is that the case? Two primary reasons for this would be awareness and avoidance.

Trading Psychology Management Awareness

Many people coming into trading have been very successful in past endeavors. If these experiences didn't involve dealing with stress in a way that the resulting emotions had to be controlled in order to succeed, they now have no reason to know that ultimately trading psychology management will be the determinant in their ability to now be a success at trading. This was my experience when I came into trading, a high performing scholar-athlete through school, and then successful at starting and running two profitable businesses; I just assumed that I would learn how to trade and be very good at it.

It is interesting just how unaware of the realities of emotional impact I actually was. I had only gotten involved in trading because I sold my businesses after my wife's mother and my father had passed away in a four month period, and I felt the 'need' to 'get away' and do something different. Coupled with these personal emotions was the 'influence' I was receiving from the person that I was learning from - paper trading was for 'pussies', just take your trades and manage them.

Absolutely, I was an emotional accident waiting to happen, and the wreck did occur. If you don't know me, or haven't heard the rest of my 'learning to trade' story before, ask me some time about how I had an office lease terminated because of my continual screaming-cussing outbursts - NOT one of the highlights of my life.

Trading Psychology Management Avoidance

People that have an avoidance issue with emotions, have either encountered them before in previous activities, or they are quickly impacted by them soon after they begin trading. However, they view psychology and emotion as personal weaknesses, therefore they won't accept that they exist; through avoidance, this group then believes that they have no need for trading psychology management.

Avoidance is not a solution for anything. It does not matter what the problems are, or in what context that they are encountered, avoiding your problems will NOT make them go away. Ultimately, they are only going to continue to get worse, and IF an eventual solution is ever forthcoming, it will be so with more difficulty and pain than would have been necessary if it was dealt with 'from the beginning'.

Obviously, everyone would love to go through life, day-to-day and task-to-task, without being confronted with fears and emotions that undermine the ability to perform; it is enough of a challenge to learn the necessary skills without also having to deal with this 'extra crap'. BUT this is not personal weakness to avoid. The person who can accept the problems honestly, instead of with avoidance and denial, is the person with strength AND the person who has the ability to find solutions for these additional challenges.

Actually, it doesn't really matter how you 'feel' about emotions and what they represent. The reality is that if you are going to trade, you are going to be effected by 'your' psychology - this is the only guarantee from trading that anyone will ever receive; this must be understood and accepted from the beginning. Then approach trading with a dual concentration on both method and psychology, developing a trading psychology management plan that is intended to gain control over the emotions brought on by trading, in order to allow focus on trading method evaluation and trading performance.

by Barry Lutz

Step By Step Guide To Identify Trading Breakouts Into Uptrends Using Simple Technical Analysis

If you need help in identifying when a stock has already break out of a trading range and is ready for a rally or move into uptrend, here is a simplified guide.

Call up the chart of the stock you are interested in, and perform the following steps:

1. Volume Analysis

When stocks fall in price, there should be an increase in volume to denote selling or distribution. There is normally a sudden spike in volume when the stock hits a near bottom or bottom. This volume spike shows that selling is exhausted, as the last remaining weak holders of the stock give up in despair as prices continue to drop and throw out their last remaining stocks, causing the volume spike.

Correspondingly, look for an increase in volume as the trend changes and there is an break out in price, when buyers come in to pick up the stock as they perceive the price has gone down low enough.

2. Pattern Analysis

Before a stock break out of a trading or consolidation range, there are tell tale signs and specific patterns that you can usually find. Among the bottoming patterns are candlestick patterns such as hammers, inverted hammers, piercing lines, rising stars, bullish engulfing patterns. Of notable interest is the inside day or included day pattern, which is commonly sighted before the outbreak. When there is an inside day, pay attention!

3. Trendlines

Trendlines is a simple way to identify outbreaks in trend. Connect the tops of previous high price ranges or the bottoms of previous low price ranges to form a trendline. A penetration upwards of the trendline will denote a outbreak to the upside and a outbreak to the downside denotes further correction.

4. Oscillators

Favorite oscillators to show overbought and oversold regions of a stock are the Stochastics and its close cousin, the Stoch-RSI. By themselves, they can lead to whipsaws as oscillators can be overbought or oversold for long periods. So oscillators like these should be used in conjunction with other indicators for synergistic interpretation. The out break into uptrends is denoted by the stochastics or the stoch-rsi moving upwards above the lower level which is normally fixed at 20% ( oversold level), and where 80% is the overbought region.

Trading outbreaks is a fine art, where some successful traders have been very successful in removing all emotion that prevent them from taking immediate action. Some of them have "perfected" their trading systems to recognise trends and patterns using just price bars and time- without any other technical indicators - so that they can trade their proven systems without being paralysed by too much analysis. To them, trading is both fun and profitable, as they have proven to outlast the many market crashes and have continued to increase their personal wealth by trading.

By: Peter Lim

A Forex Primer Forex 101

The Forex or Foreign Exchange market is the largest, most fluid investment vehicle the world has ever known. Nearly two trillion dollars are exchanged each day across a vast network of computers found in central banks, investment banks, hedge funds, and brokerage firms around the world. This is the most fluid market in the world because it operates 24 hours per day Sunday through Friday afternoon when it shuts down completely.

Around clock trading means that you rarely have problems with gaps (difference between what commodity closes at and what it opens at the following day in stocks, the gap can sometimes be devastating), this never-ending array of profit-making opportunities can sometimes lead to over trading a very costly mistake because it often defies the logic of most Forex investment strategies and often leads to missed opportunities to maximize profit.

Traders in the

Forex

operate in units known as lots . A lot is the equivalent of $100,000 (unless you opt for the mini lot) and you are essentially trying to predict how the exchange rate between two currencies will fluctuate in the future. While there are literally dozens of potential pairs, the six main players in the Forex are:

U.S. Dollar
Euro
Swiss Franc
Japanese Yen
Canada Dollar
British Pound

International corporations and nations must exchange currency to help finance payroll, secure resources, pay vendors, support infrastructure, etc. This constant exchange of money is done based on a rate that fluctuates due to a variety of factors, including:

Psychology fear, greed, and other emotions play a large role in the markets and can sway rates dramatically; however, human emotions have always influenced the markets making them predictable based upon enough data and proper analysis.

Current Events with a 24-hour news cycle, events from around the globe can quickly influence exchange rates and cause substantial price fluctuations. If investors allow fear (emotion) to affect their decision-making, then a sell-off panic can set in and artificially deflate exchange rates. However, the sell-off and panic may have been predicted if caused by historically relevant factors that triggered a similar trend in the past. Doing your homework is a good way to judge if current events are truly relevant to the true exchange rate before deciding to sell.

Government Reports Many analysts gauge the economy and the way exchange rates are trending by a number of reports released by the government on a periodic basis by a variety of agencies. GDP, the prime rate, unemployment figures, consumer confidence, and many other reports have been known to play temporary roles in the exchange rates between nations.

Many investors in Forex use margin to secure lots and you can typically secure 1-$100,000 lot for as little as $1,000. It is not very likely in this day and age of advanced technology and rapid connections for you to lose more than your investment the account will typically be shut down automatically when it becomes negative but be sure to check with your broker. Small fluctuations in the market can make a big difference for those that are highly leveraged so it is best to ask very carefully about the potential risks when thinking about this option.


While there is no central exchange for Forex traders to congregate, the market remains a great place to seek opportunity and profit. However, be sure to research any investment carefully especially for hidden costs. Brokers are not paid a traditional commission they are actually paid the difference between the bid and ask price on orders so make certain that all decisions are made only after careful research.

By: Kent Douglas -

Different Types of Investments

Overall, there are several different kinds of investments. These include stocks, bonds, and cash. Sounds simple, right? Well, unfortunately, it gets very complicated from there. You see, each type of investment has numerous types of investments that fall under it.

There is quite a bit to learn about each different investment type. The stock market can be a big scary place for those who know little or nothing about investing. Fortunately, the amount of information that you need to learn has a direct relation to the type of investor that you are. There are also three types of investors: conservative, moderate, and aggressive. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.

Conservative investors often invest in cash. This means that they put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments.

Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risks. Moderate investors often also invest in real estate, providing that it is low risk real estate.

Aggressive investors commonly do most of their investing in the stock market, which is higher risk. The different types of stock can confuse first time investors. That confusion causes people to turn away from the stock market altogether, or to make unwise investments. If you are going to play the stock market, you must know what types of stock are available and what it all means!

Common stock is a term that you will hear quite often. Anyone can purchase common stock, regardless of age, income, age, or financial standing. Common stock is essentially part ownership in the business you are investing in. As the company grows and earns money, the value of your stock rises. On the other hand, if the company does poorly or goes bankrupt, the value of your stock falls. Common stock holders do not participate in the day to day operations of a business, but they do have the power to elect the board of directors.

Along with common stock, there are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The first class, class A, essentially gives the stock owner more votes per share of stock than the owners of class B stock. The ability to create different classes of stock in a corporation has existed since 1987. Many investors avoid stock that has more than one class, and stocks that have more than one class are not called common stock.

The most upscale type of stock is of course Preferred Stock. Preferred stock isn't exactly a stock. It is a mix of a stock and a bond. The owners of preferred stock can lay claim to the assets of the company in the case of bankruptcy, and preferred stock holders get the proceeds of the profits from a company before the common stock owners. If you think that you may prefer this preferred stock, be aware that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.

Before you start investing, it is very important that you learn about the different types of investments, and what those investments can do for you. Understand the risks involved, and pay attention to past trends as well. History does indeed repeat itself, and investors know this first hand!

by Brian McGregor