The Forex Market Today

By Bart Icles

The FOREX currency market has attracted numerous investors to its very promising and highly popular investment arena. If you want to invest your money and gain profits at a faster rate, then you might want to consider entering Forex trading. But before you jump in, you will have to educate yourself thoroughly with its basic strategies and methods for you not to get burned in the process of doing actual trading in the market.

The investing methods applied in FOREX currency trading is very similar to the trading of stocks. But unlike stock trading where you purchase company stocks and gain profit from it when its value rises, Forex trading lets you purchase the world's different currencies at a certain quote, and sell it when its value rises, thus gain a profit from the margin. Both markets have the same players that range from small investors of thousands of dollars, to the large investors who invest in the millions. Anyone can participate in Forex trading and can be a certified Forex trader in no time with the availability of Forex brokers in the market with as little starting capital between $200 0 $300.

With its capacity to generate profits at shorter periods, all trading deals of both investment markets are fraught with risks and trade problems that, if executed incorrectly and untimely, will incur losses. All trade investors must educate themselves on the markets basic principles and methods if they want to stay in the market successfully. One can get all the pertinent information from enrolling in Forex classes, online courses, books and ebooks, and related media. There are also free and paid-for software programs that help in currency analysis and for prediction of market behavior. Operating non-stop around the world, Forex can be monitored anytime and from any part of the globe in the luxury of one's home or office.

When doing active trading, traders are cautioned to keep cool heads and clear minds to avoid getting greedy. One can only effectively follow this ideal way of trading when one is fully versed with Forex trading methodology and history. One can also achieve a greater degree of efficiency by practicing regular trading using a demo account, and from then on apply this to real time trading. Again, getting Forex software programs free or for purchase should be fully utilized to compliment a traders trading style and system.

To have a successful career and to see steadier profits in the Forex market, one has to constantly reinvent himself with the aid of new softwares and educational courses on the market. - 23208

About the Author:

Is automated forex trading misleading? What is forex trading? Come visit our blog to find out the answers to these questions and more.

Warren Buffett Strategy - The Most Successful Ever

By Mike Swanson

Warren Buffett strategy is known worldwide for being one of the most successful at buying stock picks ever. His philosophy is based on the Benjamin Graham process of value investing. When he took control of Berkshire Hathaway in 1965 he invested $10,000, this investment today is worth nearly $30 million. If he has invested this amount in the S&P 500 it would have grown in value to $500 000!

The legend that is Warren Buffett has grown to such a degree as to almost appear mythical. His philosophy of value investing has him pursuing bargains, much like a bargain hunter might and this is how he makes his millions. He sees value in certain stocks which other people can't. The products he purchases are under-valued, so they don't attract other investors.

Securities with low intrinsic worth are grist for his mill. He identifies these and predicts their worth by analyzing the company's fundamentals. The majority of buyers are unable to predict this and Warren Buffett seems to know that the market will eventually favor his investments.

His concern does not lie with the fact that supply and demand controls stock market intricacies and his famous quote "In the short term the market is a popularity contest; in the long term it is a weighing machine" is indicative of this.

Warren Buffett chooses stocks based on the overall potential of a company to make money as a long term prospect. Capital gain is not what he seeks and all the concerns he has are based on whether or not the company he targets is able to make money.

There are a number of questions he asks himself when evaluating the relationship between the price and the level of excellence of a stock. These include but are not limited to the return on equity in terms of performance, whether the business avoids excess debt, if the profit margins are high and are they increasing, how long it has been a public company and whether the company relies on a commodity for its products. - 23208

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When The Out Of The Money Covered Call Writing Strategy Fails Miserably

By Marc Abrams

Many websites and e-books on investment training strategies promise you incredible things. Writing Covered call options on stock is one of the most popular trading strategies taught today. These websites promise that you can earn up to 10% monthly returns using that very strategy. Sound good? Read on.

I will be the first to admit that selling out-of-the-money covered calls can bring lucrative monthly returns under the right circumstances. This strategy has been successfully used by me. However, this strategy is not without its disadvantages. The public has not been properly educated by the website and e-book marketers. They market this strategy as conservative with little risk. They leave you holding the bag when it all goes wrong.

When the stock market is rising in value selling out of the money covered calls works well. Additionally, when the stock market is neutral (not going up or down by any meaningful amount), this strategy also works well. Please tell me when the last time was that the stock market remained neutral for any length of time?

The current market seems to be bouncing all over the place. The Dow frequently moves as much as 200 points either way in a single day. This is not an ideal market for an out of the money covered call writer. Your profits will start to evaporate once the stock you are holding starts to decline. Believe me, those profits can evaporate very quickly. I have seen the value of a stock drop from $10 to $1 over night! An option sale will never yield enough premium to cover that kind of a loss.

The key to out-of-the-money covered call writing is to select stocks that will get called. Too many advocates of this strategy do not want the stock to get called. They want you to keep the stock so you can sell a covered call option on it the next month. This is a flawed strategy. You need to select stocks that are trending up in value, hence, a rising market. Those are the stocks that will maximize your profit. If the stock gets called, I know I ended up making my maximum anticipated return.

What if the stock shoots way up in value? If the stock shoots up through the strike price and remains there at expiration, it simply gets called away. Isn't that what you wanted to begin with? You may think you left money on the table by not being able to participate in those gains. If that upsets you then just buy the stock outright and don't sell covered call options on that stock. Instead, let the stock get called away and take your profit for the month. Then look for another stock to buy and sell calls on for the next month.

Remember, you can create an excellent source of income selling out of the money covered calls in a rising stock market. However, the stock market we find ourselves in today is less than ideal for this strategy. There are other strategies, however, that offer significant protection in a declining or volatile stock market. - 23208

About the Author:

Marc Abrams Is A Certified Public Accountant With Over 15 Years of Financial And Investing Experience. Visit Marc's Website at http://www.rebuildingmyfuture.com To Learn More About Writing Covered Calls In Today's Stock Market

Forex Education: Must-Dos for Beginners

By Bart Icles

It has often been said that the foreign exchange market offers a lot of great rewards to investors. However, those who choose to engage in the currency trading must bear in mind that large sums of profits come with great risks. In the long term, forex investors would often realize more losses than profits. Nevertheless, there are still lots and lots of people who continue to join this very exciting form of trading. Many beginners ask if there is a way for them to manage risks wisely as they try to increase their possibilities of making profits. In fact there is. A good start is to invest in forex education.

In the volatile environment of the forex market, one of the most important things that can help investors in managing risks is the quality of forex education that they have received. It is important that forex investors must be able to learn currency trading basics and secrets, as well as must-dos as part of their forex education.

Investing in your forex education is just a start but it is also one of the most important steps you can take in forex risk management. If you are planning to invest in the foreign exchange market, you will need to hone your knowledge and skills in forex trading through seminars, video tutorials, workshops, online tutorials, and books.

You will also need to learn more about different kinds of forex trading systems. It helps to research more about the different kinds of systems from different brokers before you finally choose one that you will use as you deal with the changing forex rates. Forex trading systems can help a lot in reducing the difficulty of the whole task of forex trading with the aid of some computer automations like charting and auto trades.

As a beginner, you will also need to have a trading plan. You will need to determine your objectives in trading, as well as the details of such objectives. Another thing you must consider is the amount of profit that you expect to realize from trading. It also helps to plan on the amount of money that you will invest on the market, what price levels would signal your exit, when to execute stop loss orders, and the level of affordable risk. All these are pretty much the parts of a trading plan. Should your trading plan start to fail, it helps to review it so you can make the necessary adjustments. - 23208

About the Author:

Using a free forex signal starts with a desire to learn and a drive to become a great trader. Learning to use a forex signal software is a powerful technique, it takes a good teacher and mentor. But once you learn how to trade using them your life will change and you have options and financial resources you never had before.

Trading Systems: Money Management

By Maclin Vestor

How to manage money when buying stocks, futures, or options -- what you must know before you buy.

Many people have a very crucial problem, they take on more risk than they can. It really doesn't matter if you're very young, if you take risk to the extreme and continue down that path, you will by mathematical law in all probability lose money.

Lets say you had an almost sure investment that was 85% likely to succeed. When it succeeded you double your money. You put all your money on it. The problem is, when the investment fails, you lose everything. Now it is just a fact that you will eventually lose everything if you continue to invest everything. You only need one trade and you are wiped out completely. Now, even if you invested 90% of your money on an investment that would win 80% of the time, you still are taking on too much risk to win in the long run. If you lose once, you will need a 1000% return just to get back to even. That simply will not happen forever, and even if it did, the large loss would limit your potential for gain so much, that you'd be better off not taking on the maximum risk.

Now, your risk of losing everything can never be completely 100% eliminated, even with conservative strategies. If you flip enough coins, eventually you'll get a very rare event such as 100 heads in a row. However, you'll also get 100 tails in a row. The idea is that you have a strategy that yields you more when you win, and/or wins more than it loses. in this case there will be several losses in a row, but there will also be several wins in a row. If you manage your money properly, you will still have enough money if you get several losses in a row, to be able to more than make up for it when you get several wins in a row. If you are forced to limit the amount of capital after so many losses, that you cannot invest with the same amount after the losses, you may be unable to win enough to make up for those losses. The idea is to keep your investments small enough to limit the chances of that happening. Although almost nothing is a sure thing, by using proper money management, you tip the odds in your favor.

Even if you have a profitable method, if you do not manage your risk, your profitable method becomes unprofitable. It's not usually the investment vehicle, it's the investor that ultimately determines how quickly you fail, and ultimately whether you are able to succeed. Under the same context, it's not usually the type of car, but the driver that determines whether you cause an accident. In order to protect yourself, you must keep your positions at a manageable level, and make sure to keep yourself limited by these rules that will limit your risk of ruin and keep the odds in your favor so you can stay in the game.

So how exactly does one manage money in a trading system? You need to determine probability of a move taking place. If you buy OTM option, the stock will have to move larger for success to occur. Of course if it does, the reward will be greater. There are probability curves based on a random walk theory that will assist you in determining the probability of a move taking place, until you know any better, use these. However, you also should use your own records of your system Determine both your risk/reward (your average % win divided by your average percentage losses, and in addition figure out your likelihood of success. When you do this, you can use what's known as the Kelly Criterion By using the formula as follows Kelly % = W - [(1 - W) / R] Kelly % = The maximum percentage of your capital you should invest per position. W = Winning probability R = Win/loss ratio

A trading system that contains good money management rules will not only outperform one without, but it will also help protect your capital, and keep you in the game. - 23208

About the Author:

Maclin Vestor teaches about variousstock trading systems and soon will teach you aboutforex trading systems in addition to stock trading.