Sunday, 18 February 2018

Forex Trading - Beginners Guide

Lesson 1 – Introduction to Forex Trading - Understanding the basics - Part 1

If you think education is expensive — try ignorance
Derek Bok, president of Harvard University 

Forex study book by the author Tim Titchmarsh


Maybe this is your first step into the exciting world of Forex, or perhaps you’re an advanced trader wanting to brush up on some skills. Either way, this course has been designed with you in mind. 
This is the introductory lesson, a comprehensive (but painless) coverage of some of the important basics of the foreign exchange markets. 

By the time you have completed this section, you should be able to cut through the Forex jargon with ease, clearly understand how currencies are priced relative to each other and appreciate market behaviours such as supply and demand. 

Furthermore, you will recognise who the market players are and whom you will be trading against. You’ll understand the effects of trading during various times of the day, learn how to calculate the value of a pip, discover the various methods for executing trades and even be introduced to Forex analysis. 

What is Forex?

‘Forex’ simply stands for FOReign EXchange; in the same way that FX is taken to represent Foreign EXchange. Forex and FX can be used interchangeably. 

Forex is the largest financial market in the world, but it is not a physical market, and therefore has no central point. There is no big Forex building in London or New York, or anywhere else for that matter. If you buy one currency using another, whether in your local bank, on an online exchange or at the airport, you are participating in the Forex market. This market covers everything from you buying your foreign currency for your holiday abroad through to large international companies hedging their exposure to the different countries they operate in, and, of course, everything in between.

Compared to the £5 billion a day volume of the London Stock Exchange, the foreign exchange market is far larger - measuring close to a whopping £3 trillion a day in traded volumes. That’s 600 times the size!

Speculators in the market readily make up £1 trillion of that daily volume. This leaves a whole lot of liquidity for traders to play with (more on liquidity later).

What is Trading?

Trading is simply the process of buying and then selling something with the goal of generating a profit. In Forex trading, we buy one currency using another. This can also be thought of as buying one currency and selling another. If someone buys yen and uses dollars to pay for them, they are buying yen and at the same time selling dollars. 

As with all markets, the current price of a currency is based on what the market is prepared to pay for it. In Forex, this is called the ‘exchange rate’ between currencies, often simply referred to as ‘the rate’. The exchange rate is simply a measure of what the market thinks one unit of one currency is worth in a unit of another currency. 

Market Basics

It goes without saying that everybody understands the processes involved in buying something. The buyer starts out with money, finds something they want to purchase, and buys that item with the money. It’s a process so simple, people rarely pause to think about it. A trade could be anything from a chocolate bar to a super-yacht or stock. It’s only when you break down the processes of a seemingly obvious transaction that you can clarify exactly what is happening. 

A buyer starts with an asset that somebody else might want, for example money. The buyer then finds something else they want, for example a pizza. Right now, because the buyer is hungry, they feel the pizza has more value to them than the money. So they swap their money with the current owner of the pizza and walk away with their lunch. 

Of course, the same can also happen in reverse. If a person needs money, and feels they are able to exchange an item that they own for an amount of money they feel has more value than the item, they may swap it for the money. To do this, they will need to find someone who feels that the value of the item is higher than the price they want to sell it at. They can then swap the item for the buyer’s money. All simple so far, and everybody walks away feeling like a winner. 

In this exchange, what is actually happening is that the buyer is effectively selling their money at the same time as buying the product, because they feel that the product’s ‘money’ value is higher than the equivalent in cash. If you are selling the product, you are effectively buying the money because you feel that the product’s value to you is lower than that of the money that you exchange it for. In both examples, you are always buying and selling simultaneously. Clear as mud? Think of this way: before money was invented, people relied on a system of barter, exchanging sticks for stones and in effect buying stones and at the same selling sticks. 

Okay, back to the market. When you have a product to sell, but are unable to find anybody that will buy the product, it becomes necessary to lower the price you are willing to sell the item for, because there is no demand for the product at the its current price. Similarly, if you want to buy a product at a particular price but cannot find anybody selling, you will need to increase the amount that you are willing to pay in order to find a seller, because there is a lack of supply at the price that you want to pay.

Supply And Demand

Products and markets rely on these principles of supply and demand. When an item is popular, it has high demand and the price typically rises until more people are willing to sell their items. Thus, available supply rises. Then, as the market becomes flooded with the items, demand for them at the higher prices falls away and the market price inevitably drops. 

The currency markets behave in exactly the same way and this is a crucial concept for new traders to really grasp. The market is, after all, just a series of orders by buyers and sellers. 

If everybody wants currency A and purchases it with B, the supply of currency A falls. This makes each remaining unit of currency A on the market worth more, causing its value to go up relative to currency B. Although in reality the amount of currency A doesn’t dry up, the orders do.

Not unlike Newtonian physics (although thankfully much easier!), an equal and opposite reaction has also taken place. While the value of currency A has gone up, the value of currency B has gone down. This is because currency B has now become more abundant due to everybody selling it. 

These examples depend on there being a finite supply of a currency. Don’t worry too much about this at this stage, but if, for example, the Central Bank for currency A prints more of currency A and makes it available to the market, then its value will go down due to the increase in availability of currency A. This doesn’t happen often, but the recent financial crises did result in Central Banks doing this on a temporary basis.

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Sunday, 23 July 2017

Mastering Short-Term Trading

The ultimate goal for any strategy is keeping your losses at a minimum and your profits at a maximum.

Source: rss_articles

Friday, 21 July 2017

Alphabet, General Motors, Coca Cola and Facebook are expected to release their Q2 2017 earnings results


Alphabet, General Motors, Coca Cola and Facebook are expected to release their Q2 2017 earnings results over the next few days. General Motors (GM) and Coca Cola (KO) are listed on the NYSE while Alphabet (GOOGL) and Facebook (FB) are listed on the NASDAQ. Coca Cola is a component of the Dow Jones Industrial Average while Alphabet, General Motors, Coca Cola and Facebook are all components of the S&P 500 index. 

Tuesday, 18 July 2017

Retirement Investing Strategies for People in Their 60s

Here are four things clients in their 60's need to consider when it comes to retirement planning.

retired couple

Retirement is different for everyone. Some people want to travel, some want to help their children financially, while others plan to continue working on a part-time basis. Also, it is becoming the case more and more often that Americans are retiring with debt. This means that it is impossible for financial advisors to have a one-size-fits-all retirement plan for their entire client base. While each client’s financial situation is unique, the one aspect they all have in common without exception is that they need consistent income.

Trading can be a source of income requiring only a hour or so a week of your time, its simple and straightforward to trade from home (or beach villa!)


Source: Investopedia

What Kind Of Trader Are You?

trading charts

Four Types of Traders

There are only really four main types of traders.


Firstly, there are Scalpers. These guys (and girls) are in-and-out of the market in rapid timeframes; they are often going for less than 10 pips on a trade. It usually requires the ability to stare at monitors all day and repeat the same process religiously. In many cases, a lot of this style of trading is now part automated. At 10 pips a trade, a key concern for scalpers is cost-per-transaction.

Intraday Traders

Next up are the Intraday Traders, characterised by the fact that they seldom hold positions overnight. A normal trade for them is on the 15-minute to hourly charts, with somewhere in the region of 30 to 80 pip targets. They often use alert systems to highlight potential entries or warning signs for exits. These traders are looking for patterns, but will also be focused on more general market sentiment, and are likely to exit a position based on their ‘gut’ feeling for when the market is turning.

Swing Traders

Third are the Swing Traders. These are individuals looking to hold positions normally for a couple of days or more, and are therefore running much wider stops and profit targets of typically upward of 100 pips. They tend to be more focused on the daily and 4-hour charts and as always are looking for patterns, though they tend to be a little more rules-based than some intraday traders. A swing trader’s focus is on capturing large movements in the markets and parts of key trends.

Position Traders

Finally, Position Traders. These are the guys that will hold large positions for weeks at a time, sometimes technically based, but more often than not based on fundamental reasons. Due to the cost of carrying long-term trades, they are looking for hundreds of pips profits from their positions. Such a trader will also look carefully at carry trade potential.
Knowing these basic personal descriptions of the types of traders above and understanding your strengths and weaknesses should help you to understand where you ought to be focusing your energy.

A big issue for new traders is a lack of understanding about themselves. Often, they try to fit themselves to a strategy that isn’t right for them. Instead, they should embrace who they are and find a strategy that works around that.

Forex: Top Three Price Action Themes for This Week

What's moving the FX market?

The S&P 500 set another all-time-high on Friday and is still going strong, and the U.S. Dollar has driven down to another fresh ten-month low. But in a week with no high-impact U.S. drivers, what can traders look for to move FX markets this week and into next?

Source: DailyFX - Forex Market News

Monday, 17 July 2017

Top 4 Alternative Investments to the Stock Market

trading on iphone

Trying to avoid your broker? Here are our top alternative investments to the stock market to help you diversify your portfolio without stocks and bonds.

Most people think of investing as buying stocks and bonds. The more adventurous might think about a real estate investment trust (REIT). Also, some people consider buying stocks of mining companies or investing in a metals exchange-traded fund (ETF) as a way to invest in gold, silver, platinum and other metals.


Source: Investopedia

Bank of America, Goldman Sachs and eBay are expected to release their Q2 2017 earnings results

dollar symbol

Bank of America, Goldman Sachs and eBay are expected to release their Q2 2017 earnings results over the next couple of days. Bank of America (BAC) and Goldman Sachs (GS) are listed on the NYSE and eBay (EBAY) is listed on the NASDAQ. Goldman Sachs is a component of the Dow Jones Industrial Average while Bank of America, Goldman Sachs and eBay are all components of the S&P 500 index.
Release Dates & Analysts Forecasts

The expected release dates and Earnings Per Share (EPS) forecasts* are the following:
Bank of America: expected to release on July 18th - EPS forecast: $0.43.
Goldman Sachs: expected to release on July 18th - EPS forecast:  $3.51.
eBay: expected to release on July 20th - EPS forecast: $0.36.
*All EPS projections come from Zachs Investment Research and are based on the aggregated views and expectations of a number of analysts.

How to interpret the results
According to Investopedia, "when a company beats [the EPS] estimate it's called an earnings surprise and the stock usually moves higher. If a company releases earnings below these estimates it is said to disappoint and the price typically moves lower".

Saturday, 15 July 2017

How Vanguard Dominated the Mutual Fund Industry

Mutual Funds

One billion dollars per day. That’s the amount of money that has been flowing into Vanguard Funds since the election. The index fund giant says from 2013 through 2016 investors dropped $823 billion into its funds, more than 8.5 times the rest of the mutual fund industry, according to Morningstar, as reported by the New York Times.

With $4.2 trillion in assets under management, the mutual fund giant has surpassed its peers and done so in its quiet and fastidious manner. Just seven years ago, Vanguard had but $1 trillion under management and questions arose as to whether index investing, central to Vanguard’s investment philosophy, along with a low cost fund structure, was built to last. Those questions have been summarily dismissed as Vanguard’s competitors continue to look for ways to lower fees while delivering consistent returns.

Source: Investopedia

What is a Mutual Fund?

A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The primary advantages of mutual funds are that they provide a higher level of diversification, they provide liquidity, and they are managed by professional investors. On the negative side, investors in a mutual fund must pay various fees and expenses.

Friday, 14 July 2017

What Are Options And How Do I Trade Them

options trading

When we talk about finance, an option is a contract which gives the buyer or owner of the option the right, but not the obligation, to buy or sell an underlying asset or instrument at a specific strike price on a specified date, depending on the form of the option ie you don’t get to own the share, rather the contract to control them.

The strike price may be set by reference to the spot price (market price) of the underlying security on the day an option is taken out, or it may be fixed at a discount in a premium. The seller has the corresponding obligation to fulfil the transaction—to sell or buy—if the buyer (owner) "exercises" the option. In reality when we trade options the option is rarely exercised. An option that conveys to the owner the right to buy at a specific price is referred to as a call; an option that conveys the right of the owner to sell at a specific price is referred to as a put. This means we can make money when in a bull or bear market, ie when the stock price is going up or when the stock price is going down.

The seller may grant an option to a buyer as part of another transaction, such as a share issue or as part of an employee incentive scheme, otherwise a buyer would pay a premium to the seller for the option. A call option would normally be exercised only when the strike price is below the market value of the underlying asset, while a put option would normally be exercised only when the strike price is above the market value. When an option is exercised, the cost to the buyer of the asset acquired is the strike price plus the premium, if any.

Sign up for our FREE webinar on how to trade Options using a simple, highly profitable Squeeze strategy.

When the option expiration date passes without the option being exercised, then the option expires and the buyer would forfeit the premium to the seller. In any case, the premium is income to the seller, and normally a capital loss to the buyer. Of course all of this buying and selling happens via your broker, so make sure you have a good broker working on your side.

The owner of an option may on-sell the option to a another person or third party in a secondary market, in either an over-the-counter transaction or at an options exchange, depending on the option in question. The market price of an American-style option normally closely follows that of the underlying stock, to be expected, being the difference between the market price of the stock and the strike price of the option.

The actual market price of the option may vary depending on a number of factors however, such as a significant option holder may need to sell the option as the expiry date is approaching and does not have the financial resources to exercise the option, or possible a buyer is trying to amass a large option holding. Remember, the ownership of an option does not generally entitle the holder to any rights associated with the underlying asset, such as voting rights or any income from the underlying asset, such as dividends. As we said, it’s all about the contract.

The options we trade have an expiry date, usually the first Friday or third Friday in the month.

If you trade your options in a spread betting account the profits and CGT are tax free in the UK! If you live in the UK just read that again – Wow!

Want to learn more?

Sign up for our FREE webinar on how to trade Options using a simple, highly profitable Squeeze strategy.

Thursday, 13 July 2017

Top 5 India ETFs for 2017

Indian Flag

For investing exposure to Indian markets, explore these top 5 India exchange-traded funds (ETFs).

India exchange-traded funds (ETFs) are comprised of securities traded in India. This is an emerging market play, meaning it carries higher risk than more mature markets carry. (See also: The Risks Of Investing In Emerging Markets.)

India’s economy is growing, but is not entirely stable and could be subject to volatility. The higher risk can mean higher returns, as each of the ETFs on our list shows. We have selected India ETFs that have the highest year-to-date returns of all India ETFs.

An India ETF is not a buy-and-hold investment. You must consistently monitor not only each ETF’s performance, but also the condition of the economy in India. (See also: Citizens Scramble for Cash After India’s Currency Ban.)

What is an ETF?

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism designed to keep it trading close to its net asset value, although deviations can occasionally occur. Most ETFs track an index, such as a stock index or bond index.

Here are the top five India ETFs by year-to-date returns as of July 10, 2017. Read more...
Source: Investopedia

Tuesday, 11 July 2017

Meeting With Sean Allison - Options Trader & Trainer

Meeting With Sean Allison - Options Trader & Trainer

Sean Allison - Options Trader & Trainer

Had a great weekend at the Entrepreneurs Boot Camp 2017, met up with Sean Allison who's a really nice bloke from Down Under. Loved his take on Options Trading and some of the strategies that he shared.

One of those was the Squeeze, which was really brilliant, you should definitely give this a look. I managed to get Sean to make this available on his webinar, click here to reserve you seat.

Saturday, 8 July 2017

The Basics of Trading a Stock: Know Your Orders

stock market chart

Taking control of your portfolio means knowing what orders to use when buying or selling stocks.

With the growing importance of digital technology and the internet, many investors are opting to buy and sell stocks for themselves rather than pay advisers large commissions for research and advice.

However, before you can start buying and selling stocks, you must know the different types of orders and when they are appropriate. In this article, we'll cover the basic stock orders and how they complement your investing style. Read more...

Source: Investopedia

What are Stocks?

The stock (also capital stock) of a corporation is constituted of the equity stock of its owners. A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. In liquidation, the stock represents the residual assets of the company that would be due to stockholders after discharge of all senior claims such as secured and unsecured debt.

Stockholders' equity cannot be withdrawn from the company in a way that is intended to be detrimental to the company's creditors.

Thursday, 6 July 2017

Polybius: A Worthy Investment?

blockchain polybius

Polybius is one of the most exciting applications of blockchain technology, but is it worth investing in? Read more...

Source: Investopedia

Saturday, 1 July 2017

Money Habits of the Millennials

Millennials are facing the bleakest financial future of any generation in decades, and are not likely to enjoy the same standard of living as their parents did. Their spending and investing habits are guided by somewhat different factors than preceding generations.

Source: Investopedia