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Forex Trading Tips And Tutorial

Category: Stock Market Trading

The Benefits Of An Investment Club

An investment club consists of a small group of individual investors who come together and contribute to a mutual fund to learn and build confidence in order for them to make educated investment decisions. Investment clubs have been around for decades and have provided people with limited funds to take part in larger investments and to get first hand experience and education.
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The Importance Of Timing In Forex And The Stock Market

When we make money from the Forex we are looking for economic data which will influence the price of currencies. But when we are looking for good companies to invest in on the stock market we have been told to “Buy the blue chips.” “Blue chips” are the big,reliable companies, and obviously these are listed for the most part on the New York Stock Exchange.

The Dow Jones Average is composed of blue chips, and since there are only 30 listed, at the same time that the average has been going up, it might seem a simple matter to toss a coin to see which ones should be bought out of this list of 30.

But let us get down to specific cases: Standard Oil Company of New Jersey is one of the largest, best managed and generally soundest corporations in the United States. Its earnings per share in 1958 were $2.72, in 1959 $2.91 and in 1960 $3.18. From 1957 through 1960 its dividends have been $2.25 per share each year. From the middle of 1957 to the end of 1960 the price trend of this stock was down. It declined from almost 70 to a point below 40.

Another giant on the list of 30 Dow Jones stocks is the highly successful General Electric. From a high in early 1960 of nearly 100, GE plummeted to a level of close to 60 in the spring of 1961 because of the actions of the United States government in connection with price fixing by the corporation.

There is some merit to the classical approach to the valuation of a stock by analyzing the underlying strength and prospects of the company, but this is only * An example of a high yield tax free bond is the Chesapeake Bay Bridge and Tunnel Authority 5% bond. In 1961 this bond could be bought under 100 to yield almost 6% and this 6% is equal to 12% for a man whose top income is taxed at a rate of 50%.

one of the elements to look at. It, of course, should not be overlooked because in the long run, earnings per share will determine the price of a stock. The only question is, “How long?” While you are holding a sound company’s stock others may be moving up and you want to move up with them.

Determine the earnings trend of the company over the recent four or five years. It should be up in general, but stocks have moved up in price while earnings were declining.

Determine the position of the industry through reading the Wall Street Journal, the financial and business section of The New York Times, the Value Line Investment Survey, and the journals published by every industry and available in any library. The reason Standard Oil of New Jersey was not moving up more rapidly is due to the fact that the outlook for the petroleum industry was not as healthy as some of the other industries.

The most important piece of advice that can be given the investor in stock is that the price of a stock is the direct result of the forces which make the price of anything (stock, commodity or service) demand and supply. For a long time in the spring of 19611 thought GE was a good buy; that it might go up. I questioned a number of brokers and investment bankers about GE. There was a distinct lack of enthusiasm. Since these are the buyers and these are the people who recommend that customers buy the stock, it was evident to me that the demand was not there. It might change very quickly, but until it did I determined to buy other stocks.

It is important to emphasize this point once again: that the price of a stock is the direct result of how much of a stock is offered for sale and what the demand is. We will return later to this point with a striking example.

The next most important piece of advice is that you should buy a stock which is moving up, not one which might move up or one which is moving down and looks as though it might be a bargain. You cannot hope to buy at the bottom and sell at the top. If you try to buy at the bottom you have no assurance that the decline has stopped; and if you try to sell at the top you cannot be certain the rise will not continue. Buy just after a stock has demonstrated its willingness to rise for a few weeks, and sell after about two weeks of decline.

The most foolish piece of philosophizing that an investor can engage in is to say to himself, “I don’t need to worry about the declining trend in the price of my stock. It will come back.” Yes, it may, but when? And if you sold and simply held cash, you might for your cash get far more shares with which to ride the market up again. At the beginning of 1960 Shell Oil was well over 40. By the summer it was down close to 30, and by the spring of 1961 it was close to 45. The downtrend was clear and the uptrend was just as clear. A person could have sold early in the decline and bought early in the rise. My wife, being as good an analyst as I, if not a little better through”intuition,” hit the low point and advised buying at that point. A profit of 50% could have been realized in one year!

Next, follow the market and follow it every few days to determine trend. The closer you are to the market the better you are informed as to what to do. Do not worry about a decline of a few days or a sudden break in the market, no matter how sharp. Worry only about the trend of your stock and the trend of the market.

Use the stop loss order to protect yourself against losses and to provide you with peace of mind. When you purchase stock after careful study and consideration, you may not want to put in an immediate stop loss order which is an order to sell if the stock reaches a particular price below the present market. In the past I have placed stop loss orders, when I bought stock, at about two points under my purchase price. If I bought a stock at 501 put in a stop loss order at 48. Very often the stock went down to 48 and I was sold out. I lost both in the price of the stock and in the commission and tax I had to pay when I bought and when I sold.

Then I had the unhappy experience of seeing my stock rise above 50 and keep on rising. If an investor followed the rule of placing a stop loss order a few points under the purchase price, he could hardly ever purchase a stock that jumps around like O’okiep Copper.

This stock jumps up and down two points during one trading session.

If a stock goes up say 10 points, you may place a stop loss order three or four points under the market. This still prevents a loss and you have already made a good profit in the stock. The strict trailing stop loss order may hurt you not only by getting you out of a rising stock on a minor decline, but the use of trailing stop loss orders by the general investing public damages the market. A slight drop in price of a stock can touch off a series of stop loss orders which lower the price of the stock needlessly.

The major value of having a stock market is the provision of a place in which to buy and a place in which to sell with little delay and at a price which can to a great extent be known in advance. For this reason stocks listed on the New York Stock Exchange and on the American Stock Exchange offer a great advantage to the investor. He knows where he stands by looking at the daily paper, and he has liquidity. He can get his money out of the stock in a matter of minutes.

With the Forex our money is just as liquid and we stand to make more money in a shorter space of time, and we can put a stop loss to protect our position.

Good software will help us predict future price movements in currencies and help us time our purchases and sales of currencies for maximum profit.

Forex Market Vs. Stock Market Which Is Right For You?

You have probably traded stocks before, but have you ever traded currencies? Currency trading goes back thousands of years and was the first market used by nations, traders and merchants to facilitate the open market process. The trading of national currencies has its own market called the Forex, which is an abbreviation for The Foreign Currency Exchange Market. The Forex Market allows individuals, companies, banks, governments and nations to take advantage of currency fluctuations in the world market to profit from judging the correct direction a currency moves against another currency. Currencies are traded as currency pairs.

The Stock Market:

The stock market has been one of the more traditional ways to make a profit from an investment. You often hear how the stock market can make a person more money from an investment than just about any other market. While you can make double digit profits from the stock market, and it usually produces more of a return than CDs or bonds, it is not always the easiest market to participate in. With tens of thousands of companies to choose from when investing, it can be downright daunting. Of course you can stick with mutual funds or index funds and make low double digit gains; it is still difficult to perfect a system that can make more than 10 to 15% on a yearly basis. The stock market can be complicated to say the least. Not only do you have to really do your homework, but you never know when a company will decide to go bankrupt or fold altogether. Penny stocks are notorious for losing people money. The large cap stocks are decidedly better, but we all know what happens when a rogue CEO gets in troublethe companys stock tanks. There is a lot of risk and uncertainty when trying to play individual stocks while going for 20 to 30% gains in short periods of time.

The Forex Market:

The Forex Market is a lot simpler and tame compared to the stock market. However, it can take more self education than the stock market since there arent as many TV and radio shows dedicated to Forex or FX Trading. Since the Forex Market is an over the counter (OTC) market, by definition it is an open, worldwide market with no central trading floor. If it were a market that had one central trading floor, it would be unable to be open 24 hours a day for traders. By definition and not by obligation, the Forex Market is open to everyone and it is open 24 hours a day, five days a week.

Forex Trading takes place with currency pairs, which are two currencies that are traded in relation to each other. Some currency pairs are more popular than others, so the need to learn all of them, and there arent that many, is not absolutely necessary. The key to trading Forex Markets is to develop a good strategy and stick to it. When you get to know a currency pair and your research points you to a certain position that you feel will make you a profit, you can then work that position all day and night if you wish. This allows for potentially much greater profits than you can find in the stock market. If you enjoy doing your own research and not simply following what everyone else does, then the Forex Market may be the perfect investment tool for you.

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Why Forex Is A Better Investment Idea Than Stocks or Commodities

Forex, the Foreign Exchange Market, is a worldwide market for buying and selling foreign currencies. The major currencies that are traded include the U.S. Dollar (USD), Euro (EUR), British Pound (GBP), Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and the Swiss Franc (CHF). The purpose of this article is not to go into the details of how Forex works, but to compare the benefits of trading in the Forex market versus trading the Equity (American stocks) or Futures markets (Commodities).

The Forex market is the largest market in the world with over 2 trillion dollars traded every day. This compares to the 200 billion dollars traded daily in the Equity and Futures market each. Because of this, the Forex market benefits from fairer prices, price stability, and better trade execution.

Forex has the advantage of being open 24 hours a day. The Forex market opens on Sunday afternoon and remains open until it closes on Friday afternoon. The Equity and Futures markets are only open Monday through Friday 8:30 a.m. to 5:00 p.m. Eastern Standard Time. This gives Forex traders the opportunity to trade around their personal schedule. Also, liquidity in the Equity and Futures markets are reduced after regular trading hours.

When trading Forex, you will not incur the commissions or transaction fees that exist in the Equity and Futures markets. You pay a spread on the currency pair you are trading and costs are very low, especially when compared to the other markets.

Investment leverage in the Forex market can be as high as a 200:1 margin. In the Equity and Futures markets your average margin is 4:1. This means that you can control $10,000 worth of currency with only a 50-dollar margin.

In the Equity and Futures markets, investors are expected to fund several thousand dollars to open a trading account. In the Forex market, you can open a mini account for only 300 dollars and begin trading.

In the Equity market, short selling is very risky and comes with limitations. In the Forex market, you are able to buy long or sell short any currency pair with no limitations or difference in risk.

As an investor in the Forex market, you are able to concentrate on only a few major currencies. There are seven major currencies yielding four major currency pairs that most Forex investors concentrate on. Whereas in the Equity market, investors have over 40,000 stocks to choose from when contemplating where to invest their money.

There are many factors to consider when deciding on which market you want to spend your time and money. The Forex market provides many benefits over the other major investment markets that will allow you, the investor, to make larger profits, take less risk, and spend more time with your personal life and less time investing.

The Definition of Investment: Piggy Banks, Coffee Cans, Stocks and Bonds

Investments can take two basic forms. First, an investment can be the purchase of goods, supplies, tools, or equipment to use in the production of increasing profits. For example, a businessperson who produces shoes may purchase a machine that automatically stitches leather in the hopes that the time saved will allow for the production of more shoes and increased sales.
The second basic form an investment can take is what most of us think of when we say we are investing our money. That is, we use the money we have for the specific purpose of making more money from it.
There are several different ways of investing money in the hopes of gaining a profit. Stocks and bonds, exchanging currencies in the Forex market, annuities, certificates of deposit, mutual funds, buying real estate to sell at a profit later (Flip That House!), IRAs, even simple savings accounts, are all methods of investing. Even loaning your brother-in-law a few bucks (at a reasonable interest rate) to start a business is an investment.
Generally speaking, the riskier the venture is, the more opportunity there is to make a higher profit; the less risky, the lower the proceeds. The FDIC guarantees savings accounts and therefore, putting your money in a savings account with the idea that you will get a fantastic return on your money is not very realistic.
A savings account has little to no risk whatsoever; therefore, the return on investment is weak. Of course, its always a good idea to have liquid assets, and a savings account is one way to do so. Most middle-class Americans should have enough in their regular savings account to tide them over in the event of an emergency or job loss.
*Quiz: Does putting your money in a coffee can and burying it in the backyard qualify as an investment? (see answer at end of article)
Purchasing stock in a company makes you part owner of that company. The two ways to make money from owning stock are to secure dividends and/or sell the stock for a higher price than what you paid for it. Sounds simple, right? Well, the basic concept is quite simple; its the day-to-day reality of the stock market that makes this type of investment a bit more complicated. There is no guarantee whatsoever that the stock you choose will make a profit. In fact, you can easily lose your entire investment. The potential for a tremendous profit exists, however, if the stock (company) hits the big time.
**Quiz: Which is riskier? Loaning money to your brother-in-law or buying stocks by closing your eyes and pointing? (see answer at end of article)
When you are deciding how to invest your money, the two major considerations are how much of a return on your investment you want to see and how much risk you are comfortable with. Once those two questions are answered, it is time for you to seek out an investment professional and start making yourself some money.
No, sorry Jed Clampett. The coffee can qualifies as hiding or saving, but not investing.
** It depends on your sisters taste in men.

Why Forex Is A Better Investment Idea Than Stocks or Commodities

Forex, the Foreign Exchange Market, is a worldwide market for buying and selling foreign currencies. The major currencies that are traded include the U.S. Dollar (USD), Euro (EUR), British Pound (GBP), Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and the Swiss Franc (CHF). The purpose of this article is not to go into the details of how Forex works, but to compare the benefits of trading in the Forex market versus trading the Equity (American stocks) or Futures markets (Commodities).
The Forex market is the largest market in the world with over 2 trillion dollars traded every day. This compares to the 200 billion dollars traded daily in the Equity and Futures market each. Because of this, the Forex market benefits from fairer prices, price stability, and better trade execution.
Forex has the advantage of being open 24 hours a day. The Forex market opens on Sunday afternoon and remains open until it closes on Friday afternoon. The Equity and Futures markets are only open Monday through Friday 8:30 a.m. to 5:00 p.m. Eastern Standard Time. This gives Forex traders the opportunity to trade around their personal schedule. Also, liquidity in the Equity and Futures markets are reduced after regular trading hours.
When trading Forex, you will not incur the commissions or transaction fees that exist in the Equity and Futures markets. You pay a spread on the currency pair you are trading and costs are very low, especially when compared to the other markets.
Investment leverage in the Forex market can be as high as a 200:1 margin. In the Equity and Futures markets your average margin is 4:1. This means that you can control $10,000 worth of currency with only a 50-dollar margin.
In the Equity and Futures markets, investors are expected to fund several thousand dollars to open a trading account. In the Forex market, you can open a mini account for only 300 dollars and begin trading.
In the Equity market, short selling is very risky and comes with limitations. In the Forex market, you are able to buy long or sell short any currency pair with no limitations or difference in risk.
As an investor in the Forex market, you are able to concentrate on only a few major currencies. There are seven major currencies yielding four major currency pairs that most Forex investors concentrate on. Whereas in the Equity market, investors have over 40,000 stocks to choose from when contemplating where to invest their money.
There are many factors to consider when deciding on which market you want to spend your time and money. The Forex market provides many benefits over the other major investment markets that will allow you, the investor, to make larger profits, take less risk, and spend more time with your personal life and less time investing.

Important Points To Know About Stock Market Trading

A type оf chart trading iѕ thе line chart. A single line iѕ drawn frоm a point close tо thе following. Thе line will reveal thе price movement оf thе currency. Anоthеr type оf chart iѕ thе candlestick chart. Thе candlestick chart iѕ a visual demonstration with rectangular boxes thаt show thе difference in prices bеtwееn thе opening аnd closing. Thе box саn bе colored tо reveal hоw thе price tainted.

Bar charts аrе аnоthеr favorite with traders, a bar graph showing thе price оf opening аnd closing оf a coin аt a time. Thе underside оf thе bar refers tо thе lowest price аnd thе top represents thе highest price. Thе line gоеѕ uр аnd dоwn reveals thе price movement until it reaches thе closing price.

If уоu care аbоut thе price movement, thеѕе graphics will work fine fоr you. Thеѕе letters hаvе bееn considered аѕ раrt оf technical analysis iѕ carried оut bу mаnу operators. If уоu аrе interested in hоw economic factors affect thе price, it wоuld bе mоrе comfortable with fundamental analysis.

Thе decision оf hоw tо interpret thе data mау ѕееm complicated but iѕ nоt аѕ bad аѕ it seems. Whу dо nоt people juѕt uѕе thе basic method tо evaluate thе markets? Thе stock market trading iѕ ѕо complex thаt уоu hаvе tо uѕе both. At lеаѕt уоu will hаvе аn advantage if уоu knоw hоw tо switch back аnd fоrth аnd uѕе both. Thе key tо perceptive iѕ tо apprehend thаt thеrе аrе capricious factors perceptibly.

If уоu understand thаt уоu саn nоt predict, thеn уоu will bе аblе tо predict сhаngеѕ in thе market. Sound likе madness? Pеrhарѕ it iѕ a bit. Forex exchange markets bесаuѕе people аrе involved in thе process, however, уоu саn ѕtill analyze thе information аnd find сеrtаin trends. Thе ability tо distinguish bеtwееn еасh type оf analysis iѕ hоw уоu will bе аblе tо make a profit.

Understanding thе chaos оf thе system саn hеlр уоu find thе order. Then, оnе саn predict market trends аnd profit frоm thеm аt уоur convenience. Thе fact оf thе matter iѕ thаt Global Forex Trading саn bе аn easy wау fоr beginners аnd professional forex traders tо make money online. Whаt iѕ appealing аbоut thiѕ opportunity tо exchange аnd trade in thе forex market iѕ leverage. In thе currency market саn bе controlled 20, 50 оr еvеn 100 timеѕ thеir initial investment. Thiѕ саn givе уоu thе opportunity tо make lots оf money frоm a vеrу small investment. Thе rеаѕоn fоr thе global currency market еvеn exists iѕ tо promote investment in international trade.

Thе online stock traders аrе thе global currency markets thеir ability tо сhаngе еvеn thоugh ѕоmеtimеѕ erratically. Forex traders аnd investors uѕе thеѕе trend lines in аn attempt tо judge whаt direction thе currency iѕ moving up, dоwn оr sideways. Thе foreign exchange market аѕ mоѕt commercial markets iѕ highly speculative аnd ѕhоuld bе understood thаt thеrе аrе сеrtаin risks involved. Thiѕ iѕ whу it iѕ crucial tо learn hоw tо trade Forex оr аt lеаѕt uѕе оnе оf thе robots auto pilot tested forex trading аѕ a tool tо help, bесаuѕе оf thе possibility оf making large sums оf money аnd аlѕо thе possibility оf losing large sums оf money.