Sunday, September 30, 2007

Diversify, Diversify, Diversify

Diversification, even in trading, is very important for risk reduction. Since you aren't going to be correct in every trade you make, diversification is necessary and important as a means to risk reduction and capital preservation.

The simple fact is this: if you put all your trading capital in one or a very limited number of stocks, you are just asking for trouble and increasing the risk you are exposing your money to. At some point, if you trade long enough, you will undergo owning a stock that drops like a rock for one reason or another. Most people who have traded for any length of time have been there, and it's no fun at all. Avoiding putting all of your eggs in one basket is the first step in limiting risk when it comes to both investing and trading.

It is important to avoid investing too much in a position. There is an old story on Wall Street where one trader asks another trader for advice. He says, "I've bought so much of this stock that I can't get any sleep at night... what should I do?" His friend says, "Reduce your position in the stock down to the sleeping point. This is not only very good advice, but very true. The smart trader takes up no position in such large quantities that it makes him overly nervous or subjects him to loss of sleep.

Trade at levels which you can afford, and you will generally feel much more comfortable in your trading. This will generally result in much clearer thinking and smarter decisions on your part. Too much risk will result in too much fear, and that will cloud your thinking and judgment.

Trade stocks that you know. Part of being confident about a position you take up relates to having some understanding of the company behind the stock. Clearly it is impossible to know every little detail about the day-to-day operation of every business you buy stock in. However, it does help if you have a basic understanding of the type of business they are in and how news (positive or negative) may relate to and/or impact a company and their stock. This will not only help you feel more comfortable about the position you take up, but it will allow you to more quickly evaluate news which may be released regarding the company.

Trade stocks you know or that are in areas you may have experience in. Warren Buffett is a good example of this philosophy. He has no problem telling share holders in his investment companies that he doesn't understand much about technology related companies and therefore steers clear of buying such stocks. Sticking to what you know is not only a good way to start out investing and trading stocks, but it can help you feel more confident and make better decisions along the way.

Another approach is to trade popular/liquid stocks. Stocks that are "popular" with the public and investment community have a very real benefit to your trading. Specifically, they tend to be very liquid. Liquidity is a measure of how much volume changes hands on a specific stock (typically on a daily basis). The more liquid the stock is (i.e. the more shares it trades) the more likely you'll get a fair price when buying or selling the stock. Also, the more likely it is that there will be a market to buy from or sell into.

Trading stocks which have very low volume (typically under 100,000 shares per day) can incur additional costs and can limit your ability to get in and out quickly when so desired. Often times if you try to buy or sell a large block of stock, there simply won't be a market at current prices. This can result in the market "stepping away" from you when you go to sell. Worse yet, you can drive the price up on yourself. While there are times when buying a little known stock may work out, for most of your trading, you should strongly consider sticking to actively traded stocks. This is true of options trading as well (i.e. stick to options on stocks which trade higher volume).

Trade stocks that are making money. The stock market is based largely on economics and business (with some emotion and perception thrown in). As a result, I personally feel it's a good idea to trade stocks on companies which are currently showing a profit, as opposed to companies which "might show a profit someday". Great ideas are a dime a dozen, as they say, and you don't have to look far on Wall Street to find stock in companies that are using other peoples' money to test out their "great" idea. In my personal opinion, I would much rather be trading stocks in companies that are currently profitable.

Additionally, keep in mind that even companies that are "making money" on the top line may not be "profitable" from a net (bottom line) profit standpoint. There are many companies out there that have racked up a tremendous amount of debt and/or have business models that, while they bring in quite a bit of cash, are unable to actually show a profit at the end of the year. Generally speaking, stocks which are currently showing a profit or are very close and very likely to show a profit in the near term, trade better and are somewhat less risky than stocks which are either in the red or struggling to show profits on their financial statements.

Part of this is because valuations are much easier to calculate from real earnings (i.e. using the company's P/E ratio) than trying to base valuations on "what might happen" down the road. True, sometimes stocks trade more actively or more wildly on news of potential profits, but at the same time, when a company announces they may not meet analysts' expectations or may experience an earnings short fall, it can get quite dangerous. Consider sticking to companies with tangible, consistent earnings when doing your trading as a further means to risk reduction.

Finally, avoid buying the Big Event. This idea tends to go hand in hand with the ideas presented above (regarding trading companies that actually are able to show a profit). In the stock market, there is always "some big event" that might take place for a company or the market. Buying or selling based on the possibility that this event may take place (or may not take place) or based on the how the market might react to such an event tends to turn your trading into a gamble more than anything else - and this is very risky.

Buying a stock ahead of what might be a "big event" can be quite risky and often times tends to delay your trading. Very often these big events (such as mergers, buyouts, etc.) get delayed for months and months. If you wish to hold a stock for weeks and weeks or months and months waiting for some big news flash, then that's perfectly okay. However, just keep in mind that generally stocks move up on news far before the average individual hears about even the rumor of the news. As a result, you often see stocks trade down on positive news (due to the fact that the news was already anticipated long in advance and largely priced into the stock prior to the release of the actual news). Generally speaking, buying the big event will tend to be not only risky, but also will tend to slow down and stagnate your trading. Avoid them when possible.

Good luck in the markets!

No permission is needed to reproduce an unedited copy of this article as long the About The Author tag is left in tact and hot links included.

Ray Johns is the founder and Senior Market Editor of, Proudly serving day traders & short-term investors since 1996, at is the publishers of the award winning Morning Stock Market Report and the home of the Internets finest real time trading desk. Ray has been on the forefront of trading and investing in the markets and has appeared as a guest on a number of radio and television shows including CNBCs Market Talk. If you would like a free trail of the newsletter and the live trading desk log on to Comments and questions can be sent to

Series 27

Financial and operations positions at an NASD firm usually require the Series 27 license. There are several areas and departments of a brokerage firm. People looking to become brokers will usually need to take the series 6 or series 7. Supervisors of brokers or sales people may need the series 24.

The Series 27 is an exam that covers topics consistent with working as a compliance officer or in another financial operations department. The exam is 145 questions and multiple choice. Like the other NASD tests, the Series 27 can be taken any day of the week at Prometric testing centers. You must register through your brokerage firm prior to arranging a test date. Once you are registered, a 120 day testing window is opened. You can take the Series 27 at any time during that 120 day period. If you fail the exam, you must wait 30 days before sitting for the test again. If you fail the Series 27 three times, you must wait 6 months.

Most of the exam covers rules, regulations and operations of an NASD firm.

Test Breakdown

The Series 27 covers several main topic areas, they include:

Balance sheet and net capital.

This section will cover computing a firm's net capital, understanding the rules and minimums of keeping minimum net capital, and understanding the balance sheet. It will also test the candidate on the effects of loans and securities on net capital and its effect on the balance sheet. This is the area that covers the most math on the test.


This area of the Series 27 includes purchases and sales of securities, transfer of securities, customer settlements and confirmations, and other items that require record keeping and reporting.

Customer Protection and Notification

This section of the exam will test you on notifications, delivery of securities, and activities in the accounts of the firm's customers.

Margin Accounts

A fairly large section of the Series 27 deals with lending of money and securities in margin accounts. The margin section will cover market values, equity, debit balance, SMA, hypothecation and the markets effect on margin accounts. There is some math in this section. You need to know basic calculation and the rules associated with margin accounts. Federal Reserve Board and NYSE margin rules are covered in this section.


The organization that oversees the municipal industry is known as the MSRB - Municipal Securities Rulemaking Board. Brokerage firms that sell municipal securities must abide by the MSRB. Students studying the Series 27 must be familiar with the rules and regulation that are covered by the MSRB.

Other areas include rules and securities acts.

Series 27 Career

If you are looking to break into the financial operations area of NASD firms, the Series 27 can be a big plus. If you are in between jobs or firms and do not currently hold the Series 27 license, you might want to consider studying for it and begin adding your process on your resume. Doing this can give you an advantage over other candidates not familiar with the exam. These are salary positions, which is the good part. Most jobs at brokerage firms (that are non-support jobs) are commission - or largely based on commission. The bad part is that firms do not hire groups of people for their compliance department. You need to keep a look-out for these openings. Most firms only need one compliance officer.

Good luck in your career!

Nick Hunter is the President of American Investment Training They offer home study courses for all NASD exams, including the Series 27.

A Modern Economist's Bartering System

Forex or foreign exchange is a growing industry in the economic market. Currencies are traded for another, thus making the foreign exchange market the largest in terms of cash. Because of trading between one bank to another, not to mention the trading between multinational corporations and government, between financial markets and institutions, cash is abundant and easily flows in foreign exchange trading.

Due to its various trading components (since there are a lot of foreign currencies in the international market over-all), the liquidity or easy cash flow of the market, huge bulk of traders and a 24-7 service transaction, the foreign exchange market is unique and is here to stay in the competitive world of business.

The foreign exchange market is not unified. There is no single dollar rate. Dollar rate varies from one country to another, this is due to the over-the-counter or OTC transactions that is practiced in most forex industries. There maybe different prices to a dollar, which is dependent on the bank, but generally, the rates are pretty much close.

The trading centers in Tokyo, New York and London are the centers of foreign exchange trading. However, all are interconnected. Tokyo may be the center for the Asian market, New York for the US and London for Europe but notice the chain of one to the other two. For example, the US session ends, then the Europe session begins followed by the Asian. It is a cycle and a change from one capital can affect the other two.

Foreign exchange can be considered as the modern economists barter exchange. A currency of one economy can be traded to another. The most heavily traded currencies are that of:

- the US dollar to the Euro
- the US dollar to the Japanese Yen
When the Euro became the official currency of the 12 of the 15 then members of the European Union, it was pitted against the dollar. The Euro enjoyed periods of ups and downs in comparison to the American dollar. As of most recent news, the dollar declined to a low as opposed to the Euro despite of the decline in the American deficit. The fact that well-established and developed countries have one currency as their official fiscal trading component, the Euro gets stronger than ever in the economic aspect.

Its not only the three forex capitals that play a part in foreign exchange trading. Markets of other economies are free to join. In fact, even their banks have a role to play in the big economic picture. Commercial turn overs and large trading are catered by international banks on a daily basis. Some of these banks trade their currencies for dollars.

Commercial companies also sought the assistance of the forex market to pay for the obtained goods and rendered services. Commercial companies may have smaller amounts of currency transactions as opposed to banks, but these trades and exchanges among commercial companies are still necessary for the trading market. For example, a multinational company that is based on various locations through out the world may have an impact in the economic picture as a whole when it stops participating in the trading market. This is the another example of the mentioned scenario: that one capital session can affect the other two, so does one multinational company in any location can affect the forex trading as a whole.

Another example proving that countries are interconnected. One economys gold is another economys gain as well.

For more information and tips about forex trading. Visit us at

Stock Chart Reading

As an investor you will want to check out any equity before you buy it. Many investors go to Morningstar which is one of the largest providers of mutual fund information in the world. It is assumed that their information is correct. After all that is what you are paying for.

Recently the SEC (Securities and Exchange Commission) called them on the carpet for not correcting an error within a reasonable time (whatever that is according to the SEC). Everyone makes errors and this was no big deal.

It seems that when you went to their site and drew up a chart or asked for statistics on Rock Canyon Top Flight mutual fund it failed to notify the potential buyer that the fund had issued a very large dividend of approximately 25% and the NAV (Net Asset Value) dropped from $15 to $11 to reflect the $4.00 dividend.

When you ask for a chart of this fund on MarketWatch, Yahoo, TheStreet or Bloomberg they only post the NAV and do not make any adjustment for the dividend or capital gains distributions. Looking at the chart it appears the fund fell out of bed. Because I look at so many charts I knew immediately that this was a distribution and not some calamity. It is best to call the fund to verify this.

Most funds that make dividend and capital gains distributions usually do so in December, some in November and very few at other times during the year.

Some nitpicker called the SEC and made a complaint about Morningstar. Not that I am a big fan of them (in fact I think their reports are worthless) they get their price information from other sources such as the above. If you are not familiar with the requirement of mutual funds to disburse their profit before year end you might be fooled when you see the price suddenly drop.

This is important for potential investors. I caution everyone to get a chart on the Internet of at least a one year performance of any mutual fund before buying. It is better to go back to year 2000 to see if the fund manager was able to keep from losing money during the last 4 years. Almost none of them could so they bamboozle about how they did better than the S&P500 Index which had a huge loss of 50% and remains down 25% from those highs at this time. Dont fall for that one.

Once again I caution that any purchase should have an exit plan. One of the basic rules of investing is never to lose a lot if you are wrong. Small losses will not ruin your portfolio, but big losses can ruin your retirement. Set your loss limit (5%, 10% or ?) and stick with it.

Charts can help you with buying/selling decisions, but check out their accuracy as charting is not an exact science.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at and discover why he's the man that Wall Street does not want you to know.

Saifun -- Is It The Little Flash Company That Could?


Do you think the market for smart phones, digital audio (MP3) players, consumer solid state drives (SSDs), portable media players, digital video cameras, GPS devices, multimedia and music handsets, memory cards and USB flash drives are growing? All these products provided a disruptive position taking away market share from their predecessors.

One market segment that could see even stronger growth than these separate products we mentioned, and include other growth products, is the flash memory market. Flash is a root component used in all the above products and more.

Based on history we are forecasting that flash is the memory medium of choice for a plethora of devices in the consumer electronics in wireless devices and that flash will grow faster than the wireless devise market. It appears that in the past, memory for computing devices has grown faster than the device that utilizes the memory. Memory of the Personal Computer (PC) and the Internet has grown faster than their supporting platform. With the PC creating tremendous growth and history as our guide the demand for both memory and disc drives for the personal computer was often the impetus of many upgrade cycles. The Internet with the many millions of new web pages created a tremendous growth in storage. Ive seen in many reports that forecasted storage of the internet has been one of the fastest growing subsets of the internet as a whole.

With a decrease in price per gigabyte (GB) of more than 80 percent over the past three years and with the high growth in wireless data the need for new and addition memory could exceed the growth of the hardware device market that uses flash for its memory. The current market in flash memory is about $25 billion annually and its forecast is about 40 billion by 2010.

With each new product cycle the advantages of flash have become more disruptive allowing it to become about 30-40% cheaper every year. Many experts are forecasting this disruptive curve to replace the disc drive market for PCs. Flash has already replaced hard drives in most MP3 players.

Currently the flash memory is designed to support two types of flash memory. One type of memory supports your machines internal usage or operating system, the other type is for more external storage needs. The internal memory often uses the architecture of NOR, which has been established for years and Intel (NASDAQ:INTC) considered by many as the market leader. The NOR technology is a more complex technology and is starting to see the market mature.

Often you will find both NOR and NAND in the same mobile device.

The much faster growing market is for external memory market needs or NAND and the one of the leaders is SanDisk. SanDisk Corp. (NASDAQ: SNDK), founded and managed by president and CEO Dr. Eli Harari. SanDisk and Toshiba jointly launched the multi-level cell (MLC). This technology made it possible to divide the cell and store two bits of data on the same piece of silicon (x2, as it were), which significantly improved the profitability of manufacturers and fabs, basically doubling the price performance curve.

This process has become the leader and allowed NAND MLC to become disruptive to the predecessor NOR architecture and in 18 months penetration has been so great that MLC is becoming dominate force in flash.

We believe that this new curve of double captivity on a single cell technology will become the single most important factor for next generation flash memory, and it will become essential as flash is staring to see possible limits in the reduction of its die size as many experts are starting their forecasting. If flash is going to continue on its curve of lowering the price of a gigabyte by 80% over the next three years, it is my opinion they will need an architecture thats designed specifically to establish this goal. There is a proprietary NROM architecture that has many advantages toward increasing capacity of bits per cell. The NROM is close to production of 4 bits of memory in each cell or quad flash.

The company we believe has a unique position and leads the NROM approach in the flash memory market is an Israeli based company called Saifun (NASDAQ:SFUN).

Saifun is an intellectual properties company which its revenues come in three forms: licenses, royalties and support. This type of model has been very successes for our model portfolios in the past. The three previous companies that had core business from intellectual property we investment into our portfolios were Qualcomm (NASDAQ:QCOM) in1997 at 3.31 per share and still holds a position. Arm Holdings (NASDAQ:ARMHY) in 9/29/1999 @ 9.60 and holds half a position and Rambus (NASDAQ:RMBS) in 1998 which appreciated about 350% in 2000 and we sold the position in the model portfolio when Intel stopped supporting the Rambus architecture late and 2000 and in 2001.

Even though it is very early is Saifun publicly traded history we are excited by its new form of flash memory architecture, it appears that Saifuns approach has many advantages over the more established NAND and especially NOR. The single most important part is their technology curve. They have the ability to double the bits per cell allowing for a second compounding curve. The other architecture they are working hard on is to shrink their size and increase density, but we believe that Saifun with its simpler model should achieve a smaller die than the others but the real advantages with Saifun is the ability to allow 4 bits of memory in every piece of silicon (x4). Doubling again the events of MLC while at the same time reducing their size thus possibly leading the new flash architecture. Another advantage is NROMs ability to work both as an operating system and memory component being able to supply both markets that individually NOR and/or NAND has target.

A second company has just announced that in 2007 they will start producing a 4 bit cell in NAND. The company making this announcement is M-Systems (NASDAQ: FLSH). They claim they will have a product on the market some time in 2007. Even though they have achieved this tremendous breakthrough we believe that because they use the whole cell instead of a fraction of the cell for this doubling process, the whole cells ability to double again may become geometrically tougher. On the last review M-Systems has not explained their business model to (make at own fabs or licenses) and delayed the secondary offering.

It is has been our opinion that companies that form successful royalty models resemble gutters and the fab companies have the appearance like shingles when looking at a roof. When it rains the gutter can create a stronger stream receiving income and achieve a much higher level of profitability. The delay of M-Systems secondary offing might reduce the chance of more fab developments.

Either way this looks like a marathon race and since this is such a very large market it will be about a $40 billion market when quad flash is widely available, that means that any of the top three or four should benefit.

Saifun already competes extremely well with NOR but early 2007 when it doubles the number of bits from 2 bits to 4 per cell it should be able to show advantages over MCL NAND currently the price performance leader. Saifun has a chance of repeating the same step that, in our opinion, allowed SanDisk to lead the last cycle.

There are many new technologies looking to replace flash but at this point there are a few that are close to achieving mainstream volumes. You should know the Saifun technology hibernated for about twenty years. This is very common, the Internet incubated for about 30 years and electricity for 100 years. New technologies often hibernate longer than people anticipate, and then it seems that they often almost explode onto the seen very quickly.

Even though Saifuns approach is about 20 years old, the technology they have just started to achieve is commercial feasibility.

The true advantage is since they only use points in the cell versus in the more convention approach such as NOR or NAND that uses the whole cell. This simpler usage allows for higher data retention and also provides a faster response time, and hopefully more density, and less power.

This is a tremendous advantage having 4 times the bits in competitive cells. Saifun also believe future that future cells could expand to possible to 8 or even 16 bits per silicon.

Possible risk

Saifun only has a handful of clients, if they loose Infineon Technologies (NYSE:IFX) Saifun largest client, they would impact their business tremendously. On a side note, it looks like it will pick up UMC out of Taiwan.

Saifun has basically signed many very large vendors like Sony (NYSE:sne) and Spansion (NASDAQ:SPSN) a spin off Advanced Micro Devices (NYSE:AMD) / Fujitsu (pink sheets) these based solely on the flash market are small in the market, since the production volume is small this could make it harder to be designed into leading volume products.

Even though we believe NROM offers a simpler cell structure with several layers, we believe it will be easy over time to reduce or migrate to a smaller form factor, but this has not been completed in high volume production. If and/or until they can compete in a smaller form factor this company will be, based on unit size, be at a significant disadvantage. Experts believe in 2007 this disadvantage should be at most minimal and Saifun believes in late cycles this will be come a true advantage.

To summarize

1) If Saifun continues to lead the flash market with more bits per cell with NROM flash architecture.

2) If Saifun if achieves the forecasting of smaller die than comparable flash.

If Saifun achieve either of these goals it could become an architecture leader in the flash memory market. If they are able to achieve both they would attain a real architecture leadership position.

According to several of our monopoly theories, available at the stock market value of the companies that lead architecture often grow faster than all the combined companies stock market values that utilize the architecture.

Thus, if Saifun become the dominant architecture with the smallest die size in my opinion it will probably attain the leading stock market value in the flash memory market.

Randy Durig manages the several Portfolios including the Monopoly Technology Portfolio to see the full list go to and

Durigs Monopoly Blue Chip Portfolio National Performance Rankings: 3rd In the United States, Ranked by 3 year annual return, for Large Capitalization Blend, 4th Quarter 2005, By Money Manager Review.

Randy Durig owns Saifun in discretionary client's portfolios and in his own account. Past performance is not a guarantee for future returns. All information we believe to be correct but make no guarantee to accuracy.

Randy recommend for open source investment news to read or publishing articles go to

Enrollment Of Beginners In Forex

Foreign exchange market becomes new market for the people who are engaged in the activity of foreign exchange. Generally, large number of people enters the foreign exchange market at their interest and particularly more number of beginners investors finds it difficult to enter the market. Foreign exchange market is a peculiar market, where more innovative things happen daily. When a person enters the forex trading, he is required to understand the various terms, procedures and other strategies required for trading. Forex trading is offered as per the customer requirement and to facilitate the investors, new innovations are been found out. Even online forex trading has been offered to the investors and the investors can also make their foreign exchange through online forex trading.

There are many forex trading companies which online forex trading to their customers. Using more courses and books offered related to forex trading should be used by the beginner investors, so that he can take part in forex trading efficiently and effectively. There are more useful tips, guides are available for the beginner of the foreign exchange and they found to be more useful to the investors. Generally for any forex trading investors, the beginner investor should be more careful and should make it more successful and complicated. Since, forex trading is the long term investment and involves unique steps, more knowledge and experience is required for the investors to be competent.

* The amount fixed for the foreign exchange usually differs and fluctuation can always be found out.

* The investor should be known that foreign exchange market is irregular market and they lay out certain set of procedures. The investor should undergo certain functions in foreign exchange.

* He should be known that foreign exchange market involves lot of risk. Particularly, trading foreign exchange currency comes up with more risky currency trading. So, the beginner investors finds difficult and they are afraid of investing in the foreign exchange currencies.

* More over forex brokers will encourage the forex trading investors and they motivate the beginner investors to come up in competitive prices. The beginner investor should come up the risks that are available in the market and the investor should try to ignore forbidden risk.

The investor should take time to read the new forex trading activities and they should practice each and everything required for forex trading. So, the beginner of foreign exchange market should be very careful and should follow the tips, guides, and steps in estimated manner.

Chris David is a SEO Copywriter of Forex Broker He written many articles in various topics. For more information visit: Online Forex Trading contact him at

Saturday, September 29, 2007

7 Profit Multiplying Trading Strategies of Successful Traders

Would you like to see your trading profits multiply? Are you struggling to squeeze out small profits and reduce losing trades? Here are some tips to help you make better decisions each and every time you trade.

One of the first and foremost strategies of the successful trader is actually having a strategy in the first place! Many new investors mistakenly make decisions based on one day of trading or the release of just one economic indicator report. The more successful traders develop a long-term strategy for their investments and trade only when certain criteria are met. Traders who go back and forth from one strategy to another are sabotaging their chances for success. These erratic changes make it much more difficult to analyze which strategy works and when.

To boost profits, you must employ careful research and long-term planning. Just because the strategy is long-term does not mean you cannot participate in day trading or swing trading. The long-term strategy means developing investment goals and making sure that each trade adheres to these goals. You will also want to develop specific criteria for your trades. Use historical prices as a starting point in developing when you will buy and sell. Write down your entry and exit strategies. Then stick to them at all times and track your results. Lastly, modify the plan as needed to produce the greatest percentage of winning trades as possible.

Successful traders analyze the level of risk that they are willing to assume and their trading strategies are built around this risk level. Evaluate your individual financial needs. A 25-year-old male is much more likely to be willing to assume a higher level of risk than a 40-year-old female with two children to support. Determining the level of risk you are willing to undertake will keep you focused when developing your trading plan.

Research is another power tool in the successful stock traders arsenal. These traders utilize stock charts, press releases, news articles, and other sources to detect trends in various industries as well as to make individual stock predictions. They also do not make their trading decisions based on biases. Make sure that you are relying on solid financials, from a reputable source.

Successful investors stay smart by being aware of the trading scams that abound on the net. From bogus stock purchase programs to promises of doubling or triple digit returns, there are always dishonest people willing to use the allure of huge profits against you. Dont get scammed out of your hard-earned money. Make sure to avoid any site selling or relating to high yield investment plans, or HYIP for short. If it seems too good to be true, it most likely is.

Finally, understand and being able to utilize current technologies that will help your bottom line in the trading game. New online software and systems can give your trading strategy a boost. If you refuse to learn how to use this technology and availability of information, you are undercutting the profits you stand to make. You could buy many trading courses and still be ahead if you found just one that enables you to multiply your profits and become a successful trader. Keep in mind that the ones that dont work for you will most likely have a money back guarantee.

Lastly, making investment decisions based on emotions is one of the poorest decisions a trader can make. Dont let the emotions surrounding a loss keep you out of the game. If you are truly interested in investing to make a profit, suspending your emotions and making fact-based trading decisions that follow along with your set trading plan. If you dont stick to your plan, then how can you determine whether it was faulty and a new plan should be formed?

About The Author:
Jeff Fairchild is the publisher of which provides reviews of trading systems and software. You can view a review of favorite stock trading software here: or a review of the ebook trading for beginners here:

***** Publishing guidelines (Publisher, delete before using this article): Make sure when using this article that the about the author resource information is included and the related links are working (clickable). *****

Taking Profits and Setting Exits

Most investors and many more market pundits continually talk about setting stops; they range from physical stops to mental stops to trailing stops to support stops to retracement stops or even moving average stops. It is easy to set a stop before you enter a position based off of your money management rules such as position sizing and expectancy. If you have a $25,000 account and want to risk 2% of the account on a $50 stock with an 8% stop; we know that the trade will allow you to buy 125 shares with a worst case scenario sell stop of $46.00 (assuming a 1-R risk of $4). This is wonderful but what should a trader do once the position gains 20%? Where should the stop be placed at that point to eliminate the chance of losing that quick 20% gain?

Several books attempt to explain how to take profits and many traders of the past have offered advice in books but most of it is fluff and subjective to opinion. I have heard people claim that they take a third of the position down after making a 20% or 30% gain while other traders take down half the position once a gain reaches 50%; but is this the correct way to manage money and positions? I thought so several years ago but have developed a more mechanical system that gives me precise exits at any time during an up-trend. It is a combination of a trailing stop and a retracement stop based upon the actual gain at any point in time. In a bull market, I will allow the system to loosen itself so I can handle a healthy pull-back without selling before a possible large move. For now, let me focus on my method for locking in profits without giving back too much.

For the sake of this article, I will continue to use the trade suggested above as the round numbers should be easy to follow.

Account Size: $25,000

Risk: 2%

Stop Loss: 8%

Share Price: $50

Shares to Purchase: 125 or $6,250

Sell Stop: $46.00

Worst case loss: $500 or 2%

If you are unsure how I came up with the numbers in this example, please go back and read my article on position sizing.

We buy the stock and it is up over 20% after the first three weeks of trading. What should I do to protect the profit I have already made?

Scenario #1: At $60, I will set a stop based on a 30% profit retracement.

To do this, you need to multiply the profit of 20% (or $10) by a 30% stop: $10*30% = $3

At this point in time, I will look to close the position and lock in gains if the stock drops more than $3 from the $20% threshold ($60 in this case). My trailing stop is now $57 which guarantees me a total gain of 14%.

Scenario #2: At $65, I will set a stop based on a 25% profit retracement. As my profit grows, my stop tightens so I dont give back too much. Again, this can loosen in bull markets and is also subject to longer term support and/or resistance lines. For the sake of this article, we will ignore all other variables.

To do this, you need to multiply the profit of 30% (or $15) by a 25% stop: $15*25% = $3.75

At this point in time, I will look to close the position and lock in gains if the stock drops more than $3.75 from the $30% threshold ($65 in this case). My trailing stop is now $61.25 which guarantees me a total gain of 23% if the trailing stop is violated.

Lets do this one more time with a 40% gain:

Scenario #3: At $70, I will set a stop based on a 20% profit retracement. As my profit grows, my stop tightens so I dont give back too much. As you can see from the three scenarios, my profit retracement has dropped by 5% as my profit has risen by 5%.

To do this, you need to multiply the profit of 40% (or $20) by a 20% stop: $20*20% = $4.00

At this point in time, I will look to close the position and lock in gains if the stock drops more than $4 from the $40% threshold ($70 in this case). My trailing stop is now $66 which guarantees me a total gain of 32% if the trailing stop is violated.

Please understand that I use these numbers since I like the separation of advances to be at least 10% from one retracement stop level to the next. Any investor or trader can substitute the numbers with something that makes more sense based on your own system and money management rules.

Outside of these selling rules, I also employ additional selling rules that use the long term 200-day moving average and long term support levels and trend lines. In a bull market, I will loosen the tight stops and look for longer term sell signals such as the moving average, a channel breakdown or even strong volatility movements that dont agree with the overall pattern (these may be obvious reversals on the daily and/or weekly charts). Other times, I have a specific price objective when placing the trade and will close the position if the objective is reached (even if the trend is still higher). A great example of this are the options I purchased in Tenaris (TS); I sold at $45 per call contact, yet they are now trading at $80 per contract. I bought above $10 per contract and had an objective to sell when the stock reached $145 which it did, so I sold my calls and moved on. Looking back, I got out much too early but didnt violate any of my rules which is more important than the additional gains. If I violated them on this trade and it worked out; what would stop me from violating them in the future and getting slammed with a heavy loss. I hope you get the point.

Chris Perruna -

Chris is the founder and president of, an internet community that teaches you how to invest your money with solid rules. We offer an extended no obligation monthly trial period starting immediately with two free weeks. We don't stop at just showing you our daily and weekly screens, we teach you how to make you own screens through education. Through our philosophy, you will be able to create your own methods and styles to become successful.

Do You Want to Learn FOREX Trading?

The Foreign Exchange Market (FOREX) has no central exchange location yet it is the largest financial market in the world. It is over 3x's the size of the stock and futures markets combined and operates via an electronic network of a banks, corporations and investors.

Foreign exchange consists of a simultaneous buying of one currency and selling of another. Currency is traded in pairs, in other words, one currency is traded for another. The major currencies are:
1. USD - United States Dollar
2. EUR - Euro members Euro
3. JPY - Japan Yen
4. GBP - Great Britian pound
5. CHF - Switzerland franc
6. CAD - Canadian dollar
7. AUD - Australia dollar

There are 2 types of investors involved in the FOREX market.The first type of investor is the hedger. The hedger is involved in International trades and utilizes FOREX trading to protect their interest in a transaction from adverse currency fluctuations. The 2nd type of investor is the speculator who invests in currency solely for profit.

Currency prices fluctuate due to a variety of economic and political factors. The major factors are:
1. Interest rates
2. International trade
3. Inflation
4. Political stability

There are many reasons investors take a great interest in FX trading Some of the major reasons are:
1. No fees
2. No middlemen
3. No fixed trade sizes
4. Low transaction cost
5. High liquidity
6. Instant transactions
7. Low margin / High leverage
8. 24 hour market
9. Online access via online trading platforms
10. Always good opportunities to trade, unlike the stock market the market is never bullish or bearish.
11. No one entity can control the market
12. No insider trading can occur

To begin trading in the FOREX market, an investor only needs a computer, a high-speed internet connection and an online trading currency account. A mini account can be opened for as little as $100.

Find out why FOREX Trading is becoming a popular form of investing for all types of investors.

How To Get Tax Sale Lists for Free

Once you know when the tax sale is coming up in your area, you need to get the list of properties that are in the sale. I use to find tax sale property lists online for tax lien and tax deed sales. This only works for counties that have this information online. For counties or states that do not have this information online, you can either call the tax collector and ask how to get the tax sale list or you can buy the tax sale list from a tax sale list provider. To find out which counties have tax sale information and tax sale lists online, you can consult my State Guide.

To go to the countys web site, first go to and click on the link to find a county. This will bring you to a page with a map of the United States. Click on the state that you are interested in and youll be taken to that states web page with a list of all of the counties in the state. Find the county that you are interested in and click on that link. You will be taken to the NACO page for that county. Click on the link to the county on the top of the page and you will go to the countys web site. Note that this will only work if the county has a web site.

Once youre on the countys web site, look for a link to the department or county office that is responsible for conducting the tax sale. For most states, this will be the county treasurer or county tax collector. If youre not sure who is responsible for the tax sale in your state, then consult my State Guide. Once you get to the web site of the person or department that conducts the tax sale, look for a link to a list of tax sale properties. For larger counties, you can usually find this online. The exception to this is the counties in the Northeastern states. A lot of the Northeastern states do not have county tax sales. Instead the tax sales are conducted by the municipality, so instead of looking for the county web site, in Vermont, New Hampshire, Maine, Rode Island, Connecticut, Massachusetts, and New Jersey, look for the municipal tax collectors web site not county web site. New York has both county and municipal sales in some counties.

If you cant find the tax sale list that you want online, you can always buy a list from a tax sale list provider. Even if you can find the tax sale list online for free, you still may want to purchase the list from a tax sale list provider. Thats because the list that you get from the tax collector does not always have the information that you need. Frequently it will only have a parcel ID number, owner name, and amount due. What you want to know is what is the address of the property, what is the assessment and value of the property, what type or class property is it, and how big is the property. All of this (and sometimes even more information) is included in the detailed list that you can get from tax sale list providers. I talked about some different tax sale list providers in the last podcast episode, How to Find Out About Tax Sales. You can listen to that episode to get the names and urls of tax list providers for different areas of the country. Purchasing a detailed tax sale list from one of these companies will save you a lot of work in doing your due diligence.

Joanne Musa is a Tax Lien Investing Coach and Consultant who works with investors who want to learn how to buy profitable tax lien certificates and tax deeds. She is the president of Tax Lien Consulting LLC, a consulting firm for tax lien investors. She is the author of the e-books: Tax Lien Investing Secrets and Tax Lien Lady's State Guide to Tax Lien and Tax Deed Investing, available at

For more tips on investing in tax lien certificates send an e-mail to

Friday, September 28, 2007

Forex Market Overview

The foreign exchange market exists wherever one currency is traded for another. Individuals are currently a very small part of this market and may only participate indirectly through brokers. It is by far the largest market in the world, in terms of cash value traded. It includes trading between large banks, central banks, multinational corporations, governments, and other financial institutions.

The forex market is a cash inter-bank established in 1971 when floating exchange rates began to appear. The average daily trading volume of US Treasury Bonds is $300 billion and the US stock market has an average daily volume of less than $10 billion.

The foreign exchange market is unique because of:

The extreme liquidity of the market,
Its geographical dispersion,
Its trading volume,
The large number of traders in the market,
Its long trading hours - 24 hours a day

There are several types of financial instruments commonly used:-

Forward transaction: A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then.

Futures: Futures are standardized and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts.

Swap: In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date.

Spot: A spot transaction is a two-day delivery transaction, as opposed to the Futures contracts, which are usually three months.

One difference between Futures and Spot is how interest is credited. Each currency in a Forex transaction has an inherent interest rate attached to it. This interest is added every single day whether the market is trading or not. Interest cannot take a vacation; money and its loaning value are still important even if the financial world has stopped dealing. In Futures, the interest is built into the price of the contract. In Spot, however, interest is not taken into account in the offering price because the Spot market is a cash market, not a contract market.

The main trading centers are in London, New York, and Tokyo, but banks throughout the world participate. As the Asian trading session ends, the European session begins, then the US session, and then the Asian begin in their turns.

Unlike a stock market, where all participants have access to the same prices, the Forex market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. The top-tier inter-bank market accounts for 53% of all transactions.

Forex Blog provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. is the main site which has useful tips to make big money online.

What is FOREX Foreign Exchange Trading

Foreign Exchange Market, or Forex as it is commonly called, is an international exchange market to buy and sell different currencies from around the world. An investor has the ability to buy and sell these currencies in order to create gains from small movements in the value of one currency over another. The Foreign Exchange Market or Forex is open from Monday at 0:00 GMT until Friday at 10:00 GMT. For this reason Forex traders are not limited to the general time constraints of the New York Stock Exchange or NASDAQ.

This versatility attracts many investors to become Forex traders. The liquidity of the Foreign Exchange Market is also very attractive for the Forex investor as trades range from 1 to 1.5 trillion dollars on a daily basis. These massive amounts of trades make it extremely difficult for any one trader to affect the market.

Foreign Exchange Trading is simply the purchase and sales of currency based on the strength of the currency and the fluctuation in the value of that currency. For example, if one were to invest $1,000 against the British pound at 1.49989 with a 1% margin and anticipate the exchange rate to climb. If that occurs and you close the exchange rate at 1.5050 you would earn roughly $400. Forex is giving you a 40% return on your investment.

Forex offers the possibility of huge profits in relatively short periods of time. The stock exchange is very different in that positions are generally maintained over a longer period of time. Although there are day traders, Forex traders have much shorter hold times on positions. Similar to the stock market marginal accounts can be obtained in the Foreign Exchange Market as well.

Forex marginal accounts are very engaging as they allow Forex traders to take large positions without having to make a large deposit. In many circumstances one can fund a marginal account with .05% the necessary funds. In other words, $500 would allow a $100,000 position. In order to trade Forex effectively and profitably, one must have some type of method to follow. There are two methods used in determining what Foreign Exchange trades one should make. There are two methods, fundamental Forex analysis, and technical Forex analysis.

Technical Forex Analysis is the most commonly used practice and uses the assumption that the changes that occur in the Foreign Exchange Market happened for a reason and are accurate. The belief is that if a currency has been trading towards a high then that currency will mostly continue towards that high with the adverse being true as well. The technical Forex view does not try to make long term predictions about the market but instead simply tries to take advantage of what has already been seen in the past.

The fundamental Forex method takes into account all aspects of the country in which the currency is traded. Things such as the economy, the countries prime interest rates, war, poverty level, and other factors are taken into account. If there is a sharp rise in the prime interest rate a Forex trader may take a position based on that information.

Online Forex trading on the Foreign Exchange Market has the potential of being extremely lucrative. One can learn to trade by creating an online Forex Account and begin by using a learning account without real funds. This will help you to understand the Forex trading process and how currencies are affected by different things that are happening on a global scale.

Copyright 2006 Jason P Bertrand

Jason Bertrand is the President of JPB Financial Services, Inc., a Connecticut Corporation and member of the Better Business Bureau. He has over a decade of experience in the financial services industry and is a Notary Public in the State of Connecticut. Please visit the following sites: Free Home Purchase Guide Feel free to contact Mr. Bertrand with any questions or concerns through, or mail to: JPB Financial Services, Inc Attn: Jason P Bertrand PO Box 552 Vernon, CT 06066 860-982-5334.

Handling Tricky Stock Investment Transactions in Quicken

If youre an investor using Quicken, you should find your investment record-keeping pretty straight-forward. There are, however, several tricky investment transactions you may need to record, particularly if youre an aggressive investor (one whos willing to bear increased risk in the pursuit of greater returns). These transactions involve short sales, margin loans and interest, call and put activities, employee stock options, and corporate reorganizations. The following paragraphs briefly describe how you record these other types of transactions.

Short Sales

A short sale occurs when you sell stock you dont actually hold. The logic of a short sale is that rather than buying low and later selling high, you first buy high and then sell low. (To make the transaction, you actually borrow the stock from your broker.)

To record a short sale transaction in Quicken, you just sell a stock you dont own. Select the Enter Transaction command button, choose the Short Sale option, and fill in the appropriate categories in the Short Sale dialog box.

To show that these are shares you actually owe your broker, Quicken displays the number of shares and the current market value as negative amounts in the Portfolio View window. To record the transaction in which you close out your short position by buying the stock youve previously sold, you record a stock purchase in the usual way.

Margin Loans and Margin Interest

If you purchase a security and the total purchase cost exceeds the cash balance in a brokerage account, Quicken assumes that youve borrowed the needed cash on margin from your broker. To show the margin loan, it displays the cash balance as a negative value. To record margin loan interest in cases where you have a linked cash account, you record the margin loan interest as an expense when you record the withdrawal from the linked cash account that pays the margin interest.

To record margin loan interest in cases where you dont have a linked cash account, choose the Enter Transaction command button and choose the Margin Interest Expense option. When Quicken displays the Margin Interest Expense dialog box, use it to describe the margin interest.

Calls and Puts

A call is an option to buy a share of stock. A put is an option to sell a share of stock. You may write, buy, or exercise calls and puts.

Writing Calls and Puts

When you write a call or put, what you really do is collect money from someone in return for promising the person the option, or chance, to buy or sell a share of stock at a specified, or strike, price by some future date.

When a call or put expires without being exercisedand this is the usual caserecording the transaction is simple. If youre the one writing the call or put, just record the transaction as miscellaneous income.

Buying Calls and Puts

If youre the one buying the call or put, you just record the option purchase the way you do any other stock purchase. If the call or put expires and becomes worthless, just record the sale as a stock purchase with the amount set to zero. (This is the most common case.) If, on the other hand, you sell the call or put before the expiration date because the call or put can be profitably exercised, you record the sale as a stock sale with the amount set to whatever you sell the option for.

Exercising Calls and Puts

You probably wont actually exercise a call or put. Youll probably sell it, as described above. If you do exercise a call or buy option, however, you need to record two transactions. To record the exercise of a call option, first record a transaction that sells the call option for zero. Then record a transaction that purchases the optioned number of shares at the option price. To record the exercise of a put option, first record a transaction that sells the put option for zero. Then record a transaction that sells the optioned number of shares at the option price.


For income tax purposes, what you pay for a call needs to be counted as part of the purchase price if you exercise the call option and purchase shares. What you receive for a put needs to be counted as part of the sales price if you exercise the put and sell shares. This can get complicated, so you may want to consult your tax advisor.

Employee Stock Options

You can track the value of employee stock options in the same way that you track shares of stock. (The purchase price in this case is zero if you dont pay anything for the option.) The value of the option, of course, is the difference between the exercise price and the fair market value of the vested shares. The income tax accounting for stock options can get a little tricky, depending on whether the options are part of a qualified incentive stock-option plan or a nonqualified stock-option plan. You may have a taxable gain when you are granted or when you exercise the option, or you may have a taxable gain only later when you sell the shares. If you have questions about the income tax treatment, consult your tax advisor. Youll need to show him or her the stock option plan document, so be sure to bring that with you.

About the author: CPA Stephen L. Nelson wrote bestselling books on Quicken and QuickBooks. Which have together sold more than one million copies, and the popular downloadable do-it-yourself guides Information about the Corporation, and Costs & Benefits of Incorporation , Incorporating a Business in Pennsylvania, Incorporating a Business in Illinois .

The True Value of the Small Business Consulting Community

The Small Business IT consulting community is a dynamic and exciting community to be active in at this time. Many different opportunities are gaining some serious momentum in this underserved marketplace in Canada. The Small Business marketplace will be the fastest-growing segment in the information technology market. Currently, approximately 97% of the businesses in Canada have five hundred employees or less, which equates to a fantastic market to specialize in.

Microsoft launched their Small Business Specialist program in the summer of 2005 at their annual partner conference. Since that time, a number of information technology consulting firms have taken advantage of this program to commence their consulting practice. The Small Business Specialist program is designed to promote Microsofts offerings to small business. It establishes SBSC members as leaders in the small business IT consulting marketplace that has been thrust into the spotlight for growth potential.

The Small Business Specialist program serves as a best resource for IT professionals to access information, promotions, partnership opportunities and assistance to service a small business oriented client base. Groups have emerged on international, national and regional levels that assist the small business specialist in obtaining not only technical but also important business assistance. In addition, each year SMB Nation brings together the small business consulting community to network, learn, share and play.

The small business consulting community has grown out of the leadership of corporations like Microsoft, SonicWALL, and Symantec. It has also grown because of people like Harry Brelsford of SMB Nation and several other leaders in the community. Their leadership has provided Small Business Specialists with additional resources to sharpen their craft long before the official launch of programs from corporations like Microsoft.

The SMB community is open to sharing experiences, ideas, concepts and best practices so that emerging IT companies can seek knowledge to develop and grow. I like focusing on a market segment where I can really get to know my clients and have a direct, tangible impact on their businesses, claims Jeff Anderson, General Manager of Red Deers Bulletproof Networks, the citys leading Small Business Specialist. Business development, however, is often overlooked by those text book technicians who have decided to start their own businesses. Learning from others in the SBSC community allows the small business consultants like Jeff to learn two or three markets and become the expert specialist in that field in order to have the potential to gain new business clients.

New service offerings are demanding small business consultants start planning now on how to bring them to their client base. Clients today are in search of options that are evolving and they must be presented in a manner and language that they understand. Managed services, remote monitoring, software and hardware as services are starting to gain some traction in the market and as a new offering they need to be available from their SMB consultant. Small businesses want a company that they can trust. When you and your peers are representative of 97% of the Canadian marketplace, it makes sense to be working with the very businesses that share the same concerns and deal with the same issues you do. Who better to give them the right tools to succeed? states Elisabeth Vandervelt of Conamex International, an award winning Microsoft Small Business Specialist in Montreal.

Todays small businesses need innovative solutions to keep them competitive in the fast paced, on-demand, we-needed-it-yesterday and downtime-is-not-an-option environment we call todays business world. SBSC members have the luxury and the ability to have direct interaction with decision makers therefore sales cycles are generally shorter while the demand for services has never been higher.

Another luxury in the small business community is the ability to share work with each other across regional, national and international boundaries. Many firms are partnering locally to provide a one stop shop for their clients who need a specialized service or coverage in other locations where their clients may have a remote user or branch office. Partnering in the SBSC community is critical to the success of the small business consultants business since it gives small firms the reach and abilities of a much larger IT company and can be the their advantage over their competition in todays marketplace.

The Small Business Specialist can rest assured that they have the pride and recognition of a job well done combined with a community to back them up. All of these positive aspects provide an overwhelming sense of accomplishment for participants in the SBSC program.

I reflect back to when my youngest son was in Beavers and their leaders consistently reminded them of the Beaver motto, the same motto that is the cornerstone of the SBSC community and all other small business consulting groups: Sharing, Sharing, Sharing! Share your successes with others; help others who are struggling; and share of yourself to make our community strong.

Stuart Crawford is the Director of Business Development for Calgarys IT Matters Inc. IT Matters is a leading Microsoft Small Business Specialist and Gold Certified Partner. IT Matters is also a gold partner with SonicWALL and an active member in the TechData TechSelect program.

Avoiding Forex Trading System Headaches

If you are a trader and you have tried to find a forex trading system that might work for you and have curiously looked up the words forex trading system in Google, havent you been surprised and annoyed at the amount of rubbish and useless material on this subject out there?

Your first job is to ignore the typically glowing testimonials telling you how great a certain forex trading system is...

Guess what? They all say great things!

Anyone who is serious about trading needs to have a forex trading system that is tailored to them, but there is no reason to start constructing your forex trading system from scratch. Look for your most important criteria as it relates to your trading style for the trading system you are planning to buy, and if it fulfills them; then you are quite certainly making a good decision by planning to use it going forward in your trading career.

Any good online forex trading system will gives traders discipline, as good systems will run the big profitable trades and cut losers quickly to give great profit potential over the longer term. If you are just starting, you should look at longer term forex trading systems that milk the big trends for profit, and cuts losses quickly. Whatever you decide on for your forex currency trading system, however, you almost certainly can't go wrong by subscribing to some of the forex newsletters. Even if you've gone through quality forex training, smart traders subscribe to newsletters written by professional currency traders that offer both fundamental and technical analysis on the markets. In other words, more knowledge and information is a good thing.

Once you know what sort of forex trading system will work best for you, look at the components that make it work. Both the desktop based and web based forex trading software have their own advantages, so use the version that you are most comfortable with. Don't forget to take advantage of some of the generous free offers by various online forex brokerages that allow you to trade in real time with paper money so you can get the hang of how things work. Couple that with the guarantees that most of the marketers provide for you to try out their systems for 30, 60 or 90 days.

You also want to choose a forex trading system company that will put your money first, and that will listen to what you want to do, and how you want to do it. After all, it is your career they are looking after.

Forex is a great money making opportunity for those who know their way around, most newbies fall hard after flying high for a while. That's because forex trading is not straightforward. You see, it is simple to enter a trade and let it run, but making yourself a profitable trader takes more than just willingness; it takes knowledge and experience.

And finally, we dont have space here to go through the actual systems being currently marketed, but with a bit of research and testing you will see why a forex trading system built on the above principles, will work, and will continue to work.

Sydney Johnson gives you more free information at Forex Trading Introduction. Search other helpful articles at- Forex Trading List of Articles. Click here

The Commodity Swing Method, PART 2 - Lock In Profits, Reduce Risk And Trade The Swings

Getting into a market is simple. Getting out with a maximum profit is difficult and is an art. How do we know when to take a profit and when to take a loss? Will I miss the big move if I get out now? Here's some methods that can take the mystery out of what to do at these critical times.

So what would be the ideal market scenario to profit using the Thomas Swing Method? Let's take an example. We are long two calls and the futures market rallies. We sell one future contract and the futures market declines. We cover the future contract at the lows and the market rallies to new highs. We sell another futures contract and the market declines, and so on. Essentially, we have taken all the option rally profits and strung them together into one line (like a string) by absorbing their declines, using the futures contract as a hedge.

Let's look at a less favorable situation. Once hedged with the short futures contract, if the futures market declines sharply into a new bear market, we still might do well if the options lose their value but the futures contract keeps profiting. Conversely, if the market explodes to the upside, the deltas of the options get closer to 1.0, so that at some point the two options will more than cancel out one futures contract and will show a reasonable profit. These are interesting possibilities considering how limited the profit chances are just holding eroding call options alone.

What is the most undesirable outcome? If the futures market goes sideways after the hedge, then the options will erode (as normal) and the futures contract will stay near break-even. Do not continue to hold the hedge if the options erode to a delta below 0.5 or have less than 30 days to expiration. This is approaching a naked futures contract since the commodity options have a smaller offset. Another overall negative is you will need to maintain margin for the futures contract no matter what commodity options you hold.

This strategy can be reversed for a long commodity put option position. (looking for a decline) You would buy a futures contract against two put options after a profitable decline.

The Thomas Swing Method is a technique any long-term commodity option holder should consider. Holding on for the big swing can be easier when we lock in short-term profits along the way. It takes a good feel of short term timing to execute this method properly. Spend time practicing this strategy on paper until it's clear. It's another tool to have ready in your trading arsenal when buying and holding commodity options for the big swing.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, "Thomas Commodity Trading Course" - they're all free.

Main site:

Thursday, September 27, 2007

Artificial Intelligence - Where Are We Today?

Indeed, we hear a lot about Artificial Intelligence these days, but few people really understand what artificial intelligence really is. Even more confusing to newcomers and novices is that many folks that are in the artificial intelligence field debate its definition. Still compounding the issue is when commercial ventures begin touting their technologies as artificially intelligent driven, when actually they are not.

There are a couple of different categories that those in the field of artificial intelligence fall into. One is those who believe that artificial intelligence is computer software which mimics human decision making or appears to mimic human decision making. Then there is the group that calls themselves purists who believe that neural network processing is true artificial intelligence. Of course we will be discussing both types. We will also touch upon all the different applications, technologies which are or appear to be similar enough, that their creators or marketers have labeled as artificial intelligence.

Today we most commonly find that such applications as search engines on the Internet, autonomous operation and interactive eLearning systems, as well as recognition software for speech, facial features, finger prints, spell checkers, voice, anti-spam programs or algorithms which scan databases to find anomalies. Of course the more intense the application for instance self-driving cars, self-piloted planes, corporate telephone systems, weather prediction, stock trading, military net-centric warfare, automated warehousing or computer space systems the more important artificial intelligence becomes.

It should be relatively easy to see that artificial intelligence has changed our lives as much as computers themselves and in the future even more still with artificially intelligent robotic androids in our homes and decision making computers at work. In the future we will have artificial intelligence running our government, transportation systems, money flows, environment, distribution systems, virtual reality entertainment systems and just about everything you could possibly dream up. Perhaps after reading this book you may in fact think of more applications in your industry?

Is the sky the limit to artificial intelligence? Indeed, it does appear to be and yet perhaps not, as we are already using AI underwater and underground, therefore the sky is not the limit and neither is the ground or anything else in this dimension. Artificial intelligence is not even limited to time, space, energy or matter in a single dimension. In the future humans may have add-on features where man and machine is merged using Artificially Intelligent components. So when we examine where we are today with Artificial Intelligent Systems the answer most appropriate would be; We are at the Tip of the Ice Berg.

The more pressing question is how shall we proceed? Does mankind have the discipline and integrity to continue the forward progression of this technology without sacrificing or risking all we are and all we have built; perhaps that indeed is the greatest question of all?

L. Winslow is a Technology and Economic Advisor to the Online Think Tank, a Futurist and retired entreprenuer. Currently he is planning a bicycle ride across the US to raise money for charity and is sponsored by and all the proceeds will go to various charities who sign up.

Learn FOREX - No Experience Necessary

When we think about the FOREX, we often hear about how hard it is but would you like to know how to learn FOREX with no experience necessary? Don't get me wrong, FOREX is difficult and risky but you can learn it even if you have no prior trading experience. You don't have to be a genius or a finance specialist to learn with this system either.

What you need is an investment strategy for FOREX that really works- not a gimmick, or a scam designed to take your money and leave you with little in return. There are so many different programs and systems on the market promising you get-rich-quick schemes and multi-million dollar plots for success that never follow through with their promises and that are really just marketing schemes designed to help some other guy get rich off of your misfortune.

Using the same techniques and most of the other traders will not make you successful. You must have more. You need that extra something to push you over the top and better than the majority. You need something that makes you stand out from the rest and succeed in ways that they do not. You also need to learn the proper techniques to help you control your own portfolio instead of letting the market control you.

Many people think that it takes years of experience to learn the secrets and techniques of the top traders in the market. While this may have been true in the past, it is not necessarily true anymore. What if there was someone willing to tell you all their secrets? If someone with years of experience in the market took the time to show you and teach you all that they knew, then you would start out jumping from a total beginner to someone very experienced and all in a very short time.

What if there was also someone capable of taking that information they have acquired and creating a system that makes it easy to trade in the foreign exchange even with no past experience? You can then begin to control your trades and create a winning portfolio and find your own financial freedom. Isn't it time that you enjoy life without having to work so hard?

When I first started researching the Forex I learned that it would take months to learn and studying charts and graphs and a lot of money to get started. Something that a full time job would not allow me to do.

Then a good friend of mine introduced me to a forex investment strategy. He told me how easy it was to learn and how it required no formal training and that I could be up and running in less than 3 hours. He also told me that he was earning monthly what banks and mutual funds were earning yearly.

You can only imagine my skepticism. So I started doing some research on the company and the proprietary software they were using. I took a leap of faith and opened up a demo account, and to my surprise everything that they claimed was true. I can honestly say that I'm earning more a month than my mutual funds and my bank are earning a year. This company does truly care about people and that is rare in this industry. I opened up my Live account on April 10, 2007 and I'm doing very well.

Check it out for yourself.

Hot Share Tips

It's official! Australia is the largest nation of shareholders with direct share ownership more than doubling since 1997 to 40.6 per cent. That figure rises to 54 per cent of all adult Australians when managed funds are taken into account.

We're also trading more shares. The Australian Stock Exchange reports the average number of trades has nearly trebled in the past year to 79,000 a day.

Large new floats such as Telstra has fueled the growth of private share ownership. For example, almost one million of the two million people who invested in our largest telecommunications company were first time investors. They haven't been disappointed with their return on capital and many have branched out into other well-known stock such as Coles-Myer, Qantas, AMP, Commonwealth Bank and others.

Smaller and less-well known companies are also floating on the stock exchange in record numbers. In the last half of 1999 more than 104 new companies went public.

Share ownership in Australia cuts across all age groups, socio-economic, ethnic and geographical boundaries. The motivation for most investors is to make money and create wealth.

Newer investors have been in a rising or "bull" market and seen their so-called "paper profits" soar. Internet and technology based companies have also been floated in record numbers with astonishing results. Many "Mum and Dad" investors are instant experts and looking for that next "dot com" company on which to make their fortune.

But what are the keys to successful share investing? Ron Bennetts is Principle Manager WA for stockbrokers J.B. Were and author of "The Australian Stock Market: A Guide for Players, Planners and Procrastinators".

His advice is simple, "invest some time as well as money, look for quality management in quality companies with earnings growth."

Bennetts defines these companies as ones that are strong and likely to increase their earnings per share. He believes the technology area is a growth sector and the bubble may burst but there will be growth.

"Look at the companies that have the qualities rather than a marketing plan that has little chance of bearing fruit," he says.

One of the keys too successful investing is diversification and Bennetts says you don't need more than 12 stocks to diversify your portfolio. He also believes 15 per should be overseas shares and this is often 25 per cent for more aggressive investors.

On seeking independent advice versus investing yourself, Bennetts says "the cost of buying and selling is often viewed as a false economy" and suggests first time investors seek professional advice.

Ten Tips for First Time Share Investors

1.Set your objectives and work out a budget for how much you want to invest.

2.Avoid speculating. Do some homework about the risks of investing in the stock market and spend time gaining knowledge on how the stock market works.

3.Take a long-term view of your investment.

4.Avoid reacting to short-term pressure and expect some volatility in the market.

5.Identify quality shares in a growth sector. Look for good quality management in industries likely to grow in the future.

6.Diversify your portfolio to spread your risk. This should ideally include about 10 stocks. Less than 10 are not enough diversification and more than 15 is too hard to handle.

7.Compliment your Australian share portfolio with international shares. Exposure overseas can typically be through managed funds.

8.Buy into a managed fund if you only have small amounts of money to invest. A managed fund is an investment where you have a manager that gives you diversification in pooled funds with other investors. To buy direct most advisors believe you need a minimum of $50,000 to do anything meaningful.

9.Monitor your portfolio as closely as possible on the performance of the companies you are investing in.

10.Seek professional advice from a qualified stockbroker or financial planner.

Thomas Murrell MBA CSP is an international business speaker, consultant and award-winning broadcaster. Media Motivators is his regular electronic magazine read by 7,000 professionals in 15 different countries.

You can subscribe by visiting Thomas can be contacted directly at +6189388 6888 and is available to speak to your conference, seminar or event. Visit Tom's blog at

Wednesday, September 26, 2007

Investing Made Simple

Why is investing so important? Investing is the vehicle that drives your goals to reality, especially for your retirement. If you just put your money in a regular savings account, chances are it isnt going to grow to the amount you need to retire successfully. While there is a great deal of risk associated with investing, if you understand your risk and manage your investments regularly, investing can be the difference between retiring and not retiring. However, many of us are terrified of investing, therefore, we are either not investing at all or not investing properly. Follow these guidelines to make investing as simple as possible.

For amateur investors, mutual funds are the way to go. They offer diversification, professional money management and ease into the actual mutual funds with low minimums. The chief complaint against mutual fund is their fees. This can be managed by sticking to no-load mutual funds and keeping your expense ratios low (below 1.50%). Individual stocks need ongoing monitoring, which most of us dont have the time to do. Also, most stock portfolios are not properly diversified. If you do buy stocks, stick to companies that you know well and plan to hold on to for a long time. Make sure they are part of a diversified portfolio.

It is very important to pick your time frame (when you want the money) and your risk level. Make sure both of these are aligned with your goals. For example, if you want the money in less than five years to save for a down payment on a house or a vacation, you should keep it in very safe investments, like a money market account. Whereas if you want the money in twenty years or longer (i.e. retirement), you are able to take on a bit more risk. Your risk level is determined if you are conservative, moderate or aggressive. Think about recent decisions you made in your personal life and apply this to your investments.

Regardless of your risk level, you need to be diversified. This means spreading your money over different types of investments, therefore, spreading your risk around. How you spread your money among different investments is called your asset allocation plan. To keep your investments as simple as possible, limit your portfolio to no more than five mutual funds. You can also choose one Lifecycle or Target Retirement Date mutual funds. This is one mutual fund that provides a diversified portfolio based on when you want your money. Most mutual companies offer them.

Even if you have a financial advisor, you should know what is going on and understand what you own. The more you know about your investments, the better your relationship with your financial advisor will be. On an ongoing basis, take charge of your investments and learn more about them. You can do this by taking a course, opening your statements, reading a book, reading the business section of the newspaper or investing articles on websites. Magazines like Money, Smart Money, Kiplinger are geared towards people that are not in the financial industry and are fun to read. Start with the cover article; dont try and read the whole thing, just spend 10 minutes a week. It will be much more manageable and you will enjoy it!

Written by Galia Gichon

(Copyright Down-to-Earth Finance LLC 2006)

Galia Gichon, Founder of Down-to-Earth Finance, demystifies personal finance particularly to women through unbiased financial education. With over 14 years experience in financial services and an MBA in Finance, she does not manage money or sell investment products. You can subscribe to her weekly e-mail newsletter at for smart tips to save more money and independent advice about mutual funds and retirement. She can be reached at 212.734.0433 and

How To Conduct Successful Fundamental Analysis

When an investor is scouting for potential bargain's in the markets, fundamental analysis will always take a top-down approach. Fundamental analysis will generally look at a number of different area's and these will be the national economy, at industry level, and at company level. Generally the term simply refers to the analysis of the economic well-being of a specific entity as opposed to only price movements.

By no means take this article as a be all and end all explanation of the process as it is a very broad discipline, but use it as a guideline on how to conduct the basics. Below I will briefly set out the basis for fundamental analysis for the three area's mentioned above earlier.

National Economy
Fundamental analysis in this instance is likely to focus on economic data principally produced by governments to assess the present and future growth of the economy. There are a wide variety of factors relating to fundamental's within the economy. Obvious economic indicators would include inflation, exchange rates, interest rates, debt and saving levels and consumer confidence. If you are already an investor you will know that publication's from the Fed or the Treasury with reference to any of these can have a profound affect on the stock market as a whole.

At the Industry Level
Fundamentals within this area are likely to focus on an examination of supply and demand forces for the products or services offered. Although this may seem vague in essence what the investor will be doing is trying to ascertain if it is viable to enter (invest his money) within a certain sector or industry. For example here in Britain the coal mining as well as ship building industries are both in major decline but there are still companies out there. Now if an investor was not made aware of this or did not conduct the appropriate research with reference to these sector's then they would have a higher risk of losing money.

At the Company Level
When a potential investor is conducting fundamental analysis this is the area that they will want to dedicate most of their time too. That is the individual company (the stock) they are looking to invest in. What an investor will be trying to do is determine if a stocks price is over or undervalued by focusing on underlying factors that affect a companies actual business and its future prospects. There are a variety of factors that a potential investor will be investigating. Examples of these will include business concept, management, competition and financial data. The majority of this information is readily available in the public domain through a variety of sources helping the investor to make a more informed decision.

So in this article we have gone over briefly the top down approach that an investor savvy in the process of fundamental analysis would use to pick a stock that the data would lead him too.

Oliver Gillies is a Trainee Sales Trader who has been working for a firm of stockbrokers in the City Of London for the last year. He also trades his own successful portfolio (11.5% in the last two months June-August). You can learn more by visiting his blog successful investors

What Every New Trader Should Know About Trading Stocks

Do you sometimes feel that trading stocks isn't going the way you think it should?

Just when you think you're getting the hang of it, the market comes along and bodyslams you back to reality. It's enough to make you think the market's primary function is to make a fool of traders.

We've all been there. We make a buck here and give back a few bucks there. Then, all of a sudden, we give back several. The market did it had its way with us. It's just not fair.

Or is it?

It's always easy to rationalize our losses. The market did something unusual...the specialist ripped us off...only the big boys make money...

But consider this...all traders take's part of trading. However, good traders make money. Sure they have losses but they don't go back to square one wondering what happened. They expect to take losses.

And, if they make money, it's because they know what they're doing. But they know something many of us never think about. They understand something so basic it often escapes attention.

No, it's not a new trading system...or indicator...or chart pattern. And it's not anything your computer can crank out. And it's not anything your broker will tell you. But it is a basic truth that has always been with us.

Let me tell you what I'm talking about...

I believe John Carter, author of MASTERING THE TRADE, said it best, "The financial markets are naturally set up to take advantage of and prey upon human nature. As a result, markets initiate major intraday and swing moves with as few traders participating as possible. A trader who does not understand how this works is destined to lose money."

Think about this for a minute...

It may go a long way to explaining why many traders don't make money. And to understand it is to realize we are often our own worst enemy where trading stocks is concerned.

Imagine...your own human nature is holding you back. Many of the things that make you what you are....your emotions...your behavioral patterns...your biases...are the very things that conspire to deplete your bank account.

They are what the market preys on to take advantage of our very nature. What's more natural than fear and greed. And what's more detrimental to trading than decisions based on these two're own silent saboteurs.

It's easy to deceive yourself when buying a stock. It's even easier to deceive yourself when you own the stock. Human nature goes into action to override decisions that are in your best interest.

Astute traders have said for a long time that the market works diligently at creating the most pain for the most people. It means the same thing. This is not a new concept. Winning traders have understood it forever.

So, if you're interested in trading stocks, why not step back and take a good hard look at at this statement. In itself, understanding Carter's statement is not the end all to trading success. But it is a good beginning because it involves a basic concept.

When you understand this statement, trading suddenly makes more sense. It's not the haphazard affair that some people create. You don't just throw money at the market and hope good things happen.

You begin to understand that trading stocks with a plan is the way to overcome emotions and habits that work against you.

It becomes easier to see why most traders often do the wrong thing... they're fearful when they should be aggressive...and they're aggressive when they should be fearful. It's called trading on your emotions. It's also called following the crowd. And it's why the train leaves without you.

But it doesn't have to...

Good things happen when you begin to understand how the market preys on human nature.

Thomas McNatt trades full time. His website,, is a valuable source of information and resources for new and struggling traders.

Can You Make Money In Penny Stocks?

Yes, you can! But the amount of money you make in penny stocks is directly proportional both to the amount of homework you do and the amount of discipline you have. Penney stocks are one of the most volatile investments into which you will ever put a dime, capable of breathtakingly fast gains and even faster collapses. So if you intend to trade penny stocks, you must be willing to monitor your investments constantly during market hours, and sell when you are in profit. You should also use stop-loss orders if your broker allows it.

Reasons For Investing In Penny Stocks
Keeping all the caveats in mind, there are still good reasons for including penny stocks in your portfolio. As their name suggests, they dont cost a lot, so you can build a significant positions in a company for a relatively small amount of money. While you may never own a thousand shares of a blue chip stock, you can own tens of thousands of shares of a penny stock.

Because you can own such large amounts of a penny stocks, you dont need to see a large gain in price to make a respectable profit. Each time the price of the penny stocks of which you own ten thousand shares goes up a single penny, your position will increase $100 in value. But if you get greedy, you can lose your profits by waiting too long to sell.

What To Learn About Penny Stock Companies
Penny stocks are not merely gambles if you spend the time to research them. You just need to educate yourself in certain aspects of the companies in which you want to invest; pay particular attention to the industry in which the company operates; the expertise and reputations of the companys management and the market acceptance of the companys product or services; past trading patterns of the companys stock; and how the sector which the company is in is influenced by economic and political factors.

You can find brokers to trade you penny stocks, but you will pay a commission much larger than that charged for stocks traded on the larger exchanges. Your broker will fill your buy and sell orders, so you wont have to monitor you penny stocks so closely, but his commissions will eat into you profits or add to your losses.

Penny stocks make up an over whelming percentage of all the stocks traded in the US each day. Over three-fifths of all NASDAQ and over three-quarters of all NYSE trades are of penny stocks, and this enormous liquidity means that you will almost never have difficulty getting your penny stocks orders filled.

Penny stocks are a worthwhile investment for those who the effort to understand them, and have the discipline to stand apart from the crowd.

You can also find more info on Hot Penny Stocks and Investing In Penny Stocks. is a comprehensive resource to get information about Penny Stocks.