Monday, September 17, 2007

Why Investing in Commodities (Part II)

In the first part, I wrote about your responsibility as the client when investing your money in any financial market. I also mentioned that investing is the art of predicting the future, and what consideration should be taking regarding this aspect of the financial markets.

In this second part, I will refer to the Risks involved in trading, particularly in the commodity market, and how to avoid some of the most common mistakes that investors make without even knowing.

3) Understand Risk

Future contracts and options over futures are highly leverage instruments, so they are considered risky investments. However, this characteristic of the commodity market is not a reason to run away from the possibility of investing in it. Remember that leverage is a two ways sword: it can hurt you, but it also can provide you with percentage returns that you probably wont find in other markets. In order to have a better chance of being successful in this market you have to understand the risks you are taking in each and every trade. You have the right to ask your broker about the risks involved in the trade he/she is offering you. Always remember that there are different types of risks that you might be taking without knowing. For example, you can be told that you should only buy options over futures because the risk is limited to the amount of money you invested plus commissions. This is absolutely true, but do you know that a high percentage of options expire worthless? This means that if you only make this type of trading you have a big chance of end up loosing all the money on your account. Another highly risky investment is to buy deep out of the money options (this example does not apply when selling deep out of the money options). These options can cost you for example only $200 each, so you might be advised to buy 5 contracts. This buying of deep out of the money options are the type of investments where the client is trying to make a fortune in one trade. These trades almost always do not work; the only thing you achieve when making those type of trades is increasing your risk and paying a lot of commissions to your broker.

When trading futures contracts there are also many ways of increasing the risk. For example, you can decide to go short on Unleaded Gasoline the day before a hurricane hits the Gulf Coast. Maybe you are thinking or are told that the hurricane is going to change direction at the last minute according to weather reports, so the next day all the energy complex is going to collapse and you will make a fortune on your short position (again an example of an investor trying to make a killing on one trade). Another typical mistake that investors do and hence increase their risk is to send money to cover a margin call. If you have a margin call, first close the position because it means that you are in a loosing position. If after you close the position, you still owe money to your broker, then send the money; and if that trade was your broker advise and was not the first time that you had a margin call, then change broker.

As you can see in these examples, risk is always part of the commodity market as it is of all investment markets. There is nothing you can do about the risk that belongs to the market, but respected it. However, you can have a better chance of making money, if you understand the risks associated with the trades you are advised to make.

4) How Much Money to Start

In order to answer this question, first you have to decide whether you want to trade on your own or have someone giving you the trading recommendations. Commodity markets are different from the stock market; is not a good idea to trade on your own if you dont have access to real time quotes, broadband Internet and the time to be in front of your computer most of the day. Remember, because of the leverage, mistakes are very expensive in this market.

For small investors, the best thing to do is to open an account with a broker that you feel confident with and that will give you advise and manage your positions. There is all kind of minimum requirements regarding the amount of money that you need to open an account. I think that small investors that are getting started in this market should open with a minimum of $5,000 and maximum of $20,000. Less than $5,000 is not a good idea because it narrows you on your possibilities of diversifying your money in different markets and types of trade, which is another way of increasing your risk. I also dont advise clients to open with more than $20,000 because remember that when you open your account, what you are basically doing on your first trades is seeing if the broker you are starting to work with has the ability and potential to make you money. As I mentioned before, if you loose money on your first 4 or 5 trades, chances are you will keep loosing money on that account. It might be cheaper to find some other place to work with.


Small investors do have an opportunity to make money in the commodity market. If you want to increase your chances of being successful in this market, you also have to do your part. It is not enough just to look for a broker, sign the paper forms and send the money. As the owner of the funds, you have the responsibility of understanding where your money is being invested and what are the risks involved in every trade. Finally, remember that you are not opening an account to get rich in the very short term. You are investing in the commodity market as a way of diversifying your investment portfolio, trying to achieve a better return overall.

Jorge Malo is the President of TeoFutures, an Introducing Broker who specializes in working with investors who want to participate in the commodity market with a minimum of $5,000. TeoFutures trades Futures contracts and Options over Futures on a non-discretionary basis for our clients. Mr. Malo has more than 15 years experience in the financial markets in the US and abroad, and is a member of the National Futures Association. Please visit our Web page at to learn more about the commodity market and our company, and to subscribe to my Free Weekly Financial Newsletter with important market information and analysis.

Electronic Medical Billing Control with Computer Aided Coding Software

The average practice submits half of its codes wrong, while some practices rarely exceed more than one code right out of every five codes. Inexact and inconsistent coding increases the risks of undercharging, overcharging, and post-payment audit. This article outlines evolution of coding from individualistic art towards disciplined and systematic process.

It is convenient to review the role of coding in the context of the entire claim processing cycle, which consists of patient appointment scheduling, preauthorization, patient encounter note creation, charge generation, claim scrubbing, claim submission to payer, and followup, which in turn includes denial or underpayment identification, payment reconciliation, and appeal management. The importance of thorough knowledge and correct application of coding rules at the charge generation stage of claim processing cycle are well known and have been frequently discussed. Less obvious but no less important is the ability to make correct interpretations of the same rules at the claim followup stage during denial or underpayment analysis and upon receiving payment and explanation of benefits.

Coding is difficult because of a four-dimensional complexity. First, the sheer volume and intricacy of coding rules make it difficult to select the right procedure code, correct modifier, and necessary diagnosis code for the given medical note. For instance, a claim will get denied if you charged for two CPT codes but provided an ICD-9 code that shows medical necessity for one CPT code only. Next, the payer-specific modifications exacerbate the complexity of coding, creating the need to code or process differently the same procedures depending on the payer. For example, some payers require medical notes attached to some CPT codes in addition to standard ICD-9 codes. Third, the codes and regulations change over time, necessitating continuous coding education and re-education. Finally, charge generation and claim followup are disconnected in space and time and often performed by different people, adding to confusion and costs of the claim processing cycle.

Only experienced coders can handle such complexity but experience too often turns into handicap as, in the absence of a reliable self-correcting process, the coder or the followup person may repeat the same mistake over and over. Hence ad hoc coding is error-prone and expensive. Paper superbill-driven coding improves upon traditional coding because it allows fewer errors and eliminates some of the costs. Computer aided coding with integrated superbill completes the transformation of coding from individualistic art towards disciplined and systematic process and is the most reliable and least expensive solution.

Traditional Coding

Since the practice owner is ultimately responsible for coding quality, it behooves the physician to manage personally the coding process. But traditionally, in the absence of systematic practice management, the physician looked for a coding approach to avoid the burden of coding. Such an approach to coding is error-prone and expensive. According to the Healthcare Financial Management Association's "Tip Sheet: Medical Claims Denial Management," the average error rate for CPT coding is 45%-55%. Some specialties (e.g., interventional radiologists) have trouble exceeding even 18% of correct coding, according to the March 2003 issue of "Healthcare Biller: The Communication Network for America's Health Care Billers," a monthly newsletter from Aspen Publishing.

Traditional coding involves the doctor, data entry personnel, and certified coder. The doctor dictates, types, or handwrites descriptions of diagnosis and procedures, without listing actual codes. The data entry personnel enter codes based on reading doctor's descriptions, and the certified coder supervises and audits the quality of coding by the data entry personnel.

Traditional coding process is error-prone because the certified coder does not audit 100% of entered codes and because such process does not have a vehicle for context maintenance between the charge creation and claim followup stages. The errors may become especially expensive upon post payment audit of the charges by the insurance company. This process is also expensive because multiple people are involved in the coding process and because the errors, if discovered at all, will be discovered only downstream, rising the costs of error correction.

Paper Superbill-driven Coding

Pre-compiled superbill-driven coding process places the doctor in control of coding, ties together claim creation and followup stages, and avoids many shortcomings of traditional coding. Such a process delivers two-fold advantage of lower cost and improved communication. First, the doctor codes at the end of patient encounter without involving data entry personnel in the middle. Second, the paper superbill serves the role of a formal vehicle for coding information communication between charge creation and claim followup stages. Additionally, a pre-compiled superbill improves coding consistency across the doctors within the same practice.

Superbill creation process has four stages:

1.List the codes used most often first. Use CPT frequency report.
2.List the diagnosis codes
3.Leave room for ancillary services
4.Include patient's information

Along with the advantages over the traditional coding process, the paper-based superbill still has four shortcomings. First, the data must be re-entered into the system from the paper superbill, introducing potential for errors. Next, the superbill must be reviewed periodically to adjust for changes in practice operations. Worse, it is difficult to keep up with changes in coding regulations, necessary modifiers, and bundling decisions that differ across various payers. Finally, the paper superbill contributes nothing to upfront coding error identification and correction, delaying potential error identification and resolution to post-submission, or worse, post-payment phases. Obviously, the later in the process the error is identified, the more expensive is its correction.

Computer Aided Coding with Integrated Superbill

Computerization and integration overcome most of the problems of paper superbills, eliminating duplicate data entry, automating code review and adjustment for frequency, practice operations, and payer idiosyncrasies, and shifting much of the error identification and correction from post-payment stage to claim pre-submission stage.

Computer aided coding with integrated superbill offers multiple advantages:

1.Dynamic - Adjusts for changes in practice operations and payer specifics. For instance, adds automated alert to satisfy unique payer demands, such as requests for paid drug invoices in addition to injection CPT code and J code for supplies.

2.Precise - Matches codes to EMR and alerts in real time about potential coding errors, such as confusing modifiers 59, 76, 77, and 91 for repeat procedure or test, or not coding the ICD-9 code to the highest level of possible digits in spite of specific diagnostic available in EMR.

3.Defensive - Allows for real-time profiling of coding patterns to alert about potential audit flag.

4.Reliable - Facilitates end-of-day juxtaposition of visits with charges, avoiding unpaid visits.

5.Inexpensive - The doctor can use it directly, eliminating extra data entry step and associated costs.

In summary, coding is a mission-critical responsibility of practice owner. Computer aided coding with integrated superbill places the doctor in control and enables dynamic, precise, reliable, consistent, defensive, and inexpensive coding process. Superbill digitization and integration overcome the four-dimensional coding complexity, tie it to EMR, patient scheduling, and billing (i.e., to the entire spectrum of practice management functions), and require powerful Vericle-like computing platforms.

Yuval Lirov, PhD, author of "Mission Critical Systems Management" (Prentice Hall), inventor of patents in Artificial intelligence and Computer Security, and CEO of Billing Technologies and Services. Vericle unites hundreds of billing services across the nation. Its electronic medical billing software tracks payer performance from a single point of control and shares compliance rules globally. Yuval invites you to register to the next webinar on audit risk at

Forex Trader- Getting Behind The Non-Farm Payroll Report

The Non-Farm Payroll report presents quite a dilemma for the new Forex trader. On the one hand it is a predictable market mover which happens on the first Friday of every month at 8:30 am Easter Standard Time.

On the other hand, it has the following major disadvantages for the Forex trader:

  • The large price swings can create whip saw reaction which can easily take out stops.
  • Trading at this time is very volatile and many online brokers cannot guarantee positions. Slippage is a major factor at this time so the Forex trader may not get the profits they think they should or they may get stopped out when they think they shouldn't.

Before considering how a Forex trader should approach the market at the time of this report, let's get behind the scenes and get some background information on this fundamental announcement:

The U.S. Bureau of Labor Statistics releases this statistic which represents around 80% of the workers responsible for the gross domestic product of the USA. In other words, the figures released show the total number of paid employees in the USA in any sector with the exception of those in:

  • general government service
  • private household category
  • certain non-profit organizations
  • farm and agricultural sector

This comprehensive report gives details of:

  • how many people are looking for employment
  • how many people are in employment
  • salary levels of those in employment
  • number of hours worked

Why is this of interest to the Forex trader and why does this information have such an impact on the foreign exchange market?

A successful Forex trader needs to have some understanding of economic factors in order to perceive what candlestick charts are representing.

The employment data contained in the Non-Farm Payroll report is a major indication of how well the economy of the USA is doing. Additionally, the data provides a guide for investors as to where to put their money.

Another major factor is the insight the employment data gives on inflation, especially the figures relating to salaries and wage trends. Any signs that inflation may be increasing or decreasing are monitored closely by the Federal Reserve which responds accordingly.

As a result, the money markets react in a big way.

How should the Forex trader deal with the Non-Farm Payroll report?

In view of the wild price swings which are characteristic at the time of the release of this report, and as many online brokers cannot guarantee positions at this time, many professional traders choose to stay out of the market at 8:30 am EST on the first Friday of each month, and for perhaps 30 to 40 minutes after.

Additionally, price action is often very muted during the first Friday of every month as the market awaits the Non-Farm Payroll report. Modest price action may even be noted one or two days before the first Friday in some instances.

The Forex trader needs to be aware of this and recognize the market conditions leading up to this report. Price will often be in consolidation working its way up and down narrow channels. Trading opportunities still exist but of course, such price behavior will require a different set of strategies.

As for the time after the report, there can often be good trading opportunities. After waiting for the market to settle, which may take anywhere between 30 to 60 minutes after the report, it is possible to start making sense of what is happening.

By observing key support and resistance levels, candle patterns, Fibonacci levels, and other indicators, it is possible for the Forex trader to profit from the second leg of price action, after the first dramatic swing has taken place.

So to summarize:

Why does the Non-Farm Payroll report have such an impact on the Forex?

Answer: Because the employment data contained in the report can be a major indicator of how well the economy is doing and how the Federal Reserve is likely to respond to inflation indicators.

How should the Forex trader approach the time of this report?

Answer: STAY OUT! Then, once wild price action has settled some time after, calmly review the information represented on the charts, and if a good setup appears, TRADE!

For a free pivot point calculator, Fibonacci calculator and the best free economic calendars click here:

Learn how the MACD indicator can help you avoid much anxiety:

Do you know the important lesson Mohammed Ali teaches us about Forex trading? Read it here:

Discount Stock Brokers

Discount stock brokers are individuals offering services for a variety of trades at discounted prices. Their position permits them straight access to the share market. Discount stock brokers are ideal for those who know the trade industry well and do not need extensive information about the market. Since an investor can obtain high discounts, these brokering services are very significant.

Discount stock brokers do not provide any investment advice. They only arrange the stocks demanded at a discounted rate. The brokers take an order and do not make commission. In other words, discount stockbrokers earn money by selling massive amounts of stock. Their services also permit the shareholder to invest some savings back into the market for a return.

Technological advancement and the popularity of computers facilitate almost any business deal from home, via the Internet. Stock brokering is also pretty simple to do online. Several companies on the Internet allow users to sign up, complete the application process and start trading within a few days. The online stockbrokers are mainly discount online stockbrokers and full-service online stockbrokers.

Discount online stock brokers - licensed to trade in shares - are popular with today's online investors. They offer an execution service for a variety of trades with lower fees than the full service agencies. Before making a decision about investments, it is wise to contact several agencies requesting information on fees, because all online stock brokers are highly competitive.

Full-service online stockbrokers can provide far more stocks and products compared to discount brokers. They also help in all share related activities, such as buying shares, creating a safe investment portfolio, and investment advice. These service providers are mostly paid by commission, hence they will work harder to satisfy the investor.

An investor opting for a discount broker has to know the market industry well, since the agent does not provide advice on what or when to buy sell, or trade. The person should ideally possess knowledge in the market. A stockholder can work with multiple discount brokers at the same time.

Discount Brokers provides detailed information on Discount Brokers, Discount Commodity Brokers, Discount Stock Brokers, Discount Real Estate Brokers and more. Discount Brokers is affiliated with Mortgage Brokers.

Forex Education - The Way of the Turtle

Many years ago, I read the story of the turtles in the book Market Wizards. I was fascinated to read how the legendary trader Richard Dennis, trained a group of novice traders in just 14 days and how these novices later became trading legends themselves.

Now we have a book written by one of the turtles themselves. The Way of the Turtle by Curtis M. Faith. This turtle and author made $30 million for Dennis - and now shares his insight of the turtle experiment and its achievements

The Bet

In 1983, Richard Dennis had a bet with his long-time friend William Eckhardt. They had a friendly dispute on whether traders were born, or could be taught to be successful. Dennis thought they could be taught, but Eckhardt thought they couldnt.

The turtle experiment took place - and Dennis won. The turtles achieved a collective compound rate of return of over 80%. This group of 23 traders had never traded before, yet were taught to trade a system in just 14 days.

Way of the Turtle reveals the reasons for their success, and covers such areas as:

. The system rules and methodology

. Why, even though they used the same method, some Turtles were more successful than the others were.

. How to expand the rules that the Turtles used - in order to find core strategies that work for any tradable market.

. How to apply the Turtle methods to your own trading strategy.

. Ways to diversify your trading risk

The Way of the Turtle is a good book - being easy, and fun to read. The book throws up one key fact that all forex traders should note in their forex education: Simple trading systems can provide a trading edge, but its psychologically difficult for most traders to follow these systems and take advantage of the edge the system can provide. This is clearly shown by the fact the Turtles results varied (despite the fact they all were taught the same methodology).

Theres also a discussion on the difficulty of executing a system that has a few big winning trades, in order to achieve an overall positive return on investment.

If you learn one key fact from the book, its that learning a successful trading system is not enough. You need the mental discipline to execute the system correctly - in order to maximize your returns.

Ive always found the experiment an inspiration, and Im sure other traders who read this book will come away thinking, they did it - so its possible!

Its possible to become a successful trader if you gain the right knowledge but you also need courage and discipline, in order to execute the knowledge correctly.

You may not be as successful as the turtles were but the book will point you in the right direction, to achieving currency-trading success. The book does this by highlighting some key areas you need to apply in your own forex trading strategy, in order to become a successful currency trader.

Way of the Turtle is well worth buying - and you should consider it to be an essential read, and part of your forex education.

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