Monthly Archives: May 2016

Why do you need an investment plan?

You can easily get discouraged with investing if you don’t know where you are heading to, thus, it is necessary to  have a concrete plan. An investment plan serves as your stairs in attaining your financial goals. But the most basic thing for you to recognize is your current financial state and what you want to do with your coming investments.

In creating your investment plan, you have to set your specific goals, however, they have to be realistic. You can’t aim for $100,000 return of  investment if you haven’t invested at all. You have to decide where does the money you acquired from your investment go. In some cases, you may want to buy a house, a luxurious car, spend it on travel or you just want to retire early. Take note that the bigger the goal is, the larger the investment must be.

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Before you invest or make an investment plan, one of your concerns should be the amount of money or funds you can honestly invest. It is necessary to estimate how much of your money you can save and you can spend. You have to picture in your mind the amount of money you can allow yourself to spend and you must obey the figures you have set as much as possible. You may check the available money that you have, your expenses and your emergency funds perhaps.

After you have set your goals, proceed on choosing your investment strategy. Investment expert suggests that if you want long-term goals, you should choose more aggressive and higher investments. On the other hand, if you are only after short term goals, then you might as well pick the conservative investments with lower risks.

As the theory says, you can deal with more risks if you are young due to the fact that you can handle any loss since you have more time to recover. Therefore, younger investors are advised to take the aggressive investments rather than the less aggressive ones. Remember, when you take less, you make less, so you become cautious about the risks which are significant or not.

Following your investment strategy is your investment policy statement. This will help you in your investment decisions and will serve as an outline for your investment adviser. The investment policy statement must include your specific goals and the strategies you may use to meet your plan. You can also indicate your expected return of  investment in a certain time together with the risks you are willing to take.

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If you can’t meet your projected savings, then you may modify your goals. Figure out the investment plan that suits your needs and if you have to learn from the basics, do it. It is also wise to check your goals from time to time so you can make the necessary adjustments.

In some instances, a financial plan and an investment plan are used interchangeably. However, a financial plan deals more on your personal plan in areas including college and risk management. A financial plan is an evaluation of your present and future financial state which is used to perceive your feasible income, asset values and withdrawal plans in the futures.

When you have an investment plan, you are prepared for the possible scenarios in the future. It gives you an overview about market possibilities and it helps you reach your goals accordingly. So what are you waiting for? Start your investment plan as soon as possible.

How To Be A Successful Forex Trader

Here are some steps you need to possess to be a successful forex trader:

  • Define your objectives and type of trading

The type of trading you desire should be relative to your objectives, as well as your personality should match on your choice.

Before entering the market, it is essential that you have some idea on how it works and how you’ll be able to get there. Make clear objectives in mind as to what you really like to attain. Thus, ensure that your trading strategy is capable of achieving these objectives.

  • Select a broker

Choose a broker whom you feel comfortable to work with and consider the offered trading platform that matches your trading styles.

A broker that offers a trading platform will enable you to do certain analysis, while a trustworthy broker is an utmost importance. Spending time reviewing the variety of brokers, gives you enough knowledge and information. You should learn your broker’s policies, including on how he or she goes about making a market.

  • Select a methodology

When choosing a methodology, you must use it consistently.

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As you enter the market as an investor, you need to have keen knowledge on how you will make decisions in terms of executing your trades. Know the information you need to make the correct decisions of whether you will enter or exit your trade. There are traders who review the underlying fundamentals of the firm or the economy, and then use a chart to modify the appropriate time in executing the trade.

  • Choose the best time frame

For direction analysis, you must choose a longer time frame, while for time entry or exit, you must choose a shorter one.

A lot of traders are confused as information involves complexities that occurs when looking at charts in different time frames. What shows up as a buying opportunity on a weekly chart could show up as a selling opportunity on an intraday chart. Hence, if you know the basic trading direction from a weekly chart, and using a chart to time entry, make sure match the two.

  • Measure your prospects

In determining how reliable your system lies on your prospects. Go back on all of your trades and measure the winners versus all your losses. Then determine how profitable your winning trades were, compared to how you have loss on your losing trades.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates on our official website, Trade12.com. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you develop a keen understanding of what is forex and certain trends involving stocks, currencies, indices, commodities, and metals. With all the positive Trade12 feedback from clients, you will be assured that your trading account is safe and secured.

What Makes the Forex Market Move?

It is not just about knowing about Technical analysis when you trade, it is also very essential to have knowledge what makes the forex market move.

News  Makes the Forex Market Move

There is a fundamental force behind the trend lines, double tops, and head and shoulder patterns, these movements and force are called the News!

The point is that news affects the way we observe and perform on our trading choices. There is no difference when it comes to trading currencies.

However, there is  a distinct dissimilarity with how news is controlled in the stock market and the forex market.

Be it big traders, small traders, skinny traders, or husky traders, all have to rest on the same news to make the market move since if there was not any news, the market would barely move at all!

Since it’s the news that makes it change, the news is very essential to the forex market. In spite of the technical, the energy that keeps the forex market going is the News!

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Two Ways to Trade the News

Directional Bias – this means that you anticipate the market to change a specific trend as soon as the news report is out. When considering for a trade prospect in a specific direction, it is good to identify what it is regarding news that will cause the market to change.

Non-directional Bias – this is a more common news trading strategy . This technique neglects a directional bias and just plays on the point that a big news report will generate a big change. It is not important  which direction the forex market moves. The feeling is,  you  just want to be there when it happens.

This means is that as soon as the market moves in any direction, you have a idea in position to enter that trade. You don’t have any preference as to whether prices will  increase or decline.

Actual Number vs. Consensus

Actual Number – once a news report is out, this is the digit that is specified.

Many weeks or days before a news comes out, there are expert that will turn up with some kind of prediction on what numbers will be out. This digit will be different amongst different analysts, however, in general, there will be a collective number that most of them settle on and this number is called a consensus.

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Sign up for a live account now at Trade12 forex broker to profit as much as you desire. You are also very welcome to express your Trade12 feedback regarding our company’s service.

Stock Market Basics

If you’re considering an investment in the stock market and the mere thought of losing money worries you, then don’t invest. The stock market is a web of complexity that is not suitable for the novice investor. Nonetheless, if you do decide to invest, there are some points you should keep in mind to prevent losses and rather increase your chances of making more money.

Let’s dive in the five basics of the stock markets—how they work and what do they react as they do.

And so we begin.

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  1. “Stock Market” Definition

Investopedia defines it as the market in which shares of publicly held companies are issued and traded in two ways: through exchanges or over-the-counter markets. The stock market is also one of the most essential gears of a free-market economy, being known as the equity market, and offers companies with access to capital in exchange for giving investors a part of ownership in the said company.

Plainly put, it is a complicated system where shares of publicly-traded companies are issued, bought and sold—to buy the stock, hold it for a time, and then sell the stock for more than you paid for it. Investors who hold stock for a minimum of fifteen years are the ones who usually succeed in the market. Stocks are long-term investments; however, there are no guarantees.

Does it seem like it’s a scary pit meant for gambling? Probably not—unlike in gambling where you lose everything you have at hand, when you invest in stocks, you will either win or lose just an amount. It is rare to lose it all, except for the instance you invested in a company that went bankrupt.

Be sure the company you’re buying is worth owning. Unless you simply love risk, you should probably refrain putting too much of your money in one stock.

  1. The Stock Market is an Adversary Trading System

The stock market is a group of millions of investors with, of course, utterly contrasting views and opinions. This is due to the norm that when one investor sells a specific security, someone else must willingly purchase it. And since both investors cannot be correct, it turns to be an adversarial system. One investor will profit, and the other will experience loss. So it is important to become knowledgeable and familiar on the investment you want.

  1. Factors that Make Stock Prices Rise and Fall

The media, opinions of renowned investors, natural catastrophes, risk, supply and demand, the shortage and surplus of alternatives, and political and social unrest are included in the many factors that determine the direction of stock prices. Quite complicated, actually.

Combining these factors and the all the relevant information that has been circulated, it produces either a bullish or a bearish sentiment, and a corresponding number of buyers and sellers. If there are more sellers than buyers, prices will go down. And of course, prices would go up when there are more buyers than sellers.

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  1. The Stock Market is Unpredictable

An example for this number: Stock prices have been surging for a couple of years now. Investors think that a correction will come and stock prices will fall. The dilemma is this:  nobody knows what will be the cause of the selloff or when it’s going to happen.

This causes investors to watch by the sidelines, holding cash, and jump as soon as the opportunity presents itself. Those who are willing to jump in despite the risk are triggered by the low cash return and it creates unease to earn apparently nothing while watching stocks move upwards.

The stock market’s unpredictability makes it almost impossible to know when to jump in when you’re on the sidelines, or when to get out when you’re in. This brings forth three issues for an investor to take into consideration.

  • Understanding the point at which stock prices are valued practically and fairly.

Market activity determines the actual price of a stock. When the decision comes whether to buy or sell, the investor often compares a stock’s actual price to its fair value. Overvalued stocks tend to repel the investor, if he were to make a practical choice.

Now, what is a fair value and how do measure it? Preferably, it would be based on a consistent formula. But there are many ways to calculate the number. One solution is to sum up the value of a company’s assets on its balance sheet, excluding liabilities and depreciation.  Due to the nature of these methods yielding slightly different results, sometimes it’s hard to identify if a stock is overvalued, undervalued, or fairly valued.

An important reminder as well is that overvalued stocks don’t always trigger the investor to sell and eventually drag the price down. A stock can stay overvalued for quite some time. This is why it is tricky to make buy or sell decisions based on where the price is in relation to some moving average.

  • The event that will prompt a slump, or a trend reversal.

To put in a simpler note: no one can predict what will happen and come in the future to cause a disruption and reversal in the trend.

  • Understanding the human decision-making process.

Humans oftentimes use logic to analyze a situation, and let emotions rule us in action.

In making investment decisions, you must be able to process the significant data and cast a good decision, since there will be investors on the other side prepared to buy what you’re selling and vice versa. It is impossible to know everything you would need to know and process it without a hint of bias, however, and thus it prompts us to make sub-par decisions at times. This happens even with the most logical and critical people.

  1. The Best Time to Buy and Sell

Benjamin Graham, the father of value investing, once said, “The buyer of common stocks must assure himself that he is not making his purchase at a time when the general market level is a definitely high one, as judged by established standards of common-stock values.”

The answer as to when to buy or sell stocks is this: the best time to buy is when others are pessimistic, and the best time to sell is of course, the opposite— when others are active and optimistic. Deciding on this matter is very crucial.

It should be remembered that when buying, the chance of a high return is bigger if you buy after its price has tumbled rather than after climbing, though it is still recommended to remain cautious. Why be attentive? Let’s say the stocks of Company A plummeted by 40 percent. The first thing to do is to ask questions—why did the stocks drop as it did? Did other stocks in the same industry experience a decline as well, was it severe? Did the entire market fall?  Assuming the other stocks in the same sector did relatively well, it can be assumed that the problem lies with Company A. It’s wise to take on and follow a buy or sell discipline.

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It takes years to become knowledgeable and well-versed in the field of financial markets and stocks. While it may seem like an unnecessary cost, but we recommend finding someone you trust and ask for their guidance. After all, diving head first into unfamiliar waters alone without any proper experience may actually be more expensive.

Best of luck to you, Trader!

Oh and by the way, you can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates on our official website, Trade12.com. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you develop a keen understanding of what is forex and certain trends involving stocks, currencies, indices, commodities, and metals. With all the positive Trade12 feedback from clients, you will be assured that your trading account is safe and secured!

Tips For Choosing A Forex Broker

The foreign exchange market accounts for over $4 million in average traded value, suggesting it as the world’s largest financial market. Hence, investors must choose a broker before entering the market to help them study their trading activity.

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The term “broker” is commonly thought of a person working in an office. There are large numbers of forex brokers you might get confused with while choosing the right one. Here are some useful tips in selecting the best forex trader.

  • Assess the type of trading you desire

There are a variety of sites that are designed for day traders, while some are made exclusively for casual investors.

An investor who wished for a frequent trading basis, is required to constantly access online and in every market data.

  • Think about the money

Hard earned money are much valued by everyone and giving it for free of cost is a big mistake.

To find the best forex broker, one must review the specified fees or commissions the broker charges. Here are a few common types of charges that accounts:

  • Account opening fees
  • Per trade commission
  • Inactivity fee
  • Account closing fees
  • Paper statement fees
  • Account transfer fees

Conversely, other forex brokers require not only fees, but also minimum account size. If you desire to trade, in which your future lies, then there is nothing to worry about. However, there are only limited options for those investors who just want to try trading.

The best services are offered to people with larger accounts. While searching for the right broker, look for tools that are offered for free as well.

Here are some common tools that are offered for free:

  • Free calculations
  • Online tutorials
  • Trading software
  • Quotes

Subsequently, some forex brokers are offering a certain amount of money next to opening an account. An additional fund is required if you wished to move from forex to stocks or commodities in order to look for an online broker that are offering these options.

  • Offering security

Choosing a forex broker must be reliable and keeps your account information safely, as opening an account requires personal information.

Remember to keep these tips in mind, and you will find the best trading broker.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates on our official website, Trade12.com. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you develop a keen understanding of what is forex and certain trends involving stocks, currencies, indices, commodities, and metals. With all the positive Trade12 feedback from clients, you will be assured that your trading account is safe and secured.