Forex trading blog

Making Saving Simpler

2010-07-05T05:31:00.000-07:00

In order to explore ways to strengthen the power of the public, the Carnegie UK Trust set up a Commission of Inquiry into the future of Civil Society. One of the major policies to spring out of it was a simple labelling measure, aimed at making financial products easier to understand. We enlisted Geoff Mulgan, chair of the commission, to tell us more...

For years, we've become accustomed to seeing labels on food products clearly explaining their content and how they have been produced. Similarly, when we buy clothes, labelling means you know exactly where the product was made and what it is made of. But why is it that when you go and choose which mortgage to take or which pension to invest your money, or even who to bank with, there is no such thing as financial labelling? And why are there so many products on the market that a lot of customers don't really understand (something that was driven home during the financial crisis)?

Making Good Society, a report which we recently published, calls for a ‘comprehensibility threshold' which would ensure a minimum standard of user-friendly language on financial products. Under our proposals, if it turned out that a majority of the customers of a financial product didn't understand a fundamental aspect of it, the Financial Services Authority (FSA )would require it to be removed from the market. The aim would be to put much greater pressure on providers to ensure that customers understood what risks and benefits they were signing up to.

Too often at the moment, business models essentially assume that customers won't really understand the nature of the product they're buying. This plan wouldn't stop the marketing of complex products completely - but would limit it to customers able to understand their complexities. If a majority of their actual customers didn't understand them, they would be removed from the market.

A second recommendation is for better labelling. Whether it's ISAs, bonds or savings, the public should have a right to know exactly where and how their money is being invested. That's why a recent commission of inquiry, funded by the Carnegie UK Trust, has recommended the introduction of compulsory ‘Fair Trade Style' labelling on financial products before they can be sold.

Both initiatives would enable customers to make fully informed choices before purchasing financial products, with all product information presented in a simple, jargon-free way. Greater responsibility would be placed on financial institutions to inform all customers of how the company invests its money, so people know whether not their money is buying shares in companies with good social and environmental track records. In an age of consumer power, this move would give the ordinary investor, faced with a wide array of choices, more control over the way their money is used.

Comprehensibility tests, likewise, would see the consumer being given greater power. Although there is currently a legal obligation on financial institutions to fully inform customers, most people find ‘financial language' difficult to understand. This, in turn, has wider implications, affecting the way in which the general public engage with financial institutions in terms of governance and accountability. It is only when the public can hold these big institutions to account that our failing financial system can properly reform itself and be truly ethical.

Ordinary investors do have the power to influence investment policies. Fair Pensions' recent campaign, Counting the Costs, saw citizens from across civil society hold BP and Shell to account with respect to the sustainability of their operations in Canada. This is just one example of ordinary people having the power to influence the policies of major financial institutions. And with this week's Budget announcement compelling UK banks to provide a basic bank account to every citizen, it is more crucial than ever that these institutions are transparent, accountable and compelled to communicate their products clearly to their customers.

Geoff Mulgan is chair of the Inquiry into the Future of Civil Society (www.futuresforcivilsociety.org)

Six Deadly Sins in Forex Trading

2010-07-05T05:30:00.001-07:00

It does not matter if you are a new trader or a veteran trader, most of us will commit one of the six deadly sins in Forex Trading. As a veteran trader, you will likely to commit only one or two, but for less informed traders, they are likely to commit more, if not all, of the sins listed below.

1. Reliance on the Experts. In 2007 to 2008, the housing market crumbled, the stock market tumbled, and many investors lost money. Many of Wall Street's top analysts had vouched for the toxic mortgage-related securities, and many investment banks went bankrupt because of this reliance on the Experts. The same principle can be applied to Forex trading. Forex reviews and forum postings can easily be manipulated; hence, you should be skeptical when coming across the latest "can't miss" software or trading courses that promise to double your trading profits in two weeks.

2. Setting the wrong goal and trading target. Everyone seems to focus on setting goals and achieving ten pips a day. This is a marketing ploy to sell more Forex trading courses, software, or the latest Forex techniques on DVDs. No one can consistently achieve ten pips a day. You can't take when the market is not providing you with trading opportunities. If you set an unattainable goal, you are setting yourself up for failure. Be realistic with yourself and set up monthly goals instead of daily or weekly trading goals.

3. Not paying proper attention to drawdown. It does not matter if you are trading manually or with automated trading software, all traders and trading software will go through a period of drawdown or a losing streak. You must always take this possibility into account and not compound your trading lot. You may compounding your winnings, but this technique will also amplify your losses when a losing streak hits. Always have an exit strategy or enough cash to cushion any drawdown that may occur.

4. Forgetting to practice, practice, and practice. In order to master a new trading skill, you will need several months, or even years to refine your skills. Don't fool yourself and think that you have mastered the market after three months of demo trading. Many have gone down the same road and failed. You will not be the exception, so don't bet your entire savings on it.

5. Falling in love with a trade. Don't hold on to a losing trade that is going to wipe out your account, even the great Warren Buffett is wrong at times; hence, be willing to cut your losses and move on.

6. Not checking your emotion. There is no such thing as a guaranteed winning trade. You must learn to treat each trade, whether it be a losing trade, break-even, or winning trade, equivalent emotionally. It is possible to have 10 or more consecutive losing trades; hence, don't give up, just learn to move on. It is business as usual, and you should not let your previous losing trades affect your decision making process. One of the primary reasons why automated trading software works so well is because it is not emotionally affected by either winning or losing trades.

The Politics of Gold - The Golden Future

2010-06-28T03:06:00.000-07:00

Greece received a $143-billion bailout package from two sources, the Euro Zone and the International Monetary Fund.

The Euro Zone is made up of 16 European member states which have adopted the Euro currency as their sole legal tender. The International Monetary Fund (IMF) is an international organization formed to stabilize international exchange rates, etc. and offers highly leveraged loans. Its headquarters is in Washington, D.C.

Since Greece borrowed too much money for too long and now can't pay it back, British economists told the Greek government to "abandon the Euro" and to default on their sovereign debt to save the Greek economy.

When that happens, look for Spain and Portugal to follow. Together Greece, Spain and Portugal have a combined public and private debt totaling $2.6 Trillion according to the economists at The Royal Bank of Scotland. There is no feasible way these countries can pay that debt back.

So, the assumption that the Euro was stable and would last forever is found to be wrong. The life of the Euro may be only months, at the longest a couple of years. Even the citizens of Greece see the looming catastrophe as vendors sell gold coins as fast as their paper assets can be converted.

German citizens, remembering the currency crisis of the 1930's, are rushing to buy gold coins. In the very near future, individual European countries will dump the Euro.

Last year Russia, China and India, along with other emerging countries, with their need to balance vast U.S. dollar reserves, found that the easiest way to do that is to buy gold. [Call Today] 888-98-Buy-Gold BuyMetalsNow.com
Governments around the world promised citizens economic security in the form of pensions and health benefits which they cannot possibly afford.

The US debt problem looms over all of Europe's debt issues. Our financial crisis is just starting. The IMF has said that the gross public debt of the US will reach 97% of GDP next year and 110% by 2015. That kind of debt is unsustainable.

If debt continues to slow our economy's growth, we will never be able to grow our way out of debt. Yet, the Treasury continues to print money, continuing our monetary instability.

Expect the same in Europe, despite the European Central Bank's anti-inflation mandate. In 2009, Central Banks, which used to be net sellers of gold, are now buyers of gold.

Bernard Shaw once said: "You have to choose between trusting the natural stability of gold or the natural stability and intelligence of members of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."

Look at the final phase of the global financial crisis, the destruction of money's value and the shrinking US dollar. The disaster has already begun.

The US is now the single most indebted nation in the history of the world.

But…gold is still the ultimate safe haven, holding its value better than any other asset class.

BuyMetalsNow.com

European Union and Forex Trading

2010-06-24T02:41:00.000-07:00

How do events in the European Union impact forex traders? With the proper forex analysis they provide trading opportunities. The instability of the Euro, the inability of countries like Greece, Spain and Portugal to pay their dues and the continuing global credit crisis have traders and investors walking on eggshells, ready to sell at the first sign of meltdown. Conspiracy theorists will try to tell you the European Union is disintegrating but this just isn't true. The global financial community has too much riding on the outcome of current events to let this player fail. In fact, just last week comments came out of the emergency Eurozone summit that underscores this. The EU itself said that it "will take whatever steps" were necessary to protect the economic stability of the Eurozone.

Forex Analysis and The Euro

For currency traders, current events have always been a valuable trading signal. Greed and fear drive this market like no other. The very nature of the forex market makes it very susceptible to emotion. With no limits on currency flow the market is able to freely trade, making it particularly interesting to technical analysts. Technical analysis is the study of financial markets through charts and assumes that market movements are measurable and repeats itself.

How Do You Trade the Euro in This Environment?

All joking aside, the proper answer to this question is "Carefully." Forex trading is risky at best and downright dangerous for the uninitiated. The market players are detached from the true values of the Euro because of fear. Each morning there are new headlines. Headlines that are driving traders to knee jerk reactions. The events in the stock market on May 6th are a prime example. The traders were just waiting for the signal to start selling and when they thought they had a strong one, look out below because here we come!

Fear of instability in the EU has traders on edge and investors are screaming to get out of the market. Whether or not the fears have any basis on reality is really of no consequence. Fear of collapse has depressed the value of the Euro to levels not seen in a year and there is little evidence of a bottom.

Forex Analysis and the European Union

Without a doubt, events in the EU will continue to influence the currency markets. In the past week, the EU and its more prominent, and solvent members have unveiled a plan to support its member countries. Their aim is to stop the Greek credit crisis from spreading to Portugal, Ireland and Spain. A fund has been set up for all member nations to draw on in times of need. This is great, but Greece can't pay its dues now; what's to change this in the future? The problem countries can't pay now, much less a greater amount which will be required going into the future in order to fund the rescue fund.

News, News, News and Forex Analysis

Access to prime information, that is, information before it gets filtered through the media, is crucial. It sounds like some insider deal but it's not. The sources of this information aren't traders; they're the central banks of the world's governments and the governments themselves. This information is widespread and available through the internet. However, going from site to site tracking down the most current news is cumbersome and time consuming. In order to get the information quick enough to act on, you need some help.

There are some sites such as ForexEgg.com that link to all the prime news sources, all the central banks, an unparalleled calendar of economic events and streaming headlines from the major news sources.

http://forexegg.com

Real Estate Portland Investing

2010-06-24T02:40:00.000-07:00

Real Estate investing is a very popular form of investment, despite the obvious risks involved. These include the limited liquidity relative to other investments, the high amount of capital involved, and the fact that is highly cash flow dependent. The latter problem is the most likely to cause failure, coming about when a real estate investor goes into negative cash flow for an unsustainable period of time, forcing him or her to resell the property at a loss.

Despite the obvious challenges, the financial rewards can be very enticing, provided you put in place a plan that will maximise your investment results. Some factors which need to be looked at by the investor include the structure of the purchase, property choice, investment finance, negative gearing, and capital gains tax. Taking all these into consideration will benefit your investment and lead you on the path to financial success.

The structure of the purchase is the first thing you need to consider when buying real estate. That is, who will own the property. This might be considered simple however there are many consequences in regards to tax and liability based on how the purchase structure is laid out. Should an investor purchase the property in their own name? Or jointly with their partner? Or with a number of people? Or as a company or trust? If you are purchasing a property with numerous other people, it might be worth considering buying it as a trust, so you can distribute the income generated to all the investors.

Individual ownership is the most common and simplest form of ownership, however it is also the least flexible when it comes to tax. Because of this, individual ownership should be limited to the family home. If you are looking buy real estate as an investment property, it is probably worthwhile not going with this approach. A
real estate Portland agent once told me, if the property is going into your name, you better be living in the place!

Sometimes investors buy real estate in a partnership with friends or other associates, however a number of tax restrictions are also applicable in these cases. Therefore a partnership also needs to be considered in some circumstances. Buying property as a company also has downfalls, such as minimal asset protection, as legal action can be taken against both the individuals and the partnership if problems arise.

A trust is the most flexible ownership structure for property investment whereby a trustee holds legal ownership of the property, on behalf of the beneficiaries. This means the people buying the real estate do not own it and any action against the individuals will not have an effect on the property. It also means both capital gains and income can be distributed to the beneficiaries.

Once you've organised the structure of the real estate purchase, you need to choose a property to buy. This decision should take into account both short term and long term plans. You may want to buy a small unit and live it in for a few years before using it as a rental property when you move into a full size home. Buying a property in a coastal town such as Portland can be used as a rental property with the idea of moving into it in retirement.

In terms of making a solid return on your investment, you can't go wrong buying something with a strong rental return with tax benefits, in an area with high capital growth, and close to all the necessary amenities. Buying something "scarce" will ensure that it becomes sought after and attracts a high price.

Getting your finances sorted for the investment is another important issue. An investment loan is often pricier than a home loan and may require you to use equity from your home as security. Choosing a fixed or variable interest rate can also effect your finances, and you should look into the likelihook of interest rates rising or falling sharply in the near term.

Any investment strategy should take a lot of planning and discussion. Before making any decisions, ensure you think through things carefully and examine all options.

Source: Article Trader