How to Choose Forex Broker
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How to Choose Forex Broker

One important thing in Forex investment is to choose a broker. Broker can be individual or company which become mediator between you and the market. The thing is that choosing a good broker can be a difficult task for the trader especially when you are novice. There are many brokers who claim to be the best and the cheapest broker. But all you need is a broker who is reliable among those brokers. To find a good, reliable broker itself can be tricky; therefore you need some criteria to pick the best one.

Broker is very crucial in helping you in the trading. Make sure that you chose broker who offers low spreads in major pairs. Spread is the difference between the bid and ask price of a particular currency pairs. The spread is the commission for the brokers. There are three commissions regarding the spread which are fixed spread, variable spread, and commission based on a percentage of spread.

The next thing to consider is the leverage. You have to really understand the leverage offered by your brokers because the leverage can be give you profits and also losses. You have to handle and control your leverage in order to gain more profit. Many brokers offer bigger leverage which can give you potential profits but you have to choose it based on your investment strategy to avoid a big loss.

The brokers are there to facilitate you in communicating with the banks to selling and buying currencies. Choosing regulated and reputable broker is also a significant point in selecting a good broker. Most registered forex broker are reliable since their name is under regulatory authority such as Futures Commission Merchant (FCM), Commodity Future Trading Commission (CFTC), National Futures Association (NFA). Those authorities exist to protect the investor against fraud, manipulation, and illegal trading. Although it depends on the investor himself to choose regulated or unregulated one, the security is essential to protect you from the fraud. Check the broker’s regulatory status and financial background to ensure that you are choosing the right broker.

In addition to that, you have to consider is the account size. You need to know the minimum balance to open a trading account. It is also important to know since it is related to the use of mini and micro accounts. Mini account requires small amount in your account and works with low pip value.

In conclusion, choosing broker is more personal decision. If you feel that you are uncomfortable and unsatisfied with your current broker you can always change your broker. The brokers exist to help you in trading after all.

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Simple Forex Trading Guide
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Simple Forex Trading Guide

It is undeniable that forex market is the largest and the most liquid market in the world with over $3 trillion in daily turnover. Yet, it is no need to have large initial capital in forex trading. It allows people to trade with low initial capital. The market offers opportunity in profits as much as the losses. The profit is gained at the volatility of the market’s price. In simple words, you earn profits when buying a pair of currency then sell it at high price or the other way around.

What you need to know is the trend. Being able to identify the trend is very crucial in forex trading since the trend can give the traders insight of the direction of the rate of a pair of currency. Identifying trend can be done through the distinct pattern made by the price. If it is uptrend, the chart will form higher peaks and valley. At this situation, traders should buy the pairs. When it is downtrend which means that the rates are decreasing, it is better to sell the pairs to make profit. You should monitor the trading trends in order to know how the market movements based on the time frame that you chose whether it is short-term or long-term trading. But you have to remember that no one can predict the future even for the professional traders.

The following thing you should know is leverage. It is used to refer the ratio of
invested
amount
related
to
the
trade’s
actual
value. Forex brokers often offer different leverage to their traders. For example when you trade at leverage 1:100 it means for every $1 that you invest, the brokers invest $100. It means that you can control $10000 for $100 that you invested. The higher leverage offered the higher opportunity to profit and higher risk losing your money.

Last but not least you have to know about the Stop Loss and Take Profit. Since forex market is very risky, traders can use these strategies in order to prevent from a great loss and realize the profit made. By using stop loss, traders can control the maximum amount that they can lose on the trading. Stop loss will automatically close your trade when it reaches the maximum amount you have decided; meanwhile Take Profit is similar to the stop loss yet it works on the profit. When you reach certain level of profit, Take Profit will close your trade. Finally, a trader should make a good money management to become a successful trader. Aiming at a big return most likely sounds a big loss. Being consistent to your plan and always learning will result in long term success.

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Advantages and Disadvantages of Stock Investment
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Advantages and Disadvantages of Stock Investment

Investing is quite a trend in today’s life and almost everyone knows about investments and uses the money for investing. Investing also means that you put your money and let them work for you.  People are interested to invest their money in order to gain profits since the future is unpredictable and so are their financial situations. There are so many choices to invest and the popular one is stock investment. Stock market is one of the potential places to invest money. It may offer great gains as well as losses. Yet, if an investor can manage the stocks, there are many advantages which can be obtained such as secure the financial position and also earn money.

The main benefits of investing in stock market is the chance to get more money. Investing in a company that is stable and growing can give more profits to the investors. Stocks offer two kinds of benefits, capital gains and dividends. Capital gain is the appreciation of the stock’s value when the company becomes more valuable and so is the ownership interest represent by each share of stock. Dividend is the excess periodic profit distributed to shareholders when the company earns more profit which more than it requires to support its maintenance and growth. In addition, stocks offer very high returns compared to other investments. Stocks are also liquid type of investment because they can be sold and bought quickly at fine price.

Building wealth through stock market can be done through multiple stock investments. It means that investor can put their money to different types of products. Investing in various sectors of economy may result in a profit even though other investment products lose value. This way, the investors can prevent from losing their money compared to those who put all their money in one product only.

Purchasing shares of stocks means that investors are taking a part of the ownership in the company. It means that each shareholder is the partial owner of that business.  Shareholders have the rights to vote on corporate board members and certain business decisions. For the passive stockholders, they are offered limited legal liability.

On the other hand, stock investment may also give disadvantages for the investors. Shareholders are the last to get paid which means that they get the remaining money after all the employees, taxes, and other company’s necessities have been paid. Moreover, the shareholders may get very limited information about the company’s book. Most of them do not even know about the company itself which make them often confused in the decision-making investment.

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How to Pick Good Stocks
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How to Pick Good Stocks

Choosing stocks to be purchased can be a tricky task especially for beginner who knows a little about stocks and stocks market. Before deciding to buy stocks, investors should know how to find good stocks which can give long term benefits for them. Many investors depend only on the number shows by the statistics of the companies’ financial statements. Using quantitative analysis indeed is a good way to know the performance of the companies. However, it is merely numbers which cannot completely reveal the actual condition happens inside the company. Therefore, investors should investigate the quality of the companies as well. By using the quantitative and qualitative analysis simultaneously, it may help the investors to find the good stocks. Qualitative analysis may consist of management, business model, competitive advantage, and popular opinion.

Management is the very first factor to be considered as a good company will be run by a good management team. Investors should find out who on the management team such as CEO, CFO, COO and CIO are. Next, investors should consider about the educational backgrounds and previous experiences. If the team consists of people who have unrelated background to the business, investors have to concern about it whether they will be suitable and can make a good management in the future. Afterward, take a look into their operational philosophy. Some businesses run with a transparent, adaptable and more flexible way while others can be more rigid and tend to valuing policy. The management philosophy can be seen at the annual report’s management, discussion & analysis (MD&A) section.

Business model deals with the company’s ability to generate profits and revenue from operations. Investors have to know about the companies’ activities so that they will know whether the stocks will give profits. It is important to be truly sure about the future of the companies based on the business model.

Competitive advantage is about the growth potential of the company. The significant thing to be considered is whether the company is in the right industry and can be profitable. Promising business often dominate the industry because the entry to the market is hard. It is proved by few companies which dominating their own sector industry, for example Google.

Popular opinion may affect the judging of company since the public opinion can give impacts to the stock’s value. This factor also may give influence to the investors. They believe that a company which has better public opinion has loyal consumers which can ease the company is expanding its operation. Popular opinion sometimes goes along with the popular brand names. Yet, picking a popular brand name is not always a good choice because if there is a bad news regarding that particular name, the stocks’ price will be affected even though it is not related to the company’s performance.

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Investing in Certificate of Deposits
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Investing in Certificate of Deposits

Certificate of Deposits (CDs) can be categorized into low risk investment which sold by banks, thrift institutions, and credit unions. Many people are interested in this investment since several banks offer higher rate of interests. Yet, the maximum amount is insured up to $250,000 for every single account. It has a fixed term range from monthly, three month, six month, or to one till five years and a fixed interest rate. Therefore, the aim of this investment is that the investors have to hold their money in bank or any credit union until the maturity so they can withdraw their money together with the accruing interest. Usually, banks offer higher interest rate for personal account rather than business account.

Since the coverage limit for each account is only $250,000, an investor may invest in his/her money in several banks or thrift institutions. Laddering CDs is another way to maximize the return by buying several CDs at one time with different maturity dates. When one CD reaches its maturity, depositor can close it and open a new CD with long term and higher interest rate. By doing this, it can help the investor to avoid fluctuating interest.

However, since CD is a deposit account which has rate of interest and the time frame marking the duration of one account, early withdrawal is one thing that investors should be aware of. During that particular term agreed-upon by the investor and the CD issuer, the money is locked away. Any violence such as early withdrawal may give some consequences to the investors. Some banks and thrift institutions will give penalty, for instance paying penalty fees or forfeit a portion of the interest earned.

In addition to that, before opening a deposit account, investor is supposed to know and understand about the term and condition of the CD. It includes when the maturity date, how much interest rate and how the investor will be paid. The changing of the interest rate is also important to know whether the interest rate may increase or decrease under a particular condition. Furthermore, an investor should know if there is any callable CD feature in the issuing bank. The last thing is how much penalty fee that should be paid if there is any early withdrawal.

Most investors consider CDs as a safe investment which has higher interest than other insured investments such as checking and saving account. Although the rates may vary from one CD to other CDs, generally the interest rates are close to current rate of inflation.

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Getting to know Forex
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Getting to know Forex

Have you ever heard of Forex? Forex or foreign exchange market is the largest trading market in the world in which people do the trading of currencies. It is also the most liquid market in this entire universe. It always opens for 24 hours a day except weekend. Anyone could participate in the Forex trading since it can be done via electronic by using computer and Internet connection. Yet, most of the dealers of forex trading are banks with few of insurance companies and other financial firms. Because Forex allows traders to trade at any amount of money, banks are the dominant dealer in this market. As mentioned beforehand that it is all done through via telephone and computer network all around the world, so Forex market does not have any central marketplace.

In Forex market, a currency of one nation is traded for another currency which means it always quotes in pair. However, the major currencies that have been traded are the Euro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen (USD/JPY); and the Swiss Franc (USD/CHF). Other important currency pairs are the Canadian Dollar (USD/CAD) and the Australian Dollar AUD/USD. The currency prices are quoted in pips (percentage in point).

Just like any other trade, trading in Forex market also means buying and selling another. To gain profit in Forex, investors should know many factors which influence the value of the currencies. Those are how and when to place trades at relative interest rates, economic stability, political stability, and the trade status of the country. Moreover, investors should have strong analysis on those issues and also come with good strategies in trading for example leverage or stop loss order.

Leverage is used to profit from the fluctuations in exchange rates between two different countries. It is loans provided by the brokers that handling the investors’ account. It is often use to take advantage for short term fluctuation in the trading market. Even though it may give some advantage, leverage can also give a great loss if the market goes against the investors. On the other hand, stop loss order is used to protect the investors and prevent them from a potential loss. It is a strategy where investors could predetermine a particular point for their entry or exit price. When the market price exceeds the entry/exit price, then the stop order will become the market price. This strategy can also give a shortcoming effect especially when the market price could eventually go higher.

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Gold Never Gets Old: Today and Future Investment
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Gold Never Gets Old: Today and Future Investment

Since centuries ago, gold is one of the precious metals which have high value and often symbolized wealth. In today economic, gold is the most prospective investment other than many investment out there like dollar which is falling over time or stock investments which have high fluctuation. As we can see that from time to time the value of gold is rising and almost never falling to a significant level.

Gold become a potential investment due to several reasons. First, it is precious metal which limited in supply and the market’s demand is just too high. Moreover, gold is not easy to be mined. The second and probably the most important thing is that gold is not severely affected when there is devaluation or inflation. Even when the recession hits almost of the people as well as most country in the world, it is gold which can save them from the economic downturn. The value of gold is more stable than other currency for example Dollar or Pound Sterling. The third, gold has high liquidity. It means that exchanging gold for cash is very easy and quick. In addition to that, the exchange rate will never give disappointment to the holder since the price is relatively high.

Gold investment can be done through various shape of gold. The form of physical gold itself is optional; it can be gold coins or bullions. Gold coin can range from one ounce and fractional sizes while gold bars may vary from one gram to four hundred ounces. Beside the physical gold, many people also invest their gold in form of paper certificate. It is a gold certificate which stating that someone has a particular amount of gold stored at an off site location. Few people also choose to invest gold in the form of jewelry with the intention that the holder can also enjoy the beauty of the gold itself. Yet, only some gold jewelry is made of 24 karat gold. Yet, investing gold in form of jewelry has many shortcomings such as the decreasing value of the jewelry for its time using which can affected the appearance of the gold; also it is quite challenging to quickly find people who want to buy it since it is not purely gold.

For people who are interested in gold investing, it is better to know where to buy the gold. Since there are many gold dealers in the market nowadays, choosing only the trusted gold dealer is an important thing to prevent the gold buyers from gold investment fraud. It is also applicable for those who want to buy gold in the form of jewelry or gold certificate.

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Why Forex Traders Fail?
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Why Forex Traders Fail?

Invest in something especially in Foreign Currency Exchange maybe seem so easy. Forex trading offers huge profit for anyone and there are some people who can achieve a great success in currency trading. In fact, statistics reported that over 90% of Forex traders fail to success. It means that the chance of losing is also great in spite of the profit make. If the losing number reaches 90% then it means that there must be reasons why the traders confront the same failure.

Those 90% traders fail due to a major common reason. They lack of knowledge in currency trading or in other word, they are not ready yet. Due to the minimum experience but they still insist to enter the trading market, they dig they own grave. Many of them lose their money because they take it less serious in learning trading. Many others depend too much on their trading tools or software. Therefore, before joining a trading market, learning and consulting to trading experts is much needed to avoid a big loss. By learning and having a good plan, a trader can avoid future risks since Forex trading is extremely unpredictable.

Many traders especially beginners fail to achieve success in this business because they are not discipline and do not follow their trading plan. Being discipline and consistent to the trading plan can lead traders to gain profits. Traders should have known when to hold or exit the trading. On the other hand, because of lacking in emotional management, fail traders tend to follow their greed and end up gain nothing. Traders should control their emotion since in trading being patience and calm is absolutely needed to face every situation including when the market turns against the traders and end up losing the trade.

The third is that common people have unrealistic expectations. One main reason people put their money in Forex trading is because they want quick money. Many traders also put all their money in the trade with the expectation that they can double it in a short time. Many of them believe that Forex trading can give them instant money with a little effort, yet this assumption is totally wrong. Success requires hard work. It is one little thing many traders forget that the currency trading is undoubtedly potential and it also comes along with damaging risk.

Finally, to gain profit in Forex trading is possible. However, there are many things one should prepare and maintain if he wants to be a success trader. Learning and studying hard, planning good, managing the money and emotional well, are the things that every trader should have.

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Begin an Investment: What You Should Know about Fundamental Analysis
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Begin an Investment: What You Should Know about Fundamental Analysis

Beginning an investment especially for a beginner may be hard since there are several things to be considered such as how to begin, where to buy, or what method to be used. One of the factors that every investor should know is the fundamental analysis.Investopedia defines fundamental analysis as a method to evaluate a security’s value by examining some factors dealing with related economic, financial, and qualitative quantitative factors.

It scrutinizes all the factors which can affect the securities’ values such as economic and financial situation in general and company’s financial condition. This method is established with the assumption that stock market may value a company at a wrong price. The profit is made when an investor can figure out whether a company’s stock is underpriced or not. By evaluating the companies’ financial report, an investor could find out the value of the stock from various companies. This is called the ‘intrinsic value’ or the ‘true value’ of the company.

The opportunity of the investor is when there is a gap between the intrinsic price and the market price. If the stock market underpriced a company, then it is the time to buy the stock with the expectation that the price will rise toward the intrinsic value. On the other hand, if the market price is above the intrinsic price then the investor should sell that company’s stock.
As above mentioned, here are some factors to be considered in fundamental analysis.

1.    Earnings

Earnings are the important element to be examined if someone wants to be an investor of a particular company. Investor should know how much earnings that the company made and its profit for their shareholders.

2.    Profit Margins

Earning is not the only thing that every investor should know. A prospective company should have a good number of profit margins. The formula of to calculate the profit margins is as follow:

3.    Return of Equity (ROE)

According to Investopedia, return of equity is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. The calculation can be done with this formula:

4.    Price-to-Earnings (P/E)

It is used to know the stock’s value by means of dividing current market price by its earnings per share (EPS). A company with high P/E is expected to be prospective in the future. It can be calculated at the end of each quarter and at the end of period for each share outstanding. This ratio is usually used to contrasting companies within the same industry.

5.    Price-to-Book (P/B)

Just as its name the calculation of price to book is to diving stock’s share price over its net assets.  It is also known as price-equity ratio. It is used to reveal the high-growth companies which is priced by the market as undervalued companies.

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Choosing A Trading Style
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Choosing A Trading Style

Every trader has his own trading style and differs from one to another. Deciding what styles that best suit for a new trader can be a difficult task because it is one of the factors that determine whether he will be a success trader or not. According to Investopedia, active trading is the act of buying and selling securities based on short-term movements to profit from the price movements on a short-term stock chart. There are four active trading styles that commonly used by the people namely position trading, swing trading, day trading, and scalp trading. Basically, the styles are based on the length of the trading itself.

Position Trading

Position trading is a long-term trading which is most suitable for those who are patient and consistent. The trade is usually going for a long period of time or years. It is more like “buy and hold” trading rather than active trading. It involves fundamental analysis and often ignores the short-term fluctuations. It uses a long-term chart for daily, weekly, to monthly and some other methods to determine the higher and lower high of the trend of a security.

Swing Trading

It is usually held for more than a day but not longer than the trend trades. It often holds overnight. Swing traders usually have their own algorithm to decide when to buy or sell their securities. They usually buy or sell their securities at the end of a trend when there is price volatility. This style is not suitable for people who cannot be at ease while they are away with their computer.

Day Trading

It is well known for active trading style. As its name, the buying and selling securities happen in a day that is why it is also known as intraday. There is no position which is held overnight. They are usually closed if the profit target has been reached. Day trading counts on small gains to build profit. This style is suitable for people with type of personality which want to start it at that day and finish it at the same day too.

Scalp Trading

This style is compatible with people who are impatient since it requires rapid activity in the trading. It last only few minutes to hours. Since it lasts for a short period of time, the scalp traders usually are people who can make a quick decision and have good focus as well as concentration. The commitment goes along with the time devoted to the trading; the shorter time frame, the more dedication needed.

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