FOREX Accounts One Size Does Not Fit All
February 28, 2009
Once you have decided that you have the proper mindset and are ready to start investing on the FOREX exchange you are ready for the next step. That step is to select the type of FOREX account you want to open. You should make this decision before you pick a broker to work with. Some brokerage companies specialize in one type of account or another. The type of account you choose could affect your broker choice.
You will find that most brokers offer several types of accounts. The primary differences between the account types will be margin requirements, minimum deposit and lot sizes. You will need to consider your trading strategy and financial resources to select the right account. The three most common accounts are mini accounts, standard accounts and managed accounts.
The most popular account with new investors is the mini account. One of the factors that make the mini account so popular with beginners is that it has the lowest minimum deposit requirements. The minimum deposit requirements for a mini account are dependent on the broker, some will allow you to open an account with only a $100 deposit. Most mini accounts will deal with lot sizes as small as 10 thousand currency units. Mini accounts may provide as much as a 200 to 1 margin rate and only require $50 per lot to trade. This means that with $50 you will be able to control $10,000 worth of currency.
Most mini accounts have a built in safeguard because they are aimed at beginning investors. This is usually referred to as “Guaranteed Limited Risk”; this guarantees that you will never lose more than your initial investment in a trade. In the case where the currency drops and the broker would need to make a margin call to keep your position open they automatically close the trade. This will cause you to lose the money you invested into this trade but you will not end up owing the broker money. The downside to this is that if the currency rebounds you will no longer have a position that you could profit from.
A standard account is another common account that has higher deposit requirements than a mini account. The usual investment to open a standard account with most brokers is $2,000. These accounts usually trade in lots of 100,000 units. With a standard account you will still usually have a margin ration of 200 to 1. To purchase a normal lot of 100,000 thousand units then will require a deposit of $500 from you. It is still pretty common with a standard account to have the “Guaranteed Limited Risk” safeguard included.
Some brokers will also offer what is called a “Managed Account”. With a managed account you will not be actively trading. A professional trader will be assigned to your account and will use your money to make trades. This requires a much lower investment of time and knowledge from you. Managed accounts usually have a higher minimum requirement amount, often of $10,000 or more.
You will want to consider your knowledge, financial situation and risk tolerance when deciding which account type will work best for you.
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Do Not Lose Your Shirt With a Margin Account
February 28, 2009
The key to the FOREX market for the average investor is the margin. Without margin trading currency trading would be beyond most investors. I will explain what the margin is and how it works.
When you have a margin account you are able to control large amounts of currency with a relatively small cash deposit. When you have a margin account with a broker you are in effect borrowing money from the broker to control a larger lot of currency. Currency is normally sold in lots with a value of $100,000. A common term used when discussing margin accounts is leverage. Leverage is how much you can control with a certain amount of money. The leverage is usually displayed as a ration such as 1:100. That would allow you to control currency worth 100 times the amount of money you have invested.
To better explain this in a FOREX exchange with a 1% margin account you could control $100,000 worth of a currency while only investing $1000. Margin accounts can allow you to greatly increase your profit; they also allow you to increase your risk. With a margin account it is possible for a trader to lose more than their initial investment. With a little prudence though losses can be minimized. Most brokers will terminate a trade before the losses exceed the original deposit.
Benefits
As discussed before a margin account allows you to buy more with the money you have which can greatly increase your profit on successful trades. By controlling a $100,000 worth of currency for only $1000 the potential gain is greater. When dealing with large lots of currency even small changes can produce significant results.
Currency on the FOREX market is traded in far more precise units than actual cash is. As an example the American dollar is traded down to four decimal points. So when you were to quote the dollar against another currency you will see a price like $1.7834 instead of $1.78. A PIP is the smallest unit when trading currencies, when dealing with $100,000 lots then each pip is worth about $10.
If the price of the American dollar changes from $1.7834 to $1.7934, you have a net difference of 100 pips. If you have a lot of $100,000 then that 100 pips will translate to $1000 where as if you were not using the margin your original $1000 would only show a profit of $10. Hardly what most would consider a highly profitable trade?
In short the primary benefit of using a margin account is that it can greatly increase the profit margin of a trade.
Risks
Since there is such a significant increase in profit potential when using a margin account it only stands to reason that there is also an increase. In fact it is quite possible to have your entire margin account wiped out fairly quickly. When using a 1% margin account a shift in the currency of a single penny will cost you $1000.
The FOREX exchange has many safety features to help you reduce the risk of this happening. One example is a stop loss order. A stop loss order will automatically close out your position in a currency if the price crosses the point you have set. This allows you to limit your losses while still having the opportunity to realize a profit.
Another risk that many people overlook is that if the price nears the point where your losses are close to being equal to the value of your margin account your broker may close out your position. If you were trying to rid out a temporary downturn that you expect to turn around soon you could find that your broker has closed it causing you to lose your entire balance and have no option to make a profit if the price moves up again.
This is a basic introduction to margin accounts and how they work, visit the website listed below to learn more about the FOREX market.
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5 Ways to Find the Best Stock Picks
February 27, 2009
There is no doubt that penny stocks are a risky and thinly traded breed of stocks issued by relatively tiny companies. Also, the SEC does not require penny stocks to follow their reporting rules. This combined with unclear or unverifiable financials can make this stock seem like something to avoid altogether. Penny stocks can be dangerous for investors of all experience levels but especially for amateurs just getting their feet wet. Here are five tips to help find the best penny stock picks.
1. Profit
First off is the company you are interested in investing in experiencing any sizeable profits. Better yet is their profit to debt ration favorable. Youd be hard pressed to find one of these little companies without debt but that doesnt mean you cant be picky. In this case the least amount of debt with the most profit will be a better investment. Another thing to watch is how progressive the debt payoffs have been. This would be a sign of good or bad financial management.
2. Industry Trends
This is one of those methods that almost all people use anyway. If there is a high demand for oil then people instinctively want to go buy oil stocks. The only problem with this kind of trend analysis is it really isnt forward looking analysis. This is just waiting and seeing which doesnt get you in on the ground floor of and investment before the public takes notice. Investing ahead of an industry trend is far better. So look for stocks in industries that are the edge of more demand.
3. Personal Interest
Theres a saying that you do well at things you enjoy to do. This makes logical sense and it works with stocks as well. If you invest in something that actually interests you then you will naturally be more studious and make more of an effort to choose the best stocks. It can be very boring researching stocks that dont interest you and you are likely not to be as thorough as you should be.
4. Tenure
How long has the company been in business? This is not to say that investing in newer companies is a bad idea but its more likely to be safer investing in a more established company with some kind of track record.
5. Bad Behavior
Last tip is an obvious one. Stay away from companies whose operations or transactions have been questionable. Even if the bad press is not completely true it will be difficult for a company to recover in the short and maybe even long term.
Scott Johns conducts research and analysis of stock market picks for a penny stock analysis company. To check out penny shares for some of his company’s latest picks.
Can You Afford To Retire
February 27, 2009
Looking to make investments for retirement always seems to be something that you think I’ll do it in another few years. However, anyone thinking in this way couldn’t be more wrong. It is vital that these days you start to think about that rainy day whilst still in your twenties and thirties because everyday you put it off could mean you have to work longer, and who really wants to work until they are in their seventies?
The way our country is today things do look pretty bleak for the future. The government is more involved with making money available to go to war than keeping the social security system in a healthy state. For many retirement seems to be fading into the distances - more of a maybe than a reality. So it is down to you as an individual whether you purchase IRS’s or put your money towards the purchase of gold coins to safeguard your future, it is something that has to be done.
Really, I am not qualified to give you advice about investing for retirement. No one simply writing an article can explain to you what plan is right for your long term financial needs. The best way to learn how to invest for retirement is to talk to a qualified financial consultant. That way, you will get the opinions of an expert, custom tailored for your needs and your financial situation. Honestly, although everyone needs to think about investing for retirement, not everyone needs to go about it in just the same way, and so having a plan that is correctly made to fit your needs is the only sure way of doing it.
The best thing about investing for retirement today is that it will eliminate years of worry. Not planning for retirement is not going to make the problem go away, and the chances are that you will be concerned about the future whether or not you have an investment plan. If you can begin investing for retirement sooner, then that will be one more thing that you can get off of your mind, and cease to worry about. Your independent financial expert will be able to advise you on your individual circumstances and have it all taken care of for you, then you will be able to sit back and watch your savings grow at a steady and useful rate. There is nothing better than that.
Discover more articles discussing retirement and senior living at http://seniorstips.com
Forex Professional Market Investor Reveals A Short Cut To Mastering Stock Market Investing Rules
February 26, 2009
To operate effectively in any forex market investing environment, you need rules and boundaries to guide your behaviour. No matter what system you`ve developed, the potential exists to do financial damage to yourself - damage that can be greater than you think is possible. There are many types of trades which the risk of loss is unlimited.
To prevent this kind of loss, you need to create an internal structure in the form of guide lines that determine your behaviour so you always act in your own best interest. This structure has to be internal because the market won`t provide it for you. The markets provide structure in the form of behaviour patterns that indicate when an opportunity to buy or sell exists. But that`s where the structure ends; with a simple indication. Nothing happens until you decide to start or forex market investing; you continue to trade as long as you want; and there is no end until you decide to stop.
All the beginnings, middles, and endings of your trades are the result of your interpretation of the information available from the market. However, while the average trader may want the freedom to make these choices, but that doesn`t mean they are ready and willing to accept the responsibility for the outcomes. The reality of forex market investing is that, if you want to be successful, you have to accept that no matter what the outcome may be, you are completely responsible. Not the market, not the economy, not world events - you.
Traders who are not ready to accept this responsibility can find themselves in a dilemma: How do you participate in an activity that allows complete freedom of choice and avoid taking responsibility if the outcomes of your choices are poor? This can be accomplished by adopting a forex market investing style that is random. Random trading can be defined as poorly planned trades, or trades that are not planned at all.
Randomness in trading is unstructured freedom without responsibility. When we trade without well-defined plans and with an unlimited set of variables, it`s very easy to take credit for the trades that turn out to our liking, because in our minds we used some kind of method. But at the same time, it`s very easy to avoid taking responsibility for the trades that didn`t turn out the way we wanted, because there`s always some variable we didn`t know about and therefore couldn`t take into consideration beforehand. Random forex market investing is an unorganized approach that doesn`t allow you to find out what works and what doesn`t.
If the market`s behaviour were truly random, then it would be difficult, if not impossible, to create consistent results. If it`s impossible to generate consistent results, then we really don`t have to take responsibility. However, direct experience with the market tells a different story. The same market behaviour patterns present themselves over and over again. Even though the outcome of each individual pattern is random, the outcome of a series of patterns is consistent and statistically reliable.
These patterns can aid your forex market investing if you choose to use a disciplined, organized, and consistent approach. Many traders spend hours doing market analysis and planning trades for the next day. Then, instead of making the trades they planned, they do something else. The trades they make are usually ideas from friends or tips from brokers. By making unstructured, random trades, they are able to avoid responsibility.
Why would they do this? When you act on your own ideas, you put your abilities on the line and get instant feedback on how well your ideas worked. It`s difficult to rationalize away any unsatisfactory endings, since they`re the direct results of actions. On the other hand, when you enter an unplanned, random trade, you shrug off the responsibility by blaming your friend or broker for their bad ideas.
The nature of forex market investing itself also makes it easy to escape responsibility. Any trade has the potential to be a winner, whether you`re a great analyst or a poor one. It takes a lot of effort to create and follow a disciplined approach that will make you a consistent winner. But, if you invest the effort, you can achieve success as a trader, and reap the benefits of the market.
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Why Choose Oil Investing
February 26, 2009
Great risks and potential huge monetary gains. This can sum up in itself what oil investing is about. Not a market for the faint-hearted, oil investing is a highly volatile sector where changes are the norm, and risk runs the gamut from quite low to extremely high.
Still, why do so many choose to invest in this highly unpredictable market? There is much that is said on the scarcity of oil, its dwindling volume, its absence of supply growth, as well as the tightening of supply by oil-producing countries. Balanced against the increasing demand for oil in a world which is driving towards consumerism, where oil needs are vital, it results in a situation where the price of oil is not likely to go down. In fact, it might just remain on the up, or constant at its relatively high price on the market. While it is true that fossil fuels are not something that can be classified as a renewable resource, the investor will often look at the situation and not the ongoing demand for the product. Any product that has a steady demand that will only grow over the next few years is a sure bet when it comes to investing.
This makes for a safe and relatively lucrative investment. However, oil investing should not be attempted as a hobby or in a happy-go-lucky way. Professional advice is best sought for this endeavor. Expert advice can be provided by portfolio managers, and investors can go one step further and learn about geographical characteristics of drill sites as well as seismic and structural features of oil industry sectors when considering potential investment.
Oil investing also provides a rather large spectrum of risk potential, ranging from relatively low to highly explosive. The easiest and less risky investment is by buying stocks of well-known major or independent oil companies. More risk and higher returns can be found in smaller, aggressive companies and service companies which are expanding into new markets. Some of the riskiest but which may provide the highest return pertains to investing with independent operating companies on a direct participation investment, and also commodities futures trading.
Other methods of oil investing include mutual funds which focus their portfolios on the energy industry, oil and gas companies traded on stock exchanges, independent oil and gas companies, drilling funds, royalty funds, lease acquisition funds, and combination funds.
However, in all these cases, sound business acumen and diligence are advised. Investment acumen, investment objectives, and investment vehicles should all be determined prior to oil investing.
Mayoor Patel is the writer for the website http://oil.oil-universe.com. Please visit for information on all things concerned with Oil Investing
Can You Afford To Retire
February 26, 2009
Looking to make investments for retirement always seems to be something that you think I’ll do it in another few years. However, anyone thinking in this way couldn’t be more wrong. It is vital that these days you start to think about that rainy day whilst still in your twenties and thirties because everyday you put it off could mean you have to work longer, and who really wants to work until they are in their seventies?
The way our country is today things do look pretty bleak for the future. The government is more involved with making money available to go to war than keeping the social security system in a healthy state. For many retirement seems to be fading into the distances - more of a maybe than a reality. So it is down to you as an individual whether you purchase IRS’s or put your money towards the purchase of gold coins to safeguard your future, it is something that has to be done.
Really, I am not qualified to give you advice about investing for retirement. No one simply writing an article can explain to you what plan is right for your long term financial needs. The best way to learn how to invest for retirement is to talk to a qualified financial consultant. That way, you will get the opinions of an expert, custom tailored for your needs and your financial situation. Honestly, although everyone needs to think about investing for retirement, not everyone needs to go about it in just the same way, and so having a plan that is correctly made to fit your needs is the only sure way of doing it.
The best thing about investing for retirement today is that it will eliminate years of worry. Not planning for retirement is not going to make the problem go away, and the chances are that you will be concerned about the future whether or not you have an investment plan. If you can begin investing for retirement sooner, then that will be one more thing that you can get off of your mind, and cease to worry about. Your independent financial expert will be able to advise you on your individual circumstances and have it all taken care of for you, then you will be able to sit back and watch your savings grow at a steady and useful rate. There is nothing better than that.
Discover more articles discussing retirement and senior living at http://seniorstips.com
Foreclosed HomeDiscover The Truth About Foreclosed Homes
February 25, 2009
Foreclosed houses are houses that have been closed by an individual or a group of individuals before another person owns them. Such situations arise when mortgagers either dont bother to take their house back or are unable to release it because of financial adversities. As a result mortgaging companies takes over the charge of the house and offers to resale it.
You might have come across property news and newspaper advertisements, local magazines or even the Internet having information about foreclosed homes. Even the real estate agents have foreclosed homes offers in plenty. To know more about foreclosed homes you can talk to the real estate agents or even the assessors. Plan a visit to the local courthouse would give you a rough idea about the various deals and how their dealing process. Similarly, you can also attend the foreclosure home auctions to know more about the auction options and the risks involved.
Planning to buy a foreclosed home is one of the most significant financial decisions an individual has to take. Purchasing foreclosed homes includes bargaining the foreclosed sale, acquiring mortgage, getting the title insurance and finishing the home purchase.
Before buying a foreclosed house you should be well informed about the various options available. This applies especially to the first time foreclosed homebuyers who are new to the foreclosed property transactions. As mentioned before, consult a reputable title agent or attorney before buying a home.
Many people harbor wrong notions that foreclosed homes are basically shabby homes in rundown neighborhoods. However, its only people who are actually investing in foreclosed properties that know that this notion is incorrect. Foreclosed homes come in a variety of size and shapes, consisting of large, beautiful new homes in the most sought after neighborhoods.
You are in for a terrific amount of savings, if you are buying a foreclosed house. Strange as it sounds, this is true. By buying homes at 10% to 60% below the original market value simplifies making monthly payments and generates huge savings on the whole. In some circumstances, individuals can buy homes with very less or no deposits, even if they have a bad credit history. Foreclosure pricing is also known for building equity instantly.
Today, you might find more opportunities for buying foreclosures than ever before. To some extent this is because of the high debt rates getting more people into financial trouble, and partially because lenders are giving mortgages to higher-risk borrowers. However, the good news is that together these factors are increasing loan default rates. People who plan to buy foreclosed homes can pick and choose the home they want at a great price. Many of these homes are not advertised, as they are not profitable for the real estate agents.
Foreclosed homes can prove to be of good value for the right person who is willing to consider all the options available. If you are a buyer of foreclosed homes, keep in mind that these houses are not necessarily vacant. Till mortgage companies hand over the house to the buyer, the original residents still own it. Basically, it depends on the buyer decision to keep the original owners as tenants or ask them to vacate the house. Furthermore, furnishing or renovation of the house is not the responsibility of the original buyers.
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No Money Down The Benefits of Real Estate Joint Ventures
February 25, 2009
Investors are attracted to the real estate market because of the incredible potential it has to multiply their money. Appreciation rates of properties are very high and almost all property deals guarantee you certain amount of profit.
One of main reasons why many others are not able to invest in real estate is that they do not have sufficient cash to pay the down payment for the purchase. However, there are plenty of financial schemes with ‘No Money Down’ option available for small investors to enable them to sustain the costs of purchasing property.
New investors can consider joint ventures, wherein one person finances the project and the other does the actual work. As a result, the one who does all the work has to put no money down for upfront costs. If you are new to the real estate game, and do not have enough funds to bear the upfront costs, you can opt for a joint venture. It is legally binding, and both parties agree upon a certain percent of profit each would receive after the project is completed.
It is a mutually beneficial partnership, wherein profits are divided according to individual contribution in terms of labor and money. The joint agreement is drawn to provide legal protection to the concerned parties in case the project fails.
A joint venture is beneficial if you are in one of the following situations:
1. When you lack borrowing capacity
If you have some money to pay the down payment, but are not eligible for a loan, joint venture would be beneficial for you. You can enter into a partnership with someone who has the necessary funds or is eligible for a loan to support your project.
2. When you do not have liquid cash or equity
You may be eligible for a loan due to your income or credit score. However, you may not have the necessary cash required to pay for the down payment of property purchase. In such a case, you can enter into a partnership with a person who can take care of the down payment.
With literally ‘no money down’ towards down payment, you can begin your dream project. There are instances wherein the seller carried a certain amount of the loan as a second mortgage. In exchange, you are required to give him a certain percent of the profits as decided in the agreement.
3. You have the necessary skills
There are investors who have the expertise to carry out a project or who have skills required for renovation. They may lack the funds for the project or may not have the inclination to invest money in the project. If you are one of those, then you can find a partner who has the money but lacks the time and expertise to complete the project.
It is important to draw an agreement carefully including all minute details to avoid any form of dispute in future.
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Negotiating a Real Estate Purchase Top 6 Tips
February 24, 2009
Negotiating may be the most critical part of the real estate purchase process. Being able to strike an advantageous deal with the seller virtually guarantees your profit. Negotiating is both an art and a skill that you will master with time and practice. Here are six tips to get you started.
Know the Property
You should know as much as possible about the real estate purchase you’re about to make. This knowledge comes from researching the neighborhood and knowing how the property compares to others around it.
Know the Seller
The best way to learn more about the seller is to listen. People will be more likely to volunteer information if you give them a chance to talk. But if you aren’t finding out what you need to know, ask questions. Understanding the seller’s situation and their possible flexibility will help you negotiate financing options as well as price.
You also need to find out what the seller’s motivations are. Why are they selling? Understanding the reasons behind the sale can help you structure a deal that meets their needs and yours.
Think Win-Win
The best real estate purchase deals result from negotiations that seek to provide something to both parties. There are certain things you want out of the deal and certain things the seller wants in order to sell. Every real estate purchase has several facets. If you can give the seller something they want, that will increase your chance of getting something you want.
Negotiate Terms, Not Just Price
Price is not your only negotiating point. Sometimes the terms of the deal are more important to the seller than the price. Once again, if you can address the seller’s needs in a real estate purchase, your offer will be more persuasive.
Maintain Control
If the seller counters your offer with an offer of his own, don’t let things spiral out of control. Prepare for counter offers by starting your negotiations low. Don’t focus on price, but use other aspects of the deal in your negotiations. Don’t re-negotiate things that have already been decided.
Be Prepared to Move On
Don’t walk away from an attractive real estate purchase without offering your best deal, but know when it’s time to walk away. There will always be another property.
As you can see from these tips, negotiating a real estate purchase is more than two people in a room. Negotiations are won or lost in the preparation. Achieving the outcome you desire depends on your research and mental preparation.
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