Explaination Option Trading

It's not like you can go down the street and ask your neighbor to explain option trading to you. They may understand stocks or mutual funds, but few people understand options trading.

The so called "gurus" will gladly explain it to you, if you pay them thousands of dollars up front. My experience tells me that the options trading community is a very tight lipped community with a high price of admission. This is why few people ever learn how to trade, or know about stock options trading.

I have to tell you that yes, I did pay that kind of money to learn how to trade and yes, it was worth it, but my opinion still remains the same about learning. You shouldn't have to pay for the basics!

In this lesson I'll not only explain option trading, but also show you how profitable it can be.

Option Trading

The first way I'd like to explain option trading is in terms of what I do on a day to day basis. I'm an option trader and I trade stock options. As an option trader I'm essentially in the business of buying and selling contracts.

"Real estate investors" buy and sell homes. "Option traders" buy and sell contracts.

The contracts are stock option contracts, but don't be too concerned with the type of contracts. Just remember this simple definition: Options Trading is the business of buying and selling contracts.

Contracts? Yes contracts. You know, like the contract you sign to buy a house, or a contract you have with a lawyer or musician.

Contract: an agreement made between two or more parties.

I could explain option trading with the dictionary definitions of stock options, and options trading, but that would bore you. Besides, I'm sure you didn't come here for that. You most likely came here for someone to explain option trading in an easy-to-understand manner.

Now bear with me for a moment as I explain option trading in a way that has nothing to do with the stock market. This will help some people understand how buying and selling contracts can be so profitable.

Options Trading Example
Let's say you find an undeveloped piece of land that you believe will increase in value over the next few years. You don't want to buy it outright, but you would like to tie up the land with a contract that gives you the right to buy the land if you so choose to.

The land is in the middle of nowhere, surrounded by 20 miles of forest on each side. You have it appraised and find out it's worth $25,000. You approach the owner and ask him/her can they draw up a contract with a time period of 3 years that will allow you the right to buy the land any time during those 3 years for a set price of $25,000.

Remember this is what the land is worth right now. There's nothing around it and its just boring, raw, undeveloped land. You pay him $2,000 for the rights of this contract.

You're not obligated to buy the land, you've just purchased the right to buy it. If you decide not to purchase the land your contract will expire, and you'll lose your $2,000.

You Hit the Jackpot!
Time goes by and two years later the city has built a new mall 15 few miles down the road. New housing developments have gone up and to top it off Wal-mart builds a super center right next to the lot that you have the contract for. This is now a prime real estate location.

Remember you have the right but not the obligation to purchase that lot next door for $25,000 AND you only paid $2,000 for the contract.

Now let's use a bit of common sense. Two years ago the land was only worth $25,000 because nothing was built around it. Do you think the land is worth more now that there are malls, housing developments, and Wal-mart next door?

Yeah, you bet your bottom that lot is worth more than $25,000. For exaggeration purposes lets say the lot is now worth $100,000. You're a happy camper! You own a contract that says you get to buy that land for only $25,000. So if you wanted the land you could exercise your contract and purchase the land for $25,000.

You would then be the proud owner of a $100,000 piece of real estate that only cost you $25,000. You could keep it, or sell it on the open market and pocket the difference between what you sold it for and what you paid for it ($73,000 or 270% return on investment).

Or you have another option. You could take the approach of an option trader. You could take that contract and sell it to someone else.

Remember you paid $2,000 for the contract. You now own a contract that says you have the right to buy a $100,000 piece of land for only $25,000. Do you think someone might be willing to pay you more than $2,000 to own that contract?

Yes any person in their right mind would.

Time to Make Some Money
You decide that you don't want to own land and you'd rather sell your contract to someone else. You sell your contract to a local land developer for $20,000 and you walk away happy because you just made an easy $18,000 dollars or a 900% return on your money.

So now you have an example of how buying and selling a contract can be profitable. It's also probably one of the easiest ways to explain option trading because as an option trader, buying and selling contracts is what you'll be doing.

**Tip** Do not dig deeper into the example. A lot of people try to figure out why a person would let someone tie up their land. Others want to know why the person who bought the contract didn't just buy the land. Keep your thinking on the surface level. Buying a contract and selling it at a higher price.

Here's the lesson: As a stock option trader you're going to invest a relatively small sum of money to buy a "contract" that controls something larger. Your research tells you that your contract will increase in value before a certain date. When it does increase in value, you're going to sell the contract for a higher price than you paid for it and pocket the difference.

Profitable ETF Trading Strategies

If you are a trader that uses technical analysis, or if you are just considering applying some technical techniques to enhance your investing and trading strategies, my recommendation is make sure you start with just a few tools, and understand them thoroughly, rather than flit about from tool to tool like a bee investigating flowers.

The reason for this is that most technical indicators derive from price, and thus have a lot more in common than may be immediately apparent. If you only examine them superficially, at wave top level, instead of diving deep, chances are you will not get the full value of the insights that even the simplest ones can reliably provide.

You are also more likely to have a partial understanding of many tools and when you put them together you may think you have more information about the market than you really have and may then act with more confidence than is warranted. In the case of technical analysis it is especially true that a little knowledge is very dangerous.

There are some broad categories of technical tools available to describe various dimensions of market conditions. Two of the most important are: measures of trendingness and oscillators

Measures of strength of trend: because the market seems to have different performance characteristics when the market is trending, it is useful to have an indicator that indicates when the market or the asset trend is sufficiently strong to begin specializing in trend following strategies.

These strategies include making an entry with a wide enough stop to allow the trend to fully develop, but close enough that a true change in trend will allow you to exit the position with a percentage of profits intact. In trends that are very strong, the strategy of buying on dips can definitely improve your returns.

Oscillators define periods of Overbought and Oversold, and are especially useful when the market is not trending up or down but can be considered to be in a band or a sideways trend. Authors disagree on what percentage of the time markets are found in this condition, and it is clear by visual inspection that some markets are trendier than others.

However, all generally agree that the markets spend enough time in sideways conditions (or non-trending conditions) that having strategies optimized for these conditions can give you a significant edge.

For example, in a sideways market, with prices confined to a definable channel, you are looking to buy low in the channel and harvest near the top of the channel. If the market were trending though you would be inclined to buy near the top of a channel, anticipating a powerful breakout from resistance which would sweep you along to new profits.

Forex Leverage Regulation

The retail forex market has long had significant leveraging allowances, but this has recently come under threat by FINRA, the largest independent securities regulator in the United States.

Since the Internet retail forex boom, many forex brokers have been offering their clients anywhere from 50/1 to 400/1 leverage on their accounts. FINRA is claiming that the proposed change would serve to protect investors from excessive market risk.

This proposal, however, assumes that traders are not using leverage properly. Having leveraging capabilities isn't tantamount to over-leveraging one's positions, and this is what the FINRA proposal is failing to recognize; instead, leverage merely allows a trader to exercise exact risk management in relation to the size of their positions.

For instance, if a trader wished to risk only 1% of their total capital per position, they would use leverage to determine the amount that they are willing to risk per pip, based on the size of thier stop loss.

Having leveraging capabilities allows a trader to dynamically adjust the size of their stop, so as to accommodate the current volatility levels of the market, while still maintaining a fixed position risk, regardless of whether they are risking 10 pips or 1000 pips.

Conversely, not having such leverage available will likely negatively impact traders who are using appropriate risk management. Reducing the leverage means that you will have less available margin for active positions, even if you are risking the same amount in both scenarios.

This means that such traders are more likely to experience a margin call, assuming a consistent position risk, if the leveraging allowances were to be reduced.

The most unpalatable part is that FINRA not only wants to limit the leverage - they evidently intend to practically eliminate it. If FINRA simply wanted to bring forex leveraging limits to the levels of commodity futures it would be far more understandable.

Under the proposal, however, forex brokers would only be able to offer leverage of 1.5:1. Anyone who trades the forex markets knows that this would effectively put an end to US-based retail forex trading, since very few people would be able to properly trade under such a mandate. US-based FCMs would go out of business, and US-based traders would invest their money with oversees brokers.

The FINRA proposal sadly appeals to the lowest common denominator: the people who over-leverage positions with inappropriate stop-losses. In doing so, they consequently hurt all of the traders who trade with appropriate risk management, and merely use leverage as a necessary and responsible tool.

For anyone that is worried about this, you can rest easy for the moment. As it thankfully turns out, FINRA does not have specific regulatory authority over the forex markets; that would increasingly be the domain of both the NFA and the CFTA, whose regulatory capacity is significantly expanding in forex.

Further, it wouldn't be in the interests of the NFA and CFTA to support this proposal, not to mention the flagrant inconsistency it would create with currency futures: they have been working long and hard to exact more control over the domestic forex market.

If it were to predominately move oversees, they would have lost the ability to effectively regulate such activities (not to mention the membership fee revenue that they would receive from Forex CTAs).

Investing Early to Achieve Financial Freedom

To achieve financial freedom, one important thing you should do is learning how to invest. By knowing how to invest you can greatly increase your chance to achieve financial freedom. It can make the difference between living from paycheck to paycheck your entire life and having financial freedom.

That's because by investing you will make your money works for you. You won't just let your money sits on the bank doing nothing. Instead, you make it work so that your wealth grows more and more. Eventually, your wealth will reach the point at which you achieve financial freedom.

But knowing how to invest is not enough, you should also start early. The earlier you start, the better you chance to achieve financial freedom. That's because by starting early you will have the compounding effect works for your advantage.

Since compounding effect has the potential to grow your wealth exponentially, the more time you have the more growth you can expect. That's why starting early is so important.

You need to start now. Don't wait until the situation is perfect for you to start investing. While waiting for the perfect time, you are actually wasting a lot of time to have the compounding effect works for you.

People who start earlier will have been far ahead of you by the time you find the "perfect" time to start investing.

Easy Way Trading For Futures

Trading orders, which in terms is the buy and sell, can originate from all the possible sources would then be channelled directly into the trading arenas, which means that this would be the place that most of the prices of these commodities would then be determined and thus investment choices would be made.

In the end of the trading day, this is where the orders are then converted into purchases all over the world and sales in the buy and sell environment. One of the major function of trading futures is the actual transfer and movement of risk.

There is an increase of liquidity in between investors and traders, who of course, based on their individual preferences would have different time preferences. Trading futures is a tool that most investors use to completely do away with the risks (which end up being minimised) that naturally occur when there are price and market fluctuations. While this is a way to remove the unpredictability of the price and market movements, futures are not 100% guarantees.

Basically, in the market, there would be two main and major groups of futures traders. One of them is the hedgers, who are more intrigued in low lying commodities and are looking to, in a sense, hedge out the risk when it comes to price changes in the market.

There are also the speculators, who make up a large part of the market when it comes to trading futures. They will try to buy a commodity in the hope that whatever system they have in place will be able to predict by buying a commodity on paper in the hope that the price will change (positive) in the future.

When you hedge, you are protected against major fluctuations in the prices on the market, and this is done actually by allowing the risks of these changes to be moved to the arenas of the 'risk takers' of the market. While this article will not get into the nitty gritty of hedging futures, just know that there are two types of hedgers, which include the sale and the purchase.

You might believe that this is laying a bet, but the piece of information is that conjecture refers to the state of a rightful venture based on the present state of the marketplace trends.

On the other hand, it is very dangerous for green futures dealers who try to forecast the marketplace and wonder without having sufficient capital or knowledge. Given that the prices are dispersed through tele-communications net and cyberspace, it creates online futures brokering very expedient and straightforward for a person.

These days a lot of agents proffer their provisions for trading commodity futures on the internet. Since additional danger is concerned in online futures trading when compared to stock trading, you have to critic for yourself whether or not it merits the additional jeopardy of trading commodity futures on cyberspace.

Buy Krugerrands Online or Buying From Dealer ?

Modern investors have more choices than at any time in history, and becoming an informed gold coin buyer can not only be an enjoyable hobby, but also save you some money as well.

Regardless of if you buy krugerrands online or from your friendly neighborhood dealer, you need to know how to determine krugerrand value on your own- don't just take a seller's word. Bullion gold coins are struck to be used as an investment medium in gold.

The majority of the coin's value comes from its gold content, or purity. Krugerrands are 22 carats, because they are alloyed with copper to make them more durable. If a kruger was 24 carats, or pure gold, it could be easily dented, and even scratched with something as soft as your fingernail. By adding copper (1/12 of volume), the Rand Refinery creates a more durable coin with the kruger's distinctive dark golden hue.

The coin is actually heavier than the denomination marked on it- for example a 1 oz gold krugerrand has one full ounce of gold and is heavier still by the added copper content. This ensures that buyers get what they want- a convenient, standardized method of buying gold. Your first task in determining how much a krugerrand is worth is to determine that value of that gold.

If you do a Google search on "Gold Spot Price" you will turn up a number of real time quotes for gold. Once you know the gold price, you can go on to determine what the premium for the coin is, and if it's a good investment.

Your next step is to determine what the current price for the size of krugerrand you are shopping for is. (A quick side note- premiums on the fractal krugerrands are higher. So if you are planning on buying five 1/10 oz gold krugerrands, you might want to consider just buying a 1/2 oz krugerrand instead, you can save a little money).

You can let your fingers do the walking- call a few local coin dealers and see what prices they are selling krugers for. Another convenient way to get an idea of what the krugerrand price is to go to eBay. You'll need to have an eBay account to do this- for some strange reason they won't let you see completed auctions without it.

If you don't have an account just sign up- they're free. Once you have your account and you have logged in, type the size of kruger you are looking for into the search box. On the left hand side, toward the middle of the page, you'll see search options. Be sure to click the tic box next to completed listing, and then search.

Completed auctions will show the listing price bolded in green. This is price that buyers are paying on the open market, and it's a good indicator of the current value of a standard, circulated krugerrand. Uncirculated or proof krugerrands will bring an additional premium due to their special nature (For example a proof is usually hand loaded on the presses, and double struck on specially polished blanks).

Okay, now you know your krugerrand value- let's talk about advantages of dealers versus buying online. When you purchase from a dealer, you are getting their expertise in addition to coin itself. You are less likely to get a fake krugerrand from a dealer, because they are in the business of dealing gold and it is in their own interest to protect their reputation.

Also, because they are experienced in dealing with gold coins (especially if you have a dealer who specializes in krugerrands), they are more likely to able to spot a fake than an amateur investor. A dealer is also a good bet if you want to buy a krugerrand for its numismatic value- or collectability.

So if you want a proof krugerrand, which is more valuable because of the special preparation and limited mintage numbers, a knowledgeable dealer is a good choice for getting good information and a fair price. There are some disadvantages. You may not have a dealer in your town- so there could be travel. Some dealers prefer to buy and sell in bulk, so they may not want to sell you a single coin.

Finally some dealers do charge a higher price than what you could get online. Speaking of buying krugerrands online, there are a few advantages to take note of. When you buy online, you have access to hundreds of coins- more than any dealer could reasonably stock. It's also very convenient- you can buy a coin from a collector in New York while sitting at your kitchen table in Texas.

In some cases if you're quick and bid at the right time, you can get a lower price than you would pay at a dealer. The down side of buying krugerrands online includes a greater chance of getting a counterfeit krugerrand. If you buy using Paypal you are protected up to $2000, but if you buy a lot of krugers exceeding $2000 you may be at risk.

You can also mitigate risk by buying from sellers with a large number of sales and a good feedback score. Finally selling krugerrands on ebay isn't free. As of this writing, it costs about $70 to sell a krugerrand. While the seller pays these fees, they are passed on to the buyers in terms of higher prices.

So what is the right answer- should you buy from a dealer or buy online? We recommend a hybrid approach. Find a dealer who sells online. This way you minimize risk, and you get all the conveniences of an online purchase. I

n absence of a dealer listing you like, do your research, determine the current krugerrand price, and check the quotes from both dealers and online, and then make your decision. If you decide to buy krugerrands online versus buying from a dealer, just make sure to do your research first!

Mutual Funds and Socially Responsible Investing

Socially responsible investments are analyzed on a global scale. The SRI agenda is to promote a set of values which are considered to be ethical and "Earth friendly" by investing in companies which exhibit these values in their corporate structure, in the workplace, in their labor practices, in their concern for the environment, and in their impact on the community (including respect for the rights of native peoples).

SRI intentionally excludes certain business sectors which are deemed to be unhealthy for the planet, such as weapons, tobacco and gambling.

Although socially responsible investing originally started a few decades ago with the religious agenda to avoid companies which promoted addictive behaviors (like alcohol, tobacco, and gambling), it evolved in the 1970s to include social and ecological agendas as well.

Today the social and ecological issues are at the forefront of socially responsible investing. Mutual funds which specialize in SRI usually focus on a particular agenda, and will only hold shares in companies that are in keeping with the SRI values.

For instance, some funds will only buy stocks in companies that manufacture and promote green energy products. Other funds will only buy stocks in companies which practice fair trade. Still others will actively avoid stocks in any corporations which are involved in the manufacture or sale of weapons, munitions or military products.

Fund managers screen prospective companies for their socially responsible practices in addition to their profitability. Once those criteria are met, the fund manager makes decisions about the characteristics of the securities that will be included. At this point, the SRI mutual fund begins to look like any other mutual fund.

The fund manager decides on small cap or large cap stocks, whether to invest exclusively in domestic companies or to go global, whether the investment goal will be for growth or income.

As for profitability, socially responsible mutual funds are comparable to other traditional mutual funds. When you stop to think about it, this makes perfect sense.

5 Trading Money Management Questions

Trading money management is fundamental if you are to achieve your goal of financial freedom. The first step you will take in setting your trade money management rules is to define your trading float, in other words, the amount of capital that you have to trade with.

In fact, one of the most commonly asked questions I get is, 'How much do I need to actually start? To help you answer that question you need to first define your objectives.

Here's 5 key objectives that you should follow to get your trading on track.

1) How much time do you have to spend trading? That might be full time, part time or hardly any time.

2) How much capital do you have to work with? Remember, you shouldn't trade money you're not comfortable losing.

3) How much risk are you comfortable with? As we all know, markets move. There'll be times when you have a drawdown. The question then becomes: how much of a drawdown are you comfortable with? 20%? 30%? You need to decide.

4) What annual rate of return do you want? This includes what you expect to make and in what time frame. Be realistic about this. Decide what you honestly think will be returned based on what you're willing to risk. For example, you're not going to have a system that will return 100% per year if you're only prepared to risk a drawdown of 5%.

5) How do you want to take your money from the market? Are you looking for cash flow (consistently taking profits out of the market) or capital growth (looking to grow your capital in the market over time, using the magic of compounding)?

All these decisions need to be based on your income objectives. Are you in it to make a steady income or are you looking at long-term growth?

And remember, there is no set pay cheque in trading. It's not a reliable income. You will have good months, even great months, but then a lull. So don't quit your day job just yet!

So many new traders set themselves unrealistic expectations. Different variations of the question "I want to make 200% a year - that isn't unreasonable is it?" are perennially fired my way. Now consider this.

Top 6 Investing Mistakes and How to Avoid Them

Investing is a skill and like all skills it takes some time to develop it. During this time many investors commit fatal mistakes that cost them a lot of money.Here are 6 mistakes that you should avoid:
Following the latest fad: buying what everyone else is buying won't make you rich. You will simply get the stock when its price is right at the top and just before it begins to drop.
Giving up too easily: many people abandon their investment plan, if they see even minor fluctuations in the market. The market tends to fluctuate a lot from day to day and watching it all the time will simply cause you unnecessary anxiety. Be prepared to make your investments for the long term.
Not diversifying: don't have so much trust in one stock. Spread your investments into many different sectors. This way if one stock doesn't do well, the other ones will cover your losses.
Investing without a plan: take you time to clearly establish a solid plan and define your goals. How many risks are you willing to take and what kind of returns do you expect from your investment?
Being in a hurry to make a profit: greed is a certain recipe for disaster. Don't get swayed by get-rich-quick schemes and options that promise high returns. Prefer slow and steady profits.
Invest only money you can afford to lose: many people borrow money or sell their house or their car to act on the latest fad. Using borrowed money can lead to serious trouble if your investments go awry. Making rash choices is something you may regret in the future. Start small, build up your capital and then gradually raise the amounts you invest.

How to Survive When Your Alternative Income is Gone

Many consumers looked at these alternative schemes as desperately needed sources of extra income to boost their budgets. They used the returns to fund school fees, car payments, mortgages and other expenditure that would otherwise be impossible to afford.

Others simply rolled interest over into their principal amount, hoping to attain a large enough lump sum to deposit on a house or to start their own business.

Despite their good intentions, however, many persons who put money in these funds took on risks they really could not afford. Some didn't even have the basic starting amount, so they pooled together with friends and family in order to get a piece of the high-yield pie. Even more disturbing are the cases where people sold cars and property or took out loans against their homes to get a large amount to invest.

Today, it's pretty clear that it's the end of the road for most of these high-return investment plans. The shut down of Cash Plus, Olint and the various other schemes will be financially stressful for those who took a chance with money that wasn't theirs, or sums that they couldn't afford to lose.

Those who borrowed to finance their investments are now facing loan payments without the income to pay. Some could even lose the homes or cars that they offered up for collateral.

So what can you do if you're one of those investors who are now suffering from the fallout in the alternative financial world? Here are some suggestions that can help you get back on sound financial footing:

1. Don't give up all hope, but be willing to accept the possible loss of your investment.

The reality is that most people knew that some of these schemes were very risky. When you take a gamble you should be prepared to live with the good and bad consequences.

2. If you've put your property at risk, find an alternate source to pay down your debt.

It doesn't make sense to wait in hope for these stalled schemes to re-start. It's crucial to find some source of income to pay your loan every month. If you have little hope of getting back your money, you may be forced to sell your property if the income is just not there.

3. Don't try to recover by jumping into another risky scheme.

Gamblers on a losing streak think that if they keep going, they'll eventually win back what they lost. The reality is they usually lose it all. Don't throw caution to the wind in your desperation to re-coup your losses. Make sure that you understand how the investment works, and that you can really afford the risks involved.

4. Create another plan to earn extra income to meet your needs.

What if the alternative schemes had never existed? Would you have given up all hope of buying your own home or starting your own business? In the past others have built wealth, not through get-rich-quick schemes, but by cutting back on spending and saving more, or by working hard and consistently in a business of their own.

Make a Lot of Money Investing

I am sure that you have explored many investing options, such as hedge funds and other managed investments, or you have probably settled for a bank CD. The problem with all these options is that the yields are simply too low, and in order for you to really make money out of your investment you have to be already rich.

For example, let us say you want to invest $500. If you get a 5% annual yield (which is very good), those $500 would grow up to maybe $2,100 in 20 years, which is not exactly a great figure for a retirement fund.

The conventional investing options are simply unable to deliver the kind of growth you need to really help you build a future starting with a small investment. Therefore, in order to break the mold and really open the door to alternatives that can actually put you on track to a consistent and significant increase of your equity, you must explore investing options that you can manage yourself. This way, every single penny you make by investing you hard earned money will go to your pocket instead of those who claim to be the experts.

Of course, this does not mean you should go right now and use all of your savings to start buying currencies, stocks and commodities like crazy, and then cross your fingers to see what happens. No, the idea is is for you to diversify and prepare yourself with the right tools and resources, because unless you are a pro, you will need those tools and resources in order to perform like one and really see your money grow.

Indeed, nowadays you will find basically two kind off investors:

1) The professional investors or financial experts -you decide how to call them- who invest based on their extensive knowledge of the different markets and their behavior.

2) The small investor or amateur investors, who invest and trade by using trading tools like software, signals and other services, or by educating themselves within a particular area of investment.

Unless you are a financial expert, you fall into the second category, which means that you can invest safely and achieve high returns on your investment, but only as long as you are prepared with a well balanced trading toolbox.

For example, if you use a reliable software to trade the forex markets, you could achieve monthly returns of 30% and even higher. If you do the math, this would allow you to turn $500 into $10,000 within a year, and with the compounding effect such a small investment could quickly turn into a small fortune after just a few years.

Trading Money Management

Underestimate the importance of trading money management at your peril. Building a trading business you can be proud of without trading money management systems and rules in place is doomed to fail from the outset.

Achieving financial success in the markets is not easy. It takes discipline, determination and a well-tested (and well-followed) plan. Despite what some might say, the skills required to become a successful trader are not inbred. Anyone can learn. And, as trading guru Dr Van Tharp points out, it's more about mindset and psychology that anything else.

The reason psychology is such an important part of becoming a successful trader is that a lot of what you have to overcome is counter intuitive. Cut your losses and let your profits run. It's one of the golden rules of trading. We all know that. But sticking to that rule when you're in the trenches is the hard part; it goes against what many of us see as the 'natural' thing to do. Our inclination is to let our losses run in the hope they will turn around and to cut our profits short in fear of losing them.

But, to win in trading, you have to learn to go against the grain.

The fact is that there are literally hundreds of perfectly good entries and there are just as many ways to make money in the markets; but that's not what makes a good system. At the core of any successful system is the same critical component: excellent trading money management. You need to have a method in place to protect your capital. No system is going to trade with 100 per cent accuracy. All it takes is one bad trade to lose it all and that's why money management is so important.

Next to your psychology, that the most important aspect of trading is money management. That said, to date, I haven't yet found a course that explains this critical aspect of trading as I believe it should be explained.

I don't claim to be the only one to recognise that money management is the Holy Grail when it comes to trading. In fact, many other success stories cite money management in trading as a core principle of their success in the markets. For this reason, I'm not going to attempt to reinvent the wheel here. No matter the market, timeframe or method (long or short), the fact is that trade money management rules need to be applied to all systems regardless of what you're trading. No exceptions.

If you're not currently successful trading the market, or you're not achieving the success that you would like to achieve, the problem will most likely be poor discipline with tradingmoney management. It's one thing to know these rules; it's another to actually apply them.

Everyone is at a different point in their trading journey. No matter where you are remember that all it takes is one new idea, one finer distinction, and you can watch your trading profits soar.
You have to understand what you're doing and why you're doing it. Once you have a good system in place, you won't need to follow market gurus, full-service brokers, tip sheets or anything like that.
You have to confidence of knowing that once you enter into a trade you'll already have your exit strategy predefined, enabling even the busiest person to manage an aggressive portfolio of securities with only five minutes a day. Most importantly, you'll be able to sleep at night because your risks will be tailored to fit your level of risk tolerance and confidence level.

Investing a Business Or Just a Hobby?

You really don't hear about great fortunes being made by investors. Ever wonder why? It's because business done right provides the most leverage, greatest velocity, and least amount of risk of any money-making activity.

Why do some businesses grow and grow while others seem to hit a ceiling which they can't grow?
The answer to this question lies in the foundation of the business. Small businesses stay small when the owner spends his or her time running the business. Effectively, these people own their job.

They have no time to work on the business because they are always working in the business.
The key is how to get the owner out of the business operations and focused on the business growth. The answer is for the business to create a strategy and a set of systems that implement that strategy. Then, and only then, will the business owner have time to grow the business.

When the strategy and systems are in place, the owner only has to manage the systems, not the people. The owner isn't doing the work, the employees and other team members are doing the work.

What does this have to do with investing?

I have discovered that the business principles of strategy and systems can be applied to investing. Investors who create a business of investing, by developing a strategy and implementing systems, can enjoy the same results enjoyed by a successful business owner, i.e., higher profits, more growth, less time spent on investing, total control over their investing and less risk.

Trading Education

When a person decides to invest their money into any kind of financial instrument, there are certain things they need to learn first. Commodities are no different. When it comes to buying or selling commodities, education is power.
There are many ways to educate yourself about commodity trading, including books, seminars, websites and discussion forums. These resources explain what you need to know to get started in this form of trade. Learning about the market can make the activity exciting, successful and profitable, while failing to understand this type of investment can mean losing the amount invested.
Commodity exchange involves short-term, high yield investments and provides investors and speculators with an opportunity to make their money grow very quickly. The most popular items include gold, oil, wheat, soybean, coffee and other raw materials. Their prices are affected by economic forces of supply and demand, market manipulation by government politics, and other factors. Even the general sentiment among investors can affect the price. If the majority of investors believe the price is going up, it will probably do so even if there is no fundamental basis for a price rise.
That is why experienced traders in this particular field know they must watch not just the recent past but also the current trends of the market. This tells them the right time to sell, to hold on to what they have, or to purchase more.
While a successful investment can never be guaranteed, learning as much as possible greatly increases the chance that yours will grow rather than be lost. When you learn how to trade commodities you will gain access to some of the winning strategies used by the top traders in this field.
If you need money now, like I mean in the next hour, try what I did. I am making more money now than in my old business and you can too: read the amazing, true story of Martin Thomas in the link below. When I joined I was skeptical for just ten seconds before I realized what this was. I was smiling from ear to ear and you will too.

Psychological Rules of Trading

If you trade 100 times a year and it costs (on average) a minimum of $45 to enter the futures market on any one trade, you will have to generate $4,500 a year in trading profits (by correctly guessing the direction of the market) just to break even. That's a 45 percent return on a $10,000 futures account! That brings me to Successful Trading Rule #1:

1) Never spend more on trading expense and overhead than your futures account.

A $100,000 futures account opened today will generate about $4,000 in interest (assuming the standard payout rate of 90 percent of today's T-bill interest of around 4.5 percent). If you spend $100 a month on quotes and research, that leaves you $2,800 or about five trades a month (60 x $45) for trading expenses.

Five trades a month from a $100,000 account would drive the average futures broker up a wall in frustration. The system gurus who claim returns of 100-200 percent a year would sneer. But here's why the average investor in futures must follow this rule as closely as possible.

If your total trading expenses (commission, bid/ask, slippage, overhead) are going to exceed your guaranteed interest income, you make it far more likely that you will suffer a drawdown during trading that will exceed 10 percent or even 20 percent of a period's starting equity.

Unless you've experienced the strain of this type of drawdown, you will never understand the enormous temptation to make emotional decisions (by overtrading or withdrawing into a shell) that ruin trading performance.

It's this type of irrational, emotional trading that caused the search for the Holy Grail - a mechanical system, that never suffers emotional lapses. But now that everyone has a personal computer, which can go through umpteen numerical manipulations of the Sacred Six ( High, Low, Open, Close, Volume, and Open Interest), purely mechanical trading is losing its punch.

More and more we are seeing false technical breakouts that never follow through to the downside or upside. There is no fundamental reason behind these price movements, only the hum of thousands of computers making the same dumb decisions at the same time.

If you want a better-than-average return in any investment, you are going to have to do something besides what the average investor is doing. Increasingly, even in stocks, the average investor is looking at momentum indicators (like stochastics) and charts to make his decisions.

If the human brain is in the equation, you must at all costs keep out the emotional factors that ruins trading decisions. One of those factors is large losses, another is the sheer stress that making many trading decisions in a short.

2) Never risk more than 1 percent (trading risk plus commissions) on any one trade.

That means a $5,000 account should only risk $50 a trade, including the cost of commissions. If that means trading only agricultural contracts on the MidAmerica Exchange or options, so be it.
We've talked about the psychological problem of losing more than 10 percent or 20 percent.

But there are two other mathematical reasons to limit your losses to the smallest ratio possible. All trading activity is a struggle to try every investment idea that looks promising in the hopes that one of them will work. The more you lose the less you have to try another trade, another trading method, another investment vehicle.

To illustrate this, we will bring Trader Tom and Humble Harry.
Likely Page Break Trader Tom and Humble Harry both start with $100,000. Both lose five trades in a row. Harry keeps his losses to 1 percent of equity, he ends up with $95,100. Tom risks $5,000 a trade and goes down to $75,000.

To get to $150,000, Tom must make 100 percent. To get to $150,000, Harry only has to make 57 percent. Tom must outperform Harry by 75 percent to get to the same goal! Harry is long one contract of coffee before the late June freeze because the moving averages turned bullish a long time ago.

Tom is long two contracts because his system takes big risks. Harry makes $15,000 and Tom makes $30,000 over one weekend. Harry is still ahead by $5,000 despite the ulcer-producing risks.

3) No matter how intellectually stimulating or exciting to trade, any trading method that, after expenses, couldn't beat a simple 18-day moving average system over the same period has to be dropped.

Charles LeBeau (who used to edit the Technical Trader Bulletin, California) once made a statement some thing like this at a seminar he spoke at: "I've tested hundreds of moving averages and I found an 18-day moving average is as good as any of them in tracking the futures markets."

Intrigued, I called him later on and he confirmed that it didn't matter too much whether you used a weighted, exponential, or simple moving average or whether you used four days, five days, or any specific number of days for the crossover average.

In stocks, the total return (capital appreciation and dividends) of the S&P 500 is the benchmark for advisers and any stock system. Anyone or anything that can't outperform the total return of the S&P 500 isn't worth following. I propose an 18-day moving average standard for the futures industry.

Add up the last 18 days of trading in a specific future. Divide by 18. When that specific future closes above the 18-day moving average, buy the next opening. When it closes below the 18-day moving average, sell the next opening.

Thirty days before first delivery date, start collecting closes of the next viable futures contract. When you've collected 18 days of data, switch over to the new month.

Make Money Day Trading

One of the fastest growing and exhilarating methods to earn extra cash today is day trading. Some people use day trading to add on to their standard income stream, while others treat it as a full time occupation. Several people earning remarkable cash with day trading which is why numerous people are tempted to try it out.
Obviously you you won't be able to just jump in and make sizable cash without knowing what you're doing! Day trading does carry risks, but knowing how to deal with these risks and make smart choices will give you the greatest opportunity at increasing your earnings, and minimizing any losses.
Naturally, purchasing stocks at a low price and unloading when the cost is high is the way to make cash in the stock market. Naturally, the big question is - how can you know when to buy stock and sell?
Employ these important day trading secrets to maximize your money-making potential.
Know the market news and stay informed about the markets. You don't have to take hours doing this, however you should have a couple of key sites you keep up with and it's a good idea to monitor a few organizations closely. You want to gain a good overview of what's going on in the stock market.
Don't waste time on shares with small volatility. With day trading day trading, money is gained by buying and unloading stocks that are frequently changing in price. As its name suggests, day trading involves moving financial instruments throughout the course of a day. You just don't have time to stick around and find out what happens while other profitable trades are passing you by.
Increase your math skills. You'll need to be able to analyze trending and financial data quickly. There's no need to be a master mathematician, but you need to understand what the financial data mean so that you can make fast, sound assessments.
Develop plenty of guts. You should keep your emotions level to not let them to alter your assessments. you must hold a clear mind at all points.

Forex Trading

A lot of people have a difficult time choosing the forex software that's right for them. Discovering the perfect forex trading software almost always takes time as well as a ton of research. It's extremely important that you take the time to find the perfect software for you. If you want to make any profit, this is a necessity.
A fair amount of traders start off in forex trading because it's the easiest way to make money. It is much simpler to make a profit than in conventional investing with stocks and shares, where you need to deal with daily uncertainty. However, there's so many different forex software out there that finding the best one seems like an impossible task (although it's actually quite simple).
When you're choosing forex trading software there's one thing that you must keep in mind. Do not fall for over hyped sales letters and tricks. Instead do research and rely on real facts. This is the most important aspect of finding the best forex software to become a successful trader.
For every different forex software you find, you must do a fair amount of research. Also some software allows you to start with a trial period with their forex trading software. These trials can range from free to less than $5 and allow you to try out the software before you seriously purchase it. Something else which is useful is a money back guarantee. This should make you more confident in your purchase as you can always return the product.

Trading

In this modern world, online investing for beginners is now possible. Anyone can actually purchase and sell stocks via the internet. It is a fact that most traders enjoy looking on their online accounts whenever and wherever they want, while brokers like the idea of receiving orders online, more than taking them on the phone.
If you are someone who has scant knowledge about investments, you can now enjoy online investing for beginners. The opportunities to investing over the internet are just numerous. Brokerage firms and companies offer trading online to old time as well as new clients.
Online investing for beginners will certainly interest you as one significant benefit of trading over the net is that the commissions as well as trading fees are much lower. Certainly this is a big advantage to anyone who wishes to make a good start on online trading.
While online investing for beginners can be very inviting, there are actually a few drawbacks. For one thing, you need to have a personal communication with your broker if you are new as this can be very beneficial especially in the aspect of learning more about the trade. This only means that online trading can be difficult for someone who is not net a savvy in the stock market. In order to minimize any problem or difficulty that one might experience when engage in online trading, it is best to gather and learn as much information on stock trading as possible.
Online investing for beginners can become more effective, profitable and much easier if you involve yourself with an online broker who has adequate experience in the field for a good number of years. He can serve as your professional adviser and guide in your goal of making it good in online trading.
Final word, online investing for beginners is a profitable endeavor. However, it is not for everyone to join. Think first and discern if this type of investment is for you and once you decide that it is, be fully prepared and equipped with the knowledge on the field.