Beginner’s Guide To Trading Futures

 Introduction

Welcome to the Beginner’s Guide to Trading Futures. This guide will provide a general overview of the futures market as well as descriptions of some of the instruments and techniques common to the market. As we will see, there are futures contracts that cover many different classes of investments (i.e., stock index, gold, orange juice) and it is impossible to go into great detail on each of these. It is, therefore, suggested that if after reading this guide you decide to begin trading futures, you then spend some time studying the specific market in which you interested in trading. As with any endeavor, the more effort you put into preparation, the greater your odds for success will be once you actually begin.

Important Note: While futures can be used to effectively hedge other investment positions, they can also be used for speculation. Doing so carries the potential for large rewards due to leverage (which will be discussed in greater detail later) but also carries commensurately outsized risks. Before beginning to trade futures, you should not only prepare as much as possible, but also make absolutely certain that you are able and willing to accept any financial losses you might incur.

The basic structure of this guide is as follows: we will begin with a general overview of the futures market, including a discussion of how futures work, how they differ from other financial instruments, and understanding the benefits and drawbacks of leverage. In Section Two, we will move on to look at some considerations prior to trading, such as what brokerage firm you might use, the different types of futures contracts available and the different kinds of trades you might employ. Section Three will then focus on evaluating futures, including fundamental and technical analysis techniques as well as software packages that might be useful. Finally, Section Four of this guide will provide an example of a futures trade, by taking a step-by-step look at instrument selection, market analysis and trade execution. By the end of this guide, you should have a basic understanding of what is involved in trading futures, and a good foundation from which to begin further study if you have decided that futures trading is for you.


Source: investopedia.com

Introduction to Stock Trader Types

 Introduction to Stock Trader Types

Being a stock trader can be both profitable and gratifying. To maximize the financial benefits and your own enjoyment, you need to decide what kind of stock trader you want to become. The right fit depends on personality, time availability, and capital investment.

Depending on how much risk they’re willing to incur, traders usually focus on one or more areas involving growth, value or income building.

  •     Growth-centered trading involves the practice of buying stock in companies that are poised to grow and expand their profits. This type of trading might focus on investing in new companies, which offer rapid growth potential. As a company grows, the value of its stock will rise, bringing the stock trader profits. Growth-centered trading may include potentially risky ventures like buying into a business IPO (Initial Public Offering). IPOs are a good example of how growth-centered trading can potentially bring great rewards; but it also carries a high risk of failure. Traders who pursue a growth-oriented stock-trading strategy must have the confidence to trust their own instincts rather than seeking reassurance from sure facts.
  •     Value-focused investing is one in which traders are on the lookout for underpriced stocks at companies that have the potential to perform better than their stock price seems to indicate. One way is to find companies that have significantly lower stock prices than that of their major competitors. It is important to ensure that the company in question has not manipulated its dealings to make the stock price fall instead of rise. Once honesty and integrity are established, along with the fact that the company’s share price is under-valued, the value trader is now in a position of less risk.
  •     Income-oriented investing is the most conservative of common stock trading strategies. In income-oriented trading, the focus is on capital preservation, with low price fluctuations being of the utmost importance. Since a steady income is the objective, an income-oriented investing style will focus on the biggest and best-known companies, those that dominate their particular market segment and can be counted upon for steady growth and profit. The emphasis is always on acquiring prestigious or blue chip stocks. This lower risk can be established by using bonds and time deposits as well as targeted investments in selected equities. Income-oriented traders usually end up focusing on older, more established firms with good market positions, established management teams and good cash flow.

After studying the ideas and practices of traders who apply all of these types of investing, you will be better equipped to find your own comfort zone using a style that suits you.

The world has many stock exchanges and many investors. An understanding of the following rule makes for simplification: “For every one buyer there must be one seller.”

Almost all types of stock trading are potentially profitable. But profitability is not only about picking the best stock. One must pay attention to complex rules governing matters like money management, risk management and trade management rules.

You should be flexible enough to use several different types of strategies in your market system and your business plan, so that you can adjust to the market, be it bearish, bullish or even range bound.

For a beginner in stock trading, making decisions can seem to be an overwhelming task. You may even wonder where to begin. One of the most helpful ways to get past this initial fright is to study the stock trading strategies of experienced and successful investors. By absorbing the ideas and knowledge of seasoned traders, you can form your own ideas about the style of stock trading that will best serve you in your particular situation. And the more you know, the more you’ll enjoy trading.


Source: investopedia.com

Top ETFs and What They Track

Introduction to ETFs

Before we dive in to discover the top ETFs, let’s make a brief review of what ETFs are and what makes them an interesting investment.

What Are ETFs?
An Exchange-Traded Fund (ETF) is an investment fund that tracks an index, specific asset or basket of assets to which it is pegged. ETFs are bought and sold throughout the day like securities on the stock exchange.

ETFs cover many areas of the market including stock indexes, stock market sectors, commodities, currencies, bonds and even instruments that track the volatility of the stock market.

In some ways, ETFs might appear comparable to mutual funds, in that both involve a pool of assets. But these two types of funds actually operate quite differently. Unlike a mutual fund that has its net-asset value (NAV) calculated at the end of each trading day, the price of ETFs price fluctuates with supply and demand during the regular stock market trading session. (For more on a comparison between ETFs and mutual funds, see Mutual Funds vs. ETFs: A Comparison.)

Origins of ETFs

ETFs were originally created to track various market indexes. The first ETF was the Index Participation Shares, introduced in 1989 and aimed to track the S&P 500. Toronto Index Participation Shares (TIPS) was introduced in Canada in 1990 by the Toronto stock exchange to track an index of major Canadian companies TSE 35 and later TSE 100.

In 1993, the SPDR S&P 500, which tracks the S&P 500 Index, was launched. It trades under the symbol SPY. SPDR has since become a juggernaut among ETFs.

Growth of the ETF Market

The popularity and variety of ETFs available has grown tremendously over the past decade. According to the Investment Company Institute (ICI), the number of ETFs has grown from 102 in 2001 to 1,194 in 2012 with total net assets of more than $1.3 trillion.

Advantages of ETFs

  •     Lower Costs: Annual management expenses of ETFs are typically substantially lower than those of mutual funds. ETFs are also free of “loads,” the entry and exit fees that some mutual funds charge. It is often pointed out that many mutual funds fail to beat benchmark indexes such as the S&P 500. However, the fact that ETFs are now available to inexpensively and effectively track these indexes highlights their potential appeal to investors. Why pay high fees to enter a mutual fund that may fail to beat an index such as the S&P 500 when you can buy an ETF that efficiently tracks the benchmark index with a very low management fee?
  •     Tax Efficiency: Due to low turnover and the way they are structured, ETFs are typically more tax efficient than comparable mutual funds.
  •     Diversification: ETFs allow investors to invest in a broad array of markets that they may not otherwise have had access to. For example, prior to the advent of ETFs, investors would have needed access to trade the futures markets in order to trade commodities such as gold. The ability to easily allocate assets into a diverse range of markets empowers investors to better manage their risk against adverse moves in the market.
  •     Versatility: ETFs are traded throughout the day in the same way as stocks, their prices fluctuating with supply and demand in the market. Investors can sell ETFs short and use all the various order types used with stocks to enter and exit the market. ETFs normally have the same commissions as stocks and can be traded on margin. Additionally, the barriers to entry are low, as an investor can purchase as little as one share of an ETF.
  •     Transparency: Unlike mutual funds, the holdings of an indexed ETF are readily visible, either in their prospectus or on their website, so you can always know what you own. While mutual funds are only required to disclose their portfolios on a quarterly or semiannual basis, all “actively managed” ETFs must by law disclose their full portfolios every day. Active management refers to the use of a discretionary element, where management actively decides on which assets to include in a fund.


Source: investopedia.com

Introduction to Binary Options

 Sponsored by Nadex

 A binary option is a straightforward yes/no trade. At expiration the option will be worth 100 or zero. No other settlement price is possible. That’s why it’s called a binary option.

The option is, however, tradable at any time during trading hours on the North American Derivatives Exchange, or Nadex. There is no obligation to carry the position until expiration.

And because the risk parameter is well defined, there will never be a margin call, only the initial debit cost of the trade. With a binary option trading at 50 ($50 per contract), neither the buyer nor seller will be margined higher than 50 because neither the buyer nor the seller can lose more than their original investment. (Your initial cost is always your maximum risk exposure to the trade)

Nadex Binary options can have various expirations. These can be a week, a day or even 2 hours in duration and the trade can be entered and exited at any time prior to the binary expiration.

Nadex is a US exchange that matches buyers and sellers on every trade in a regulated environment.


Source: investopedia.com

Investment Valuation Ratios

Introduction

This last section of the ratio analysis tutorial looks at a wide array of ratios that can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation.

However, when looking at the financial statements of a company many users can suffer from information overload as there are so many different financial values. This includes revenue, gross margin, operating cash flow, EBITDA, pro forma earnings and the list goes on. Investment valuation ratios attempt to simplify this evaluation process by comparing relevant data that help users gain an estimate of valuation.

For example, the most well-known investment valuation ratio is the P/E ratio, which compares the current price of company’s shares to the amount of earnings it generates. The purpose of this ratio is to give users a quick idea of how much they are paying for each $1 of earnings. And with one simplified ratio, you can easily compare the P/E ratio of one company to its competition and to the market.

The first part of this tutorial gives a great overview of “per share” data and the major considerations that one should be aware of when using these ratios. The rest of this section covers the various valuation tools that can help you determine if that stock you are interested in is looking under or overvalued.

To find the data used in the examples in this section, please see the Securities and Exchange Commission’s website to view the 2005 Annual Statement of Zimmer Holdings.


Source: investopedia.com

The Money Market

Money Market: Introduction

Whenever a bear market comes along, investors realize (yet again!) that the stock market is a risky place for their savings. It’s a fact we tend to forget while enjoying the returns of a bull market! Unfortunately, this is part of the risk-return tradeoff. To get higher returns, you have to take on a higher level of risk. For many investors, a volatile market is too much to stomach – the money market offers an alternative to these higher-risk investments.

The money market is better known as a place for large institutions and government to manage their short-term cash needs. However, individual investors have access to the market through a variety of different securities. In this tutorial, we’ll cover various types of money market securities and how they can work in your portfolio.


Source: investopedia.com

personal Income Tax Guide

 Introduction

For many people, getting ready for tax season is about as much fun as planning a trip to the dentist. Just thinking about getting ready for tax time causes most people to get a pit in their stomach, and their blood pressure boiling. Sadly, just like it’s too late to worry about cavities once you’re sitting in the dentist’s chair, it’s too late to try and minimize your tax bite a few days before taxes are due. By being proactive and planning ahead, you can ensure that your annual appointment with the IRS is as painless as possible.

In this tutorial, we’ll cover everything you need to know to get ahead of the game, including a look at some of the most misunderstood basic concepts, the most overlooked deductions and some steps you can take today to save yourself some money – even if you weren’t the most prepared or diligent person last year.


Source:  investopedia.com

Download Investing Crash Course in Currency Trading

Abe-Cofnas-Sentiment-Indicators

 

Introduction
Video 1: What Exactly Are FOREX Traders Exchanging?
Lesson 2: Coming to Peace with Pairs
Video3: Quoting Currencies
Video4: Calculating Margin and Understanding Leverage Ratios
Video5: Calculating Profit, Loss, and Risk in FOREX
Video 6: Understanding Brokerage Types and Getting Started
Video 7: The Realities of FOREX

 
 

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credit And Debt Management

Introduction

America is addicted to debt. Just call us the credit nation, from the highest levels of government all the way down to Main Street USA. America and Americans are obsessed with credit and rely on debt every day. Even as the nation and its consumers struggle under record debt levels, we continue to rack up more.

Like it or not, we need credit. As we have established during and since the global financial meltdown of 2008, credit keeps the wheels of the global money machine well greased. Concepts, such as buying a home, starting a business, or buying an investment property often could not become realities without some form of credit. In fact, utility companies, banks, landlords and even employers often require credit checks before extending services or employment. Consider the following statistics:

  • As reported by the Federal Reserve Board (FRB), the size of total U.S.consumer debt grew nearly five times in size from $824 billion in 1990 to nearly $2.2 trillion in 2005.
  • According to Experian, without factoring in mortgages, in 2008 the average American held over $16,635 in debt.
  • According to ComScore, in 2008 55% of Americans maintained a running balance on their credit card accounts.
  • According to Visa and MasterCard, in 2006 alone there were 984 million bank-issued Visa and MasterCard credit and debit card accounts in the United States.
  • Mail Monitor, a credit card direct mail tracking service, reports that roughly 4.2 billion credit card offers were made to U.S. households in 2008.
  • An online poll conducted by CardTrak.com reports that the average rate for bank credit cards reached a whopping 19% in March 2007, whereas the average rate in 2003 was 16.5%.

Watch: Prioritizing Debt

Credit and its associated debts are a part of our reality, and will continue to be for the foreseeable future, and it is up to each individual consumer to not let credit ruin them. Unfortunately for many, it already has. The level of consumer debt has grown exponentially in the U.S., where tens of millions of credit consumers find themselves overwhelmed by their personal debts.

If you find yourself in a credit or debt bind, keep reading. This tutorial will provide an overview of credit and debt management concepts that every consumer should know about so they know how to live with credit.


Source: investopedia.com

Credit Crisis

Introduction

The events of the 2008 credit crisis and their consequences will shape the investment landscape for decades to come. Therefore, investors who wish to be successful need to have a comprehensive understanding of the credit crisis and the changes it has produced in the financial community. This tutorial will provide readers with a broad-based overview of the credit crisis. It’s an excellent starting place for developing an opinion about the future of the global financial environment.

The tutorial begins with a brief history of Wall Street, an analysis of the differences between investment and commercial banking, and an overview of the disappearance of the classic investment bank. In the second chapter, we’ll discuss the crisis in more detail, provide a look at some famous historical crises and compare their causes with the 2008 credit crisis. The third and fourth chapters will look more closely at the credit crisis; first by examining its origins and then by analyzing the events that prompted its onset. The tutorial will then provide an overview of the most important events that occurred during the credit crisis before examining governmental efforts to mitigate the crisis and prevent the systemic collapse of the financial system.

We’ll also examine the crisis’s impact on financial markets and investors, and provide an overview of its impact on the financial markets. You’ll also find some timeless investment lessons that the credit crisis has reinforced and that can help you succeed through future market downturns.

While this tutorial is as comprehensive as possible, readers should remember that the credit crisis consisted of an amazing array of previously unimaginable events. In addition, future accounts of the credit crisis may differ somewhat from this tutorial, based upon the perspective that will come from examining events with additional hindsight.


Source:  investopedia.com