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Trading Bonds Today

Filed Under : Forex by Trevor
Apr.7,2012

Buying stocks and bonds are two totally different activities. In fact, a short trader will generally want to stay clear of bonds as they are more of a long term investment. By long term, I mean that a bond will usually take many years to become a worthwhile and profitable investment. Short term traders can find better uses of their money than tying it up in bonds that take many years to mature.

This doesn’t mean that traders should stay completely away from bonds. There is quite a bit of potential here, but only in certain instances. Bonds have no ownership properties, they are merely a debt owed by a company or government. Buying and selling bonds is seen as a valuable long term strategy within TradeVantage, but by speculating in bond options, you can trade bonds and take advantage of shorter term price changes.

A bond option can let you try and make money over the short term by predicting whether the bond’s value will go up or down. If you think the price will go up, you want a call option. If you think the price will decrease, you want a put option. Options let you buy a contract to buy or sell a set number of the asset in question after the end of a specified time. This expiration time is marked by a strike price, or the price at which you will be buying or selling the bonds. If the actual price moves far enough beyond the strike price in the right direction, you will be profitable.

The downside of options is that they are costly and they are not something that day traders can partake in. Even a short term option is still a long term option for an active day trader. But they have a valuable place within your portfolio if you know how to use them correctly. A short term option can be as little as a month, which makes them much more valuable to a trader than a multi-year bond would be. And by taking advantage of a company’s momentum, you can still make money with bond options even if you don’t want to hold onto an asset like a bond for many years. This allows you to profit over the short term while trading long term assets.

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Hedge Funds Push Their Bets

Filed Under : Forex by Trevor
Feb.21,2012

Money MarketsThere is a constant pressure in the markets which causes the fear whether certain economies if they will succeed when they have been written off. Certain hedge fund managers are not buying into the lackluster economies and feel like these specific economies will do very well. These economies include the US, euro zone, and China. The battered banks in Europe have seen a boost from all the cash influx recently in the market. Even with China slowing down in its fifth quarter in a row it’s not as bad as everyone makes it out to be.

Many hedge funds missed out on the rally in January. The S&P 500 rose nearly 4.81 points while hedge funds rose 2.6% in that same month. The cautious methods of trading in a hedge fund during the month were based on some of this really bad economic news. With this information behind us it’s time to move forward and these hedge funds feel like they can push the stocks higher. What this all entails is that risk is back. Many hedge funds that missed out last year just mistimed the gains they could have been made. Some funds are trying to get back in the game by snapping up derivatives and other means. Hedge funds aren’t like a penny stock millionaire, but do have the means to buy up tons of share at any given time.

Microsoft shares that hit a five-year high and analysts believe that we can come close to the performance of Apple. The increase in the tablet market and cloud computing have made Microsoft the big comeback story in 2011 and 2012. With the upcoming Windows 8 launch there’s a lot of expectations for Microsoft to succeed even further beyond where they are now. We’ll just have to keep a close eye on the stock and how is affected by news in the future. You knew it was only a matter of time till Microsoft made its comeback against Apple.

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Investing During Tough Market Conditions

Filed Under : Forex by Trevor
Oct.1,2011

During times like these, finding a safe trade or investment can be downright tricky. With worries of a recession looming before us, how are we expected to make money in the market? If the answer to this question was obvious or easy, we would all be rich. The truth is that there is no easy answer to this question. Trading in turbulent or downward falling markets is tricky; many people have lost fortunes trying to do this.

One of the best ways to make money in the market is to follow prevailing trends using Tom’s EA. If the stock market is falling, find a company with poor numbers and sell it short. Or find an exchange traded fund that is the inverse of a major index and buy that. VIX rose by 35 percent on August 18th, 2011. This basket fund is a volatility measure of the S&P 500 index and because the S&P index fell by 53 points on this day, the volatility index increased dramatically.

The hard part is the predicting. Even the most carefully plotted out trades sometimes fail. In order to survive, you need to commit to diversification. Don’t use all of your money to trade; invest some of it. Investments for long term growth aren’t as flashy as quick trades, but they will help you to protect your capital over a longer period of time. Trading is a tough profession; you need to always be on the lookout for your long term safety. If you put all of your money into trades, your risk of ruin becomes much higher than if you invested a portion of it.

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Market Movers

Filed Under : Forex by Trevor
Aug.16,2011

If you want to be successful in the Forex market, you need to know what moves markets and the Delphi Scalper. This will help you to get a jump on trades before other traders and thus have a higher profit amount at the end of the month. This might sound simple, but it is actually a tough process. It is impossible to predict currency market movement accurately 100 percent of the time. But the more you learn and practice, the better you will become at it.

Major national banks and institutional investors are the biggest market movers. While there are millions of individuals trading their own money out there, the amounts they trade are deemed inconsequential when compared to the billions traded daily by these larger organizations. Keeping up with how these institutions are trading will give you a clue of where to put your own money. If the major banks are moving away from holding the dollar, perhaps this is a sign that you should too.

Look for news reports that concern the major market movers. Having news reports and knowing how they will affect the market can put you in a prime position for the anticipation of the currency in question’s next move. What’s more, if you plan carefully, you can have your trade automatically executed and ended, allowing you to just sit back and watch the profits come in. GDP reports and minutes from national bank meetings can give you this information. You just need to interpret it for your own profit.

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The World Bank

Filed Under : Forex by Trevor
Jul.11,2011

The World Bank was established in 1944 and it is headquartered in Washington, D.C. It provides financial and technical assistance to developing countries across the world.

The mission of the World Bank is to fight poverty with passion and professionalism; help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors.

The World Bank isn’t a traditional bank but instead it is comprised of two development institutions who work collaboratively: the International Bank of Reconstruction (IBRD) and the International Development Association (IDA). The World Bank has 187 member countries.

The IBRD’s goal is to reduce poverty in middle income and creditworthy poor countries while IDA’s interest is the world’s poorest countries.

Working together, these two institutions provide low-interest loans, interest-free credits and grants to developing countries. The money is used for a number of reasons including investments in education, health, public administration, infrastructure, financial and private sector development, agriculture and environmental and natural resource management. You can also use the Trade Miner software to help make your investments that much better.

Recently, Secretary of State Hillary Clinton was a rumored to be interested in taking over as the president of the World Bank. The position will be open after its current president, Paul Wolfowitz, plans to step down at the end of June.

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Analyzing Fundamental Data in Forex Trading

Filed Under : Forex by Trevor
May.10,2011

There are traders who rely exclusively on technical analysis and the Trailingator for all their trading. Their assertion is that all the information out there is in the charts. While there is some truth to that, the Forex market is somewhat different from others. If you just follow technical analysis, you will always be a follower of the action and not a predictor. Technical analysis is especially unreliable when you wish to anticipate market movements.

Analysis of the market fundamentals actually reveals the underlying causes that lead to the gyrations of the Forex Markets. Currencies are affected by a plethora of reasons, from geopolitical to financial and weather related. World economic conditions are always in a flux, and deciphering their impact on currency markets is not easy.

The first step in analyzing the fundamentals of Forex markets is to identify the key players. These are financial institutions, central banks and governments. Fiscal decisions taken by individual states affect the value of their currencies in relation to others. While some of these decisions are taken in an impulsive manner, most are taken at regularly scheduled events that are known well in advance. This helps Straddle Trader Pro traders around the world to get this information as soon as it is released.

Decisions taken at these key events have a direct effect on their currency’s value in comparison to others. Smart traders would be well advised to be abreast of these fundamental factors when making trading decisions.

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ETF Versus Other Indices

Filed Under : Forex by Trevor
Mar.13,2011

Many people often confuse exchange traded funds with market indices. This is an extremely easy mistake to make. ETFs often are mirror images of an index, but there are some major differences. For one, ETFs merely track other investment products. An ETF can track and mirror an index, but they are two separate entities. For example, an ETF like SPDR is a mirror image of the S&P 500, only it is reduced so that one share of the SPDR is worth 1/10th of the value of the S&P 500.

An ETF can also track other investment products besides indices using the Portfolio Prophet. ETFs were created so that investors could more easily diversify their capital in a safe and inexpensive way. Indices are imaginary portfolios of stocks, while it is possible to buy a share of an index, it is much more expensive than buying a single share of an ETF.

ETFs also differ markedly from mutual funds. Mutual funds are much more tightly managed and as such have many more fees associated with them. An ETF can be comprised of similar products as a mutual fund, but at a much cheaper cost to the investor. ETFs then offer a flexibility that you cannot find in traditional mutual funds.

Another difference between ETFs and mutual funds is that ETFs have a fixed number of shares. When a mutual fund wants to grow, they simply create more shares for their investors. ETF shares are bought and sold very much like stocks are, making ETFs a more fluid investment.

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Range Bound Markets

Filed Under : Forex by Trevor
Mar.7,2011

A range bound market can make for a very frustrating trading experience. In these markets, the currency in question is not going up or down drastically, but is staying within a tight range where there is mostly sideways movement. If you are not a day trader, these markets can tie up your money and prevent you from making a quick profit.

In order to deal with range bound markets, there are a few things you can do. The first is to play your trades in a manner that allows you to profit from the small ups and downs of the market. In other words, you will want to act as a day trader and follow the more minute changes that the forex market experiences. If you are not comfortable trading larger amounts of currencies, a second option is to sit out and wait for a more profitable opportunity like using the Pro Trade Copycat Signal service. This sitting and waiting method allows you to preserve your trading capital for the most beneficial opportunities.

A third option is to find a new currency pair to trade. Just because the EUR/USD currency pair is stagnant, this does not mean that all currency pairs are. Branch out and explore other money making ventures within the forex market. If the Euro is not performing well for you, consider the Japanese yen or the Swiss franc. There are many opportunities out there for an observant trader to take advantage of. You may just need to look around a bit in order to find them.

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Day Trading

Filed Under : Forex by Trevor
Feb.9,2011

Day trading in the stock market and day trading in the Forex market are two totally different creatures. While you might have success at one of these, it does not necessarily translate perfectly to the other. As you will see, Forex trading is much easier to begin day trading in, although both types of day trading come with significant risk.

It is much more difficult to be a day trader in the domestic stock market. This is because the stock market is much more regulated than the Forex market. If you are labeled as a pattern day trader by your broker (four or more day trades in a five day period), you are required to keep your margin account at $25,000 or more. This makes entry to day trading much more difficult because with Forex trading, there is no minimum entry point. You cannot instantly withdraw money from a stock market margin account either. The law says you must maintain a balance for at least two days before a withdrawal can be completed.

Margin accounts can only be doubled within domestic stock trading. This minimizes the risk that the broker is put at. With Forex trading and the Elemental Trader, some sites allow 200 to 1 or higher margin credit. The risk associated with Forex is higher because of this. There is also a law regarding margin calls with stock market day traders. If your broker wants you to reimburse the margin credit they allowed you, you must meet this requirement within five business days.

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Price Reversals versus Retracements

Filed Under : Forex by Trevor
Jan.18,2011

A price reversal can be difficult to predict; they are quite easy to see in retrospect, however. This does us little good, however, so the better we are at predicting them, the more money you will make. Oftentimes, traders become confused as to whether the movement they are seeing on a chart is a reversal or a retracement. A retracement is a very short term thing, usually, and knowing how to spot the difference between these two occurrences will help you to improve your trading. Here are some things that will help you determine the differences between the two.

Reversals can occur at any time. Retracements, however, usually occur at the tail end of a big move as the price moves to find its most stable point. This means that it is more likely to be a retracement if the price has just undergone a major change.

Another key difference is that with retracements, the fundamental indicators of a currency do not change or only change very slightly. With a reversal, there is generally something with the fundamentals of that currency that reflects why the change is taking place. If you stick to solely technical analysis, you will not be able to spot these factors; therefore, being a well rounded trader has its benefits.

A final thing to be aware of is that sentiment does not generally change during a retracement. If there is a bonafide uptrend, there will be legitimate buying interest. In a genuine downtrend, there will be interest in selling off the currency.

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