Stock Options - The Basics

By Russ O Brown


My last article touched on the volatility and some basics of volatility's influence on options. Now I would like to start with the basics and give our readers an overview of how options function. This and the following articles in this options series will not be a complete options education. However it should provide a foundation on which you can build a solid understanding on how to properly use options. Some of the references used, assume that you have an understanding of trading stocks.

In order to fully understand options we must start with the basics, this is our foundation. Understanding terms and definitions is vital to understanding how to properly implement options. Some important terms and definitions follow:
Strike~ The pricing increments of options, usually priced in increments according to equity price. E.g.; equities priced up to $100, options priced in $1 increments. $100 to $150 priced in $5 increments. $150 + priced in $10 increments.
Call~ May be a bullish position. The right to, but not an obligation to purchase a given amount of stock (usually in quantities of 100 shares) for a pre-determined price, at a pre-determined future date.
Put~ May be a bearish position. The right to, but not the obligation to sell a given amount of stock (usually in quantities of 100 shares) for a pre-determined price, at a pre-determined future date.
Trend ~ The direction of stocks or indices over a minimum of five trading periods.
Greeks~ The underlying factors that drive the price of options.
Delta ~ the amount an option's theoretical value will change for a corresponding one-unit (point or dollar) change in the price of the underlying stock (equity option), or value of the underlying index (index option).
Gamma ~ the amount an option's delta will change for a corresponding one-unit (point or dollar) change in the price of the underlying stock (equity option), or value of the underlying index (index option). Also known as the Delta of the Delta.
Rho ~ the amount an option's theoretical value will change for a corresponding one-unit (percentage-point) change in the interest rate used to price the option contract.
Theta ~ the amount an option's theoretical value will change for a corresponding one-unit (one day) change in the number of days to an options expiration. It is a measurement of an option's theoretical time decay.
Vega ~ the amount an option's theoretical value will change for a corresponding one-unit (one percentage-point) change in the contract's implied volatility.
IV ~ a consensus in the marketplace of an underlying stock or index's expected volatility as predicted, or implied, by an option's price. It can be calculated with an option pricing model as the volatility assumption that would be used to generate a theoretical value for a call or put that is equal to its current market price, and is expressed as annualized standard deviation in percentage form.
Bullish~ Believing the price of stocks will trend higher.
Bearish ~ Believing the price of stocks will trend lower.
Neutral ~ When the market trades in a range over an extended time.
Expiration ~ (American style options) Option contracts technically expire the third Saturday of each month, since the stock markets are closed on Saturday it is generally accepted as the third Friday of each month.
Bid ~ The price the brokerage firm will pay per share for an options contract.
Ask ~ The price a brokerage firm will accept per share for an options contract.
Spread ~ The difference of the bid and ask price.
Exercise ~ The decision to purchase the underlying equity at the option contract strike price.
Assignment ~ For an equity option, the writer must sell (for a call) or buy (for a put) 100 shares of underlying stock at the strike price per contract.
Long ~ Holding a position in anticipation of the equity continuing in the present trend.
Short ~ The investor has assumed the obligation to buy 100 underlying shares at the strike price if assigned on the short put.
Time Decay ~ The premium of at- and out-of-the-money options consists only of time value. It is time value that is affected by time decay as well as changing volatility, interest rates and dividends. Also termed extrinsic value.
Leaps ~ Long-term Equity AnticiPation Securities, or LEAPS, are long-term option contracts. Equity LEAPS calls and puts can have expirations up to three years into the future, and expire in January of their expiration years. Index LEAPS may have expirations of up to five years into the future and generally expire in December of their expiration years.
These are the basic options definitions; there are more complex definitions for the varied strategies; which will be covered in later articles. I know terms and definitions are not the adrenaline pumping rush of actually placing a trade. However, I have found over the years that having a good understanding of the basics makes it easier to learn the more complex attributes. Understanding these terms, what they mean, when, and where they are used, is vital before entering a position. Another important aspect prior to entering a position is to have an understanding of the terms used by your broker and how to place the correct limits on your order.

Prior to entering an option position make sure you fully understand all the mechanics of your chosen strategy. Before implementing a strategy that is new to you; trade it on paper until you are comfortable with how it works and how to exit the position correctly. As prior articles have stated, have a plan and trade your plan. When in doubt stay out of the trade, there will always be another opportunity.

Be sure to visit tradingtoolz.com and start your FREE 7 day trial and discover the advantages membership has to offer. You may also be interested in receiving the free eBook "Traders Mindset".

Best of Trades Russ Brown TradingToolz LLC http://tradingtoolz.com

The author and publisher of this Training and the accompanying materials have used their best efforts in preparing this Training. The author and publisher make no representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this Training. The information contained in this Training is strictly for educational purposes. Therefore, if you wish to apply ideas contained in this Training, you are taking full responsibility for your actions. The author and publisher disclaim any warranties (express or implied), merchantability, or fitness for any particular purpose. The author and publisher shall in no event be held liable to any party for any direct, indirect, punitive, special, incidental or other consequential damages arising directly or indirectly from any use of this material, which is provided "as is", and without warranties. As always, the advice of a competent legal, tax, accounting or other professional should be sought. The author and publisher do not warrant the performance, effectiveness or applicability of any sites listed or linked to in this Training. All links are for information purposes only and are not warranted for content, accuracy or any other implied or explicit purpose.

Article Source: http://EzineArticles.com/?expert=Russ_O_Brown

How To Invest In The Stock Market With Little Money

By Omar Best






Many people think that you need a lot of money to start investing in the stock market. On the contrary, you can get started investing for as little as $25. Thanks to the internet, stock investing is accessible to individuals of all walks of life. All you really need to get started is an internet connection and a bank account.

One thing that you must understand when you are just getting started investing is that this is not a get rich quick scheme. You should not expect to make $1000 from an initial investment of $25 in a week. You need to recognize that investing in the stock market is a long term process. Of course, there are experienced stock traders out there that make lots of money day trading, but if you are new to this type of investment, then you should take your time and learn.

If you do not know anything about stock market investing, then you should really think about investing time and a few bucks to learn. The money that you spend now to get familiar with stock investing will pay off in the long run. One of the reasons why people lose money investing in stock is because they do not understand the basics. Stock market investing is one of the riskiest investment vehicles out there. Consequently, if you are clueless about how the stock market works, then your risk exposure is magnified.

So here is what you need to do to get started investing with little money:

1. Find a stock broker that does not require a large minimum investment to open an account. You are looking for a broker that requires a minimum of $1000 or less to open an account. Some of the online brokers that fit this criteria are E-trade, Sharebuilder, and Firstrade. You also want to look at how much the broker charges you per trade or transaction. If they are charging over $10 per transaction, then it may not be worth it to open an account with them.
2. Once you have found a broker that you would like to use, then you need to open the account. Be prepared to have to verify your identity and bank account information. Opening an account is simple but it can be tedious. You may also be required to fund your account before it is opened.
3. Once you have opened your brokerage account, then you need to familiarize yourself with the account. Most online brokerages have a suite of tools that you can use for tracking your trades or researching your potential investments.
4. Before you start actually investing in stocks, you need to make sure you understand the basics of stock market investing. There are several resources available to you offline and online. Some of the resources are paid and some of the resources are free. You can even subscribe to some free online investing newsletters to get tips on investing.
5. Once you have an understanding of how the stock market works, then you should be able to make educated investment decisions. Of course, even with the best education, you will still have some bad investments. Nevertheless, with some type of investment knowledge, you will have a better chance of making good investment decisions.

Finally, no matter how much money you are starting off with, you still need to find out how the stock market works before you start investing your actual cash.

Once again if you are just getting started out investing, then you need to make sure that you understand how the stock market works. Find out all about the basics of stock market investing.

Article Source: http://EzineArticles.com/?expert=Omar_Best

Easy Forex Strategies: Range Trading

By Sam Milner

 

One of the best Forex trading strategies for the beginner is range trading. The reason is that it is probably the easiest strategy to use. It is not just beginners who use this type of strategy, a lot of very successful professional traders also use it. While it is a fairly simple strategy there are a few things that you have to be careful of when you are range trading.

Range trading is probably the easiest strategy for the beginner to use when they start in Forex; fortunately it is also a very profitable strategy. It is based on the fact that the price of currency often stays within a certain range. Once you know what that range is it is easy to make decisions about when you should buy and sell. Determining the range that a currency trades in is a pretty simple task.
In order to be a successful range trader you are going to have to figure out the support and resistance levels for the currency you are interested in. The support level is the price that the currency won't go below and the resistance level is the price that it doesn't go above. Once you know what these are all you have to do is buy when the price hits the support level and sell when the price hits the resistance level.

Finding support and resistance levels requires a basic understanding of technical analysis and an ability to read charts. The good news is that these are probably the easiest things to identify on the charts so most beginners pick it up fairly quickly. Finding resistance and support level is based on trend lines, when you draw these on a price chart it will be pretty clear where the resistance and support levels are. Once you know that trading becomes very easy, but you do have to be careful.

If you are going to use a range trading strategy it is important to keep in mind that the price can and does break through the levels that you have established for resistance and support. What we are determining is the levels at which the price will have a hard time breaking through, if there is enough momentum it will however move through these levels. That means that you are going to have to pay attention to other things besides the trading range. In particular you will want to pay attention to things like changing interest rates; this can have a huge impact on the price and send it right through the support and resistance levels.

Even for experienced investors it can be hard to find the right Forex trade. Fortunately there are quite a few easy Forex trading strategies that you can use to help you identify profitable opportunities.

Article Source: http://EzineArticles.com/?expert=Sam_Milner

Real Estate Investment - How to Make Money Investing in Property

By M L Collins


Real estate investing involves buying, managing, renting and/or selling property for profit. Investing in property has more benefits than the stock market and is more likely to make money. It is not however the ideal investment for everybody, but it is certainly worth considering.

To begin as a property investor you don't need a specific qualification or university degree. Age does not matter you can begin at 18 or 80, many people start when they retire. It can be a part time interest or full time occupation.

Your success, depends largely on being able to obtain useful and timely information, whether you do all the research yourself or use the services of an agent or locator.

When starting out begin by concentrating on one area or region, and find as much information and examples as you can. It's best to have an idea of the type of property that you are looking for - residential, commercial, retail.

Many investors buy property with the intention of adding value. Real estate development is the improvement of property as part of a real estate investment strategy. Property development has to be professional, start small with something you can handle; estimating renovation costs usually comes with experience. Before starting on this route if you are not a professional - take advice.

Any investment may go up or down but real estate has historically been a good investment, if bought at the right time! Buying a property to collect income in the form of rent is usually a good investment. Buying a piece of land which does not have planning permission, but you are told has future potential, is speculation.

Compared to other investments real estate has limited liquidity (the ability to convert an asset to cash quickly), a large financial commitment is required (although capital may be gained through mortgage leverage) and it is highly cash flow dependent.

The primary cause of investment failure, is that the investor goes into negative cash flow for a longer period of time than is sustainable.

Investors rarely pay the entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase price will be financed using some sort of financial instrument such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity.

You will need to evaluate a property as to its market value, potential future value or as a landlord its rental prospects. In all areas of real estate investing the money that you make will depend to a large extent on the initial deal. Study your market.

If buying a property for rental, either single property or multiple units consider the "Price-to-earnings" ratio (P/E ratio) for an indication of the true value. To assess your earnings i.e. rents, you will need to study local rents for comparable units or homes in the area in which you intend to buy.

Having located a property and completed due diligence (investigation and verification of the condition and state of the property) you will negotiate a sale price and sale terms with the seller. Most investors employ real estate agents, surveyors and attorneys to assist in actually purchasing a property.

Property investment is not a means to "Get rich quick" but many have used skillful leverage and astute buying to make fortunes.

And for further information, on Real Estate Investment, reports and FAQs on Property planning, buying, building and designing, with Free Instant Access, visit http://www.mypropertyfaq.com

Article Source: http://EzineArticles.com/?expert=M_L_Collins

What It Means to Start Investing in Gold

By Timothy R Fletcher

 

For the sake of accuracy, we should begin with a much-needed correction as we consider what it means to start trading gold.

Technically, one does not "invest" in gold or any of the other commodities.

When you invest, you are purchasing stock in a company in order to participate in the capital gains of that stock's value and to participate in its profitability by receiving dividends.
Because gold and the other commodities do not produce revenue, profits, or dividends, you are "speculating," not investing, when you purchase them.

So, what does it mean to speculate on gold?

Assuming that you're not a manufacturer who needs gold for your production process, it's fair to also assume that it means you want to protect the value of your wealth.

First, understand that an ounce of gold is merely an ounce of gold.
Gold doesn't change in value. Its price fluctuations, either up or down, are indications of the changing value of your dollars.

Consider this. In January, 2009, it took only 900 of your dollars to buy one ounce of gold. At this writing, it takes almost 1,600 of your dollars to buy the same ounce of gold.

Gold has not gone up in value.

Gold's price has gone up because the value of your dollar has gone down.

Second, understand that anything you own that is over and above your "cost-of-living," is part of your wealth.

Some have great wealth.
Some have very little wealth.
All of us have some wealth.

When you trade some of your dollars for gold, you will be protecting what wealth you have from the dollar's declining purchasing power.

Third, understand that there are risks.
If you look at a 10-year chart of gold prices, you will see that the charted price line rises dramatically from less than $300 per ounce early in 2002, to over $1,900 per ounce in the fall of 2011.
Notice that it is a jagged line. Gold's price fluctuates!

The timing of your gold purchases should be coordinated with the times that gold "dips" in price and there is a "pull-back."

To "buy low and sell high" is still a valid concept!
There are periods of "consolidation" that typically come after sharp advances in price.
That is the time to buy.

Think of gold's price as climbing a staircase. It takes a few steps up, followed by a step or two back down. The overall progress may be upward, but keep in mind that there are pull-backs.
As long as the government continues to over-spend and pay its debts by printing more dollars, there will be a continuing devaluation of the dollar and a continuing rise in the price of gold.
The successful gold speculator pays attention to the news and reads the conclusions of the economic analysts who write about our economy.

Through such observation, you can draw reasonable conclusions about our government's debts and the probable direction of the price of gold.

You cannot eliminate all risks, but you can minimize your risks by gathering information.

Trading your dollars for gold can be done in several ways.
You can purchase coins and bars or you can purchase stock in the gold mining companies. There are also many Exchange Traded Funds (ETFs) that hold gold bullion and/or gold mining stocks.
If you believe that the dollar will continue to decline, it's time to start shopping!

Timothy Randolph Fletcher is the Managing Editor of the NDW TREND TRADING REPORT. It is a monthly publication that provides research, analysis, and specific stock choices for traders. The company also provides a QUICK-START GUIDE TO STOCK TRADING for those who are considering stock trading for profits. Click here for a free copy!

http://newdaywealthprotection.com/index165.htm

Article Source: http://EzineArticles.com/?expert=Timothy_R_Fletcher

Hedge Funds - Their Definition And Characteristics

By Jeremy Wong



 Usually, the definition of hedge funds may vary from one person to the other. Basically, hedge funds are funds that may take both long and short-term positions, buy and sell undervalued securities and invest in almost any opportunity in the market where there is are foreseen impressive gains and reduced risks. In general, the primary aim of most funds is to reduce volatility and risk while attempting preserve capital and also deliver positive returns under all market conditions.

Many people may be wondering; how do you go about investing in hedge funds? Investing in funds is not a difficult course of action. However, it is imperative to seek counsel and guidance from trained and licensed fund consultant so as to make sure that you get to avoid common pitfalls or over concentrating on only one form of investment option. The strategies and techniques of investing in funds are quite different from traditional trading methods. Many strategies are aimed at hedging against down turns in the market. This is particularly important especially in dealing with the volatility and anticipation in today's overheated stocks markets.

What are the common characteristics of hedge funds?
Well, these funds utilize a variety of financial instruments to minimize risks, enhance returns and minimize the correlation with equity and bonds markets. These funds are quite flexible in their investment options since short selling, calls, leverage and any other viable option may be utilized. The funds vary a lot in terms of investment returns, volatility and risks. Usually, a hedge fund is managed by experienced investment professionals who are generally strategic and knowledgeable.

Some of the common types of hedging strategies include selling short. This is a strategy that involves selling shares without owning them, hoping to buy them back at a future date at a lower price in the expectation that their price will drop. Another strategy that may be utilized involves investing in deeply discounted securities of companies that may be about to enter or exit a financial distress or bankruptcy, often below liquidation value. Many of the strategies utilized in hedge fund investing happen to be non-correlated to the direction of equity markets.

Before you set out in fund investments, it is imperative to ensure that you are an accredited investor. Learn and gather all the information you can about these funds before you finally set out to invest. Try also to consult friends and professionals who may have invested in a hedge fund before as they may understand key funding strategies that may be needed to be employed. In order to benefit from a hedge fund investment, you have to stay alert and informed. For instance, ensure that you get to learn about the various types of market movements that affect your fund. Stay updated and seize all opportunities that may arise.

What are the main advantages of hedge funds?
Well, funds have the ability to generate positive returns in both rising and falling equity and bond markets. Including these funds in your investment portfolio will serve to reduce your overall investment portfolio risks and to increase your returns. Looking at the current market trends, these funds may only gain more popularity with time.

Whether you're a skilled investor or just a novice, having the right information on the best hedge funds and biggest hedge funds is essential to making the most appropriate investment choices.

Article Source: http://EzineArticles.com/?expert=Jeremy_Wong

Stop Losses the Right Way, Where, and How

By Dr Winton Felt

When volatility is high and stocks whipsaw up and down, how do you know where to place a stop loss? Is there a right distance from the stock’s price to place the stop loss? Is there a correct procedure to determine where to put it? As the stock approaches the stop loss, you may get nervous and want to cancel the stop loss so the stock will not be sold. How do you keep from selling too soon or from getting “psyched” out of a good stop loss (as when emotions cause a person to second-guess reason) and staying with a bad position too long? The answer to the first questions is related to the answer to the last question. If your stop loss placement is mathematically sound and based on the laws of probability, and you truly understand and accept what that means, you won’t be as easily psyched out. That is a major advantage of a volatility stop loss. It is based on mathematically determined significance. The same can be said for stop losses based on support levels. A breakdown through a support level is an event of significance.

Getting “psyched out” is a psychological problem that often gets in the way of disciplined investing. Once, when I was managing accounts on behalf of our advisory firm, a client called and asked if it wouldn't be a good idea to have stop-losses in place to protect us if any of our stocks plunged. I had just taken the positions and had not yet placed the stops. At the time, I agreed that stop-losses would be appropriate. I had been teaching clients for many months about the need to implement a stop loss for every position. The lessons apparently were sinking in. The feedback I was getting from clients suggested that they were in agreement about the need to sell quickly when a stock declines more than is characteristic for the stock or when it plunged through a pre-determined level of support. However, when one of those stop-losses was triggered, a client called who wanted to know why I sold when the stock was low. This person wanted to wait for the stock to rebound before selling. This is a form of seller’s remorse. The client agreed that selling early while the loss was still small was the best procedure. However, when it came down to locking in a small loss, the individual was conflicted. He agreed with the strategy in theory but not with its implementation. Nobody likes to take a loss. Here is a special Bulletin: any person who does not use stop losses is begging to be taught a lesson in risk control. The market will oblige.

There are those who firmly believe in risk control but get "psyched out" of their discipline by the market. For example, a person might try to use a stop-loss but then give up on stop-losses altogether when that stop is triggered just before the stock resumes its climb. The root of the stop-loss "problem" is the uncertainty that stems from most people’s lack of knowledge regarding proper stop placement. They either place the stop too far away from the stock, or they place it so close that it is virtually certain to be triggered.

If a stock repeatedly rebounds after a decline to $50, then there is support at $50. That means there is demand at that level. If the stock drops through that price, it means the selling was severe enough that it overwhelmed all the buyers at that level. That is a significant event. Just below that buying support is where a stop loss belongs. If the stock breaks through that support, it is destined to go lower. Our traders at stockdisciplines.com look for significant events like this and they also look for events that are statistically significant. That is, when stock behavior is outside the normal distribution of excursions for that stock, it is considered significant. Here is an example. If it is normal for a stock to make an excursion of up to 2% on either side of a 50-day moving average within a period of 100 days, then an excursion of 3% below the moving average would be significant. Refusing to sell on a significant negative event will not stop the decline. It will only cost you money. People do not like to admit they are wrong. They cling to the hope that the stock will eventually live up to expectations.

 Assume that the distribution of a stock’s daily low prices about its moving average indicates that downward price excursions equal to or greater than 4% below the stock’s moving average occur only once in 200 days. Assume also that you are trying to capture the gains achieved by trends that last about 100 days. A spike of 4% below the moving average would be well outside the probability envelope of your investment time-horizon (the stock is deviating much more than is “normal” for the stock). That kind of price excursion would be a significant event. That is where a stop loss belongs. It would be foolish to keep holding the stock and hoping for a recovery. To do so would be blatant evidence of a lack of discipline. A disciplined trader would sell immediately. Even if the trader should later decide to repurchase a stock recently sold, the decision will be based on much greater clarity of thought and with more objectivity after it is sold than the decision to retain a stock that is already in the portfolio.

Of course, the caller mentioned above knew the stock was at a low by hindsight. If the stock had continued to fall, the caller would have thought the move was well-timed. The point is that at any given moment one can never be 100% sure what a stock will do next. One of the biggest errors a trader or investor can make is to confuse what is with what is hoped for or with what has been. The best traders always keep their eyes on the present. Acting on what is (on what the facts actually are in the present) sometimes means relinquishing your preconceptions about what a stock ought to do. If a stock has broken through support, forget about your expectations for the stock. The company may be great and its product may be wonderful, but its stock is for some other time. Additional information and videos about stop losses are at http://www.stockdisciplines.com/stop-losses.

 

 About the Author

 

Dr. Winton Felt

Dr. Winton Felt has current market reviews, stock alerts, and free tutorials at http://www.stockdisciplines.com Information and videos about stock alerts and setups are at http://www.stockdisciplines.com/stock-alerts Free tutorials are at http://www.stockdisciplines.com/free-tutorials

 

History And Development Of Derivatives

By Abey Francis

 

Derivatives refer to a variable, which has been derived from another variable. Interest in derivative products may mostly arise out of Interest in the underlying product, but it can also be without any interest in the underlying. Even if so, the values of derivatives and the underlying are interrelated and irrespective of the fact that one has interest in both or only the later, the two will affect each other prices.

The underlying can be any product, literally anything ranging from agricultural products, foreign exchange, interest rates, oil, gas, gold or silver, stocks and stock indices, financial instruments (Treasury Bills, Bonds, etc.) or anything in the world, which itself is traded. Thus derivatives are derived from markets, products, risks or any underlying on which they are based.

Derivatives have been in use for hundreds of years, in the form of futures or options, when high seas cargoes were bought and sold in future prices (or priced for future delivery) or rice produce sold for future delivery by Japanese farmers. The future transactions were then done in various pockets, in anticipation of future deliveries. The explosion of the market could be linked to or coincided with the collapse of Bretton Woods fixed exchange rate regime (35 USD = 1 Ounce of Gold) and suspension of US Dollars' direct, links to gold in the 1970s. The delinking of US dollars to a fixed parity of gold, effected volatiIity of exchange rates as also the interest rates. The increased volatility thus lead to the creation and explosion of a financial derivatives market which has since than grown manifolds.

In early 1970s, the Chicago Mercantile Exchange introduced the world's first exchange traded currency future contract. Later in 1975, the first interest rate futures were introduced. Several exchanges then introduced exchange rate and interest rate futures contracts. By 1983, the derivative markets saw further growth with currency options trading in Philadelphia Stock Exchange.
Trading in Currency Futures and options gave the world a whole new range of risk management techniques for managing exchange risk, which helped in growth of global trade, investments and cross-border remittances.

This was the time (early 1980s) when interest rate swaps were also introduced. Interest rate swaps helped borrowers and lenders to switch their borrowings/lendings from fixed to floating rate structures are otherwise, as per their views on the interest rate movements.

Mid-1980s saw a boost in the derivatives market, with a host of exchange rate, interest rate as also commodity price risk derivative tools/products being traded in various exchanges, which was evident from the fact that Chicago exchange handled millions of derivatives contracts annually.

Initially, the derivative products were used mainly by the hedgers as actual users of the underlying contracts, who used these products for managing their risks. The importers, exporters, financiers, borrowers, buyers, etc., were the major users of these products.

Gradually, individuals and institutions tracked the prices of derivative products, much similar to speculation in commodity prices or cross currency prices. They started speculation in futures, options and swap prices. This gave depth and volumes to the derivative markets.

Further, there were people who would be always on a look out for, opportunities of mispricing and uneven pricing on the markets, and arbitraged between market differences, until the differences disappeared.

Thus, hedgers, speculations and arbitrages provided depth, volumes and initiative for newer derivative products, so that a large number of exchanges offered these products with spurt in volumes by the day. The derivative products in a short lifespan of 25 years, have seen tremendous growth, which can be observed from the fact that in April 1988, the average daily turnover in derivatives was to the order of USD 1.3 trillion while, the notional amounts outstanding for OTC contracts and exchange traded contracts stood at USD 72 trillion and USD14 trillion respectively in June 1998. (BIS Data):

The main reasons for this growth in derivatives market were increased volatility in the financial and commodity assets during 1970 and 1980s, the oil shocks, in 1971 and thereafter, the need to insulate exchange risk for incomes in different currencies, arising out of increased global investments, technological advancements providing real-time information systems and 24-hour financial trading platforms, also development of pricing models and instruments based on computer-generated work sheets, the political developments and not the least but the most important would be increasing professionalism amongst all market participants, be it banks, traders, actual users, companies, investors, etc.

 

Retrieved from "http://www.articlesbase.com/currency-trading-articles/history-and-development-of-derivatives-5540809.html"

 

Abey Francis - About the Author:

Full time blogger engaged in the areas of management and technology. Author and Moderator of famous business management blog Management Articles and Business Case Studies.

 

 

Day Trading Strategies

By Simon Francis Froiland

 

There is no way better place to do this than trade in the stock market, and specifically the day trading. Day trading is the act of buying and selling or trading stock within the same day. In this kind of trading, the traders target is to make profits through taking advantage of small price changes in highly liquid stocks, by investing large amounts of capital on them. To maximize your profits, you need to arm yourself with "air tight" strategies. Here are some of the tested strategies:
Analyze the possible stock candidates for trade. An appropriate stock will allow you to enter and leave the stock at a good price. You must study the high and low points, the conditions the business you're investing in is experiencing and how the price of their stock has been behaving in a recent period.

An ideal stock candidate should also portray volatility. This is the price range in which the trader will operate. This can result in great profit or loss depending o the approach. Remember, in trading stocks, particularly day trading, you can make money when a stock goes up, or a stock goes down, it all depends on the position you take. The position you take is determined by you. You determine your level of knowledge, and the better your decision making skills on what position to take, the more money you make.

The second step is to use a wise trading style to identify a target. One of the strategies is to buy the stocks while they are at the low of the day and selling them at the high of the day. Scalping is also a day trading strategy which involves selling your stock immediately it becomes profitable. Other strategies include the fading strategy and studying the momentum of the stock. There are more, and through research and study you'll learn the ones that suit your risk profile best.

It is also important to know how to determine a stop loss and know how to evaluate performance. This is critical when you find you've made an incorrect judgement on a position or purchase. it's like learning where the brakes are when you first learn to drive, and something your driving instructor was keen to teach first. The course you choose should take the same approach, and teach you the methodologies around a stop loss.

This kind of stock trading is not without risks and requires a well organized strategy. Find out more about these and other day trading strategies by clicking on the link below. It is not like the other forms of investing in the share market, this is a much faster pace where decisions need to be made quickly and you need to be fully prepared for all contingencies, not to mention an air tight strategy to maximize your profits.

Know how to make money by trading in the stock market safely!

If you've watched your retirement savings take a dive, your job "security" go out the window, and your way of life look as though it's threatened, then it's time you took some action.

Many of us are facing the same problems and struggling to make ends meet month after month.
The best investment you can make is in yourself. Only you can change this, and there's plenty of help to get you there. Learning how to trade shares is a sure fire way to generate a consistent income, no matter what the market conditions are.
Go to http://www.barefootsharetrading.com right now to learn more.

Article Source: http://EzineArticles.com/?expert=Simon_Francis_Froiland

Borrowing to Invest - Should I? Shouldn't I?

By Alex G Ward

 

The ideas and dreams that come with the thought of investing can be almost intoxicating for some. It's entirely understandable; who doesn't like the idea of sitting back and watching your bank account swell with minimal effort on your part?

While investing your money and making it work for you is a wonderful initiative if executed correctly, there are an increasing number of people who are opting to borrow an initial lump sum of money from a financial institution in order to kick start their dream portfolio.

This may sound like a wise strategy (once you hit a few prize stocks you'll pay that debt back in no time, right?,) but when you delve a little deeper you'll find that borrowing to invest is more often than not the best way to start off on the wrong foot.

Borrowing money to invest is commonly referred to as 'gearing' and isn't necessarily a practice we believe is overly wise. When you stack up risk vs. reward, it's very rare that 'gearing' sees you finishing up in the latter category.

Would you consider venturing down to your local bank, filling out the forms, taking a loan for say, $10,000 and then heading straight to the casino to put it all on a hand of poker? No? Not even after you've read book after book after book on Texas Hold 'Em?

The vast majority of readers out there would have instantly thought, 'no way!' So, if you're not prepared to put yourself in debt to risk it on a gamble, what is the real difference between that and say, the stock market?

Both can boast dizzyingly high payoffs whilst also presenting the very real risk of you losing some or all of your money.

While this analogy may seem a little rich for some, we believe it carries behind it a fair amount of common sense.

While we gladly acknowledge that gambling and investing are entirely different beasts, in our opinion they do have one, very important phrase in common: 'only spend what you can afford to lose.'

This is certainly a topic that is ripe for debate however we believe that there is never a reason to put yourself in debt in order to begin investing. It's counterproductive and if you find yourself struggling with the idea, think about what would happen in the worst case scenario; if that initial investment was lost, could you survive financially?

If the answer is 'no,' then you don't need to give up your investment dreams, just go back to the drawing board, speak to a financial adviser and go about setting some financial goals that, at this particular stage of your life, are most realistic to your current circumstances.
Investing should never feel like a gamble.

For more original articles like this visit our 100% free, resource-filled website:
http://www.ezyinvestment.com

Article Source: http://EzineArticles.com/?expert=Alex_G_Ward

10 Different Ways to Diversify Your Investments

By A. Michael Hayes Jr

 

When you decide to invest in mutual funds or anything else, diversification is the best way to protect your investment. Mutual funds are an easy, inexpensive way to diversify your investments. That is one reason why mutual funds are so popular. However, most investors don't diversify correctly. They own too many mutual funds, they hold too much in cash, or they do not invest enough money.

That is not smart investing. Once you understand how to diversify correctly, you will have a critical advantage over other investors. Since the financial markets are as predictable as the weather, you need a strategy to help prevent you from losing money. I can't predict exactly when it will rain, but I can give you an umbrella to help protect your investments. How am I going to do it?

I'm going to show you how to diversify effectively. The key to diversification is spreading out your money over different types of investments. Your investment portfolio has endless possibilities. There are many different ways to diversify, and some of them will work for you. There is no "one size fits all" strategy to diversification.

Here are ten different ways to protect your investments:

1. By investment type. Most investors are familiar with this method, which can include stocks, bonds, mutual funds, currency, convertible securities, and real estate. The values and earnings vary greatly for different types of investments. Make sure you choose the type of investment that is right for you.

2. By country. The global economy is becoming more connected, with more companies and countries working together to earn profits. Investing globally in different countries can prevent you from losing money if one country's economy slow down.

When the United States goes into a recession, investments in foreign countries may perform better. Foreign currency is another way to diversify by country. Some foreign currencies hold their value better over the long-term, which can add security to your investments. This can also help you fight inflation.

3. By industry. Each industry has different market cycles and different profits. An energy company may earn different profits than a retail company or manufacturer, and investing in different industries can give you an average of their returns.

Index funds are a great way to invest in many different industries with low costs. Many investors follow the Dow Jones index, which is itself an average of major industries. Sector funds can also help you mix up the industries in your portfolio.

4. Market capitalization. This term refers to the size of a company. Smaller companies have different market cycles than larger companies, so they earn different profits.

Investing across different sized companies can minimize risk in a difficult market. Smaller companies also have fewer investors, so investors may find underpriced opportunities more often by investing in small companies.

5. Investment company. There are many investment companies available out there, and even more financial brokers. Every company is different. The company that manages your investment has a significant impact on your risks and returns. Make sure you feel comfortable investing your money there.

Mutual funds, stocks, and bonds are not guaranteed like a bank deposit, so it will be difficult to recover your investment if a company goes bankrupt. Investing with different companies can help protect against this.

6. Investment style. Equity funds usually focus on one of two investment strategies: growth or value. These strategies usually take turns outperforming each other, which can be a roller coaster ride if you focus on one investment style. By investing in both, you can get the average performance of both styles with moderate risk.

7. Market development. Financial markets like the stock exchanges in New York, London, and Tokyo have been around for over 60 years. Investments are generally less risky in developed countries with productive economies and stable governments. Emerging markets usually do not have a well-developed economic structure. Investments in these countries can have explosive growth.

8. Rate of return. It is impossible to predict which investments will perform best in the future, so chasing the hottest new funds will almost always lead to below average returns.

Keep an eye out for funds have fallen out of favor recently but still have great management, low expenses, and solid long-term performance. These "sleeper" funds may keep your returns climbing.

9. Holding period. Stock traders will hold different stocks for different periods of time. This is a strategy that investors can also take advantage of.

Set different target dates for some of your investments, and write it on your financial statement. Once your investment reaches the target date, it is time to consider selling it for a better opportunity. This can help you take advantage of market cycles, and you can always come back to a good investment later.

10. Cash. Sometimes investors forget that keeping your investments in cash is a viable option. Investors usually want to have as much invested as possible, but cash can sometimes be a good choice.

Avoid using the "all or nothing" approach to cash when the market becomes chaotic. Investors who panic and move 100% of their investments into cash usually do it at the wrong time and miss any market recovery.

You can keep your risk down and stay ready for great opportunities by following these three guidelines: move small portions of your investment when moving into or out of cash, keep track of your investments regularly, and don't hesitate to invest in a great long-term fund when the market calms down.

A. Michael Hayes, Jr

You can learn more about diversification and investing by visiting my website, Great-Mutual-Funds.com.

A. Michael Hayes, Jr is a mutual fund specialist, writer, and the author of Great-Mutual-Funds.com. He has over 5 years of experience in the financial industry with a leading mutual fund company.
"After 5 years of helping thousands of investors and learning a TON about mutual funds, I decided it was time to pass on my knowledge and experience to everyday investors. So I found an amazing web hosting company and started this website."

Michael still works in the mutual fund industry, helping investors and financial advisors achieve their financial goals every day.

Receive FREE updates on the best mutual funds [http://www.Great-Mutual-Funds.com] and learn how to invest like a professional today!

Article Source: http://EzineArticles.com/?expert=A._Michael_Hayes_Jr

Factors Affecting Foreign Exchange (FOREX) Rates

By Abey Francis

 

When trade takes place between the residents of two countries, the two countries being a sovereign state have their own set of regulations and currency. The exporter would like to get the payment in the currency of his own country, the importer can pay only in the currency of the importers country. This creates a need for the conversion of the currency of importer's into that of the exporter's country.

Foreign exchange is the mechanism by which the currency of one country is gets converted into the currency of another country. The conversion is done by banks and financial institutions, who deals with foreign exchange business.

When one currency is converted into another, there must be some basis in effecting the conversion. The basis by which the currency unit of one country gets converted into currency units of another country is known as foreign exchange rate. Foreign exchange rate is therefore the price of one currency in terms of another. The rate of exchange for a currency is known from the quotation in the foreign exchange market.

Factors Affecting Exchange Rates

In the globalized economic environment of today, economic activity is globally unified to an unprecedented degree. Thus, changes in one nation's economy are rapidly transmitted to that nation's trading partners. These fluctuations in economic activity are reflected, almost immediately as fluctuations in currency values.

Some of the important factors that influence currency values are balance of payments, inflation rates and interest rates.

Balance of Payments: The balance of payments summarizes the flow of economic transactions between residents of a given country and the residents of other countries during a certain period of time. Balance of payments represents the demand and supply of foreign exchange which ultimately determine the value of the currency. When the balance of payments of a country is continuously deficit, it implies that the demand for the currency of the country is lesser than its supply. Therefore, its value in the market declines. If the balance of payments is surplus continuously, it shows that the demand for the currency in the exchange market is higher than its supply and therefore the currency gains value.

Relative Inflation Rates: Suppose that the supply of dollars increases relative to its demand. This excess growth in the money supply in an economy will cause inflation. This inflation causes the weakening of nations currency.

For example, higher prices in the United States will lead American consumers to substitute French imports for U.S. products, resulting in an increase in the demand for euros. In effect both French and Americans are searching for the best deals worldwide and will switch their purchases accordingly.

Hence a higher rate of inflation in the United States than in France will simultaneously increase French exports to the United States and reduce U.S. exports to France. In other words a higher rate of inflation in the United States than in France will lead to depreciation of the depreciation of the dollar relative to the euro or, to an appreciation of the euro relative to the dollar. In general, a nation running a relatively high rate of inflation will find its currency declining in value relative to the currencies of countries with lower inflation rates.

Relative Interest rates: Interest rate differentials will also affect the equilibrium exchange rate. For example, a rise in US interest rates relative to Indian rates all else being equal, will cause investors in both nations to switch from Rupee to dollar-denominated securities to take advantage of the higher dollar rates. The net result will be depreciation of the Rupee in the absence of government intervention. It should be noted that the interest rates discussed here are real interest rates. The real interest rate equals the nominal or actual interest rate minus the rate of inflation. The distinction between nominal and real interest rates is critical in international finance. If the increase in U.S. rates relative to Indian rates just reflects higher U.S. inflation, the predicted result will be a weaker dollar.

Only an increase in the real U.S. rate relative to the real Indian rate will result in an appreciating dollar.

Abey Francis, a full time blogger engaged in the areas of management and technology. Author and Moderator of famous business management blog Management Articles and Business Case Studies

Article Source: http://EzineArticles.com/?expert=Abey_Francis

Investment Farm - A Wealth of Opportunities

By Mark H Holland

 

Investment farms are becoming increasingly popular and there are several key factors that you need to know to invest in farmland and consequently get good returns. Farm investment into land and the operating business gives investors the best straight forward link to the returns available from agriculture. The dairy industry and high performance sheep and beef farms provide the most direct gains from food demand trends in industries that are globally competitive and have steady industry structures and well proven cash flows.

Some of the options you have to invest directly into the agricultural business include owning a farm and leasing it out. This gives investors exposure to changes in land values. You will see as returns and profits from farming increase so will the value of the land and rent provides cash returns. You may find however find tension between the owner of the land wanting to manage the farm in a way that will ensure its long term value will be guaranteed and increase, where as the tenant of the farm land may want to manage the land in a way that will provide short term returns. You also have the option of investing in a share milking company or a contracting company as this can provide you with strong cash returns.

Investing in an operating farm business via buying the farm outright or through being involved in a syndicate will give an investor direct exposure to commodity returns, land value increases, increasing farm productivity and operating efficiencies. An example of this is the dairy giant Fonterra as their shares make up 10-15% of the assets which gives additional exposure to returns from this large company. Capital gains in this scenario happen through the appreciation of farmland's value and this can be strengthened through development and productivity gains. Through this investment option however the revenues can be repeated due to climate effects, and changes in commodity prices and exchange rates. Although this can be avoided by buying the right investment farm land and using a conservative debt structure and input costs usually change together with the commodity prices.

You can also invest in listed agricultural stocks as this provides a liquid exposure to agricultural returns. Investing in listed stocks directly will lead to the price movement being magnified. Investing in futures is another option and this provides exposure to movements in commodity prices.

Agricultural commodity prices usually react over the long-term so this is a good long term option. Investment farms are a compelling investment opportunity. Food and soft commodity prices are experiencing record highs in correlation with the global population growth and investing in this industry will see you with good returns as investment opportunities increase.

The major investment by Waibury has been the ownership of share farming and dairy farm investments throughout New Zealand and predominantly in the Canterbury region. Find out more about our investment farms here.

Article Source: http://EzineArticles.com/?expert=Mark_H_Holland

Financial Leverage And Return On Equity - What is Leverage?

Article by Mike Singh

 

You've probably heard the term before, leverage, but what exactly does it mean? Another term is gearing. So when you use this, you are also doing what can be called gearing. In essence means using the resources that are available to magnify the positive or negative aspect in the final product or result.

               
Usually when you do this type of dealing in business or finance, it is similar or synonymous with borrowing. This greatly involves ROA (return on assets) and ROE (return on equity). The main point is to make ROE higher than the ROA. If it is not, leverage or borrowing can be used.

Some of the basics of how this leverage works include reinvesting a previous loan. When you reinvest the loan you are borrowing or using leverage to get a better ROE on your loan. This type of leverage can involve a lot of risk, but to many it is very much worth it. This is because leverage can give you better returns and greater potential as well.

There is also a theory called the Modigliani-Miller theorem that involves leverage. This theory has to do with a company's equity versus their debt. For example, one that has none actually is known as an all equity firm. While one that has leverage is one that has both equity and debt. The value of the ratio between the two is how much leverage the company has available to them.       

 There is yet another form of leverage that involves the use of options. Usually something called a call option is purchased. This gives the investor an advantage because they are able to purchase these options at what is called the underlying security at any time. The value of the actual security will rise more sharply then the underlying one. This gives the investor a lot of ability to earn more money if value increases. There is of course a risk in this as well, but the leverage that can be gained from it is invaluable.

In general when you use leverage, you will be taking some risks. In the end, a lot of people will find that the benefits of using this technique far outweigh these risks. This is because a lot can be gained if leverage is used in the right time and in the right place. Make sure you carefully weigh the pros and cons before you decide to use leverage for yourself. But if you should decide to do so, you may be glad you did.

How to Use Cash-on-Cash to Compare Investment Opportunities

By James Kobzeff

 

In this real estate investing article, we want to discuss cash-on-cash return by exploring its meaning, benefits and shortcomings, popularity amongst real estate investors, and then the cash-on-cash formula alongside several examples.

So let's get started.

The cash-on-cash return (or equity dividend rate) measures the ratio between a property's anticipated first year's cash flow before tax (CFBT) to the amount of initial cash investment made by the real estate investor to purchase the rental property.

Here's the idea: cash on cash is the percentage of cash flow to cash investment.

The popularity and use of cash-on-cash in real estate investing is because it provides investors with an easy way to compare the profitability of several investment opportunities quickly. For example, an investor could compare the first-year yield of a real estate investment based on its cash-on-cash (or CoC) to the yield offered by a bank on a CD. In this case, for instance, the investor might decide to invest his cash into an apartment complex that returns a CoC of 7.6% rather than into a CD paying 3%, and vice versa.

Generally speaking, though, cash-on-cash return is not considered a particularly powerful tool for measuring an income property's profitability because it doesn't consider the time value of money. In other words, because it doesn't compound or discount money over time, CoC is restricted to measuring an investment property's cash flow in the first year of ownership only.

Nonetheless, the cash-on-cash return is not without validity. It certainly will provide real estate investors a quick way to compare investment opportunities and similar income-producing properties.

How to Calculate

Cash on Cash Return = Annual Cash Flow / Cash Investment

What It Means

Before we consider an example, let's be sure we understand the components of the formula. This will be crucial for you to compute cash-on-cash correctly in your own rental property analysis.

1) Annual Cash Flow - This is the cash flow before tax (CFBT) in opposition to the cash flow after tax (CFAT). In other words, it's the cash flow for the first-year without an adjustment for Federal income tax. CFBT is calculated by computing annual rental income less annual operating expense less annual debt service or loan payment.

2) Cash Investment - This is the total amount of initial cash required to purchase the property and includes the down payment, loan points, escrow and title fees, appraisal, and inspection costs.
Example

Okay, let's compute a cash-on-cash return.

You're analyzing the profitability of a six-unit apartment building according to the following scenario. Each of the six units collects $1,000 per month. You estimate the first year's operating expenses will be $28,800. Your mortgage requires $126,000 down, loan points of $2,940, and a monthly loan payment of $1,956. You estimate your closing costs, i.e., escrow, title, inspections, and appraisal fees, at $2,100.

First, compute the annual cash flow:

Gross Scheduled Income $72,000 ((6 units x $1,000) x 12)) less Operating Expenses of $28,800 equals $43,200 (Net Operating Income) less Mortgage Payment $23,472 ($1,956 x 12) = $19,728 Cash Flow

Next, compute your cash investment:

Down Payment of $126,000 plus Loan Points of $2,940 plus Closing Costs of $2,100 = $131,040 Cash Investment

Finally, compute CoC:

Cash on Cash Return = Annual Cash Flow / Cash Investment, or, $19,728 / $131,040 = 15.06%

Okay, now let's apply it.

You're trying to decide where to invest $126,000 cash. You can invest it in a 3% T-Bill at your local bank or, as you just discovered, you can purchase a six-unit rental income property and get a cash-on-cash return of 15.06%. What do you do next? You might want to do a full-blown real estate analysis on the property and look at some other key returns and measures. Though on the surface, the investment real estate appears to be the most prudent real estate investing choice, you can't make a decision without more information and a more complete real estate analysis.

But here's the caveat. Be sure to use credible property data for your analysis; confirm that everything the seller or agent gives to you is complete and accurate; compute all numbers and property data concisely and carefully.

With that said, here's to your real estate investing success.

James Kobzeff developed ProAPOD to provide superior real estate investment software to investors and agents. Want to learn more how you can create cash flow and profitability presentations with cash-on-cash and other rates of return in minutes? Go to => http://www.proapod.com

Article Source: http://EzineArticles.com/?expert=James_Kobzeff

How Much Money Is Needed To Begin Emini Day Trading?

By Matt Dye

 

Emini day trading has a few requirements to get started ranging from skill, to finance, and personality. Having these qualities from the start makes the process easier, since they are all important in order to be successful. In order to be a successful trader you must have a few things in order.

• First, you need to have the right attitude. You should be able to think quick and make clear concise decisions when you need to. Working well under pressure is a key trait for the world trading. Fortunately, this is a skill that can be learned and/or honed if you need work in this area.
• Second, you need to have an area set aside for your workspace. A workspace should have a computer with software loaded, internet connection, and be setup for business with no distractions.
• Third, you must have a clear understanding of the market.
• Last, but not least, you must have the finances to support your new business venture.

One of the most common questions new traders have is how much money do they need to get started? Fortunately, trading e minis does not require as much money as other types of trading. For example, to day trade stocks / equities one needs at minimum $25,000. For emini trading you only need $3,500-$5,000 to get started. The leverage in the emini market allows for proper money & risk management with this amount, which makes emini day trading much more realistic for many people.
More and more people are turning to the eminis for the reason of low entry requirements as well as the ability to have $500 day trading margins. Just because the cost of entry is low, however, does not mean that money management should be negated. When everything functions in harmony, the trader becomes a success!

Matt Dye is an emini day trader and trading coach with a strong focus on high probability strategies and skill development. At A Business With Trading you can hear top level day trading training through the emini trading course and the complimentary emini trading room.

Article Source: http://EzineArticles.com/?expert=Matt_Dye

What Are the Markets and Economic Indicators in Share Dealing?

By Bryan Rollins

 

For any experienced trader in the field of share dealing, the movement of the market and the general economy is considered as one of the main factors that make the pricing of stocks as well as commodities to fluctuate and sway. Hence, this will definitely be considered as well as an essential ingredient or component of any trading strategy. This is also because of the fact that different markets always respond to various key economic indicators as well as other sectors of the market. In this light, this has a significant effect for the success of publicly listed and traded companies.

Aside from that, current affairs of a country and economy also make the market move include economic announcements as well as public or economic policies. With these, a trader will be able to develop a more reasoned strategy that will be applicable in share dealing. This will also help a trader to have a guide whether investments will be more consistent in the coming days or months or otherwise.

On the one hand, economic indicators are very important as well as the perception of the public on these indicators. For example, when the public sees a specific indicator as positive, then it could possible signal a specific share price or it may also hinder the same. This depends on the relation of the related business to the said economic sector. The reverse would also be applicable, specifically when the public perception towards a specific economic indicator is negative.

For instance, if the interest rate in a country increases, it could be seen as optimistic or good news for a manufacturer with heavy market in US. This will also consequently make the price of shares to rise. Well, this is due to the fact that an increase in the interest rates can be interpreted in a way that it would that the dollar is appreciating. This also strengthens the dollar. With that kind of situation, the United States becomes more attractive to do business with for businesses located therein. Hence, they would be more willing to spend abroad as well as import goods. Aside from that, this would also have a direct positive impact to the bottom line of the other countries that are the origins of the imported products.

With the foregoing, traders in share dealing must also understand the other side of the coin. While public perception is very crucial, actual data should be treated differently. As a matter of fact, the difference between what is perceived and the reality also have an effect to the movements of the share prices. This is primarily because markets are obviously dependent and vulnerable to what is happening around them, whether it is economic or even political.

IndependentInvestor.co.uk is an online trading portal, providing a range of information and advice for traders in share dealing and across all stages of the trading spectrum to help improve their fortunes in the financial markets. Maintained by successful share traders who research about economic indicators and provide honest reviews, helping traders find the most cost-effective, functional platforms for accessing the markets.

Article Source: http://EzineArticles.com/?expert=Bryan_Rollins

Strategies You Can Use In Real Estate Investment

By Teka Mullwani

 

If there is one lucrative industry in the world today it has to be the real estate industry. Many of the wealthy and rich people in the world own some form of real estate. One reason why real estate is lucrative is that it is one of the few industries where what you purchase increases in value. Another reason why investing in this industry is good is that the need of housing will always be on the increase. The earth has over 2 billion people. These people need housing or some form of shelter which can only be found by investing in real estate.

There are some strategies you can use if you want to get profits from your investments in property.
One of the strategies is to purchase land in an area where developments are being proposed to take place or where developments have started taking place. For example, if a certain government has proposed to decentralize some of its functions to counties, it would be good to purchase land in those counties while the land is still cheap. As the proposed developments are implemented, the price of your property will begin to increase. Many of the proposed developments usually come with social amenities such as educational institutions, infrastructure, health facilities and recreational facilities.

Generally, you will find that properties which are located near provisions of social amenities are much more expensive than those located away from them.

Another strategy that you can use to get profits from your real estate investment is opting for construction instead of buying a home. It is much cheaper to construct a home than it is to buy a home that is ready. Not so many people are aware of this. It is only real estate investors and some architects who know this trick. This is why you will find some architects who double up as real estate owners. You can decide to purchase land then construct a home or an apartment block. In a few years time, you will have recovered your investment and you will be getting profits.

You can also use the strategy of consulting with real estate investors or companies on how you can buy property. Since they have been in this business for a while, they know all the tricks of the trade and will advise you on the way you should go.

Investing in property is one of the best investments anyone can ever make.

If you are in Utah, you can purchase property through Utah Discount Realtors.

Article Source: http://EzineArticles.com/?expert=Teka_Mullwani

Advantages Of CFD Trading

A CFD (Contract for Difference) is an agreement between two parties, buyer and seller, to exchange the difference in current value of a financial instrument and its value at the time of contract. If the difference is negative, the buyer has to pay to the seller the difference amount and, if not, the seller has to pay the buyer. CFD Trading a simple way of trading like normal share dealing. The difference between these two is that the former offers greater flexibility than the latter.

There are lots of options available for making investments. However, CFD trading is considered a safer trading option than normal share dealing. It is a reliable source of investment and opens up new horizons to many trading opportunities. CFDs can help you make most of your investment capital. The main advantages of dealing in CFD are:

* Time Adjustments: One of the biggest advantages of CFD trading is that you can go as long and short as you want. This means that you can opt for shorter time frames as well as continue trading for a longer period of time depending upon your wish. The growth remains almost consistent.

* More Profits in Less Time: CFD Trading gives you an opportunity to make more profits with a smaller float. You can magnify your returns by 10 times as CFD brokers provide 10 to one or 20 to one leverage. But for making such huge profits, you need to have a good CFD system and full knowledge about the subject otherwise you can lose more.

* Day Trading: Investors have an option of CFD Day Trading where they don't have to pay overnight interest costs. By doing this, they protect themselves from the overnight risk of stocks.

* Greater Flexibility: CFD Trading offers a great deal of flexibility to investors. Unlike usual share dealing, you can place all your trades at any hour of the day.

* No Fixed Expiration Date: CFDs do not have a fixed expiration date. You can close your position and when you choose.

* Immediate Trading: While trading CFDs, you don't have to wait for an execution. It just takes few seconds. In normal share trading, the investors need to wait for an executive.

* Wide Access: CFD Trading is not restricted to one financial instrument only. CFDs are an easy way to deal across a large cross-section of the market. With one CFD account, you can deal in all of the markets.

* Immediate Profits: CFD Trading help you make money in least possible market provided that you get the subject right. Unlike other share dealings, you just cannot buy and forget them. Rather you have to maintain your position every day for short term advantages.

* Profit From Falling Price: The best part is that you can make profits from rising as well as falling prices while dealing in CFDs. All you need to learn the tricks and trades of the business.

CFD Trading is gaining popularity because of quick money and simple operating process. Though it is an easier way to make more profits in less time, but you need to actually learn about trading process as well as CFD market.

 

Retrieved from "http://www.articlesbase.com/personal-finance-articles/advantages-of-cfd-trading-3630866.html"

Diann Mclaughlin - About the Author:

CFD Trading is considered as a safer option of making quick money as compared to other methods of share dealing. CFD is a new way of trading that offers greater flexibility and leverage to investors.

 

Steps to Picking Top Selling Stocks

By Gary S Spirer

 

Everyone wants to see more growth from their funds. To do so, you need to find an investment vehicle with high growth potential. Many advisors have found that the best way to grow your money is to invest in stocks. But, it is difficult to invest when you do not anything about investing in stocks and you may be scared of losing your money. In order to answer the question "How to pick top selling stocks", you can follow the following steps below for picking up the top selling stocks.

Step 1 Read

You should read as much as possible about the traded company, stock markets, accounting etc and try to know more about the stocks that a corporation is offering. How sustainable are there products? Try to locate the company's official website and read everything, including the prospectus. The more you learn about the company, the better your chances of selecting a good stock to invest in.

Step 2 Study the graphs

Read the local newspaper in the stock section. Track the movement of the stocks. Study the graphs located near the stock to see the trend of the company's stocks. Is the line in the graph going in an upward direction or downward or zigzag? If the stock is increasing in value steadily, then the line should point upwards. If not, you might want to be wary before investing in a declining or volatile stock. Be cautious if the company is undergoing reorganization or other fiscal problems.

Step 3 Stick with what you know

You should start with the industries that are familiar to you, may be through advertisements or through your friends/relatives. Try to invest in the products that are familiar or popular.

Step 4 Review financial statements

Try to look for the company's financial statements and reports before investing. Try to analyze the statement. Check for asset liquidity by using the current assets/current liabilities ratio. The greater this ratio, then the more liquid are the company's assets as for every dollar spent, that much more in revenues are earned.

Step 5 Perform technical analysis and general trending

Learn to identify stocks with their criteria that are indicated with potential future price appreciation. Learn technical analysis tools like candlestick charting, EMA, MACD, etc. to better time your entries and exits. At the same time, look for general trends in the economy with these tools.

Remember, stocks are a high yielding investment.

Gary Spirer holds a bachelor's degree in Literature from New York University graduating magna cum laude, and an MBA in Finance from Columbia University.

Mr. Spirer began his career at the prestigious investment banking firm Lazard Freres, where he worked at their real estate affiliate. Subsequently, Gary founded his own real estate company, Capital Hill Realty. In real estate Gary has developed, syndicated and invested in properties that in today's value, aggregate over $500 million.

For more on Stepsto, check out our website StepsTo at http://www.stepsto.com
For more on stocks, click here http://www.stepsto.com/stepstos

Article Source: http://EzineArticles.com/?expert=Gary_S_Spirer