Investing Advice: Top 4 Investing Mistakes

There’s an old saying that goes something like this: "experience is the best teacher". In some sense this is true, because plenty of people don’t learn unless they learn it the hard way. An example would be a boy thinking that he can make it big in the boxing world by learning everything about it. After studying everything needed to know about the sport, he enters a local boxing tournament, only to have his face beaten black and blue – why? Coz the chump had no prior ring experience. After having made a mistake, it’s important that you do everything you can to learn from it, and make sure that it doesn’t happen again.

Same concept goes with investing, a classic example would be this: a man puts invest his money in a particular stock that’s doesn’t move well. He keeps pooling his money into it because he "feels" that things will eventually turn. Being a newcomer to this type of biz, he doesn’t know anything and has no experience, which would have told him that isn’t the type of investment he should be pouring his cash into. Today I’m going to share with you a piece of investing advice that’ll help you avoid financial ruin. Here it is: by avoid the big mistakes made by other investors.

That simple piece of investing doesn’t sound like much, but it does mean a lot – it means everything. Moving forward, the first investing mistake made by many is committing at the wrong time. They usually make the fault of not grabbing the opportunities that run their way. They usually put them off, and in the end realize that they just threw away a fortune. Too bad, there ain’t anything they can do to turn back time, like Superman did in one of his movies. The 2nd mistake that’s made by a whole lot of chumps is not selecting their investments with care.

They tend to pool too much money into something that isn’t working, or let go too soon because of a minor fluctuation. They don’t know that it’s completely normal, and it’s the way the capital market ticks. The 3rd mistake plenty morons make is going to the stock market with no money. With no cash to compensate failures that are EXPECTED to happen, how do you expect to continue playing the game and make a profit? It’s like freaking going to war without any firepower! The end result of doing any of the two is the same, which is: mug hangs himself.

So do yourself a favor settle all the debts you’ve got, and come play the game when you’re stable and got enough capital. 4th fault is not spreading your investments. Playing this kinda game needs you to invest smart. Going with gut feeling will get you killed here. There’s another saying that goes like this: "no risk, no reward". I can’t make a list of the people that took that way too literally – they usually end up losing a bundle of dough. True that taking a risk is part of everything, but it has to be "planed out" carefully, or in other words, is a calculated risk.

To ensure your survival in the jungle, follow the investing advice stated here by avoiding these particular mistakes. Play things real smart and financial freedom will soon be within your grasp.

Choosing A Day Trading System

cocupEveryone that aspires to trade in the markets should select a consistent trading system. Below are the principles for examining a trading system. How many of these principles do you adopt with your current approach?

* To corroborate a trading system you need a minimum of 50 trades in the test. You should also have at least 75 ticks (overall market trades) in a bar to have a sound charting approach.

* Calculate your average profit per trade, the average loss, and the percentage of your all wins and losses.

* The biggest winning trade should not surpass 50 of the net profit. Otherwise the random lucky trade factor will throw off your system results.

* What is the Expectancy Ratio of your method? If it does not surpass 2 to 1 with a 50 but makes money, can you psychologically trade it and except all the losses necessary to stick with the system?

* As Van K. Tharp, Mark Douglas, Bill Williams, and Bent Steenbarger the Market Wizards all say, you trade your beliefs about the market. What does your trading system expose about your trading mentality? Does your system lead to doubt or confidence?

* Compare your trading system to other types of investments. Which system has the best Internal Rate of Return with the least risk? At minimum you need at least four times the return of a low risk investment (T-Bills) to make your system worth trading.

What is the best approach to build a solid trading system? Just like you build anything else. You first start with a goal, and apply the principles to reach the end result. Then you create a plan to achieve that goal, which includes all the risks, rewards, terms and conditions necessary to reach your goal.

The missing element is often the next step: execute the plan, closely observe your results, and make necessary modifications or changes to the system. The last step is to observe your emotions to see if you can accurately trade these signals, and play the probabilities for gains versus losses as you have laid out your system.

Mental control is the biggest challenge of any trading system. Have a plan, and trade your plan. This is the best path to achieve your goals.

The Use of Currency Trading Pairs

If you plan to go into forex, one of the most important points you need to understand is how currency trading pairs work. Although you are free to experiment and sift through other currencies where you can possibly make a profit, pairs in currency trading are the basics where you will base your trading plans from. If you are new in the field of currency trading, you should definitely consider being an expert with the currency pairs before you explore other fields.

In forex, currency pairs work by relating their values against each other. Each pair is composed of a base currency and a quote currency. The base currency is the first among the pair which is the target currency that you wanted to buy. Meanwhile, the quote currency is the second among the pair which tells you how much of it do you need to buy the base currency or the first one. Using the USD to Euro conversion, a quote presented as USD/Euro=.067 simply means that you will need 0.067 Euros to be able to purchase one US dollar.

Working with Currency Trading Pairs

To be able to plot out your plan in the forex business, you will constantly need to consult your own currency pairs. Among the most popular trading pairs are the combinations of US dollars and Euros, US dollars and Japanese Yen, US Dollars and Swiss Franc. Most of the forex traders use US dollars as their quote currency since it is the most widely used currency in the world. The Euro, Swiss Franc, and the Japanese Yen are among the highest yielding and also most volatile base currencies in the trading game.

As a forex trader, it is your responsibility to keep track of currencies individually. In reality there really are no hard and fast rules about currency pairs. You are the one who gets to ultimately decide which of these pairs you plan to keep an eye on and develop. But it helps to have a separate track of these currencies individually so that if a raise occurs in each of them, you can easily form your pairs and make a sell or buy them at the soonest possible time. The thing about currency pairs is that they may not last as long as you would like them to. Sometimes, you need to make quick pair ups to keep ahead of the game.

Choosing the Best Currency Trading Pairs

As mentioned, there are actually no limits to which currencies must be paired against each other. What it takes is a watchful eye and keen observation to make sure that you have the right combination to trade in the currency market. But if you are a newbie and you are still trying to gain your momentum in the currency market, it will be good to stick with major currencies, such as dollars and euros, as your quote currency.

Although these currencies fluctuate as much as the others, they are also the more frequently used. These currencies will help you develop your own style when it comes to scouting the currency trading game since they are widely used. It is also a good idea to keep only two pairs at a time and gradually increase as you gain more confidence in buying and selling your existing currencies.

Buying Gold Coins

Should you be buying gold as an investment today? I wouldn't because the price of gold has been extremely volatile lately and if you get in at the top, it's like getting in at the top of the real estate, stock and any other market, any gains may be lost. If you're going to go into the gold market, the rules are the same as any other investment, it's best to go in a little at a time. Invest the same amount of money every month and any ups and downs will be smoothed and you won't be concerned by the violent swings.

There are other reasons to buy gold besides making a killing in the market. Even conservative investors should have some gold in their portfolio no matter what the market is doing. Not necessarily as an investment, but as insurance. In worst case scenarios, gold will always be worth something, in the best case, gold will be worth more than cash that's in the banks and stocks.

What kind of gold do you buy?

Isn't gold, gold? There are gold coins, gold bullion, antique gold coins, gold stocks, gold mines, futures and commodities markets, stocks and funds that invest in gold mining and equipment that's used to mine gold and precious metals.There are American gold coins and several countries produce gold coins of some sort and in several different denominations, sizes and quality.

Should you buy gold online?

How do you know an online dealer is reputable? The same way you know a brick and mortar gold dealer is reputable. Check the Better Business Bureau, check with independent sources from Internet, family and friends. If they've only been in business a short time, be extra wary, but even established dealers have been known to have problems.

One of the several questions you should be considering is if you want to keep the gold yourself or have the dealer keep it for you. If you're extra cautious and want to ensure your gold is actually in your hands instead of a piece of paper saying it's in a vault somewhere, you may be paying a premium for shipping and insurance. This is another good reason to buy small quantities spread over time. Then there's safety deposit rental if your bank doesn't provide one for free.

What about gold confiscation?

A major reason given for buying gold coins instead of bullion is that in America's history, the government confiscated all gold bullion and reimbursed citizens in paper dollars for their gold, whether they liked the price or not. This law is still on the books and is still a valid law that many, especially now are particularly worried about. An exemption was made during the confiscation for dentist gold, gold jewelry and coins that had intrinsic value to collectors. Does this mean the American Eagle gold coin series has intrinsic value to collectors? New American Eagle gold coins are considered bullion and may be subject to confiscation. If that's a particular concern, ensure you're buying antique gold coins. Those coins come with a hefty premium, dealers and brokers know that and try and push the sell of old gold coins for exactly those reasons.

Selling your gold is the easy part. Because it's gold, you can sell it any time and anywhere in the world. There are always dealers in any decent sized metropolitan area, but like any insurance policy, you shouldn't cash it in unless you absolutely need it.

Forex Trading- What you should know about it

There are a lot of opportunities online now a day where one can make a living and in some cases make a serious income which will enable them to quite their day job. These online opportunities include affiliate marketing, multi-level marketing, paid survey, online investment and the list goes on. Among the opportunities, foreign currency exchange or better known as Forex Trading is one that many online income opportunity seekers looking for.

However there are a lot of things and aspects should be considered before one decides to make forex trading as their prime online business. A better understanding of the forex industry and how forex trading operates are important.

Foreign exchange market
Foreign exchange market is the place where currencies are trade. Banks (commercial and central bank) and financial institutions will facilitate the buying and selling of foreign currencies transaction activities here. Other financial institutions include currency speculators, corporations and other institutions.
The main purpose of the forex market is to facilitate international trade and investment. Major currencies traded are US Dollar, Pound Sterling, Euro, Japanese Yen,etc. The continuation growing of the daily volume in global foreign currency exchange market and its related markets have make forex market one of the largest financial market in the world.

Foreign Exchange Rate
Forex rate are determine by floating exchange rate and fixed exchange rate. Fixed foreign exchange rate are decided and fixed by its government. Under floating exchange rate system, forex rate will be fluctuating according to the demand and supply of the particular currency. If the demand (buying) for a certain currency is more than what its supply (selling), its rate will be higher. There are 3 major factors which determine the buying and selling of a currency. There are Economic factors, Political conditions and Market psychology. However, these things tend to be short-term, and don't affect it for long.

Margin Account
To trade in foreign currency exchange, a bond account called margin account should be open. It’s like a saving account where you should deposit certain amount of money in it before you start your forex trading activity. This account will be overseen and monitored by your broker. Different brokers require different amount of margin money to keep your positions open.Normally your broker will not allow you to risk more than what is in your margin account.

How foreign currency is trade
Foreign currency trading occurs when one country's currency is traded for another country's currency at the prevailing exchange rate.Currency is trade in LOTS. Each lot has amount of currency and its trade on a point or pips system. Different currencies have its worth of amount for each point or pips.

Advantages of Forex trading over other types of investment
As compare to other type of investments, Forex trading has the following advantages:
i) Lower margin
ii) No commission and exchange fees
iii) Lower risk
iv) 24 hour market place
v) Free market place

Conclusion
Lots of people make money on online forex trading; some people have become extremely wealthy however as with any online business opportunities, there are no guarantees that you will make money or lose everything you own. You need to be very careful and exercise due diligence. Learn as much as you can about online Forex trading before investing any money and start trading.

This article is available for reprint in your ezine, website or ebook. You MUST agree not to make any changes to the article and the RESOURCE BOX MUST be included.
Photobucket

Download Firefox

Your Ad Here