Tips on Diversifying Your Investments

Posted on December 18, 2014 in Investment by

investment diversification

Successful trading depends a lot of psychological aspects. It is quite simple and clear to understand the importance of diversifying your investment. A regular trader is dealing in and out of stocks frequently on short notice. Therefore, a trader needs to make some very quick decisions about diversifying his portfolio with different types of investments.

In order to achieve certain goals, a trader needs to have exceptional presence of mind. Moreover, he also needs discipline to stick with trading plans about booking losses and profits. You can not let your trading emotions get in your way.

Don’t be Afraid to Take Risks

When it comes to diversifying your investments, you shouldn’t be afraid to take risks. You should invest your money in precious metals, such as gold, silver and platinum. These can give excellent long term results. When a trader sees that the stocks are down or receive some similar bad news about general market, he may be scared.

In such situations, it may be difficult to overcome fear. A trader may also feel compelled or simply overreact to liquidate holdings, stop taking risks or just cash everything. Such a trader may be able to avoid some loss, but he will also be unable to make any profits.

Avoid Greed with Your Investments

While trying to diversify your investments, you should never be greedy. If an investment is looking good currently, it’s not necessary that it will give good returns in future. Greed is a trader’s worst enemy. It forces an investor to hang on to probable winning positions for too long. A trader keeps trying too hard to make more profits. This is one of the most dangerous traits in a trader. He will always risk blowing everything out of proportion and making bad choices.

Creating an Appropriate Plan

In order to diversify your investments, you need a specific plan. A trader needs to spend some time learning a lot about his area of interest. For instance, if a trader deals heavily and may be interested in IT stocks, it will be better for him to gather some information and gain knowledge about IT businesses. In the same way, if a trader has always been interested in energy stocks, he should be well-versed in this area.

In order to gather information and gain knowledge, a trader needs to formulate a plan to educate himself. He should also attend relevant conferences and trading seminars. There is also a need to conduct extensive research to understand the market.

Moreover, it is extremely important for the trader to consider experiments with some new concepts and options. For instance, you should consider setting stop losses at different places or using options to minimize risk. Experimenting is one of the most effective ways to achieve success. Experiments provide experiences to reduce emotional decisions.

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3 Tips on How To Trade Oil in 2015

Posted on December 15, 2014 in trading commodities by

oil prices

As far as commodities go, oil is still a major player when it comes to providing you with the best returns on your investment. Take it from me – it’s much easier than it sounds, and can be a great way to generate income if you know what you’re doing. To trade oil, you can buy oil futures online and when the market price increases, your’ll receive a payout from your broker (equal to the difference between the price that you bough the oil future for and the price at which it was sold). Learning to trade oil online can take some time, but can be extremely profitable once you’ve mastered it. Here are some tips on how to trade oil in 2015.

1. Oil trading is booming

Oil trading will continue to prosper in 2015. However, like the financial markets, trading can fluctuate, and in order to get the best return on your investment, you’ll need to understand the system before you start. I took some time to learn the basics of the crude oil market, and found out what caused oil prices to increase or decrease. This really helped me a lot when I first got started, so you might want to do the same.

2. Immerse yourself in the markets

There are a number of online resources that will tell you about how changes in the demand for (and supply of) oil can affect market prices, and you’ll be able to get a wealth of tips from market traders and investors. Once you’ve learnt everything you need to, you’ll need to be one-step ahead of the market (and you’ll be in a great position to trade oil in 2015). Newspapers and television networks that cover economic developments such as CNBC and Bloomberg can provide you further information when trading.

3. Take it slow

Some investors go a bit crazy once they’ve opened a new trading account with an online broker. Without understanding the risks involved, they may place unwise trades that don’t yield the results that they want. The result? They find themselves back at square one again. The key to a long and successful career in trading oil is to take things slow. Remember – oil trading can be an extremely risky business so you will need to be sure that you understand everything before you embark on this new journey. Spending a few weeks (or even months) playing around with a demo account online can help you to learn new skills and practice trading without real cash.

I also recommend you’ll take a look at – The Best Commodities to Trade in 2015.

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Factors Affecting Gold Prices

Posted on December 9, 2014 in trading commodities by

gold bar

For every economy, silver and gold are its most valued assets. For this reason, more and more people are exploring gold & silver market to invest. However, with the gold prices changing daily, there is a rising curiosity among investors concerning current and future pricing of the precious metal. So, What affects gold prices ?

Factors Affecting Gold Prices

1.Demand and supply

Just like other commodities, demand & supply of gold plays a vital role in their pricing. When demand for a commodity increases, the price will definitely increase. On the other hand if there is abundance of supply of a commodity, the prices will go down. Demand for gold comes from three main sources; investment demand, industrial demand and jewelry demand.

Many people consider gold and silver to be one amongst the safest investment options’. This pulls demands from many investors, institutions, and government in terms of bars, coins and ETFs (Exchange Transfer Funds). When this happens, gold prices go up.

Gold has many industrial applications due to its conductivity, durability and malleability. This means, gold has high industrial demand, making its price go up.

Jewelry demand is the most popular type of demand. Demand for the gold jewelry has always been high, and this plays a crucial role in gold pricing.

2.World Economy

The effect of world economy on gold price is immense. Many people invest in precious metals, and this makes them very pricey. If the economy is booming , there is solid supply of gold, silver and other precious metals and this lowers their prices. On the other hand, if an economy is struggling, supply maybe interrupted, and the prices will be high. Basically, when the gold prices are high ,it signifies a struggling economy. This is because in a weak economy, the safest investment is either in silver or gold. So, investors invest in these precious metals, and the prices go up.

3.U.S Dollar

For many years, U.S dollar has been considered the world’s reserve currency. Since gold is priced in dollars, its price is affected by the movement of this currency. If a foreign-currency weakens against this dollar, the gold prices will rise because the countries must spend more money. On the other hand, if a foreign currency strengthens, gold prices decrease. So, if U.S dollar weakens against any foreign currencies, many investors lose their faith in dollar and will start investing in precious metals such as gold. This raises the gold prices.

I also recommend you’ll take a look at this article – The Best Commodities to Trade in 2015.

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Trading Psychology Explained

Posted on December 7, 2014 in trading psychology by

trading psychology

Traders require a lot of different skills and characteristics to achieve success in trading markets. In order to be successful in financial markets, you also need to get control over your emotions and follow discipline. Some important traits needed in a trader include the ability to properly understand the functioning of a business organization, its basic fundamentals and direction of changing market trends. Even more important traits are trading psychology, trading emotions and discipline. In this post, I’ve discussed some basic concepts that rule the trading psychology.

Understand the Concept of Fear

A trader needs to have proper understanding of the concept of fear. Fear is just a basic natural reaction to what a person perceives as a serious threat. For a trader, the threat seems to be associated with his money-making potential or profit. It is always better to quantify fear. With a better understanding of what scares you, it is possible to overcome fear and make better choices.

 

Don’t Be Greedy

Greed can be very hard to overcome. In fact, greed is a part of basic human psychology. People always want to keep trying hard and perform better. If a trader becomes greedy, he needs to recognize it. This will allow him to develop appropriate trade plans on the basis of rational and realistic business decision.

 

Importance of Discipline and Trading Rules

Before trading emotions or trading psychology make a trader commit some mistakes, he needs to understand the importance of trading rules and discipline. Whenever a trader lays out certain guidelines on the basis of risk-reward relationships, he needs to establish some limits. This allows a trader to exit a trade or market regardless of his emotions.

Needless to say, a trader needs to do a lot more than just establishing or setting price targets. For instance, if a large seller or buyer enters the market, the trader may want to exit. Similarly, a trader may sell or buy a security when news of negative or positive earnings comes out. It is also better to set limits on the amount that a trader desires to win or may lose in a day.

 

Review Performance
Last but not the least, a trader needs to assess and review his performance on a regular basis. A trader should not only review his returns and individual positions, but also need to be prepared for various trading sessions. He needs to be always updated about the markets and assess his progress regarding ongoing education and so on.

A periodic assessment can easily help a trader correct his own mistakes. This will be quite helpful in increasing returns. This allows a trader to maintain an appropriate mindset. This way, a trader will be psychologically prepared for the market.

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4 Tips for Trading Forex

Posted on December 3, 2014 in forex by

forex dollar to euro

Forex – or the foreign currency exchange market – can provide you with a significant return on your investment. With opportunities to make money 24 hours a day, you will be able to generate income at a time that best suits you – although you will need to be aware of the risks so you don’t lose your hard-earned cash. Here are some 4 tips for trading Forex that I’ve picked up over the years that can help you get more out of your trades.

1. Familiarize yourself with the system

Forex can be complicated for beginners. I remember I had trouble at the beginning and could have done with some extra help. Therefore, it’s a good idea to read how-to guides and tutorials that teach you the basics of Forex and how to execute orders. Many Forex trading systems let you play around with a demo account for a number of weeks so you can learn how to test different strategies and make trades online without risking any real cash. Take some time to learn about the risks involved when making trades. Remember – despite initial successes, you could be back at square one if you make some bad trades due to lack of experience.

2. Keep abreast of market developments

Like other financial markets, Forex can fluctuate and sometimes appear highly volatile. To make sure you get the best returns on your investments, make sure you use market analyze to find out the latest trends. You can increase your chances of making more money when you follow trends, so take some time to examine Forex charts and keep abreast of the latest economic news and developments.

3. Use currency pairs

Make an order by placing one currency against the other, or by purchasing currency pairs. You can make money if the value of the first currency in the pair increases when compared to the second. If this doesn’t happen, you can lose your investment, so be aware. Remember – if you ‘short’ or sell the currency pair, it means that you expect one currency to lose its value against the other. Spend some time researching currency pairs, and find out the risks involved when trading.

4. Trade responsively

Opening a new Forex account with an online broker is straightforward, and you could be up-and-running within a few minutes. Although the world of Forex can be exciting, it’s best to take it slow and determine a budget that you can realistically stick to. If you’re spending too much money chasing unprofitable trades, it might be time to cut your losses.

I also recommend you’ll take a look at this article – Best Currencies To Trade In 2015.

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Best Currencies To Trade In 2015

Posted on November 30, 2014 in trading currencies by

currency traiding

Central banks around the world have been controlling the Global market and deciding what goes up and what comes down for almost all of the last decade. Goldman Sachs’s top trade ideas suggest that the same can be expected in the year 2015. The Global market research team of Goldman Sachs highlighted that the falling euro currency may benefit European growth as the price of metals and minerals goes down, but the currency trade market expects Euro to be a huge letdown for investors in the year 2015.

The two major currencies that determine the fate of investors, United States Dollar (USD) and Euro (EUR) seem off balanced as the Euro continues to slowly plummet. However, the USD seems to being doing better owing to the USA’s improving economy and trade. It has been depicted by the Goldman Sachs global currency research team that the Euro may fall upto 1.15$ compared to the United States Dollar in the upcoming 12 months. The report said that the difference in the monetary policies will be a result of the diverging economic condition of United States of America and the regions that have Euro as their currency.

In the United States, the State of Indiana has had a record growth in the RV automotive sales and the rest of the States are helping to revive the slowed down economy. The State of North Dakota is producing large amounts of shale oil and the Silicon Valley is swamped with Apple Inc. producing records breaking iPhone sales. Seattle has had a large number of orders for manufacturing of the Boeing aircrafts and New York is producing more and more jobs for the people with tech companies like Google and Microsoft pulling their weight.

On the other side, the Western Europe is an economic crunch, the developmental progress by Japan has been fractured by multiple atrocities and the production giant, China has been facing the slowest economic growth rate since the year 1990. With the International Monetary Fund’s projection of having the world economy back on track by the end of the year 2015, only USA has been able to live up to the small expectations set at about 4.8% growth. Countries of the Middle East, Europe and especially BRICS (Brazil, Russia, India, China and South Africa) have been a major disappointment economically.

Going with the data and strong research conducted, it seems like that the United States of America have a good year ahead of them. This without question suggests that investing in the USD (United States Dollar) would be a smart investment in the coming year over other major currencies as the Euro, Japanese Yen, Great British Pound and others.

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Guide on the Best Commodities to Trade in 2015

Posted on November 26, 2014 in trading commodities by

gold trading

Long term investments in commodities have become increasingly popular over the past few years. There are a wide range of commodity assets you can trade in binary options. The following are some of the best commodities to trade in 2015.

Copper

Copper is one of the most widely used metals in the world. It is used in various types of industries including plumbing, lighting, roofing, and wiring. Copper is resistant against corrosion. It also serves as an effective electrical conductor. There has been an increase in demand for copper as China and India became more industrialized. Traders who have a good understanding on the demand and supply principles should trade copper. Copper trading is suitable for traders who are able to make good speculations on economic activity. Technical traders will also find copper trading appealing as copper is traded daily and it is sufficiently liquid.

Gold

Gold trading is popular because it has a high price volatility. Gold is often seen as a commodity with a store of value. The demand for gold comes primarily from central banks, governments and individual investors. Many people  invest in gold as an emergency commodity against war, inflation and economy downtimes. You can trade gold against different types of currencies. Gold has a leverage of 500:1 and it has a low spread. It can be traded in small increments. Gold is traded as a binary asset in up/down, touch options and in/out contracts. The best months for gold trading are from June to December.

Crude Oil

Crude oil is a substance found in the formations of certain types of rocks including gasoline, petrol, naphtha, and fuel oil. Every day, millions of barrels of crude oil are produced. Several factors are taken into account in the trading of the crude oil commodity including margin, margin changes, and contract face value. Crude oil futures can be traded at the New York Mercantile Exchange (NYMEX) and Tokyo Commodity Exchange (TOCOM). The crude oil futures price is quoted per 1000 barrels in NYMEX Light Sweet Oil and NYMEX Brent Crude Oil Futures. IN TOCOM Crude Oil Futures, the contract size is per 50 kiloliters.

Silver

Silver is a ductile metal that has good electricity conductivity. Silver is well known for its store of value. It is not as volatile as gold but it offers high volume trade opportunities. You can trade in silver by predicting the movement of the price of silver over a set period. Experts predict that the value of silver will increase by 35% in the upcoming year. There are also some experts that predict silver will hit a price of $250 in the near future.

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Introduction And How To Trade Binary Options

Posted on November 12, 2014 in binary options by

binary option buy or sell

A binary option is based on a YES/NO proposition; will an asset be above a stipulated price at a certain time? Trades are placed based on whether you believe the answer will be a yes or no. This simple attribute of binary options has lead it to be one of the simplest form of financial trade. As simple as the yes/no rule is, there is a lot to learn about binary options (read more in www.myforexspace.org) before a trader can venture out to the market.

Digital options vary i.e. options traded outside the U.S are structured differently than binaries on U.S exchanges. Just like in any form of trading there are profits and losses to be made however, here the risk and profit potential are capped. To get an in-depth view of the trade, let’s employ a few examples i.e.

Will the prices of Oil be above $1,250 at 1.00 P.M today?

As a trader, the decision to enter the binary trade will depend on whether I believe the price of oil will be higher/lower than the stipulated at that precise time. If I think it will be higher I will buy the digital option while if I disagree I’ll sell it. The price of each option is between $0 to $100, there is an ask and bid price just like in other financial markets.

Still using our oil example, the option is trading at $42.50 which is a bid and $44.50 being an offer at 1 o’clock. Buying the option will cost you $44.50 while selling will be $42.50. let’s make an assumption that I have decided to buy at our current offer price, if at 1 P.M the price of oil exceeds $1,250, the option becomes worth $100 thus making a profit of $(100-44.50)= $55.50 (deduct fees). However if the price doesn’t rise as I had expected, the option will expire at $0 hence I’d have made a loss of $44.50 (being out of money). The offer and bid keep changing throughout before the expiration time, as a trader you have an option of closing before the expiration time to lock a profit.

Each No is a $0 and every Yes is a $100, what a trader makes another trader has lost thus it’s a Zero-Sum Game. Each trader has to put up capital for his/her side of the trade and a trader can purchase multiple contracts if they so wish. The bid and ask prices are determined by the traders as they continuously assess the probability of a yes or no. if the ask and bid on a digital option is high i.e. 89 and 85 respectively, then traders assume it’s a win thus choose yes.

In conclusion how to trade binary options is simple but that doesn’t mean that making money is easy, there is also another trader on the other end that believe they are correct. Always trade with capital you can afford to lose and practice with dummy accounts before you jump into real capital.

Did you find this introduction useful? You should also check our guide on How to choose the best binary options broker

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