Do away with ignorance about the forex market - Some questions answered..

Do away with ignorance about the forex market - Some questions answered

December 8, 2012

Did you recently take the decision of trading the forex market in order to boost your monthly income? Well, with the spurring debt obligations within the nation, almost all consumers are looking for ways to augment their monthly income so that they have enough money to pay back their liabilities. Are you too wondering about the prospects of taking a plunge in the forex bandwagon in order to become debt free? If answered yes, you should clear your doubts about this particular market so that you don't base any of your decisions on wrong information about the currency market. Here is a list of the most common questions that hover around the minds of the investors when they're new to the trade. Check them out to boost your knowledge and thereby take better informed decisions.

What is the difference between the forex and the other markets? 

Currency trading basically doesn't take place on a regulated exchange and is neither controlled by any government body. The members or the investors trade here with each other based on the credit agreements and their business usually depends on their metaphorical handshakes. The traders who participate in the forex market cooperate and compete with each other and this builds enough profits. It is certainly different from all the other markets as there is no fixed rule as there is in the stock market. There is nothing called insider trading in the forex market. It is also traded 24 hrs throughout the entire week.

What is a pip in the forex market? 

A pip is nothing but the smallest percentage increase of trade in the forex market and it stands for a "percentage in point". Usually in the forex market, the prices are quoted to the 4th decimal point and if there's any change within that decimal point, it is known as 1 pip which is equivalent to 1/100th of 1%.


Is there any possibility of commission in the forex trading? 

If you're a trader, this is rather good news for you that there are no commissions in the forex market. The entire forex market is a "principal-only" firm and all the forex firms are not brokers but dealers. They make money through the bid-ask spread and they don't need to charge commissions for making profits. Once the cost of the spread is cleared by the price, every penny that you gain means pure profit for the trader or the investor.


Which currencies are usually traded in the currency exchange market? 

It certainly goes without saying that majority of the traders will trade the most liquid currencies in the market and they're only capable of making better profits. There are the most popular 7 pairs that account for almost 95% of the entire speculative trading. The most common currencies are EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD and NZD/USD.

Therefore, if you wish to try your luck in the forex market, you have to ensure clearing all your doubts before taking any step. Take into account the answers mentioned above so that you don't end up taking wrong decisions.

The online forex trading platform MT4 and its specialized benefits

December 7, 2012

If you’re a forex market trader, you must be aware of the fact that the forex trading platform is one of the most important elements that the forex traders need to consider before joining a trading company. According to the studies revealed by the forex market analysts, the Meta Trader (MT4) currency trading platform is by far the most popular and widely used forex trading system throughout the world. This is till now the best rated forex trading platform that boats of linking a large number of forex traders with the forex markets throughout the world. The MT4 platform offers a consistent, advanced and protected connection and can even be utilized for trading markets lie futures CFDs, options and also stocks. Most forex traders nowadays prefer to offer the MT4 trading platform as they know that more and more traders will be interested towards using it and they just can’t ignore the benefits that it provides.

The biggest benefit that it offers to the forex traders is that it offers you opportunities to create programs such as the expert forex advisors. These might range from the intensive robot like programs that help in discovering the forex signals to the straightforward applications that offer you with basic forex alerts. The MT4 also helps maintain a vigilant eye on the trade, place the trade and when to exit the trade as per the rules that have been set forth by programming. This is one of the most astounding features of the MT4 application.

Some featured benefits of the Meta Trader platform

Apart from the above mentioned benefits, the Meta Trader, there are some other impressive benefits that are provided to the clients. Here are some of them.

• It offers a customized view that will help you put any color into the forex chart.
• It is extremely user-friendly and simple
• Offers 9 time frames for trading
• Carries more than 50 in-built indicators that assists the traders while they analyze the trades
• Offers you an opportunity to use many indicators on a single chart
• Offers multiple chart setups
• Offers real-time export of data through DDE protocol and automated trading

All the forex traders who prefer trading automatically are indeed pleased with the large marketplace and the plethora of options that they’ve got. As mentioned earlier, one can develop his own expert advisor but there are lots of advisors that you might choose from. On the other hand, there are various forex signal companies that offer you with various automated forex signals that have been sent from the meta-trader platform. So, when you’re trying to set up your fortune by trading the forex platform, do make use of the MT4 trading platform so as to gain all the above mentioned benefits and set profits rolling.

Commodity trading – 5 Essential tips to help you

December 7, 2012

Commodity trading essentially takes place in the markets that deal with primary or raw products. These products are then traded through exchanges of regulated commodities. As for the commodities, then they’re physical substances like lumber, oil, metals, food and likewise. These are traded by the investors through the futures contracts. Investors mostly trade in these items so that they can gain out of the fluctuating prices.

5 Essential tips for commodity trading

Enlisted below are 5 essential tips that you can make use of in case you’re planning to get into commodity trading.

1. Time frame involved: The idea of trying out different time frames is a good one. Only when you’ve tried out the different time frames will you be able to choose which one’s the best one for you. As an investor you’ll need to choose the time frame that you’re most comfortable to work in. The time frame’s important for various purposes like the idea of analyzing the market, placing as well as closing orders. It’s advisable that you select a higher time frame because that’ll give you a bigger picture of the market price movements.

2. The risk reward ratio: Keep this in mind always that when the probability to win a trade as compared to the probability of losing one is smaller, then it’s important that you don’t trade at all. It’s important for you to assess the risk reward ratio prior to getting into the commodities trade. The ratio of 1:2 is considered good at the lowest level, however 1:3 or more is considered even better. This means that the chances of losing are 3 times lesser than your chances of winning. Taking the right trading decision isn’t easy, especially in the face of the global economic meltdown which affects the commodity costs to a great extent. Hence the risk reward ratio is so very important.

3. The trend lines: It’s a good idea to draw trend lines always. Trend lines happen to be one of the simplest yet powerful tools that you’ve got as a commodity trader. A trend can basically do 3 things – Firstly, it can go up, it can also go down, and apart from these it can go sideways as well.

4. Trend as support or resistance: After you’ve determined the trend, then you could make use of the line as support or resistance. Say for instance, the market goes up and it falls down again on the trend line, then there are chances that it’ll bounce off the trend line and carry on moving up.

5. The three indicators: It’s advisable that you use the three indicators to confirm your entry into the market. Moving Average Convergence Divergence, stochastic, and the relative strength indicator are a few you could consider. There are oscillators as well that are quite good when it comes to identifying oversold or overbought market conditions.

Keep in mind the 5 essential tips discussed above when commodity trading and it shouldn’t really be a problem for you to get the hang of it soon.

Consider your circumstances well before investing in stocks

December 5, 2012

Investing in stocks is a good option when you’re approaching retirement. The amount of money that you should invest depends on several factors. In other words, there is no specific answer to this question. As per experts, retirement portfolios are never complete without stocks. It is important that you adjust your portfolio with time so as to make it ready for your retirement. The idea is to save money as well as to ensure financial security during the retirement years.

Forget rules and believe in circumstances

You’re very likely to come across various opinions when it comes to preparing your retirement portfolio. One way, as most of the financial advisers put it, is to subtract your age from 100. The result you get is the percentage that you should invest in stocks while preparing your retirement portfolio. For example, a 50 years old person should invest 50 percent in stocks. Remember, this is no hard and fast rule. The increase in life expectancies suggests that people should be inclined towards investing more in stocks irrespective of their ages. The more you invest in stocks, the better the security you get in the years to come. 

Equities have started to play important roles in a portfolio. Higher investment in equities is going to help you meet the financial challenges that you’re likely to face during those long retirement years.

Allocate your assets well

You have to do the right asset allocation if you want better returns from your portfolio. Now, doing the right asset allocation involves diversifying your investments across various asset categories. This will reduce the portfolio risk and ensure higher returns at the same time. You have to start well with allocating assets in order to give the right shape to your portfolio. Some academic studies reveal that investment in stocks is responsible for almost 90 percent of the returns. 

The appropriate asset allocation largely depends on the circumstances. There are factors like time horizon and risk tolerance that have major roles to play in this. You’ll also have to take your personal goals into account. 

Don’t invest more than you can afford to lose

Sometimes, it is right to take the professional approach. If you have invested in retirement funds of major companies, you’ll see your glide path (shifting mix of equities, bonds, and other holdings) change as you age and approach retirement.

There is no point in having your mind set on a particular rule when you’re thinking of investment. Take your age, net worth and risk tolerance into account while investing. Make sure you’re not investing any more than you can afford to lose. It is always better to keep your investments within limits. Being overly cautious about investing money is going to help you control your investments and make a proper retirement portfolio. It is always better if you get in touch with a good financial advisor if you’re unsure about your investments. This way you can count on the investments you make and ensure a better future for yourself.

Make it big in the stock markets as a beginner !

October 20, 2012

If you want to make money, you should surely give stock trading a try. If you have been running way from this trade thus far, it is time you brought some changes in the way you think about the stock markets. Stock markets are really fun. You’ll just need to have the necessary knowledge on finance and how things work. This will make sure you’re not among those who step into this trade without preparation and end up losing their fortunes. 

This article intends to provide you some tips on how you can start off with stock trading on a bright note. There are some dos and don’ts that you should always keep in mind before you try your hand at this trade. Read on to gain ideas on how you can make the stock markets work in your favor.

Never buy and sell stocks frequently
Stop trading your securities if that’s what you like doing most of the time. Remember, frequent trading is not going to make you any richer than you already are. The brokers are the people who get benefitted the most. Frequent trading allows the brokers to make lots of money. There is no way you will ever become rich by being greedy. The short term capital gain taxes along with the trading fees are going to make sure you don’t make a lot in the stock markets. It is always wise to hold your nerves if you want to earn profits in this trade.

Know the strategies
Focusing more on the investment strategies is going to help you reach greater heights. For example, investing in highly priced and undervalued stocks will place you on the winning side in the future. Stocks like these have a very high growth and earning potential. Similarly, you can count on technical analysis to make a healthy prediction of stock movements. This chart based analysis works better with long term investments.

Don’t let panic strike you
You should learn to experiment with your money if you want to be a stock market investor. Get rid of fears. There is always the need to remain cautious while you invest in stock markets, but that isn’t to lose your nerves when things look undesirably down. Wait for the right time to sell and you’ll end up as a winner in the long run. 

Choose the right broker
Proper research work is the only way you can get yourself a good broker. You can also go for what your friends and relatives suggest you. Make sure your broker have the qualities that you want to see in him/her. Placing trades online saves you money. Make sure your broker allows you to do that. Brokers that charge high fees should be avoided at any cost. High charges don’t necessarily mean better services. You’re going to lose a significant portion of your profits if you continue paying high fees. Go for brokers that are appropriate for the beginners to avoid confusion.

The aforesaid points are surely going to assist you as you step into the world of stock trading. Beware of scams as they have become a common occurrence these days. Needless to say, proper knowledge can enlighten you enough to stay protected from the stock market scams.

Monsoon aspect and stock market

August 17, 2012

Failure of monsoon is one cliché headline I have been noticing for the past 1 month. It is a cause of concern since most of India’s agricultural territory is rain fed. Except for few places like Punjab, Haryana ,etc rest of India has a paucity of Irrigation system. Thus if rains have bottomed out, it will have direct impact on agriculture trickling down to higher inflation.

One should note that only 15-20% of GDP comes from agriculture but about two thirds of Indian population which stays in rural India relies on it for its bread and butter. June IIP data which entered the negative territory might plummet more if monsoon doesn’t get better. This is because low rainfall will lead to lower yield and higher prices. Though we have about 90-100 MMT storage capacity which can contain inflation, poor monsoon will have a sentimental impact on the stock market which has already been underperforming its previous years. Due to low rainfall the out-performing FMCG companies also will a negative impact and even the two wheeler motor industry since most of its customers are from rural India, and a gloomy output in agriculture will be bad for the industry. The badly hit states have been Gujarat, Maharashtra and Karnataka. This will significantly impact the cotton industry.



Graph shows huge variation over the years.
COURTESY : business.rediff.com

On a larger note there is a need to develop at least the irrigation infrastructure as soon as possible and even replace the obsolete methods used by IMD so that the farmer and investor can expect during the monsoons. Looking at the flip side poor monsoon is good for companies into cement and construction as monsoon is always a hindrance to them. So it seems to be a good idea to take beaten down stocks from infra space in this season after circumventing on a bottom up approach. Even though rupee has deteriorated steps must be taken to increase imports wherever necessary.

Use Market Developments and Money Managing Techniques for Share Trading

August 4, 2012

Money management with stock market trading and investment is a dynamic prospect. The possibility of high gains and fast income is the biggest pull for anyone looking to enhance their existing pot of money by funneling it into a more resourceful process such as stock trading and investment. However, these benefits come with a fine print.

Short term trading or long term investment in stock markets is highly susceptible to risk failure. If one gets into the process unaware, unprepared and without a calculated risk assessment, the likelihood of incurring heavy losses is very strong. Particularly when one decides to trade beyond one’s financial limits, there is a chance that with a drop in the market, losses will axe one’s capital investment altogether, leaving them financially and security-wise broke.

One way to avert this drastic turn of events is by trading market trends. The concept of trend trading considers that a definite market trend is likely to culminate and continue for a certain period of time before another similar trend emerges. And it is within the parameters of such trends that stock trading and investments are carried out so as to avert risk damage as far as possible.

It is in the ability to identify trends and trade them efficiently that the success of trend trading lies. As a practice, trend trading has for long been considered as one of the best templates for stock market trading, despite the emergence and acceptance of many new practices in the same field. 

However, pinning market trends, trading trends and exploiting profits out this practice does not come easy, particularly because market dynamics keep on shifting. Unexpected domestic and international economic upheavals and natural causes can drive market trends into completely ominous conditions. Fund flows, domestic and foreign, are difficult to trace and this too can affect market trends deeply. While the struggle to successfully map and execute trend trading is all-pervading, price patterns regularly level the playing field and help plan the time of entry more tactfully. 

The best strategy, then, is to focus on stocks rather than trying to adopt a speculated trend in the markets. When the stock selection is calculated and good, it will be able to hold its own and generate returns over medium to long terms, even if the markets are less favorable. Moreover, aspiring traders can resort to taking assistance from top financial services providers with respect to market research and investment tips and tricks. Kotak Securities is one brokerage firm that provides across-the-board guidance to aspiring investors looking at stock trading and investments.