YodZiaN

An option is a contract to that gives the holder the right to buy or sell currency at a pre-determined price at a specific price. The holder of the contract has the right to exercise the option but is not obligated to. Options are used as a hedge in FOREX transactions; they are frequently used by companies that trade in oversea goods to reduce their risk.

Options come in two different flavors. Call options give the contract holder the right to buy the currency. Put options give the contract holder the right to sell the currency to someone else.

When the contract expires the actual value of the options is whatever the holder will get by actually exercising the contract. If the holder will gain nothing by exercising the option then the actual value of the option is zero. The value of the option at any other time during the contract is what is called the intrinsic value, that is the value if the holder were to exercise the option at that time.

The intrinsic value is partially based on the set price of the contract, which is also known as the ?strike price?. A call option has an intrinsic value if the current price of the currency is higher than the strike price. This would allow the contract holder to buy the currency at less than the current value and then re-sell it for a profit. A put option has an intrinsic value if the current price is less than the strike price of the option.

Any time an option has a positive intrinsic value it is said to be ?in the money? if the intrinsic value is negative then the option is considered to be ?out of the money?. It can also have a value of zero which means that the current price is the same as the strike price in which case it is considered to be ?a the money?. Options should only be exercised when they are ?in the money?.

There are complicated formulas used to calculate the intrinsic value of an option, these formulas take into consideration both the current price as well as the time value. The time value is calculated based on the market conditions, including things like interest rates on both currencies as well as the time left in the contract. The pricing of options is delicate; they must be low enough to attract buyers but also high enough to attract the sellers as well.

Options are primarily used to minimize risk in FOREX trades. Read more…

One working definition of a Day Trader is, ?A person whose goal is to make his or her profits from a security in the shortest amount of time [preferably during a single day.]? Though this definition is simplified, the day-to-day job of a Day Trader is a far more complex series of events and strategies that must be learned and implemented.

My description of daytrading has largely been based on past experiences with the markets, as well as the changes in the markets and the global economies themselves. Keep in mind; the stock market is not your friend. Much like war, in day trading and/or short-term investing, you are pitting your wits against every other person in the market. Every dollar you make is on the back of someone else’s losses. Your goal is to win with your investments and your trading, and that requires someone else to lose. Try to make sure it’s not you. Never forget that, and you’ll be off to a much better start in the markets.

How risky is daytrading? Well, before you read on any further, imagine taking about $10,000 in crisp, brand new one hundred dollars bills out into the backyard. Put them on the ground and douse them in lighter fluid. Then strike a match. Don’t burn your money just yet, but just stand there. That’s about how risky daytrading is.

Always remember: at any given time, when you are daytrading for a living, you are risking probably that much money (if not quite a bit more), and your money is in perhaps just as much risk. While we are not suggesting that you actually set fire to your money in the backyard, our analogy is fairly accurate. If that bothers you, then perhaps you might consider another line of work, or a good mutual fund, because I don’t know any good day traders that haven’t seen at least $10,000 go up in a puff of smoke during market hours. It’s simply unrealistic to expect to be able to trade professionally and profitably from day one. Mistakes will be made; lessons will be learned; money will be lost as you learn. It’s a never-ending process to a large degree. In fact, the day you feel you have mastered the markets, that’s the day you get your head handed to you.

In the years I have traded, I have seen many people come and go. I’ve seen people make and lose large sums of money very quickly. I have made and lost large sums of money very quickly! I’ve seen stocks go from pennies to hundreds of dollars and back again, taking traders and investors for a ride in both directions. And yet, still, in all the years I have been in this business, I am sure of only one thing about the stock market–that I have not seen it all yet. If anyone claims to have all the answers about the stock market, or claims to be the only person you should listen to – run, don’t walk away from them and/or their services.

One of the most frequently asked questions is, ?How much capital do I need?? It is a somewhat difficult question to answer. How much do you really need in order to start day trading? How big a “stake” (a term used to refer to your starting capital) is required to get going? The only answer is that it’s different for each person, and it’s something you must consider for yourself before you start. However, I personally feel, in general, you should have enough trading capital to purchase between 500 to 1000 shares of any given stock. Ideally, this would be without having to use margin.

If you are in the habit of trading $40 to $80 stocks, this could mean you need as much Read more…

Do you know of anybody who owes money either on credit or with a credit card?

If you do are these persons financially secure for their future?

Are they able to make their agreed payments per month?

Are they happy?

If you have experience with the above then I am sure you don?t want to go down the same route!

I am going to share two top secrets with you my friend that will avoid any pitfalls with debt. They are basic and are used by top multi millionaires in the world today! Worth knowing?right!!

The first secret is this;

?Save yourself first?- ?Save yourself first.?

This means using the money we have in a way that will save us from all those nagging monthly repayments, getting letters, and phone calls when the payments are not met.

Also to ?save yourself first? means we invest wisely the money we already have.

How can this be done?

First, open up a savings account and avoid spending on impulse.

Next, seek professional advice from experts. For example a financial or wealth building coach or mentor will assist you on top financial decisions in your life.

Research how much money will be saved over a five, ten, twenty year period if credit is not used.

Read books by millionaires because they have a positive financial mindset, this is helpful to learn!

Attend a course which will assist to build positive financial habits.

Avoid the snare of a credit card which is very unlikely to be paid of completely.

Remember, when credit is used we pay back interest on top which could be used to invest into our future.

When we ?save ourselves first? we stay completely in control of our life and financial future!

The second top secret is;

Set financial goals and Read more…

Have you ever felt trapped in a Rat Race and wished to retire quickly but rich?

Have you ever felt that you are spending way too much time working with your boss at your office instead of with those you love? Your spouse, children, friends?

Have you ever felt frustrated because you are so deep in debt that you think you won’t be able to retire because as soon as you do, the money will stop coming and thus you won’t be able to pay off your mortgages and credit card?

Have you ever felt that you have no control over your life anymore in terms of time? Think about it: can you take a vacation just anytime whenever you want/ need it and as long as you want/ need it?

Have you ever wished that you can work whenever you want and wherever you want?

You are not the only one!

Too many people are trapped in a Rat Race because they have to. There are too many bills to pay, and too many dreams to fulfill. To them it seems that there is just no way to quit their job and enjoy life, travel and see the world with their loved ones.

Most people work because their bills tell them to, not because they really love to do it. Most people enslave themselves to their debt or job, because (they think) they have no choice.

This is when the craving for achieving financial freedom come in.

Freedom to choose when to work, without worries about income cuts. Freedom to spend more time with your loved ones, without worries about your employment or your boss. Freedom to take an expensive vacation, without worries about retrenchments thereafter. Freedom to do what you like, instead of what you’ve got to do, without worries about whether or not what you like generates enough income for you.

If you seriously crave for financial freedom, finding a better job with a higher paycheck is not going to work. Higher paychecks would usually mean more expensive lifestyle, more needs, more mortgages you THINK you can afford, more responsibilities thus more working hours and more time to spend at the office instead with your loved ones. And there is always the same problem: as soon as you stop, the money stops.

If you understand this, you will come to see that financial freedom is not measured by how much money you make by working, but by how long your money can support your normal lifestyle when you stop working.

And financial freedom is definitely not about accumulating abundant riches. It is about a golden chance to live abundantly!

Imagine! With financial freedom, you will have more quality time to spend with your family and friends. You will have more control over your life to do whatever you want, whatever you love, whatever you’re passionate about. You will be able to give more, help others, make your part of the world a better place to live! You will be able to spend as much or as little time with your business as you choose. You will be able to come and go at will.

What a great chance to live abundantly!

Is craving for financial freedom realistic? Yes it is. It is not impossible to achieve it. Ordinary people have achieved financial freedom. They may not have their own luxurious yacht, but they have the time and the money to take their family on an expensive cruise to the most expensive spot on earth.

There are basically only two fundamental things ordinary people have known for decades to achieving financial freedom:

1. Manage your time and money!
Time and money are the only two factors that keep people from achieving financial freedom.

To duplicate the success of people who have reached financial freedom, you do not need to have self-confidence, super intelligence, high education, great luck, hard-work or great career path. Although those are all Read more…

Regardless of where we are in life we can all learn something about money and how to better prepare for our future. Especially when we see that the national average is $10,000 in credit card debt and that savings and preparedness is dropping. This article can put you back on track to a more fulfilling and financially free life.

1) Automate your investing. Experience has proven that if we have to make a conscious effort every time we need to invest we will start with good intentions and then miserably fail a few months later. If you can automate your savings, whether by using your employers 401k, a sep (self employment plan), or direct deductions from your account you will finish ahead. The rule here is if you don’t see it, you won’t realize it and you won’t miss it. Some of these deductions will reduce your taxable income and save you further on taxes (see your CPA and tax advisor for more info on this). A good rule of thumb is to set aside 10% of your income.

2) Real estate. If you haven’t already, buy a house. Renting will only make your landlord (hint – house owner) rich. Regardless of what the immediate market does real estate is one of the best long term investments you can make. It also has many advantages including deductions for mortgage interest. Real estate will always go up. People will always need a roof over their head. Just watch HGTV, real estate has made many millionaires and is a key factor in almost every tape and book series on gaining wealth. Stick with the standard 30 year fixed mortgage.

3) Medical and life insurance. You need to have them, if you think you don’t just ask anyone that didn’t have it when something unexpected happened. If you love your family, they are a must. But, on that note, don’t get taken. Buy term life. 20 years will give good term coverage and if you follow all of these tips you won’t need anything beyond that. Whole life only makes your agent rich and really never builds any value for the huge costs involved. Term life can be purchased cheap over the internet at great savings. For medical insurance, in most states Blue Cross and Blue Shield offer great plans that are a fraction of Cobra or employer plans. If you have an adequate employer plan, by all means use it. Stick with big names like Blue Cross as they will be around for years.

4) Don’t ever buy new cars. It is a fact that new cars lose 25-30% of their value the moment you drive it off the lot. Let someone else pay for that depreciation and get a two or three year old car or truck. With the latest technological advances cars can easily go 150,000 miles and above. A two or three year old vehicle with 30,000 miles on it will save you not only in initial cost, but also on your insurance, and taxes. Also do your homework before buying your car. Get your credit score and see what loans you qualify for. This can easily be done right off the internet and will save you big at your local dealer (never take a dealers word for your credit and rate – they will hold 1-3 points on rate and that can mean thousands in extra interest over the term of the loan).

5) Get out of debt. I put the Read more…

Monday is the exception to the general rule: if London catches a cold then America sneezes; the FTSE is still heading down and so the American markets will probably follow suit when they wake. And we’re all catching the virus because of the Asian sell off.

This weekend I got scared. I try not to let things influence me but who can not read the papers, right? I figured this to be a minor correction with a chance to make some money on the up-curve but it’s beginning to look like a more significant drop. What began to look cheap on Friday is now beginning to look [still] overpriced.

But you have to be careful of hype. Best approach is to wait and see until tomorrow. Why buy today when prices could be lower tomorrow? Also, with this volatility, it might be wise to wait two days. Sure, you could take a risk and try to catch the bottom of an up-curve, but with no one knowing what’s really going on, Read more…

Unbeknownst to 98% of working people, the 40 year plan is over. Statistics show that by age 65 less than 2% of Americans can truly retire in comfort without the help of family members or the government. The lackluster performance of the stock market over the past 6 years has dashed many people’s hopes of retiring early. It used to be that you could get a great education, get a great job and settle with a company by 25 years of age, keep your nose clean, work your way to the top, invest in your companies stock and by age 65 retire the company you sacrificed for will take care of your retirement and medical expenses for life.

For many now this is just wishful thinking and a pipe dream.

Today’s norms:

The harsh reality is: Corporate down-sizing (e.g. Gillette, Ford, and GM). Corporate bankruptcies – Enron, Worldcom). Company’s robbing company pension plans and judges are allowing it to happen just ask people working for the airlines, illegal insider stock trading, age discrimination, companies cannot afford to pay health insurance premiums because they have sky-rocketed and people are living longer.

Other forces: World Instability, unfettered nuclear proliferation, Sept 11th, natural disasters all cooked together.

Yes, the poor performance of the stock market, lower interest rates and the real estate boom have contributed greatly to people looking for alternative investment strategies such as self directed Read more…

Just the other day one of my friends, Linwood, asked me, ?David, how are you doing in commodities?? I replied, ?Why as a matter of fact, I?m checking on some profits right now.? Linwood went on to say that his cousin is a commodities broker. I replied, ?And you have not invested in commodities yet? What are you waiting for??

My friend went on to say that he wanted to learn more about commodities before he invested in them. He is very smart in wanting to learn before he jumps into something he does not fully understand.

Being a success coach in teaching people how to invest in commodities, I seized the opportunity to help him get acquainted with commodity investing. I pulled up a website that showed the prices of what commodities were trading at. I went over some basics like how to read and interpret the charts.

He then asked me where I thought he could invest $500. I proceeded to tell him that I thought Gold offered a good opportunity. I cautioned him that Gold was currently in an uptrend but that it would eventually pull back.

I then asked him what was the minimum amount of money he would be satisfied in making? The reason I asked this question is because I wanted to make sure his expectations were realistic. I asked him other questions too ? like what was his timeframe for an expected payoff? He answered these questions. Based on his answers to the questions we devised a plan of action.

I advised him to take a look at investing in a Gold call option. At the time the option was priced at $490. I advised him that the commission and fees would add to this price a little. I said let?s watch the price for a week or two to see if he would have made money in the trade.

This strategy is referred to as ?paper trading? or as I like to call it ?play before you pay.?
It is a great way to learn how to invest and use different strategies before you risk your money.

The following day we watched the call option go up in price to $700. This represented a $210 profit in one day. Another way of looking at this is he could have made a 43% profit in one day. The next day Read more…

The questions below will help you interview and evaluate a financial planner to see if they are the right one for you. You will want to select a competent, qualified professional with whom you feel comfortable whose expertise and business style suits your financial planning needs.

1. What experience do you have?

Find out how long the planner has been in practice and the number and types of companies with which they have been associated. Ask the planner to briefly describe past work experience and how it relates to their current practice. If your financial planner will be offering you investment advice, it is advisable to work with someone who has been through a recession or down stock market.

2. What are your qualifications?

The term “financial planner” is used by many financial professionals. Ask what qualifies him to offer financial planning advice and whether he holds a designation such as the Certified Financial Planner or Chartered Financial Analyst marks. These professional designations show dedication to the profession and the ability to pass detailed examinations. Determine what steps the planner takes to stay current with changes and developments in the financial planning field. If the planner holds a financial planning designation or licenses, check on his background with the NASD AIMR , SEC or other relevant professional organizations.

3. What services do you offer?

The services a financial planner offers will depend on a number of factors including credentials, licenses and areas of expertise. Financial planners cannot offer insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless registered with state or Federal authorities. There are some planners who offer financial planning advice on a range of topics but are not licensed and do not sell financial products. Others provide advice only in specific areas such as estate planning or on tax matters.

4. Are you Independent of financial product sponsors?

Product sponsors include stock brokerage firms (discount and full service), insurance companies and banks. Ask the financial planner about the type of clients and financial situations he or she typically likes to work with. Some planners prefer to develop one plan by bringing together all of your financial goals. Others provide advice on specific areas. Make sure the planner?s viewpoint on investing matches your own and is not too cautious or overly aggressive for you. Some planners require you to have a certain net worth before offering services.

5. Will you be the only person working with me?

The financial planner may work with you himself or have others in the office assist with your activities. You can meet everyone who will be working on your investments or plan. If the planner works with professionals outside his own practice (such as attorneys, insurance agents or tax specialists) ask to get a list of their names to check on their backgrounds.

6. How will I pay for your services?

As part of your financial planning agreement, be sure you see in writing how they will be paid for the services provided. Planners can be paid in several ways:

? a salary paid by the company for which the planner works. The planner?s employer receives payment from you in fees or commissions to pay the planner?s salary.

? fees based on an hourly rate, a flat rate, or on a percentage of your assets and/or income.

? commissions paid by a third party from the products sold to you to carry out the financial planning recommendations. Commissions are usually a percentage of the amount you invest in a product.

? a combination of fees and commissions whereby fees are charged for the amount of work done to develop financial planning recommendations and commissions are received from any products sold.

7. How much do you charge for your services?

While the amount you pay the planner will depend on your needs, the financial planner should provide you with an estimate of possible costs based on the work to be performed. Such costs include the planner?s hourly rates, flat fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.

8. How are you licensed?

Many financial planners offer advice in securities or insurance when they are not licensed in these areas. Some states may not require licensing but consumers may want their advisor be properly regulated and licensed. Licensed persons pass examinations and have many hours of continuing education annually. However, there are some licensed advisors who are are merely salesmen in an advisors suit.

Ask the planner to provide you with a description of her conflicts of interest in writing. For example, financial planners who are employees of banks, insurance companies or investment firms often favor their own company products, even when less competitive. The planner may also have relationships or partnerships that should be disclosed to you, such as business he or she receives for referring you to an insurance agent, stockbroker, accountant or attorney for implementation of planning suggestions.

9. Have you been publicly disciplined for any unlawful or unethical actions in your professional career?

Several government and professional regulatory organizations, such as the National Association of Securities Dealers (NASD), your state insurance and Read more…

You may recall that following the 9/11 attacks, the stock market closed for several days. It re-opened on 9/17 with the Dow down 7%.

That was it for one couple I know, Mary and Frank. The attack on the country, coupled with the attack on their personal finances, was too much. They were worried terrorism would sink our economy and stock market like the Titanic, so they sold all their market investments.

Was it the right move?

Nope. In less than two months, the situation changed drastically: Within 53 days, the market recovered all it had lost. And by the end of the year, the market was 12% higher than it had been when Mary and Frank had bailed out. Now their greatest problem was not having a strategy to get back in. In their uncertainty and confusion, they became paralyzed by fear of making the wrong move again.

You?re well aware that September 2001 was not the first time the U.S. weathered catastrophe that directly impacted investors. Among other events, we?ve been through a depression, World War II, the Cuban missile crisis and an assassinated president.

Yet the stock market has continued to thrive.

Despite market resilience, a lot of people lost a lot of money. It might be tempting to think that if investors had been more informed about what was happening geopolitically, they could have headed off personal financial devastation. But that?s a sucker punch. Now that we can be acutely aware of every twist and turn in the world, does it make sense to invest based on international political and military posturing? Not if you want to make money.

Here?s another example. Shell-shocked, Janice met with her financial advisor in March of 2003. She?d seen the market tank through the horrific bear market from 2000 through 2002. She?d read sordid tales of corporate theft that cost investors billions and, in many cases, their retirement. She was worried by accounting scandals. And, of course, there was this problem in Iraq.

Janice was convinced that any one of these events could mean disaster for her investments. In her mind, all of these things happening at the same time meant certain financial catastrophe. Demoralized, Janice sold all her holdings. And from an emotional standpoint, you couldn?t blame her.

But from March of 2003 through the end of 2003 the Dow rose 32%. Janice missed out completely.

Our market has survived everything thrown at it. Unfortunately, we?ll most likely always have a crisis to overcome. The current terrorist problem could be with us for many years, and that?s certainly a human tragedy. However, no one can revoke the business cycle. There will always be companies that make great products and high profits. Those companies will expand, and the value of Read more…