Investing

Your Portfolio: Time to Cash In?

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Your Portfolio: Time to Cash In?

There is one very important time that you must understand when it comes to your portfolio: time to cash in. You have to know when to take the money out of your investment portfolio to use it, typically for retirement. While some of this revolves around your needs – if you hit retirement age, for example, you have extra pressure to cash out regardless of how things are going – some of it also involves performance and the general trend of the economy.

When this gets tricky is when your portfolio is earning very well. On one hand, you want to get the money out of it before a reversal comes and you lose money. Many people in the United States who cashed their portfolios to retire in 2009, after the recession hit and the market dipped, wished they had cashed out back in 2006. They actually saw their values fall, causing them to lose money that they had previously thought of as their own. Their need to retire still meant they had to cash out on schedule, but they may have even lost so much that all of the money they made in the last three years just became a wash; they would have been able to retire just as well three years before, without working at all, even though they had to live off of their retirement funds for longer.

On the other hand, though, you want to leave a strong portfolio in place for as long as you can. It compounds on itself; the more money you have in it, the more you can potentially earn over the next quarter or the next year. If you start pulling money out, even earning at the same percentage is simply going to bring in less money because there is less to work with. You don’t want to take it out too soon and miss out on those earnings.

The best thing that you can do is to allow your portfolio to get to the point where it is earning enough every year that you can live off of the interest. You can then start taking just the interest out, and you’ll make it all back the next year. This is a sustainable portfolio that can carry you for as long as you need. You may never need to take all of your money out since you have enough to live off of, drastically reducing the financial stress you feel during retirement.

Of course, this is not going to be possible for everyone. If your portfolio is never going to hit that level, you have to make some tough choices, based on the economy and your needs, to cash out at the right time. Just make sure, before you make any adjustments, that you really understand the most important time for your portfolio: time to cash in.

Binary Options Trading Strategies

Profiting from Channeling Price

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Profiting from Channeling Price

Stock channeling is one of the most reliable ways of taking advantage of the market’s tendency to trend. Profiting from channeling price really is a matter of buying low and selling high. This technique helps you to eliminate guesswork from investing.

How Channeling Price Works

Stocks usually move up and down repeatedly in waves between two parallel lines. This is what is referred to as stock channeling. The upper trend line, also known as a high price point, acts as resistance while the lower trend line, also known as a low price point, acts as support. The channel is the area between the low and high price points.

The waves formed by the stock’s ups and downs can become predictable. Investors can profit by buying and selling channeling stocks as they fluctuate. This technique is reliable because it primarily relies on the market’s natural tendency to move up and down. When a stock starts going up in price, investors reach a point where they decide that the price is too high and can decide to start taking their profits. Other investors might decide to short the stock. The reverse happens when the stock starts going down. Investors start adding to their positions when they feel it’s cheap enough while other investors who had taken short positions start to cover their shorts. This type of trading activity works together to keep stocks channeling back and forth. These channels, however, don’t continue on indefinitely. At some point, the channel will be broken and a new one formed.

Before this happen, however, the trader can take advantage of the price swings. The trader will usually buy the stock just after it starts moving up on a cycle and sell just after it starts moving down. This can happen with a frequency of a few weeks or months and the profit gained on each cycle can quickly accumulate to a point where the trader makes handsome profits by the time the channel breaks. Stock channels can last for years thus providing the investor with ample room to profit.

For instance, let’s say an investor buys 100 shares of a stock of company ABC at $15 and sells when it reaches $18. The trader waits for maybe a week or so till the price drops to $15 and sells when it hits $18 again. The trader repeats this two more times and he makes a handsome profit of $1,200 in maybe 6 months or less, which is a very good return from their investment of $1,500.

Stock channeling is a great way for a trader to keep the emotions of fear and greed in check. The high and low points of the channel act as sell and buy signals that the trader executes without having to second guess their decisions. Profiting from channeling price is quite easy since channeling allows the trader to make money regardless of whether the market is bullish or bearish.

Investing

How to Trade Contracting Triangles

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How to Trade Contracting Triangles

When it comes to trading and investing there are a variety of methods used to help traders and investors decide when to enter a trade and when to exit. In addition to these methods there are also indicators as well as chart patterns that can be used to help predict the direction in which an asset or security will go. These predictions help traders and investors decide if a good deal will occur or not and whether or not they should cut their losses. There are a plethora of chart patterns out there that help traders map out and determine market trends. Triangle patterns are commonly used by traders. Triangle patterns form a clear shape of a triangle. They indicate a crossover of two trend lines, ascending or descending and flat. The price of the security wavers between the two trend lines. The most common triangle patterns include the contracting triangles. For a trader to know how to trade contracting triangles they must have an understanding of the market trends as well as the chart patterns associated with contracting triangles.

Contracting triangles refer to those chart patterns where the two trend lends cross over each other after one of them experiences as price brake. For those following the Elliot wave method, this is after wave e ending point. A more specific definition of a contracting triangle indicates that a triangle is a five wave pattern that is labeled with letters A through E. These triangles feature a subdivision of 3-3-3-3-3. These triangles will always occur in a position prior to the last actionably wave that is of one larger degree. For example, meaning wave four out of five-wave structure. Once these triangles are finished they will be followed by a sharp move that is known as a thrust that catapults them into the opposite direction.

Contracting triangles come in two different types. There are limiting contracting triangles and non-limiting contracting triangles. Non-limiting will behave in a slightly different fashion when around the converging trend lines as opposed to limiting triangles. Perhaps the most distinguishing aspect of non-limiting triangle is the congestion that can be found near the apex of the point. For limiting triangles a price thrust after wave e should not be less than at least 75% of the largest wave of the triangle. This is the target of the trade. For non-limiting triangles the price thrust is after wave e does not need to be confined to any set amount. It is usually short lived and corrective. Predictably the price will then return to the original trend. In order to trade successfully with non-limiting triangles it is recommended that a traders target be fast as well as based on other lagers patterns.

Contracting triangles are very common when referring to chart patterns. By understanding how to trade contracting triangles a trader will have a higher chance of making a profit. Trading triangles can be difficult, but with time, effort, and research any trader can master triangle chart patterns.

Binary Options Trading Strategies

Ways of Analyzing Chart Patterns

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Ways of Analyzing Chart Patterns

If you are involved in any kind of financial trading, you will know that you need to find methods of forecasting price movements, in order to know when to enter and exit trades. One of the major methods is the use of charts to indicate price trends, known as Technical Analysis. However, simply looking at charts is not enough — you have to understand about analyzing chart patterns.

Charts in financial trading usually show a sequence of prices plotted over a specific time frame, with the y or vertical axis representing prices, and the x or horizontal axis representing the time scale. Most charts show intraday data — that is, price movements inside the period of a day — or daily data, in which intraday data is compressed to display each day as a single data point. However, charts showing longer periods can also be useful, to provide an idea of historical price trends.

Two of the most popular types of chart are the bar chart and the candlestick chart, both of which provide four specific pieces of information — highest, lowest, opening and closing prices over the period, usually a trading day. A bar chart uses a vertical line to represent the time period, with horizontal bars to the left and right showing opening and closing prices respectively. A candlestick  chart shows the same four pieces of information by using the length of the candle body, and the wick and tail going up from the top and down from the bottom.

One of the clearest types of pattern provided by these charts is the indication of support and resistance levels, which are related to the forces of supply and demand. Support is the level at which prices fall far enough to affect supply, and so stop falling, while resistance is the level at which prices rise high enough to affect demand, and so stop rising. On a chart you can see where a falling sequence reaches a point below which it never drops, which is the support level and a signal to buy, or where a rising sequence reaches the level above which it never rises, which is the resistance level and a signal to sell.

There are a number of techniques that you can learn to use for analyzing chart patterns. One example is moving averages, which make it easier to gauge the direction of a trend by averaging out the data points, thus smoothing out price fluctuations. When a price falls below the moving average, it’s a signal to sell, and when it rises above, it’s a signal to buy. There are various types of moving average, including exponential, simple, and weighted the exponential being the most often used, as it gives more weight to more recent data.

Another popular technique is Bollinger Bands, which are plots on a chart, two standard deviations below and above a simple moving average. The distance between these bands becomes wider or narrower according to the volatility of the market. The closer prices move to the upper band, the more overbought the market is, so it’s a sell signal, and the closer they move to the lower level, the more oversold the market is, so it’s a buy signal.

The fact that prices move in trends is one of the fundamental principles of financial trading, and this is why chart patterns are so important. There are many other techniques for analyzing chart patterns, but these are among the most popular. Successful traders will use three or four, and when they all point in the same direction, you know it’s a clear signal to trade.

Investing

IPO Basics Tutorial

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IPO Basics Tutorial

If you are new to investing, you have probably heard the term “IPO” mentioned in the media. The letters IPO are short for the phrase “initial public offering.” This IPO basics tutorial will help you understand how initial public offerings work and whether you should take advantage of them. The following example shows how an IPO works.

Jim and Mary

Jim and Mary develop an all purpose household cleaner that is made of safe, natural ingredients. The cleaner is so versatile that it can be used to clean dishes, clothes, bathrooms and just about any surface without harming the finish. They sell a few containers to friends and family through home demonstration parties, but the cleaner becomes so popular that they cannot keep up with demand. Customers love the product because it cleans well and is environmentally friendly.

Jim and Mary work long hours in their garage mixing ingredients to make the cleaner, bottling it and packing it. A regional retailer contacted the couple about carrying the product in their stores, but demand will be impossible to meet without a manufacturing facility. They do not have the money to lease the building that they need so Jim and Mary decide that they could raise funds to expand the operation by selling shares of stock to investors. Investors would pay a certain price per share in exchange for part of the profits when the product takes off.

Going Public

Jim and Mary meet with an underwriter (investment bank) that handles the necessary paperwork required by the Securities and Exchange Commission. Eventually they are ready to offer an IPO that will allow investors to purchase shares in their company. This is how they raise the cash needed to move into a small manufacturing plant that will allow them to hire additional employees and meet the demand for their product.

How IPOs Marketed to Investors

When a company is thinking of offering an IPO a public announcement is made to alert interested investors. Additionally, representatives may travel from place to place, marketing and drumming up excitement about the IPO. The media is an important in driving interest in an IPO. Finally, when the big day arrives.

How Do You Get in On an IPO?

If you are a beginning investor, forget about getting in on an IPO when it is offered. An IPO is geared toward institutional investors who can put millions toward purchases of shares. They want to buy low and sell high and have the money to make the huge profits. However, once the stock hits one of the exchanges, anyone can purchase through a broker or an online share trading program.

Just because a company is successful while it is private does not mean that it will make you tons of money when you become a shareholder. You should expect ups and downs. Some IPOs that excited investors initially have turned out to be duds. The purpose of this IPO basics tutorial is to give you a basic overview of how these investments work. If you are new to investing, seek the advice of a qualified financial expert before you invest in any stock.

Binary Options Trading Brokers

Understanding Binary Options Regulations

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Understanding Binary Options Regulations

The issue of binary options regulations and safety is one that has been dogging the industry since the setting up of deregulated trading in 2008. Initially, people viewed binary options trading as a great innovation in the financial market industry that was feeling the pinch of the global financial crisis. However, a flood of negative stories about unscrupulous brokers fleecing traders cast a dark shadow over the binary options market. In fact, an article published on Forbes described binary options trading as a crapshoot. In addition, the recent indictment of a broker by the CFTC further served to add more bad press. The broker faced charges of unlawful solicitation of clients in the United States.

The Disadvantages of Non-Regulated Platforms

Regulation is all about protecting clients and their money from unfair trading conditions, fraud, bankruptcy, and any other factor that the government may classify as an infraction. Regulation places the onus on brokers to set up adequate facilities to ensure that most of these unacceptable events do not occur.

To begin with, all brokers must register themselves with the relevant regulatory agencies. In addition, they must have a physical presence and a workforce with unquestionable integrity. They must also have the financial ability to handle all withdrawal claims from their clients. Occasionally, brokers must present themselves to the relevant regulatory bodies for assessment. They must also keep funds belonging to their clients in a separate account, distinct from their own funds. This segregation of funds ensures that the clients’ funds are protected from issues such as bankruptcy.

From the above, it is easy to understand why criticism of the binary options market was so vicious. Some of the controversial issues included:

  • Very little regulation
  • Lack of government monitoring
  • Lack of segregation of funds
  • Lack of adequate transparency
  • Inadequate capital requirements

Present State of Regulation

Binary options regulations are changing. Due to numerous complaints from discontented clients, Cyprus Securities and Exchange Commission decided to change its classification of binary options. In May 2012, CySEC decided to list binary options as financial instruments subject to regulation, effective end of 2012. Consequently, all brokers operating under CySEC had to comply with the new policy by the end of 2013.

Afterwards, Malts, Japan, and Italy followed suit by transferring the oversight of binary options to the relevant regulatory bodies that oversee the financial sector. The Financial Conduct Authority regulates the binary options market in the UK, while the Australian Securities and Investment Council regulates the binary options market in Australia.

Impact of the Current Regulatory Framework

As things stand, traders must comply with the new realities or face the consequences and risks, which may follow. Traders who choose to work with unregulated brokers should move their accounts to regulated brokers to enjoy better protection. Traders should look for a definitive list of all regulated brokers in their jurisdiction and seek a better understanding of binary options regulations. Moreover, as for the unregulated brokers, time may come when they will have to comply.

Binary Options

The Best Binary Options Recommendations for Successful Trading

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The Best Binary Options Recommendations for Successful Trading

Trading binary options is becoming increasingly popular. More individuals are learning how to get in on the act and earn money for themselves. Likewise, more systems (software) and brokers are getting in on the action daily to help traders (especially beginners in some cases) trade in the easiest, most convenient and efficient ways possible. With all the choices available now, there are still some binary options recommendations for trading successfully that remain true irrespective of your broker or how new you are to trading. That is, they apply to beginners and advanced traders alike. Following tried and true binary options recommendations can help you reduce risk and loss while maximizing your profits and Return on Investment (ROI). Recommendations include but are not limited to the following:

1.The first recommendation is to pay attention to your trades. It is important that you are on top of what is happening with trades you are making. This will help you make adjustments as needed and maximize your profits while minimizing risk and loss. Being aware can earn you a lot more money.

  1. Understand and pay attention to the recommendation and trading strategies of your broker. This is collar to the previous suggestion of following your trades. Being familiar with the offering and recommendations of your binary options broker can also help you turn a profit from your trading.
  2. Pay attention to new developments. In the world of binary options trading, things are always trading. New brokers with better features that can help you earn more are always coming on board. However, if you are not aware of the new developments, then you will be unable to capitalize on them. If you are aware though, then chances are you will stay ahead of the game and remain profitable with efficiency and relative ease.
  3. Make use of your Call (up) and Put (down) trading options. Call and put allows you to purchase (call options) or put a stop to trades depending on announcements in the market and the flexibility allowed by your broker. Making use of these trading options will help you anticipate and respond to the market in a way that keeps you profitable. Of course, it also requires that you pay attention to what is happening.

While they are all important, one of the most important binary options recommendations is: have an exit strategy. It is no secret that with investments and trading, there can be market swings and developments that will affect a trader’s profitability. In the case that a trader or investor is facing imminent loss, it helps to have an exit strategy that can be utilized. A viable exit strategy will help the trader to cut out of any trading option that will in essence result in a loss as opposed to a profit. In other words, an exit strategy allows you to again cut losses and maximize profits.

Binary Options

The Pros and Cons of Binary Options Bonuses

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The Pros and Cons of Binary Options Bonuses

There are many traders who have a negative opinion of binary options bonuses. This is largely due to their lack of understanding of the terms and conditions that come with the “free money”. Traders who know what they are doing know that these bonuses can be very helpful, especially for those who are starting with account balances that are very low. Read on to learn more about binary options bonuses.

Why Brokers Issue Bonuses

There are two main reasons why binary options brokers issue bonuses. The first is to attract new clients. The vast majority of binary options brokers offer similar products and services, so aspiring traders are always looking for something extra to convince them to work with a particular broker. That is usually the bonus. Brokers with the biggest bonuses are often given strong consideration by aspiring traders. Secondly, brokers normally issue bonuses to give new traders a boost. In many cases, new binary options traders invest small amounts of money ranging from $50 to $200, depending on the broker. It may take a trader a long time or dozens of trades to increase this balance to a reasonable level with such a small capital. The bonus is meant to boost the trader to greater heights. For instance, a 100% bonus on a deposit of $200 means that the trader would be working with $400, not $200.

Types of Bonuses

There are basically two types of bonuses:

Deposit Bonus: This is usually given to traders when they deposit funds into their trading account. Most brokers normally issue a bigger bonus on the first deposit and smaller bonuses on subsequent deposits. A deposit bonus can either be a percentage of the deposit or a fixed amount based on the amount of money deposited.

Trading Bonus: This is a bonus given to traders during certain events. For instance, some brokers issue trading bonuses every quarter or when the account balance of a trader reaches a certain level.

What You need to Know

Bonuses come with strict terms and conditions. Any trader who is planning to withdraw the bonus before opening a single trade will be disappointed. Those who make a huge profit using the bonus and submit a withdrawal request soon after will also be disappointed. In many cases, traders who want to make a withdrawal before they reach the trade limit have to give up the bonus as well as all the profits arising from the bonus. That said, binary options bonuses are meant for individuals who are trading for a long period of time. The trade limit can only be met through consistent trading over a period of weeks or months. Once it has been reached, the account balance of the trader can be withdrawn. When making an initial deposit of $400, with a 100% bonus, the trader will have an account balance of $800. The trade limit is usually fifteen times the sum of the bonus and the initial deposit. In this case, the trade limit is going to be $12,000. To make a withdrawal, the trader has to open trades with a total value of $12,000.

Binary Options

How do CFD’s Work?

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How do CFD's Work?

A CFD, or contract for difference, allows a trader to realize a profit or loss without actually owning the underlying asset. A CFD is the difference between the entry and exit levels of a trade. This instrument closely mirrors the price movements of the underlying asset. A CFD is essentially a contract between a broker and a client. There are several reasons why CFDs have become increasingly popular over the last couple of years. But how do CFD’s work?

How CFDs Work

Let’s assume a stock has a price of $25.26. A trader buying 100 shares of the stock would require $2,526. If the trader uses a traditional broker with a 50% margin, they would have to part with $1,263 cash. With a CFD broker, however, a 5% margin would likely to be enough and the trader would have to part with only $126.30.

CFDs do come with a catch though. When a CFD trade is entered, the size of the spread is equal to a loss on the position. If the spread with a CFD broker is 5 cents, the stock will need to appreciate 5 cents for it to break even. If a trader owned the stock outright, they would realize a 5 cents gain, but would end up paying a commission and using a much larger capital outlay. Therein the tradeoff lies.

If the underlying stock continues appreciating to, say, a bid price of $25.76, a trader who owns the stock outright will realize a $50 gain, equal to a 3.95% profit margin. The CFD bid price, however, would likely be about $25.74 since the CFD spread is usually larger than that of actual stocks. The trader will thus gain $48, which is lower in absolute amount, but with a much higher profit margin of 38% ($48/$126.30). The profit might be somewhat less because the CFD trader might have to buy at a higher price of say $25.28. The margin is nevertheless much higher than would be the case if the trader bought actual stocks.

The Advantages:

Higher Leverage: The biggest advantage of CFDs is that they provide a trader with much higher leverage than traditional trading. The standard leverage in a CFD market can be as low as 2% margin requirement and can go up to 20% depending on the underlying assets. This increases the potential profits for the trader.

Global Market Access: Most CFD brokers offer products from all the major world markets. This helps traders to easily trade any market from one platform.

No Shorting Rules: Certain markets prohibit shorting at certain times or require the trader to borrow the instrument. The CFD market does not have such rules.

No Fees: Very little if any fees are charged on CFDs

The Disadvantages:

CDFs do have some potential pitfalls. The spread that traders have to pay on entries and exits can nullify profits from small moves.  The higher leverage also magnifies losses when they do occur. The CFD market is also not as highly regulated as the traditional stock market which exposes traders to some risk of dealing with unscrupulous brokers.

Many traders today are seeking to understand how do CFD’s work because these instruments have emerged as an excellent alternative for certain trades. An investor is, however, advised to carefully weigh both the pros and cons of CFDs before trading in them.

Binary Options

Mastering the GBP/USD Pair

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Mastering the GBP/USD Pair

Mastering the GBP/USD pair requires a brief introduction to currency pairs. Every new trader wants to know the best currency pairs to trade, and which ones are easier to analyze and predict for beginners. Before deciding the best pair, it is important to learn about the different types of pairs and how they differ from each other. There are three different types of currency pairs:

  • Exotics
  • Crosses
  • Majors

The most traded currency pairs are the majors, and they contain the currencies of the world’s top economies. These include the United States, Europe, Great Britain, Canada, Switzerland and Japan. The majors include the EUR/USD, GBP/USD, USD/CAD, USD/JPY, USD/CHF, and EUR/JP. These are the most convenient and accessible pairs to trade for both experienced traders and beginners. In addition, they are the most stable as the financial and economic situation in the richer countries is comparatively stable.

The crosses are the currency pairs that do not have USD in them. Before the crosses, most currencies were fixed to the USD, and in order for one to exchange a certain currency, for example, EUR to GBP, one had to convert to USD and then to GBP. Examples of crosses include EUR/AUD, GBP/JPY, AUD/CAD, NZD/JPY and EUR/GBP.

On the other hand, exotics are currency pairs with a currency from a developing country from Africa, Asia, South America, Middle East, or the Pacific.

Mastering the GBP/USD

Great Britain has a rich history and stunning landscapes. Unfortunately, its currency, the Pound, is not as peaceful and easy going. The GBP goes through periods of chaotic price action and sudden spikes. In addition, the liquidity of the GBP/USD’s is not as high as that offered by the EUR/USD, despite accounting for as much as 14% of the daily currency trading volume. Fortunately, shrewd traders can take advantage of those short-term price actions.

The good news for traders is that Great Britain was able to avoid the current debt crisis that is stinging most of Europe, mainly due to its rejection of the Euro. Unfortunately, Britain’s economy is contracting, and the country is sliding into a recession. Additionally, according to media sources, the country had the heaviest debt load on record.

Before going any further, traders should understand a few things about the GBP. Firstly, its volatility creates short-term spikes that may be difficult to swallow for traders who are not prepared. Secondly, it is very sensitive to interest rate adjustments from the Bank of England. Thirdly, the GBP/USD pair is remarkably sensitive to the United States economic data reports.

Technical traders should be very careful when trading the GBP. The Pound has unpredictable technical analysis, which means that there are many false breakdowns and breakouts. Technical traders must study and seek a thorough understanding of the GBP/USD pair before making their next move. It is advisable to back up one’s technical analysis with the underlying fundamentals.

Mastering the GBP/USD pair is more difficult than mastering the EUR/USD. This can be a disadvantage or advantage depending on a trader’s level of expertise. New traders should always paper trade until they learn the ropes.