Becoming a better forex trader

The beginner strategy is just the start of a whole world of trading. From indicators to chart analysis, there are many opportunities to learn and improve your trading.

However, there will always be a core group of principles that you need to comprehend. Grasping these three basic forex trading concepts allows you to make smarter decisions while you are trading:

• Technical analysis
• Money management
• Trading psychology

Technical analysis

Technical analysis is a method of analysing price movement on a chart to determine possible future price action by using things like indicators, channels, divergence, and much more. I teach you how to analyse Japanese candlestick charts using many different methods. The strategy you use will depend on your personal trading style.
For example, one trader may prefer to use moving averages while another may choose to use the Fibonacci indicator.

You can know more about Technical Analysis from my old post .

Money management skills

Money management, also called risk management, is a core concept that protects your trading capital from losing trades. It should be part of your trading strategy immediately when you begin your trading career.

Money management encompasses concepts like stop losses, scaling in and out of trades, and risk to reward. Understanding these methods can help you maximise your profits and avoid losing your trading account.

For example, most professional traders do not advocate risking any more than 1% to 2% of an account on a single trade. This protects your account from performance downturns and allows you to trade safely with leverage.

Trading psychology

It is not analysis of the markets alone that allows a forex trader to become successful, it is the psychology of a trader. By overcoming psychological influences, such as fear and greed, a trader has a better chance of being successful.

A trader must stick to the rules of their system and not let psychological influences distract them. The path to becoming a good trader is not necessarily an easy one, however, working through your psychological issues will allow you to trade with a disciplined approach.

How To Become a Good Trader

Traders are not born – they are made

Starting out as a trader can be daunting. With so many strategies, principles and concepts to learn and choose from, it can be difficult to pick a path and stick to it.

Trading can also be an emotional roller coaster, taking you from the thrill of winning to the anxiety and self-doubt of losing in one short session.

An experienced trader knows how to stop emotion influencing trading decisions – becoming capable of jumping straight back in the markets even after a loss.

These are not skills that any trader was born with though. They are skills that are acquired through study, discipline and practice.

How to become a good trader

Learning to trade is not an easy journey, but it is one that many have made before you.

We will now look in more detail at some of the ways you make this journey easier.

Practice trading strategies

Just like a concert pianist has to work hard at perfecting the basics before he performs a concert, it takes practice and dedication to become a winning trader.

The difference with trading is that the process of practising – learning from your mistakes – can cost a lot of money. This can be psychologically and financially hard to take.

Demo accounts are therefore a must for beginners. They allow you test out strategies and different trading methods in real market conditions, but without risking real money.

Moving on to real money

After you have practiced your strategies and are comfortable with how to execute your entry and manage your trade, you are then prepared to work on the next stage of learning, which is to control your emotions.

Whilst a demo account can mimic the emotions that you feel when trading real money to a certain extent, you will not experience the full brunt of emotional influence until you move to a real trading account.

If you have practiced a strategy on a demo account beforehand, then you are in a better position to learn how to control your emotions, because you have practiced the decision making to the extent that it is almost automatic and you simply need to concentrate on taking a series of trades and get used to the emotions.

Break it into bite sizes

Experienced traders incorporate technical or fundamental analysis, risk management and strict entry/exit rules into every single trade they make.

They know that by applying each of these elements consistently, their trading will produce favourable results over time. They also know that skipping any one of these stages could ruin their strategy and lead to heavy losses.

If you are a beginner trader, trying to master so many links in a chain at the same time can feel overwhelming.

Therefore, don’t expect to learn a trading strategy in one go.

Rather, work on different elements of each strategy in bite-size chunks until you understand them and can fit them together like the pieces of a jigsaw.

For example, dedicate yourself to studying and experimenting with different money management principles until they feel second nature. Then move on to the study of entry or exit levels.

Approaching your education in this way will not only give you a much clearer sense of direction, it will ensure that you are making the best use of the time you dedicate to trading.

Of course, you will still have losing trades, however, as long as you know that you applied each trading rule carefully and consistently, any losses will be easier to digest.

Master your emotions

It is vital when trading to keep a firm focus on what you are trying to achieve long term.

Many traders start in the industry because the flexibility of trading for themselves might improve their lifestyle. Others do so because they want more control over their earnings potential.

Whatever your reasons for trading, remind yourself of them regularly. Write down your goals and stick them on your wall so that while you are learning and going through the difficult process of mastering your emotions, you can always refer back to your aspirations.

Reminding yourself, for example, that your whole reason for trading is that you can spend more time with your family can make it easier to put in perspective the disappointment and stress of losses when they do occur.

Reminding yourself of how much income you hoped to earn from your trading can also be a great way of refocusing your attention and getting you back into the market.

Take emotion out of your trading when you are actually trading

However, you must make sure that you are in a logical mindset when you are trading. You must be able to let go of emotions and you need to learn how to only think about the trade and only refer to your goals and dreams afterwards.

The reason why is that you do not want to influence your own trading. Take, for example, the scenario of experiencing a losing trade whilst thinking about the money that you hope to make with it. The losing trade now makes that dream seem further away and you are in danger of getting caught up in chasing losses.

This can lead to warped expectations, which can result in chasing losses.

One way you can overcome this is to write down your trade beforehand. By writing down your entry, stop loss and profit target on a piece of paper, you begin to switch your mind into a logical state and concentrate more on the trade itself, rather than what it is trying to achieve. You are then in less danger of becoming influenced by emotion.

Are you Losing Wasted Money or Earning Extra Money?

Important Forex Tip – What’s the currency held in your broker?
This is one very important thing that every forex trader should know.What’s the currency that you hold in your forex broker account?Regardless of which country are you living in.Your currency denominator in your forex account should NOT be in USD.This may come as a BIG Shocker to you.And if your denominator is in USD. Change It Now!

Important Forex Tip – What’s the currency held in your broker?

Here’s why:
My Example: I’m based in Singapore. Around 2-3 years back, the USD to SGD (singapore dollar) is at the rate of 1 : 1.4 (est)
Forex Blog: Therefore $1 USD is equals to $1.4 SGD.
Forex Blog: But today $1 USD is equal to $1.1~ SGD.
So had my forex account denominator be held in USD. I will be making a huge loss!Just for example. If your capital is $100,000 USD 3 years back, if i convert it back to SGD. It will be $140,000 SGD.And supposedly, if i never traded the account. Today my capital left will be $110,000 SGD.Meaning i made a loss on my account even though i did not even took a single trade!
Do you see what i’m driving here.Even though if i had traded the account, my profits would have been wiped off or massively reduced due to the currency difference.Which also means that you are practically wasting your time trading forex as none of your profits could be seen.

So what now?
Here’s the fact.
The USD will continue its way down, unless there is a chance of them clearing the trillion of dollars in debt. (chances are really slim)Til then, the USD will at least not grow back to what it once was.So if you are living outside of the United States.You should either put your currency in your own country’s denominator or place it in a country which has a stable economy (eg. Singapore is one of them) And if you are living in the United States.You should change your denominator to another country which has a stable economy. (Not EUR – due to its mounting debt)
Some brokers will not allow the change if you are living in the United States but some will.So if those brokers doesn’t allow you to change your denominator to other currency.
CHANGE THEM!

By changing your denominator to other currency, and if the USD continues falling against the currency you put in.You will see a growth in your capital without even trading!So that’s Extra Profits! (or even to cover your losses you made through silly mistakes)Let me know if this post has helped you.Do share it and like it! Cheers!

Click here to check out our online forex trading.

Forex Brokers: What to Look For

You should not rush to choose a new broker. We recommend that you take advantage of several free demo accounts and compare them carefully before you commit to one. You should also read our reviews, peruse a few forums and find other resources to further educate yourself about the broker. To help you make an informed selection, we compared trade details, brokerage types, funding options, trading platforms, and help and support.

Trades
While volume investors fuel the majority of the $4 trillion dollar per day foreign exchange market, increasingly opportunities are opening up to lower-volume investors. In the past, minimum deposits were in the thousands; now you can fund a new account with as little as $100. This low deposit requirement gives you the opportunity to test out a few services without having to risk large sums of money. Most forex trading brokers also require only a 1,000 minimum trade lot size. If you are trading from the U.S., leverage is limited to 50:1; however, if you are trading from other countries, you may be able to leverage as much as 400:1. In terms of trading pairs, brokerages offer a choice of 30 to more than 60 trading pairs. While you may not choose to trade more than 60 trading pairs, you will want to verify the trading pairs available to ensure that the ones you are interested in are accessible through your selected broker.

Brokerage & Funding Options
Before selecting a new broker, you should consider the broker's reputation, funding and payment options, and all associated fees and interest. While conducting our research, we noticed that withdrawing money seems to be trickier than depositing money into your account. Keep in mind that it may take days or longer to retrieve your funds, so you should not trade with money that you actually need. It would be prudent to investigate customers' experiences with withdrawals before signing up with a new broker. Also, be careful to note what type of broker they are and what governing agencies the broker is regulated and licensed by.

If you are a day trader, you may not have to worry about interest rates. However, if you hold a position overnight, the broker will charge you interest. For Muslims, most offer interest-free accounts that charge a fee rather than interest. Other fees to consider include wire-transfer fees, margin rates and routing fees.

Trading Platforms
Most forex brokers offer MetaTrader to their clients as the trading platform. If you are an experienced trader, you are likely already accustomed to using this popular trading platform. Those that offer MetaTrader also provide access to the mobile version. All platforms are now web-based, and many brokers offer their own proprietary trading platforms as well. If you are trading with a market maker broker, it is recommended that you monitor a few trading platforms to ensure that they are offering you fair deals.

Help & Support
Although nothing can replace extensive research and experience with a broker over an extended period, we did compare how easy it is to contact the forex brokers and what kind of education they provide. The best forex brokers offer telephone and email support during generous business hours. Many also provide limited chat support. All services provide free demo accounts so that you can practice trading strategies and using the trading platform.

Forex trading involves a high amount of risk, so we recommend that you educate yourself as much as possible before you start. The top brokerage services provide documentation, videos and tutorials to help you learn how to minimize your risk.

GCM is a group of elite markets traders, experienced in trading the world’s largest financial market with huge turnover volume in a day. We foresee that the future trend in the capital markets, gold futures will continually transforming and challenging world of online trading. Hence, GCM is committed and will be one of the most outstanding trading services provider in the region.

 

Price-to-earnings ratio (P/E)

A company's price-to-earnings (P/E) ratio tells you how much investors are willing to pay per unit (£1, $1, €1) of a company's earnings. For this reason, it is sometimes nicknamed the "price multiple" or the "earnings multiple."

It is calculated by dividing its market value per share by its earnings per share:

PE = Market value per share/earnings per share

For example, if a company's stock is currently trading at £40 per share, and its earnings per share have averaged £2 over the previous four quarters, its P/E ratio for the year would be 20.

This means that investors buying the stock now need to pay £20 for every £1 of earnings generated by each share.

P/E shows the desirability of the company's shares compared to other companies

The P/E ratio therefore tells us how attractive a share is relative to other shares. The higher the P/E, the more money shareholders are prepared to invest for the same £1 of earnings

This gives P/E its most important use for equity investors – it helps them decide whether a company's share is overpriced or underpriced compared with the company's real, fundamental value and with other shares in the same sector.

Caution with very high P/E figures

A high P/E ratio may indicate a share is overpriced, in which case you may decide to sell it on the expectation that its inflated price will soon collapse and it will fall back to its real value.

Conversely, a low P/E ratio may indicate that a share is underpriced or cheap, in which case you may decide to buy it on the expectation that other investors will soon become aware of its fundamental strengths and its share price will rise to its real value.

Generally, a P/E lower than 15 indicates that a company's shares are currently undervalued, while a P/E ratio higher than 20 indicates that its shares are overvalued.

Take into account the industry and size of the company

This is only a very loose rule however, as P/E ratios tend to be different based on the industry in which a company operates and on its size.

Technology companies, for example, tend to have higher P/E ratios than other sectors because their growth rates are usually higher and they give investors a higher return on equity. In contrast, utility companies tend to have a lower P/E ratio.

Consider P/E over time

Another way of using P/E ratios is to look at a company's P/E over a period of time.

If, for example, a company's P/E ratio has risen significantly higher than its historical average P/E ratio, and you cannot find fundamental reasons to justify that – for example, a hot new product – this may indicate that its shares are overpriced and now might be a good time to sell.

The same can be applied to entire sectors. If, for example, the average P/E ratio of pharmaceutical companies has dropped significantly below its historical average, and you can find no fundamental reason to explain this, it might indicate pharmaceutical shares in general are currently underpriced. This means that now might be a good time to buy pharmaceutical shares.

At this point, you could apply the P/E ratio to individual companies in the pharmaceutical sector to work out which in particular seem most underpriced.

Bear in mind that, similarly to the EPS ratio used in its calculation, the P/E ratio relies on companies reporting their earnings accurately.

It is of course possible for companies to manipulate their earnings, so the P/E ratio should never be relied on as your sole indicator before deciding whether to buy or sell a share.

Understanding different types of stock funds

There is a slew of various stock mutual funds - here are the most common categories and sub-categories.

When searching for stock mutual funds, you're going to run into all sorts of names and categories. They are usually pretty broad and sometimes misleading, but at least they give you an idea of what you are getting yourself into.

Here are some of the most common categories and sub-categories.

Value funds

Value fund managers look for stocks that they think are cheap on the basis of earnings power (which means they often have low price/earnings ratios) or the value of their underlying assets (which means they often have relatively low price/book ratios).

Large-cap value managers typically look for big battered behemoths whose shares are selling at discounted prices. Often these managers have to hang on for a long time before their picks pan out.

Small-cap value managers typically bottom fish for small companies (usually ones with market value of less than $1 billion) that have been shunned or beaten down by other investors.

Growth funds

There are many different breeds of growth funds. Some growth fund managers are content to buy shares in companies with mildly above-average revenue and earnings growth, while others, shooting for monster returns, try to catch the fastest growers before they crash.

Aggressive growth fund managers are like drag racers who keep the pedal to the metal while taking on some sizeable risk. These types of funds often lead the pack over long periods of time - as well as over short periods when the stock market is booming - but they also have some crack-ups along the way.

Growth funds also invest in shares of rapidly growing companies, but lean more toward large established names. Plus, growth managers are often willing to play it safe with cash.

As a result, growth funds won't zoom as high in bull markets as their aggressive cousins, but they hold up a bit better when the market heads south.

Consider them if you're seeking high long-term returns and can tolerate the normal ups and downs of the stock market. For most long-term investors, a growth fund should be the core holding around which the rest of their portfolio is built.

Growth-and-income, equity-income, and balanced funds

These three types of funds have a common goal: Providing steady long-term growth while simultaneously throwing off reliable income. They all hold some combination of dividend-paying stocks and income-producing securities, such as bonds or convertible securities (bonds or special types of stocks that pay interest but can also be converted into the company's regular shares).

Growth-and-income funds concentrate more than the other two on growth, so they generally have the lowest yields. Balanced funds strive to keep anywhere from 50 to 60% of their holdings in stocks and the rest in interest-paying securities such as bonds and convertibles, giving them the highest yields. In the middle is the equity-income class.

All three types tend to hold up better than growth funds when the market turns sour, but lag in a raging bull market.

All of these are for risk-averse investors and anyone seeking current income without forgoing the potential for capital growth.

Specialty and other types of funds

Rather than diversifying their holdings, sector and specialty funds concentrate their assets in a particular sector, such as technology or health care. There's nothing wrong with that approach, as long as you remember that one year's top sector could crash the following year.

They are most appropriate for investors who are interested in a particular theme - say, biotech - but want to defray some of the risk of choosing individual stocks within the sector.

Introduction To Trading Futures

Welcome to the Beginner's Guide to Trading Futures. This guide will provide a general overview of the futures market as well as descriptions of some of the instruments and techniques common to the market. As we will see, there are futures contracts that cover many different classes of investments (i.e., stock index, gold, orange juice) and it is impossible to go into great detail on each of these. It is, therefore, suggested that if after reading this guide you decide to begin trading futures, you then spend some time studying the specific market in which you interested in trading. As with any endeavor, the more effort you put into preparation, the greater your odds for success will be once you actually begin.

Important Note: While futures can be used to effectively hedge other investment positions, they can also be used for speculation. Doing so carries the potential for large rewards due to leverage (which will be discussed in greater detail later) but also carries commensurately outsized risks. Before beginning to trade futures, you should not only prepare as much as possible, but also make absolutely certain that you are able and willing to accept any financial losses you might incur.

The basic structure of this guide is as follows: we will begin with a general overview of the futures market, including a discussion of how futures work, how they differ from other financial instruments, and understanding the benefits and drawbacks of leverage. In Section Two, we will move on to look at some considerations prior to trading, such as what brokerage firm you might use, the different types of futures contracts available and the different kinds of trades you might employ. Section Three will then focus on evaluating futures, including fundamental and technical analysis techniques as well as software packages that might be useful. Finally, Section Four of this guide will provide an example of a futures trade, by taking a step-by-step look at instrument selection, market analysis and trade execution. By the end of this guide, you should have a basic understanding of what is involved in trading futures, and a good foundation from which to begin further study if you have decided that futures trading is for you.

How To Choose A Profitable Share Or Forex Currency

The decision to buy something is relatively easy.

What, specifically, to buy is an altogether different problem. Before you drive your new car home, you have to choose a certain make, a certain model, certain upholstery, a certain color scheme.

You decide between six cylinders and eight, between regular shift and automatic transmission, and say yes or no to white walls, radio, heater, and a dozen other optional extras.

So with securities. Although there are only two major categories-bonds and stocks-to select from, the variations and refinements and optional extras are as numerous as they are confusing.

For many investors, one factor may be sufficient reason to determine a choice. The man of modest means will very likely find corporate bonds at $1,000 apiece too steep and their 3 per cent interest payment too small for what he is trying to achieve.

A wealthier investor might be fascinated by the potential in common stock but find that he would obtain a greater yield from tax-exempt municipals. All investors, however, will do well to become familiar with the various kinds of securities represented in corporate capital structures in order to understand their effect on each other and their bearing on the choice he eventually makes for himself.

The corporation is an entity marvelously adapted to the requirements of all parties involved. It developed in response to the needs of the business community for funds over and beyond its own resources to enable it to build, expand, and grow.

The basic, one-celled form of business life is the individual entrepreneur-the store owner who merchandises goods, the artisan supplying services, the small manufacturer-whose capital needs are met out of savings or through a modest bank loan.

Somewhat more complex is the partnership, the pooling of the resources of several individuals to share in a joint venture. Presumably the credit of the group is somewhat stronger than that of the individual. The partners also assume responsibility for management of their company, participate in all profits accruing, and are legally liable for all debts outstanding.

As long as firms remain relatively small, either type of organization is adequate. As opportunities for expansion present themselves, however, when new plant and equipment are required, when greater amounts of raw materials must be stockpiled, and branch offices and distributors underwritten, and personnel increased, the individual and the partners are hard pressed. Their surplus generally is too small, their normal lines of credit too limited to do the job.

Enlargement of the partnership is no answer. Outside investors willing to take on the mutual responsibilities of partnership, or to immobilize their funds in a partnership agreement, are hard to come by. In any event, the range of financial needs at this stage usually is so great that only by increasing the partnership to ridiculous proportions could they be met.

The solution? A public stock corporation. Ownership thereby is spread among as many hundreds or thousands of people as are willing to buy in, their proportional part of the firm being represented by the amount of stock or number of shares they hold. Their reward is likewise a proportional share of their firm's profits.

Their control is exercised through the board of directors they elect. And because their stock is a standardized, known quantity-and because there are stock exchanges they can readily withdraw from the company and sell their piece of ownership to someone else.

The corporation, once established and in being, is an impersonal thing of indeterminate duration. Directors and officers may come and go, investors may buy in and sell out, but the corporation has a momentum and life force which may enable it to run on indefinitely.

With the Forex picking one currency against another is also similar, but you have the benefit of using Forex software to help you nowadays which can sometimes be downloaded free.

Tips for trading in a bear market

A bear market is a market where stock prices are continually falling. A bear market represents the bearish attitude of investors who are pessimistic about the future of the economy. When investor sentiment is bearish trading the stock market is not as easy as trading it when there is a bull market. There are really only two ways to trade a stock bear market and one of them is not to take any notice of share market tips and continue purchasing stock as if you were in a bull market. The two ways to trade in a bear market is to either short sell stock or use an option strategy to protect your existing portfolio of stock.


What is short selling? When you buy a stock you essentially are buying or owning a piece of the company you have the stocks in. You do this through a stock broker or on rare occasions directly through the company. Buying and selling shares through a broker requires that you open an account with the broker which can either be a cash account (you pay cash for your purchases of stock) or a margin account (you borrow some of the funds required to buy the stock from the broker and the stock you bought is collateral for the broker).

When you short sell you are actually selling a stock that you don’t own, but that you promise to deliver at a later date in the future. What happens is that when you short sell your stock your broker will actually loan the stock to you, either by taking it from their holding inventory, or from another customer of the firm or from another broker house. The stock is sold for you and the funds from the sale are credited to your cash or margin account with the broker. The idea of course is that you believe that the price of the stock will fall, maybe from a market tip, or you have done your research and come to the conclusion that the stock will lose value and at a later stage you can buy back the stock at a lower price than what you sold it for and make a profit. To close out the short sell you have to buy back exactly the same amount of stock you originally sold. Of course if the stock price has risen you will lose money.


You can actually hold a short position for as long as you want, however, the broker will charge you interest for the duration of time you short. Also because you don’t possess the stock that is on loan to you and then you sold, you are obliged to pay the owner of the stock any dividends or rights issues which have occurred while borrowing the stock. Furthermore, if there is a stock split during the period you are borrowing the stock, you will owe more shares at a lower price.

The second way to trade in a bear market is to protect your portfolio by buying put options on the stock you hold. You will need to make sure the puts expiry dates are beyond the date of when the stock price falls. This strategy has a downside which is limited to the premium paid and can be very rewarding when the stock price falls.

The 5 Best Ways to Invest in Gold

The ultimate dollar hedge investment will always be gold. Investing in gold through ownership of the metal itself, mutual funds, or gold mining stock provides the most direct counter to the dollar. As the dollar falls, gold will inevitably rise. In a moment, we’ll provide you with many ways for positioning your portfolio to profit from a bull market in gold. For now, we emphasize the high probability of gold’s future. The real potential for profits in the coming years and decades is not going to be found in the traditional American blue chip industry. That is a financial dinosaur that can no longer compete in the world market.

The future growth is going to be seen in gold. The world economy may remain off the gold standard, but ultimately the tangible value of gold as the basis for real value-whether acknowledged by central banks or not-will never change. Historically, this has always been the case, and it always will be. In other words, we are on a “gold standard” in spite of the popularity of fiat.

You have many choices.

In the following paragraphs, you’ll discover five ways to invest in gold. Based on your level of market experience and familiarity with products, one of these will be appropriate for you.

1. Direct ownership. There is nothing like gold bullion, the ultimate expression of pure value. Historically, many civilizations have recognized the permanence of gold’s value. For example, Egyptian civilizations buried vast amounts of gold with deceased pharaohs in the belief that they would be able to use it in the afterlife. Great wars were fought, among other reasons, to pillage stores of gold. Why the allure? The answer: Gold is the only real money, and its value cannot be changed or controlled by government fiat-the underlying reason for governments to go off the gold standard, unfortunately.Gold’s value will rise based on the pure forces of supply and demand, no matter what Mr. Greenspan decrees regarding interest rates or greenbacks in circulation. The big disadvantage to owning gold is that it tends to trade with a wide spread between bid and ask prices. So don’t expect to turn a fast profit. You’ll buy at retail and sell at wholesale, so you’ll need a big price jump just to break even. However, you should not view gold as a speculative asset, but a defensive asset for holding value. Since your dollars are going to fall in value, gold is the best place to preserve value. The best forms for gold ownership are through minted coins: one-ounce South African Krugerrands, Canadian Maple Leafs, or American Eagles.

2. Gold exchange-traded funds. 

The recent explosion in exchange traded funds (ETFs) presents an even more interesting way to invest in gold. An ETF is a type of mutual fund that trades on a stock exchange like an ordinary stock. The ETF’s exact portfolio is fixed in advance and does not change. Thus, the two gold ETFs that trade in the United States both hold gold bullion as their one and only asset. You can locate these two ETFs under the symbol “GLD” (for the streetTRACKS Gold Trust) and “IAU” (for the iShares COMEX Gold Trust). Either ETF offers a practical way to hold gold in an investment portfolio.

3. Gold mutual funds. For people who are hesitant to invest in physical gold, but still desire some exposure to the precious metal, gold mutual funds provide a helpful alternative. These funds hold portfolios of gold stocks-that is, the stocks of companies like Newmont Mining that mine for gold. Newmont is an example of a senior gold stock. A senior is a large, well-capitalized company that has been around several years and has a profitable track record. They tend to own established mines that produce known quantities of gold each year. For many investors, selection of such a company is a more moderate or conservative play (versus picking up cheap shares in fairly young companies).

4.  Junior gold stocks. This level of stock is more speculative. Junior stocks are less likely to own productive mines, and may be exploration plays-with higher potential profits but also with greater risk of loss. Capitalization is likely to be smaller than capitalization of the senior gold stocks. This range of investments is for investors whose risk tolerance is broader, and who accept the possibility of gold-based losses in exchange for the potential for triple-digit gains.

5.  Gold options and futures. 

For the more sophisticated and experienced investor, options allow you to speculate in gold prices. But in the options market, you can speculate on price movements in either direction. If you buy a call, you are hoping prices will rise. A call fixes the purchase price so the higher that price goes, the greater the margin between your fixed option price and current market price. When you buy a put, you expect the price to fall. Buying options is risky, and more people lose than win. In fact, about three-fourths of all options bought expire worthless. The options market is complex and requires experience and understanding. To generalize, options possess two key traits-one bad and one good. The good trait is that they enable an investor to control a large investment with a small, and limited, amount of money. The bad trait is that options expire within a fixed period of time. Thus, for the buyer time is the enemy because as the expiration date gets closer, an option’s “time value” disappears. Anyone investing in options needs to understand all of the risks before they spend money. The futures market is far too complex for the vast majority of investors. Even experienced options investors recognize the high risk nature of the futures market. Considering the range of ways to get into the gold market, futures trading is the most complex and, while big fortunes could be made, they can also be lost in an instant.

We cannot know, predict, or even guess, when the demise of the dollar is going to occur, or how quickly it will take place. But we do know it is going to occur. The tragic mismanagement of monetary policy by the Fed over many years has made this inevitable.

Removing the U.S. monetary system from the gold standard was not merely a decision of short-term effect. Nixon may have seen the move as a means for solving current economic problems, but it had long-lasting impacts: trade deficits, growing federal debt, and the ability to print money endlessly and build a new credit-based economy. Internationally, the decision by the United States virtually forced all other major currencies to also go off the gold standard.

Any investor who views the economic situation broadly-both domestically and internationally-can see that trouble lies ahead. We have delayed the inevitable because China is a partner in our monetary woes.

The Chinese are building their own debt on the dubious foundation of the U.S. dollar, and other Asian economies have been forced to go along for the ride. When the dollar falls, many other countries will suffer as well. The offset, logically, is found in commodities. Investing in oil stocks makes sense, for example, because the price of oil is rising and as it becomes more difficult to drill oil those companies that own drilling and exploration operations will benefit. It makes sense to invest in other commodities as well.

The tangible asset play is clearly where future value is going to lie. With China’s never-ending need for coal, iron ore, tungsten, copper, oil, and other metals, the future of tangible markets is the bright spot in the gloomy financially based economics of the world.

Leading the charge is gold. It is ironic that monetary policy follows a predictable pattern.

Governments overprint money and their currency crashes. Inevitably, they always return to gold, but often at great expense and with considerable suffering. We find ourselves in another one of those moments in time where irresponsible monetary policy has put us at risk. But we don’t have to simply hold on and wait for the demise of the dollar; we can take action now because that demise is great for your portfolio-if you position yourself in tangible assets rather than in empty fiat promises and the bizarre economic premise of U.S. monetary policy.

Goods and services can be paid for only with goods and services. Currency is nothing but an IOU, a promissory note that is not backed up with any tangible value. Once we reach our national credit limit, monetary policy will be forced to retreat. When that happens, traditional investors and their savings accounts are going to be hit hard. The beneficiary of the falling dollar will be the investor whose holdings emphasize tangible value of goods: resources and precious metals.

Every danger to one group of people is invariably an opportunity to another. It all depends on where you position yourself. Those investors positioned in dollar-based investments are going to suffer the loss of purchasing power when the dollar’s value disappears. Those who have moved their investments to higher ground will benefit from the change.

Methods of Forex Trading

Forex trading is one of those things that can seem really subjective. Everyone has their own preferences on how to get the job done. I don't think I can say for sure that there is an absolutely right way, but there is many wrong ways.

As a trader, your method has to be something that makes sense on paper, and when you are trading live. If you want to make money trading forex, there is more than one way to skin a cat.

Scalping

This is one of my least favorite methods. Scalping is when you are basically just trying to scrape a few points here and there. It can seem easy if you manage to be successful at it for awhile, but it tends to be a method of luck, meaning you can lose just as easily as you can win. There isn't much rhyme or reason to it.

The Forex Daytrading Method

Along with scalping, daytrading is one my personal least favorites. There are people that do like to be tied to a screen all day and make money while trying to make intraday trades. Day trading is typically technical trading that is based on technical indicators and occasionally some news. It requires some reasonable amount of skill, that usually has to be learned with experience. If you are just beginning to trade forex, day trading probably isn't for you unless you start very small with your lot sizes.

Big Picture Forex Trading

Big picture trading is looking at the larger charting timeframes. Looking at currency pairs over days or weeks and trading the trend of those timeframes. This is one of my favorite methods because you aren't left hinging on every pip up or down. You work over many days, or months and set big targets and wide stops. You still need to trade small as a beginner, particularly because on these charts moves can be thousands of pips, so you need to plan accordingly. However, the movement is so slow that it lessens the emotion if you are trading with care.

Automated Forex Trading

There are several different ways to do automated forex trading. You can depend on signals given by a signal provider or simply run an expert advisor on an install of metatrader that trades based on preprogrammed signals. I don't personally care much for automated trading as it's pretty difficult to find a good system that survives in most market environments. I consider automated trading something that is good as an alternative strategy that you run alongside your real trading strategy. If you plan on engaging with automated forex trading, make sure to keep it a small part of your trading plan. Don't wager large amounts on software with a slick sales page. Unless you've seen results for yourself, nothing is guaranteed.

No matter how you plan to trade, you need to keep your emotions in check, watch your risk, and be honest with yourself when you are having trouble. Even professional traders don't like to admit when they are having a losing streak, or what is causing it, but it only hurts your bottom line when you don't face problems. That's a bit of a general business principle, but it strongly applies to trading.

Forex trading will eat you up and spit you out if you don't handle yourself and your trades properly.

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How To Make, And Keep, Money Trading Stocks

If you are serious about making and keeping money by trading stocks, then there are three things you need to do, and do well.

• Money management 
• Orders 
• Trading system

Money management

Money management comes first. Without a rock-solid method of managing your trading funds, you trading results will be only be fair at best. Money management is more than just knowing how much money you have tied up in a trade. It's a method of using the right portion of your trading account on any one trade relative to the perceived risk and reward.

There are a few things to consider to managing a trade successfully:

What is your account size? 
Your account size determines how long you stay in the trading game. If you are skillful, then you will not require a large account. On the other hand, even if you are a new trader, you can use a small account as long as you control your risk.
Controlling the risk means never using more money then you need on any one trade. A very simple formula for stock market success is to risk less than 3% of your total account value on a single trade.

If you have a $10,000 account, this means you never lose more than $300 per trade. If your account drops to $9,000, then you risk less than $270.

As your account grows, while the total amount at risk increases, you still only risk a maximum of 3% of your account. Say your account is at $12,000, then your maximum amount at risk is $360.

In theory, this ensures that you never go broke! And that is of utmost importance.

How profitable is your trading system? 
If your system is profitable, then you will typically win more money then you lose. While some consider the percentage of winners relative to the number of losers, nothing could be further from the truth.
It doesn't do you any good to have a system that wins on nine out of very ten trades if you give all of your gains back on the one loser. More important is that the winners overwhelm the losers.

A profitable trading system might have a third of the trades result in the maximum loss planned for, a third of the trades either make or lose a little money, and a third of the trades bring in the profits.


What is the initial amount at risk on a per share basis? 
It's worth repeating, risk no more than 3% of your total account value on any one trade. If you keep this in mind, you are ensured of minimizing losses to your account. At what price you enter a stock and where you place your initial stop price are used to determine how many shares you trade. 
What is the profit potential?
The profit potential of a system is the 'edge'. If you can estimate how much money you *might* make over time, and if that profit comes from many trades over time, then you probably have a winning system.
A trading system will either have a profit target that determines when to enter AND exit (good) or it will tell you when to enter and keep you in a profitable trade as long as possible without giving back much, or any, gains (better).

Orders

No matter what trading pattern you use to enter a stock, you will make the most money by using the correct orders.

When you wait until a stock has proven it's intensions - typically by trading above the previous day's high for a buy, or below the previous day's low for a sell short - then having an order in place that captures that exact price is crucial.

Let's say your favorite trading pattern signals a buy for. If you are an end of day trader, then the next morning you watch the opening price for the stock. If the stock opens less then yesterday's high, you place a stop order to buy above the previous day's high. Even better is to include a limit price with that buy stop order.

How much above the previous day's high is your call. As long as it is greater than the previous day's high, you are making the stock prove that it is going up.

Sure, you give up some of the profit potential. But you are more likely to turn a profit with a stock that is moving in your favor.

Once you are in a position, then you need to protect yourself from loss. If your method of picking stocks is good, then it's unlikely that the stock will revisit the current prices. Continuing with the buy example, to protect your account from a catostrophic loss, place a good-till-cancel sell stop order below the recent low. If yesterday's low is lower then the current day's low, that's where the sell stop order goes.

And make certain that the order does not include a limit. Stocks can and do gap down. Expecting that you will have a sell order filled at your stop price is a quick way to the poor house.

Trading system

Your choice of what method to enter and exit stocks plays a critical part in your stock market sucess.

A great trading system looks for low risk opportunities to enter a stock. Knowing at exactly what price signal to enter and when to exit - even if it is for a small loss - will keep your account growing. As long as you consistently follow the rules layed out by a well designed trading plan, you can count on steadily growing your trading account.

My favorite trading pattern does a great job of identifying stock likely to move rapidly in your favor. There is no reason to be trading stocks that are not ready to deliver the biggest gains in the least amount of time.

If you are serious about taking your stock trading to a higher level, then read about this trading pattern.