How To Invest in Global Markets

Global Investing Trading

Today I’m writing about long term investing trading the global growth trend. Two very significant country economies going forward are China and India. Chindia as some call it, comprises about two billion people, and the surrounding areas of Asia and the Middle East are very significant also. The growth moving forward long term in these areas is exponential that was has happened in the past, and a great opportunity for anyone around the world to benefit from.

ADR – Advance Depository Receipt

One great way to invest in global growth is through Foreign stocks listed on the NYSE and Nasdaq stock exchanges as ADR’s or what’s called Advance Depository Receipts. Today with online trading access anyone from any country can open an investing trading account with a number of different brokers from around the world and invest and trade in global growth companies. Of course locals in their respective countries may choose to invest trade direct with their local brokers and exchanges, but also have the choice of an account with an international broker too. Direct investment in foreign companies on foreign exchanges through foreign brokers may or may not be available to foreign investor’s traders. Check with a broker from the country you’re interested in investing trading whether you qualify to open a investment trading account that specific country.

The Most Liquid Financial Market in the World

Another very good market to be invested trading in is the forex or currency market. With its 24 hours a day 5 day a week market, buy or sell in the most liquid financial market in the world. Forex involves high leverage and risk. The first major factor to understand and implement is the amount of leverage you’re using and understand its profit loss consequences, or what is called risk management. Simple to learn and once implemented now you can fine tune the amount of leverage you’re using creating low-risk high-reward returns of 3:1 plus profilt/loss ratios. Managing your leverage and only entering investments or trades with 3:1 plus profit/loss ratios or another term reward/risk ratio. With a disciplined risk management system such as this, you will have smaller losses and much bigger winners providing sustainable strong long term returns. The more active you are in managing and always fine tuning your portfolio income, the more potential you have in earning above average returns.

New Economy Low-Risk High-Reward Profitability

The greatest thing of the new millennium is the availability of online practice demo investing trading systems for stocks, options, forex, and futures. Trading the live markets with fake money to practice and hone your investing trading skills. I called it interactive new school financial intelligence old school never taught. I learned this way as many others have also. Now there’s no more need to aimlessly throw real money at the market and lose because you don’t know what’s going on. You do the practice losing first with fake money, then you go with your real money after, when you feel confident enough to do so.

Institution Program Trading – Small Investor Trader Automated Trading

Also another new investing trading innovation today is automated trading computer programs. Wallstreet has been using computer program trading for decades. Automated program trading is now available and very affordable for small investors and traders too. I highly recommend to investigate and use these very disciplined low-risk high-reward stock and forex auto trade programs. They produce phenomenal low-risk high-reward returns once implemented, fine tuned, monitored and managed.

Global Financial Opportunities

The opportunity for anyone in any country with even small amounts of investing money has the ability to invest and trade in the global financial markets now. Globalization is here providing a multitude of low-risk high-reward investment and trade opportunities. Start with knowledge, set dated investment trading goals, have an investing trading plan, execute that plan or plans with discipline, and benefit with better than average returns in the long term.

Good day, good investing and trading for your financial freedom future!

Foreign Exchange Risk and Benefits

The Good and the Bad 

We already have mentioned that factors such as the size, volatility and global structure of the foreign exchange market have all contributed to its rapid success. Given the highly liquid nature of this market, investors are able to place extremely large trades without affecting any given exchange rate. These large positions are made available to forex traders because of the low margin requirements used by the majority of the industry's brokers. For example, it is possible for a trader to control a position of US$100,000 by putting down as little as US$1,000 up front and borrowing the remainder from his or her forex broker. This amount of leverage acts as a double-edged sword because investors can realize large gains when rates make a small favorable change, but they also run the risk of a massive loss when the rates move against them. Despite the foreign exchange risks, the amount of leverage available in the forex market is what makes it attractive for many speculators. 

The currency market is also the only market that is truly open 24 hours a day with decent liquidity throughout the day. For traders who may have a day job or just a busy schedule, it is an optimal market to trade in. As you can see from the chart below, the major trading hubs are spread throughout many different time zones, eliminating the need to wait for an opening or closing bell. As the U.S. trading closes, other markets in the East are opening, making it possible to trade at any time during the day. 

While the forex market may offer more excitement to the investor, the risks are also higher in comparison to trading equities. The ultra-high leverage of the forex market means that huge gains can quickly turn to damaging losses and can wipe out the majority of your account in a matter of minutes. This is important for all new traders to understand, because in the forex market - due to the large amount of money involved and the number of players - traders will react quickly to information released into the market, leading to sharp moves in the price of the currency pair. 

Though currencies don't tend to move as sharply as equities on a percentage basis (where a company's stock can lose a large portion of its value in a matter of minutes after a bad announcement), it is the leverage in the spot market that creates the volatility. For example, if you are using 100:1 leverage on $1,000 invested, you control $100,000 in capital. If you put $100,000 into a currency and the currency's price moves 1% against you, the value of the capital will have decreased to $99,000 - a loss of $1,000, or all of your invested capital, representing a 100% loss. In the equities market, most traders do not use leverage, therefore a 1% loss in the stock's value on a $1,000 investment, would only mean a loss of $10. Therefore, it is important to take into account the risks involved in the forex market before diving in. 

Differences Between Forex and Equities 

A major difference between the forex and equities markets is the number of traded instruments: the forex market has very few compared to the thousands found in the equities market. The majority of forex traders focus their efforts on seven different currency pairs: the four majors, which include (EUR/USD, USD/JPY, GBP/USD, USD/CHF); and the three commodity pairs (USD/CAD, AUD/USD, NZD/USD). All other pairs are just different combinations of the same currencies, otherwise known as cross currencies. This makes currency trading easier to follow because rather than having to cherry-pick between 10,000 stocks to find the best value, all that FX traders need to do is "keep up" on the economic and political news of eight countries. 

The equity markets often can hit a lull, resulting in shrinking volumes and activity. As a result, it may be hard to open and close positions when desired. Furthermore, in a declining market, it is only with extreme ingenuity that an equities investor can make a profit. It is difficult to short-sell in the U.S. equities market because of strict rules and regulations regarding the process. On the other hand, forex offers the opportunity to profit in both rising and declining markets because with each trade, you are buying and selling simultaneously, and short-selling is, therefore, inherent in every transaction. In addition, since the forex market is so liquid, traders are not required to wait for an uptick before they are allowed to enter into a short position - as they are in the equities market. 

Due to the extreme liquidity of the forex market, margins are low and leverage is high. It just is not possible to find such low margin rates in the equities markets; most margin traders in the equities markets need at least 50% of the value of the investment available as margin, whereas forex traders need as little as 1%. Furthermore, commissions in the equities market are much higher than in the forex market. Traditional brokers ask for commission fees on top of the spread, plus the fees that have to be paid to the exchange. Spot forex brokers take only the spread as their fee for the transaction. 

Risk Control

Controlling risk is one of the most important ingredients of successful trading. While it is emotionally more appealing to focus on the upside of trading, every trader should know precisely how much he is willing to lose on each trade before cutting losses, and how much he is willing to lose in his account before ceasing trading and re-evaluating.

Risk will essentially be controlled in two ways:

1. by exiting losing trades before losses exceed your pre-determined maximum tolerance (or "cutting losses").
2. by limiting the "leverage" or position size you trade for a given account size.

Cutting Losses

Too often, the beginning trader will be overly concerned about incurring losing trades. He therefore lets losses mount, with the "hope" that the market will turn around and the loss will turn into a gain.



Almost all successful trading strategies include a disciplined procedure for cutting losses.  When a trader is down on a positions, many emotions often come into play, making it difficult to cut losses at the right level. The best practice is to decide where losses will be cut before a trade is even initiated. This will assure the trader of the maximum amount he can expect to lose on the trade.

The other key element of risk control is overall account risk. In other words, a trader should know before he begins his trading endeavor how much of his account he is willing to lose before ceasing trading and re-evaluating his strategy. If you open an account with $2,000, are you willing to lose all $2,000?  $1,000? As with risk control on individual trades, the most important discipline is to decide on a level and stick with it.Determining Position Size

Before beginning any trading program, an assessment should be made of the maximum account loss that is likely to occur over time, per lot. For example, assume you have determined that your worse case loss on any trade is 30 pips. That translates into approximately $300 per $100,000 position size.  Further assume that the $100,000 position size is equal to one lot.  Five consecutive losing trades would result in a loss of $1,500 (5 x $300); a difficult period but not to be unexpected over the long run. For a $10,000 account trading one lot, this translates into a 15% loss.  Therefore, even though it may be possible to trade 5 lots or more with a $10,000 account, this analysis suggests that the resulting "drawdown" would be too great (75% or more of the account value would be wiped out).

Any trader should have a sense of this maximum loss per lot, and then determine the amount he wishes to trade for a given account size that will yield tolerable drawdowns.

Valuation Of Stocks

Stock Investments yield very good returns when played correctly. If you are starting to trade stocks you will make good money. When you begin trading, you will have list of stocks that you can buy. Most investors who make money in stock market turn to value investing. Value Investing is when you buy stock for the value it has and not the cheap price point.

In this article you will get to learn about various techniques to measure value of a stock. There are two kinds of Valuation Techniques. We will begin our study with Fundamental Valuation. This technique is used to understand a stock price. You can either work with these techniques or just look at supply and demand to derive the value. The second way is a short term way and will not work if you want to work long term in the stock market.

Some valuation techniques:

* Earning per share: Simply put, EPS is total net income of a company divided by the total outstanding shares. You should look at EPS number derived using both GAAP principles and Pro Forma also. When companies report EPS using GAAP they may take earnings multiple times while in other number, each earning is taken just one time. You can compare EPS numbers from past to see growth and then see which companies deliver better returns and are good enough to buy.

* Price to earning ratio: To calculate P/E ratio, just divide the per share price by the EPS figure calculated above. You should compute both historical as well as forward ratios for this number. To calculate past P/E numbers, you can use the EPS number for last four quarters or last 4 years. Forward pr future earning numbers are calculated to measure future earnings. Remember one thing that stock price measures future earning not the past earning. Past earning is merely an estimate as to what could be the future earning.

* Rate of growth of a company: Rate of growth of a company impacts valuation a lot. You can begin by looking at he growth in sales , top line and bottom line of a company over span of last four or five years. Companies regularly give growth guidance, you can listen or read that press release and get ideas as to what is the comp0any looking at.

* Earnings Before interest, taxes, depreciation and amortization or EBITDA: This is a good measure of cash flow of the company. It will tell you how is the cash utilized and cash position. It works well with public as well private companies. You can get hold of income statement of a company and then calculate the EBITDA. This ratio can be used to compare various companies also.

There are more ratios that can be used to study a stock further. These ratios discussed should be a good starting point when you start looking for a company to invest your money. If you want to make quick money in stocks, you need to pick very carefully. Working with financial ratios will help you make good picks and make money by trading these stocks.

The Time For Short Duration Bonds Is Now

As the economy imploded back in 2008/2009, the Federal Reserve did everything it could to reignite growth. That included sending short term interest rates down to the basement for the last five years or so. In order to get any sort of real yield in the current low rate environment, investors have been forced to go out on the maturity ladder and into longer-dated bond funds like the iShares 20+ Year Treasury Bond (NYSE:TLT).

That’s kind of a big problem.

With the central bank now tapering its quantitative easing programs and new Fed chairwomen Janet Yellen hinting that a bump upwards in short term rates could be near, longer-dated bond holders are in for a world of hurt. Luckily, there are ways to shorten your duration and prevent some of the potential losses when interest rates rise.

Going Short Is Key

Giving her first testimony as the head of the Fed, Janet Yellen gave investors a bit of a surprise- higher interest rates could be around the corner and much sooner than many analysts had predicted. Overall, Yellen predicts the Fed could do an initial rate increase as early as spring of 2015, as the economy improves. That statement was echoed by several other Fed board members. Many investors had pegged that a rate increase wouldn’t come until 2016 at the earliest.

While that increase to short-term interest rates is actually a good thing- meaning the economy is finally moving in the right direction- they can cause some unpleasant side effects for fixed income seekers. Bond prices are inversely correlated with the direction of interest rates. That essentially means as interest rates rise, bond prices will fall.

And for those investors looking at long-dated bonds, that fall is going to be felt even harder.

That’s because a bond’s duration is a key factor in determining its gains and losses. Duration is a way to measure a bond’s price sensitivity to interest-rate movements. The longer the duration, the worse the drop. For example, if interest rates were to rise by 1%, a bond fund- like the uber-popular Vanguard Total Bond Market ETF (BND) and its average duration of 10 years- would see its price fall by about 10%. Meanwhile, a similar investment with a one-year duration might only decline only 1%.

And given that the Federal Reserve is going to be raising rates very soon, investors holding long duration bonds are going to get killed. The sheer thought of rising interest rates sent the Barclay's 10-30 Year Treasury Index- with a duration of about 16 years- down about 13% last year.

Shortening-Up

Investors who hold positions in “core” bonds funds like the iShares Core Total US Bond Market ETF (ARCA:AGG) should think about lightening up their duration exposure by adding a swath of short duration bonds. There are plenty of ways to do just that courtesy of the ETF boom.

For those looking for the safety and high credit quality of Treasury Bonds, the Schwab Short-Term US Treasury ETF (Nasdaq:SCHO) could be a prime place to start. The ETF tracks 49 treasury bonds and its underlying index has a low duration of only 1.9 years. That will help it survive as interest rates rise. Also helping the fund is its low expense ratio of only 0.08%. That helps SCHO provide a little extra yield versus rival funds like the PIMCO 1-3 Year US Treasury Index ETF (NYSE:TUZ). Albeit, yields are still pretty paltry.

For investors still looking for more income, short term corporate bonds could be the answer. Schwab and Vanguard’s commitment to low cost funds makes them top buys in their respective sectors. The Vanguard Short-Term Corporate Bond ETF (Nasdaq:VCSH) holds over 1,600 corporate bonds, including New York based companies like telecom giant Verizon (NYSE:VZ) and investment bank Citigroup (NYSE:C). That breadth of holdings, along with a low duration of 2.8, makes it a prime corporate bond play. Likewise, the SPDR BarCap ST High Yield Bond ETF (Nasdaq: SJNK) can be used to bet on corporate issuers with less than stellar credit ratings.

Finally, for those investors looking to hide out in cash as rates rise, the actively managed ETF duo iShares Short Maturity Bond (Nasdaq:NEAR) and PIMCO Enhanced Short Maturity ETF (Nasdaq:MINT) make ideal plays. Both hold a mixture of emerging and developed market government, corporate and mortgage-related short-term investment-grade debt. Both funds should be able to capture rising interest quicker as their durations are both less than a year.

The Bottom Line

While the specter of rising interest rates has been haunting the markets for years now, it seems that fear is finally coming true. The recent Fed tapering agenda, along with comments made by key central bank officials, both indicate that interest may be heading higher sooner rather than later. Given that scenario, the time for bond investors to get short is now. The previous picks- along with funds like the Guggenheim Enhanced Short Duration ETF (NYSE:GSY) –make ideal selections to shorten up their duration exposure.

Economic Indicators That Affect The U.S. Stock Market

For investors, simply investigating a company’s cash flows, sales, debt loads and other vital statistics may not be enough to understand the firm’s outlook and future. Various outside influences have a big effect on your portfolios returns - even if things are going swimmingly for your stock. Various economic indicators and forces could, and do, impact just how well your portfolio performs.


While a degree in economics isn’t necessary, understanding how these various economic measurements influence investment returns is a vital lesson for investors. Having knowledge of these basic concepts can mean the difference between big gains or a hefty portfolio loss.

Gross Domestic Product (GDP)

Commonly used as a general gauge of economic health for a nation, Gross Domestic Product, or GDP, can be a huge influence on your investment returns. Basically, GDP is the total amount of services and goods produced in a given country’s borders. This includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.


As you would expect, this measurement of a nation’s economic health has a huge effect on stock market returns. Any significant change in GDP- up or down- usually has a significant effect on the direction of the stock market. For example, when an economy is healthy and growing, it is expected that businesses will report better earnings and growth. Obviously, these sorts of higher profits please investors of all stripes and will push them into equities. At the same time, lower GDP measurements can have the opposite effect on stock prices as businesses begin to suffer.


A prime example of this was during the recent Recession. As U.S. GDP fell and contracted, broad stock market indexes - like the SPDR 500 S&P - sank to decade lows.

Unemployment Rate/Jobs Report 

Another very strong indicator that affects the stock markets is the unemployment rate. Like GDP, rate of employment illustrates the development and the strength of the economy. The Jobs Report is reported monthly by the U.S. Bureau of Labor Statistics and accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States. The statistic is used to assist government policy makers and economists in determining the current state of the economy and in predicting future levels of economic activity.


Investors follow this number closely as well. The Jobs Report and unemployment rates are critical measures of an economy’s overall health. Essentially, more people with jobs equates to higher economic output, retail sales, savings and corporate profits. As such, stocks generally rise or fall with good or bad employment reports, as investors digest the potential changes in these areas.

The Consumer Price/ Produce Price Indexes

The cold hand of inflation could also be a real bear on portfolio returns. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) measure the price changes of baskets of goods. The Consumer Price Index points out the average change in the price of consumer goods and services across more than 200 different categories. The data contains prices for homes, energy, food and medical items that people use on a daily basis, while the Producer Price Index (PPI) tracks the average price of over 10,000 commodities that companies will use to transform into finished goods.


For investors, periods of high consumer and producer inflation can spell the death knell for corporate profits. Higher consumer prices for basic goods can mean that there won’t be any leftover money to buy discretionary items, like Starbucks lattes. At the same time, higher PPI numbers could prevent a firm from expanding or hiring more workers, as the cost of producing goods increases. The stock market can rise or fall based on the signals these two indicators provide.

Retail Sales 

Finally, with retail sales accounting for up to 70% of the United States GDP, the monthly measure of consumer confidence and actual retail sales data is of utmost importance. Any period of extended drop-offs in retail spending - especially around seasonal highs, like Christmas - can trigger a downturn in the economy by lowering tax receipts to the government and forcing companies to reduce head counts due to decreasing profits.


Additionally, the retail sales report is one of the timeliest as it provides data that is only a few weeks old. Individual retail companies often give their own sales figures around the same time per month, and poor reports from these companies can trigger sell-offs across the entire spectrum as investors fear a stock decrease.

The Bottom Line 

There are far more influences on stock holdings than just sales, earnings and debt measures; various changes in the economy can affect portfolios, as well. The smart investor knows to keep an eye on all indicators, economic and otherwise, that can signal a change in the markets. The previous measures are just some of the economic data that can be used to help shape a macroeconomic picture of the economy.

Why managed funds?

Inside this Managed Funds Smart Guide

Step 1: Why managed funds?
Step 2: Types of funds
Step 3: Choosing a fund
Step 4: Fees
Step 5: How to invest
Step 6:Find A Managed Fund

Not everyone has the time and resources to build a diverse investment portfolio and keep a close eye on it. That's where managed funds come in.

Managed funds allow you to pool your money with other investors so you can all invest in assets that might otherwise be out of your reach.

On your own, you might have sufficient funds to make a worthwhile investment in one or two stocks; together with other investors in a managed fund, you'll gain exposure to a whole range of assets. And professional fund managers will manage these investments for you.

There are various types of managed fund. Some focus on one particular asset class, such as property. Others invest in a combination of assets - across shares, property, bonds and cash.

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When you buy into a managed fund you buy 'units' of equal value in the fund. If the value of the assets owned by the fund rises, then so too does the value of your units. If the value of the investments falls, then so too does the value of your units.

In addition, profits from the sale of fund assets, such as shares, and income generated by assets are passed on to unit holders in the form of 'distributions'. These distributions are in some ways the equivalent of receiving dividends on shares.

The attraction of managed funds is diversification (see Building Wealth). If you want to invest in shares but only have $1000, you'll really only be able to invest in one company - leaving you overly exposed to the fortunes of that business.

But invest that money in a share fund and you'll gain an interest in 10, 20 or even 50 Australian or international companies.

The same applies to property trusts. You might want to include real estate in your portfolio but can't afford to buy an investment property yourself. Instead, you could invest in a property trust, gaining exposure to shopping centres, city office blocks, warehouses or hotels, depending on the fund's focus.

Investing in a managed fund also gives you access to the expertise of professional fund managers, who should have better research and deeper knowledge of the markets in which they specialise. Apart from anything, they work full-time in investing, while you may not be able to devote much time to a portfolio.

Of course, you won't have complete control over where your money is invested - those decisions are made by the fund manager. But with thousands of managed funds to choose from, you should be able to find one that reflects your risk profile and closely mirrors the choices you might have made yourself.

In addition to their other benefits, many managed funds also offer the convenience of savings plans, which can be a way of easing yourself into the market with limited resources.

After investing an initial lump sum - as low as $1000 in some cases - a savings plan allows you to contribute a set, smaller amount each month (say, $100).

This also gives you the benefit of 'dollar cost averaging'. In the months when the unit price is low, you'll get more units for your $100; in the months when the unit price is high, you'll buy fewer (though you'll enjoy the capital gain).

In theory, if you average out what you paid for your units across the year, the fluctuations should largely be ironed out.

Tip:

Managed funds are also sometimes called unit trusts, in reference to the legal structure used by managed funds. Another term you'll come across is 'managed investment'. That's a broader term, also covering investments such as solicitors' mortgages.

When Should You Make A Short Sale?

Since the success of a short sale depends on the price of the shorted security going into speedy decline in a relatively short span of time, you should consider making a short sale in the following circumstances:

• Bearish trend is developing rapidly – To improve the odds of success on your short trade, the best time to go short is when there is strong evidence that a bearish trend is developing rapidly in a sector or market. While a decline of 20% in a broad index like the Dow Jones Industrial Average or S&P 500 is typically viewed as a bear market, even a drop of 10% is sufficient to set alarm bells ringing for most market participants.

• Fundamentals are deteriorating – This can mean a significant miss on the top line or bottom line for a company, or a string of unexpectedly weak economic data for a broad market index. However, before initiating the short sale, you must ascertain whether sudden signs of weakness are due to a one-off event or are indicative of a deeper malaise; a short sale may be appropriate in the latter case but not in the former. Thus, if a company reports an unexpected loss in a quarter, you should determine the specific reason for the loss. If the net loss was caused by a one-time asset impairment charge, it may only represent a temporary setback; but if the loss was on account of a substantial decline in sales, this may be a clear sign of deteriorating fundamentals.

• Technical indicators are signaling “Sell” – A short sale may also be indicated when multiple technical indicators confirm a “Sell” signal. These indicators can include a breach of a critical long-term support level, a break of an important moving average – such as the 200-day MA – that has been a major support level in the past, a key reversal day, sell signals corroborated by the MACD and/or RSI, and so on. The more technical indicators that support the bearish thesis, the better.

• Abrupt change in momentum / sentiment – The biggest bear markets typically develop after all-time highs have been scaled, as for example the Japanese stock market in the late 1980s / early 1990s, the Nasdaq index from 2000 to 2002, and global equity indices in 2008-09. Investor sentiment and market momentum often changes abruptly right after new peaks have been reached. For a short-seller, while the period of this momentum / sentiment shift is the best possible time to go short, identifying this shift is a monumentally difficult task.

The Bottom Line

An experienced trader may initiate a strategic short position if only one of these factors looks likely to develop. For instance, the trader may take a short position in advance of a struggling company’s earnings report. But for the greatest chances of success on the short side, the optimal time to make a short sale would be when all the above factors are in your favor, which typically happens in the early stages of a bear market.

Gold & Silver

What Is Metal Trading?

Precious metals such as gold and silver have been traded either as currencies, or at least as the basis of currencies, or commodities, for hundreds of years.

Gold and silver are heavily traded these days and are viewed as having a certain "security" and are considered a "safe" investment. As they have been highly valued in our culture for so long, their value is now known intrinsically to us and in times of economic hardship or global economic strife the value of these metals will rise as investors will see them as "safe-havens" for their capital.

There has been steady rise in the price of gold over time if you look at the long term trend. Towards the end of 2007 through to 2008 Gold rocketed over fears of the credit crunch led investors to seek safer assets for their capital. The price has continued to rise, and In 2011 we saw Gold reach $1500 per oz. and above.

The value of gold not just intrinsically but as a secure asset has led to great increases in trading volumes of late, as well as record-breaking prices.

Major Metal Products

Gold and silver have been a major part in the creation of currency and trade from ancient times. They were both used to depict a monetary value or representation on how much gold or silver each coin was worth. Both gold and silver have been used as a standardised method of measuring wealth. The silver standard was a monetary system in which standard economic unit of account is a fixed weight of silver. The silver standard was widespread until the 19th century when it was replaced by the gold standard. The gold standard worked on exactly the same premise as the silver standard only it was weighted with gold instead of silver.

However the nature of the gold and silver standard did have its downfalls especially the fact that they created boom-bust economies. Eventually gold and silver standards were replaced by notes and coins made from other sources that were used to represent a monetary value. Even though in the modern world gold and silver are not used as much to barter they are still highly regarded and as such have become a valuable commodity to speculate on.

Copper is an industrial metal used mainly in building and construction such as electrical work and plumbing. This is often considered as an accurate measure of economic growth. If the demand for copper is increasing you will usually see at the same time as this an economic expansion. Chile, Peru, South Africa, North America and China are the largest producers of copper. Any political unrest in the main producing countries, strikes or shipping problems could all cause the price of copper to fluctuate quite considerably.

What factors can affect the prices of these products? Here are some key factors that can affect the price of these metals:

Equity Markets

Gold price in general will react adversely to the strength of equity indices as investors turn to gold for a more secure asset.

Global Economy

As with equities above, any factors that suggest global economic issues or problems, unemployment, GDP, etc. will again lead investors to seek safer assets in the form of precious metals.

Global Supply

Unlikely to affect short-term prices, but may have an impact long-term. As these metals are minerals that are mined, they are clearly subject to supply pressures. At the moment mining is sufficient to meet demand, but deposits are not infinite.

Industry

High grade copper is used across the globe in all industries and as a result the performance of industry can have an impact on the pricing of this metal.

Why Should I Trade Metal Products?

The market has seen gold prices reach record highs due to falling equity markets and global concerns. The last 2 years have provided an interesting time to trade gold and other precious metals and the opportunity for investment is clear. Here are some key points to consider when trading these products.

Volatility

These products, especially gold, have been very volatile in recent times. Not just over previous years where gold as hit record highs, but the intra-day ranges have been large too, thus providing an opportunity to benefit from these movements.

Popularity

As gold is very widely traded, there is plenty of information available such as articles, reports and discussion forums, which can help traders to make informed decisions.

Price transparency

The global appeal of gold trading and the immunity to market manipulation and insider trading make trading in metals appealing to investors.

Investing in Property

Inside this Investing in Property Smart Guide

Step 1: Why property?
Step 2: The potential return
Step 3: Tax
Step 4: Selecting a property
Step 5: Managing your property
Step 6: Non-residential property

Property has been a popular route to wealth for many Australians for many years. Buying their own home is often the first 'investment' many people make; purchasing another property may well be the second – even before shares and other assets.

But your first investment in property needn't be your home. Indeed, buying a small apartment to rent out can be a good way to accumulate funds so you can eventually buy your own place, in an area where you want to live.

Increasing numbers of young Australians are choosing this route, buying in one suburb while renting in a more desirable and expensive area – or living at home for a while longer.

Still others are diversifying into non-residential property via property trusts and syndicates.

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Sensible investments in property have many attractions. Property can be less volatile than shares – though not always – and it tends to be regarded as a safe haven when other assets are declining in value.

It has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. Then there's the tax advantages associated with negative gearing (more about that later).

However, as with any investment, there are no guarantees. Property prices go down, as well as up, and sometimes tenants are hard to find – especially good ones who pay on time and take care of your investment.

Investors need to have a keen awareness of the interest rate environment – how higher rates might affect their expected net return and the market for their property should they wish to sell. They also need to make sure the return or 'yield' from their property stands up against the return they might have achieved had they invested in shares, for example.

Of course, you don't have to make a direct investment in property. Pooling your funds with other investors in managed funds with a property focus, listed property trusts or property syndicates provides exposure to a broader range of property – including commercial, industrial and retail as well as residential – often with a smaller investment required.

Many financial advisers would argue that too many Australians let direct investment in residential property dominate their portfolios. In theory – and this is far from reality for most people – property should account for perhaps 10 per cent of an investment portfolio.

Checklist:

You can invest in:

Your own home
A residential property to rent out
Listed property trusts
Unlisted property trusts
Property securities funds
Property syndicates

What is Forex Trading?

The foreign exchange market is the "place" where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in Egypt can't pay in euros to see the pyramids because it's not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate. 

The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion per day. (The total volume changes all the time, but as of August 2012, the Bank for International Settlements (BIS) reported that the forex market traded in excess of U.S. $4.9 trillion per day.) 

One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter(OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly. 

Spot Market and the Forwards and Futures Markets 
There are actually three ways that institutions, corporations and individuals trade forex: the spot market, the forwards market and the futures market. The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on. In the past, the futures market was the most popular venue for traders because it was available to individual investors for a longer period of time. However, with the advent of electronic trading, the spot market has witnessed a huge surge in activity and now surpasses the futures market as the preferred trading market for individual investors and speculators. When people refer to the forex market, they usually are referring to the spot market. The forwards and futures markets tend to be more popular with companies that need to hedge their foreign exchange risks out to a specific date in the future. 

What is the spot market?More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards ongoing political situations (both locally and internationally), as well as the perception of the future performance of one currency against another. When a deal is finalized, this is known as a "spot deal". It is a bilateral transaction by which one party delivers an agreed-upon currency amount to the counter party and receives a specified amount of another currency at the agreed-upon exchange rate value. After a position is closed, the settlement is in cash. Although the spot market is commonly known as one that deals with transactions in the present (rather than the future), these trades actually take two days for settlement. 

What are the forwards and futures markets?Unlike the spot market, the forwards and futures markets do not trade actual currencies. Instead they deal in contracts that represent claims to a certain currency type, a specific price per unit and a future date for settlement. 

In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves. 

In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the U.S., the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement. 

Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well. 

Note that you'll see the terms: FX, forex, foreign-exchange market and currency market. These terms are synonymous and all refer to the forex market. 

Introduction to Forex Risk Management

Forex risk management can make the difference between your survival or sudden death with forex trading. You can have the best trading system in the world and still fail without proper risk management. Risk management is a combination of multiple ideas to control your trading risk. It can be limiting your trade lot size, hedging, trading only during certain hours or days, or knowing when to take losses.

Why is forex risk management important?

Risk management is one of the most key concepts to surviving as a forex trader. It is an easy concept to grasp for traders, but more difficult to actually apply. Brokers in the industry like to talk about the benefits of using leverage and keep the focus off of the drawbacks. This causes traders to come to the trading platform with the mindset that they should be taking large risk and aim for the big bucks. It seems all too easy for those that have done it with a demo account, but once real money and emotions come in, things change. This is where true risk management is important.

Controlling losses

One form of risk management is controlling your losses. Know when to cut your losses on a trade. You can use a hard stop or a mental stop. A hard stop is when you set your stop loss at a certain level as you initiate your trade. A mental stop is when you set a limit to how much pressure or drawdown you will take for the trade. Figuring out where to set your stop loss is a science all to itself, but the main thing is, it has to be in a way that reasonably limits your risk on a trade and makes good sense to you. Once your stop loss is set in your head, or on your trading platform, stick with it. It is easy to fall into the trap of moving your stop loss farther and farther out. If you do this, you are not cutting your losses effectively and it will ruin you in the end. 

Using correct lot sizes

Brokers advertising would have you think that its feasible to open an account with $300 and use 200:1 leverage to open mini lot trades of $10,000 dollars and double your money in one trade. Nothing could be further from the truth. There is no magic formula that will be exact when it comes to figuring out your lot size, but in the beginning, smaller is better. Each trader will have their own tolerance level for risk. The best rule of thumb is to be as conservative as you can. Not everyone has $5,000 to open an account with, but it is important to understand the risk of using larger lots with a small account balance. Keeping a smaller lot size will allow you to stay flexible and manage your trades with logic rather than emotions.

Tracking overall exposure

While using reduced lot size is a good thing, it will not help you very much if you open too many lots. It is also important to understand correlations between currency pairs. For example if you go short on EUR/USD and long on USD/CHF, you are exposed two times to the USD and in the same direction. It equates to being long 2 lots of USD. If the USD goes down, you have a double dose of pain. Keeping your overall exposure limited will reduce your risk and keep you in the game for the long haul.

The bottom line

Risk management is all about keeping your risk under control. The more controlled your risk is, the more flexible you can be when you need to be. Forex trading is about opportunity. Traders need to be able to act when those opportunities arise. By limiting your risk, you insure that you will be able to continue to trade when things do not go as planned and you will always be ready. Using proper risk management can be the difference between becoming a forex professional, or being a quick blip on the chart.

Tips for New Traders

GCM understands the importance for new traders to familiarize themselves with the platform and the different markets’ characteristics and trends. Therefore, we have provided a list of essential trading rules for beginners:

• Start small

• GCM allows you to trade in very small minimum trade sizes; take advantage of this while you are still unfamiliar with trading. You can increase your size gradually as you become more confident.
• Remember why you are trading
  Your primary objective should always be making money. You should also enjoy and have fun whilst doing it, but fun should never be your prime concern. Only place a trade after your have researched the market and have a clear direction. Otherwise, save you money for a better opportunity.
• Only risk money you can afford

• It is vital to have in mind how much you are actually risking at all times. It is equally vital to make sure you are comfortable with the amount involved. If not, the pressure you will feel from the fear of an unaffordable loss will undoubtedly lead to rash decisions.
• Have realistic trading targets
  Setting yourselves fixed target levels before you enter into a trade will help you overcome the influences of fear and greed. The targets could be things such as:
  • Profit goals (per day, month, year)
  • Size to trade at any one time
  • Entry/exit points
  You should define two exit levels: an exit point should things go wrong and an exit point for taking your profit when things go well. Of course, as you become more confident, these rules can be changed to fit any new strategy you may wish to employ.
• Be disciplined

• When you have lost on your last trade, it does not mean that you are more likely to win on your next trade. Doubling up should always be done with care: you should only increase your bet size by a substantial increment if you think there is a substantially greater chance of profiting more than before. Even then, you should take care to carefully manage your risk.
• Use stop losses
  A stop-loss will enforce your exit levels and will aid you to cut your losses.
• Expect losses
  You cannot win on every trade, even the best traders in the world get it wrong. Managing a losing position and acting swiftly to cut your losses is a hugely important (and difficult) skill. Analyse your losing trades and learn from your mistakes.
• Do your research

• Have your own opinion about every trade so that when you are ready to execute you are confident that you are taking a valued and judged view. You need to fully understand how the trade works and that you aren’t thwarted by some small detail of which you are unaware of.
  Here are a few tips that can help you understand your trade:
  • Read relevant company reports
  • Look at financial websites
  • Look at the fundamentals and historical charts
  • Investigate other factors that may affect the trade, economic indicators or announcements
  GCM offers free charting, news and research packages on our website, which are constantly being updated. GCM is an execution only platform and does not provide you with any advice on what or how you should trade.
• Monitor positions closely
  Checking how big your profits are when things are going well is easy, but it is just as important to monitor your losing positions to the same kind of scrutiny. When things are going badly you may have to act rapidly in order to prevent the situation getting worse.
• Ask questions

• You should never be afraid to ask a question, especially when you are new to trading. The easiest way to learn more about trading is to ask the professionals.