5 Tips for Trading Forex

The forex market is the most popular financial market in the world, popular due to the liquidity of major forex pairs, as well as because it’s a 24-hour market. Here are some tips to improve your forex trading experience:1. Be educatedWhich currencies will you trade? If you are squeezing your trading in around a job, then choose a trading session that will work for you:• The Asian trading session – opening at 0:00GMT and closing at 9:00GMT
• The London trading session – opening at 8:00GMT and closing at 17:00GMT
• The New York Trading session – opening at 13:00GMT and closing at 22:00GMTOnce you’ve chosen your forex trading session, which currency pairs will you choose? Generally Asia-Pacific currencies, like the JPY, AUD and NZD are active in the Asian trading session. European currencies are active in the London trading session, like GBP/CHF, GBP/JPY, GBP/USD, EUR/GBP and USD/CHF. And in the New York trading session, major forex pairs (paired with the USD) are more liquid, along with some European currencies due to the session overlap – AUD/USD, GBP/CHF, GBP/JPY, GBP/USD, USD/CHF and USD/CAD.Although most of your forex education will come from trading experience, a trader should learn about the markets and economic factors that affect them, using the media and online resources, along with market updates than some forex providers have on their sites.2. Make a planWe’ve already discussed when you want to trade forex, and this will probably influence the currency pairs you choose to trade. So why are you trading, then?Setting goals gives you a framework for your forex trading – not only are you more likely to achieve your goals if you clarify them, but if you have a specific goal for a trade you are also more likely to get out of trades with your profits before the markets turn, rather than greedily waiting for an extra pip.Once you’ve defined your objectives, find a system and stick with it – take every trading entry, adjust every stop, and close every trade as the system says.If you aren’t sure about your trading system, being consistent is the best way to find out whether it works or doesn’t. And, if it works, sticking to it will result in more consistent profits.Your forex trading system should address:
• Trading rules for entering, adding to, and closing positions
• What to do if the internet connection, telephone or computer fails
• What you will do if you are unable to trade due to holidays or illness
• What percentage of your account you can afford to lose
• How to set orders for when the market opensOnce your plan is in action, keep records to monitor your success.3. Reduce your riskYou should never risk more than 2% of your capital per fx trade – this means that even if you lose ten trades in a row you have still only lost 20% of your account. The more you lose on your trades, the more difficult it is to turn your situation around, so doesn’t it make sense for you to just risk a small percentage per trade?So if you had $1000 capital and you lost 2%, you would be left with $980. You would need to make back $20 to return to your original equity value, that’s only 2.04% of $980. If you continued your streak of bad luck for ten trades, losing 20% or $200, you still only need to make back 25% to get back to your original equity value (200/800 x 100 = 25%).This may seem like a lot, but imagine if you had lost $750, or 75%, on a single forex trade, you would only have $250 of your capital left, so would need to make a 300% return to get back on top (750/250 x 100 = 300%).As you can see, the more you risk, the less likely you are to get it back.4. Cut your lossesIf you are just trading forex for an hour or so a day, then find a trading platform that allows you to set automatic stops. An automatic stop allows you to program your trade to exit automatically if the market turns against you to a certain degree, and it means you know your maximum losses if you can’t be in front of your computer all day.For example, if you bought the AUD/USD at 1.5789 with a stop loss at 50 pips, your stop is set at 1.5739. That means if the value of the AUD drops to that level, your trade will be automatically closed and you won’t sustain any more losses.Once you have a stop-loss, it is usually a good idea to stick to it, rather than moving it further and further away in hope that the market will shift in your favour. Some trades are winning trades, and other ones are losing trades. A good trader learns when to get out of losing trades, rather than desperately adding funds to the trade in the hope that it will turn around.5. Protect your profitsAs the forex markets are very liquid, your profits can turn into losses very quickly. Two methods of protecting your profits are using trailing stops, and trading in multiple lots, a lot being the number of contracts you buy in one transaction.A trailing stop is when you create a stop that follows the forex market when it moves in your favour. So if we take the example from point 3, you bought the AUD/USD at 1.5789. Instead of having a stop loss at 50 pips, you could set a trailing stop at 50 pips, making your opening 1.5739. If the Australian dollar goes up to 1.6322, your stop will rise to 1.6272, meaning that even if the value of the AUD falls, you will still make a profit as your closing price is now set higher than your opening price.Trading in multiple lots give you separate profit targets. If you place one at a conservative level, like 20 pips from your entry level, and the other one further away, you are more likely to make some profits than losing everything.In conclusionIf you educate yourself, make a plan, reduce your risk, stop your losses and protect your profits, you are on the way to being a profitable forex trader.

The Market is Excited, But Challenges Still Loom For Small Businesses

There is a disconnect between the market rally indicating the economy may soon recover and small businesses who continue to face a challenging environment. First, you must keep the market rally in historical perspective and you must interpret the market’s rally. The market rally has caused some excitement due to being one of the strongest market rallies in history. However the 50% rise between March and July 2009 should be compared to other historical benchmarks. According to Barron’s Market Week (August 3, 2009), in July 1997 the S&P ended at 954 and the S&P ended July 2009 at 987. The return during a 12 year period was only 3% (total return, almost no return on an annualized basis). Additionally, the July 2009 S&P level is well below the October 2007 all time high of around 1,580 (over 37% lower according to Yahoo! Finance). The current market rally is indicating that for large and publicly traded companies times are beginning to stabilize. Perhaps not improving, but less bad news is good news in the current environment. Smaller businesses, however, face more challenging times ahead.The financial lending institutions need to flow monies form Wall Street to Main Street. The credit markets are thawing and larger companies can once again qualify for loans. Qualifying for loans will allow the larger companies to calm their cash flow nerves. However, small businesses are facing increased scrutiny when applying for and renewing loans. Even with a high credit score and a large portion of collateral small business owners are having loans not being accepted or renewed. If the loan is not renewed the small business may not be able to raise equity and to take advantage of their local market conditions. Then loans are not renewed, small business owners are forced into repayment. A lot of small businesses and small business owners do not have the assets to repay the called loans. The cash outflow to repay the loan (if available) can potentially lead to a financial hardship for the small business by crushing liquidity, working capital needs and accelerate the cash burn rate. All of which make it more difficult to qualify for a loan from other lenders. These obstacles place more pressure on small businesses (even in a recovery). In additional small businesses will be forced into tougher lending standards which could potentially increase the number of small business failures at the same time the economy recovers for larger companies. Understanding this situation is important for small business owner because they can (immediately) begin to review their operations and focus attention on their financial position in order to take steps to strengthen their overall position before they request a loan or apply for a loan renewal from a financial institution.Second, financial lending institutions currently are trying to figure out the new lending standards. The new standards are tougher than small business owners want them to be. Small businesses enjoyed the NINJA times (No Income No Job or Assets – no problem). Now small businesses feel they are being hassled at the time of the renewal since they have to provide accurate financial information and they understand the renewal is no longer guaranteed. The small business’s “hassle” is the increase of time involved and higher financing costs, including hiring a Certified Public Accountant (CPA) to issue financial statements and attend loan workout meetings. Financial lending institutions, however, have been faced with higher loan failures and are currently finding out the personal guarantees they had signed by the small business owners are semi-worthless. The small business owner protected themselves by transferring all of there assets to their spouse who did not sign the personal guarantee. This leaves the bank with a bad loan and a worthless personal guarantee. Banks may have both spouses sign the personal guarantee in the future for more protection. A troubling sign is a lot of small businesses and owners are not well capitalized (i.e. they do not have many assets, but do have debts and a good life style). As larger companies have built assets over time and made drastic cost cuts and lay offs of the work forces smaller companies have minimal assets and minimal liquidity and did not cut costs and work forces as quickly or dramatically as larger businesses.Wall Street and the U.S. Government are lending to and bailing out Wall Street Companies, but Wall Street and the U.S. Government is not lending to or bailing out Main Street Companies. As larger companies are beginning to receive financing from financial institutions and bail out monies form the U.S. Government; small business lenders, such as CIT, have received little or no attention from Uncle Sam. CIT is one of the more important lending institutions for small businesses (The CIT Threat By Donna Childs). Small business lenders and regions banks seem to be hurting the most out of all of the financial institutions at the moment. In order for these institutions to lend monies to small businesses in the future they will have to increase their lending standards. For Main Street companies to qualify for loans in the future small businesses need to make major adjustments to their business model including building assets and overall strengthening the financial position of the business and owner (just as their larger counterparts have done).Third, the economy is still in recession and growth will not be the glory days of the past. David Rosenberg, chief economist at Gluskin Sheff, stated “What matters is the contour of the recovery” (The Best Five-Month Run Since 1938 By Kopin Tan and Andrew Bary) meaning that the economy still has a long way to improve. The markets might have “improved” 50% between March and July 2009, however the business environment has not improved or not improved that considerably. Continued pressure on the economic recovery and growth over the next several years includes unemployment around 10% and increasing, the US savings rate has increased over the past 12 months, corporate America continues to de-leverage and the U.S. Government is too involved in private markets.Unemployment of 10% and rising as well as an increase in the US savings rate places pressure on consumer spending due to uncertainty of future employment and income. Consumer spending at the local level directly affects small business performance. A reduction of consumer spending pressures the survival of small businesses. According to “The Recession is Over Now What We Need Is A New Kind Of Recovery” by Daniel Gross (Newsweek August 3, 2009) 5 million jobs are anticipated to be created by 2011, however the economy has lost 6.5 million jobs since December 2007. Consumer spending due to uncertain employment over the next several years can financially pressure local small businesses. As corporate America continues to de-leverage itself it repays debt instead of making purchases and instead of increasing its workforce. The reduction of purchases does trickle down to small businesses and less procurement can affect small business revenues. The U.S. Government involvement in large corporations should be more troubling than the news reports. Our pride as a market based economy and being a Democracy has been turned into the U.S. being Socialist without any major opposition. Yes, we are Socialists since the government owns private enterprise. As taxpayers complain that the government cannot do anything right or efficient at least. Now we are using more of taxpayer resources for Wall Street companies and not Main Street companies will have significant effect on Main Street’s future. Mr. Gross states it costs the U.S. government $92,000 in government spending or $145,000 in government tax breaks to create one job. The average job in the U.S. pays less 1/3 to ½ than this amount. The jobs created will first affect larger businesses, with hope that it will trickle down to small business. At least Main Street will still have its pride (even if it is forced into bankruptcy). Small businesses must be aware of this environment and understand the recovery has many challenges over the next several years to come.In conclusion, small businesses have several challenges in the years ahead. Immediate action is necessary to continue to evolve their business model and strengthen their financial position. Business owners should expect to sacrifice more and potentially raise equity (diluting their ownership) in order to survive the rest of the recession and to try to stay alive through the recovery. Small businesses should continue to stay vigilant during the potential economic recovery in order to continue operations.

Branded – It Is How YOU Will Be Remembered!

BrandedThere was TV show when I was young about a US Army Cavalry Captain drummed out of the service for cowardice. A deed he did not commit. I still know the song and one line goes like this: “What will you do when you’re branded, will you fight for the name?” Have you ever felt like you were “branded” and as you walked around? Like everyone knew something about you and it changed the way they treated you? Was it untrue? The show lasted several years, with each episode negated the coward brand.When I think about the word “branded”, I go back to my cowboy days on the ranch. When branding day came, it came early in the morning with starting the fires. After getting the fire started, it was placing the irons in the red coals until they, too, were red hot. Next, comes roping the calves away from the herd and pinning them down. Hearing the bawling of the mothers who knew what was coming next still haunts me. The next sound, a sizzle and the smell of the iron as it burns into the flesh and hair of the calf. That branding smell is something you never quite get out of your nostrils, ever. The brand will never change on that hide.Branding your business is just as memory making. When people hear your name, your company name, your product, or your service, what flashes into their minds? The branding of a company takes thought, research, and imagination. Once the brand becomes recognizable, changing the brand usually means starting all over with a new business and a new business model, new clients.We brand people, too! Does that shock you? I know your mom, like mine said these words, “Don’t judge the book by its cover”, or “Sticks and stones can break your bones but names will never hurt you”. The opportunity is that names stick and being classified sticks.The branding of people is different. Once branded by others, we have a choice, to stand and re-brand or accept what has been branded on us. At this stage of life, I wear several brands. Some are hidden under old brands, some I am proud of, some I am not, and some I even earned.I was branded at an early age. I did not realize it until later in life. The fortunate part for me was that a good friend and mentor told me that everyone has a brand of some sort that is on them. I myself was branded at an early age of not being the sharpest knife in the drawer by a teacher and my mother agreed. Teachers know these things. So I reacted to the expectations and reacted accordingly. Mother knows best?My mentor went on to tell me that each time we are branded we have a wonderful opportunity to move ahead on the next great adventure. “What Great Adventure?” I asked.He continued on. “Re-branding is a natural part of life. You get to answer some new questions that are only yours and yours alone. What do you really want to be? What do you really want to do? Have you discovered your gifts and talents and how to use them? Where do you want to go? Who you become is up to you. You have a choice. Be miserable and accept the hand you were dealt or tell the dealer you would like a fresh hand. The adventure is that new insights added to the past insight to move you to the next level.” Change is possible.Let’s look at this situation another way. On the ranch when a calf is branded, the cherry red iron is placed on the hide of the calf. The brand does not change. It will be that way for as long as the cow lives. The calf will never have control of changing that brand. It labels where it belongs.People on the other hand can change their brand and do. I went from not the sharpest knife in the drawer to someone feared by the management at the company I worked for. I was the union steward. I was good. I never lost a grievance.But, one day I woke up and realized that instead of fighting against the management, I was protecting people that should have been fired and would have been without a big union protecting them. Employees lacking good work habits. I had the opportunity to really help my union brothers and sisters by weeding out the unwanted. I realized that the rest of the group was carrying the work load and having to work harder because I was protecting the useless. Most of them were not in the union, but had the same rights and access to the steward as those who paid dues. How much money does that cost a company when part of the employees work harder to cover for those who do little of the work? How many raises did the worker miss paying the wages for everyone?I handed in my union steward card. I re-branded myself again. I left where I had worked 20 years and went to be an office manager in another building. I had to re-brand and move on. The people who were my friends in the past now did not talk to me, called me things I will not repeat, and there was no going away party given for me.The realization was this: people followed others that spoke well, treated others with respect, and sought to be a helping hand to all. This sent me on a new adventure.Was re-branding myself easy? NO! Was it the most fun? NO! Was it the most exciting thing that I continue to do? YES! Today I look at the chance of re-branding daily. Some of my brands do not change. The moral and value code stays the same. I remain trustworthy, loyal, and respectful. The learning and searching continues on daily.The next great adventure (re-branding) was on to a new world of training others. This was the greatest responsibility so far I had been in entrusted with. Setting the example each and every day of how to do their jobs as well as be a representative of the company on and off the clock. From there it has been building new companies for others as well as my family. The only thing that has stayed constant is that, as you change, improve, and re-brand, you will grow. As you grow you have an opportunity to help others by being that mentor, that friend.How were you branded? Are you still wearing that brand or did you get a new one? All of us have an audience that we want to be heard by, to share ourselves with. Mine is simple and hard to do. Teach personal accountability and personal leadership to everyone that I am blessed to come in contact.