Global Macro Investing and Yield Curve Strategies

By Peter Howard

The Treasury yield curve is one of the best and most applicable tools that a global macro investor can have in his or her toolbox. Most of the time used for bond trading there are several applications for it in the stocks and currency market as well. The truth is by using the yield curve correctly you can better trade just about everything.

While there are may types of yield curves the most commonly used and most applicable is that of the Treasury yield curve. All you need to do to make a yield curve is to obtain the yield on different Treasury maturities. Get the ninety day, two year, five year, ten year, and the thirty year yields and you will be able to plot them out and see the shape and levels of the yield curve.

Of course being able to tell what will happen in the economy does not always translate to being able to profit from it as the markets sometimes do their own thing, or at least that is how it can seem. So how does one apply the yield curve to their trading? The primary rule of thumb is that an upwards sloping yield curve is bullish for the economy while a downwards sloping yield curve is bearish. The steeper either curve is the better or worse it is. At least these are the general rules.

So how does this help your trading? Well if the curve is steep then there is little chance that bonds will be able to stage a very robust rally. At the same time it might be a great time to go long stocks. If the curve is sloping down then it is a harbinger of things to come and the economy is ready to contract and therefore it is kind of a sell signal for stocks. At the same time if the curve is inverted then it is a great time to look at going long bonds as the Fed will likely begin a interest rate easing cycle and therefore driving up bond prices.

If money is expensive then the economy will have a hard time expanding. If money is expensive for banks then they will not lend very much as they are not making money off of it. If money is cheap then the economy can grow easier as banks will lend and businesses will borrow more to expand and to spend.

Bonds are like a lever. When bonds are high yields are low. When yields are low bonds are high. It is like a board on a fulcrum, when one end goes up the other end goes down. This is how bonds and rates are related.

So if you are a global macro investor that is using the yield curve you can forecast when to get in and when to get out of stocks and bonds based on the macro economy. At the same time you can use the information and trade currency differentials as well.

Nothing is perfect and nothing works all the time. Any good global macro investor knows that to have long term success without blowing up you will need to use proper risk control gauges as well as other tools in your analysis. The yield curve is smart but it is not all knowing. - 23199

About the Author:

If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro investing advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.

Stock Trading Strategy: Pyramid Your profits!

By Jordan Weir

We've all heard the age old adage, cut your losses short, and let your profits ride. Yet the vast majority of traders don't use this concept to its fullest. The proper application of this single, key piece of advice can be the difference between showing a profit at the end of the month, and showing a loss. This method is known as pyramiding your profits.

The art of pyramiding your profits begins with good risk management. You should never risk more then 5% of your portfolio on any given trade, and many experienced traders use numbers as low as 2-3%. This doesn't mean someone with a $50000 portfolio can only invest in $2500 worth of a companies stock, it means that when they are setting their stop loss, they must be cognizant of how much they can lose on the trade.

So if a company is trading at $20 per share, and our stop loss is at $17.50, we can lose $2.50 per share by buying. If were willing to lose no more then $2500, then $2500/$2.50 = 1000 shares. So we should purchase 1000 shares for this trade.

With your standard trade, that would be hit. An order to sell at a certain price, and order to buy at a certain price, and a stop loss. When your pyramiding your profits though, there's an integral extra step. When the stock has gone up in price, and you have some profits, you add MORE to the position. Lets say it goes up to $22.50, and you decide to move your stop loss up to $21.00. You now have 1000 in gains if you get stopped out. To pyramid your profits, you add that 1000 in gains to your risk amount for the trade, for a total of $3500. Since its now at 22.50, and we can risk up to $3500, then we should purchase another 2300 shares. (3500/1.5 = 2334).

If it gets stopped out at 21, then you made gains of $1000 on the shares bought at 20, but you lost $3450 on the shares bought at 22.50, for a total loss of 2450, which is approximately how much you were risking on this trade. If it then continues to go up to $25/share, then you made $5000 on the shares bought at 20, and another $5750 on the shares you bought at 22.50, giving you a total gain of $10750, while only putting 2500 at risk. By adding shares, or pyramiding your profits, you substantially increased the potential reward of the trade, while maintaining a safe level of risk, and by cutting your losses short, and letting your profits run, your ability to profitably trade the markets will be greatly enhanced.

Make no mistake; this strategy is applicable to long term investors as well. Assuming youre invested in an up trending stock, then adding shares to your investment whenever it breaks above the last high will greatly assist in maximizing the profits from the big overall trends that appear in the markets. If you're investing for longer time periods, its advisable to leave some profit in the case of it hitting the stop loss.

This strategy is the natural embodiment of the saying, cut your losses short and let your profits run. Its also in stark contrast to another bit of conventional wisdom, you never go broke taking a profit. While its true that you never go broke taking a profit, the size of the profits in relation to the size of the losses is very important. Pyramiding your profits increases your stake in whats working, while cutting out what isn't, and that's how you make money in the markets.

The key to success in trading is to have big gains, and small losses. By doing so, you can be wrong half the time, and still make money in the market. By pyramiding your profits, you insure big gains and small losses. Using this stock trading strategy, you can truly cut your losses short, and let your profits run. - 23199

About the Author:

Want more information about profitable Stock Trading Strategies? Visit Jordan's website and find out all you need to know to successfully navigate any market. Everything from Sector Rotation to long term option strategies is covered, giving you the information you need to succeed. Check it out now!

Guide To stock market for beginners

By Roy Steve

In todays world stock markets provide the fastest way to make money. The effort involved in making money on the stock market is literally zero. That said the risk involved is correspondingly higher.

For making money on the stock markets it is essential that you know the stock market lingo. It helps to know the basic terms as well as the basic understanding about how the stock market works.

The most important thing to learn is to make sure that you have the understanding of the stock market terms and the terminology. You should learn what is day trading and what is the settlement period. You should also familiarize yourself with various stock exchanges like the NASDAQ, NYSE and ASE.

Another major factor to learn is about the middlemen and the brokerages. As a new entrant you will have to decide what kind of brokers you would want to go with. There are brokers who offer discount as well as brokers who do not. Now these discount stock brokerages will not give you any advice for investing whereas the full service brokerages will give you full advice on investing. The fees definitely will be different for each one of these.

As an investor you should at the outset be able think about the kind of risks that you are willing to take. If you are not averse to risk taking then you can easily invest in more volatile stocks. On the contrary if you are more of a cautious investor then only invest your money in very safe defensive stocks.

The main point here is that you should be aware of your risk taking abilities

As a beginner in the stock market it is always better to first test the waters by investing small amounts in good selected stocks and that will help you make sure that you do not lose money initially - 23199

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Path for stock market for beginners is not very defined and you should know how does the stock market work

Let Gold Kick Start Your Wealth.

By James Cole

History

Almost all of us would like to be able to invest in gold. For centuries there has been a romance around investing in gold, and gold-related greed is a key element of fiction and history going back to before the time of the Egyptians. To be able to buy gold and sell gold and to own gold bullion may seem like something that is out of reach of most of us, but the reality is that not only is it more than possible but also that now is a good time to be investing in gold

Gold and its Value.

The fact that so many people have fought over gold shows just how valuable and desired it is as an investment. Wars may not be fought over it now, but the wars still exists on the gold market. As investors turn away from shares in the uncertainty of the credit crunch, more and more are turning to precious metals, and now is an excellent time for those who buy gold and those who sell gold.

The price of gold is now on the rise, and this rise is driven in no small part by the increase in demand on the part of investors wanting a better and more trustworthy long-term investment than the current sale of shares. Gold bullion is bucking the trends of the market, and many more people are looking to buy gold and sell gold than ever before. This is the ideal time to buy.

There is a bullish atmosphere around buying and selling gold at the moment that confirms this buyers market, and the expected rise in US inflation in the coming months is likely to pull even more investors towards the gold bullion market. This may not be the case just for individual investors either as corporate investors seek to maximise their return with the trade of gold.

The current market is an excellent time for those who sell gold because of the high demand, and equally good for those who buy gold, because the price will only go up for now. In the last 8 years, the value of gold has considerably outperformed the U.S. dollar, which only emphasises how good it is to buy gold right now.

Invest in Gold.

You can of course buy gold bullion bars to kick start your gold investment. However, for smaller investors that is not likely to be the best route, however romantic it may seem. Gold bullion bars is probably a better route for larger investors and those hoping to only speculate in the short term about gold value.

A simple way for a small investor to get involved in the gold trade is to buy gold coins. Coins are generally easier to buy and sell rather than larger gold bars. It is relatively simple, for example, to buy gold Krugerrands (from South Africa) and sovereigns (from Britain). These are both recognised forms of gold by collectors and by gold markets, and are both excellent ways of small investors getting into the market to buy and sell gold.

Trading in gold is of course best thought of as a long-term investment over ten years or more, in order to maximize your return. Gold of all kinds has shown itself to be a very stable form of investment over long periods of time, and is less prone to the vagaries of the stock market in terms of fluctuating value.

Gold bullion investment is an ideal form of investment for those looking to widen the breadth of their portfolio, and if you buy gold it will add value to your portfolio while strengthening and stabilizing it also.

Result.

Gold therefore, should be seen as an ideal way of improving your investment for the long-term. If you can you should make every effort to acquire some gold bullion and to buy gold as part of your investment portfolio. The current market conditions are perfect for those who wish to buy gold or to sell gold. - 23199

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Before you try to buy or sell gold make sure you check James Cole easy way to buy gold instantly and get a free MasterCard.

Why and How you Should Compare Auto Insurance Rate!

By Guiscard Mathurin

If you are comparing free auto insurance quotes, then there must be many questions that come through to you. Here are solutions to few of them.

There are many reasons why people compare auto insurance. However, before you do that, you need to know what goes behind the scenes when companies give free auto insurance quotes. While comparing the free auto insurance quotes, please note the area that you live is a major factor that affects the free auto insurance quotes. If the area that you are living in has high number of crime & thefts, then the rate will shoot above the roof for sure. If you prove to the insurance company that you have parked the car in your garage & has installed an alarm system that might help you lower the quotes.

Getting the best rate is one of the main reasons for you to compare auto insurance. The Internet provides the best answer to compare auto insurance quotes. All you have to do is simply enter some important information and the quotes for you to compare auto insurance are ready. It has been noticed that if you compare auto insurance & study it well, it will surely be beneficial for you in many ways. And for those who compare auto insurance, and do it well, they save a lot of dollars.

Now, when you compare auto insurance policies, you do that with the free auto insurance quotes that you would have got, either online or over the phone. The key is " The source from where you get these free auto insurance quotes. If it is credible enough, trust you would get good quotes for your perusal.

There are many things you could do to get quotes for the insurance coverage. While some of them may seem time-consuming to you, it is important you spend this amount of time. At stake is " The best and the most affordable auto insurance coverage for your vehicle.

Saving money is one part of the deal, but you also need to ensure you choose a respectable company when you compare auto insurance. At the end of the day, the free auto insurance quotes will only tell you certain things, and credibility of the company is definitely not something it will tell. This is for you to find out!

Getting free auto insurance quotes is not a tough ask at all. All you have to do is log on to the Internet, and get some quotes from different websites. One thing you should avoid is getting quotes from the same company, else you would spend a lot of time to compare auto insurance and yet not get anywhere.

If you do the compare auto insurance activity well, you would realize how profitable the free auto insurance quotes are for you. For starters, you will easily be able to save at least hundred dollars on your insurance coverage. Not a bad incentive that! - 23199

About the Author:

When it comes to shopping for auto insurance, we all need the cheapest possible policy that we can find. Simply calling an auto insurance agent is not enough. We need to Compare Auto Insurance Quotes from multiple insurance agents online. By contacting different companies, you can be on your way to reduce your Auto Insurance Rate in no time.