Appreciating Momentum

By Chris Blanchet

When it comes to security price momentum, many people will look at the general trend of a security without fully understanding the technical basis of the term. What Momentum really tells us, however, is whether the trend will continue or reverse. Without technical analysis and events like Momentum, many investors would buy high and sell low.

Defining Momentum Sharing similarities with the Moving Average Convergence-Divergence (MACD), Momentum tells investors how much a security's price has changed over a certain time period. Investors with a general understanding of technical analysis methods, and this method in particular, will be able to more accurately determine whether day-to-day changes in price are merely a reflection of a market's systemic behavior or if it is signaling a more permanent trend.

In other words, Momentum allows investors to see the true strength of particular price trend. When relying on multiple technical analysis tools in conjunction with Momentum, investors are better able to understand the true, underlying price trend. Armed with this information, investors can make appropriate changes to their security holdings. Making such important decisions can become difficult at best without the assistance of technical analysis tools.

Calculating Momentum For do-it-yourself investors, completing your own technical analysis can be burdensome thanks to the often complicated mathematical demands needed to pinpoint events and patterns. With Momentum, the math is not all that difficult or involved. Simply, to arrive at a Momentum reading, you take the security's close price and divide it into the close price 10 periods ago, and then multiply it by 100. Or: Close $ /(Close 10 time-periods ago) * 100].

Trading on Momentum Basing trade decisions on Momentum is quite simple. If the Momentum value is greater than zero, then a bullish signal is trigger; less than zero, a bearish signal is triggered. Investors should, however, be cautious in that extremely higher low values might not suggest a reversal but instead a continuation of the existing trend. For example, where investors are looking to sell, instead of trading on Momentum, investors should wait for the actual security price to begin its fall before committing to selling.

When it comes to trading on technical analysis events, investors should always use other events to confirm or refute positions they are currently considering. Never make a trade based on one technical signal. Momentum can often serve to confirm or refute other events or even the underlying price trend in a particular security.

As mentioned previously, many events triggered through technical analysis involve heavy mathematical calculations. For most investors who do not have the time or ability to complete their own mathematical work, trading software has evolved to the point where your computer will go so far as making simple buy and sell recommendations. Understanding technical analysis is one thing; completing the work is another. For most serious investors, trading software not only makes sense, but it improves profit. - 23199

About the Author:

Christ Blanchet has more than 15 years of experience as a Financial Advisor. His is the technical analysis and options contributor at Online Trader Today.com where free members can follow the Technical Analysis Series and receive a complimentary e-book on Option Sensitivities. He maintains a debt-free blog at How To Repay Debt.com

Forex Trading: A Brief History

By Bart Icles

The foreign exchange or forex market is perhaps the biggest market in the world. With the leverage, high liquidity, and availability it offers - not to mention its low dealing costs, more and more people are becoming interested in engaging in forex trading. Although the forex or currency trading market is largely the sphere of financial institutions, practically anyone who is interested in forex trading can learn the basics, engage in the market activities, and earn the benefits.

So how did the foreign exchange come to be? One can say that it all started with the introduction of minted coins to trading. As years passed, stable governments introduced paper as "I owe yous" and gained popular acceptance during the middle ages. These paper "I owe yous" later became the foundation of what we know today as currencies.

With the rise of banks and central banks came the concept of the convertibility of currencies into gold. Prior to World War I, exchanging paper money for gold did not happen often. On several occasions, the failure to print paper money in proportion with a government's gold reserves led to inflation that in turn resulted to political instability. To counteract these devastating results and protect local national interests, governments started to agree on foreign exchange controls to keep market forces from reproving monetary irresponsibility.

After World War II, countries faced the biggest challenges on monetary inflation. To address this, governments have reached the Bretton Woods agreement that suggested a currency exchange system built on the US dollar. This resulted in a system that dealt with fixed exchange rates that reinstated the gold standard to a certain degree, fixed the value of the US dollar, and fixed the value of other main currencies to the dollar.

In the 1960s, national economies moved in different directions that placed the Bretton Woods agreement under increasing pressure. For quite some time, several realignments helped keep the system alive but the Bretton Woods agreement finally collapsed in the early 70s when President Nixon suspended gold convertibility in August 1971. However, governments continued to trade currencies based on fixed rates, and even set off regional efforts to stabilize the monetary volatility.

The European Economic Community or EEC introduced another system based on fixed exchange rates. This came to be known as the European System of 1979. Although this modern system almost met its end in 1993, efforts to stabilize currency continued in the region and it has successfully renewed the attempts to fix currencies and replace many of these currencies with the Euro.

Today, the foreign exchange market remains to be one of the most lucrative and dynamic trading markets in the world. It continues to exist not only to facilitate trade and investment, but also to place appropriate value on multifarious international currencies. - 23199

About the Author:

Your forex training starts with a desire to learn and a drive to become a great trader. Using forex trading training takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

Beginner Forex Trading Basics

By Krosw Ell

Forex trading is one of the most interesting ways to try and invest money. The market brings people from all around the world and gives them a chance to make some really great returns. If you are new to forex you should really like this information.

So now we have to figure out why you decided to trade forex. Spending time now on this question will help you in your execution later. There will be many factors that are involved in your trading style.

Newbies to forex should always take there time and stay away from intra day trading. If you trade on the larger time frames you will have a better chance of finding a profitable system. By doing this you should earn more profits in the beginning.

So you don't have alot of capital to start but you enormous goals. This is okay, but you need to realize how long it's going to take to do this. THis is really something you should give some thought to before you invest.

Everyone's favorite subject is risk management. Not really but it will probably be the number one factor in your success. You need to keep this number reasonable so that you can stay in the game long enough to profit.

There are thousands of ways to trade the market and now you have to find what's right for you. One thing to remember is that most systems work with correct money management. Find one that you like and stick to it.

So you have done everything and you are still not profitable. Your education will never stop and you may to to take a break and find your weak spots. If you do this at the correct times you should continue progressing toward your goals.

This should have shed some light on different areas of trading and hopefully helped a little. Make sure to stay on top of yourself and don't let weak spots in your trading go on too long. If you can keep your head right you can be profitable with forex trading. - 23199

About the Author:

Before you trade a dime, make sure to visit Kroswell's forex tradingblog!

Forex Accounts

By Ahmad Hassam

Good money management is the key to your long term success in currency trading. Many people ignore this aspect of trading at their own peril. Trading discipline means using a trading system that uses good money management rules to avoid using emotions in making trading decisions.

One of the worst blunders that trades can make is to try to trade without sufficient capital. This does not mean that you should have a lot of money before you start trading; it only means that you need to have enough capital in your account to take advantage of the movements in the markets. Low capital increases your chances of getting blown out.

A trader with limited capital is always a worried traders always looking to minimize losses beyond the point of realistic trading. The minimum amount required to open a standard account with most forex brokers is $2000. You can start with $2000 but it is recommended by most of the professional traders that you should start with $5000-$10,000 to get good results.

A standard account or a regular account lets you trade a $100,000 standard lot with a $1000 deposit. This account is often also called 100k account. The broker is giving you an interest free loan of $100,000. This $1000 is kept as the margin or guarantee by the broker. This is a 1% margin. Your account should have more than $1000 if you want to trade.

When you open an account with a forex broker, you must first determine what the default margin requirement is. You can change the account margin requirement to whatever you feel comfortable with. If you start with a 2% margin, it will cost you $2000 to trade one standard lot of $100,000.

Many brokers try to offer huge leverage to the new trades in order to entice them. You can get a leverage of 200% in most of the standard accounts. Using 200% leverage means trading $200,000 with a $1000 deposit. With this small deposit you are controlling a huge amount. Be careful! Dont use more than 4% leverage while trading in the beginning. Too much leverage is dangerous.

I am not saying that leverage is bad. You need to know it is a double edged sword that can cut both ways. It can increase your ROI but at the same time it can wipe you out in case of a slight market move going against you. Its just that you need to understand and learn how to use leverage. You can only do so with practice and with practice and more experience; you can increase the level of leverage in your trading.

Mini accounts are great for beginners. You can open a mini account with most of the brokers with a deposit of only $300. The mini account was developed to accommodate investors who were looking for bringing more diversification to their stocks portfolios. This small dollar requirement allows many small investors to participate in the forex markets. Many were previously unable to do so. Some brokers offer micro accounts as well.

On a mini account, you have different lot sizes as compared to the standard account. One lot on a mini account means $10,000. You only need $50 to control a mini lot of $10,000. A pip size on the mini account is equal to $1 instead of $10 as on a standard lot.

If you lose 100 pips on a mini account, it means losing only $100. Losing 100 pips equal $1000 on a standard lot. A mini account reduces your risk by 10%. But it also reduces the profit that you can make by 10%. Start with at least $500 on a mini account. A mini account is a great way for new traders to practice forex trading. First develop the feel of how the forex markets work. Once you become an expert, trade on a standard account. Standard lot gives you the opportunity to make good ROI. - 23199

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Discover A Revolutionary New Forex Robot. Develop your own Forex Trading System.

Manufacturing And Importing Your Product From Asia

By Davina Cruella Sandwich

For many many years now, companies have been having their products mass-manufactured in Asia, usually in and around Southern China as this is now recognised as the global manufacturing centre of the world.

The reason for this is that you get a lot more for your money in China than you do pretty much anywhere else because of the exchange rate, a single unit of their currency (Yuan) is worth far less than a single unit of ours.

That is pretty much the main reason that a lot of companies source their products from Asia. I mean, what more reason does a company need to do something if its going to save them lots of money in the long term? But there are some other advantages, and a few disadvantages.

The advantages are few, but still obliterate the disadvantages in my opinion. Of course the main one, price is a big factor as I previously mentioned. There are 11.2 Chinese Yuan for every 1 British pound so you do get a lot more for your money.

Also, you can get in with the Chinese trading industry, and if you can become known among them, this can be infinitely advantageous. Another advantage is that you will undoubtedly wind up closer to the raw materials you need, hence you save money on that as well!

The disadvantages, I would say, are severely disproportionate to the advantages in that they seem relatively insignificant. The main disadvantage is the shipping cost. Actually getting your produced product back to the UK/USA/wherever you are based can be a bit pricey, but compared with the money you will have saved on the actual production, I think this is an insignificance.

As well as that, there's the time that shipping takes. This is probably more of a disadvantage as this could result in loss of turnover if demand for your product is high enough. Also, the production might be a little sloppy to start with, but if you get a good sourcing company to sort it all out for you, they will ensure that this doesn't happen.

To conclude, I believe that the advantages that come with manufacturing your goods in Asia far outweigh the disadvantage. - 23199

About the Author:

A great company to do all your import and manufacture with is Red House Global. They have had decades of experience and are well known among the Chinese traders, ensuring you the best price.