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Understanding Penny Stocks for Day Traders

If you want to reach a state of financial freedom, you need to pick the right lane. Do you want to focus on the big time stocks that are stable and very unlikely to be volatile? Or do you want to trade in a space where the stocks are cheaper, but more likely to make moves to make you profitable? Penny stocks can provide that type of environment even for a new trader.

Penny stocks, as defined by day traders, generally fall into the category of $2 to $10 per share. They don’t actually cost pennies. They represent small cap companies that are trading with enough volume so that active traders can leverage enough shares to make a profit with their trades. It is a delicate balance and it can require trading on margin, which is basically trading on credit.

As an aspiring day trader, you need to be able to anticipate trends and pick hot stocks before they make their moves. It takes time to learn how to do that. That is where a day trading education site can come in handy. Finding a place where you can learn strategies and techniques from veteran traders through online video courses, where you can interact with other traders in a community of like-minded people, that can be a real asset for a newbie. It provides a place to learn valuable lessons before risking real money.

Penny stocks can make huge jumps during a particular day of trading. Being able to anticipate which stocks are about to make a jump is a skill that can be learned. You need to look for the right market conditions, the best historical data and technical indicators that precede a run on a particular stock. If you can jump in at the right bar at the right time, you can position yourself for a trade that makes 20-30% profit. Add up a bunch of those and you are in good shape for the day. Then string 4 or 5 good days together and you will have a profitable week. That is how you start.

The key is to search for the medium sized wins, instead of going after huge scores. You are not going to find the next Apple or the next Facebook in penny stocks. That is looking for a lottery ticket. Playing the lottery is very bad odds. You want to look to be profitable 60% of the time and keep your profit/loss ratio at 2/1. That means that your losses are small enough that your profits are going to come through on top.

Being able to trade in a simulated market with virtual currency gives you a chance to make the wrong moves and still survive to trade another day. That makes the learning curve a lot shorter when you get into trading real money.


Currency Valuation and its effect on Forex market

Currency valuation is the setting the exchange rate of a nation’s currency. It is very important as the national government can influence the price rate of the government currency to make some important decisions like boosting their international export and also to lessen the foreign debts sometimes.

We are going to give you some example how a change in currency valuation can affect the Forex market and also the international trade. Remember that when we are talking about Forex market, we are not talking about only Foreign Exchange market, we are also talking about the international financial and investment market and agreements.

Boosting exports by devaluing currency

One of the classic example how a fall in the price of a national currency is the sale of European cars to the US markets. Many US citizens use cars which are made in Europe and imported to the United States. If the European Union devalues their currency, it means the value of Euro will fall against the dollar and people can buy less expensive cars in the US. This is one strategy how countries devalue their national currency to export imports.

What is effect will this devaluation have in Forex? The first effect will be that the Forex market will be volatile. Euro and US Dollar are the two most traded currency pair of the Forex industry. When the price of the Euro falls, it haves an impact on Forex industry as well. Though European government may only devalue their currency for fostering their imports, it will have an effect on the investment and Forex world.

Making the market volatile

Though not all of these currency valuations are taken by pre-measured steps in Forex trading industry, sometimes there are events which may happen to change the value of the national currency. For example, if there is a country experiencing Hyperinflation which has happened in Zimbabwe, they will have more volatility in the market. These volatile markets are one way of making money, but they are also a market to lose your money. You can trade the market from Singapore but still, you will easily experience the impact of global economic change. Many traders in Singapore of consider this as the essential part of trading. In fact, it is true since these major changes of the strength of a certain currency create a high level of volatility in the Forex industry. And if you know the perfect way to do the market analysis then market volatility will be your best friend.

Have you really understood what we want to say?

We have doubts if you really have understood our intellectual discussion. To keep things simple, remember this is a very hard thing to digest and we do not expect you will understand it from top to bottom. As you trade the market, you will see that change in currency valuation is bad for Forex and traders to like to trade in a more stable currency valuation market. Being a currency trader you need to trade with a stable currency pair. For this reason, many Singaporean traders only trade the major pairs. It’s true that the synthetic pair often offers great profit taking opportunity but in the long run, their price evaluation can never be measured with a standard scale. The fluctuation is so high that any trader can lose a huge amount of money in a fraction of a second.

Summary: Currency trading is one of the most difficult tasks in today’s world. But once you learn the perfect way to assess the strength of the economic performance of a certain country, you will see things are a lot easier for you. This type of assessment is often known as fundamental analysis. So make sure that you have solid knowledge about technical and fundamental analysis as a professional currency trader.

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CFDs, Binary Options, Digital Contracts, what’s the difference?

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If you are a trader who is new to the online trading scene you may be wandering what the difference is between all the retail instruments that you can trade.

What first started as simple Forex and Equity has now morphed into a massive industry with a number of different instruments that one can trade on including CFDs, Binary Options and a relatively new concept called the Digital contract.

Indeed, no one can blame the new trader for being slightly overwhelmed. The industry is constantly changing and it can be hard to keep track of the different ways individuals can make money in the retail trading market.

However, a little bit of research will no doubt help new traders make the most of these instruments? Given the unique nature of these products, they offer a number of different strategies that one can implement.

In this post, we will run through an overview of just how these instruments differ and what type of strategies one can implement.

CFDs

CFDs (or contracts for difference) are one of the oldest types of instruments on the market. Essentially, a CFD is a spread betting type instrument where the trader will get paid according to movements in the asset.

The trader does not own the underlying instrument but instead has entered into a contract with the broker at the entry price. The trader agrees that the broker can mark the CFD to market at the end of every day and roll the position forward every day.

Another important characteristic of CFDs is that they sometimes involve a large degree of leverage. In other words, the trader can enter a position that is considerably larger than the money that they stake on the trade. This is of course a double edged sword as the price can also go against the trader.

Hence, when trading CFDs, it is quite important that the trader makes use of stop losses that are well placed that can either realise the profit that the trader aims to achieve or can stop a loss when the trade goes in the other direction.

Binary Options

Binary Options are a relatively well known exotic option on Wall Street and have been used for a number of years. It was only in about 2008 that they were being offered on the retail market to average investors. One needs to understand the basics of binary options before they can start trading them.

A binary option is in essence a variant of a traditional financial option. It has the same characteristics, namely a strike, expiry time and price. The difference between a binary option and a CFD is that a binary option has a binary payoff. The trader can either get 1 (or 100) or 0.

This makes Binary Options a relatively straightforward type of instrument as the trader knows from the outset how much they are likely to gain or lose on the investment. It gives a certain degree of certainty for the investment which allows a range of binary option strategies to be employed.

In the case of simple High Low Binary Options, the investment is relatively straight forward and easy to enter. The trader either thinks that the price of the asset will go up or will go down. In the latter case he will enter a PUT option and in the former a CALL.

If the price goes up in the trade expiry time and the trader entered a CALL option then the option expires in the money and the trader gets the positive pay-out (100). If, on the other hand, it went the other way he will lose the initial investment. Of course the opposite can be said for the PUT.

This is why Binary Options are sometimes thought of as a “bet” on the direction of the asset. However, one should not assume that binary options should be traded as a type of casino bet as they are indeed an investment instrument which is priced uniquely.

Digital Contracts

These are a relatively new investment instrument that has been made available on the market. They are a combination of a binary Option and a CFD. They are essentially contracts where the trader can either enter a PUT or a CALL.

In its essence, a digital contract offers the trader the chance to enter a binary like trade with a number of different strike levels. It also offers the trader the chance to exit the trade prior to expiry and realise the profit.

These strike levels range from those that are close in the money (near current price) to deep out of the money (far away from strike). Hence, the range of payoffs that are available to the trader are quite diverse. The trader could make small gains on the instruments by entering contracts which are close to in the money. They could also make large gains on those contracts that are far out of the money.

This could work well for the trader that aims to make a profit from a large movement in the price on events such as price action moves on release of important economic news. The trader could enter contracts that are deep out of the money.

Conclusion

Although there are a range of instruments that one can enter on the retail market, each will serve a different purpose. It is important to make sure that you understand the risk and returns involved with each of these instruments.

A well thought out strategy will make use of a range of these instruments. This is possible these days given that most brokers provide a range of these instruments on their platforms.

 


Reasons Why You Shouldn’t Be Afraid of Trading on the Stock Market

Many people are afraid of trading on the stock market. It can certainly be a daunting task when you’re trying it out for the very first time. There is no denying that. But you shouldn’t let those feelings stop you from giving it a go. Investing is not quite as intimidating or scary as you might imagine it to be. Here are some reasons why that’s the case.

You Can Learn All You Need to Know

There are certainly many complicated aspects of investing. It’s not the kind of thing that you can just dive into without knowing the basics first. And there are many other things that you’ll need to learn besides the basics. But don’t worry. These things can all be learnt if you’re willing to put in the effort. You don’t need to be an expert to invest; you just need to be willing to learn. You can learn more about what it takes to succeed as an investor by reading online articles and delving into books.

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Investing Isn’t the Same as Gambling

Many people believe the myth that gambling and investing are pretty much the same. Planning and strategy play a much bigger part in investing than gambling though. Gamblers have no real control. But investors can shift their money, track investments and sell up at any time. On the other hand, gambling is pretty much all to do with luck. That’s not the case with investing. When you learn all the ins and out of investing, as I discussed above, you can make the right decisions. You have a lot more control than most people realise, so don’t rule it out on that basis.

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Investing is Better than Saving Right Now

At the moment, interest rates are at historic lows, and that makes it very difficult for you to see your money increase. That’s why so many people are not turning away from savings accounts and investing more of their money instead. It allows you to increase your money, and that’s something that nothing else will allow you to do. You should, of course, invest carefully because you could always sustain losses. But if you don’t take a few risks, then you’ll have to accept that your money simply won’t grow. If you ask me, investing is the infinitely better option for most people right now.

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You Can Take a Break At Any Time

It’s much easier to take a break from investing in stocks and shares than it is with other forms of loans. For example, if you invest in properties and have a large portfolio, you can’t just drop it and take a break. You have a commitment to look after those properties and the people renting them out. Whereas, when you invest in stocks, you can sell them up and leave the stock market behind for a little while. There is no need to make any big long-term commitment. So, if it gets too much for you or you decide it’s not for you, it’s easy to sell up and leave it all behind.


The 1-2-3 Method for Forex Trading

The 1-2-3 Method for Forex Trading

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The 1-2-3 method is a trading strategy that is used across nearly every investment market there is. Futures traders use it, stock traders use it, and now, forex trading is benefitting from this particular strategy. When it’s used correctly, this method offers traders the ability to predict entry levels with a great deal of accuracy.

The Bottom Line

Most often, when searching for how the 1-2-3 method works, investors are simply shown a few candlestick graphs with certain points circled for emphasis. That might work for some visually-minded investors, but others may not understand the point of the strategy simply by looking at a chart, so here it is:

The point, or bottom line, of 1-2-3 trading is to predict the end of a prevailing trend.

That’s it. You’re simply using data to get a clue as to when a trend is headed for a reversal. This is very well suited to the Forex market, because there are trends for the same assets across a variety of time frames, all of which can be analyzed and exploited to make the best trades possible.

Example: Down to Up

Let’s say you’re watching a downtrend in a particular currency’s value. First you need the most recent low, and the most recent high. Now, if the downtrend were to continue steadily along it’s downward path, the next high after the most recent low would be lower than the most recent previous high.

So, if you see that the next high is higher than the most recent previous high, that is your first hint that the downtrend is ending. This where the name “1-2-3 method” comes from in forex trading. The strategy is named for the three data points you need to get a hint that the trend is trading: the recent low, the recent high, and the next high.

In order to trade wisely, the next thing you need is confirmation. Watch for the next low: if the next low is lower than that most recent low you started with, the trend is likely continuing, and you just witnessed a little bump. However, if the next low is higher than your original recent low, you’re looking at a confirmed trend change.

Now What?

Once you’ve confirmed that a trend has changed, you still want to be sure you’re trading safely. The best thing to do is wait for the next high after your confirming low; if that high closes at a price greater than the third point in your 1-2-3 method, you’ve got a winner. Most forex traders would utilize the strategy now to trade long.

The 1-2-3 method can be used in reverse for uptrends. Simply watch for an overall downward pattern with the three data points. As traders get more and more comfortable with the market, they can eventually begin using this forex trading strategy to get in the door even sooner, which means their profit margins can be even higher.

Choosing the best strategy for trading can pay off big time with a little practice. Of course, no forex trading strategy works all of the time. The forex market is often considered one of the most volatile, so predicting trends isn’t always an exact science. But as far as methods go, this one has withstood the test of time throughout almost every trading industry, making it a go-to for most traders.

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Meta Description: Learn what the 1-2-3 method is, and how to utilize this time-tested forex trading strategy to see higher returns and more confidence in your trading.


New Investors: Read This Before You Start Trading!

Different people see investment and trading in different ways. For some people, it’s not much better than playing roulette. For others, it’s a fine science, and has absolutely nothing to do with luck. If there’s one attitude you don’t want to have, it’s that trading is an easy way to make money! so many rookies get chewed up by the markets by making ill-informed mistakes. Here are a few you should be aware of.

One of the most damaging mistakes you can make is thinking you have a sixth sense for trading. Okay, maybe you do have a certain amount of intuition when it comes to business and economic changes. However, you won’t have much success in trading if you go with your gut instinct on all big decisions. Some traders can come off as cocky, I know. Don’t let this attitude make you think that they’re all winging it though! For the best start in trading, you should be relying on logic, solid information, and proven strategies. Sure, you might come across a small up-and-comer once in a while who’s worth investing in. Just make sure you’re making decisions based on evidence, and not emotion.

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Another big mistake is starting to invest before you know enough about it. Let’s say worked as a higher-up at a business for some time, and watched certain markets explode and crash. In this position, it can be easy to think that you’ll pick trading up as you go along. Believe me, you’d have to be extremely lucky to jump right into trading, and still get good returns. One of the most important things in trading is having a good understanding of how it works. If you want to go into Forex trading, then start learning how to study charts and make predictions. If you’re going to be trading in dividends, then start reading specialised blogs such as dividendmantra.com . The more you know about your market, the easier it will be to profit from it.

Finally, don’t take too long to close the trade. Countless rookies invest some money, watch it grow, and then stick with it without keeping up-to-date on the asset. Sometimes it’s down to belief in their own intuition, on thinking that the stock will continue to rise in value indefinitely. Whatever the reason, this usually ends up with the newbie learning a hard lesson, and losing all their invested capital. Starting finding out about how assets plateau, and how you should act according to shifts in the market. If you hang onto an asset that goes into a nose-dive without you noticing, then you’ll be in for a nasty shock! After a big loss, some newbies panic and immediately re-invest in a poor stock, which takes us back to my first point. It feels great to win, I know. However, it’s extremely important to know when to close a trade.

 


Stockbroking Essentials for 2016

We have already witnessed a substantial amount of volatility in 2016 and if the past few months can serve as any indicator, the bears may very well dominate the remainder of this year. Those who are already involved within the markets or who may be considering an entrance into this malleable environment should be aware of some of the essential takeaway points to keep in mind. Which strategies should be embraced and are there any notable pitfalls to avoid? Let us briefly examine both of these topics in greater detail.

Modern Times Require Modern Platforms

High-speed Internet access and user-friendly trading systems have opened up the investment world to anyone with a will to succeed. It is still of paramount importance to appreciate that not all platforms offer the same level of efficiency, clarity and responsiveness. Traders who hope to enjoy a substantial edge over their competitors have therefore been taking advantage of the instruments that can only be found at CMC Markets. Unlimited conditional orders, highly advanced platform features and mobile-friendly applications are but a few of the metrics which have enabled this brokerage to offer the best return on investment throughout Australia. The concept of a second-best firm has no merit within the world of stockbrokers.

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One Eye on the News

Access to real-time news feeds can be either a benefit or a disadvantage. As any late-breaking stories circulate around the global economic community in a matter of minutes, staying ahead of this curve is now a necessity. Those who fail to monitor such events are bound to find themselves at the losing end of what would have otherwise been a profitable trade. This is another motivating factor which has drawn investors of all sizes towards the systems provided by CMC Markets.

Diversification

A diversified portfolio can produce profits regardless of external market conditions. This is of particular importance when we have already observed that 2016 seems to be bordering on a bearish market. It is therefore deemed wise to spread one’s investments across a number of different sectors; some of these offering more liquidity than others. A few examples here include:

  • Currency pairs.
  • CFDs
  • Treasuries
  • Commodities
  • Warrants
  • Funds
  • ETFs

Although many will choose to adopt a more prudent stance, we should always recall that fortunes tend to be made when the markets are seen to be taking a downturn. This stance is perfectly illustrated in the expression “never buy when it is high”.

These flexible principles should always be used in synergy with more traditional methods such as hedging, the placement of automatic stop losses and chart analyses. Those who approach this year with the correct mindset should expect to enjoy superior levels of performance. When we combine the efficacious tools provided only through CMC Markets, it is clear that every (somewhat) dark cloud has a silver lining. Please browse through our site to learn more in regards to what is offered.


Finding forex brokers online

The purpose of the forex broker is not really restricted to providing you a trading platform which helps you trade with ease. Your broker is your connection with the markets. The broker is essentially responsible for providing you the cover that allows you to trade with margins. Needless to say, as a trader you need to exercise due discretion while you are actually in the process of selecting the online forex broker. And, what exactly are the factors that you need to keep in view? We will discover in the course of this post.

Factors that you need to consider while you are in the process of selecting a broker

Are you too confused about the right steps to take when it comes to selecting a forex broker? Don’t be—since we’re here to help.

Find out if the broker is regulated or not

There are a lot of unregulated brokers functioning in the market. You should be prudent enough to avoid them since there is every chance of them “vanishing in the air like a puff of smoke” after you have spent a substantial portion of your hard earned money. So, find out whether the broker is regulated or not. There are different regulatory bodies governing the currency markets of different countries. So, you should, at first, find out about the apex regulatory body governing the Foreign Exchange Market in your country (if don’t already know about it) and then find out if the forex broker consulted by you is regulated or not.Forex Trading System

For instance, if you are trading in the US, then you would want your forex broker to be registered with Commodity Futures Trading Commission (CFTC) or National Futures Association (NFA).

Flexibility

Does the forex broker offer you a reliable platform? Are the services of the broker backed by financial software which allows you to trade from anywhere you want? Or is the platform mostly “offline”? If yes, then you might as well end up facing major problems – simply owing to the fact that the forex market functions 24 hours a day. And, if your platform doesn’t work all the time then you could miss out on opening or closing a trade at the most opportune moment.

Margins or deposits

Let us tell you that the forex margins differ from broker to broker. If you are able to trade with low deposits then you can benefit by profiting from higher leverage.

What is the size of trade that you are allowed to trade with?

Once again, the trade size varies from broker to broker. A standard lot consists of 100,000 trading units of a currency. There are some brokers that offer you fractions of lots.

Online presence

One of the best ways to investigate the credentials of the broker will be to ensure that you are actually going through the online forums in a bid to find out what the forex traders have to say about the quality of services offered by brokers.

Do keep these points in view in order to be duly guided.

Author Bio: Sam Payn, a well-known industry blogger, is enthusiastic about sharing valuable tips on Forex – his newfound love. Many of his blogs focus on the need to choose the right online forex broker.


A look at the Forex Market in Indonesia

On December, 2015, the Forex exchange reserves in Indonesia had touched a whopping 105,900 USD million that was tipped as the largest figure since July 2015. The Foreign Exchange Market in Indonesia has successfully been promoted as one of the potent ways to earn money fast. Investors in the country have been looking for quick money and the Forex market promised them fast money for sure. Let us take a look at the forex market in Indonesia.

The Forex Market in Indonesia

It’s the local futures brokers who have played a crucial role in promoting the forex market in Indonesia. A forex broker Indonesia typically offers services both online and offline and is also backed by either a representative office or master IB. The leading trading brokers in the country offer local telephone numbers for their dealing desk.
The Indonesian traders can hypothetically be divided into two main categories. There is one segment which is absolutely comfortable dealing with the risks associated with the forex broker or the products and is in favor of regulated solutions led by FSA. Indonesian investors are also known to rely heavily on Singapore and Australian regulated brokers. Then there is that other section of investors that prefers low cost solutions. They just want to trade fast and not face any hassles during the initial period.

The Indonesian currency market: A Few Facts (Past and Present)

The capital market of the country is fairly developed. It was the Dutch Colonial government that supervised this market way back in the year 1912 but had been shut down during the World Wars. The Capital Market Supervisory Agency had been established to take care of the functionalities of the Foreign Exchange Market as it was reopened in 1977. The particular sector had been privatized in the year 1992 with a new ownership at the helm of things. The privatization of the company was a direct result of the improvement of the economy.

The stocks featuring in the Indonesian market include traditional commodities like energy and industrial materials. The banks and other financial institutions enjoy the largest share in the market – standing at 25.23%. The Industrial Materials, Consumer Goods and Energy have 20.03%, 14.71% and 13.72% shares respectively.
Very interestingly, the Forex market has flourished in Indonesia, despite the fact that the country has people living below $2 per day. Perhaps the success of the forex industry is attributable to the presence of strong private and government sectors in the country.

How should you select a Forex broker in Indonesia?

Today, if you are on the lookout for a reliable forex broker in Indonesia, make sure you are making a selection only after conducting thorough research on the background of the broker. There is no dearth of forex brokers functioning in Indonesia. However, not all of them will offer you equal quality of services. So, it is imperative on your end to ensure that you are doing your research properly before opting for a service.
Hope we have been able to help you. Good luck!


Various Advantages Of Trading Online

Many beginners will find it hard to believe but there was a time when it was not easy to trade. All the trades necessarily had to go through a stockbroker where brokers would take orders from the traders, make their own suggestions and then handle everything when it came to the actual buying and selling of various assets. Thanks to the advent of Internet, these days it is possible for anyone to open an account for trading online for almost all the asset classes.

The Ease Of Trading Online

Online trading has made it very easy for beginners as well as experienced traders to trade in currencies, stocks, CFDs, commonalities and various other asset classes. In addition to ease of trading, there are a number of other benefits of trading online.

Close-up of a financial report with the silhouettes of business people in the background

Close-up of a financial report with the silhouettes of business people in the background

One of the biggest benefits of online trading is lower cost of trading. Most of the traditional brokers usually charge a substantial fee for each trade. On the other hand, online brokerage firms usually charge flat fees for transactions and these flat fees are very inexpensive as compared to the charges by the traditional brokers.

Another main benefit of online trading is that it gives you complete control over your investments and portfolio. When one could trade only through traditional brokers, one had to often stick to the advice given by the brokers. However, online trading ensures that you have complete control over your financial future and do not need to trust the impulses of a stranger. You can do all the research online and make your own trading decisions based on your research.

Quick And Smooth Trades

Another big benefit of online trading is in its near instant nature. Earlier, it used to take a lot of time to execute a trade depending on the type of asset class. On the other hand, online trading usually takes only a few seconds. In most of the cases, it takes only microseconds to execute a transaction. In simple terms, there is almost no lag between the order put in by an investor and the actual transaction.

Online trading also offers a lot of flexibility. Before the advent of online trading, investors had to buy assets in particular lot sizes. However, trading online has removed the requirement of a minimum trade allotment. This has added flexibility and liquidity to the market as investors can invest even a small sum of money to test the waters before putting in a substantial amount of money.

Online trading brokers offer investors a number of tools to make it easy for them to research and make online trades. For instance, investors these days have access to real-time price charts, a variety of calculators, a variety of graphs and various other indicators to make trading decisions in an easy manner.

In Conclusion

Overall, these are some of the main benefits of online trading. However, it is also important to keep in mind that while online trading is convenient, it also has some drawbacks. Therefore, one should be careful while trading online and manage money smartly to become a successful trader.


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