All about investment

By: Alan Haburchak

Stockbrokers have been reported to have misused hedging strategies over and over again. However, if a financial loss occurs because of an investor did not recommend an appropriate strategic hedge, that money may be able to be recovered.

In general, hedging strategies look for a "spread" between market value and theoretical or "true" value and attempt to extract profits when the values converge. As hedging is a strategy designed to minimize exposure to unwanted risks, while still allowing a portfolio to profit from investment activity, it is an important aspect to investing. It is highly recommended that investors discuss the use of hedging strategies with their stockbroker from the onset of any investment.

One common hedging strategy is the investment in a security a broker believes is under-priced relative to its "fair value". The short sale of similar securities or security is combined with the investment. By "playing both sides", it does not matter whether the market as a whole goes up or down in value, only whether the under-priced security appreciates relative to the market. This strategy is often referred to as a "speculation in the basis," where the basis is the difference between the security's theoretical value and its actual value.

Some stockbrokers fear that by suggesting a hedging strategy to a client the concept will tarnish their professional reputation. However, it has been proven over time that if the basic strategies are fully explained to a client that most clients want to minimize their risk, not add risk.

Given that appreciation rates for equities, the last twenty years have been well above long-term averages, most investors are open to the concept of transferring price decline risks to others, if the strategies, including costs and fees are appropriate.

Many brokers who have clients with taxable portfolios do not consider hedging strategies for several reasons. Concerns include the time commitment, the complexity of the issue, and the fear of what other people, including the client or other advisors, might think of a stockbroker who recommends hedging strategies.

Some brokers believe that many clients are not financially sophisticated enough to make informed decisions about hedging strategies and therefore claim those concerns are the reason they did not recommend a risk management approach.

Ignorance on the part of the broker and inaccurate perceptions by others are not valid reasons for stockbrokers to not recommend that their clients include these legitimate risk management tools as a part of their portfolio strategy. Losses that are incurred because a stockbroker did not offer the most suitable hedging strategy may be able to be recovered.

Brokers are required under regulations to suggest and offer suitable strategies to their clients. In addition, investment advisors, who have more stringent fiduciary duties and standards, are obligated to seek investments and strategies that are in the best interest of the client. Part of the strategies that go along with investment include risk management.

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by: Shaun Rosenberg

Selling calls on long term stocks can produce great income. The strategy works great for stocks that you are long term bullish on.

When you sell a call on a stock you already own you are making a covered call. You would get the premium of the call option. In exchange you will have to sell the stock at the calls strike price if that price is met or exceeded.

In other words you are limiting your potential gain from the stock for some quick cash. This is why if you like a stock for the long run you may only want to sell calls with a strike price that will probably not get you called out of your stock.

The best time to sell a call in this case would be when your stock is pulling back. If your stock pulls back down at resistance or breaks support then you could decide to sell a call above those lines. The money you make on the call option could help you feel better about staying in the stock during a pull back.

The worst time to sell a call if you are long term geared would be during extremely bulls markets. If your stock is making huge gains, then you do not want to be selling calls. This would limit your gain to the upside.

If you do end up selling a call on a stock you own and the stock moves up past the strike price of the call then you have two options. You can choose to do nothing. In this case you will have to sell the stock at the strike price of the option.

That may not always be a bad thing. If you were in the stock for a couple years then that price might be far more then you originally paid for it. You may decide you can find better investments out there and would be happy selling this stock.

If you still like this stock and want to hold onto it you can choose to buy the call option back. Because the stock went up your call option would be more expensive then what you sold it for. In this case you would lose a little on the option in order to keep your stock.

In general, selling calls will produce a great gain on stocks that you are holding. Unlike dividends which might pay off 4-5% in a year covered calls can pay off 4-5% in a month.

For more information on how make covered calls visit http://www.stocks-simplified.com/covered_calls.html

For more information on how to trade in the stock market visit http://www.stocks-simplified.com

If you have at least a few months that Forex came into your life you have surely heard of Fibonacci levels in Forex charts. But what is Fibonacci?

Fibonacci sequence is a series of numbers. Every number is being produced by adding the last Fibonacci number to the previous. The first numbers of Fibonacci sequence are 1,2,3,5,8,13,21,34,55,....etc

But what has Fibonacci sequence to do with Forex Trading? IF you divide two sequential numbers you get the result 1,618. The square of 1,618 is 1,27. The inverse number of 1,618 is 0,618. The inverse of 1,27 is 0,786. These numbers are called Fibonacci numbers because they result from Fibonacci sequence number's analogies.

The 1,618 number was called 'Golden Mean' by ancient Greeks and other ancient cultures. They called it so because they observed that this number is found everywhere in nature. The result of creations, living organisms to space galaxies, that have this number embedded is symmetry.
But enough with maths and science! Let's see the use of Fibonacci numbers in trading. Since the beginning of investment industry, traders have noticed that prices tend to change direction in levels that are very close to these numbers I mentioned above.

For example in an unptrend the prices will go up and then swing down to a level that is a Fibonacci number before continuing the uptrend. These levels are called Fibonacci Retracement levels. The most common Fibonacci levels in Forex market are 0.382, 0.5, 0.618 and 0.786.

Nobody knows why prices tend swing in these Fibonacci levels. And nobody knows at which exact Fibonacci level will the price change direction in advance.

How could you use this knowledge to improve your trading?
Well, you should know that prices tend to reverse at Fibonacci retracement levels. A lot of novice traders use the exact point of a fibonacci retracement level e.g. 0.618 as a trade entry. Experienced traders know this fact and wait for other traders to get their stop loss hit and then enter the market. Fibonacci retracement levels should be used as an indication of entry and not as the exact point of entry. Moreover the bulk of traders use 0,618 and 0.386 retracement levels. Experienced traders know this tendency and wait for other retracement levels not widely used like 0.786 or 0.707 in order to enter a trade. Use these Fibonacci retracements as well. Make the difference!

But how would you know at which Fibonacci retracement level will the price change direction? Fibonacci retracements, like other technical indicators are more valid when they are calculated for a greater time value. Do not pick minor swings to calculate Fibonacci retracements. Pick greater price swings instead. Moreover, a Fibonacci level becomes more valid when it coincides with another technical indicators such as trendline resistance or support, MACD or RSI divergence and so on. The most valid retracement level should be choosen keeping in mind that further confirmation from other technical indicators should be taken into account. You wouldn't like to put your money on risk with only one reason, would you? So choose the Fibonacci retracement level that coincides with other reverse signals.

Last of all let's see the use of Fibonacci numbers in trading time analysis. Pick a significant hi or a low in a daily chart. Then calculate trading days (excluding weekends) from that point and on using Fibonacci sequence. You would have the first, the second, the third, the fifth the eighth trading day and so on. Watch that in trading days that are Fibonacci numbers, prices tend to reverse direction! Isn't it amazing? Add this tool to your chart analysis and you wont lose!
After all these years of trading experience and research I have found that Forex charts iclude some special price patterns created by price swings. These patterns are formed under certain price relations between their swings. My trade system will provide you with low risk and hi reward trading entries.

Think smart. Learn more:

Author

Delija Crnovrsanin is a recognized authority on the subject of Forex Industry, His web sites: Forex.DelijaWorld.com provides a wealth of informative articles about Forex Trading Strategy, Forex Trading Platform and News in Forex Market...

Article Source: http://www.ArticleBiz.com

Illiquid stocks usually have bigger ticks than more fluid stocks, but generate larger gains with less volume. Less volume means that it takes less to push a stock up than it does to push a heavily traded stock. Trading illiquid stocks can help improve your trading and make a trader more knowledgeable on the effects of volume. Illiquid stocks can help investors reach trading goals much faster as each movement is much larger than the movements in high volume stocks.

How to Generate Profits

Proven strategies for profiting from illiquid stocks are gap strategies. Low volume stocks are much more prone to gapping, and thus, strategies for gapping up and strategies for gapping down are much more effective in trading these stocks. Technical analysis can be more difficult to apply to low volume stocks, but is much more profitable on moves than high volume. Technical analysis indicators are choppier and less fluid than on high volume securities.

Less Data More Decisions

If you’ve ever taken a look at a stock chart of a low volume stock, you’ll see that technical analysis doesn’t apply as well. Moving averages can be as volatile as the price itself, and momentum indicators are less accurate. Custom indicators with longer data timeframes and special weighting can help smooth out the ups and downs and give a better picture of future direction.

Back to the Basics

The basic trading fundamentals, such as earnings reports and price to earnings ratios, are much easier to comprehend and apply to these stocks than technical analysis. Fundamentals work over the long term much better, as they show real value of a company rather than the day to day trading range. While not completely custom indicators, a long term PE reference will help you determine if the stock is oversold or overbought much better than the technical analysis counterpart, the RSI.

Lower Volume Can Be Better

Low volume stocks need less attention than the ever changing favorites like the QQQQ or common ETFs. The price action of penny stocks, low volume stocks, and other illiquid investments is much more contained and infrequent, allowing a trader time off in between trades. Proven strategies like earnings reports and fundamental analysis works well on the lower volume stock, and for long-term investors, the most illiquid stocks are the best.

Leroy Rushing is an active, professional day trader; trading coach; and author. He is the Founder and CEO of Trading EveryDay, a distinguished provider of educational trading products and services that are available worldwide. Trading EveryDay also has many articles with unique perspectives on day trading.

Article Source: http://www.ArticleBiz.com

Pressure washers are useful in number of ways. Painters use pressure washers to provide top quality washing services along with their normal painting services. Car dealers use them for a quick wash. There are various types of pressure washers like Industrial pressure washer, gas powered pressure washer and portable pressure washer. Pressure washers are in priced at a high rate and so many companies look for pressure washer financing.

Industrial pressure washers may be steam pressure washer, cold pressure washer or hot pressure washer. There are some specialized pressure washers that combine the three modes. These pressure washers help in cleaning, disinfecting, sanitizing and dissolving more industrial substances. They do the work fast and effortlessly. They use high pressure to dissolve the harmful substances without the need for any chemical cleaners. They clean even stubborn substances like grease, mold, and mildew etc easily. They can be used in any surfaces like concrete, brick, stainless steel, aluminum and so on. Due to their excellent features, they carry a high price tag. Hence pressure washer financing is often essential to acquire them.

Gas powered pressure washer allows professional cleaning without spending more money. It has more operating pressure to clean the surface. It is ideal for several work sites. Some of them even have child safety lock to assure enhanced protection. It has separate detergent injector and integrated hose to ease the cleaning work. It is heavy duty and provides long lasting performance. However the initial cost is high and often requires pressure washer financing to acquire it.

Portable pressure washers are very convenient to use. They are compact and they can be taken to any place in your car. They help in cleaning bikes, cars, horses, pets, wetsuits etc. They can be taken easily to tight locations. They can be used for both home and commercial purposes. They can be used along with detergents. They are durable also. They offer number of benefits to business people. Hence they are little bit expensive. Therefore many companies find it wise to go for portable pressure washer financing to acquire them.

The pressure washers play vital role in industries and other commercial places. They offer professional cleaning service at low cost. In turn if the company depends on professional cleaning service each and every time, it needs to spend more. Though the initial cost of pressure washer is more, it offers valuable service. The company can also seek the help of some reliable financing companies that have great experience in dealing with general equipment financing. This can help the company to acquire pressure washer financing in better terms.

The company need not require involving in any frustrating procedure to get financial help to acquire pressure washer. A simple application form is enough to grant fast approval. Some financing companies accept online application also. Hence it is possible for almost all companies to acquire any type of pressure washer suitable to them.

The company can then repay the amount to the financing company in low monthly repayments. Hence many companies prefer financing pressure washer nowadays.

Chris Fletcher’s page features more about new and used Pressure Washer Financing and other finance topics.

Many people think that investing in mutual funds is the way to go and the best method for getting rich. I think mutual funds are horrible investments. Here are 8 reasons why you should not invest in mutual funds.

1. Mutual funds don't beat the market.

72% of actively-managed large-cap mutual funds failed to beat the stock market over the past five years. Trying to beat the market is difficult, and you’re better off putting your money in an index fund. An index fund attempts to mirror a particular index (such as the S&P 500 index). It mirrors that index as closely as it can by buying each of that index’s stocks in amounts equal to the proportions within the index itself. For example, a fund that tracks the S&P 500 index buys each of the 500 stocks in that index in amounts proportional to the S&P 500 index. Thus, because an index fund matches the stock market (instead of trying to exceed it), it performs better than the average mutual fund that attempts (and often fails) to beat the market.

2. Mutual funds have high expenses.

The stocks in a particular index are not a mystery. They are a known quantity. A company that runs an index fund does not need to pay analysts to pick the stocks to be held in the fund. This process results in a lower expense ratio for index funds. Thus, if a mutual fund and an index fund both post a 10% return for the next year, once you deduct The expense ratio for the average large cap actively-managed mutual fund is 1.3% to 1.4% (and can be as high as 2.5%). By contrast, the expense ratio of an index fund can be as low as 0.15% for large company indexes. Index funds have smaller expenses than mutual funds because it costs less to run an index fund. expenses (1.3% for the mutual fund and 0.15% for the index fund), you are left with an after-expense return of 8.7% for the mutual fund and 9.85% for the index fund. Over a period of time (5 years, 10 years), that difference translates into thousands of dollars in savings for the investor.

3. Mutual funds have high turnover.

Turnover is a fund’s selling and buying of stocks. When you sell stocks, you have to pay a tax on capital gains. This constant buying and selling produces a tax bill that someone has to pay. Mutual funds don’t write off this cost. Instead, they pass it off to you, the investor. There is no escaping Uncle Sam. Contrast this problem with index funds, which have lower turnover. Because the stocks in a particular index are known, they are easy to identify. An index fund does not need to buy and sell different stocks constantly; rather, it holds its stocks for a longer period of time, which results in lower turnover costs.

4. The longer you invest, the richer they get.

According to a popular study by John Bogle (of The Vanguard Group), over a 15- or 16-year period, an investor gets to keep only 47% of a cumulative return from an average actively-managed mutual fund, but he or she gets to keep 87% of the returns in an index fund. This is due to the higher fees associated with a mutual fund. So, if you invest $10,000 in an index fund, that money would grow to $90,000 over that period of time. In an average mutual fund, however, that figure would only be $49,000. That is a 40% disadvantage by investing in a mutual fund. In dollars, that’s $41,000 you lose by putting your money in a mutual fund. Why do you think these financial institutions tell you to invest for the “long term”? It means more money in their pocket, not yours.

5. Mutual funds put all the risk on the investor.

If a mutual fund makes money, both you and the mutual fund company make money. But if a mutual fund loses money, you lose money and the mutual fund company still makes money. What?? That’s not fair!! Remember: the mutual fund company takes a bite out of your returns with that 1.3% expense ratio. But it takes that bite whether you make money or lose money. Think about that. The mutual fund company puts up 0% of the money to invest and assumes 0% of the risk. You put up 100% of the money and assume 100% of the risk. The mutual fund company makes a guaranteed return (from the fees it charges). You, the investor, not only are not guaranteed a return, but you can lose a lot of money. And you have to pay the mutual fund company for those losses. (Remember also that, even if you do make a return, over time the mutual fund company takes about half of that money from you.)

6. Mutual Funds are unpredictable.

The holdings of a mutual fund do not track the stock market exactly. If the market goes up, you might make a lot of money, or you might not. If the market goes down (the way it is now), you might lose a little bit of money . . . or you might lose A LOT. Because a mutual fund’s benchmark isn’t a particular market index, its performance can be rather unpredictable. Index funds, on the other hand, are more predictable because they TRACK the market. Thus, if the market goes up or down, you know where your money is going and how much you might make or lose. This transparency gives you more peace of mind instead of holding your breath with a mutual fund.

7. Mutual Funds are sales items.

Why don’t all these money and financial magazines tell you about index funds? Why don’t the covers of these magazines read “Index Funds: The Most Obvious And Rational Investment!” It’s simple. That’s a boring heading. Who would want to buy something that isn’t exciting or that doesn’t tickle one’s imagination of immense riches? A magazine with that headline won’t sell as many copies as a magazine that boasts “Our 100 Best Mutual Funds For 2008!” Remember: a magazine company is in the business of selling... magazines. It can’t put a boring headline about index funds on its front cover, even if that headline is true. They need to put something on the cover that will attract buyers. Not surprisingly, a list of mutual funds that analysts predict will skyrocket will sell loads of magazines.

8. Warren Buffett does not recommend mutual funds.

If the above seven reasons for not investing in mutual funds don’t convince you, then why not listen to the wisdom of the richest investor in the world? In several annual letters to the shareholders of Berkshire Hathaway, Warren Buffett has commented on the value of index funds. Here are a few quotes from those letters:

1997 Letter: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.” 2004 Letter: “American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous.”

Bottom Line: If you want to make money, you need to copy what rich people do. So if Buffett doesn’t like mutual funds, why would you? So, if not mutual funds, what should passive investors invest in? The answer by now is clear. Invest in index funds. Index funds have lower fees, and you keep more of your returns in the long term. They are also more predictable, and they give you peace of mind.