Forex Trading And US Stock Market (Part I)

By Ahmad Hassam

Right now the stock markets are bearish. Nobody knows when the stock markets will turn around. It can be a few years before the global economy comes out of the recession and with that the stock market sentiment turns bullish. When the stock market is performing poorly, the forex market enables you to offset your losses. When the stock market is doing well, the forex market also enables you to accelerate your profits. The real magic of forex market unfolds when you combine it with other profit generating markets like the US Stock Market.

Many small investors lost their lifetime savings in the stock market crash that happened in 2008. Most of us invest in the stock market. You should use the forex market to complement your stock market investing and supercharge your returns on investment if you do nothing else with the forex market.

Many foreigners invest in the US economy because of its size and the opportunities that is offers. US treasury bonds and stocks have been popular among foreigner for a long time. US stock market attracts investors from around the globe. The US stock market is the largest and the strongest stock market in the world. Before foreigner can invest in US stocks they need to convert their native currencies into US Dollar.

When the US stock market is performing well and the stock prices are rising, more and more foreigners want to invest in US stocks. But they cannot directly invest in US stocks. First they have to convert their native currencies into US Dollars. The value of US Dollar will rise when they exchange their native currencies for more and more US Dollars.

But what happens when the US stocks start going down just like that has happened now. More and more foreigner and Americans look for other investment opportunities when the US Stock Market isnt doing well. When they sell US stocks, they get US Dollars. They need to convert these US Dollars into their native currencies or whatever currency they prefer. Investors start selling US Dollar to buy other currencies when this happens. The value of US Dollar drops.

Historically the US Stock Market had been going up till 2008 when the sub-prime mortgage crisis started. In other words, the stock market is cyclical. It ebbs and flows as the market participants vacillate between levels of confidence and doubt.

Interestingly, the stock market booms and busts are fueled by the same investor emotional volatility. During the stock market boom, the investor emotions run wild. Everyone gets overexcited to the point of buying stocks selling at ridiculous prices.

The investor emotions run wild again during stock market busts also. Everybody panics and start selling stocks at ridiculously low prices. Sometimes there is no rhyme or reason to what happens to the stock market. This is exactly what is happening at the moment.

During good times, everyone who picks stocks looks like a genius. You dont have to put a thought into it. It just seems to happen so naturally. Times like these give you an excellent opportunity to enhance your returns in the forex market.

However, forex market becomes more useful when the stock market loses its value. Virtually nowhere else the forex market works as a perfect hedge for your investments than in the stock market.

You are completely at the mercy of the stock market if you have all your money invested in the stocks. However, you can retain more control of your financial future if you put a portion of your money in the forex market. So when there is a downturn in the stock market like that in the present, you can offset your losses in the forex market. - 23204

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know These Forex Broker Games. Get Netpicks Forex Signals Free!

How To Buy Penny Stock As Additional Income For You

By Malcolm Torren

It's not unusual to find people who would work two jobs for more income. You may have been working for more than eight hours a day, five days a week. For a time, your pay was good enough. Later on you feel that you need more. So you work harder. Then you realize that no matter how much effort you do, your pay stays proportional. Then you decide to buy penny stock shares because you heard somewhere that it can make your rich.

This is not really true. Owning shares in a company also means putting your money at risk. If you gain some, that's good. That means you earned some money without practically lifting a finger. But what if you lose your investment? To buy penny stock shares also requires a little bit of work. The difference is that the work is more on research and learning, and not on pleasing your boss.

1. Your penny stock broker. Your next step is to know where to start. Penny stocks are shares bought at an amount less than one dollar. Some stocks are higher and would go to a three dollar mark but not beyond five. That is the basic rule. You need a penny stock broker to assist you with your investment. But make no mistake. There are many swindler brokerage firms out there.

2. Educate yourself with the secrets of the trade. Basically it's a buy and sell concept. Your stock broker will give you advice on what stock to buy and when to get them. They will also help you in understanding the trade. But it doesn't mean you stop learning. Brokers will still rely on your trading decision. They will still consult you if you wish to buy penny stock of a small company. So it pays to do you part in research too.

3. Know how far you're willing to go in terms of investment. By nature, all business investments have risks. But they behave differently from each other. The penny stocks have a unique risk level. It's not as liquid as those with large and medium cap shares. And often there is the lack of information of the shares and small companies' credibility. The real risk is when swindlers manipulate this part of the system. Beware of this type of investment propositions.

4. Never go and invest beyond what you can afford. Remember that your decision to buy penny stock investments is because your salary is not enough. The implication is that if you invest more than what you normally earn, the more you won't have enough. If you invested so much and lost, you will lose it forever. Regulate your investment. Learn to bank roll your funds. This is just common sense in business. Buy less and sell more.

This is not yet enough to get you started. To buy penny stock that gives you big smiles at the end of the year, you have to know more.

Stock market is a dynamic field where an investor can lose or gain everything within a matter of seconds. If you know your part of the deal well, you will have a better chance of earning more than you anticipated. Don't stop learning and most importantly don't overspend. - 23204

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Get more. Discover the secrets of penny stock pick before you buy penny stock.

Money Management Can Make Or Break You

By Maclin Vestor

Many people have been through it all, they've lost money and made money in stocks, they've lost and made money in poker, and they've lost and made money in options, and they've even lost money and made money in gold. Ultimately the one thing that can make or break you is Money Management. It is what separates the winners from the losers and the haves from the have-nots. What do people that go through those experiences ultimately learn from?

The rookies are always looking for the penny stock, the hot tip, the day trading, the options, or something that can make them rich quick. They are essentially looking for that lotto ticket in hopes they can put all their money in and have it pay off. The experts are focusing on protecting what they have, even if they're just starting and it's just a little bit. Although experts often use trading and investment systems, the fact is that it almost doesn't matter at all how good the method is, if you cannot manage your money well. In stocks although people who can read financial statements and charts, and understand if a stock is likely to go up, or do back testing on certain method and estimate a probability that stocks using that method went up in the past, it is difficult to pin point the exact odds. That makes managing your money more difficult. However, just because you can't know the exact probability, doesn't mean you can't use past results to estimate a probability range, and manage your money well. Lets just assume for a while that you could know the exact probabilities. If you know that you will win 3 times as much as you lose when you win, and you know that the win will take place half the time, do you know for sure that you will make money in the long run?

This is a trick question, you can never know with certainty that you will make money, but is it probable? Again, that still depends. How can this be? It's easy to say that if you invest $100, you will turn it into $200 (gaining $100) half the time, and you will lose $33 the other half, that in 100 one hundred dollar investments you can expect to make $5000, lose $1667 and net $3333. However, this fails to take into account how likely you are to be able to afford the $1667 in losses and maintain that $100 investment every time out of 100 times.

In other words, the $3333 net gain is theoretical, and takes absolute no consideration on how likely you are to be able to afford those 100 investments. What if you only had $100 and you bet it all, you have a 50% chance that you lose $33 of that 1000... what then? You can't simply make another $100 investment, So instead you have to make a $66 investment, now your win will be significantly less. If you lose yet again it will become even more difficult to get back to even. Although on paper this is a good investment, it is not a good investment without proper money management. You may have built a very safe car that drives straight, but if you are a bad driver you still could crash.

Unfortunately many people don't learn how to drive their financial investment vehicles, and instead rely on money managers, financial advisors, mutual fund owners, and company CEOs to do everything for them. This isn't a bad thing for those unable or unwilling to learn. However, the risk is not only that these people won't manage your money well, and not only that if they do, you still may pay them so much in fees and expenses that it's not profitable, but also that by handing the keys to your investment vehicle over to someone else, you lose control and you fail to learn anything. Although you may accomplish your goals with the help of these people, you also could do this yourself with a good trading system that uses good money management. - 23204

About the Author:

Maclin Vestor teaches about varioustrading systems and teaches you system trading skills that can make you a better trader.

Save Money Now and Use Alternatives

By Robert Jackson

Want to save more money without sacrificing? Then think of alternatives. Many people find that the products or services they switch to are actually very similar.

Many people pay for gym memberships but are they really necessary? Some dumb bells, a morning jog is really all we need most of the time right? This way, you aren't paying for zilch and you will still be fit.

Cable TV is so expensive these days that everyone should seriously think about canceling. With services like Netflix and iTunes, watching your favorite shows and movies are easy.

Those who have phone service probably can cut it up. Some people have gone with cell phones only and their lives were exactly the same. Those land lines are really just ancient technology now.

Restaurants usually give you so much sauce that you can just add more meat to the dish and have it still taste the same. This works especially well for Chinese food, so even if you don't know how to cook, you can eat at home for less now.

Chances are good that you are overpaying for your cell phone plans. For almost all of us, going with a prepaid plan will almost certainly save us money. It sounds crazy, I know, but it really works if you do the numbers.

Many people redeem points for merchandise but redeeming for cash or travel certificates are usually the best deal. Think about all the options that they give you and run the numbers!

This one is against the grain but paying for a year's worth of the magazine you love is probably better than buying them at a stand. This is because you will probably buy more than two a year (if it's one that you love) and the per year subscription cost is usually twice the cost of one magazine.

Renting probably makes no sense on paper but if you factor in that you probably don't the product that you felt you absolutely need at the heat of the moment, it's probably cheaper to rent it than to buy it.

Generic brands are often skipped because they are deemed to have lower quality. Chances are, it's not true at all. Sometimes, the generic brands are exactly the same, and other times, it's even better than the name brands. The only difference? Marketing. - 23204

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Make Money Trading Forex Without Breaking A Sweat

By Seth Gainer

Forex trading is becoming one of the most popular ways among those who like to make money online. With the advent of the internet many people have started trading in the forex market as one can earn money sitting in the comforts of their home. Forex trading involves certain amount of financial risk; however, with little extra caution and appropriate planning one will be able to make money without sweat.

One need to be good at speculation in order to engage in forex trading. It is essential to have a very good understanding of the currency exchange patterns in the market. Another important factor that is crucial to make money here is correct timing. Though forex trading operates somewhat similar to share market it does not bear such great risks of the share market.

Forex trading can be categorized into two basic types ? short term trading and long term trading. You must choose how you would like to deal with the market to make money so that right strategies can be planned accordingly. However, it is always possible to move from short term trading to long term trading and vice versa.

In short term Forex trading, the trader observes the currency patterns to take advantage of the sudden rise or fall of the currencies. The trader does not wait long to make money here. Profit is seen through short term exchanges; the strategy is used here is to make swift changes with little profit margin. Short term trading requires a certain level of experience to see profit.

Long term is ideal for beginners who want to make money through forex trading. Here the trader stays with a particular currency that increases in strength and waits until it reaches the peak before any form of exchange is done. Unlike the short term trading, daily transactions does not happen here.

There are a number of courses to teach the basics of how to make money through forex trading. These courses will teach the beginners the strategies one needs to know to avoid loss and risks. Some of the training courses also give the students with tools used in this trade so as to enhance their profit level.

Just to be on the safer side, to start with one must invest in forex trading only the money that they can spare. This has to be considered only as a secondary source of income. It is not advisable to invest your entire savings in this trade as it involves risk. Moreover, forex trading should not be made as your main source of income at least until you settle well with the trade and master it. Another important rule of thumb is to go steady with the profit margin and not to wait for too long either to make more profit or to salvage loss. You will be able to make money if you adhere to these basics.

One of the best ways to start is to select a stable currency that grows stronger gradually. As forex trading is dependent on a number of factors, beginners should learn to pay attention to factors those are not that easily evident. The traders should have a specific trading strategy while approaching the currency market to make money. One also should have excellent analysis skills to keep a close watch on the global currency trends. One must not be too hasty to make money through forex trading as soon as they start, they should give themselves some time to learn the trade. - 23204

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Before you wager your hard earned money, check out our free forex trading resources. Plugging into a successful currency trading system is a must for all Forex currency traders.