Forex Trading Online

Forex Factory: foreign exchange

2012-03-14T07:03:00.001-07:00

Forex Factory: foreign exchange: The foreign exchange market (usually referred to as the forex, FX or currency market) is a global financial market where a currency is tra...

Forex Factory: foreign exchange

2012-03-14T07:02:00.001-07:00

Forex Factory: foreign exchange: The foreign exchange market (usually referred to as the forex, FX or currency market) is a global financial market where a currency is tra...

Why You Need A Forex Trading System To Succeed - A Story Of Two Forex Traders Just Starting Out

2012-01-21T00:29:00.000-08:00

With whatever field or investment you'd like to take on, there are always tools and resources available to assist you. And this is especially true when it comes to Forex. The currency market can be quite overwhelming, and becoming a successful Forex trader does not come from pure luck. There are simply too many factors that can affect the direction that currency prices will move toward.
Here are two important realities to consider:
1. Most newbies try to take on Forex using no assistance or tools. (Most newbies lose all of their money).

2. Most successful traders use a Forex trading system to help them (Successful traders make VERY good money in Forex).
But even with these realities commonly known, newbies still try to attack Forex blind, basing their buying and selling decisions on limited knowledge and experience. It is not until they have lost all of their trading funds that they consider that it probably would have been smarter to invest in a Forex trading system and software from the beginning. Don't make the same mistake. If you want to be successful with currency trading (ie. making consistent profitable trades) then it is highly recommended that you investigate the many Forex trading systems and software on the market.
Let me illustrate further with a story of about two Forex traders:
Tom and Jim have been reading about Forex a lot recently. Both have been spending hours online trying to understand what currency trading is and how (and if) they can make some quick profits. All of the marketing ads that they read say that you can increase your money very, very quickly. Sure, there's some risk involved, but the potential rewards are just too good to pass up. So they both decide to try out Forex and see if they can make a go of it.
Both guys are highly motivated and want to give Forex their best chance. So each of them is going to invest $1000 of their savings into currency trading. If they lose the $1000, then they will quit Forex and re-evaluate whether or not to try again in the future. By investing a thousand bucks, both have shown that they are fully committed to making Forex work for them.
Starting Out:
Tom takes his entire $1000 and transfers it into a retail online Forex broker. Tom will be making all of his trading decisions on his own. He will be doing his own research and will lurking on Forex forums and blogs to see if he can get some much needed tips.
Jim goes a different route. Although he is just as motivated as Tom, he is also aware of the complexity of the Forex market and realizes that he just doesn't have much experience at this point. So he takes $900 and transfers it to the same retail Forex broker as Tom. He saves the remaining $100 in order to get access to tools and resources (ie. Forex trading systems and software) to help him make better trades. He used to day trade stocks and knows first hand the edge that these tools and resources can have (especially if you are just learning the ropes).
Month 1:
Tom jumped right into currency trading. His first trade started off in the positive, but quickly went south. Before he could post his sell request, he had lost $100. Although he did have some minor profitable trades, overall his trading history was very similar to his first trade. Many trades started off good, but for some reason (that he just didn't have the experience or knowledge to understand), then would eventually trend down. At the end of his first month trading currencies, Tom's trading account was down to $400.
Jim, did a little bit of research and found Forex Ambush. This was a membership website that provided its members winning signals. What really caught his eye was that they boldly stated that their trading signals were 99.9% accurate. How could they make such a bold statement? Jim did some more digging and found lots of positive feedback from current members. And there was one more thing that finally swayed Jim into giving Forex Ambush a try: they offered a 7 day trial at a fraction of their normal price.
For less than twenty bucks, Jim had seven days to try out Forex Ambush and their 99.9% accurate trading signals. He was really excited. He had $900 in his Forex trading account and still had $80+ to use in case Forex Ambush didn't help.
The next day Jim received an email with a trading signal from Forex Ambush. He was still very new to Forex, but with the bold accuracy statement still in his mind, Jim put in his order just as the trading signal specified. When his transaction closed later that day, Jim had made a $145 profit. He was very excited! After his 7 day trial ended, Jim went ahead and signed up to be a permanent member of Forex Ambush. Although not every trading signal resulted in profits, almost all of them did. And the losses that he did have were very small. After a month, Jim had $1750 in his Forex trading account.
Month 2:
Tom was feeling deflated. Within a month, he had gone from $1000 to $400. In order to try to make back his money, he did higher valued trades that were much more risky. The end result: he was down to $0 before the month had even ended. Tom was angry and frustrated. He swore off ever doing Forex again, telling anyone that would listen that it was a scam and that they should save their money.
Jim, on the other hand, was on cloud nine. He had turned his initial $900 and turned it into $1750. He was still getting the daily email from Forex Ambush with the trading signals, but he was also testing out a few other Forex trading systems. After a month of profitable trades, he had a much better understand on the Forex market and was full of confidence. By the end of month 2, Jim's trading account was now at $2355.
And the most remarkable thing was that Jim was doing all of this in his spare time. He still had a full-time job to cover his living expenses. Everything he made in Forex was extra. He has been contemplating quitting his job and trading Forex on a full-time basis. But for now, he's happy for the stability his current job brings him and is enjoying the benefits that his "side" money in Forex is providing him.
The moral of the story: if you want to succeed at anything that you have very little knowledge and experience with, it is highly recommended that you invest in the tools and resources to maximize your chances of success.
You need to ask yourself: do you want to be like Tom, poor, angry, and swearing that Forex is just a scam? Or would you rather be like Jim, investing in tools to help you succeed and enjoying the profits that those tools will help you make? If you are serious about making money with Forex, then you owe it to yourself to find a Forex trading system that will give you the winning edg

Opening a Forex Account

2012-01-11T10:40:00.000-08:00

Once the basics of forex trading are understood, you can look at opening an account.
Demo Accounts
The best training method in forex trading is a demo account. With virtual money to practice learning the trading techniques, a demo account allows any trader to improve their skills with no risk of loss. Opening a demo account is usually very simple. Usually, the prospective trader can simply go to a broker's website and apply for a demo account online - and can be trading with the account within minutes. See the Forex Broker List for quick access to many demo account applications.
Types of Accounts
There are 3 basic types of accounts, Full Size, Mini, and Micro.
Full Size or Standard
This account is best suited to the experienced trader, or the trader sufficiently comfortable in trading substantial sums of currencies.
The term standard size describes a common unit of measurement in forex trading. Currency is traded in specific units, described as lots, and the size of a lot is 100,000 units of the currency, as in $100,000 USD.
Full size accounts are often opened only with large initial margin deposits of perhaps $100,000, but they can be available with $25,000, or even $2,000.00. However, a trader must be aware of the risks of leverage.
Mini
A Mini account is usually one/tenth the size of a standard or full size account, or $10.000. Brokers allow lower initial deposits for mini accounts. New traders may be more comfortable with mini accounts, as will experienced traders who prefer to trade in smaller units.
Micro
Micro accounts are usually one/hundredth the size of standard accounts, or $1,000.00. Initial deposits for micro accounts might be available for as little as $25.00, although it might be more reasonable to maintain a balance of $500.00.
Choosing�a Broker
The growth of the Internet and the global nature of the forex market has allowed for a large number of forex brokers, each offering slightly different service levels, and many operating under different laws and differing levels of regulatory scrutiny. The variety might be confusing, but it is important to select a broker with careful consideration. The following are some of the main points to consider when choosing a forex broker.
Trading Platform and Charting
Your forex broker will provide a trading platform-either in the form of a downloaded computer application, or in the form of an online service that must be accessed through your web browser. It is the trading platform from which you will monitor the markets and execute trades. This will be the main tool in your forex trading arsenal. Therefore, using a trading platform that is easy to use, and with which you are comfortable is important. This is a factor that should influence your choice of forex broker.
You should find the trading platform to be quick and responsive, and simple to use. Entering and exiting trades should be simple and direct, and the platform should allow you to easily watch your open trades, and quickly exit them. All trading platforms provide charting capability and some provide additional market information. However, the quality of such features can vary greatly from platform to platform; consideration of those features and other aspects of the trading platform should be included in your appraisal of the broker.
Execution Speed
The speed with which trades are processed by a forex broker is an important consideration closely aligned with the question of trading platform. In some platforms, speedy execution can reduce potential for loss, since quick execution can mean that the price at which the trade occurs has not changed between the time of placing the order, and the time that the trade is executed by the brokerage. However, for many trading platforms, the trade price is fixed at the time the order is placed, and does not change regardless of trade execution speed. Either way, this is an important aspect broker selection.
Regulation
Many countries, such as the United States have regulatory bodies which oversee forex trading, and all forex brokers must be registered with those authorities and comply with their regulations. However, the level of regulation and the protection offered by law can vary dramatically from country to country. Therefore, the regulations under which a broker operates must be carefully examined and considered, especially when choosing a broker from outside your own country.
Minimum Account Size
For many forex traders, another important factor in the selection of a broker is the account size offered. Brokers offer accounts with varying minimum or initial account sizes. Account size is affected by the margin requirements. As forex allows trading on the margin, a smaller account balance means less investment for the profit potential, but can come with increased implied risk of account loss, if the account balance is insufficient to handle short-term unfavorable changes in currency price.
Leverage and Margin
Leverage determines are the amount of funds required to be on deposit (in the trader's trading account) in order to trade a certain amount. For example, if the leverage allowed by the broker is 100:1, then trading of a currency pair valued at $10,000 would require a margin of at least $100.00 be maintained in the trader's account.
Selecting a broker that offers higher leverage allows the trader to trade larger amounts of forex with less margin (and therefore, with a lower trading account balance).
Spreads
The spread is the difference between the purchase and selling price of the currency, in other words, the difference between the Bid and Ask prices. Brokers earn revenue by retaining a portion of the spread. Spreads offered by brokers are usually fixed for each currency pair, and can vary substantially from broker to broker. Ensure that the broker you choose offers narrow (small) spreads leaving more profit for you.
Customer Service
This point should be well-known with description. However do remember that, the level of customer service you receive from the brokerage can affect your trading experience and your profits/losses. Ensure that the level of customer service provided by a broker is responsive and effective.

Fundamental and Technical Analysis

2012-01-11T10:37:00.000-08:00

Analysis of the market is not merely a part of trading; it is the essence of forex trading. Market analysis generally takes one of two approaches, or a merging of the two approaches. The first approach, fundamental analysis, considers factors and events, opinions and policies that might impact the future value of a currency. The second approach, called Technical Analysis, involves the study of historic and current currency values and trading volume. Whatever the approach, the objective of analysis-technical, fundamental, or blended-is to attempt to project currency price direction and identify trading opportunities.
Fundamental Analysis
Fundamental analysis for forex traders focuses on factors that might influence currency values, including interest rates, the overall state of affected economies, central bank and government monetary and fiscal policies, Gross National Product, etc. Some of the factors that should be considered in fundamental analysis are described below:
The Economy
While the worldwide recession of 2008 was a factor for all countries, it affected different countries to different extents, and different nations responded to the challenge using varying strategies. Those differences resulted in changes in the relative value of world currencies. In addition to global events and responses, more localized changes in localized economic conditions affect the value of individual currencies. Events that have a detrimental effect on economies tend to decrease the relative values of economies, while those events that have a positive effect tend to increase the value of related currencies. For example, a sustained drought in Australia might result in downward pressure on the Australian Dollar, while an increase in oil prices can result in a jump in the Canadian Dollar.
Political (In)Stability
All major currencies are issued by politically stable countries. However political stability changes over time-sometimes abruptly. Dramatic changes in political stability can affect currency values dramatically by affecting confidence in the currency, and by reducing economic activity. Fundamental analysis of currency trading should include keeping close watch on changes in political stability in related regions, starting with base knowledge of regional political stability. A good source of basic political information on countries is the Central Intelligence Agency of the United States. Their website has a World Factbook and is a good place to start a general analysis of the baseline politics and stability of a country
Government Policy
Government policies - particularly monetary and fiscal policy can have substantial impact on the value of the nation's currency. Nations often use interest rate as an important tool in monetary policy - increasing interest rates to cool economic growth and curb inflation, and decreasing rates to stimulate economies. Fiscal policy also impacts currency values; higher taxation can slow economic growth, while low taxation and spending can stimulate economies. Of course, these factors will affect currency values
Observing Other Participants
Another fundamental aspect of forex trading is the understanding other market participants and the effect they may have on currency values. Governments and Central Banks, private banks and other financial institutions, hedge funds and other speculators may all play a role. Central banks or hedge funds can buy the currency, and raise the price in one day. Large private banks can also affect the market with their activity, but usually only over a long term period. The actions of private speculators can also impact currency prices.
Events and Reports
Agencies of many world governments track statistical data that reveals aspects of the economy. Often, the agency will release the results of their data collection and analysis at regular scheduled intervals. Such reports often relate directly to regional economic conditions, like inflation rates, gross national product, employment rates, trade balance and inflation. Those reports can have a dramatic impact on currency values. The forex trader should be aware of the timing of such reports, and adjust trading strategy appropriately - sometimes simply exiting all related trades (being flat) because of the uncertainty that precedes such reports. Fortunately, the timing of such events is known in advance, and reported widely on online economic calendars.
Other events can also impact currency values dramatically. Such events include meetings of central bank committees or release of national budgets.
Economic Theories and Models
Forex trading is a recent development, but stocks and equities have been studied for a long time, and economic theories and models abound on the best way to analyze information.
These models look at various aspects, such as the activities of business in the economy, and even the most basic psychological attributes such as belief that the country is moving in the right direction. Business activity is a long term indicator of strength in the economy. A widespread belief that a country's fundamental economic indicators are accurate will sustain a currency's value, even if the short term economic outlook may be bleak.
The theories available to the investor include those on currency parity and national balance of payments, and models on interest rates, the role of money, and the types of assets purchased in a country. The data used by these instruments include economic and employment statistics, interest and inflation rates, and sales information such as gross domestic product, trade and capital flows and retail sales. By using this information, the trader can evaluate the fundamentals of a nation's economy, and ensure the basic research is sound
Technical Analysis and Charting
Often, forex markets are studied through the use of charts that show market prices over a period of time. Traditionally, financial charts were drawn by hand. Fortunately, today such charts are available through forex trading platforms, and are available online on websites such as this one http://forex.tradingcharts.com/chart/
Charts are used extensively by traders, to study past patterns of price movement, identify ongoing trends, and to try forecasting future price movement. Technical indicators are often used in conjunction with charts. Simple technical indicators include moving averages. Many complex indicators are available, which involve complex mathematical analysis of price data. Fortunately, online charts do all the calculations automatically, and display the results as overlays on the chart.
Forex charts are usually presented in one of several formats, including line, bar chart and candlestick.
Bar Charts
Perhaps the most popular type of forex chart is known as the bar chart. Bar charts plot price (in the vertical dimension) over a period of time (in the horizontal dimension). Each bar on the chart represents a fixed time period, which can often be selected by the viewer if the chart is being viewed online or through a forex trading platform. Each single bar (or 'tick') on a bar chart illustrates 4 distinct prices for the period of time represented by the chart. Those prices are: open - currency price at the start of the period; high - the highest price during the period; low - the lowest price during the period; and close - the price of the currency at the end of the period.
With experience at reading charts, a trader can visualize market action quickly from a bar chart or can study the chart in depth to identify trends, levels of price support and resistance, indications of potential trend reversal, repeating cycles, and much more. The same capabilities exist in another popular form of chart, which displays the same information, but in a different format.
Candlestick Charts
Like bar charts, candlestick charts plot forex price levels over time. Candlesticks display the same information as bar charts for each "tick": open, high, low and close. However, the presentation of those four prices is dramatically different than in a bar chart.
In a candlestick chart, each individual time period (or tick) is shown as a small graphical image called a candlestick. High and low prices for the period are shown as thin vertical lines at the top and bottom, extending beyond the thicker "main body" of each candlestick. The top and bottom of the main body of each candlestick represent the opening and closing prices for the period, and the color of the candlestick main body signifies which was higher: the closing price or the opening price. Often, a higher close is signified by a white, hollow, green or lightly colored main body, and a lower close is indicated by a solid black or reddish main body.
Traders trained and experienced in the use of candlestick charts look for visual patterns, and specific candlestick formations that signal potential trend changes or other market activity.
Technical Analysis
Technical Analysis goes hand-in-hand with forex charting. Technical analysis attempts to forecast future price movement through the mathematical analysis of past price action. For many traders, technical analysis is the most important tool for examining the market. Technical analysis involves the study of past and forex prices-often though the use of charts-with the objective of predicting future prices movements and trends, and identifying opportunities for profitable forex trading.
Many traders advocate technical analysis as the most (or only!) reasonable method to attempt to predict prices. That opinion is based on the idea (and cliche) that the "market action discounts everything". That statement means that all factors that can be known that can impact currency prices are already reflected in the currency price. (Of course, few technical traders would dare ignore pending events, such as the release of economic reports discussed in the section above.).
In addition to the belief that the "market action discounts everything, fundamental analysis is based on two additional ideas:
Prices move in trends: this truism is apparent by observing a forex chart. Currency prices tend to move in the same direction for periods of time.
Market history repeats itself: Again, some examples of repetitive cycles can be observed on almost any forex chart. However, this premise proposes an idea more subtle: that for a set of general setup conditions in currency price history, currency prices are likely to respond in direction and manner similar to their response to the same initial conditions in the past.
Various simple tools can be used in technical analysis, such as moving averages, trend lines and support levels, or the advanced trader might choose from a wide range of advanced analyses and theories including relative strength index, Fibonacci studies, cycles, and many more.
Some popular fundamental analyses include Elliott Wave Theory, Fibonacci Studies, and Pivot Points.
The Elliott Wave Theory holds that markets are affected by the psychology of the population, and move in response to this psychology in a predictable pattern. The theory was developed in the 1920's for stock markets and is now being used in forex trading.
Fibonacci Studies look at the relationship of numbers and apply the same sequence analysis to the forex market, to project the direction the market will move.
Pivot Points refers to the point at which the currency changes direction and increases or decreases over the day. Information from the previous day is examined to see where the pivot point will be for the current trading day.
All of these tools provide the trader with the perspective needed to ensure trades are accurate and profit is maximized.
Many books have been written about fundamental analysis, and there is much much more to learn on the topic.

Mechanics of Forex Trading

2012-01-11T10:33:00.000-08:00

Placing an Order
Orders to buy or sell currencies can be placed any time the market is open. With most trading platforms, placing a forex order is as easy as a click of the mouse.
If a trader wishes to buy a currency pair, he is said to be taking a long position on that pair. The trader who is long will profit when the currency pair increases in value. A trader who sells a currency pair is said to be going short. That trader will profit if the currency pair decreases in value.
It is an important principle to understand that the forex trader can place an order to sell a currency pair that he does not "own". To exit that "short trade", the trader simply places an order to buy the currency pair in the future. See below for more information on exiting trades.
More about long and short in forex trading
The concepts of buying, selling, long and short can be confusing in currency trading, since in every forex trade one currency is exchanged for another - essentially there is a buy/long and a sell/short in every trade. For simplicity, it might be easiest to think of a currency pair as being an abstract financial instrument to which a price is assigned by the forex market.
At the same time, it is important to maintain perspective and remember that the abstract-appearing instrument, in a very real way represents the actual relative value of two very real currencies. When a currency pair is purchased, the trader is purchasing the base currency and selling the quote currency. When a currency pair is sold, the opposite is true: the trader is buying the quote currency and selling the base currency.
Order Types
Orders are the instructions that traders give brokers to buy or sell currencies. Those orders are usually issued directly to the forex broker through the trading platform.
Various types of orders are used in forex trading. The forex order types will be familiar to traders experienced in equities or futures trading. Three common types of orders are the Market Order, the Limit Order, and the Stop Order.
The Market Order instructs the broker to buy at the current market rate, and in the electronic age, is carried out with the click of the mouse. In the forex market, this order type is usually executed immediately, at the price displayed in the trading platform at the time the order is placed (at the instant of the mouse click). That ability to place orders instantly is in marked contrast to many other markets, when the actual price at which a market order is executed might differ greatly from the price at the time the order is placed.
The Limit Order instructs the forex broker to execute a trade to enter a forex trade at a specific price. The trade could be either to buy currency when (if) it reaches a specific price below the present market price, or to sell the currency pair when (if) it reaches a specific price above the present market price.
For example, consider a trader who wants to buy USD/CAD, thinking that it is likely to increase in value. However, the trader believes that the pair will decrease in value slightly below the present market price before climbing. Since the trader wants to take buy at the lowest possible price, he therefore wishes to wait until the pair reaches the lower price before entering into the trade.
Without a limit order, the trader would need to patiently watch the trading platform, waiting for the price to dip to his target entry price, and then placing a market order.
The limit order automates the process. The limit order can be placed, and the trading platform will wait for the price to drop to target price entered by the trader.
A drawback to using a limit order is that it is only effective at the specific price, and not one pip away. However it does mean that a trader does not have to continually monitor the market waiting prices to meet his entry price.
The Stop Order is similar, but opposite to the Limit order. This order type is normally used to exit an existing forex trade by liquidating a position when the market price changes against the expectations (and position) of the trader. The Stop Order is an order to buy above the present market price, or sell below the present market price. This order is normally used to limit losses if the currency pair price changes unfavorably in a forex position. For that reason, it is also known as a stop-loss order.
Exiting a Position
A trader exits a position, that is, completes the trade, or leaves the market, when he executes the opposite trade by which he started. If he bought USD/CAD he then sells USD/CAD. Note that the trader could also have sold USD/CAD initially, and then bought USD/CAD later to exit the trade and close the position.
Calculating Profit or Loss
Once a trade is completed, profit or loss can be calculated-this is usually done automatically by the trading platform (and most platforms calculate profit and loss continuously throughout a trade. Profit/Loss is the difference between the value of the currency when the trade was entered, and when it was completed (or exited). It is important to understand how profit and loss is calculated, in order to better understand forex trading.
Just as in an auction, a transaction in the foreign exchange market uses the terms Bid and Ask to describe the value of the currency. The Bid is the price at which the currency pair can be sold by a trader, while the Ask is the price at which the currency pair can be bought. In a long trade on a currency pair, profit loss is the difference between the Ask price when the trade is entered, and the Bid price when the trade is exited. Conversely, in a short trade profit/loss is calculated as the difference between the Bid price at the time of entry, and the Ask at the time the trade is exited. An example will help to clarify.
Assume that a trader believes that the Euro will increase in value as compared with the US Dollar. The trader places a market order to buy EUR/USD, and the trade is executed at the (then) current price of 1.3490/93. Since the trader must buy at the Ask price (and this is a Full Size account), the purchase is for 100,000 Euros at the price of $134930 US Dollars.
As the trader hoped, the value of the Euro does in fact, increase relative to the US Dollar. The trader closes the trade by selling EUR/USD, at the market price of 1.3505/08. Since the trader must sell at the Bid price, he sells the EUR/USD for $135050 US Dollars.
The profit on this trade is $80 US Dollars ($135050-1354930)
However, if the trade did not work out as well as the trader hoped, and the trade was exited below the entry price, the profit/loss would look much different.
Let's assume that the trade was closed by selling the EUR/USD position when the price was at 1.3484/87. At that price, the 100,000 Euros are sold for $134,840. The trade results in a loss of $90 US Dollars ($134,840-$134,930)
Account Balance, Leverage and Margin
A quick review of leverage and margin might be helpful.
Every trader is required to maintain funds in their trading account with the brokerage. (This deposit is normally held in a segregated fund, in trust - often as regulated by the legal authority under which the brokerage operates, but be sure to check, since requirements vary from authority to authority, and possibly from brokerage to brokerage).
The minimum amount of this account is often set by the brokerage terms. In addition to the established minimum, the account also has a very practical use for margin. In order to enter and maintain a trade, the trader must commit some of the trading account; this amount is called 'margin', and the trading account itself is sometimes referred to as a margin account. The amount of margin committed by the trader for any specific trade is a percentage of the trade value, in a ratio usually called leverage.
Leverage ratios are commonly in the range of 100:1 to 10:1. If the ratio is 100:1, the trader must reserve 1% of the trade value as margin.
For example, consider the trader who enters a full size trade for USD/JPY. That trade has a value of $100,000 US Dollars. If the leverage offered by the broker is 50:1, the trader must maintain and commit 2% of the trade value in his margin account, or $2000. If the USD/JPY trade gains in value, the trader's account balance will increase by the amount of the profit (thus providing additional funds that the trader might use to enter additional trades).
However, if the trade loses funds, even temporarily, the trader must commit additional margin funds to the trade, thus reducing the amount in the margin account that would otherwise be available to commit to other trades. If losses in the trade exceed the balance available in the trader's account the trading platform usually exits the position automatically.

Charts and Quotes

2012-01-11T10:31:00.000-08:00

Why Charts and Quotes?
Charts and quotes are the language of forex prices. Expertise in reading charts and understanding quotes is a valuable--even essential--weapon in the successful forex trader's arsenal. Effectively reading charts and quotes requires being familiar with numbers and decimal places and basic math principles like addition and subtraction, multiplication and division. To being exploration of charts and quotes, let's review some basic information covered in previous sections.
Currency Pairs, Base currency & Quote currency
In forex trading, a trader buys one currency at the same time he sells another, or vice versa. The two currencies are commonly called a currency pair. Both currencies are listed together so the trader can know exactly what value is placed on the currency bought and the currency sold. For example as USD/CAD quote might be displayed as 1.0438/41. In this example the first currency, the United States dollar, is called the base currency and the second, the Canadian Dollar is the quote currency.

For many currency pairs, the U.S. Dollar is used as the base currency, reflecting in this case the value of the CAD (the quote currency) in relation to 1 USD. This example indicates that 1 USD can buy 1.0438 Canadian Dollars, or that it takes $1.0438 Canadian Dollars to purchase 1 US Dollar.
Not all currency pairs use the USD as the base currency. For example, when the Euro was introduced in 1999, the government of the European Union decreed that all foreign exchange quotes using the Euro would place the value of the Euro first. Therefore, quotes involving the Euro would read as follows: EUR/USD 1.4545, meaning that one Euro will buy 1.4545 USD. Two other notable currencies are listed as the base currency in all quotes, even against the USD; the Great Britain Pound (GBP), and the Australian Dollar (AUD). In some cases, neither the USD nor the EUR are found in the base currency or quote currency. Such currency pairs are called cross rates. An example of a cross rate is CAD/JPY (Canadian Dollar/Japanese Yen). (Note that definitions of the term cross rate vary. Some rely upon the context of the county in which the term is used - seemingly an arbitrary definition in a global marketplace.)
Bid/Offer and Ask, Spreads
In any forex transaction, one currency is sold at the same time another is bought. Just as in an auction, the foreign exchange market uses the terms Bid and Ask to describe the value of the currency. The difference between the Bid and the Ask, also known as the spread, is used to calculate the amount of profit or loss on the trade.
Forex rates are often stated with both Bid and Ask included together, separated by a slash:
For example the term USD/CAD 1.0438/41 indicates that the bid price for USD/CAD is 1.0438, the ask price is 1.0441, and the spread is therefore 0.0003, or of 3 pips.
Remember: the Ask is the price at which a Trader might purchase the currency pair, while the Bid is the price at which a Trade might sell the same pair. The Bid is almost always lower than the Ask price, except in unusual conditions seldom (if ever) experienced by the speculator
As an example of how the quote prices relate to trading, consider the following:
Assume that the current price of United States Dollars when compared to Canadian Dollars is USD/CAD 1.1000/03 (the Bid is 1.1000 and the Ask is 1.1003, and the spread is 0.0003, or 3 pips. At those rates, a trader wanting to buy one USD would pay 1.1003 CAD, while he could sell one USD for 1.1000 CAD. To put this in practical forex-trading terms, a trader wanting to buy 100,000 USD would require $110,030 CAD, while 100,000 USD could be sold for $110,000 CAD.
If the trader purchases USD/CAD at those rates, and then trader waits until the forex price quote rises to USD/CAD 1.1006/09, he could sell his USD/CAD position for $110,060 CAD earning a profit of $60.00 CAD.
However, if the price for the USD/CAD does not change in the time the trader holds the position, and the traders sells the USD at the same price 1.1000/03, the position would be sold for $110,000.00 CAD, creating a loss of $30.00 (the amount of the spread).
What is a pip? What is it worth?
Profits, losses and spreads in forex trading are often expressed as pips. A pip is the smallest unit of price for any currency. It is short for "Percentage in Point". In forex trading, currency values are usually stated very precisely, to the fourth decimal point. A pip is the smallest change in the fourth decimal place, or 0.0001. For example, for USD, a pip is 1/100th of a cent. The Japanese Yen is the only currency expressed to the second decimal place, making a pip 0.01 in this case.
Forex Charts and Technical Analysis
Often, forex markets are studied through the use of charts that show market prices over a period of time. Traditionally, financial charts were drawn by hand. Fortunately, today such charts arehttp://forex.tradingcharts.com/chart/ available through forex trading platforms, and are available online on websites such as this one .
Charts are used extensively by traders, to study past patterns of price movement, identify ongoing trends, and to try to forecast future price movement. Technical indicators are often used in conjunction with charts. Simple technical indicators include moving averages. Many complex indicators are available, which involve complex mathematical analysis of price data. Fortunately, online charts do all the calculations automatically, and display the results as overlays on the chart.
Forex charts are usually presented in one of several formats, including line, bar chart and candlestick.
Technical Analysis
Technical Analysis goes hand-in-hand with forex charting. Technical analysis attempts to forecast future price movement through the mathematical analysis of past price action. Various simple tools can be used in technical analysis, such as moving averages, trend lines and support levels, or the advanced trader might choose from a wide range of advanced analyses and theories including relative strength index, Fibonacci studies, cycles, and more.

The Sneaky Way To Managing Losses In Your Forex Trading

2012-01-04T04:24:00.000-08:00

One of the cardinal rules of Forex trading is to keep your losses small. With small Forex trading losses, you can outlast those times the market moves against you, and be well positioned for when the trend turns around. The proven method to keeping your losses small is to set your maximum loss before you even open a Forex trading position. The maximum loss is the greatest amount of capital that you are comfortable losing on any one trade. With your maximum loss set as a small percentage of your Forex trading float, a string of losses won`t stop you from trading. Unlike the 95% of Forex traders out there who lose money because they haven`t applied good money management rules to their Forex trading system, you will be far down the road to success with this money management rule.

What happens if you don`t set a maximum loss? Let`s look at an example. If I had a Forex trading float of $1000, and I began trading with $100 a trade, it would be reasonable to experience three losses in a row. This would reduce my Forex trading capital to $700. What do you think those 95% of traders say at this time? They would reason, "Well, I`ve already had three losses in a row. So I`m really due for a win now."

They would decide they`re going to bet $300 on the next trade because they think they have a higher chance of winning.

If that trader did bet $300 dollars on the next trade because they thought they were going to win, their capital could be reduced to $400 dollars. Their chances of making money now are very slim. They would need to make 150% on their next trade just to break even. If they had set their maximum loss, and stuck to that decision, they would not be in this position.

Here`s a perfect illustration why most people lose money in the Forex trading market. Let`s start out with another $1,000 float, and begin our Forex trading with $250. After only three losses in a row, we`ve lost $750, and our capital has been reduced to $250. Effectively, we must make 300% return on the next trade and that will allow us to break even.

In both of these cases, the reason for failure was because the trader risked too much, and didn`t apply good money management. Remember, the goal here is to keep our losses as small as possible while also making sure that we open a large enough position to capitalize on profits. With your money management rules in place, in your Forex trading system, you will always be able to do this.

When Do You Need a Tax Attorney?

2012-01-04T04:22:00.000-08:00

Tax attorneys are lawyers who specialize in the complex and technical field of tax law. Tax attorneys are best for handling complex, technical, and legal issues.

You definitely need a tax attorney if:

* You have a taxable estate, need to make complex estate planning strategies, or need to file an estate tax return.

* You are starting a business and need legal counsel about the structure and tax treatment of your company.

* You are engaging in international business and need help with contracts, tax treatment, and other legal matters.

* You plan to bring a suit against the IRS.

* You plan to seek independent review of your case before the US Tax Court.

* You are under criminal investigation by the IRS.

* You have committed tax fraud (such as claiming false deductions and credits) and need the protection of privilege.

Tips of Forex Trading

2011-12-23T05:06:00.000-08:00

I think I had better start off by clarifying that there really are no “secrets” to trading in the forex market, but there are certain things that successful traders do that unsuccessful traders do not do – and vice versa.It seems to be a well established fact that 95% of all the people that trade the forex lose some or all of their investment while a small percentage of traders make a very handsome return. Why is this?

If we were able to make a detailed study of every successful trader, we would find that there is a common thread that runs through these people. The details that we could take from this thread could be considered to be the five secrets of successful forex trading.So here is the first “secret”. Successful Forex Traders love to trade. They love everything about trading. They love the studying, the planning, the scheming, the waiting, the anticipation, the execution, the result, the atmosphere and of course they love making lots of money.

These traders talk, eat, sleep and dream trading. It is not a job. It is a way of life. They DO NOT do it just for the money!In my forex trading business, one very common question that I am asked is “how do you overcome the boredom of being stuck in front of your PC all day?”.The answer is of course that I do not find it boring. I love trading and if I didn’t, I would find a different way to make a living.

The next “secret” is emotional control. Successful traders have learned the ability to trade without emotion. This does not mean that they do not care about the outcome of their trade, quite the opposite. Successful traders always trade to win, but they do not let their emotions play a part in the process. They just look at the cold hard facts and then either trade or wait. Successful traders also accept that there will be both winning and losing trades and they treat both with the same lack of emotion.The next “secret” is to have a system. Now it really does not matter what system you use so long as it produces more and bigger winning trades than losing ones. This is referred to in trading circles as “an edge”. If you do not have an edge, then I highly recommend that you consider the trading system that I co-developed called The Amazing Stealth Forex Trading System.

The penultimate “secret” is to be disciplined. This means having the self discipline to STICK TO THE PLAN. There is a great maxim in trading. Plan the trade and trade the plan. If you have a winning system, make sure that you have the discipline to stick to the rules exactly.

The final “secret” is to have enough money to trade safely. In many ways this should be RULE NUMBER ONE. More people fail to make money when trading on the forex through insufficient trading capital than for any other single reason.

When trading it is vital to adhere to strict money management and capital conservation techniques. Money management must be an integral part of any good trading system, and of course you should never trade with money that if lost would cause you or your family financial difficulty.If you can take onboard and learn these not so secret “secrets”, there is no reason why you should not be able to join the ranks of successful forex traders.

Future Trading

2011-12-16T10:38:00.000-08:00

“A Future trading is a financial exchange where people can trade future contracts”. Simply, it is buying or selling a specified quantity and quality of a financial instrument at a specified time in the future at a price determined at the time of purchase and sale. Many people take it as a complicated, high stakes, risky business. This misconception is due to the lack of the proper financial knowledge and a clear understanding of its purpose. Because of high gain and financial security in future market, many professional traders don’t trade the stock market any longer.
The best way to start the trade is to get educated. Many seminars are offered by reputable broking houses to learn future trading from experienced traders. A specialized mentor can save a lot of time and money. Most traders are now relying on technical analysis to predict price fluctuation, to predict entry or exit price levels and timing. There is no magic formula exists to analyze the market. Fundamental analysis is one way to evaluate whether a market is likely to go higher or lower.
Future contracts can be purchased on margin, meaning that an investor can buy a contract with a partial loan from his or her broker. Maintenance Margin is the amount of money that a trader must maintain in his account in order to keep a future position running. If cash balance falls below this level, he/she would receive “Margin Call”, a notification from broker to top up his/her margin balance with cash back up to its initial margin level. It is done so that trader’s entire equity can’t be wiped out. Future trading is a zero-sum game; means if somebody makes a million dollars, somebody else loses a million dollars. Future traders have an incredible amount of leverage on them. Despite of all these problems, future trading is one of the best ways to make some quick profit.

FOREX

2011-12-06T04:50:00.001-08:00

START FOREX TRADING AND GET RICH !

Forex Triple Top Chart

2011-11-28T11:01:00.000-08:00

Triple Top formations are reversal patterns with bearisch bias, this pattern is not often seen in the forex market (also note Triple Bottoms, Double Bottoms and Double Tops). Triple Tops are identified by three consecutive highs of similar (or almost) height with 2 moderate pull backs in between (neckline).

The triple top can be a major reversal pattern (if found on a daily chart or bigger timeframe) that can be formed after an extended uptrend. This pattern is confirmed when the currency pair price breaks from (it's third peak) above through the neckline, the most likely price direction is now DOWN.

What does a Triple Top formation look like?

A triple top formation is a distinct chart pattern characterized by a rally to a new high (peak1 or resistance1) followed by a moderate pull back (10 -20%) to the neckline (support level), a second rally to test a new high ( peak2 or resistance2) followed by a moderate pull back (10 -20%) to the neckline (support level) and finally a third rally to test a new high ( peak3 or resistance3).

The three peaks (highs or resistance levels) are at approximately the same price level. What follows is a pull back to below the neck line (support).

How to trade this pattern?

Go short below the Neck Line (support level) when the currency pair price breaks from (it's third peak) above, the most likely price direction is now DOWN. Place your stop couple of pips above it's third peak price!

Your target must be at least twice the distance from it's third peak break to the neckline.

Example: If the third peak price is at 1.2300 and the neckline is at 1.2250, your target level must be at least 100 pips when trading the break out!

Chart example

USD/JPY Daily Chart Triple Top reversal chart pattern

Forex Trading

2011-11-28T10:55:00.000-08:00

he forex market is quickly becoming one of the most popular markets for trading.
Not only are the experienced traders looking to this market to maximize their trading returns, but many new, individual investors are now able to trade the Forex market — just as they do stocks and futures.
More and more individuals are seeing Forex not only as a new way to diversify their portfolio, but are also finding that it is becoming the most profitable component of their investments.
And that's because of the many advantages Forex offers over other markets like stocks or commodities. Here's what you will typically see advertized about Forex:
— Unparallelled liquidity. It is the largest financial market in the world by far. Almost $2 trillion being traded daily!
— Excellent leverage potential. Individual investors have access to leverage of 100:1 and even 200:1
— No Commissions (more on this later on)
— Low trading costs.
And yes, the Forex market really does offer all these advantages.
But the last two points above talk about costs, and that's what we'd like to focus on in this article.
Like any trading, there are costs involved, and, while these may be much lower than they used to be, it is important to understand what those are.
Let's start by looking at stock trading, something that most of us investors are pretty familiar with.
When trading stocks, most investors will have a trading account with a broker somewhere and will have investment funds deposited in that account.
The broker will then execute the trades on behalf of the account holder, and of course, in return for providing that service, the broker will want to be compensated.
With stocks, typically, the broker will earn a commission for executing the trade. They will charge either a fixed dollar amount per trade, or a dollar amount per share, or (most commonly) a scaled commission based on how big your trade is.
And, they will charge it on both sides of the transaction. That is to say, when you buy the stock you get charged commission, AND then when you sell that same stock you get charged another commission.
With Forex trading, the brokers constantly advertise "no commission". And, of course that's true — except for a few brokers, who do charge a commission similar to stocks.
But also, of course, the brokers aren't performing their trading services for free. They too make money.
The way they do that is by charging the investor a "spread". Simply put, the spread is the difference between the bid price and the ask price for the currency being traded.
The broker will add this spread onto the price of the trade and keep it as their fee for trading.
So, while it isn't a commission per se, it behaves in practically the same way. It is just a little more hidden.
The good news though is that typically this spread is only charged on one side of the transaction. In other words, you don't pay the spread when you buy AND then again when you sell. It is usually only charged on the "buy" side of the trades.
So the spread really is your primary cost of trading the Forex and you should pay attention to the details of what the different brokers offer.
The spreads offered can vary pretty dramatically from broker to broker. And while it may not seem like much of a difference to be trading with a 5 pip spread vs a 4 pip spread, it actually can add up very quickly when you multiply it out by how many trades you make and how much money you're trading. Think about it, 4 pips vs 5 pips is a difference of 25% on your trading costs.
The other thing to recognize is that spreads can vary based on what currencies you're trading and what type of account you open.
Most brokers will give you different spreads for different currencies. The most popular currency pairs like the EURUSD or GBPUSD will typically have the lowest spreads, while currencies that have less demand will likely be traded with higher spreads.
Be sure to think about what currencies you are most likely to be trading and find out what your spreads will be for those currencies.
Also, some brokers will offer different spreads for different types of accounts. A mini account, for example may be subject to higher spreads than a full contract account.
And finally, because the spreads really are the difference between bid prices and ask prices as determined by the free market, it is important to recognize that they are not "guaranteed". Most brokers will tell you that there may be times during periods of low demand, or very active trading when the spreads widen and you will be charged that wider spread.
These do tend to be rarer situations because the Forex market really is so large and demand and supply are generally quite predictable, but they do occur, especially with some of the lesser traded currencies. So it's important to be aware of that.
In summary then, when trading Forex, understand that the "spread" is truly your most important consideration for trading costs.
Spreads can vary significantly between brokers, account types and currencies traded. And small differences in the spread can really add up to thousands of dollars in trading costs over even just a few months.
So be sure to understand what currencies you are going to be trading, how frequently, and in what type of account and use those factors to help decide which broker can offer you the best trading costs.

Advance Your Financial Position

2011-11-28T10:54:00.000-08:00

Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world's financial centes New York, London, Tokyo, Frankfurt and Zurich. Historically, the only way to participate was from the trading floor of one of these bourses, but today, people can trade forex from anywhere through a secure internet connection and a PC.
Today's traders operate in a global network, taking positions in the market and making investment decisions based on either relative value between two currencies, or a particular currency's actual price. Currency value fluctuations are constantly renegotiated through trading activity, and this activity, and the corresponding currency values are also indicators of the levels of currency supply.
An example of market behaviour greater demand for the Euro might indicate a weakening supply. Low supply and increased demand will drive the price of the Euro up against other currencies like the dollar, until the price better reflects what traders are prepared to pay when short supply exists. Another way to look at this situation is this higher demand means it will cost more dollars to buy the Euro, which equates to a weakening of the dollar in comparison. Analysis of situations such as in this example forms the basis for a trader's investment decisions, and they will purchase or sell currency accordingly.
This should be remembered, as while many see the foreign exchange market as the vehicle for converting their home currency while travelling abroad, many others choose to use the market to advance their financial position and secure their future.
by Jay Moncliff

How Forex Brokers Work

2011-11-01T08:30:00.000-07:00

Like any other business in the history of business, your broker’s raison d’etre, is to make as big a profit as possible. There are about as many ways to go about this as there are brokers. For those who are in it for the long haul, however, it is generally best to adopt a set of practices which are deemed fair by their clients: certain boundaries are set, and operating beyond them can cost a brokerage its reputation, and along with it its clients. Straying outside these boundaries, therefore, is not considered as being in line with the long term goals of the business. How strictly these boundaries are enforced, especially when there is little chance of clients ever even becoming aware of any transgression, again varies from business to business. For the sake of simplicity, in this article we assume that everyone in the business is squeaky clean, as if every client could peek into the broker’s back office at any time and dissect every trade. This is obviously not the case, and many brokers do take advantage of this opaqueness, but the details of that are best left for another discussion.
So without further ado, let’s get into the details of how forex brokers function. Somewhat removed from the top-tier interbank market, retail forex brokers are there to provide a service that would otherwise not be available, that is, giving an investor with a $10,000 bankroll the chance to speculate in the up-until-recently very exclusive forex market. There are generally considered to be 2 types of brokers providing access at the retail level: Electronic Communications Networks (ECNs) and Market Makers. ECNs are generally somewhat more exclusive, requiring larger deposits to get started, but are seen as providing more direct access to the interbank market. As we will see, there are certainly advantages to this, but some disadvantages as well. Market makers, on the other hand are more often than not, the counter party to their clients’ trades, creating somewhat of a conflict of interest, whereas ECNs profit from commission fees charged directly to the clients, regardless of the result of any trade, they are seen as being completely impartial – an ECN has no incentive for a client to lose money. In fact, one could argue that an ECN stands to profit more if a client is successful, meaning that s/he will stay around longer and they will be able to collect more commission fees from them. A market maker, on the other hand, being the counterparty to a client’s trade, makes money if the client loses money, providing an incentive for some shady practices, particularly in an unregulated market. The extent to which this happens varies among individual blo. There are akers lso some benefits to trading with a market maker (see our ECNs vs. Market Makers article) Some brokers also provide a service that doesn’t quite fit into either category – they route different orders differently, depending on complex algorithms, or on a dealing desk, that analyze each order and attempt to fill it in the way that will be most beneficial to the broker’s bottom line. They can offset some client orders against one another, effectively creating an in-house market, they can choose to be the counterparty to a client’s trade (trade “against” the client), or they can offset their position with a hedge through a higher-tier counterparty. Note that the market maker is mainly concerned with managing its net exposure, and NOT with any single individual’s trades. They are NOT gunning for your stop losses specifically, but may be gunning for clusters of stops.
If you have already read the first article in the series, structure of the forex, you will recall that market mechanics are responsible for the variation in bid/ask spreads, and also for slippage. So it seems the two biggest novice traders’ pet peeves are not so much a function of who their broker is, but rather their lack of understanding of the way the forex market operates. A broker that offers a fixed spread tends not to fill orders during periods of low liquidity because this would expose them to undue risk, and as much as their job is to cater to their clients, remember they are in business primarily to make money for themselves. Some brokers also offer guaranteed order fills, such as “guaranteed stop losses”. Again, if there is no counter party to take the trade, they have to expose themselves to risk in order to fulfill this guarantee, so don’t be surprised if you see such a broker quoting different/delayed prices around important trend lines or support/resistance levels. Be especially aware of brokers who offer both guaranteed fills AND fixed spreads.

Automated Forex System

2011-10-13T05:57:00.000-07:00

How do Forex Automated Systems Work?

If you are going to trade Forex, sooner or later you will hear about automated Forex systems. They are also called “robots”, “expert advisors”, and “auto traders”. No matter what you call them, they all operate in a similar manner. While the exact technical set ups will vary from system to system, the operation of them will essentially be the same.
You will download and install the system to your Forex trading platform, and set up should only be a couple of steps. The basic premise of these things is that they are essentially an “add on” to your trading platform. This allows for easy installation, and uninstalling is just as simple. Because of this, many traders will actually have several different systems that they use in a variety of market environments.
The systems will fall into two basic categories: automatic and semi-automatic. The automatic ones will place trades for you, without any input from you at all. The semi-automatic ones will simply give you a signal or suggestion as to which way to trade a particular currency pair.
The automatic one will simply buy or sell based upon a sometimes complex mathematical formula that tells the computer when it is time to enter or exit the trade. The automated system simply does all of the work for you. It is very common for these systems to have a hidden proprietary algorithm that you never see in order to make these decisions. The one thing they will all have in common is that they are all mathematically based. Hiding the algorithm is just a simple way of protecting their intellectual property.
The semi-automatic system offered by forex automated traders will simply let you know when it gets a signal to buy or sell. The system will still have that hidden algorithm that you won’t see, but instead of placing the trade you will often see some kind of pop up alert when it is time to trade. You can then choose as to whether or not you want to trade the signal, allowing greater flexibility for the trader.
The majority of these systems are made for the MetaTrader 4 platform as it is by far the most popular one out there. There are systems made for other platforms such as GFTSDealBook 360, NinjaTrader, TradeStation, and many others. However, you will find an almost unending supply of them for the MT4 platform as even the brokers that use other platforms will often offer MT4 as well.
The better Forex automated systems will come with a money back guarantee, normally through some kind of ClickBank vendor account. Because of this you should be able to feel somewhat comfortable with the software as your money can be refunded. However, it is recommended that you try a new system out on a demo account just to make sure it performs up to your standards. Like anything else, there will be some that are better than others and your mileage may vary so to speak.

Forex Trading Online

2011-10-12T06:02:00.000-07:00

GBP0409loss

TAX FREE YEARLY

2011-10-07T10:16:00.000-07:00

$7,000 of Tax-Free Income Every Year

If you are trading through a corporation or combination of legal entities that includes a corporation, you have the opportunity to obtain tax-free income by the proper utilization of a little-known tax code provision, Section 280A. This article will address the concept behind this strategy, the rules for its operation, and then conclude with several pitfalls to avoid.
First, the rules. They are simple, and so “taxpayer friendly” it is surprising. Section 280A(g) of the Internal Revenue Code states:
[I]f a dwelling unit is used during the taxable year by the taxpayer as a residence and such dwelling unit is actually rented for less than 15 days during the taxable year, then . . . the income derived from such use for the taxable year shall not be included in the gross income of such taxpayer . . . *
Hence, under the plain language of this section, a taxpayer can (a) rent out his or her residence to someone else, including a corporation; (b) for fourteen days or less during a calendar year; and (c) not report the income received from the rental(s). To follow the logic to its ultimate tax conclusion, if the income is not includable in gross income, then taxes are not owed on that income.
It is also interesting to note what the code section does not say. It does not say that the rent paid by the renter (a corporation in our situation) is not deductible by the renter-corporation as an ordinary and necessary business expense. Nor does any other code section deny deductibility to the renter for the rent so paid. To the contrary, the general rule would be that reasonable rent paid by the corporation for space to conduct the corporate business is indeed a proper deduction.for the corporation.
So here is the strategy: Your corporation, which is recognized in the law as a separate legal entity and a separate taxpayer from you, is required by state law to hold at least one shareholder’s meeting and one directors’ meeting a year. That is the required minimum. It can hold more. Indeed, most corporations need to hold so-called “special meetings” of the Board of Directors on a frequent and periodic basis.
So the corporation needs space in which to hold such meetings. The location for special meetings of the Board is typically not specified in the By-Laws, and for good reason. The location needs to be “convenient,” and a fixed location might not always be convenient. The corporation could do what many corporations do, namely rent space at a local hotel for a board meeting. Were the corporation to do so, it could hold a directors’ meeting at the hotel, pay reasonable rent to the hotel (a figure typically determined by local market conditions), and the corporation could deduct the rent so paid as an ordinary and necessary business expense under § 162 of the Code.
Now Section 280A(g) comes into play. Instead of renting the meeting space at a local hotel or other facility, the corporation could rent your home for the meeting. Provided all the conditions of the Code were met, Section 280A(g) tells us that the rent received by you is not reportable and hence not taxable.
Tax-free income? Not even reportable? Yes, that’s exactly what is provided by Section 280A(g). But there are several caveats to take into account.
1. Do not violate the “less than fifteen day” rule. The “less than fifteen day” rule of the Code section contains no wiggle room. Fourteen days is “less than fifteen,” but fifteen is not less than fifteen. If you blow that rule by renting out the residence fifteen times or more during a year, the entire Code section does not apply. Then you are back to the general rules that otherwise govern such transactions: The entire income received (not just the portion above what was received for fourteen days) is reportable and taxable.
2. The rent paid must be reasonable. As with every other aspect of business expenses, then rent paid must meet the “ordinary and necessary” requirements of Section 162. The burden of proof as to the reasonableness rests on the taxpayer. To sustain that burden, the corporation should conduct a local market survey to determine what constitutes an appropriate, fair market value rent to be paid. For the survey to be fair and reasonable, the properties being compared should be comparable. Translation: The facilities that are being surveyed (e.g., local hotel meeting rooms) should be roughly comparable in appointments to the personal residence that will be rented. At the risk of sounding elitist, one who lives in a single-wide mobile home should not be surveying the rental cost of a room at the downtown Ritz-Carlton hotel. Those properties are not comparable.
Here is a suggested approach for determining the appropriate rent to be paid by the corporation to the homeowner:
a. Hold a special meeting of the corporate directors. The directors pass a resolution ordering the corporate president to conduct a survey of local facilities available for corporate directors meetings. The parameters of the search should be specified in the resolution. Typical parameters might be: a room for 4 attendees (or however many directors you have in your corporation), for a 2 hour meeting, with coffee, water and soft drink service to be refreshed after one hour, and available within a specified geographical area (the area where you live).
b. The corporate president then conducts the survey as directed. This will require talking to a representative in the “sales and catering” department, the “banquets” department, or whatever office within the hotel handles such meeting room arrangements. Ideally, ask the hotel representative to fax a bid proposal to you so you have the bid in writing. Failing that, the president needs to keep copious, detailed notes of where he called, who he spoke with, the date/time, the parameters of the room request, and the response received.
c. The president then analyzes the data received and prepares a recommendation to the Board on what rental value the corporation should be prepared to pay to hold its meetings. There is no set formula for analyzing the data. Do whatever is reasonable—throw out the high and low bids, average them all together, whatever makes sense.
d. The Board then holds another special meeting to receive the president’s report and recommendation. Assuming the Board accepts the president’s recommendation, the Board then adopts a corporate resolution that establishes the rent to be paid. It would be a good idea to attach the bid proposals received from the hotels and any notes made by the president to the corporate minutes that document this meeting as to how the decision was made what constitutes a fair and reasonable amount to pay for rental space.
As a side note, if the two special meetings of the corporate directors that were held as part of this process were held in your personal residence, the corporate resolution could conceivably provide for retroactive rent to be paid. In fact, it would be a good idea that the minutes of the prior meetings reflect that it is the Board’s intent that retroactive rent will be paid to the homeowner once the market survey results are known.
Let’s assume, for purposes of illustration, that the survey concludes that $500 per meeting is a fair and reasonable rent that reflects local market conditions. $500 per meeting times 14 meetings per year equals $7,000. That’s $7,000 of deductions to the corporation and $7,000 of tax-free income to the homeowner!
That’s not chump change. That’s real money, and real tax savings!
* Interestingly, the IRS has not issued any regulation for this Code section. That is unusual since most Code sections have regulations that construe the section and provide examples of how to apply the Code section.
** Each state’s corporation law specifies the frequency and number of required meetings. The Model Business Corporation Act, which has been adopted in some form in most states, requires a minimum of one annual meeting of shareholders and one annual meeting of the Board of Directors. Check your local state law to see whether additional meetings are required. Any requirement for more frequent meetings certainly should not present a problem to corporations that are pursuing the Section 280A strategy outlined in this article since those corporations are going to be holding frequent meetings.
*** The general rule is in Code § 61(a)(5), which states that “[e]xcept as otherwise provided in this subtitle, gross income means all income from whatever source derived including . . . rent.” Hence Section 280A(g) is an “except as otherwise provided” exception to the rule that would require inclusion in gross income of all rent received.
**** If you do live in such a personal residence, then you need to discount the rental values from the hotels to reflect the difference in the properties being compared. This is the same technique that a real estate appraiser uses to adjust for the appraisal values of different properties that are being compared. By way of example, if the hotel survey rendered a fair market rent of $500, then a discount of 50% (or whatever higher or lower discount factor was reasonable under your particular circumstances) would result in a fair market rental for your residence of $250

FOREIGN EXCHANGE

2011-10-07T10:05:00.001-07:00

Introduction to Foreign Exchange

Foreign Exchange is an international financial market place where money is sold and bought freely. It is a non-stop cash market where you speculate on changes in exchange rates of foreign currencies. Forex operates through a global network of banks, corporations and individuals trading one currency for another but has no physical location and no central exchange not just like other financial markets.
The Forex market spans from one zone to another in all major financial centers on a 24- hour basis since it has no physical exchange. Since there is no centralized exchange for currencies to be sold or bought, forex is considered to be an over- the counter market or what is called OTC. Banks and forex dealers are connected around the world via internet, fax and telephone to form the Forex market. Read through this article, introduction to forex, in order to know more about forex trading as well as its purpose and many more. Learning forex enables us to know some forex terms, codes, numbers and definitions. Forex trading 101 or the introduction to forex trading will enable us to know how forex works and how to make money with currency trading on forex.
The foreign exchange market began in the 1970's when free exchange rates and floating currencies were introduced. Before retail investors can access the foreign exchange market through banks that transacted large amounts of currencies for commercial and investment purposes. After exchange rates were allowed to float freely in 1971, trading volume has increased rapidly over period of time. Now the Foreign Exchange Market that we see made importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders and hedge funds all use the Forex market in order to pay for goods and services, transact in financial assets or to reduce the risk of currency movements by hedging their exposure in other markets.
The Forex market has the following characteristics: First, Forex is a very liquid market because there are always ready and willing buyers and sellers for the currency you want to trade. With this characteristic it gives us the ability to quickly buy or sell a particular item. Second, Forex is a large trading volume with a daily average of $1.9 trillion in April 2004 (source: BIS study Triennial Central Bank Survey 2004). Third, Forex is open 24 hours worldwide with major trading centers in London, New York, and Tokyo and made traders access the market any time and act on global developments. Lastly, Forex has lower transaction cost. Traders only pay a spread and a broker’s commission ranging from $20-$120 depending on the volume of the trade. It also allows traders to deal directly with the market maker paying only the spread and the price at which a market maker will buy from a customer.

TIPS FOR WOMEN STUDY ABROAD

2011-10-07T09:58:00.000-07:00

Study Abroad Safety Tips for Female Students

Studying abroad is often associated with excitement, personal growth, and cultural awareness. But students should be aware that in some study abroad destinations, keeping safety in mind is just as important.
In most large cities, female students need not worry about their safety more than they do in the United States. When negative incidents have occurred in these areas, they are often highly avoidable. In these destinations, a good rule of thumb is that if you wouldn't do it at home, you shouldn't do it here. Much of remaining safe has to do with trusting your instincts, as well as with projecting a confident and assertive attitude.
But female students inevitably will have to fend off unwanted attention more than their male counterparts. And simply because your new surroundings will be unfamiliar to you, you need to be more vigilant than you would be on your home campus or in your hometown. Of course, you will want to avoid taking shortcuts and routes that are off the beaten path, especially late at night. You should also travel around with at least one other person. Cat calls or other unsolicited attention from the locals should remain unacknowledged in these situations. Much of staying safe abroad is common sense.

HISTORY OF FOREX

2011-10-07T09:15:00.000-07:00

A History of Trading the Forex Market

Forex currency trading has made massive advancements over recent years and is becoming on the Internets most searched for trading opportunities.
Technological advancements have made Forex an opportunity to make money for everyone from small individual speculators to large multi-national companies.
In reality the principles of Forex trade have existed for centuries but it wasn't until 1967 when the idea of a global system of currency exchange first began to be put together.
A college professor named Milton Friedman famously wanted to take a bank loan in Pounds Sterling (feeling that the currency was overpriced against the dollar) and then sell it before buying it back once the price against the dollar had fallen.
This would allow him to repay the bank and pocket a nice profit for himself. His loan application was declined due to the bretton woods agreement that was in place at the time but this set the wheels in motion for worldwide Forex trading.

The Birth of the Foreign Currency Exchange

In 1971 when floating exchange rates began to materialize and the bretton woods agreement was abandoned, the foreign currency exchange market was born.
This advancement was welcomed with open arms by the International companies who had often noticed big profit changes both positive and negative simply based on the value of their native currency against the value of the currencies in the markets in which they traded their day to business activities.
These companies would see fluctuating exchange rates effect their profit and loss accounts, often with millions being made or lost simply on the value of one currency against another.
It was also these companies that were first to spot the huge money making opportunity currency fluctuations offered and these same companies were the first to leap on to the Forex trading bandwagon and attempt to increase their profit margins through brave yet profitable currency exchange decisions.

Online Forex Trading Advances

Of course when Forex first began the Internet was a distant dream and therefore trading was carried out exclusively by the cash rich worldwide organizations.
These were companies who could afford to throw a few million in to the mix in an attempt to make some big money trading currencies.
Trading was carried out over the telephone via several exchange centers all over the world. A trader would monitor global activity and then ring their broker in order to commence or complete a trade order.
The transfer of funds to complete trades was done through bank transfers which often took a few days to go through. This meant that whilst the Forex market offered a fantastic earning opportunity, trading was both time consuming and a hassle.
With the advent and then increasing popularity of the Internet, Forex trading online opened up the doors to millions of people who had never previously had the resources to take part.
Gone are the days of having to phone through your intended trade, Credit and Debit cards are even accepted with some online brokers for depositing funds. Even more recently the Forex market has opened up to individual traders even with very small amounts to invest.

Women Study Abroad

2011-10-06T10:55:00.000-07:00

In a bid to create more opportunities for women in education, Iranian reformists have voted for a law that will allow unmarried women to study abroad, says Arab World News. The bill still has to go through the Guardian Council in order for it to be fully approved. Reformists feel that, by going abroad, women will have access to scientific education that is unavailable in Iran. On the other hand, those opposing the bill have insisted that allowing unmarried women to travel “without any custodian where there are no restrictions paves the way for the corruption of our girls”. Reformist lawmakers are not optimistic and expect that the matter will have to be taken to the Expediency Council which will act as intermediary. The council is Iran’s leading constitutional body that has to approve all legislation. It is mostly made up of conservative hardliners.

online earning

2011-10-06T10:53:00.001-07:00

Here's anothr free lesson on how deploy the Elliott Wave Princple in your trading plan...

Happy Trading!!

Trading using technical indicators -- such as the MACD, for example, Moving Average Convergence-Divergence -- can do one of two things: help you or hinder you.

Using them as a forecasting method alone can be about as predictable as flipping a coin. But when you combine them with other forms of technical analysis (i.e. the Wave Principle), the same MACD can be your new best friend.

Technical indicators are meant to do exactly what the name implies: "indicate" that a buy or sell signal may be in place. (Don't confuse "indicate" with "guarantee": They are not called "technical guarantors" for a reason.)

Elliott Wave International's Futures Junctures editor Jeffrey Kennedy shows you how he uses technical indicators to his advantage in his FREE eBook, The Commodity Trader's Classroom:"Rather than using technical indicators as a means to gauge momentum or pick tops and bottoms, I use them to identify potential trade setups."

Jeffrey goes on to describe his favorite indicator, the MACD:"Out of the hundreds of technical indicators I have worked with over the years, my favorite study is the MACD [which] uses two exponential moving averages (12-period and 26-period). The difference between these two moving averages is the MACD line. The trigger or Signal line is a 9-period exponential moving average of the MACD line."

Figure 10-1 gives you an example of the MACD indicator in Coffee futures.

Forex trading and business

2011-10-06T10:51:00.000-07:00

Credit Crisis in Europe: How the Stability of an Entire Region is Teetering on the Edge of a Major Collapse

By EWI's European Financial Forecast editor Brian Whitmer (excerpt)

Panic Now and Avoid the Rush -- July 30, 2010

The market's collective sigh of relief is also reflected in authorities' stress testing of 91 European banks. In case you missed last Friday's results, their message is clear: relax.

The Committee of European Banking Supervisors (CEBS) gave passing grades to nearly every bank on its list. all five Italian banks, and five out of six Greek banks that it analyzed.

Even with share prices that sit 29%-66% beneath their 2009 countertrend highs, the CEBS says that the Bank of Ireland, Piraeus Bank, Banco Popolare, and Banco Santander are all in good shape. In fact, just seven of the 91 banks failed to make the grade. The group, for example, passed both Irish banks and all four UK banks that it evaluated. The CEBS gave clean bills of health to all four Portuguese banks, by the German government anyway. Everyone else -- 84 institutions in all -- are supposed to be strong enough to withstand another economic shock.

It's not so much the stellar results that expose the optimism of a Primary degree rally, but rather the Banking Committee's stress Five were in Spain, one in Greece, and one, Germany's Hypo Real Estate, is entirely owned tests themselves. They are notable primarily because they failed to test for any real stress in the first place. As the chart shows, the Committee's "adverse scenario" regarding economic performance assumed a mere 3% deviation from the European Commission's GDP forecast.

In other words, just like the UK budget office, the CEBS is utilizing a woefully diluted version of the economic deterioration that is about to grip the continent. Another test looked at banks' resilience to a sovereign risk shock, yet the analysis merely used conditions similar to those of May 2010.