Flexible Investment Strategies

Do you owe a lot of money? If you own money in quite a few places it is a good initiative to get the most costly debt paid out first.

So how do we understand which debts are the most expensive? Figure out what you pay in interests on your various loans – loans with the highest interest rate are the most expensive loans in spite of loan size.

That said, it’s also essential to determine which of your loans that are tax deductible. You may without doubt have a loan that has a high interest rate but it might be tax deductible. So this should also be taken into account.

Here is a good plan, you can use to get rid of debt. You begin to pay your most expensive loans off with as high a monthly installment that you know you can handle. When your most expensive loans are paid, you carry on with the second-most expensive.

The money you used to pay the most expensive loans with, you are using now to pay the second-most expensive of. And this continues until you all your loans are paid off. Seeming too simple, this approach actually works – it worked for me anyway.

Learn how to invest. After you have paid your high-pricedloans, then it is time to start investing. How much do you earn in interest on your bank account, 1/2%, 1%? It is probably not much more than 1%.

There are numerous ways where you can get more out of your money than to have them standing on the bank account. More and more people are beginning to take an interest in the stock market, and it is a good development. There are many possibilities to earn money by putting your money into equities.

There is, of course, also a risk by putting their money into shares, so it is important not to invest more than you can afford to lose. It works this way, that the higher the risk you’re willing to take, the more you can potentially earn and lose. There are many good investment guides for newbies – free – in the Internet.

Need guidance about how to take control of your own economy and begin building a nest egg of you own using a desktop stock ticker, then take a look at the website of Felix B. Hardy. Felix is a long time investor and he know a lot of easy tricks to get rid of debt quick using desktop stock tickers

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Financial markets are huge. Daily billions of dollars change hands in these markets when different financial instruments change hands. You can trade stocks. You can trade bonds. Ever heard of the futures market and futures trading? Well, futures are a security just like stocks and bonds. Stocks give you the ownership in part of a company while bonds are issued by governments and companies to borrow money from the investors. Futures are somewhat different than stocks and bonds!

Futures contract as the name implies is a binding contract between two parties for the delivery of a commodity or an asset or even a financial instrument at some future date between the buyer and seller of that contract. Futures market is a highly regulated market with the CFTC responsible for its regulation. Buyers and sellers don’t come in direct contact with each other. In between is the Central Clearing House that enforces the contract reducing the risk of party default!

Futures market is the backbone of the whole sale and retail commodity market ranging from oil, wheat, corn, heating oil, meat, cattle, soybeans and other foodstuff. So you can well imagine the importance of the futures market. Futures market serves the purpose of hedging and speculation.

These contracts get regulated through a central clearing hours so the risk of one party backing out of the contract is minimal. This limits the time and risk exposure experienced by hedgers and speculators. Now, futures contracts are by design time bound and expire at a fixed date.

Now you can easily trade these contracts by opening an account with a FCM brokerage and deposit an amount to start trading these contracts on margin. The minimum amount with most of the brokers is something like $5,000 but it can less too! Brokers allow leverage upto 10:1 when you trade on margin. Compare this to the leverage of 2:1 allowed by stock brokers. In the last decades, electronic trading has become highly popular among the traders. This includes futures as well.

In US, open outcry trading still takes place during the official hours at the different futures exchanges. However, most of these futures contracts also get traded electronically. GLOBEX allows electronic trading of most of these futures contracts 23 hours each day. Electronic trading provides a more level playing field, more price transparency and lower transaction costs.

CME, NYMEX and CBOT are the three most important Futures Exchanges. GLOBEX allows you to trade most of the contracts that get traded on these exchanges. The popular contracts that get traded on GLOBEX are the E-minis like the S&P 500, NASDAQ 100 and Dow. You can also trade E-mini gold futures as well as crude oil futures on GLOBEX.

GLOBEX trading overnight tends to be thin and more volatile than during the official trading hours that are from 8:30 AM EST to 4:15 PM EST. If you trade financial news on Bloomberg or CNBC before the stock market opens officially, you will find quotes on S&P 500 futures and other taken from GLOBEX.

These GLOBEX quotes are real time and if you have taken a position with sell stop or a buy order, early next morning, you might find your position executed with a new position or out of the position altogether. Futures can be highly profitable if you know how to do it!

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As a trader, you are always looking for short term profit. While as an investor, you are willing to invest long term in a company or a security to make capital gain. In trading, you are always looking for making profit from the volatility in the market. Day trading has a short term time horizon of only one day. A day trader opens a trade and closes that trade in the same day to make a quick profit. Day traders need quick reflexes as well as a keen observation of the market volatility. Many people day trade successfully. However, on the other hand hand, many people have a long term time horizon of many months to years. They have a long term financial goal and this matches with their investment style.

Investors in theory can wait for a long time to see their stock pick to play out. A company’s stock may be ridiculously cheap. But it may stay like that for a long time before it catches everyone else’s attention and the price is bid up. It might be good for investors to learn a few tricks from traders especially day trading that can help them make a few quick bucks.

Successful day trading requires an innate sense of discipline. Successful day trading requires the sense when to commit money to a trade and when to cut the losses and run. However, if you are an investor who has never day traded, you might have done so much research and committed so much time waiting for a position to work out that you might forget the cardinal rule of traders: The market doesn’t know you are in it.

However, if too many investors start practicing momentum investing, it sometimes leads to bubbles like the tech bubble that happened at the end of 1990s. Now, when doing momentum investing, you need to also do some fundamental research behind the company. As most of the momentum investing done during the dot com bubble was on hearsay without being supported by any strong fundamentals!

One of the tricks that you can learn from day traders is momentum investing. In momentum investing, you look for securities that are expected to go up in prices accompanied by the underlying momentum. When investing, you try to buy low and sell high. In momentum investing, you buy high and sell even higher!

How to you find that a security has got momentum behind it? You can use these technical indicators like the MACD ( Moving Average Convergence and Divergence), RSI (Relative Strength Index) or the Stochastic. A swing trader is also looking to ride a trend as long as it lasts. A trend lasts as long as it has got momentum behind it. Momentum investing is similar to swing trading.

However, if too many investors start practicing momentum investing, it sometimes leads to bubbles like the tech bubble that happened at the end of 1990s. Now, when doing momentum investing, you need to also do some fundamental research behind the company. As most of the momentum investing done during the dot com bubble was on hearsay without being supported by any strong fundamentals!

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Developing a trading system is not easy. It requires first of all good trading experience. Than you need to test your trading system under live trading conditions. It might take time as well as involve the risk of losing money. To overcome this difficulty in testing a trading system or a trading strategy, backtesting has been developed. Backtesting is possible with the use of software. A trading system might comprise of a set of two or more indicators with a set of rules that tell when to enter or exit the trade.

How to do backtesting? Backtesting uses historical data to test the performance of the trading system under the past market conditions. Using a backtesting software makes it very simple and easy.

There are many problems with historical data. There is no slippage in backtesting. Slippage is one of the most important problem that a trader faces while trading live. The other problem that the backtest ignores is the widening of spreads under volatile market conditions. So backtesting results are no guarantee that the trading system will perform well under live market conditions. Things that worked in the past might not work now. Similarly something that didn’t work in the past, may work now! You never know!

In other words, no two trades work out in exact the same way twice. SO you have to be careful when looking at the back testing results and take it with a pinch of salt. However, there are still some advantages of back testing a trading system.

Some markets are highly seasonal. For example, if you are a commodity trader and tend to trade agricultural commodities like the grain, seed or the livestock, these have a fixed planting and harvesting cycles.

For example, some markets especially the commodities market is highly seasonal and cyclical in nature. We can take the example of agricultural commodities like wheat, grains,corn, cotton, coffee and stuff like that. In case of the stock market, there is much talk of the January Effect. Well, it is there no doubt about it. Some years, it is highly pronounced and others it is not that pronounced. Similarly stock prices tend to rise at the end of each month and the first few days of the new months. The reason for this is that many institutional investors tend to put the new funds to work at the end of the month and the beginning of the new month! Now in other markets, you might not find any seasonal trends. For example, there is very little seasonality in curreny market or the bond market.

Back testing can also help you establish the amount of time a particular market tends to run in a certain direction. For example, in case of US Dollar Index, its trend lines tend to last for months to years.

Now when you back test your trading system and the set of indicators, you can check their accuracy. For example, if you using a trading system based on moving average crossovers, you can back test it using different combinations. Then monitor each combination under live conditions to see which works the best.

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Are you new to the Stock trading market? Are you just now thinking about opening a trading account or broker account? Or are you just looking to learn a little more about where your 401(k), IRA or mutual funds are being invested? Either way here is a beginner’s introduction to the Stock trading market.

Firms or individual companies often trade equity known as stock. The purchase of the stock on the stock trading market gives the purchaser a small percentage of ownership in that company or those companies that he or she chooses to invest in. Stock traders known as day traders often look to the stock trading market for short-term gains. Often times their investment time frames are measured in days and weeks rather than months or years. These are often times professionals who work on a full or part-time basis allowing themselves to hold full-time employment in other vocational arenas. However financial advisors or financial managers actually manage other individuals portfolios taking a commission based on trading activity in the stock trading market.

Then there are individuals or stock trading investors who look at the stock trading market as being a much longer-term investment. These individuals or companies hold their stocks for months or years at a time. In this instance the entity investing in the stock trading market has looked at a companies’ financial health on a fundamental level and feels that the long term prognosis for that particular company is positive.

So ultimately while some individuals are taking a long-term position within the stock trading market other individuals choose to take a much shorter term position pulling their earnings off the table on a much more frequent basis. Either method of trading can make money however an individual who’s completely unfamiliar with the market should seek the advice of a financial advisor in order to prevent the risk of lost capital.

So always keep in mind whether you’re getting in to the stock trading market as a long-term investment or for short-term gains, you can make money in a bear market and in a bull market but if you get greedy ultimately you will lose.

Want to find out more about stock trading market, then visit Henry Mangult’s site on how to choose the best stock market guide for your needs.

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