Financial Markets Stabilize After Recent Beatings
Traders, investors, and financial journalists must have been glad to reach the end of a week that will surely go down in the history of financial markets. The FTSE closed the week just 66 points down which the S&P 500 actually managed a small profit. Homeowner, the closing figures do not even begin to tell the whole story with the FTSE trading in a 521 point range and posting its best one day rally in history on Friday.
The turmoil began last week with the bail out of Fannie Mae and Freddie Mac. This raised hopes of a similar bail out of the Lehman Brothers. To say that investor’s were shocked when Lehman’s was not only denied a bailout, but filed for insolvency would be an understatement. Lehman’s collapse sent shockwaves throughout equity markets sparking a domino effect that knocked over Merrill Lynch, AIG and HBOS.
Even the most seasoned investors had a hard time steadying themselves last week as the newswires continue pump out dark news, and once in a generation headlines. Fear was understandably widespread with the Russian stock market suspended indefinitely after dropping 10% in an hour, and a large money market fund ‘breaking the buck’, meaning they lost their unit holders money. When the supposed safe havens of money market funds start to break down, investors see little choice but to fly to quality. There is a flood of assets transferring to safety of short term US Government Treasuries, forcing the yield on three month Treasury Bonds down to their lowest level since the great depression. Gold endured a remarkable week trading in a $140 range before closing the week up around $90.
On the economic data front, US CPI was in line with expectations, and oil prices have continued to stay below $100. Both of these factors indicate that the inflation monster may be coming back under control. However, the FOMC voted to keep rates on hold last week, initially markets had a mixed reaction. Many believe the Fed has now left itself some ammunition to deal with a weakening economy further down the line. It also sent out the signal that it would not be influenced by market makers into cutting rates as they did back in July.
It was the two emergency announcements on Wednesday and Thursday that had the greatest impact last week. After central banks dropped a coordinated liquidity bomb overnight on Wednesday, global equity and credit markets initially seemed to show a very cautious reaction. The greatest reaction seemed to come from the Fed’s plan to create a giant ‘bad bank’ that would absorb many of the toxic subprime assets held by banks. This measure accompanied with a crack down on short sellers, seemed to have hit the nail on the head for the financial institutions, with the root cause of the credit crunch (sub prime assets) being attacked.
Next week’s headlines will be dominated by Ben Bernanke’s testimony before congress starting on Wednesday. We also have US existing home sales on Wednesday and new home sales on Thursday. However, the planned economic announcements could be secondary to any surprise headlines or further emergency measures. When stock markets move percentage points in the matter of minutes, anything can happen.
Although equity markets bounced last week, the panic at one stage reached such an extreme that the yield on 3 month US Treasuries reached 0.02% on Thursday, returning just $2 on a $10,000 investment. Investors weren’t just running to safety, they were blindly staggering to anywhere with no exposure to the credit markets. When investors press the panic button as they undoubtedly have done, there is potential for a counter rally to set in the short term as we saw on Friday. However, looking at large crashes from 1987, 1997, 1998, 2000 and 2001, the follow on reaction is typically a range bound market. A barrier range trade returns a profit if neither of two predetermined levels are hit within a specified time. A barrier range trade at BetOnMarkets predicting the Dow Jones not to touch 12200 or 10500 over the next 16 days could return 39%.
Forex Trading System – Trading Breakouts For Triple Digit Profits!
Do you want a simple timeless, method you can understand which works and will continue to work and can give you triple digit annual profits? Then you will find it in this article and base your Forex trading system on it and you can enjoy great profits…
The method is trading breakouts to new chart highs or lows. The reason it works and will continue to do so, is because it’s based on this fact which you can observe on any Forex chart:
Most major trends start and continue from new market highs or lows.
Look at a chart and you will see this and trends that last for weeks, months or years, get in and hold them and you can make huge profits.
Breakout trading, enables you to get on board these trends and ride them, most traders however cannot do this despite the fact it works – why?
Why Most Traders Don’t Trade Breakouts
Because when a break occurs, they want to wait for the dip and this is due with traders think they pinpoint timing is the way to make money but with breakout trading you miss the start but as you cannot predict prices this trading the reality is the way to go.
Breakouts if there good ones simply do not come back and the trader who waits will wait in vain.
So what should a breakout system consist of?
You need to get Forex education in 3 main areas and they are the following
1. Choosing the Best Breakouts
Not all breakouts of course go right so to get the odds on your side look for levels that have been tested numerous times – the minimum is 2 times but the more the times the better. The more times a level is tested before it breaks the better the odds of success tend to be.
2. Confirming Breakouts
You then need to confirm the breakout. A good one will feature acceleration in momentum and for this you need some momentum oscillators to help you. We have discussed these in other articles.
One or two are all you need to confirm the break and if they support it, its time to execute your trading signal.
3. Stops and Money Management
Stops are under the break.
The real key with trading big breakouts is to have your stop behind random volatility.
These big breakouts can last a long time so you need to give a bit back at the end when the trend finally turns. You cannot buy or sell market highs or lows exactly and your aim is to make money by catching a major chunk of the trend and you can do this and make a lot of money.
A method that NEVER Goes out of date
As long as markets trend, breakout trading will work and make money and even better most traders can’t do it
It’s a very simple Forex trading system but it’s also very effective, easy to understand and time efficient. Once you have learned the basics you can be making money in around 30 minutes a day and be on the way to making big profits by trading breakouts.
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Financial Mistakes You May Be Making
All of us make financial mistakes, and research in the new fields of evolutionary economics and behavioral economics are starting to explain why. It will be good to have this knowledge someday. But in the meantime, here are ten of the more common money mistakes you may be making, so you can start correcting them now.
1. Making A Competition Of Financial Decisions
Trying to “beat” anyone else in a financial transaction is a bad habit, unless you are playing poker or negotiating a business or investment deal. The first people to buy new technology get to show it off, but they also get the worst version at the highest price. If you “win” at an auction it means you paid more than anyone else was willing to pay. Looked at that way it doesn’t seem so smart.
Evolutionary economics explains why we feel this need to “win.” It developed as a way to gain a better position in the tribe, which increased one’s survival odds thousands of years ago. This tendency of ours is of very little value in a modern economy, so ignoring such urges is wiser.
2. Believing You Are Owed Something
Nobody owes you a thing unless you have a contract or a promise. Dwelling on what is “owed” to you is a financial mistake because it gets in the way of doing what is necessary. And why does anyone owe you a thing? For example, health insurance came to be expected of large employers based on nothing more than the fact that many provided it. Had enough companies provided cars to employees, we would think we are “owed” a car by our employer.
Forget what is “owed” to you. Just work honestly to get what you can. Ask for a raise, but if you’re not paid enough, find another job. Collect that unemployment benefit if it’s available, but don’t think others have an obligation to provide your income for you. Once you stop looking for your “due” you can start looking at how to make money and create what you need for yourself. Usually this means seeing what others want, and finding a way to provide it for a paycheck or a profit.
3. Believing Value Is About Prices
Suppose a television normally sells for $900 and is on sale for $400. Is that a good value? Most people may think so, but the value of personal items is measured by what the individual user needs. If you’re as happy with a $200 television, then the other is over-priced from your perspective. Such personal purchases are worth only what it makes sense for you to pay. If a $20,000 car is worth just $3,000 to you, then that’s that (and you don’t buy it).
4. Believing Value Is All About You
I once saw a man lose $30,000 by pricing his home too high and leaving it empty for years – one of the more common financial mistakes. With investments, value has nothing to do with what you think a thing is worth. The only important measure is what the market will pay for it.
People often confuse personal consumption items with investments, thinking, for example, that a car is an investment. A $22,000 kitchen remodeling project isn’t an investment either, if future buyers will pay only $10,000 more for the home afterwards. The owner might like to think it added $30,000 in value, but his ideas are irrelevant. He better enjoy that new stove and cupboards, because they were not investments, but a $12,000 personal purchase (that’s his net loss).
5. Believing High Profits Are Unfair
In any honest sale, the price is fair, or it wouldn’t have been paid. Consider if your own house had a market value of $400,000 and you wanted to sell it. Would you lower the price to make it more “fair?” Not likely, so why expect any business to charge less than what the market dictates?
How much profit is made on something is entirely irrelevant to what its value is. Your choice is to buy it or not. It’s a financial mistake to waste time complaining about a profit you would gladly accept if you were on the other side of the transaction. The truth is that you wouldn’t buy it if it wasn’t a fair price, and nobody (in a free country) is forcing you to. Spend your energy looking for a better alternative or finding ways to make more money instead.
Financial Planning – 5 Ways Of Not Overspending When On Vacation
Most people look forward to vacations the entire year. It is a time of relaxation and of family bonding. Some families meet new places, some go to the same location every year, and some just stay home and rest. It does not really matter where the holiday takes place, but how much you spend on them. Following you will find some tips on how to enjoy your free time without spending more than you need to.
Savings: Key To An Unforgettable Trip
If you still have a good four or five months before departing, then this recommendation will fit you like a glove. If each month you put aside 10%-15% of your income and destine it solely to a vacation fund, then when the time to pay for that trip comes, you will have saved enough for the expenditure not to hit your finances so hard. Setting aside such a low monthly percentage will help you to save without you even noticing it. And what is more, you can apply this technique not only to trips, but to anything else you might want or need.
Coupons And Promotions: Your Best Friends
It will be a good idea for you to surf the web in search of any promotion that might help you to save a few bucks in your trip. If you usually travel by plane for business or something of the sort, you might have many frequent flier miles, which will be great if you are flying to your special destination. Otherwise, you will be able to contact tourist information and they will let you know if they offer any promotions on accommodation or transportation.
Budget: Keep Focused On It
Nowadays, many households make financial plans before leaving for holidays. They include the cost of the essentials, such as food, accommodation, transportation, etc, and try to make out how much money they will spend without going overboard. Now you and your family have your brand new budget and you are about to leave for your very much expected holidays, everything is perfect. Once you get to your destination, you have to stay focused on that little piece of paper on your pocket or daily planner. Most people tend to forget they ever made a budget and start spending like crazy, do not let this be your case. Concentration and motivation are essential.
Credit Cards And You: Learn To Go Separate Ways
Evidently, bringing your credit cards with you on your trip is a very accurate decision. In case of an emergency, credit cards can really come in handy. But it is advisable not to carry them around with you. If you leave the hotel, leave them there. Keep them somewhere safe, but not with you. Why, you might be wondering. To resist temptation. If you only have cash with you, the necessary amount for you and your family to dine out, or to go to that excursion you had in mind, you will not be able to spend it on unnecessary things. Otherwise, it will be very easy for you to get carried away and to pay everything with your plastic card.
Now you are ready to leave town and head toward your relaxation period. I hope you enjoy!