Category: How to Start Trading – Beginners

  • Who Are The Best UK Investors All the Time?

    Who Are The Best UK Investors All the Time?

    The Best UK Investors All the Time
    Finding the best UK investors all the time was a quite difficult job. There are so many incredible investors in the UK. but also some of them even the best made unbelievable failures.  

    Traders Paradise decided to write about the best UK investors from the second part of the XX century.
    Some of them are still active, fortunately.

    The other reason why writing about the best UK investors was a tricky job is that not all of them are widely present in the public. Moreover, the majority of the best UK investors avoid that.

    Anyway, Traders Paradise went all across the internet, examined all articles about them and there is our presentation of the best UK investors. Right in front of you.  

    Maybe some of them could be an inspiration for you. Moreover, you can mirror their investing performances or just get a clue on how to start or improve your investing style.

    Enjoy the reading!

    Wild markets are like a boomerang.

    If investors have fear or panic there will be a lot of ups and downs in the markets. Or, when the market is volatile investors are frightened and panicked.

    But some investors are different. They can see opportunity where every other see disaster. So, we can say that great and famous investors always have self-discipline and patience. That’s why they are successful.

    Who are the best UK investors?

    And our story will start with the economist that developed his own economic school of thought thanks to his followers.

    John Maynard Keynes

    John Maynard KeynesJohn Maynard Keynes

    He was born on 5 June 1883 in Cambridge into an erudite family. They were open-minded family. His mother was the first female mayor and father was a philosopher and economist.

    Keynes studied mathematics at Cambridge University.

    After finishing, he found a job in the India Office. At the same time, he worked on a dissertation. That secured him a membership at King’s College. He stayed at Indian position till 1908 after which he came back to Cambridge. He joined the treasury at the beginning of World War One. When the war was ended, he issued ‘The Economic Consequences of the Peace’ which became a best-seller.

    Between two World Wars, he earned a very steady amount of money by investing in the financial markets. Also, he continued his theoretical work. His most famous piece ‘The General Theory of Employment, Interest, and Money’ was issued in 1936. Even today, it is the caliber for economic theory all over the world. After that book, it was so easy for Keynes to become a famous economist in the UK and with the most influence. With the beginning of World War Two, he continued to work for the treasury again and became a member of the house of lords.

    John Maynard Keynes built macroeconomics in the 1930s.

    He is largely disregarded now.

    The central idea of this economic school of thought is that government intervention can secure the economy.

    During the Great Depression of the 1930s, economic theory was incapable to explain the circumstances of the dangerous economic collapse.

    Keynes produced a revolution in economic thinking for that time.  

    The stand of Keynes’s theory is the idea that aggregate demand (a theory of total spending in the economy) is driving power in the economy.

    Aggregate demand is the total of spending by households, businesses, and the government.

    Further, Keynes asserted that free markets have no ability to balance mechanisms that direct to full employment.

    Keynesian economists support government intervention through public policies. Governmental intervention can lead to price stability and full employment, state Keynesians.

    During the war, Keynes had a crucial position in the consultations. He is one of the most important figures that developed the post-war global economic order. He had an important role in the devising of the World Bank and the International Monetary Fund.

    Famous John Maynard Keynes died on 21 April 1946.

    Neil Woodford

    The Best UK Investors All the Time 1Neil Woodford is one of the best UK investors

    He was one of the most honored and best-known fund managers in the UK. He was born in March 1960. In 1981 he has a degree from Economics and Agricultural Economics from the University of Exeter.

    More than 26 years he was a central member of the UK equities team at Invesco Perpetual.  He was named a Commander of the Order of the British Empire (CBE) in 2013 for services to the economy.

    As a leader of investments at Invesco Perpetual Woodford managed over £15 billion of assets. In 2014 Neil founded his own fund management firm, Woodford Investment Management LLP.  

    Prior to this, he was the head of UK Equities at Invesco Asset Management Limited and had been its fund manager since 1998. Woodford had worked as a fund manager at Eagle Star since 1987. He was also employed at Woodford Asset Management LLP. 

    Early days

    Woodford began his investment career at the Dominion Insurance Company in 198. He has experience in both corporate finance and fund management.

    He doesn’t like to be a public figure so we can find a little bit of information about his life.  In a rare interview, he said his ÂŁ10.6bn Woodford Investment Management business now.  If you ask anyone in the UK to identify an investment manager they will point one name: ‘Neil Woodford’.

    The audience in the UK likes to believe that Woodford is their response to US investor Warren Buffet. There is a legend connected to Woodford’s work as an investor.  Britains believe that he is one of only several fund managers in the world who are able to cheat the market and producing long-term returns for investors.

    The truth is that thanks to his knowledge, his investors avoided the dangers of the bursting of the “dotcom” stock market bubble in early 2000. And then proceeded to make money for them.

    Woodford is the private investor’s champion in the UK. Britains like to say he is the man who made Middle England rich.
    ‘I’m not an investment genius,’ he said once. ‘I am just someone who follows a disciplined and rigorous investment approach. If you want to talk investment geniuses, think Anthony Bolton. And, of course, the epitome of genius, Warren Buffett.

    ‘Yes, people have heaped praise on me in the past but they have also not spared me opprobrium. Everybody likes to build people up in this country and then smash them down.’

    In March 2000, financial advisers accused him of ‘intransigence’ over his refusal to acknowledge the potential of technology stocks. Today, it looks like bad luck is following him. But Woodford is street-fighter. He will know how to deal with it.

    UPDATE 12/07/20:

    In October 2019, one of the best UK’s stockpickers ended his multi-billion-pound empire.
    He is known as “Oracle of Oxford” “and was dismissed from his troubled ÂŁ3.1bn Equity Income fund by its administrators,” wrote BBC.
    But last news tells that Neil Woodford is back in business.
    Woodford announced several days ago he would leave the last two funds he is managing, Income Focus and Woodford Patient Capital. Also, he said he will close all investment management business.

    John Templeton

    The Best UK Investors All the Time 2John Marks Templeton one of the best UK investor

    Sir John Marks Templeton was a UK investor, banker, and fund manager. In 1954, he entered the mutual fund market and created the Templeton Growth Fund. In 1999, Money magazine named him “arguably the greatest global stock picker of the century.”

    He was born on November 29, 1912, in Winchester, Tennessee, United States. Died on July 8, 2008, in Doctor’s Hospital, Nassau, The Bahamas.

    As a pioneer in both financial investment and philanthropy, John Templeton spent a lifetime encouraging open-mindedness. He created the motto for his Foundation, “How little we know, how eager to learn.”  Maybe that the best represents his philosophy both in the financial markets and in his methods of philanthropy.

    He attended Yale University and graduating in 1934 near the top of his class. Also, he graduated with a degree in law in 1936.

    Templeton began his Wall Street career in 1938.

    We can say he created some of the globe’s greatest international investment funds.

    He took the strategy of “buy low, sell high” to a maximum. Templeton was picking nations, industries, and companies popping the bottom. He called it “points of maximum pessimism.”

    In 1939, he borrowed money to buy 100 shares each in 104 companies selling at one dollar per share or less. Among them were 34 companies that were in bankruptcy.

    He turned huge profits from them. Among his chosen 104 companies only 4 were wasted, actually worthless.

    In 1954 he founded the Templeton Growth Fund. With dividends reinvested, each $10,000 invested in the Templeton Growth Fund Class A at its inception would have grown to $2 million.

    In 1992, he sold the Templeton Funds to the Franklin Group. In 1999, Money magazine called him “arguably the greatest global stock picker of the century.”

    Templeton became a billionaire by globally diversifying mutual funds. His Templeton Growth Fund, Ltd. was among the first to invest in Japan in the middle of the 1960s. Templeton also created funds in nuclear energy, chemicals, and electronics. By 1959, Templeton went public, with five funds and more than $66 million under management.

    He refused technical analysis for stock trading, favoring instead to use fundamental analysis.

    ‘You can’t outperform the market if you buy the market’ was one of his favorite sayings. How did he manage to beat it so spectacularly himself?

    Templeton was one of the most generous philanthropists in history. He gave away over $1 billion to charitable causes.

    In 1972 he established the Templeton Prize, which, according to the charitable foundation that he started, is the world’s largest annual award given to an individual. The prize, which rewards those who have “made an exceptional contribution to affirming life’s spiritual dimension”. It is currently ÂŁ1m and always beats the value of the Nobel Prizes. Winners have included Desmond Tutu, Dalai Lama, Chiara Lubich, Mother Teresa, Lord Jakobovits, King Abdullah of Jordan, Arthur Peacocke, etc.

    Templeton renounced his US citizenship in 1964. He held dual naturalized Bahamian and British citizenship and lived in the Bahamas.

    Richard Branson

    The Best UK Investors All the Time 3Richard Branson

    Sir Richard Charles Nicholas Branson was born on July 18, 1950, in Surrey, England. He is a UK business magnate, investor, author, and philanthropist. Also, He founded the Virgin Group, which controls more than 400 companies.

    He launched Virgin Records in the early 1970s. It is now the multinational Virgin Group. His early life story is a bit out of the standard. Richard Branson dropped out the school at age 16.

    Branson has dyslexia and had poor academic performance. On his last day at school, his headmaster, Robert Drayson, told him he would either end up in prison or become a millionaire.  In London, Branson started off squatting between 1967 and 1968. He launched his first successful business, a magazine named Student, in 1966.

    The first issue of Student appeared in January 1968, and a year later, Branson’s net worth was estimated at ÂŁ50,000. Branson started his record business from the church where he ran Student magazine. He interviewed several popular figures of the late 1960s including Mick Jagger and R. D. Laing.  

    Branson advertised popular records in Student, and it was an overnight success.

    Once Branson said, “There is no point in starting your own business unless you do it out of a sense of frustration.”

    Branson eventually started a record shop in Oxford Street in London. In 1971, he was questioned in connection with the selling of records that had been declared export stock. The matter was never brought before a court because Branson agreed to repay any unpaid VAT of 33% and a ÂŁ70,000 fine.

    His parents re-mortgaged the family home in order to help pay the settlement.

    His entrepreneurial projects started in the music industry and expanded into other sectors, including the space-tourism venture Virgin Galactic, making him a billionaire.

    The Virgin Group reached 35 countries around the world, with nearly 70,000 employees handling affairs in the United Kingdom, the United States, Australia, Canada, Asia, Europe, South Africa, and beyond.

    Branson is also known for his adventurous spirit and sporting achievements.

    Richard Branson ranks eighth among the wealthiest British billionaires by net worth.

    Mike Ashley

    The Best UK Investors All the Time 4Mike Ashley

    A famous investor Wallace Ashley is a British billionaire and investor in the sporting goods market and one of the best UK investors. 
    He entered the field store industry following the acquisition of House of Fraser. He is also the owner of Newcastle United after paying around ÂŁ135 million to buy the club.

    Ashley turned whistleblower on industry rivals in 2000, handing the Office of Fair Trading evidence of business meetings held by sports retailers to fix the price of football shirts. Ashley attended a meeting at the Cheshire home of David Hughes, the chairman of now-bankrupt rival Allsports. At the meeting, Dave Whelan, the founder of JJB Sports, reportedly told Ashley: “There’s a club in the north, son, and you’re not part of it.”

    On 23 May 2007, Ashley bought Sir John Hall’s 41.6% stake in Newcastle United at one pound per share, for a total cost of ÂŁ55,342,223 via his company St James Holdings Ltd.

    Under the terms of UK takeover law, having purchased more than 30% of a listed company. And he was obliged to make an offer to buy the remaining shares at the same or a greater price.

    On 31 May, it was announced that the Newcastle board were considering Ashley’s offer.

    On 7 June, it was confirmed that chairman Freddy Shepherd had agreed to sell his 28% share to Ashley, which left Ashley free to take control of the club.

    As of 15 June 2007, Ashley owned a 77.06% stake in Newcastle United, on course to withdraw the club from the stock exchange having surpassed the 75% threshold required.

    The hundred percent acquisition was done in July. Ashley paid around ÂŁ134 million. He also paid off large sums of debt obtained from the previous administration.

    On 11 May 2016, Newcastle United were relegated for the second time under the ownership of Ashley, after local rivals, Sunderland beat Everton 3–0.

    As of October 2014, Ashley owned an 8.92% stake in Rangers International Football Club (RIFC), the parent company of Scottish football club Rangers. The Scottish Football Association has rejected Ashley’s request to raise his shareholding in RIFC to 29.9%, due to the fact he already owns a large amount of Newcastle United shares, which was seen as a conflict of interest.

    In January 2015, Rangers fans protested against Mike Ashley’s plans to secure a ÂŁ10 million loan using the club’s stadium as security. All the main Rangers supporter groups have heavily criticized Ashley and expressed major concern and distrust about his nature and purpose of his intentions.

    On 23 June 2017 Ashley sold his entire Rangers shareholding to Club 1872 and Julian Wolhardt.

    Ashley is protective of his private life. He is known to prefer casual dress rather than a suit. He often carries his fundamental business tool of a mobile phone in a plastic carrier bag rather than a briefcase.

    Ashley is a private person, he never attended industry functions or gave interviews.

    He left school at 16.

    Anthony Bolton

    The Best UK Investors All the Time 5Anthony Bolton

    He was born on 7 March 1950.

    Anthony Bolton is one of the UK’s best-known investment fund managers and most successful investors. He had managed the Fidelity Special Situations fund from December 1979 to December 2007.

    Over this 28-year period, the fund achieved annualized growth of 19.5%, far in excess of the 13.5% growth of the wider stock exchange, turning a £1,000 investment into £147,000.  Until April 2014 he managed Fidelity China Special Situations PLC, a London Stock Exchange-listed investment trust.

    He started a career at the age of 29, he was recruited by Fidelity as one of their first London based investment managers. In surveys of professional investors, he is regularly voted the fund manager most respected by his peers.

    Bolton began managing Special Situations (a UK equity OEIC) when he joined Fidelity in 1979 and continued until 2007.

    He managed other funds alongside Special Situations during this time. From November 1985 to December 2002, he managed the Fidelity European Fund (a European equity OEIC). He managed the Fidelity European Growth fund (a European equity SICAV) from 1990 to 2003, Fidelity European Values PLC (a UK-listed investment trust) from 1991 to 2001, and Fidelity Special Values PLC (also a UK-listed investment trust) from 1994 to 2007.

    In 2006 his Special Situations Fund was split.

    The success of the fund had brought in so much money from investors, it had become the UK’s largest open-ended fund (OEIC) and it was feared that the fund was becoming too big to manage successfully.

    The fund was split into the UK and Global Special Situations funds. The Global Fund and the UK fund continuing under Bolton’s stewardship until the end of 2007.  With Bolton’s step back from fund management, many questioned whether the fund could continue to outperform the market in the future. And not without the reason.

    Bolton’s former funds suffered amongst the worst redemptions in 2007.

    Investors withdrew ÂŁ335m from the Special Situations fund and ÂŁ508m from Global Special Situations. However, redemptions in both funds slowed significantly in 2008, and in March 2010, at ÂŁ3 billion, the UK fund is almost back to the same size as when Bolton stepped down.

    When he stopped managing funds in 2007, he took a full-time role in mentoring and developing newer investment managers.
    He still works with Fidelity.

    Nick Leslau

    Nick LeslauNick Leslau

    This famous UK investor was born on 18 August 1959. He is a UK commercial property investor. His wealth is estimated at ÂŁ350 million.
    Leslau is chairman of Prestbury Investments.  

    He is a 30% shareholder in Prestbury‘s Secure Income REIT which owns properties such as Thorpe Park, Warwick Castle, and Alton Towers. Secure Income REIT also owns 20 private hospitals and 55 Travelodge hotels in the UK.

    Early days

    Leslau left the University of Warwick where he was studying German, studying surveying, and become one of the best UK investors.

    Leslau joined the ground rent company of commodities traders Burford Group. He had completed a degree in estate management at South Bank University and became a chartered surveyor with Burford. At age 23, he became CEO of Burford Estate & Property.

    Wanting to move further into the property, contacted Nigel Wray to engineer a reverse takeover of Wray’s listed company Chartsearch in 1986 for ÂŁ8 million. They expanded the company into a ÂŁ1 billion enterprise, buying large parts of Oxford Street and the Trocadero center.

    In 1997, Leslau and Wray set up their own small property company MAYBEAT Limited, which they merged into one of Michael Edelson’s Alternative Investment Market-listed shell companies called Prestbury Group Plc.

    The board consisted of Leslau, Wray, Viscount Astor, John Hodson (the then chief executive of private bank Singer & Friedlander), and Edelson. Over the next two years, it produced a return of 150% on net asset value. Leslau grew its total value to several hundreds of millions of pounds before taking it private in 2004.

    In 1999, Leslau founded an investment vehicle, Edenhawk, collectively with Wray, Archie Norman, and Julian Richer. And once again, they merged the company into an Edelson shell company, Knutsford Plc. The plan was to acquire a retail business to take advantage of the retailing skills of Norman, a former Chairman of Asda, and Richer, who had built up the retail group Richer Sounds.

    Within weeks the value of Knutsford had soared to ÂŁ1 billion.

    They attracted attention from financial media around the world as potential acquisition targets were touted by the media such as Marks & Spencers and Sainsbury’s. Knutsford concluded a deal with WI Link (which continues to trade successfully).  No one could hope to achieve the dizzy expectations generated by the media in the weeks after flotation.

    Knutsford announced the end of the dot com boom in the UK.

    In February 2001 Leslau set up a private company, Prestbury Investment Holdings, funded by HBOS and Sir Tom Hunter.
    Leslau is now chairman of Prestbury Investments.

    He has sat on many quoted and unquoted company boards including, most recently, Max Property Group Plc, and is a Member of the Bank of England Property Forum.

    Jim Slater

    Jim SlaterJim Slater is one of the best UK investors all the time

    James Derrick Slater was born on 13 March 1929 and died on 18 November 2015). He was a British accountant, investor, and business writer. Slater rose to prominence in the 1970s as a businessman and financier. And one of the best UK investors.
    In 1964, investor Jim Slater acquired control of H Lottery & Co Ltd, a ÂŁ1.5m public company, which with his business partner Peter Walker they renamed Slater Walker Securities.

    In the 1960s and 1970s, James Slater was one of the top players in the City. He was active in business and investing until his death in 2015.

    Slater was, at the beginning of his career, a chartered accountant and writer. He had a column in the Sunday Telegraph and he was writing under the nickname ‘Capitalist’.  

    Slater Walker Securities was a huge success in the 1960s and early 1970s. But it crashed in the banking crisis of 1974.

    The firm was in connection with acquiring businesses and selling off anything that was considered to be surplus to demands.

    During the secondary banking crisis in 1975, Slater Walker faced financial difficulties and received support from the Bank of England. Slater resigned as chairman in October 1975, because the Singapore Government began to try to extradite him from the UK for alleged offenses by the company in Singapore referring to the alleged misuse of more than ÂŁ4 million of company funds in share deals. The Singapore government’s attempt to extradite Slater was dismissed by the Chief Metropolitan Magistrate at Horseferry Road Magistrates’ Court in 1977.

    In separate proceedings, following the takeover of the company by the Bank of England, a prosecution was brought against Slater by the Department of Trade alleging 15 counts of offenses under the Companies Act.

    Slater was guilty of the Companies Act offenses and fined ÂŁ15 per count.

    Fortunately, the court accepted that the offenses were purely technical. Also that Slater didn’t act dishonestly and that there was no question of him having made any personal gain through committing them.

    Finding himself technically bankrupt after the collapse of Slater Walker, Jim Slater invested his residual funds and repaid all of his personal creditors within a few years. And paid with interest.

    Slate came to publicity again as the author of The Zulu Principle.

    That book, and his subsequent Beyond the Zulu Principle in 1996, Slate spread the idea of investing in small-cap stocks, and the use of the PEG ratio to help identify targets.

    Slater did not create the PEG. But he was absolutely responsible for its popularity as a stock-picking tool.

    In order to find a way to help investors to filter the full market to find out which shares are worth looking at, Slater developed the Company Really Essential Financial Statistics products — REFS.

    Be focused on small caps was Slater’s investment style. His famous statement was “Elephants don’t gallop.”

    That explains the idea that big companies cannot double in size, but small ones can. He has also devoted himself to knowledge.

    The website The Motley Fool wrote about Slater:

    “He doesn’t want to know a little about everything, he wants to know everything about a few things. If those few things include a handful of neglected companies, the chances of his making money should be greatly increased.”

    His hobby was chess. Amongst other sponsorships he donated $125,000 to make possible the 1972 World Chess Championship between Bobby Fischer and Boris Spassky in ReykjavĂ­k, Iceland, doubling the total prize fund.

    Why these UK investors?

    This is our choice of the best UK investors. Maybe some others have different. Our criteria while we were trying to pick the best UK investors were how do they influence the market, the companies they hold, and moreover, how they were acting when everything gets apart.

    Yes, they show strength, power, but more than anything, they are fighters. They are the best UK investors because they have self-discipline and patience to achieve their goals even when markets play against them.

    They are the winners and hence, they are the best UK investors.

  • The quick ratio or acid test ratio

    The quick ratio or acid test ratio

    3 min read

    The quick ratio or acid test ratio 3

    The quick ratio is a liquidity ratio that estimates the strength of a company to pay its current obligations when they come due with only quick assets. It is also called an acid test ratio.

    Quick assets are current assets that you can change to currencies within 90 days or in the short-term.

    In other words, the quick ratio is a measure of how well a company can meet its short-term financial liabilities.
    It is liquidity metric and can be calculated as follows:

    (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

    The quick ratio can be calculated for quick assets only.

    The quick ratio or acid test ratio

    Let’s explain why sometimes the quick ratio is known as an acid ratio?

    That comes due to the historical use of acid to examine metals for gold. The early miners used it.

    If the metal passes the test, they know it is pure gold. But if the result was opposite and metal was rusting, the gold miners knew there is no value.

    The acid test of investment determines is a company able to instantly change its assets into cash within 90 days.
    So, the acid test ratio is a more traditional variant. The other liquidity metric is a modern one – the current ratio.  

    They are pretty similar but the acid test ratio gives a more precise estimation.

    How is that?

    The acid test includes only the most liquid assets to study.

    It will never examine inventory because it is almost impossible to change inventory into the cash in a short time frame. The company often sell inventory on credit.

    Yes, there are some analysts that add inventory in the ratio, but if it is more liquid than some receivables.
    To show you, let’s assume this information was in the balance sheet of our hypothetical firm:

    The quick ratio or acid test ratio 1

    Let’s apply the first quick ratio formula and the data above. So, we can figure this company acid test ratio:

    ($70,000+$20,000+$50,000) / $105,000 = 1,33

    This means that for every dollar of this company’s current liabilities, it has $1.33 of very liquid assets to satisfy urgent obligations.

    We will not take inventory into consideration. As we said, the company may require months or years to sell inventory.
    Why it matters?

    It is important that a company have sufficient cash to pay accounts, interests when they come to be paid. The higher ratio shows that the company is more financially secure in the short term. The companies with a quick ratio greater than 1.0 are enough capable to meet their short-term obligations.

    Low or decreasing acid- test ratios usually shows that a company is fighting to keep or increase sales.

    Maybe it is paying bills immediately or getting receivables too slowly. Hence, a high or increasing acid-test ratio means that a company has solid growth.

    It is quickly turning receivables into cash and regularly covers its financial obligations. Such a company regularly has active inventory turnover and cash exchange periods.

    However, the acid-test ratio has its possible disadvantages.

    To begin, it provides no data about the level and timing of cash flows. And it is very important because it really defines a company’s ability to pay liabilities to the arranged date.

    Also, the formula assumes that a company would sell its current assets to pay current obligations. That is not always pragmatic.

    But this analysis can give you a solid and quick view of some company’s financial status.

    It is crucial for investors to know if some company are ready to pay its bills and credits.

    Some firms use their long-term assets to produce earnings. But, selling off resources will damage the company. Also, it is a signal to investors that current plans aren’t making enough profits.

    Higher quick ratios are more welcome for the company.

    It confirms there are more quick assets than current liabilities.

    A company with a quick ratio of 1 indicates that quick assets are equal to current assets. This also shows that the company could pay off its current debts and not to sell any long-term assets.

    An acid ratio of 2 indicates that the company has twice more quick assets than current liabilities.

    And you can see how does it work. When the ratio increases, the liquidity of the company increases too.

    This is a good sign for investors. Well, this is an even better sign for creditors. You know, creditors want to know they will be paid back on time.

    One example more.

    Let’s assume some company is asking for a loan. The bank asks a complete balance sheet so it can calculate the quick ratio. Company’s balance sheet carries the following accounts:

    table

    The bank can count quick ratio like this.

    ($20,000+$7,000+$2,000) / $21,000 = 1,38

    As you can see the company’s quick ratio is 1.38. This means that the company can pay off all of the current contracts with quick assets. And moreover,  it will have some quick assets left over.

    For investors, it’s good news, too.

    Don’t waste your money!
    risk disclosure

  • Where to Invest – Know How to Find

    Where to Invest – Know How to Find

    3 min read

    Where to Invest - Know How to Findby Gorica Gligorijevic

    OK, you think it is time to start investing! But before you dive into that world you have to know several things. Very important things.

    This article is not about where or how to invest. It is all about how to find what is necessary to do before you decide to invest and where to invest.

    We need to know more about how should we invest our money.

    Most of the time we do so without any research. That is completely wrong!

    Who even try to find some information about investing was overwhelmed by the tens of thousands of stocks, bonds, mutual funds, etc out there.

    You must be so scared of all the options. And you may give up.

    But keeping all your money in a savings account can take you on the wrong side.

    Nobody starts out as a specialist. Even the best investors were in your shoes.

    For the start, you must consider two questions.

    The first one is, where should you begin.

    And second, how to begin.

    First comes first.

    Where to begin.

    You may read different financial websites.

    As a financial site, Traders Paradise,  research all the time, collecting information from different sources. We have our tops, it is so natural.

    But we would like to share with you some free websites.

    The best-of-the-best that can provide you the education and news.

    We can tell you to read us, but you already do that, indeed.

    The best information about where to start investing we found on Cabot Wealth Network that includes a lot of free information. Their education section has valuable data about Stock Market Analysis, Market Timing, Selling Stocks, Technical Analysis and plenty of others.

    The site Investopedia is a very good source too.

    It is an invaluable source for definitions of financial terms. This site has tutorials and articles broken down for beginners. And all is free. Investopedia is a great site even for professional traders.

    Don’t give up when you see their long long sentences, they are hiding very valuable data inside.

    Among free websites, Traders Paradise highly recommends the Motley Fool. Don’t be foolish! Their name is just a good cover. These fellows are all market.

    They are excellent no matter if you are seeking to make your own analysis, or like the help of an experienced specialist. The Motley Fool is ready for you.

    Yes, you have to pay some of their services, but that could be a genuine opportunity for you, a beginner.
    Traders Paradise wants to recommend one site more. It is AAII Investor Classroom: www.aaii.com/classroom. But it isn’t free.

    It bears many lessons. They are treating everything from the risk management to the dividend stocks evaluation. The cost to join is $29 per year.

    If you want to start investing, you should analyze the characteristics of a company in order to evaluate its value.

    Where to Invest - Know How to Find 1
    That is security analysis. You have to check a company’s financial documents and financial circumstance, its management, and rival advantage. Of course, you would like to identify its rivals and markets.
    Why is this important?

    The technical analysis finds that all the major parts of a business are reflected in the price of the stock. Technical analysis examines the market supply and demand.  It is an effort to recognize where a stock’s price will go in the future.

    Amongst sites needing paid subscriptions, we recommend Investor’s Business Daily eTables, Zacks, and

    American Association of Individual Investors (AAII). They are really helpful.

    For example, Zack’s does expect membership. If you want to get to the spicy material.

    Well, surprise, surprise!

    The membership is free. You can devote three minutes to sign up. You will have an in-depth review of both stocks and funds. Moreover, you will have access to many free reports that will help you.

    And you have to read books.

    Where to Invest - Know How to Find 2
    There are thousands of various books about investing. One of them is everlasting and evergreen “The Intelligent Investor” by Benjamin Graham.  

    You can find a lot of respective books out there. You can adopt the main ideas from these books because they touch any market over the globe. Well you know,  many questions are the same to all worldwide investment. The macroeconomic indicators, asset allocations, and currency risks are the same all over the world.

    Investors are overwhelmed with information. Everything is trying to catch your attention. From press releases to SEC filings, for example. Yes, it’s always helpful to be informed.  But how to isolate the good information from the uproar.

    Press releases usually neglect bad information. They are adjusted on the good news. Analysts have spectacularly prejudices. At the same time, the official statements are tricky to be used, actually, they are not useful because of their vocabulary.

    So, where to look for information before you start investing?

    Corporate websites include information about a company. From financial statements to annual reports and surveys.

    When you are seeking the financial information they can be easier to navigate.

    What you have to look for?

    First of all, financial statements.

    Of course, you would like to take a look company’s presentation. Remember, never neglect this.
    Company presentations can give you an important summary of the past result. Also, the predictions for the following years.

    Company press releases can hold a treasure of information about progress and financial fulfillment.
    Find their investor contacts. They can be an important source for investors. But always keep in your mind who is paying them.

    Securities analysts can be an excellent reservoir of information for investors. Buy-side analysts are a better reservoir because they are not so biased. Analyst reports can be found in places including:

    You can find analysts reports among stockbrokers.

    Also, among companies.

    Some companies offer analyst research to potential investors.

    Find some broker with the fiduciary obligation.

    A fiduciary relationship is where one person (fiduciary) undertakes to act for another, placing his or her interests ahead of their own.

    We will give you a quote from the legislative site:

    “Fiduciary obligations refer to the duty to avoid conflict, the duty to not make a profit, and the duty not to gain a personal benefit or a benefit for a third party, without the consent of the principal.”

    But most of the necessary things you have to do by yourself.

    You have to examine your needs and goals.

    It’s worth to think about what you actually desire from your investments. Take your time. If you know your goals, your risk tolerance, you are on a good path.

    Estimate how long you can invest.

    Consider about how quickly you need to get your money back.

    Or just let a robo-advisor invest your money for you.

    Don’t waste your money!
    risk disclosure



  • Trading Forex at the Weekend Gaps

    Trading Forex at the Weekend Gaps

    3 min read

    Trading Forex at the weekend gaps is a growing field of investment. Forex weekend trading hours have extended away the traditional trading week.

    Forex trading the weekend gaps are becoming popular because of trader’s expecting Sunday’s opening price to return to Friday’s closing price.

    There is a mistake that you can’t trade over the weekends.

    So,  you surely can trade online at the weekend. To be honest, weekend trading in currency, stocks, CFDs, and futures is increasing fast.

    Actually, the forex market is opened during the weekend.

    How Trading Forex at the weekend gaps is possible if we know that the forex market is working 24/5?

    Well, it is decentralized. And technically the forex market is open 24/7. It is true that the majority of dealers close transactions on the weekend. For retail traders close at around 5 p.m. EST on Friday and open around 5 p.m. EST on Sunday.

    And we can see a gap during the forex open time only when the price movement is great because of some news.

    But gaps are quite obvious in the forex market when the market is closed over weekends.

    How does it come?

    The market prices are moving over the weekend. You can not stop the currency transaction. For retail traders, the price isn’t the same on Friday when the market closes trades and on a Sunday afternoon when it opens.  

    If the price is higher on Sunday, we have a gap up. But we will have a gap down if it opens lower than the Friday afternoon price.

    Trading Forex at the weekend gaps is very familiar to forex traders. It is a very often use strategy. Why is that?

    Well, the Forex market is, in fact, open 24/7. Yes, trading ends on Friday and can be opened on Sunday evening.

    But so many things can influence the currency price movement over the weekend. So, when traders are trading at weekend gaps, they are expecting the opening price will hit the closing price.

    The gap traders believe that the price will continually fulfill the gap. Really? In fact, it constantly does. But it isn’t feasible always.

    That’s why some traders make losses. Some gaps are tradable some are not.

    For example, we recognize four varieties of gaps.

    Breakaway gap

    The breakaway gap regularly rises a new trend.

    The price frequently develops out of the consolidation phase. Moves up or down with powerful momentum. What leave behind is the gap.  

    Some crucial, breaking events may cause movement. That new trend isn’t always tradable. Breakaway gaps happen at the end of the price pattern. They indicate that the new trend is starting.

    Trading Forex at the Weekend GapsThe breakaway gap

    Exhaustion gap

    Exhaustion gap occurs close to the end of a price pattern. It indicates a definitive try to reach new highs or lows. Usually, it comes after a sudden move. It has an unnatural rise in volume and then turns strongly. Also, you have to know that it comes after some news or reports. For example, after the earnings announcement. That is the period when trading activity increase. Traders are closing their big positions. That causes an obvious reversal. You can find the exhaustion gaps no matter if it is an up or down trend.

    Trading Forex at the Weekend Gaps 1The exhaustion gap

    Common gap

    It simply represents a space where the price shows a gap.

    They are gaps seen on a price chart and they are very common and the most generally traded.

    Also, they regularly arrive late Sunday and early Monday market openings.

    They are suitable for short-term intra-day trading. You should look for a common gap around Sunday midnight and trade those Forex gaps at that time.

    Trading Forex at the Weekend Gaps 2The Common gap

    Runaway gap

    Runaway gaps mark trend continuing. A runaway gap is fairly one of the most secure ways to trade. Particularly if you combine them with other price tools.  

    A runaway gap happens when the price is gapping into the course of the trend. When the trend is strong you may see them.
    Runaway gaps regularly work inside a trend.

    Traders need to recognize the gap before they find the potential increase in price. This means that runaway gaps are traded after the action.

    The bottom line

    The gaps can give a lot of news about market moving.

    Trading at the weekend gaps is risky.

    But you can use the information produced by a price gap to develop a complex trading plan. It can be helpful with other trading ideas.

     risk disclosure

  • Order Flow Trading

    Order Flow Trading

    3 min read

    Order Flow TradingOrder flow or transaction flow

    Order flow trading is more of a mindset. We cannot say it is a trading system or trading method. It is all about how some traders are viewing and imagining the market place.

    Say in this way, the orders are moving price.

    So, the intent of an order flow trader is to identify patterns on which they are getting triggered.

    It is also called a transaction flow. 

    Order flow happens when a trader believes the price of an asset will move and then the trader chooses to execute the order.

    Also, order flow trading is an expression that generates a lot of mess.

    Some traders believe that such trade is based on very secret information from the banks. That just a small group of people have knowledge about it.

    But you can see that some of them believe that it is another kind of price performance.

    To determine order flow trading you have to clarify what kind of trading you want to execute.

    Many of the retail forex traders are trying to place directional bets.

    That is when the trader is going long or short, speculating that prices will go up or falling.

    For example,  if a trader believes a currency pair will move up, he/she will set a buy order. But if such a trader prediction is a currency pair will go down, he/she will go short, meaning the trader will sell. This is directional trading.

    It is one of the most traditional styles of trading.

    If you choose directional trading, you may decide to be a dynamic trader. You want, for example, to execute a market order and pay the spread. That is one possible choice.

    The other alternative is to set a limit order or stop order marking the order flow to be executed at a specific price or executed after the market hits a specific price.

    This is different sorts of order flow.

    Order Flow Trading 1Order flow trading is alike to price action trading

    The trader who executes a market order is achieving a more dynamic order. Such doesn’t like to wait for a limit order.

    It is questionable if that order will or will not be filled.

    But the trader who set a limit order or stop-loss order is creating a more inactive kind of order flow. Even if the orders are not executed, they are helpful in building the order flow.

    Order flow trading is alike to price action trading.

    They both intend analyzing the market in a specific style.

    Price action traders try to conclude which direction the market going to move in. Order flow traders think they can foretell the same thing but based on capturing the actions the other traders done in the market.

    Order flow trading, so how does it work?

    The basic idea lays behind that if you are able to recognize when and where traders are going to make decisions, you can presume what is the future course of the market. The main purpose is to determine when the prices are moving up or down.

    To be more clear, one trade will never cause such movement.

    But thousands of orders appearing at the same time can generate the price’s turn.

    And we can say that the main intent of order flow traders is to find how other traders trade. On that way, such a trader can recognize when numerous orders will appear to the market, large enough to generate a price movement, either up or down.
    All the trader needs to know is what is the basic goal of their trading method. Based on that knowledge, he/she can predict on which position they will make a decision which will place orders into the market.

    The basics of order flow trading

    Order Flow Trading 2Two types of order flow trading

    There are two main types of orders that traders can execute in the market.

    Each of them is executed for different reasons. Hence, have different influences on the market price after execution.

    The traders can place market orders or limit orders.

    One group will place a market order because they want to earn money as quickly as it is possible.

    They place a market order to open their trade because they don’t want to miss such a great chance. This is so-called reactive strategies. Meaning, the traders are reacting on what is happening in the market at this moment.

    When a trader places a limit order, that means that trader wants to have a trade at a price which he expects will be reached in the market.

    Stop losses are also limit orders because they provide trader to buy or sell at a price which has to be reached in the future.  
    Both affect the market price but in different ways.

    A market order spends some of the liquidity in the market. On the other side, the limit order is placed to add liquidity to the market.

    And, here we are!

    The keyword for order flow trading is liquidity.

    Liquidity explains how accessible is it to buy or sell in the market.

    When it is easy to sell or buy, the market is liquid.

    For example, the forex market is one of the most liquid financial markets in the world.

    Buying or selling on the forex market is so easy because you will always find who is going to sell to you or to buy from you.
    Why is this so important for order flow trading?

    When low liquidity occurs that means that most of the orders on the market are buy orders. The traders can’t achieve buy trades placed because there are not enough people in the market ready to sell.

    There have to be a big amount of sell orders placing the market in order for the market to be liquid.

    It is really important to learn that when low liquidity is approaching the end, it means the traders have made the decision in the market.

    But which decision?

    That depends on which course the low liquidity movement happened. If it was a drop-down then the traders have placed buy trades or carried profits off sell trades which have previously been placed.

    If it was an up-move, traders placed sell trades or took profits off buy trades.

    Price does not move because of some mysterious technical indicator. Nor moving average will move the price.

    For the price to move, traders need to execute enough orders to utilize the liquidity at the best bid/offer.

    If there are no orders to be executed, the price will not move.

    This is the cruel truth in trading.

    The market will never move to your direction if there is no order flow.

    The outcome of the trade is managed by the performance of other traders. The real transaction and order flow are produced by other traders.

    The bottom line

    Order flow trading is not a technical analysis or fundamental analysis. They are not able to move the market.

    Order flow and liquidity is the base of the market.

    That’s why many traders have gained the losing tradings. Their losses happen because the technical or fundamental analysis cannot produce enough order flow to move price in your favor.  

    Order flow trading tries to improve the lacks in technical and fundamental analysis.

    When you learn and practice enough, you will find this is the most successful approach to trade.

    Don’t waste your money!

    risk disclosure

  • Currency Trading Guide For Beginners

    Currency Trading Guide For Beginners

    3 min read

    Two Different Approaches to Profitable Forex Trading 3
    Currency trading, also foreign exchange or Forex trading, is the buying and selling of currencies. That is happening in foreign exchanges or in the foreign marketplace. The main goal is to make a profit.

    Often you can find it is called ‘speculative Forex trading.’

    The main difference between currency trading and other trading is the liquidity of the Forex market.

    When you participate in the forex market, in essence, you have to buy one currency and sell for another at the same time.
    This is called a currency pair.

    Each one is interpreted by three letters. The first two letters describe the name of the country. So, the third letter interprets the name of the currency.

    How can you make a currency trade?

    Base currencyCurrency trading: Currency pair

    Currency trading is regularly executed completely over brokers and market makers.

    If you want to trade in the Forex market you will depend on the brokers in order to execute a trade.

    The first thing you have to do is to pick a currency pair.

    If you make a mistake, it could lead to a losing trade.

    So, we recommend you to choose between seven major currencies. Honestly, you have to pick one of existing seven. It isn’t a big deal!

    But there some problem may arise.

    There are some traders who have difficulties pairing up currencies. Sorry, but we have to say that.

    Some others cannot recognize which pair will perform the best.

    As we said, there are 7 major currencies. And, they are most traded.

    You have no other choice than to trade them in pairs.

    Forex trading is profitable - Is it the truth?Currency trading: 7 major currencies

    The first mistake you may make is to pick your pair based on some country’s economy. Don’t do that because your profit will depend on your position while trading on particular currency pair.

    That means if you are willing to be a day trader or very active trader you will probably pick 4 or even all 7 pairs.

    On the other hand, if you prefer to be a long-term trader you would like to wait and see which pair perform the best. Such traders always want to catch the best opportunity and they rather wait than to hurry.

    Say, you are a conservative trader.

    What you have to know?

    Number one, the forex market is open for currency pairs’ trading 24 hours a day. From 6 PM on Sunday in New York, to 4 PM on Friday.

    Each day starts at the Sydney market open. It is 5 PM to 2 AM Eastern Standard Time. Then switches into the Asian market. Tokyo’s market is opened from 7 PM to 4 AM.

    That’s not the end. When the Asian market is near to be closed, the European markets are starting their session. It starts with London’s market opening from 3 am to the midday.

    The last session belongs to New York. It begins at 8 am to 5 pm.

    That represents one week of forex trading session.

    So, you can place your trade when and where you want. The Forex markets are opened 24/7.

    What you have to take care of when trade currencies?

    Following Lead Traders - Good Or Bad For You?Currency trading: make a profit

    Well, the first is its value. Currency price is changing fast and frequently. The reasons for that can be various. For example, Brexit is one of them. But sometimes, the market by its own nature will cause changes in currency prices.

    The fluctuation isn’t a bad thing, but when it comes with high frequency, you might not be able to determine the changes which could cause the loss.

    For example, the euro is strong. And countries from the EU would buy, let’s see, U.S. products. In order to meet payments, they have to change euros for US dollars.

    So, we have the following situation.

    If large amounts of euros are traded for U.S. dollars in a short time frame, it forces interest for the U.S. dollars. As a consequence, the U.S. dollars value increases. On the other side, the value of the euro related to the U.S. dollars decreases.

    The risk involved in currency trading

    Currency trading implies high leverage.

    It is very possible with small investments to gain a big amount of cash.

    Forex is not highly regulated. There are several sorts of trades not regulated at all. That can boost the risk of currency trading.
    If you are the beginner in currency trading you should start on some free demo platform. There is no risk involved.

    If you have a certain good result, and only IF, you should start with live currency trading.

    Don’t waste your money!

    risk disclosure

  • How to Get Started Real Estate Investing?

    How to Get Started Real Estate Investing?

    Real Estate Investing - How to Get StartedReal estate investing is easiest to understand but getting started can appear scary

    By Guy Avtalyon

    Real estate investing can be key to your financial status in the future.

    Yeah, investing has to be done on time. This means you should start at an early age.  Because you must have the chance to take benefit of compounding interest.

    Have you ever think about real estate investing? Well, how to tell you and not to ruin the fairytale?

    You may have a really good salary but you can work limited time in your life. For example, 40 years. The truth is that the majority will never get rich working regular jobs. Every day from 9 to 17.

    Okay, some will get rich but you are speaking about people who become CEOs in their 30s. And had lucky to start in some big and respectable corporation.

    To be honest, I’m not jealous. I don’t envy anyone. What I want is to find a way how to provide our older days and years with a decent sum for a comfortable life. An for this present life, of course.

    We are speaking about financial freedom. And one of the ways to reach it is something called passive income.

    How to generate reservoirs of passive income?

    Stock investing is a good idea.

    But, as far as we know, real estate investing can produce big returns and increase your net worth. And it is with less risk than stock market investing. The markets are volatile, don’t you know that?

    Real estate investing is also easiest to understand as a way to invest. On the other hand, getting started in real estate investing can appear like a scary thing. But, frankly, you can screw it up.

    So, I want to give you some tips on how to start real estate investing.

    Do you know the meaning of wholesaling and prehabbing?

    What are property types?

    Have you ever heard about single-family, multifamily? It can seem strange and scary to new investors. But it is one of the smartest investment actions you can make.

    Yet, investing in real estate can give quite nice capital if you make clever investments. If you are thinking about investing in real estate, there are some investment tips for beginners.

    Real estate investing is a business

    Believe us, it isn’t enough to provide hot water or electricity or heat supply. Yes, the rent will come anyway. But real estate investing is more difficult and demands you to be involved.

    First of all, there are various different types of real estate investments. There are residential, commercial, and industrial. But also, a real estate that can be traded on stock markets. Have you heard about REITs? That’s it! So, you must understand that real estate investment is a business.

    The main advantage is that it isn’t necessary to understand all about real estate.

    Real estate investing strategy

    You must have a plan in place to achieve your goals. That’s alpha and omega for everything.

    When investing in real estate as beginners you must have a business plan and a real estate marketing strategy.

    These two parts will point up the goals you want to achieve. They will give you a roadmap to realizing them. Also, they will show you how new deals continue to run.

    Yeah, there are risks and rewards.

    But there are some investment choices excellent for novices. Let’s break down some investment opportunities that are correct for new investors in the real estate market.

    Are all real estate investing strategies equal?

    Nope. Choose a simpler strategy as a starting point. For example, wholesaling.

    Your job as an investor is to be a middle man. You will have to recognize and ensure a property that is being sold for under market value. Your main goal is to set the contract to a final buyer.

    Or you are talented for prehabbing.  

    What is prehabing?

    It is an entrance to investment rehabbing.

    Or more specific, it is when you buy and place a property, building or land, for resale. You can improve that property’s condition through trivial changes.

    Why should you do that?

    Because buyers can’t see the latent value or recognize more work and costs and they may not be there for real. Many houses can look in notable bad conditions. A few cosmetics improvements can have a significant influence on the end buyer.

    You may choose REIT investing.

    Don’t pretend you don’t what is it. We asked you before.

    Okay, once again. It is a tremendous opportunity for beginners in the real estate investing world.

    Real Estate Investment Trusts (REITs) are ideal for all of you who are looking to earn passive income. How?

    REITs have the ability to provide revenue comings. It is known as dividends.

    In the same way that investors invest in stocks, you can invest in REITs. Primarily a company owns or supports profit yielding real estate. REITs provide investors to collect all types of benefits. For example, long-term capital appreciation, or profitable opportunity in diversified real estate portfolio.

    How to get started real estate investing?

    Getting started investing in real estate as a beginner often depends on the investment capabilities, read capital, available. Investing in real estate is an honestly nice idea. After all, who would refuse to make extra money? Making money is so sexy. To be honest, it is not for everyone. Some people are suited for real estate investing but others are not. Remember! Don’t waste your money!

    But I have one question for you.

    Which real estate investing for beginners strategy suits you the best and why?

    Share it with us and other readers.

     

  • Swing Trading and Day Trading – Make A Difference

    Swing Trading and Day Trading – Make A Difference

    4 min read

    Swing Trading and Day Trading - Make A Difference
    Swing trading or day trading? Where is the difference?

    For some new trader, day trading and swing trading are like two different movie roles.

    Day traders open and close many positions in a frame of one day. On the other side, as a totally different character, is a swing trader. Such a trader takes trades that last many days or months.

    The different styles satisfy different types of traders. It depends on some factors such as the type of market, how much time they want to spend on trading, or what characteristics they have as traders.

    Normally, both methods have the same goal: to make a profit grown on price changes in the market.

    First of all, you should know all the features of your trading system. You have to feel comfortable when trade and you must profit from it.

    Never ever pick your trading system randomly. Or because it works for someone.

    Why is that?

    Because the trading system is like a pair of gloves. The only one will suits you the best.

    Your trading system must meet your temperament.

    It isn’t about that swing trading is better than the day trading. It is all about which method satisfies a trader’s individual goals.

    Some traders will adopt swing trading, but others will use day trading.

    Day trading is good for traders who want quick returns. For example, a day trader risks 1% of funds on each trade. If there are loses, the trader loses 1%.

    What does happen if a trader win?

    A trader will make 2%. Do you know why?

    Reward to risk ratio is 2:1.

    Let’s go deeper!

    Assume the day trader wins 50% of trades. And the trader makes, for example, 6 trades in one day. That will be in the final score 3% on the account balance. Yes, minus trading fees.

    Well, with making 1% per day the trader will increase trading account by more than 200% per year.

    Wait, nothing is so easy!

    On the other side of the medal is that you can very fast drain your trading account if you opt day trading.

    How?

    Let’s see!

    You must have winning trades twice more than lost trades. At the same time, you have to win 50% of all the trades you take.

    Tell now is it easy!

    Swing trading collects gains and losses increased gradually.

    The purpose of swing trading is to take larger price moves than it can be found as intraday price performance.  

    In other words, swing trading has based on the fact that the price does not run in a continuous course.  

    For you to have a clear picture.

    Have you ever see the waves on the ocean?

    That’s how the price moves in swings, depending on the short-term price trend and momentum.

    The essential concept of swing trading is to enter at or near one swing top and exit at or near the next.

    Just like riding the waves. Swing trading is a trading methodology that seeks to capture a swing.

    Just like a surfer trying to catch the wave. Swing trading, in essence, is to catch one move in the market.

    Swing Trading and Day Trading - Make A Difference 1
    In an average month, the swing trader could profit 3%, minus fees.

    For a one year, a swing trader may gain 36%, which sounds good. Some proponents of day trading will tell but offer less potential than a day trader’s possible earnings.

    But swing trading fans will tell that has a much larger profit potential than day trading.

    On their benefit, the time frame for trading is larger so the profit targets are also greater.

    The truth is if you modify the numbers of trades won, the wins compared to losses will have an influence on earning potential.

    Sound logical indeed!

    The universal rule, day trading has more profit potential. Especially if you trade with a small account.

    Well, everyone would like to trade with a large account.

    But there is the catch with day trading.

    When the volume of the account increases it is harder to employ all the resources on short-term day trading.

    Or think about this!

    For example, the percentage of returns decline the more capital the day trader has.

    The money returns are increasing, of course! But 3% of returns on $2 million account is still more than 50% on $100,000.

    The capital demands

    Day trading and swing traders can begin with different sums. It depends on which market they want to trade. There are some differences if they trade the stock, forex or futures market.

    If you want to day trade stocks in the US it is recommended to start with $25,000.

    Swing Trading and Day Trading - Make A Difference 2
    A swing trader will start with $10,000 and rather with $20,000 if want to pick a profit from trading.

    A lot of money indeed.

    But if you want to start day trading on the forex there is no minimum needed for that.

    Well, it is advised that traders should start at $500. To swing trade forex, the minimum recommended is about $1,500. But you would like to start with more. You will need the capital that allows you to enter a few trades at one time.

    To trade futures as a day trader, you will need about $6,000 more or less.

    For example, trading micro contracts may require less.

    For swing trader to trade a futures contracts, it is recommended at least $10,000. Even more! About $20,000 or more is better.

    This amount depends on the margin demands of the contract you want to trade.

    Time frames differences

    Frankly, day trading takes up much more time. Day traders ordinarily trade for at insignificant two hours per day.

    Are you sure you have 2 hours every day to dedicate to trading?

    There is preparation time, too. That means spending three to four hours at the computer.

    Swing trading will demand a much shorter time. For instance, a trader is swing trading off a daily chart. Such a trader may find new trades and update orders on current positions in less than one hour.

    Even less!

    Some swing traders will finish all about trade once a week. That means a one-hour per week, and moreover, not over the night.

    They can go to sleep earlier! Or do whatever they want! Go to the cinema! Or have a romantic dinner!

    If you prefer to be an unfortunate day trader, you must do day trading while a market is open and hot.

    On the other side are swing traders. They can place orders at any time of day. Even when the market is closed.

    They are such lucky guys!

    The bottom line

    We cannot say the one trading style is better. They are just different. Both can be suitable for different needs.

    Day trading has more profit possibilities.

    Swing trading has a bigger chance of percentage returns.

    There is one big difference.

    Money demands to start trading are considerably different.  

    Day trading requires more time than swing trading.

    But swing trading demands less stress.

    Anyway, your decision will be the last one. But remember, you have to find the one which will suites you the best.

    For your profit.

    Don’t waste your money!

     risk disclosure

  • Swing Trading Forex Explained

    Swing Trading Forex Explained

    2 min read

    Swing Trading Forex
    Swing trading Forex is a type of short-term market speculation where positions are held for longer than a single day.

    It has relationships to long-term trend following. But you instead are looking for much shorter market moves.

    Also, swing trading is a longer term trading style. It requires patience to hold your trades for several days at a time.

    It is excellent for those who can’t monitor their charts throughout the day. For those who can dedicate several hours examining the market every night.

    The swing trader is actually looking for multi-day chart patterns.

    Why?

    To achieve bigger price moves or swings than you would typically get from a day trade.

    It is possible to start forex swing trading with $1,000 or less. Moreover, with the right plan, it is possible to start making a small income or to grow the account.

    The point is that the forex market gives precise control over positions size and risk.

    So, even a small account can be traded in the same way a experts trade a large account.

    Swing Trading Forex 2
    But you have to know some steps that guide you through the process of growing any size forex account.

    Yes, you can start with less, but if you want a decent income, you should start with at least $500.

    The problem with start with less than $500 is that you’ll be limited on the trades you can take.

    On the other hand, $1,000 gives you a bit more space. So you should be equipped to take most of the swing trades.

    This is apparently best suited for those who have enough free time to stay up-to-date with what is going on in the global economies.

    Swing trading tries to recognize “swings” inside a medium-term trend and enter only when there are big chances of winning.
    In general, swing trading is taking trades which last for a day to a couple of weeks.

    When you swing trade the point is to spend about 20 minutes each night finding trade set-ups. This happens after the US market close but before the London market open.

    You can set your entries, stop losses and targets and go to sleep.

    The advantage of swing trading Forex

    Swing Trading Forex 3
    The advantage is, the risk is managed and the targets and stop losses are set. So there’s no need to continually monitor the trades.

    When you set targets longer than stop losses, the math will be done and increase your account.

    Even if you gain only 40% of your trades you will be profitable using this method.

    The trades last much longer than one day. So larger stop losses are needed to overcome volatility. A forex trader must adjust that to their own money management plan.

    There can be many changes in the price during the shorter time frames.

    Hence, you will experience trades go against you during the holding time.

    It is essential that you are able to stay cool during these times and trust in your analysis.

    Forex Swing Trading and Brokers

    A man is watching the monitor
    Before getting into swing trading, it is recommended to have the right type of forex account.

    Your account must allow you to trade micro lots.

    Why is this necessary?

    A micro account allows you to trade in 0.01 lots. That means each pip is worth $0.10 for example in pair EUR/USD.
    So, each pip is worth $1.

    A standard account expects trading full lots, where each pip is worth $10.

    The good thing with a broker that lets you trade micro lots is that you can really adjust your position. Assume you increase your account to $10,000. You’ll still want to be able to trade micro lots. With micro lots, you can adjust your position so you’re risking 1% of your account.

    On a $10,000 account, with risk at 1%, you can lose up to$100 per trade. With a 70 pip stop loss, you can take 14 micro lots which give you a risk of $98.

    Can you see the difference? Nice!

    Trade micro lots and trade with a broker that lets you trade in micro lot profits regardless of account size.

    Try to find a broker with small commissions. The spreads could be less than a pip in most pairs. This is perfect for swing trading Forex.

    The bottom line

    Swing trading is more of a style, not a strategy. The time frame defines this style. There are countless strategies you can use to swing trade. Swing trading is a style that moves over short to medium time frames. It occupies the very short time frames of day trading and the longer time frames of position trading.

    The support and resistance are the key concepts behind this style.

    Swing trading Forex strategy gives you the choice of following the trend. Also to trade counter to the trend.

    If you don’t mind holding your trades for several days or you don’t mind having large stop losses.

    You are stable and swing trading Forex is for you.

    Don’t waste your money!

    risk disclosure

  • Forex trading commissions – how to pay less

    Forex trading commissions – how to pay less

    Forex trading commissions - how to pay less 4Forex trading commissions can eat up a big part of your Forex profit. 

    By Guy Avtalyon

    What are Forex trading commissions? We want to share with you some little-known ways to save on commissions. Also, we will show you how to cover back your costs.

    Well, in any business that you go into, you’ve got specific costs: rental cost, marketing cost, etc.

    In the trading, commissions are the transaction costs. That means, we pay it to broker and that’s how the broker makes money.

    How do brokers charge their Forex trading commissions?

    There are 3 kinds of brokers, but let’s separate them into 2 main groups:

    1 – market maker

    These brokers charge a commission on the market bid/ask spread. Whatever the bid/ask spread is, they’ll quote you one or 2 pips higher.

    For example: if the market is quoting at 1.2456 they will quote you at 1.2457. This extra pip goes to the broker so they can make money.

    2 – ECN brokers

    An ECN broker is a forex financial expert that uses electronic communications networks (ECNs) to give clients direct access to other participants in the currency market. They charge a fixed commission. The lowest commission we saw is $3,50 per lot.

    That means, for every lot you trade, they will charge you $3,50 to buy and $3.50 to sell.

    So, when you open and close a position, known as a round of the trip, the total commission you will pay is $7.
    Let’s see what the bid/ask spread looks like for two sorts of brokers.

    Assume you want to go long on one lot of EUR/USD. And you buy at 1.2456 and exit at 1.2476 making you 20 pips in profit:
    20 pips x1 lot = $200

    But there are commissions.

    Let’s see how the different kind of brokers will charge you Forex trading commissions:

    Market maker: They quote you 1.2457, which is 1 pip more, that will cost you $10 per lot. When you sell, they quote you 1.2475, which is 1 pip less, and that will cost you $10 per lot.

    So we can see that the total cost of your round trip is $20 per lot. Out of your $200 profit, $20 goes to the transaction costs. That is 10% of your profit.

    Your cost can be higher if they were marked up by more than one pip.

    ECN broker: When you buy at 1.2456. They charge you a fixed commission of say, $3.50. When you sell, you sell at 1.2476 and again, you will pay $3.50. The total cost per lot is $7 off your round trip. It is also out of your $200 profit.

    And, can you see the difference?

    It’s in all the math.

    What else you need to know about Forex trading commissions?

    First of all, how much commission you pay when you place a trade depends on the number of lots you trade or your position size.

    Meaning, the bigger your position size, the bigger the number of lots you trade, and the higher the commission you pay for your trade.

    So, let’s see, what defines the number of lots you trade or your position size?

    Of course, it depends on how close your stop-loss is.

    Do you know the formula?

     

    Your stop-loss distance is the only point you can really manage on a trade-by-trade basis. The smaller your stop-loss distance, the bigger the number of lots you trade, and the more commission you pay. You can check this plays out using a Forex position sizing calculator, it’s easy to find online.

     

     

    So, you’ll see, your account size is $5,000 and your risk is 3% per trade, and your stop-loss is 8 pips away. With the help of this calculator you know you’ll be trading 1.875 lots. and you know that you have to pay the commission of $7 per round trip.

    The math shows:

    $7×1.875 lots + $13,13 commission.

    But what will happen if your stop-loss is 20 pips away?

     

    The calculator shows that the number of lots you’ll trade is 0.75. Let’s calculate the commission:
    $7×0.75 lots = $5.25 commission.

    Should you go for a wide stop-loss?

    That can be okay if you are a position or swing trader.

    But if you have experience of a few weeks or a few months your stop-loss is further, for example, 30, 100, or 200 pips away.
    When you got a wide stop-loss, the number of lots you trade will be less. On the other hand, the transaction cost takes up a smaller percentage of your profit.

    The one thing is certain: As a trader, you have to pay the spread and your broker always earns it. To get the best contract possible, you have to choose a reputable broker. The one who has substantial relationships with the large foreign-exchange banks.

    You will find in the end, the cheapest way to trade is with a very reputable market maker who can provide the liquidity you need to trade well.