What is Forex and How to make money with Forex 5
Forex strategies - is it possible to make a lot of money with forex?
This is one of the last few forex articles here on Ideas on How to Become Rich about forex - one of the last few articles associated all things associated with forex and how to make money trading currencies. I must say here that all the other forex articles were researched and developed as this is an ideas on making money blog, and I am definitely not an expert in forex and not an expert in foreign currencies. I am rather good at investment and making money on the stock exchange for penny stocks and for standard blue chips, but that is about the extent of my knowledge and all other information here on my make money site here is to share ideas on how people can make money and the various approaches taken to various markets. My background is in Economics (Honours) and investment is my major theme here on this site. I am writing this honest preface to my article because today I am going to talk about what I have gleaned from my research on forex - and today's topic here is forex strategies. There are no guarantees in any article in the world and no guarantees for anything in this world that will tell you that you can definitely make money, but here are some key forex strategies that you may wish to consider:
1. Learn fundamental analysis and technical analysis cold, and either:
- choose either one of them and stick with it for your forex strategy and investment paradigm, or
- combined both approaches, which makes more sense; meaning that for a forex strategy you will research both on the general macroeconomy and market perspectives of fundamentals, as well as the technical, day to day movements of the price.
2. For technical analysis, and indeed forex in particular, you will need some kind of knowledge of mathematics and some tracking software for the latest information. There are two key ideas here:
a) you will need to know some mathematics, and in particular, Fibonacci numbers and the Fibonacci method for forex because apparently there is some major link between making money and your knowledge of this key information
b) for technical analysis and for forex you will need a constant stream of real, life data for currencies and this is not easily available unless you have the right connections, the right software and the right websites.
Therefore, the forex strategies here are: immediately find some contacts who have live and good experiences in forex strategies and forex trading, then get some software, preferably free, but if that is not possible, then get some that require some money and some sort of fees, and then start building up a whole list of websites that you need. Some websites might be educational, like Ideas on How to Become Rich, and some others might be educational and more advanced, and yet others might be data mining and currency news sites, and even others may be links to governments and to brokerages worldwide.
3. Perhaps for the most important of forex strategies is to get a winning approach for forex - for instance, be international, where you trade every currency that is major and that can make you money, regardless of whether or not you believe in the currency or the country, for that matter; choose not to be a speculator but a real investor, but then again, that is only my opinion, and of course your forex strategies can revolve around day trading and being totally technical analysis and data based rather than long term or anything like that. The key is that you make your own winning approach to forex strategy.
For example, you can have some successful trading strategies involving only simple moving averages, where you use an algorithm. The key is still to make sure that your upside is more likely than your downside. You can also use support and resistance levels, and that might be a good strategy to use, successful and simple and algorithm based, or commonsense based, if you like.
4. Research and continue to upgrade, both in terms of education and in terms of information regarding forex and forex news. At any early stage, this site proves invaluable and educational, but as time goes on, you move on and go to other more important educational sites and also to try your hands at some simulations and also some real money. Forex is reputedly good for making money, if you know how, so do try your very best and all the best for making money!
Hope you make lots of money with forex strategies and forex, good luck and all the best in your money making ventures!
What is Forex and How to make money with Forex 5
What is Forex and How to make money with Forex 4
What is Forex and How to make money with Forex 4
Forex fundamental analysis and forex technical analysis
In my earlier posts here on Ideas on How to Become Rich, I covered fundamental analysis and technical analysis. It is interesting and important to note that fundamental analysis and technical analysis are important to forex trading and making money using currency exchange as well. What is fundamental analysis and technical analysis in the context of forex?
Fundamental analysis in the context of forex means that someone looks at the macroeconomy of a country and the target currency; looks at the political situation of the country; national unemployment; tax policies and all the stuff like that in order to find out and measure the effects that these events and policies and situations will have upon currency values. In other words, the forex trader who uses fundamental analysis is using the same concepts and ideas to make money as the investor who invests in the stock market from the investment paradigm of fundamental analysis as well. The fundamentals of a company will affect the stock price ultimately; the fundamentals of a country will affect the currency values, ultimately, and that is what the forex trader is looking and watching out for in order to make money. At the same time, it is important to note that a currency does not just reflect the fundamentals, and there is an important role played by perceptions, ideas, rumours and anticipations and expectations of market participants.
Many other forex traders use technical analysis instead, which looks at values and movements of the currencies, and ignores the fundamentals of the country's economics and indicators that fundamental analysts take so seriously. The investor assumes that the movement of the currencies considers most of the factors inside it; movements of prices have causes and effects; history repeats itself. The main thing is that the technical analyst makes no forecasts way in advance but looks at the trends and prices, just like a technical analyst for stocks does his business, in order to make money.
Perhaps a cross comparison might help budding forex traders or forex beginners seeking to improve their knowledge, so do visit
technical analysis on Ideas on How to Become Rich
and
fundamental analysis on Ideas on How to Become Rich
to build up your investment and technical knowledge. More to come here in future posts on forex and how to make money with forex! Stay tuned here.
What is Forex and How to make money with Forex 3
Why utilise the forex market to make money? Why should I choose forex trading over other investments?
In this series I am talking about forex. I will now give reasons for picking forex trading over other investments or financial instruments.
The forex market is basically the market where currency is traded, and it is the largest financial market in the world. Until the 1990s only major players and big institutions could play this game, but now with the rise of the Internet even the small guy next door can play this game. Information, knowledge, an internet connection, and voila, one can join in the forex market and do currency trading.
Some of the popular, major currencies being traded worldwide:
USD
United States
Dollar
Buck
EUR
Euro members
Euro
Fiber
JPY
Japan
Yen
Yen
GBP
Great Britain
Pound
Cable
CHF
Switzerland
Franc
Swissy
CAD
Canada
Dollar
Loonie
AUD
Australia
Dollar
Aussie
There are many benefits to trading foreign currencies in the forex market. These are the major and most important reasons:
There are no commissions, no middlemen, no fixed lot size when trading, low transaction costs, a 24 hour market, no one can corner the market, leverage, high liquidity, free demo trading accounts, and even better mini and micro trading options are available.
There are no commissions: Brokers are compensated by the bid-ask spread, and so there are no commissions.
There are no middlemen: Spot currency trading eliminates the need for middlemen, and so you can trade directly on the market for a particular currency pair.
No fixed lot size: You can determine your own lot size instead of having a predetermined lot size.
Transaction costs are lower: The transaction costs are lower than most other investments.
24/7 forex market: The forex market never sleeps, unlike your local stock exchange.
No one can corner the forex market: The forex market is huge and hence no one can ever corner it and control it for extended periods of time, even countries and their central banks cannot corner it.
Liquidity in forex is high: You will also never be stuck in a trade because liquidity is very high.
You can have free demo trading accounts: In addition, you can train and practise your skills in forex before you go on to do a real life transaction and real life forex moves.
Minis and micros? Also, if you don’t have much money, you can do the mini and micro trading accounts, which allow people who have little money to start out in forex markets doing currency trading.
You will need some basic capital (your money) and a high speed Internet connection if you wish to get started in forex trading. Good luck and all the best! More to come on this site about forex, forex markets, forex strategies and tips and much more on becoming rich and making money.
What is Forex and How to make money with Forex 2
What is Forex and How to make money with Forex 2
In Ideas on How to Become Rich, we have now explored a new fields, called foreign exchange, and we will be looking into forex for ideas on how to make money and become rich.
Forex is basically the trading of currencies, and the trick is to make use of the discrepancies in currency values and prices in order to make money. Conceptually, that's easy enough for using forex to become rich, but there are of course many complicated technical details.
This section may get a little boring because it does not dive into forex right away but deals with terms and words associated with forex. All research is mine and I utilised the following resources on forex because I knew little about forex before researching into it on a major scale. Education is key to understanding forex as it is indeed a viable way to make money and might be the key to your financial success. The best educational resources for forex, and for beginners to forex, are:
articles on ezinearticles.com , of which one of the contributors to other financial and investment articles apart from forex, is myself (yours truly) and http://www.babypips.com/school/the_skinny_on_forex.html for complete beginners.
I do the research and the writing and the synthesis to save you time and effort, and then you can access the information and resources to make money and ideas all here on my website. My advice for beginners to forex is that the ezinearticles are only worth reading once you have learnt and mastered the basics, because most of them are actually advertisements for online programmes and other types of software that help you make money doing forex. That is to say: know what forex is first, learn all you can about forex, and learn strategies and moves for success in forex, and then currency trading will be a money spinner and money earner for you. Then read ezinearticles.
Definitions and terms associated with forex
long = buy
short = sell
These two key terms are the basics of forex that you definitely need to know.
the bid = the price at which you will sell
the ask = the price at which you will buy
the spread = the difference between the big and the ask
rollover = this depends and varies from firm to firm, but the main thing is: there is a rollover interest rate that a trader either pays or earns
demo trading = doing trading using a fake account that simulates a real account for forex
pip = the most common increment of currencies, the last decimal place of a quotation - don't worry, all forex brokers will do this calculation for you, and besides my brother doesn't know what a pip is either!
lots = forex is traded in lots, where a lot is $100,000 normally - you might have to confirm this as it may vary from country to country
margin = also known as the account margin, this is a minimum forex account size
margin call = the broker will call you when your account falls below margin requirements, so that you have to put up the difference
market order = order to buy and sell at the market price
limit order = order to buy and sell at a certain price
stop-loss order = is a limit order linked to an open trade to prevent additional losses
GTC = good till cancelled order - active in the market till you cancel it
GFD = good for the day order - active till the end of the trading day for forex
OCO = order cancels other order - a mixture of limit or stop loss orders
More to come on forex and how to make money with forex in future posts here on Ideas on how to become rich.
What is Forex and How to make money with Forex
What is Forex and How to make money with Forex - basics and introduction
In Ideas on how to become rich, we have covered all sorts of money, finance and investment topics ranging from investment basics, to fundamental analysis and technical analysis, CDs, mutual funds, savings and bonds, making money online and getting a good, high paying job, all as ideas on how to become rich by making money.
In the next few posts, I will be dealing with a topic on foreign exchange (forex) and how to make money with forex, and ideas and concepts related to forex. This will get a bit technical, just as it did with the technical analysis part of my writing (no pun intended).
In this post I will be dealing with the basics: what is forex?
In the forex market, what we are doing this time is buying and selling currencies. The goal is still to make money, just the same as investment in stocks and shares and all other financial devices and financial instruments. The object of forex trading is to make money by the buying and selling of currencies, so the key idea is that first you have to exchange one currency for another currency, and then later convert the second currency back into the first, so as to make yourself a profit.
This is because currencies fluctuate, due to many factors, such as economic factors (macroeconomic factors such as balance of payments, inflation, economic growth and others), political conditions, and basic human psychology (the same factors here that affect the stock market and capital gains and losses).
I would say that if you know how to invest in the stock market, picking up forex will be rather easy and a smooth ride for you because there are many similarities between stocks and forex. You will be happy to know that the fundamental analysis and technical analysis skills and concepts that you have learnt or can review in my earlier posts will come in really handy, because there are also two main approaches to trading currencies, and they are, yes you guessed it: technical and fundamental analysis.
However, of course, there are fundamental differences and dissimilarities in technical aspects of forex, which will be dealt with in the course of this Ideas on how to become rich blog.
The reason why I personally think that forex is a bad idea is that it requires monitoring and there are many variables to consider. Monitoring is that you need to have access to data and information, and despite the fact that economics says there is perfect information, there really is no such thing as perfect information. In addition, there are many variables to consider, and many are out of your hands. That is why I strongly prefer stocks and shares to forex. However, if you are good at analysis, and like numbers and math, forex will be very good for you because forex is just the kind of thing that might make you a lot of money. Information and research are key, and if you like doing tracking and investigation, as well as monitoring and evaluating data and prices, forex might turn out to be the correct idea to make you very rich.
More to come on forex on Ideas on how to become rich. Stay tuned!
Mutual Funds Basics 2 - one more point to note
Mutual Funds Basics 2 - one additional point to take note of when dealing with US based Mutual Funds
Tax impact (in the case of the USA only; thanks to Yahoo finance)
Most mutual fund investment profits are taxed around the world, but in the USA there are a few additional considerations to take into account. If you want to make money, taking taxes and fees into consideration is a really good idea. The profits on mutual fund investments are typically subject to federal, and often, even state and local income taxes, unless you are investing through either a tax-free retirement or education account, or something like that.
While there is the joke about being certain about nothing except death and taxes, there are also many considerations here when it comes to making money with mutual funds.
With respect to your mutual funds and taxes in the USA, if you invest in a regular taxable account, then the dividend and the taxable interest distributions that you receive are taxed as ordinary income each year.
A mutual fund is required to distribute its net realized capital gains each year, and those distributions are also taxed as either short-term gains or long-term gains, depending on how long the mutual fund held the securities in question.
A mutual fund that buys and sells securities (with a trigger happy fund manager) frequently may add to your tax bill with hefty capital gains distributions.
You will also incur taxes on your capital gains, and also pay taxes depending on how long you had held the shares, if you redeem shares in a mutual fund at a price higher than you paid for them.
Please do take note of all the abovementioned points if you want to invest in mutual funds.
(source of information: Yahoo finance)
Bonds basics
Bonds basics – I’m bond, James “Bond”
I am now in the second post in the series of savings, mutual funds, bonds and CDs and the like, conservative investment instruments. Now I am going to discuss bonds. Here are the basics to bonds:
A bond is very basically a loan and you are the lender. Who's the borrower? Usually, it's either the US government, a state, or a big company like General Motors, if you are lending money to the US government. In Singapore, it is a little known fact that the Singapore government issues bonds too. Many government and business entities need a lot of money to operate - to fund the federal deficit or to build roads and finance factories, for example - so they borrow capital by issuing bonds. Bonds are actually very big business, especially in the United States.
When a bond is issued, the price you pay is known as its "face value." Once you buy the bond, the bond issuer promises to pay you back on a particular day - it's called the "maturity date" - at a predetermined rate of interest - the "coupon." Say, for instance, you buy a bond with a $1,000 face value, a 5% coupon and a 10-year maturity. You would collect interest payments on the bond adding up to $50 in each of those 10 years. When the decade was up, you'd come back to get back your $1,000 and walk away.
A key difference between stocks and bonds is that stocks make no promises about dividends or returns. For instance, General Electric's dividend may be as regular as a heartbeat, but the company is under no obligation to pay it. And while GE stock spends most of its time moving upward, it has been known to spend months or sometimes even years going the other way.
On the other hand, when GE issues a bond, however, the company guarantees to pay back your principal (the face value of the bond) plus interest on the bond. If you buy the bond and hold it to maturity, you know exactly how much you're going to get back, basically. That's why bonds are also known as "fixed-income" investments, as they assure you a steady payout or yearly income. And although they can carry plenty of risk sometimes, as all investments do, this regular income is what makes bonds inherently less volatile than stocks.
As an aside: “Some say that gentlemen prefer blondes; that is incorrect, as it should be: Gentlemen prefer bonds J” (Old joke.)
Savings, deposits, CD basics
Savings, deposits, CDs and all the basics you need to know for finance (apart from investment ideas and investment knowledge basics)
In my last few posts I did a series on making money online, but now I am back to information regarding more basic and simple topics, like can I make money from savings and CDs (certificates of deposits). As this blog is on ideas on how to become rich, and I am targeting a wide variety of readers, I shall now complete a series of articles for people who are risk averse and still wish to make money via deposits, mutual funds, index funds and the like. Investment may be something that you will want to look into also, and you can access investment basics and ideas here on my blog.
Topic for this post: Savings and deposits, (CDs) Banks’ Certificates of Deposit
Here, you lend a bank your money for a specific amount of time (up to, say, for instance five years). In return, you receive a set amount of annual interest and when the CD reaches maturity, meaning that it expires of ends, you come and get your money back. As a side note, this appears to be the most common plan for some Singaporeans to save money, as they lock it up in the bank where they cannot touch it and collect interest on it and don't have to think so much about making money.
How much interest you earn is the key to making money with CDs. And that depends on a number of factors such as which bank you visit and look around, the prevailing interest rate and how it compares to the inflation rate, how much money you invest and how long you lock it up for. It's important to note that inflation affects your interest rates because the higher the inflation the higher the rates, and hence you do not necessarily earn as much as with a lower inflation and lower interest rates. You can look around the banks and see what the rates are like as they change very often and usually depend on economic conditions or the like. In Singapore, generally the interest is usually very low, and in other countries, especially the United States and Britain generally the interest is usually better and higher.
When buying a CD, there are two terms you may need to know: the annual percentage yield APY and the annual percentage rate APR (Yahoo.com). The yield is the total amount of interest that you will earn in one year. It's expressed as a percentage of what you invest and takes into account that the way the bank compounds the interest. The rate is simply the interest rate you will earn for that year. If, say, you earned 1% per month, the APR would simply be 12%. But the APY would be 12.68%. That's because here the APY takes into account the compounding effect on the interest you earned earlier in the year.
For conservative investors, the best thing about CDs is that your money is safe, relatively speaking. When you purchase one through a bank, your total assets there should be insured, so there’s no worry there. The other advantage is that you know what's coming back to you, and hence you can plan accordingly. And you're still earning more here than if you let that money rot away in a savings account earning a paltry interest.
However, there are several big problems with CDs that everyone should be aware of: They have usually tiny returns as compared to other investment devices, they can lock up your money for the long haul and for many years, and they may not counter inflation. If you buy a five-year CD in 2002, for example, you can't get the money out any earlier than 2007 without paying a steep penalty. Even on a one-year CD, you might even be penalized for instance three months’ worth of interest. That's why a money market fund or an index fund may be usually better alternatives. The rates may sometimes be slightly lower, but you can always come back and withdraw your money whenever you see fit. Also, CDs may not be inflation proof, where sometimes your CD may not even be enough to counter inflation. The reason is that you are still taking in the older interest rate even when the general price level increases overall, thus shaving off your gains.
In other posts in this series we will be discussing about mutual funds and more on stocks and shares. Visit my website once again for more information!
How to become rich making money online
How to become rich making money online
According to my research there are many ways of making money online. The problem is that if you really want to learn how to become rich by making money online, I cannot really help you as it's not easy as the people who sell or market the products claim; there is no really easy way to actually make real money online; there are many things you can do to make money online but not all of them will be suitable for you, and so on.
Simply: there are real problems and real difficulties to handle, and so while you can indeed make money online, the problem is that in the large majority of cases, it will not make you rich, but may provide a modest or small income.
The problem with most online claims on how to make money online is that they are false and fake claims. There is no actual way of guaranteeing how much you can earn online. There is no way of telling how successful you will be following someone's programme or someone's software. Some of the websites are fake and false altogether, so caveat emptor. But the fact still remains that it is possible to make money online. The problem is that for most of us, it will never be one of the ways to becoming extremely rich unless we put in a lot of effort and time.
(If you want to become extremely rich making money online, there are ways of course. But I'm saving that for later...)
Currently, the best ways of making money online, if you are prepared to put in time and effort, are:
1. Do online paid surveys and online polls that companies conduct so as to get paid money. There are many companies that pay money for surveys so that they can understand their markets better. For instance, there is OpinionWorld, where the payout is sometimes in terms of money and payout in terms of cash sometimes. For practically all the paid survey systems, before you can make money you need to pay a registration fee and need to download something first. My opinion is that if it is a trusted site and you have lots of time to do paid surveys, then go ahead and make money online doing surveys.
2. Make a blog and put adsense on it. This is what I have done, as well as what many people have done. This is going to be very important if you intend do become a professional blogger. This idea to making money online can also be extended, not just to blogs, but to other websites as well. If you already have a website, or can build one and get one hosted, then it will be a good idea to put some ads on it in order to generate some advertising revenue. The most common advertisement system online is currently Google adsense, and all you do is to register with them and get the code for your website or your blog. The Google adsense bot will automatically target ads for your blog and hence will generate you some revenue if people click on your ads. However, it is not a good idea to depend entirely on Google for your income - one source of income cannot beat multiple sources of income, and as you've heard, "don't keep all your eggs in one basket". So TLA - Smart Link Marketing might be a good company to sign up with, as they also provide ads. In my case, I also depend on Nuffnang, but for my American and British readers, Nuffnang only applies to Southeast Asian websites, so this will only help Asian readers who run websites or blogs. I will be talking about Google adsense, making money on the Internet and such related matters in the next post, so don't worry. Terms like affliate marketing, SEO, rankings, Google and all that will be familiar to you because I will analyse them here on my blog.
3. Run an online business. That is, sell and buy things on the Internet. This is also a very good way of making money, although this is not really the best money making idea if you are not technical minded and cannot use HTML and Javascript, etc. If you can hawk a product and team up with a money-minded but very technical person who can help you with domains, programming language and all the other technical details, you will be able to make some money online buying and selling. This however takes time and will earn you money in the long run.
So the three key ways of making money on the Internet are: do paid surveys, get some form of advertisement for your site, and do online businesses. I will be talking more about the second idea, because this second idea on how to make money is more common and more obvious to people who know their stuff, and is probably the best way of making money online. There are many other ways to make money online, but I think they don't work, but you can just have a look and try them out if you like:
1. Do free e-books and then later charge for them online, selling e-books to people
2. Gamble on online casinos (and in some cases, people claim to have a system that can beat online casinos)
3. design beautiful websites and blogs and sell them for money (might work if you work very hard and then again, the money return you get might be very low for all the hard work and effort put in)
4. becoming an A-list pro blogger and getting paid tonnes of money in advertisements, endorsements, articles and the like
5. writing essays and writing literature papers and exam papers for students and desperate teachers to download (this only works if you have lots of time to spare and you are a really good writer!)
All right, that's all for this post. Stay tuned!
Investment: Technical Analysis basics 1
Investment: Technical Analysis basics 1
There are two common approaches when investigating any investment: fundamental and technical analysis. Fundamental analysis focuses on the company, looking at things like balance sheets, book value and price earnings ratios, and is used to determine if the stock being considered is a good long-term investment. Technical analysis focuses almost entirely on the stock price and its concomitant patterns. The fundamental assumption with fundamental analysis is that the stock price will reflect the company’s profitability. The more profitable the company is, the higher the stock price will be. Investors using fundamental analysis are certain that one follows the other.
Technical analysis, on the other hand, also called chart analysis, is based on completely different assumptions. The premise is that the market is made up of a large group of people behaving in predictable patterns. The challenge for technical analysts is to therefore find these patterns in the price movements. The patterns tend to become obscured in the price trends, since outside events tend to influence the movement of the price. These outside events tend to add noise that mask or change the price patterns of the stock. Technical analysis uses many tools or techniques. However, the goal is always to predict the price movement of the stock. If the prediction is correct, then a profit is made.
Fundamental analysis is considered more conservative than a technical analysis approach. There is far less agreement as to the soundness of technical analysis, but the appeal of technical analysis is the perception that one can make a profit more quickly than with a buy-and-hold approach, the typical result of fundamental analysis. The returns and payoffs differ from person to person.
So in short: What is Technical Analysis?
"Technical analysis is the practice of studying a stock’s past prices and trends in an attempt to determine its future prices and trends. People who utilize technical analysis often study charts and graphs of a particular stock, industry, or sector to find patterns."
I think this here is the best and simplest explanation that I've found!
Investing in the Stock Market to Make Money
Investing in the Stock Market
Assuming that you have some money capital, and want to become rich, there is the stock market. The stock market is one of the most consistent ways of making money if one knows how. This post will attempt to discuss how to invest in the stock market and make money, from the point of view of the Singapore stock exchange. Nonetheless, the lessons learnt are from great investors worldwide, and the lessons can be applied to every single country's exchange, with minor adapations. I myself am a fan of Warren Buffett's method of investment. Nonetheless, again, I think it's important for one to make up one's own mind and choose the approach suitable for oneself, when it comes to investing. True enough, modelling some famous investor could be useful, but "a poll is no substitute for thought"... if I remember Buffett correctly.
There are technical investors, fundamental (value) investors (of which Warren Buffett is the most famous exponent, along with his teacher Benjamin Graham), speculators, fund managers, etc. In this post and the next few, our point of focus will be on general education or ideas with respect to investment and capital appreciation. I will also recommend various models and various investors to learn from and to emulate; I'm not influencing your decisions in any way.
Anyways, these are my two recommended sites for Singaporean investors:
http://www.ses.com.sg/
http://www.poems.com.sg/
One leads to the Singapore stock exchange, and the other leads to POEMS, which is an online investment portal. Now due to modern technology, stock exchanges have gone online.
For American investors, the websites to know are:
http://www.amex.com/
http://www.nasdaq.com/
and the famous Standard and Poor's:
http://www2.standardandpoors.com/portal/site/sp/en/us/page.home/home/0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0.html
More posts here to come regarding the stock market and investment principles and ideas! Once again, stay tuned...
