Candlestick charting is a highly powerful tool in the trading arsenal of any trader. In the last two decades, candlestick charting has become highly popular. There are many candlestick patterns that give profitable trading signals. Some are simple while other are complex. Hammer, the Hanging Man and the Spinning Top are three simple candlestick patterns that can be easily spotted. All three are different!

The first question. How do you identify whether this is a Hanging Man or a Hammer? If this type of pattern appears at the top of an uptrend with the long wick at the bottom, it is a Hanging Man. And if it appears at the bottom of an downtrend it is a Hammer. Hammer and the Hanging Man both have a very small candle body accompanied by a long wick either on the bottom.

Now suppose, you find the Hammer or the Hanging Man. What you need is to look for the confirmation the next day! Now, in most of the cases, you will also find a small wick on the top of the candle body.

Now suppose, you think that you have spotted the Hanging Man in an uptrend. Wait for the confirmation the next day with the opening price. If the opening price on the next day is less than the previous day’s close, you have a true Hanging Man. If not, then that was not a true Hanging Man.

Similarly, if you spot a Hammer at the bottom of a downtrend, you need to confirm it with the opening price on the following day. If the opening price on the next day is higher than the closing price on the last day, the Hammer formed was a true Hammer.

Whenever, you trade candlestick patterns, first spot them correctly than wait for the confirmation on the following day. The best chart for these candlestick patterns is the daily chart. Once, you get the confirmation, trade these patterns. They can be highly profitable. But in case, you don’t get the confirmation the next day with the price action, simply ignore the pattern as not true.

Spinning Top is just like the Hanging Man and the Hammer. Spinning Top is a signal that the battle between the bulls and the bears ended in a draw. It will start next day again with ony side giving in. What this means is that an explosive move in the price action can take place the following day.

Spinning tops appear much more frequently and are very easy to spot with a very small body in the middle of the candlestick and almost equal wicks on the two sides. A spinning top is a nice indication that the trend is about to change direction. Knowing about a trend change early is a highly profitable trading signal.

Mr. Ahmad Hassam has done Masters from Harvard University. Master Candlestick Charting with this 82 page PDF FREE Candlestick Guide! Get this 49 page Quantum Swing Trading Report FREE.

Have you heard the term “leverage” when people are discussing their investments? This can be quite a confusing and daunting concept for many people. But all leverage really means, is borrowing to invest. The reason people call it “leverage” is because typically existing assets are used as the security or basis of the borrowing. That is, you leverage off the value of a current investment or asset, to borrow more money to invest.

This article covers the general principles of leveraging your investments. If it is something you are considering but have never done before, discuss your ideas with a licensed financial adviser. They will ensure you are structured correctly and can minimise your risk and exposure.

When I started investing, my borrowing habits where the same as most peoples. I had a floating credit card debt which varied to my whims. I had a small personal loan for some household items and a bigger one which enabled me to buy my car.

The problems with these types of debt are two fold. To start with, the items I bought when I borrowed are all depreciating items. That is, their value decreases as they get older. The second thing is, due to the fact that I borrowed to buy things I could use personally, (as opposed to a money making use) I could not claim the interest on the borrowings for tax purposes.

Things have changed over the years. I learned that debt is much more efficient when spent on investments. So now my credit card debt is negligible and paid off every month. My personal loans are completely paid off. Despite this, I have a lot more debt. I have a massive debt on an investment property. I have a margin loan for share trading. And I have a FOREX investment account which is leveraged at 400:1 (Which means I borrow $400 for every $1 I put in)

What is the logic then of borrowing to invest?

Borrowing to invest increases your ability to earn investment returns. Its simple maths really. You have more money to invest because you borrowed some, so when you invest the money wisely, you’ll earn more returns. There is one additional variable to this equation though to keep in mind, the interest on the loan. Your investment strategy must be strong enough that the additional earnings are higher than the interest on the borrowings. Otherwise your net position is actually going backwards. Ie. Overall, you are losing money.

Generally speaking also, interest payments on investment borrowing are tax deductible (get advice from your accountant on this point). As the borrowings have been made to increase your income, the interest payments on the loans are a direct cost of your income production. This typically makes the interest payments a tax deduction. For example, as my investment property creates a rental income, the borrowing are a cost associated with producing that rental income.

Margin loans work in exactly the same way. I have some stocks and I borrow some money using them as collateral. I typically try and keep a 50% leverage ratio, every dollar of stocks I own lets me borrow and invest another dollar. So I end up with a stock portfolio double the size I could have bought with my own money, I earn the returns on the entire portfolio, but pay interest on the money I have borrowed. Because I borrowed to earn money on stocks, the interest is tax deductible for me.

So there are definite advantages you can gain from leveraging your investments. There are risks also though, which is why you should seek proper financial advice prior to moving down this path.

The first risk with borrowing to invest is the same with all loans. Loans come with obligations. You need to be able to fund the repayments, both the principle and the interest. So you need to do your sums properly and work out whether your income can cover these repayments. If you mess this up and over-extend yourself, typically your lender will come and seize your goods and assets and sell them to get their money back. This is never a good position to be in.

In a margin loan situation, it is a little different. If you borrow too much here, you may breach the allowable % of assets to debt you are given and if this happens, you will be expected to put more money in to put the loan back in “good order”. This can be quite difficult if the market swings strongly against you. So you need to know that in extremely adverse market conditions (2007 – 2009 are a good example of this) you can generate enough income to cover such margin calls.

There is alway also the possibility that your trading strategy loses money. If this happens, because you borrowed so you could invest more, you lose more money.

All risks with investing can be mitigated with strategy. That is why it is so important to speak to a licensed financial adviser before you invest and especially before you borrow to invest. So if you are considering leverage, speak to an adviser about risk mitigation. Leveraging your investments can definitely be financially rewarding, but only when you properly understand and manage your risk and when it is backed up by a consistently high performing investment strategy.

Gnifrus Urquart has enjoyed impressive success investing for many years. As such, he likes discussing investment strategies and giving trading tips to others interested in investing

categories: Loans,Finance,Leverage,Credit,Money Management,money,investing,currency trading,forex,stock market,property,mortgage,real estate

The whole point of investing in stocks is to choose one that has the greatest chance of a rising share value. Don’t we all look for a stock that we could buy for $10 and later on sell for $300 per share? Well, how can we proceed to accomplish such a feat? What would make a stock rise so much?

Buying a stock is essentially buying a small piece of the company and its future potential for growth and profits. So if the company does well, its stock will go up in price and if the company does poorly its stock will go down in price.

Now why does the stock goes up and down with the performance of the company. Actually the real force behind the stock rise and fall is the market place. The marketplace is in fact buyers and sellers, individuals and organizations that want to buy stocks or sell them.

This buying and selling of stocks can only take place in exchanges like the New York Stock Exchange and over the counter markets like NASDAQ. If there are more buyers of the stock, its value will go up and if there are more sellers in the market, the stock price goes down.

Sometimes you will find that the company does well and is posting good quarterly earnings but still its stock price goes down. What’s the reason behind this? Now it doesn’t mean that if the company does well and is showing good profits and earnings, its stock price will go up.

Stock price goes up and down because of what the buyers and sellers expect will happen with the company in the near future. In reality the price of stock depends on the investor’s expectations. The price of a stock goes down because there are more sellers than buyers. So why is it so? The stock price does not go up or down just based on the company’s present performance.

In the short term, the behavior of the stock price is irrational and it can behave in crazy and illogical ways. However, the performance of the stock and the performance of the company over the long term have a logical relationship.

Focus on finding companies that are strong, well positioned in the right industries and have solid fundamentals like a good management, good product, good service, growing industry, rising sales, increasing profits and so on. The bottom line is don’t worry about the short term gyrations of the stock price. Sometimes the industry and the economy matters more than the company. Picking a stock doesn’t happen in a vacuum. Understanding the company’s industry and the overall economic environment is critical to stock picking process.

Mr. Ahmad Hassam is a Harvard University Graduate. Try these cash printing Forex Signals from heaven. Discover a revolutionary Forex Robot System!

categories: forex,stocks,currency trading,mutual funds,finance,investing,business,wealth,ecommerce,real estate,market news,trading,day trading,money

The options market has caught the fancy of many investors and this is not surprising. The beauty of options is embedded in its very name. You have the options but not the obligation to buy or sell stocks at a given price by a given time. Now for options buyers this option unlike futures limits their maximum liability to the option premium they had paid at the time of buying the options contract.

In’78, Chicago Board Options Exchange (CBOE) began options trading on popular stock indexes such as the S&P 500 Stock Index. The CBOE options trades in multiples of $100 per index point. This is much cheaper than the $250 multiple per index point for the S&P futures contract.

An index option allows the investor to buy the stock index at a set point within the given time period. Let’s take an example. Suppose the S&P 500 Index is at 1100 points. You have a bullish opinion of the market and are of the opinion that the S&P 500 Index will go further up.

So you decide to purchase a call option at 1150 for three months for 50 points. In other words you paid an option premium of $5000. Now what this means is that if any time for the next three months you decide to exercise your call option, you will get $100 for each point the index is above 1150.

So when an options contract loses value, you only lose the premium that you had paid while buying that contract. In that case you will only lose the premium of $5000 that you had paid to buy the call index option. Now, 1150 is the strike price of the index option. In case the S&P 500 Index does not rise above 1150, you can simply decide to not exercise your call option.

Contrast this with S&P futures. In case of S&P futures, the downside risk is unlimited whereas in index options the downside risk is limited to only the premium that you had paid for the options contract. Call options are considered to be bullish. So for you to make a profit with this call option, the S&P 500 Index will have to rise above 1200 point within the next three months otherwise you will lose your premium.

A Put Index Option works in exactly the same way as a Call Index Option except that you make profit when the stock index goes down. If you had bought the put index options instead of the call index option in our example above, every point below the strike price of 1150 would have given you a profit of $100. In case the S&P Index had fallen to 1100 point, you would have recouped your options premium. Put options are considered to be bearish.

Now the option premium that you pay is determined by the market and it depends on many factors like interest rates and dividend yield. But the most important factor is the expected volatility of the market.

Mr. Ahmad Hassam is a Harvard University Graduate. Try these cash printing Forex Signals from heaven. Discover a revolutionary Forex Robot System!

categories: forex,stocks,finance,investing,business,mutual funds,wealth,ecommerce,real estate,market news,currency trading,personal finance,money,trading

Capitalization or cap refers to the combined value of all the share of a company’s stocks. The division between large cap, mid cap and small cap are often blurry and not sharp. When you start looking for good stocks, you often come across these terms like large cap, mid cap, small cap, growth and value. Let’s discuss these terms for a moment.

Mid caps are companies with $1 to $5 Billion in capitalization and small caps are companies with $250 million to $1 Billion in capitalization. Anything below $250 million can be considered as micro cap. However the following divisions are generally accepted: Large caps are companies with over $5 Billion in capitalization.

What is the P/E ratio? The P/E ratio divides the price of the stock by the earnings per share. Suppose, company ABC stock is presently selling for $50. Now suppose that last year company ABC earned $5 for every share of the stock outstanding. This means stock ABC P/E ratio is 50/5=10. So the higher the P/E ratio, the more investors are willing to pay for the stock.

Now the higher the P/E ratio, the more growth the company is supposed to have. So it can be either the company is growing real fast of the investor have high hopes of its growth. Now these hopes can be realistic or foolish, you never know!

Eugene Fama did seminal research on stocks and stock market s in 1970s. Most of his results were startling and broke many myths. According to Fama and French, two famous researchers who did ground breaking research on stocks, over the last 77 years, large growth stocks have only seen 9.9% annualized rate of return as compared to 11.5% for the large value stocks.

Now intuitively you might have thought that growth stocks are better. What can be the reason for their lower performance over the years? The most probable cause seems to be their immense popularity. Since most of the headlines are captures by high growth companies, investors seem to think that they are the best investments.

Let’s go back to the IPO of Google. Think about Google, how its stock price shot up within a matter of weeks after it hit the market. Weeks after that it began to cool off. In 2007, Google stock was selling something around $500. So large growth stocks tend to get overpriced before you are able to buy them!

Mr. Ahmad Hassam is a Harvard University Graduate. Try these cash printing Forex Signals from heaven. Discover a revolutionary Forex Robot System!

categories: forex,stocks,mutual funds,finance,investing,business,wealth,trading,day trading,ecommerce,real estate,market news,currency trading,money

If you are interested in investing in companies that are involved in the production, transformation and distribution of commodities, than one of the best ways to do so is through investing in the Master Limited Partnership (MLP).

The shares that an MLP issues are called Units and the investors who own them are known as Unit Holders. MLPs are public entities that trade on public exchanges. An MLP issues shares that trade on an exchange just like a company stocks that trades on an exchange. You can invest in an MLP by buying its shares on an exchange.

Now most of the MLPs trade on the New York Stock Exchange. A few MLPs also trade on the NASDAQ and the AMEX. When you invest in an MLP, you are essentially investing in public partnership. There are tax advantages to investing in MLP. Unlike regular corporations, an MLP is only taxed once. Because of Congressional Legislation, any MLP that derives 90% or more of its income from the production, distribution and transformation of commodities qualifies for this tax exempt scheme. You must be curious how this tax advantage works out.

Suppose you invest $1 in the stocks of a regular corporation and you are in the 35% tax bracket. Corporate tax is 30% of it’s before tax income. This means that for each dollar that you invest you need to get at least $1/ (1-0.35) =$1.54 just in order to breakeven. So the corporation will have to generate $1.54/ (1-0.3) =$2.2 for each dollar that you invest in order to return you $1 after tax profit. Since an MLP has got the tax exempt status it will only have to generate only $1.54 for each dollar that you invest in it.

This tax advantage gives an MLP competitive advantage as compared to other corporations when competing for assets. This means a huge advantage for an MLP. Now an MLP is run by a General Partner (GP). In most cases, the majority of these GPs in MLPs are other corporate entities setup with the specific purpose of running an MLP.

However, most GPs do a good job of running the MLP as it is in their financial interests. Now you must know as a limited partner in an MLP, you have limited voting rights. This means when you invest in an MLP, you are giving away the keys of ownership to the GP. This means you are out of the decision making in an MLP.

Investing in MLP units can give you quarterly cash flows as well as appreciation of the unit price. An MLP is obligated to distribute all available cash back to its unit holders on a quarterly basis, so you will be getting a quarterly income from your units. Secondly as the MLP expands and grows overtime, its units may give you capital gain as well.

Mr. Ahmad Hassam is a Harvard University Graduate. Trade Dow Futures . Learn Commodity Trading !

categories: forex,stocks,trading,mutual funds,day trading,investing,business,finance,ecommerce,wealth,currency trading,market news,personal finance,real estate

The reason MLPs exist is to distribute all available cash back to the MLP unit holders. As said, this has to be done on a quarterly basis. The following factors are considered before determining the amount of cash distributed to each individual investor:

1) The difference between the total cash flow and the cash flow ploughed back into the MLP for futures growth. 2) How many units you hold as an MLP investor. 3) The incentive distribution rights created for the GP. These are just a few factors. There might be more as well. You need to understand the reasons behind the factors that determine the distribution of cash among the individual investors.

So once you decide to invest in commodities, you have many investment options like mutual funds, stocks, ETFs as well as MLPs. You must do your due diligence while making your investment decisions. There are always pros and cons of each investment vehicle!

You can invest in commodity stocks, you can invest in commodity ETFs, you can invest in commodity mutual funds. The possibilities are many. So investing in an MLP is just like investing in stocks. Investing in MLPs is quite simple. Since an MLP is a publicly traded entity. You can simply invest in an MLP by calling your broker and telling him or her how many units of a particular MLP you are interested in buying.

Majority of MLPs trade on NYSE with a few trading on NASDAQ and AMEX! Something like 50 MLPs is being publicly traded in the United States. Out of these 50, 40 are energy MLPs meaning that they are involved in the storage terminals, pipelines, transportation, refining and distribution.

Most of these MLPs engage in infrastructure investment that can pay a steady stream of revenue overtime. Moreover, investing in pipelines and other energy infrastructure offers steady cash flow streams for an MLP. You only need to remember this 90% of the income that comes to an MLP should come from the production and distribution of commodities for these MLPs to have the tax exempt status.

So when you invest in an MLP, you should look for answers to the following questions: 1) What’s the historical payout of the MLP? 2) How much is the cash flow? And so on. If your brokerage firm has published some research on the MLPs, you can reference that.

Don’t forget there is always some risk involved in any investment. The more return you demand, the more risk you will have to take. Now investing in MLPs do come with some risks like most of the infrastructure is like pipelines and drilling rigs that are vulnerable to natural disasters and earth quakes like the Hurricane Katrina, so any such event can have a negative impact on your investment.

Since the MLP is fairly small at this moment, there can be liquidity issues in withdrawing your investment from an MLP. These are some of the risk that you can face while investing in an MLP. There is another risk related with the management. You don’t have much say in the management of the MLP. Running an MLP is basically a GP show. If you are not satisfied with the performance of the management or its policies only thing that you can do is to withdraw your investment from that MLP.

Mr. Ahmad Hassam has done Masters from Harvard University. Trade Dow Futures . Learn Commodity Trading !

categories: forex,stocks,mutual funds,trading,day trading,finance,investing,business,ecommerce,real estate,currency trading,market news,personal finance,money

The next best holiday bets are the Labor Day and the Memorial Day because they fall before the first day of trading in September and June respectively. The day before the President’s day is the worst day and the day after the Easter is the worst day after. However, you should keep in mind that a lot of other factors also come into play and you have a lot of room for error.

Children love Santa Claus. Do the markets love Santa Claus? You must have heard about the Santa Claus Rally? Most of the folks usually feel fairly good about themselves around this time of the year. The best time of the year to own stocks is the Santa Claus rally which for all practical purposes is the 17 day stretch from December 21 to January 7. This is the best time of the year. People are happy and the markets are happy.

FED tends to lower interest rates during holidays in order to go into the New Year with less of a worry if the economy is slowing down. There is a low trading volume which tends to exaggerate the trend if the economy is not doing well and is slowing down. However, when you are dealing with seasonality, you should keep these facts in your mind:

1) The market is not longer static. Money has no borders now. With one mouse click money is transferred from one locality to another. The seasonal effect may get interrupted by other events. More and more people have real time access to information and larger amounts of capital than at any time in the past.

2) At the end of the year, institutional investors want to make their results look as good as possible to their shareholders and tend to buy the stocks and so on. Institutional investors like mutual funds, hedge funds and insurance companies have become important players in the markets. So in case of an event free environment, seasonal tendencies may hold up fairly well.

3) The days of long term investing or what you call buy and hold are dead! Frequent market crashes have taught the investing public that investing for the long term is fairly risky. So there is more short term trading going on. These are the times for day traders and swing traders. With fewer people willing to hold stocks for longer periods, it is very difficult to predict seasonality.

4) The recent market crash was the result of CMO and Default Swaps bringing down the banks and Insurance companies in ways that had not been anticipated or foreseen by the analysts. Many had assumed that derivate securities are safe. Infact they have highly unpredictable tendencies. Derivates and outside the market trading activities can result in highly unpredictable patterns.

So with everyone talking about the seasonal tendencies in the market, it reliability becomes less diminished. Then there is a change in demographics also taking place. With the aging of the population, the overall trend will be towards more income producing investments.

Mr. Ahmad Hassam has done Masters from Harvard University. Try these cash printing Forex Signals from heaven. First trade on your Forex Demo Account!

categories: forex,stocks,mutual funds,trading,day trading,finance,investing,business,wealth,ecommerce,currency trading,market news,personal finance,retirement

Markets tend to react to the outside events. Markets react to the seasons. Markets react to holidays. Markets react to political crisis. Markets are what the people are thinking. The day before the Presidents day is the worst day and the day after the Easter is the worst day after. However, you should keep in mind that a lot of other factors also come into play and you have a lot of room for error. The next best holiday bets are the Labor Day and the Memorial Day because they fall before the first day of trading in September and June respectively.

Children love Santa Claus. Do the markets love Santa Claus? You must have heard about the Santa Claus Rally? Most of the folks usually feel fairly good about themselves around this time of the year. The best time of the year to own stocks is the Santa Claus rally which for all practical purposes is the 17 day stretch from December 21 to January 7. This is the best time of the year. People are happy and the markets are happy.

There is a low trading volume which tends to exaggerate the trend. If the economy is not doing good and is slowing down, FED tends to lower interest rates during holidays in order to go into the new year with less of a worry. However, when you are dealing with seasonality, you should keep these facts in your mind:

1) More and more people have real time access to information and larger amounts of capital than at any time in the past. The market is not longer static. The seasonal effect may get interrupted by other events.

2) End of the year is special. Companies want to show good performance at the end of the year. At the end of the year, institutional investors want to make their results look as good as possible to their shareholders and tend to buy the stocks and so on. Institutional investors like mutual funds, hedge funds and insurance companies have become important players in the markets. So in case of an event free environment, seasonal tendencies may hold up fairly well.

3) The days of long term investing or what you call buy and hold are dead! Frequent market crashes have taught the investing public that investing for the long term is fairly risky. So there is more short term trading going on. These are the times for day traders and swing traders. With fewer people willing to hold stocks for longer periods, it is very difficult to predict seasonality.

4) The recent market crash was the result of CMO and Default Swaps bringing down the banks and Insurance companies in ways that had not been anticipated or foreseen by the analysts. Many had assumed that derivate securities are safe. Infact they have highly unpredictable tendencies. Derivates and outside the market trading activities can result in highly unpredictable patterns.

So with everyone talking about the seasonal tendencies in the market, it reliability becomes less diminished. Then there is a change in demographics also taking place. With the aging of the population, the overall trend will be towards more income producing investments.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service! Know These Candlestick Patterns!

categories: forex,stocks,currency trading,investing,finance,business,trading,wealth,retirement,ecommerce,home business,mutual funds,money,credit