Trading And Seasonality In The Markets
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.
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.
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) 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) 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. 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.
4) A lot will be written about the recent stock market crash. What were the actual causes of the recent stock market crash? Why so many big banks went belly up in matter of days. What was so special that made this liquidity problem contagious with banks all over the world? 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.
Many things are changing. The world is always changing. 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. So with everyone talking about the seasonal tendencies in the market, it reliability becomes less diminished.
Mr. Ahmad Hassam has done Masters from Harvard University. Try This 1500 Pips A Day Forex Signal Service! Know These Candlestick Patterns! Get a totally unique version of this article from our article submission service
Beginning Investors and The Stock Market
The stock market is not a place for the timid as shown by its terrible performance over the last year or so. You should never invest money in the stock market that you cant afford to lose and this has never been more evident than this past year.
Anyone who believes that stocks are not risky just does not understand how the market works. If you want safety, you need to be invested in government bonds or bank CDs that are guaranteed. Of course you will get a low interest rate buy your money will be safe no matter what the market or economy does. Stocks may allow you to get a higher rate of return but with that higher rate comes risk.
It seems that in the last decade or so, the stock market has become much more volatile. It is routine to see swings up and down in the market of 200, 300, and even 400 points were in past years that was unheard of. Part of the reason for this is the Internet and the ability for anyone to trade stocks at a push of a button. Rather than investing in stocks for the long term, some investors have become day traders and trade in and out of stocks very rapidly. Likewise, the Internet has made it very easy and effortless to make trades and you dont even need to talk to a real person like you did in years past. This has led to many more trades being placed and much more volatility in the market.
The stock market will have you scratching your head if you are new to the stock investing game and trying to learn for the first time. If you watch the business shows on television they will throw around more fancy words a minute than you can ever learn it seems.
If you are interested in learning about the stock market, your best bet may be to do some studying first before you get involved. You can pick up some good books at the library or in bookstores that will explain market concepts to you and make getting started easier. You can also learn things online but it is important to know that your learning process will be a long one. There is a lot of information to understand about the stock market and stocks so you must be patient as your investing adventure will last a lifetime.
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Boomers As Transformers – Boomers Change Everything They Contact!
The Pig in the Python
For years, the people born shortly after world war II have been referred to as “Baby Boomers”. The U.S. Census states that a Boomer is “someone born during the demographic birth boom between 1946 and 1964″.
This cohort includes nearly 80 million members with incredible buying potential.
A lot of people, particularly advertisers, believe this body of people to be a consistent one; nevertheless doing so is really a bad strategy. Traditionally the group has been considered to be comprised of rebels, as defined by the era of the sixties (e.g., free love, peace-niks and war protesters), but many constituents are actually quite conventional in their beliefs and behaviors.
People born during this time period are varied: most (but not all) have children; some are grandparents and/or “empty-nesters;” others are never married, caring for an aged parent, separated, gay, or members of non-nuclear or alternate lifestyle families. Some are still full-time employed, some are retired, others giving heavy analysis to retiring.
Change Agents Affect All That They Encounter
There is, however, one distinctive that has accurately reflected this generation – they’re transformers. Due to the size of this group, and relative wealth, they’ve had a revolutionizing effect upon living conditions and economy in the US over the previous six decades. In fact, writer Doug Owram has called them “a shockwave,” and writer Landon Jones has identified Boomers as “the pig in the python”.
This cohort has altered nearly everything as they’ve moved through their teenage years, early adulthood, their roles, the economy, etc. – and there is no cause to believe that they have terminated their metamorphosis on our culture.
I am expecting that the latest area to be impacted by this generational cohort is retirement.
I recall when I was a kid, I considered any one aged 50, or more, was “old” but now, experts consider fifty to be the beginning of Early Middle Age, and propose that Old Age doesn’t begin until after age seventy five. Currently, Americans at age fifty will probably live another 35 years, and so, be “retired” for twenty years or more – so what are they about to do with all that free time?
During previous years, the period of retirement was often relatively short and sweet and characterized by deteriorating fitness, little money, and few decisions; however, for this bunch of virtually 80 million US people, those limits no longer pertain. In their 30’s, they bragged about “never growing old,” and now, it’s their responsibility to defend that claim.
What are they going to do with an additional 20 or 30 years of active aging? Modern diet and medical care have considerably extended that period when people remain healthy and strong (for example, my mom is in her 90s, lives alone, and still drives her own automobile).
How Retirement Is Being Changed
Are the “Boomers” going to be satisfied to drag out the rocking chair, kick back on their balcony, and watch the world pass them by? I think not!
Generally, individuals of this generation are on the path to self-actualization (as Maslow used the term):
* A lot of them have tons of things they need to accomplish yet in their lives.
* Considering they’ll have 20-30 years of time to fill, they will be interested in a wide selection of leisure activities (e.g, travel, golf, at-home entertainment).
* As a consequence of all this time, they also want to stay fit enough to enjoy that time – so they are going to be extremely interested in products and services that may help them keep healthy and powerful.
* A lot of them will essentially “reinvent” their careers – starting that job or position they have always dreamed about, but had to put off due to relationship or other obligations.
* A lot of Boomers will start their own businesses, and the Net provides them with many possibilities they’ve never had previously.
* Training, novel experiences and things that will provide them with time freedom will be important for this group of affluent US people.
How will you balance that time between work and play? Are there hopes that you have put off for a long time but wish to accomplish throughout your “retirement”?
If you are among those folks desiring to launch your own company, think about beginning an affiliate or other internet business – but be aware that the problem with most online businesses is that their coaching tends to be superficial. Unfortunately, you’ll need more education than they routinely impart. One excellent place to start gaining the knowledge that you will need is to join the Online Success for Beginners class.
Understanding Spot Forex Market (Part II)
The worlds big banks are the main players in the spot forex market. These big banks make an exclusive club where most trading activities take place. This club is known as the Interbank Market.
Down the hierarchy in the spot forex market are the smaller banks, big multinational companies, hedge funds and other institutional investors or speculators and the retail forex brokers. The wealthier you are and the more money you have or are able to get credit for, the more chances you have of accessing this big boys club.
These players conduct currency transactions in the interbank market if they have large capital and have credit standing with the large banks. The independent retail traders lie at the bottom of the market structure.
The retail forex traders trade through their forex brokers. They generally trade in much smaller lot sizes. Central banks are also occasionally involved in currency transactions. So there is no central exchange in the spot forex market to set the prices. Then who sets the currency prices?
Market makers make the bid and ask prices based on the currency movements that they anticipate will take place. Without a central exchange, the currency prices are set by the market makers. For example, in some emerging countries a Citibank or UBS may be the only bank in town so anyone wanting to trade that currency is forced to accept their terms. With no central exchange it may become very difficult for the nonprofessionals to come up with an accurate view of the forex market.
Big banks are involved in currency speculations in a big way. Many banks have professional traders solely dedicated to trading forex for speculation. Largest banks are the major market makers and they handle billions of dollars worth of forex transactions on behalf of their clients like the other institutions and companies and also for themselves. 90% of the spot forex trading is speculative in nature. However, most of the big currency transactions take place between the big banks. Daily there is huge flow of money between the different banks globally.
This big money laden network is knows as the interbank market. Interbank market is where large banks deal with one another. The resulting massive flow of money handled by these big banks is what primarily drives the currency markets.
The transactions carried out by these big banks like the Citigroup, Barclays, UBS, Deutsche Bank, Bank of America, Merrill Lynch etc amounts to the greatest bulk of the total daily forex volume. Most of the trading activity takes place in the interbank market.
How do the big banks deal with one another in the interbank market? The banks deal directly with one another through the electronic brokering platforms like the Electronic Brokering Services (EBS) or Reuters Dealing 3000 Matching. These brokering services get the best available rates for the various currency pairs. Products from EBS, Currenex, FXAll etc enable banks to reach a larger client base while still maintaining control over their risk. The reality is that a small group of banks control the forex market.
A forex transaction is not the exchange of cash for another asset like the stocks or oil but rather the exchange of cash today in return for the acceptance of cash at a later date. In order to do this the banks need to know that the counterparty is of highest credit standing. The banks establish specific credit lines with one another in order to deal with one another in the forex market as there is no exchange to serve as each banks counterparty. These brokering systems match buying and selling requests from the bank dealers. Between these two competitors they connect at least 1000 banks together.
Smaller banks that also trade forex also get access to these brokering platforms. Next large companies come. As the main market makers, these big banks constantly quote bid and offer prices to one another thereby making the market.
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!
Is It Time for You to Retire Yet?
If you have decided that it is time for you retire, think very carefully about it. Is it really something you want to do right now? There is no single age when it’s “right” to retire, so if you think you’ve worked enough and now’s the time, you are absolutely entitled to retire.
If you can afford to retire, congratulations. There are a lot more things you can do now with your time. You can do just about what you want, whenever you want. That sounds pretty good, doesn’t it?
When you retire, that means you will likely get some money from the company you have worked with for a number of years. Whether it is a lot of money, a little money, or none at all really depends on your situation. You have to figure out whether or not you have enough money to retire based upon your own situation.
Under normal circumstances, people retire as they get older and do not want to work anymore; in some cases, they cannot work anymore. Of course, getting older is something that happens to all of us and is something that none of us can control. Many of us will be energetic well into our golden years, while others of us will be somewhat infirm or maybe even very infirm. And if you cannot work anymore, that is another consideration. Regardless, when you retire, a big consideration is what you are going to live on. That is where retirement money comes in.
When you retire, you can likely go places you have wanted to see for many years. Now’s the time. Go ahead, and take a holiday in whatever place you choose, such as renting out a beach house for six months. Or, perhaps you want to move from the place you have lived for so many years and start a new life in an entirely new place.
Still other people choose to become their own bosses, and start a completely new career that they do very well at. However, if that is not something you want to do, that is fine. You can also simply relax for the rest of your life. After all, it is well deserved. You have worked long and hard, and now’s the time for you to do what you want to do. With no employer to answer to any more, your time is your own.
Decide what you want to do; perhaps you want to get up before the sun does and go fishing, do some chores around the house, take up an exercise program, go on vacation, and even sail around the world. Or, maybe you are even daring enough to go bungee jumping, or go scuba diving. As long as your health will permit, you can literally do anything you want to do.
Retirement is the time when you can do all those things you never had time to do before. Don’t wake up feeling like you have nothing to do simply because you do not have a job to go to anymore. Instead, feel lucky that you have put in all of those years of hard work, and now is your time to do whatever you want. If you had not worked as hard as you had come, it is likely that you could not retire now and do whatever you want to do.
However, one thing you need to keep in mind about retirement is that you have to be ready for it emotionally. You also have to be ready for financially, which means that you know you will have enough money to take care of your needs for the rest of your life. Do not retire if you will be running out of money within a few years.
That will not work. You have to be 100% sure that this is what you want and this is what you can do before you go ahead and do it. Retiring is a big step for anyone to take, but if you know in your heart that you are ready, then what are you waiting for? If you have thought long and hard about it and you still have not changed your mind, then you are ready.
And you do not have to be in your 80s when you retire, either. You can do it whenever you feel you are ready financially and emotionally. However, it is not good for anyone to sit around for decades doing “nothing,” and it is not good to retire to early if you know you are not going to be able to support yourself financially. A few years down the road, you may very well regret retiring if you are struggling financially. So do not decide hastily, but do decide once you have talked to someone if necessary, then make your final decision.
Remember that when you retire, you should really be able to have fun and do what you want to do, with no one stopping you. If you want to go to the Bahamas and spent significant time there just playing on the beach, then do it. As long as your responsibilities and finances allow it, nothing should stop you.
If you are planning to retire rich then there are certain rules to follow to become successful. First you’ll need to avoid the 9 retirement errors and start behaving like someone that already has success.
What Is Breakout Fading? (Part I)
Fading breakouts refers to trading against breakouts. When we believe that breakouts from support and resistance levels to be false and unsustainable we fade breakouts. Suppose you believe that the currency prices will not be able to follow through action in the direction of the breakout. You trade in the opposite direction of the breakout.
False breakouts are a bane for breakout traders but boon for breakout faders. False breakouts are also known as fakeouts. Fading breakouts tends to be more effective as a short term strategy. Fading breakout is not meant to be a long term strategy.
Support level attracts the buyers enthusiasm for higher bids. It prevents the price from falling further. The resistance level attracts the sellers enthusiasm for shorting and it prevents the price action from advancing higher. Support and resistance are seen as the price floor and the price ceiling respectively.
The idea of trading breakouts appeals to many independent traders especially those new to currency trading. The crowd likes to trade the breakout. It is perfectly logical for the crowd to think that if the support level is penetrated, then the price action should move downward. The crowd is more likely to sell than to buy when the price action breaks the support level from above.
The opposite is true of a price break above the resistance level and the crowd usually concludes that if the resistance is broken, then the prices are more likely to advance higher in the rally. Hence, the crowd is more likely to buy than to sell when the price action breaks the resistance level from below.
You will find clusters of stop loss orders placed around both the support and resistance levels. These stop loss orders are placed by traders who have brought near the support level or have sold near the resistance level. Now you can also understand why there tends to be large number of entry stop orders placed just above a resistance level and also placed just below a support level.
So when the price action breaks out above the resistance level, short positions will be stopped out. Similarly, long positions will be stopped out when the currency prices crosses below the support level.
You will ask why most breakouts fail? The fact that smart traders need to take the money from the novice and inexperience traders is one of the most important reasons why most breakouts fail. Always remember, it does not always pay to have the same mentality as the crowd. The majority will cash out of the trading game broke.
Money has to be made from the majority. Not from the minority who got it right. The crowd holds the dumb money with the weak hands. Smart money belongs to the big players who have a couple of tricks to sabotage the crowd.
It causes vertical rallies or declines when the crowd scrambles to get out of their losing positions. Most money is made when the crowd turns out to be wrong. Read Part II for more on Breakout Fading.
MACD Divergence Explained
Interpreting a MACD divergence can be very useful in your trading. What does a MACD Divergence means? Just that the current price trend is running out of steam. It may not happen right away. But a MACD Divergence is a powerful hint that the market is changing. Spotting a MACD divergence correctly will only come after practice. It is easy to spot MACD crossovers and dramatic rises but not so a MACD divergence.
What you are looking for is when the price action and MACD do not agree. For example, if the price is making a series of higher highs and MACD is making a series of lower lows, something is wrong between the two.
Most probably the traders are getting nervous. They are slowly fading out of their trades. No one is trading against the trend and yet fewer and fewer traders are in the trend. MACD divergence is seen as a sign that fewer and fewer traders are in the trend.
The only traders in the trend are nervous. They are likely to exit their trade at the first sign of trouble. So if MACD is diverging from the bullish trend. As soon as the bears muster up enough guts to short, the bulls will exit and the bears will take over.
There are two powerful keys in locating times when MACD divergence is likely to represent a reversal in the price action. This is exactly why MACD divergence is so powerful. It takes time to setup. However, when it works, it often works well.
Suppose the price action is at the double tops or double bottoms. MACD divergence can be powerful. You spot MACD divergence at this point. This is known as Exhaustion Pullback. You are making your trading plan based on the bounce/reversal or breakout of the support and resistance (S&R).
This is a sign that the price action is running out of steam. This would indicate that there are not enough committed traders to break the support and resistance. You should trade now based on rejection reversal.
MACD is also used as an overbought/ oversold indicator. When you see that it has reached its overbought/ oversold range and the price action is turning normal, this is a signal that you should avoid trading at this time.
Dont get confused and think that the currency pair is overbought and everyone is buying. When the price action reaches its extreme, you will see price exhaust and the MACD line drop back into normal zone. Dont confuse the overbought/ oversold MACD zones as trade opportunities. Avoid trading at this time.
It is also important to note that divergence can not only be found on the MACD line and the signal line, it can also be found on the histogram. These two situations along with your other technical indicators can provide excellent trading opportunities.
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