InvestMacro FX

Most traders don’t worry about the fundamentals. These numbers include the general economic and market conditions that impact a stock, as well as the financial information known about a company’s activities and its financial successes and failures.

Instead, traders focus on technical analysis and trends that can be seen using that type of analysis.

Taking the time to analyse the fundamentals of a stock will put you one step ahead of the trading crowd. Using fundamental analysis, you can determine how a stock’s price compares with those of similar companies based on earning growth and other key factors, including business conditions.

When starting a fundamental analysis, select an industry or business sector that interest you for possible stock purchases. If a particular company perks your interest you can start your research by looking at the major players in that company’s sector or by turning to the sector’s fundamentals.

Regardless of how you start, you need to narrow down your list of companies and you want to compare to the ones that are in similar businesses within the sector, so you can find the best opportunity. You also want to be sure the stock trades well by looking at its daily volumes of trades. Stocks with low trading volumes can be hard to get into and out of, making them riskier stocks.

Most of the tools used in fundamental analysis require you to compare at least two companies operating in similar business environments to understand the meaning of the information.

The best way to do that it to compare and understand the company’s financial statements, in particular the critical parts of the income statement, cash flow statements and the balance sheet.

Once you get to grip with a companies fundamentals you can then best decide which companies to invest in. It’s likely you will then want to watch closely for trends to decide when it is best to make an investment.

About the Author

I’m Dave Johansen, co-owner of MicrocapMania.com, a website dedicated to the penny stock trader. See our Microcap Millionaires Review and find out how you can grab two free penny stock picks just by paying us a visit!

EURUSD’s downward movement extends to as low as 1.2885 level. Deeper decline is still possible later today and next target would be at 1.2750 area. Initial resistance is at 1.3025, only break above this level could indicate that minor consolidation of downtrend is underway, then bounce to 1.3100-1.3200 area could be seen.

Daily Forex Analysis

By James Woolley

The FTSE 100 is an index that is made up of the 100 largest (listed) companies in the UK, in terms of market capitalisation. Not only does it give you an indication of how well the major UK companies are performing, but it is also a very good index to trade. Indeed there are three different ways you can trade this index.

First of all you could consider trading FTSE 100 options. If you are confident that the value of the FTSE 100 will rise in the future, then you could buy a call option. Conversely if you think that this index is overvalued, you could think about buying a put option.

Options trading is quite a complex subject, and is not an instrument that I personally trade myself. However they are useful for trading the FTSE 100 in both directions.

A second way to trade this index is through spread betting. This is not available in every country, but here in the UK it has two main benefits – it is a lot easier to understand than options trading, and you do not have to pay any tax on any profits made.

Spread betting is relatively straight forward. If the FTSE 100 is trading at 6000, you may be quoted a daily price of 5999-6001. So if you think the price is set to rise before the end of the day you would go long at 6001. You can close this position (for a profit or loss) at any time you want or you can simply let it close out automatically at the end of the day. Your profit is your stake per point multiplied by your profits (or losses) at the point the trade is closed.

You can trade this index on an intraday basis, like in the example above, or you can take longer positions using contracts that expire several months away. So it is very easy to go long or short of this index whenever you want.

A final way you can trade this index is by trading a FTSE 100 ETF. These are very popular with stock market investors because you can buy and sell them just like you would with ordinary shares. They can be placed in an ISA or pension fund and they are ideal if you think that this index is going to rise in the months or years ahead.

So as you can see, there are several ways you can trade the FTSE 100 index. Plus it is just as easy to go short as it is to go long, so you don’t necessarily have to wait patiently on the sidelines when you think the market is grossly overvalued.

About the Author

Click here to read a review of Stock Trading Nitty Gritty, the new training course that teaches you how to successfully trade individual stocks.

By James Woolley

Many traders in the UK have been drawn to the FTSE 100 index over the years, but very few people manage to make consistent profits trading it. So what are the reasons why so many people end up losing money?

Well I think the main reason is because there are several factors that affect the movement of this index, and many of these are almost impossible to predict. For a start you often have economic data being released early in the day, which can often have a dramatic effect on the movement of this index.

You will also find that later in the day the FTSE 100 will basically just follow the Dow Jones. If the Dow Jones starts moving strongly higher, then the FTSE 100 will almost certainly do exactly the same. It’s sad to see our main index mimicking the Dow Jones in this way, but it happens every single day. The only time it will move independently is in the first half of the day, ie when the American markets are closed, but even then you will often find that this index will follow the Dow futures.

Also because of this you often get sudden price spikes in this index when there are any significant economic data announcements coming out of America. The more important announcements will often have a major impact on the US markets (or the futures if they occur before the market opens) and therefore the FTSE will respond accordingly. This makes it very hard to predict where the market is heading in the immediate future.

Another reason why this index is so difficult to trade is because apart from all the external influences, it is also very unpredictable. Some days it may move 100 points and be very easy to trade, whilst other days it may trade in a very narrow range of say 30 points, and hardly move at all during the day. Plus when you factor in the spread, which can be two or three points, it is not at all easy.

The same applies when you trade early morning breakouts. This is often the best way to trade this index, but even then there will often be times when the index is very indecisive and there are a lot of false trading signals.

So overall it is easy to see why many people who attempt to trade the FTSE 100 index often end up losing money in the long run. In general most people find that it is a lot easier to trade individual shares or the forex markets.

About the Author

Click here to learn how to trade FTSE 100, and to read about some of the best FTSE 100 dividend stocks for 2011.

By Nicholas Dockerty

Investors use fundamental analysis to ascertain the intrinsic value of a financial instrument in the market. It’s about collating data in order to make a decision about what a company or currency is really worth now and what its future prospects are.

For shares this means looking at the performance of a company in fine detail, so that’s sales data, earnings, return on equity and such like. However, even if the analysis of the figures is flawless, a company’s financial figures provide only half the picture. For a really complete analysis the investor must look at external factors too, macroeconomic and political.

A good example of this would be if you were looking at a copper mining company such as Kazakhmys. Now this company might be highly efficient at controlling costs and excellent at maximising sales but if the price of copper falls or rises then its earnings will be affected. Therefore an investor must be aware of what will influence the price of copper in the global marketplace.

Each commodity has its own unique weighting of factors that will influence its price. The price of Gold and the US dollar are very closely linked – investors have been using the relative stability of the former to hedge against a weakness in the price of the latter. Whereas, the price of copper is more susceptible to changes in the cycle of supply and demand in business.

At the moment China is the driving force in the global economic recovery. To sustain its massive growth China needs resources, such as copper, to fuel its manufacturing sector. That’s why we’ve seen copper prices push higher in the last two years.

What has been worrying investors and the Chinese authorities recently is the rise in inflation in China. One way of looking at the causes of inflation is the oversupply of money in the economy caused by rapid growth. A way of decreasing the supply of money is by increasing interest rates in an attempt to slow down the economy.

If the Central Bank of China announces it’s trying to slow down its economy by raising interest rates this will lead to a decline in demand for copper, which means the price of copper will fall and the earnings of companies such as Kazakhmys will too.

About the Author

Trading CFDs can be an excellent way of taking advantage of what’s happening in the global markets. Whatever your opinion is on how China’s economy, copper and share prices will perform over the next year or so, consider taking a position with IG Markets, the UK’s No.1 CFD provider.

Find out more at http://www.igmarkets.co.uk.

By James Woolley

I’ve been lucky enough to make some very nice profits from forex trading in 2010, but you can never be completely confident in your own abilities because market conditions can quickly change. So how can you make some consistent profits in 2011?

Well first of all if you’re a day trader or an early morning trader, for instance, you should be aware of the average daily trading range for each of the major currency pairs. In the last few months many of the leading pairs have seen their averages fall quite considerably, as indicated by the Average True Range indicator.

So therefore if this trend continues into 2011 and we see a relatively small trading range each day, you have to take this into consideration. There is no point targeting big points gains that are well in excess of the latest ATR figure.

To give you an example, the average true range of the GBP/USD pair is currently 135 points at the time of writing (December 29th 2010). So if you are like me and enjoy trading early morning breakouts, you would have to be cautious about trading any breakouts early in the day if the overnight trading range is already in excess of 100 points, for instance.

However if the range so far is just 30 or 40 points and a breakout occurs when the London market opens, then there is much more room for the price to move strongly in the same direction for the rest of the day. This is in stark contrast to earlier in the year when the trading range was in excess of 200 points and you could be a lot more confident about the price continuing to move in the desired direction.

Another way to make money in 2011 is by concentrating on longer term trades. A lot of people focus on trying to make quick profits, but as I’ve already pointed out, the trading ranges are quite small at the moment for the major pairs and this could continue into next year.

You are much better off trading the 4 hour and daily charts. My main forex trading system uses the daily chart for highlighting the overall trend, and the 4 hour chart for pinpointing entry and exit points. This has worked very well for several years now, and there is no reason why this shouldn’t continue to be profitable in 2011.

The major pairs will always conform very well to technical analysis on these longer time frames, and overall it is a lot easier to make money. You simply need to come up with a straight-forward trading system that is able to detect one or two high probability trading opportunities every week.

The point is that if previous years are anything to go by, there should be plenty of opportunities to make money from forex trading in 2011. This is particularly true if you lengthen your time frames and trade the longer term charts. However it is still possible to make money from short-term trading as well despite the narrow trading ranges. You just need to find the right trading method.

About the Author

Click here to read about the Forex Profit Multiplier course, which includes free trading software and three different trading systems, and to read a full review of Forex Morning Trade.

By Owen Trimball

Option paper trading is a term used to describe the way we would test an option trading system without employing real money. There are several major benefits from doing this.

1. You get to prove to yourself whether the system you’ve chosen or been trained in, is actually, a profitable one. Additionally, it permits you the means to tweak and improve the system and determine the financial consequences without any actual exposure to risk. This can give you a belief in the system itself.

2. The process of option paper trading “trains” you how to react to adverse market conditions. A component of any worthwhile options trading system is the assmption that a percentage of trades will be losing ones. You must be psychologically prepared for this. Where a predetermined stop loss is a component of your system you will need practice in accepting losing trades before you decide to use your own capital.

3. The most successful options traders claim that 90 percent of trading success is about psychology. You need the right mindset when making trading decisions. If you assume the mindset of a gambler, you will feel the pain of gambling losses. It is crucial that you look at your trading with the mindset of a serious business person. On a daily basis you’ll make business decisions according to strict criteria. You will need to have patience and wait for the right setups and confirmation signals so that you don’t make the mistake of trying to anticipate the market before it shows you where it’s going.

You will have to practice how you manage your trading capital and use position sizing in a methodical way so you don’t risk too much of your money on any one trade. You may need to make some blunders in this area and “feel” the consequences of greed or unnecessary risk. Option paper trading is not merely about discovering trading opportunities, but also about learning the self discipline that’s so necessary in order to succeed.

How and where to Paper Trade

Typically the most popular options brokers such as TradeKing, OptionsXpress and ThinkorSwim, include an attractive feature that enables you to paper trade without resorting to real money. They provide you a “Paper Trading” tool, where live options prices are applied to live stock prices and you can try out your trading strategies without risking real money. But the rest is real, including trading reports which keep a record of all your deals and brokerage costs, so that you can see what your profit or loss would have been, had you been trading with your own personal funds.

Just add an imaginary amount of money to begin with and then proceed with implementing your trading plan. This is an excellent way to gain real confidence that you can actually make a living trading options.

One last thought. Option paper trading must be taken seriously for it to be truly effective. A casual approach which neglects to monitor your trades or enters questionable positions knowing that you can’t really lose, is a dangerous psychology. Trust me, when you graduate to using real money, all things will change at an emotional level … so to make use of it as a serious training ground and you will be rewarded.

About the Author

Owen has traded options for many years and is writes for “Options Trading Mastery” – a popular site that explores the best Option Trading Strategies including the popular Iron Condor.

By Cedric Welsch

Any person who is truly aiming to become a professional trader must be aware of the extreme importance of listening to the latest updates and news about the foreign exchange market. A truly dedicated trader should be all ears to every latest market trending for analytical purposes.

One thing that distinguishes a successful investor from the many common investors out there, is the wisdom of wanting to learn as much as possible about anything he or she is investing upon. In the case of a professional trader whose primary goal is to make profits out of his investment, studying and analyzing the currencies he is most interested about is definitely the wisest move to make.

And when it comes to collecting data and the necessary info needed in order to come up with trading decisions, there are several different news sources available that can provide continuous feeds on the latest changes influencing the values of all currencies both local and international. Through these different currency trading news portals, a trader never has to take certain level of risks concerning his investing activities.

In trading currencies, there are certain steps that needed to be carefully performed first before even coming up with a final decision. The first of which is research, a trader must be very good at gathering the certain data necessary. The trader will then carefully perform a study based on the gathered data. After a careful study and analysis has been conducted, it will be much easier for the trader to make calculated forecasting on the market trending. If all the above mentioned procedures will be performed well, then making the necessary profits will not be hard to achieve.

However, as bad as it may sound like, a lot of wannabe successful investors make the grave mistake of perceiving the entire business of trading currencies to be purely based on luck. These traders tend to make hasty decisions that are based entirely through gut feel most of the time. And in forex trading, this of all attitudes is simply the wrong kind to adopt. Trading is a business that is based on facts, statistics, and absolute data. It is definitely not a game of luck or gut-feel.

When you begin to develop the habit of actively listening to foreign exchange news, you will soon realize that such kind of news have a superbly wide array of coverage. In fact, a forex news source is known to provide updates and latest feedbacks on almost every aspect covered within the area of finance and investments. So, if you are the type of investor who is interested in a variety of investment mediums including stocks, bonds, and currencies, then you definitely must be an active listener to foreign exchange news and other similar info sources alike.

About the Author

Don’t fake your way to trading success, you need the forex currency news. And better not associate with fake brokers, let broker forex review guide you.

By Cedric Welsch

People that have extra funds in their bank account often just leave it sitting there. This is a waste, as a financial investment is one of the best ways to use surplus money. However, it is important to plan the use of this money as without proper research and planning, investors can lose everything.

Before investors get started, they should think about why they are investing their money. By doing this, they are setting clear goals when they get started. This will help avoid confusion when decisions need to be made sometime in the future. Some reasons that people invest their funds are that they want to conserve existing funds, grow existing funds, or attempt to do both of these things.

What people do with the money that they have saved over the years will depend largely on their personal preferences. As many people do not take the time to make goals before they invest their money, many people find that the money that they make or conserve is misused.

In order to stop this happening, they must do some financial investment planning. This planning will consist of setting realistic goals, regular monitoring of investments and a portfolio redesign whenever one is needed. This is a very broad and simplistic money processing plan that is applicable to every individual who is considering on investing their funds. Just knowing about the process of investment is not all that an investor will need to know. Investors should be aware of all the investment options that are available to them and know which ones that they should invest in.

Those that do not want to invest in risky ventures may want to think about investing in cash investments such as currency, savings accounts, coins, gold, money orders and many other money related investment opportunities that are available. These ventures are popular as they pose very little risk to the investors. Those that have an appetite for riskier investments may want to think about investing in things like mutual funds, real estate and the stock market.

Regardless of what risks investors want to take, beginners should seek the advice of a professional. This will help them make a wise decision about how they want to invest their funds. Generally, most banks will have someone available for customers to talk to about financial investment advice. These consultants will be able to help potential investors with their queries.

About the Author

Forex News and Forex Review are good sources of information when it comes to learning about forex. These learning resources are filled with the latest and most up to date information in the realm of forex.

By Nicholas Dockerty

On the first trading day of the New Year, 4 January 2011, the FTSE 100 gained an impressive 113.93 points finishing the day at 6013.87. The 6000 level is symbolic as the FTSE 100 was last seen trading around this level before the financial crisis started in earnest back in 2008 when the index fell as low as 3512. And when you consider the low for 2010 of 4805.75, which happened at the start of July, the UK’s leading index has come a long way indeed.

But how will the FTSE 100 perform in 2011?

It’s difficult not to stumble upon a piece of negative economic information or commentary in the UK at the moment. Inflation is steadily increasing, up 3.3% in November and not what the government had predicted in its target. A VAT rise of 2.5% to 20% has many analysts fearing a fall in consumer spending once the Christmas and New Year peak period is over. Unemployment in on the up too, a third-quarter gain of 35,000 now means that the total unemployed in the UK is 2.5 million and, according to various projections, will rise even more through 2011 as the economy struggles to replace the lost public sector jobs with private sector ones.

The UK GDP figure was revised down from 0.8% to 0.7% for the third quarter in 2010 suggesting that the recovery will be a slow one. The latest Nationwide Building Society survey recorded a rise in house prices for December but said that UK house prices were likely to fall throughout 2011.

So why are investors in such a positive mood? One explanation is that the FTSE 100 consists of a significant amount of global companies with some 65% of revenue coming from overseas nowadays. At this point, some of the FTSE 100’s best performing companies are reliant on high commodity and natural resource prices brought about by China’s continuing rapid economic growth.

Therefore, perhaps a much more realistic gauge of the UK economy is the FTSE 250, but that index climbed 23% in 2010.

Analysts argue that another reason why equities are going up is that difficult economic conditions tend to favour the fittest, most effective companies and as merger talk and cost cutting exercises proliferate there then comes a tipping point, in the minds of some investors at least, during which the potential for growth in an individual company outweighs the prospect of decline.

And with the global economy looking set to experience another year of ups and downs equities are just looking a more attractive option for investors at the moment.

These are some of the reasons why we’re seeing a difference between what is happening in the underlying economy and the stock markets in the UK at the moment. But what do you think will happen throughout 2011?

About the Author

CFD shares trading is one way you can take advantage of the financial markets in 2011. With CFDs you can also take a position on the direction of an index. To find out more about CFDs and the financial markets visit IG Markets, the UK’s No.1 CFD provider.