InvestMacro FX

By James Woolley

A lot of stock market investors invest in a large number of different stocks because they have always been told that they should have a well-diversified portfolio. However there are a small minority of people who like to invest in just one or two stocks at any one time. So for those people, let me discuss some of the factors that you should consider.

If this is your preferred strategy, then you clearly need to spend a great deal of time choosing exactly the right stocks. If your entire portfolio consists of shares in just one or two stocks, then you could potentially lose a lot of money if you make the wrong choices.

So first of all I would recommend that you automatically exclude small-cap stocks, and instead focus on mid or large-cap stocks. I personally would only consider a few very large market-leading companies from amongst the large-cap stocks, but there are some great companies amongst the mid-cap stocks as well.

The point is that you want to eliminate as much risk as possible, which is why you should exclude small-cap stocks. Therefore you want to find some big name companies that are likely to be at the forefront of their respective industries for many years to come.

This means that you want to find companies that have long records of growth going back many years. More importantly, you want to do some thorough research to make sure that this growth is likely to continue in the future as well. So you basically want earnings growth and dividend growth.

Dividends are very important for this type of investment strategy because they can make a huge difference to your overall profits. If you only invest in one or two shares, then you not only want long-term share price appreciation, but you ideally want some healthy dividends as well. You can of course bank these dividends, but you are much better off ploughing these dividends back into your chosen shares to get the full effect of compounding growth.

Finally if you have income coming in from elsewhere, you could consider adding to your holdings whenever the share price is temporarily oversold. For example when the RSI and stochastic indicators are both below 30 on your price chart. This will again add to your long-term profits if the companies in question continue to increase their profits every year.

The point is that despite being frowned upon by some people, it is not actually a bad strategy to invest in just one or two stocks. If you pick good quality companies that you know inside out, and that you know will continue to grow in future years, then you can make some substantial long-term gains.

About the Author

Click here to read a review of the TradeKing broker, the popular online discount broker, and to read a full Zecco broker review.

By Ben McArthur

Here are some Forex trading tips you should consider before investing in Forex trading. Chances are you won’t get rich overnight but it may help to save your nest egg. The top traders know that controlling risk is just as important as knowing how to trade for big gains, if not more important.

Investing large amounts of money into something you haven’t researched is like trying to hit a target with a blindfold on, you might get lucky but it’s more likely you are going to hurt someone. Investing like this means the person you hurt will be yourself.

Set a limit as to how much you are willing to invest. You should only enter any market with the amount of money that you are willing to accept as a loss without too much damage to your overall trading capital. Find your personal comfort level and stick to it.

Listen to your instincts. A smart investor follows a plan, and that plan is in place way before the first trade is ever made. It can be hard to follow your instincts when the emotions of a live trade unfold. If you try to keep your mind-set the same as when you developed your strategy you’ll be more successful.

If a trade takes off, stay in control, don’t pull out too soon or wait for the bottom to drop out. Stay with your trading strategy, you should have a projected stop-loss in place. Just let it happen. If you see weaknesses in your strategy adjust between trades, not during them.

Never invest everything in one trade, no matter how confident you are. A seasoned trader will always diversify. Diversification is your safety net for huge losses. Without diversifying you could be out of the game before you had a chance to play.

Shop around for a broker. Not all brokers have the same spread (fee charged by brokers). Treat this like a business by keeping your costs low in order for you to better maximize your profits.

Always test a new strategy. You can find or hear about Forex trading strategies anywhere but, what may work for one person won’t always work for you. Test any new trading strategy with paper trades or in your demo account before taking it live. You may need to make adjustments to your new strategy; you won’t know that until you try it.

Following these 7 steps should help you to avoid a very costly learning curve. The Forex trading market will always be there when you are ready so, take your time, put together a plan and work the plan until you are confident you can make steady, consistent winning trades and then go for it.

Get more forex tips
the author’s website.

About the Author

Learn more about Forex and forex trading secrets at the author’s website.

By James McKee

For the first time in over two months the Euro is seeing highs above $1.38 against the USD, due in part to Germany’s tight control of spending and efforts to control debt in countries such as Greece and Ireland. Still more problems loom on the horizon for the Euro that will be centered around mounting debt in other countries such as Italy and Portugal. The mounting debt problems in certain countries within the EU is dragging down less-burdened countries along with them. Most of the debt has been shouldered thus far by Germany, who has taken a much more active role at all levels in the financial systems of Europe.

During the initial days of conflict in Egypt the Euro fell sharply as risk appetite dropped, and the currency saw renewed vigor as investors poured in. The Euro has always been the stable currency above the US Dollar but as time goes on if Europe does not find a way to address its mounting debt the EU may find itself in serious trouble very soon. Germany’s recent wrangling with issuing European debt that forces buyers to shoulder European losses was a controversial move that saw much debate world wide.

The forex currency exchange has seen a great deal of turbulence due to both poor financial planning and rampant civil unrest in Europe in recent years. The temporary highs of the Euro are just that, temporary; the austerity measures recently put it into place across the continent have been semi-effective at best. Currency traders should take note of the recent initiatives by foreign countries such as China making moves to purchase the debt of countries such as Portugal. Such moves will be required for overall financial solvency in Europe in the near future if the continent cannot pull itself out of its debt quagmire than the Euro will remain a risky investment.

About the Author

The author’s love of life is ultimately rooted in his drive to learn forex

By Ben McArthur

Forex trading can be a highly profitable profession. Because it is the largest financial market on the planet, Forex trading offers many opportunities to make profits.

But in order to become one of the elite Forex traders, you must have the proper plan in place to succeed. The most successful traders know that profiting and surviving in the markets takes knowledge and rigid disclipine. There’s no room for undisclipined traders who are not ready to have a solid strategy and the disclipine to stick to it.

1. The first secret of top traders is to accept responsibly for their trades. Never blame the market or bad advice for a losing trade. You are ultimately responsible for your success or failure.

It’s hard to emphasize enough the importance of having a trading system that has been proven to be profitable, and harder still to stress the importance of never varying from your trading system.

Your trading system is not perfect. Neither is the latest guru’s trying to sell you their newest system. The most important rule of your system and all of the others is simple: stick to the rules of the system and when you have a losing trade ask yourself this. Did I follow the system? If you did then evaluate what went wrong in the trade and see if there is anything in your trading system that can be refined to avoid a similar loss in the future.

2. Have a trading system that fits your particular style of trading. If you’re not comfortable day trading then obviously you would not want to use a day trading system. Many traders are not comfortable or simply don’t have the time to follow every little movement all day. Still others find day trading best suited for their style of trading and their temperament.

Some prefer to make short term trades and trade accordingly. By having a trading system that they are comfortable with, these traders can take a position in the market and let their system dictate when to exit the trade. A good short term system, used with appropriate stops, is a more stress free way to trade for many traders.

3. Have a plan and trade your plan. By having a well thought out plan in place before entering a trade, things become almost automatic. You know in advance where your entry point will be, where to place stops, when and if to add to a position, and where to exit the trade.

Properly planning your trades in advance takes away the emotional aspect and lets you trade in a more professional manner. Poorly planned trades can have a huge emotional effect on you if the trade goes against you. Instead of having a precise strategy in place, you are now trading more on emotions. This can not only have emotional complications, it can also wipe out your account.

4. A good trading education is worth it’s weight in gold. No one can reasonably expect to be a good trader without a proper education. Learn all you can about the Forex markets before ever making a trade. Study as much as you can about the proper mindset you must have and prepare yourself thouroughly before taking the plunge into trading.

Decide what type of trading strategy is best suited for you. Most good traders ultimately find that following and refining a trading system that fits their trading style will yield the best results.

There is a lot of excellent, and FREE software available that will allow you to hone your trading system and skills until you are comfortable enough to begin trading.

5. Positive thinking produces positive results. As was mentioned above, having a solid foundation about the Forex markets, developing a trader’s mindset and having a solid trading plan will go a long way to help you succeed as a trader. Disclipine to stick with your system and having a strict risk management regiment are vital to your success.

To succeed at Forex trading you must first believe that you can be successful. Doubting yourself and not having confidence in your trading skills will almost surely lead to failure. Prepare yourself with knowledge and have confidence in your own abilities at all times. These are the real keys to trading success.

Visit the author’s website for more Forex trading tips and forex secrets

About the Author

Learn more about Forex and forex trading secrets at the author’s website.

By CountingPips.com

The US dollar has been on the rise in forex trading action despite the worse than expected monthly government jobs report released today. The American currency has been gaining versus the euro, British pound sterling, Japanese yen, Australian dollar, Swiss franc and the New Zealand dollar today while showing a slight decline versus the Canadian dollar.

The US stock markets, meanwhile, have been mixed with the Dow Jones industrial average being just about unchanged, the NASDAQ up by over 10 points and the S&P 500 higher by approximately 1 point in the afternoon of the US session.

Gold futures have been lower by $3.80 to trade at the $1348.30 per ounce level while oil has declined by $0.95 to trade at the $89.59 per barrel level.

Today’s government jobs data came in much less than expected with a gain of 36,000 jobs for January following a revised gain of 121,000 jobs in December. Many market watchers blamed adverse weather conditions and January’s snowstorms as holding the jobs data down for the month.

Market forecasters and economists were expecting the nonfarm payroll report to show a gain of approximately 146,000 jobs for the month.

The unemployment rate fell to 9.0 percent in January from 9.4 percent and reached its lowest point since April 2009.

November’s employment data was also revised higher to show an increase of 93,000 jobs after a gain of 71,000 jobs previously reported.

Private companies created 50,000 jobs in January as the service sector added 32,000 jobs and the goods producing sector increased by 18,000 jobs. Government hiring fell by 14,000 workers for the month.

Professional and business services led the way in the service sector with job creation of 31,000 workers while retail trade hiring added 27,500 jobs in January. In the goods producing sector, manufacturing jobs rose by 49,000 workers while construction jobs declined by 32,000 workers.

Feb. 4 (Bloomberg) — Dean Maki, chief U.S. economist at Barclays Capital Inc., discusses data showing the U.S. jobless rate declined to 9 percent last month from 9.4 percent in December. Employers added 36,000 workers, the smallest gain in four months, after a 121,000 rise in December that was larger than initially reported. Maki talks with Betty Liu and Michael McKee on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

What’s cooking in the Philippine Stock Exchange as of late? Well, Alliance Select Foods, Inc. or FOOD looks to be on a brink of another major upswing! For those who does not know this company, it used to be known as Alliance Tuna International, Inc. (TUNA). It’s a company that is engaged in tuna processing, canning, and export of canned tuna products from General Santos City in Mindanao across the globe. During the past two years, it bought stakes in PT International Alliance Foods Indonesia (PTIAFI) and Prime Foods New Zealand (PFNZ) to enhance its international reach and product diversification.

So like I said, it appears that a major bullish move is about to happen at least from a technical point of view. As you can see from its chart, FOOD has been forming a pennant pattern after making some headlines during the past two weeks when it suddenly erupted from PHP 1.52 last January 6 to reach a high of PHP 1.850 yesterday (February 2) and earlier today (February 3). Participation in this issue has also increased as can be seen in its volume during the same period. This suggests that people with knowledge could be seeing something worth their money. Now, a break above the mentioned high could send FOOD skyrocketing towards PHP 2.18 (gauged by projecting the height of the pennant’s pole from PHP 1.85. So my suggestion is better keep an eye or two on this one as this may swing for a home run sooner  than later.

More on LaidTrades.com …

I want to wish everyone Kung Hei Fat Choi or a Happy Chinese New Year as we enter the year of the metallic rabbit. And why not celebrate it with a bottle or two of San Miguel Beer? Well, it’s not exactly like the Tsingtao Beer of China but it’s actually way better! San Miguel Brewery or SMB in the Philippine Stock Exchange is the largest producer of beer in the Philippines. Its flagship brand, San Miguel Pale Pilsen, is exported not only in Asia but all over the world. Having said that, drinking some not only makes people light on their heads but it could also have them profit a buck or two.

Back in January 10, I mentioned that something could be brewing with SMB (kindly see my post here). Back then, I thought that it was already poised for an upside breakout from either an ascending triangle or a pennant pattern. However, that did not happen until earlier today (February 3, 2011) when it rose by 10% from an opening of PHP 29.00 to a closing of PHP 33.00. As you can see from its chart above, the breakout was accompanied by a relative rise in volume. It also closed on its high which signifies optimism among its buyers. Moreover, the MACD also made a bullish crossover, suggesting that SMB could start to ascend once more. So given today’s price action, an upside target of PHP 41.50 or even PHP 50.60 could be derived.

Cheers!

More on LaidTrades.com …

By Anton Eljwizat

The EUR/AUD pair has experienced much bearishness in the last few days as it currently trades at 1.3380. The current bearish trend is expected to come to an end anytime soon, and a bullish correction may be in the making. I will illustrate below that the EUR/AUD may very well be heading for a reversal. Traders are strongly advised to take advantage of the trend at an early stage.

• Below is the 4-hour chart of the EUR/AUD currency pair.

• The technical indicators that are used are the William Percent Range, Relative Strength Index (RSI), and Slow Stochastic.

• Point 1: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 2: The RSI signals that the price of this pair currently floats in the over-sold territory, suggesting upward pressure.

• Point 3: The Williams Percent Ranges is showing that this pair is heavily over-sold and may be experiencing strong upward pressure.

• The volatile downward movement which occurred prior to this upward correction has generated these indicators, and there appears to be room for this correction to continue.

EUR/AUD 4-Hour Chart

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

With much of Asia still on holiday, FX price action was largely subdued overnight. However, AUDUSD did receive a strong boost when the RBA kept the forecasts for 2011 and 2012 inflation unchanged, despite the flooding. EURUSD traded 1.3609-1.3652, USDJPY 81.45-81.70. Fed Chairman Bernanke’s economic assessment largely echoed the latest FOMC statement. The Nikkei-225 is up just over 1% at the time of writing.
US data supported our analysts’ call for faster Q1 growth as non-manufacturing ISM surged to the highest level since 2005, and was well above expectations. We continue to expect real GDP growth in the current Q1 to accelerate to 4.2% from 3.2% in Q4 despite the unusually inclement weather that is temporarily delaying/postponing some economic activity. New jobless claims fell slightly more than anticipated to 415k. Wintry weather has resulted in unusually choppy data in January and we expect the weather to also affect the January payrolls. Our US economists forecast a +80k rise in headline payrolls, well below the consensus of +143k.
EUR

The messages conveyed by European Central Bank President Trichet at the Feb. 3 press conference were pretty much the same as those of the Jan. 13 press conference. However, what the FX market was inclined to hear and how it interpreted Trichet on each occasion made all the difference to the euro. Going into last month’s meeting the market expected nothing new and heard hawkishness. EURUSD popped. This time the market expected hawkishness and heard nothing new. EURUSD dropped. Like last month, Trichet put inflation front and center in his remarks. But while he again noted evidence of short-term upward pressure, mostly because of energy prices, he qualified this by saying that the current situation didn’t appear to pose any danger to price stability over the medium term. He then emphasized that it’s the immediate term that counts. There were no hints of dovishness but certainly not enough hawkishness to meet market expectations.
German Chancellor Merkel said there will be no concrete decisions at the upcoming EU summit though she did say the Eurozone has to take important steps by the end of March on stability, growth and competitiveness because if the euro fails, Europe fails.
Services PMIs were mixed. Germany’s reading rose to 60.3 from December, close to all time highs, and the French print rose to 57.8. However, peripheral readings are stabilizing but remain far from the levels of the Eurozone core. Eurozone retail sales declined unexpectedly by 0.6% m/m, but this could have resulted from poor weather.
GBP

Sterling was supported by the Services PMI which came in above consensus at 54.50, and rose substantially from the prior reading of 49.7.
CHF

Our analysts pushed back their SNB policy rate move forecast to June, from March. Although the latest Swiss economic indicators have been anything but disastrous, Swiss franc strength has weighed on officials. The SNB has kept policy expansive as judged by lower short-term rates. Our main scenario now calls for a an increase in the SNB’s 3m CHF Libor target by 25bp to 50bp at the June MPA.
AUD

The RBA’s Statement on Monetary Policy concluded that the economic impact of the floods would be temporary, echoing comments made in Tuesday’s policy statement. The 2010 GDP forecast was revised down to 2.75% from the previous estimate of 3.5%, but the 2011 GDP forecast was raised to 4.25% from 3.75% previously. No change was made to the 2011 or 2012 forecasts for core inflation.
CAD

Our Canadian economists expect a modest net increase in employment of 10.0k (consensus 15.0k). Canadian Finance Minister Flaherty has already warned of potential challenges regarding jobless numbers, which seems to support our below-consensus forecast.

TECHNICAL OUTLOOK
EURUSD stalls in front of 1.3888/1.3948.
EURUSD BULLISH Stalled in front of 1.3888/1.3948 resistance zone. Initial support lies at 1.3571.
USDJPY BEARISH Support lies at 81.31, break below this would expose 80.93 next. Resistance at 82.15.
GBPUSD BULLISH Focus is on 1.6299 key high with scope for 1.6379 next. Support lies at 1.6010.
USDCHF BEARISH While initial resistance is at 0.9526, focus is on 0.9329/01 support zone.
AUDUSD BULLISH Breach of 1.0149 has put focus on key resistance 1.0256 next. Support lies at 1.0083 yesterday’s low.
USDCAD BEARISH Momentum is negative; break of 0.9861/38 support area would expose 0.9820. Near term resistance at 0.9978.
EURCHF BULLISH Rise through 1.3002 has exposed 1.3069 ahead of 1.3118. Support at 1.2781.
EURGBP NEUTRAL Sharp fall through 0.8510 puts pressure on 0.8433, break of this would expose 0.8413 next. On the upside initial resistance is defined at 0.8533.
EURJPY NEUTRAL Decline through 111.28 has turned the model to neutral; 112.92 and 110.32 mark the near term directional triggers.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.