How To Retire Early By Using A 401k Account

By Kevin Papason

People do want to spare some amount from their salary, but for some reason this becomes a difficult task to do. The moment we get our paycheck it's so easy to spend it all. Sometimes, we get surprised at the mushrooming expenses that demand your attention, and before you even realize, you've already spent your entire paycheck.

Does this sound like you? Well then why not give the 401k account. It will reduce that temptation by taking that check and depositing it in your savings account without you seeing the check.

The benefits of a 401k account do not end here. Truth is, there's a lot more to this account. You may be thrilled if you find out that your own company is even contributing to your savings. Your company can deposit an amount that is also dependent on your contribution. You can gain 50 percent more savings from your company if it agrees to this arrangement.

Let's take this as an example: out of your hard work you are able to save 2 grand every year. Since your company agreed for 50 percent contribution, it will have to add one grand in your account. So you get a total of $3,000. That's easy money for you. Of course, you need to put more if you want to save more.

The good news spreads to matters of tax. With the 401k account, you are free from tax and that means that no cent you put in will be considered for taxation. Without paying tax, your money has a chance to grow.

Bear in mind that the growth of your account would still depend on your capacity to invest. If you invest little, then you reap little. If you invest much, then you get to reap much. The idea here is to invest the maximum amount you can afford. Some people may find it impossible to put in their whole paycheck to their 401k account at one time. It's important to really study and budget the paycheck so that they can save more money, instead of spend money.

Like the regular savings account, 401k account gains interest over time too. The interest allows your money to grow continually while you deposit the money in the bank for a long period of time.

You may have heard of the saying that constant saving can bring out the millionaire in you. With your 401k account, you can make this possible. Even with regular paycheck, if you make a wise investment, you will realize this dream. - 31391

About the Author:
If you lose your job, you should look into a 401k rollover to IRA so you don't lose all that money in your old employers account. You can find more tips and suggestions at 401k rollover school.

How To Put Stop Loss?

By Ahmad Hassam

When adjusting your stops due to an increase in trade size, always move the stops closer to your current position. An increase in trade size is usually caused by adding on or scaling in to a winning position. This lowers the risk in relation to your larger trade size.

When you trade, always try to develop an overall picture of the market using multiple time frames. As a rule, always set your stops on the same time frame as you entered your trade. Many traders want to know about moving stops based on different time frames. For example, if you had used a daily chart to enter your trade, use the daily chart to set your initial stop.

Day traders dont trade overnight. Each day is full of action but when the night comes peace prevails. For day traders there is a risk when holding a trade overnight. In day trading, you are supposed to close your position at the end of the day. Sometimes an opportunity arises and you decide to continue the trade overnight. There is always a possibility of unforeseen event occurring during the night.

Suppose you are trading a 15 minute time frame. Therefore your stop loss and position size are based on the 15 minute time frame. In stock trading, unexpected event may create a gap open. This may adversely affect your account value.

Your trade is profitable and you see much more profits if you hold the position overnight based on your 15 minute chart 5 minutes before the close of the day. How do you decide to take the decision to let the trade continue overnight?

When deciding whether to let the trade continue overnight, consider the following 5 rules. 1) The 15 minute chart must indicate a solid trend in place. 2) You should place a new stop loss based on your daily chart. 3) The trade must currently be profitable. 4) Your risk should be no more than 2% of your trading account based on your new adjusted stop from the daily chart. Reduce your trade size. 5) When the market opens the next day, be sure to monitor your trade.

The most common thing that can happen in case of a poorly placed stop loss is that you will get stopped out on a correction. After being stopped out, the market will race back in the direction you were initially betting on. Continuously tweak your trading strategy to get the maximum returns. It is crucial from the profit point of view to refine your strategy. The more profitable you will be, the better your stop strategy is.

There is no way to time the market perfectly. Your goal should be to get the probabilities in your favor by choosing a risk/reward ratio of at least ". This risk to reward ratio will also tell you about the placement of your initial stop loss. Now you should keep this in your mind that there are no perfect stops. Just dont forget, getting repeated stopped out will add to your commission fees and spreads making your trading cost higher. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!

Pattern Trading

By Ahmad Hassam

Pattern trading may be considered one form of breakout trading. There are basically two types of chart patterns. One are the chart patterns that generally represent price consolidation and include patterns like triangles, flags, pennants, wedges, rectangles and the head and shoulder pattern among others.

For the most part, these chart patterns are traded when a breakout of one or another kind occurs. Now dont confuse the head and shoulder with the name of a shampoo. It is a chart pattern that you must be familiar with if you want to continue reading this article otherwise first make yourself clear about these chart patterns and then continue reading this article.

Now when we talk of pattern breakouts it should be clear which chart patterns constitute a continuation pattern and which chart patterns are considered reversal patterns. The second type of chart patterns that are the Japanese Candlestick patterns! Candlestick patterns are not tied as closely with breakout trading.

The most common chart patterns found on the currency charts that are generally considered to be reversal formations include double tops/bottoms, triple tops/bottoms and head and shoulder tops and bottoms.

The most common chart patterns that are generally considered to be continuation patterns include flags, pennants, triangles, wedges, rectangles and others. When a continuation pattern approaches breakout on the side of the pattern that would denote a continuation, technical traders patiently wait for a breakout.

Pattern trading is like playing with shapes and is very similar to the general support/resistance breakout trading in terms of entries and exits. One benefit of pattern trading lies in the precise profit targets. This type of trade is treated as a breakout trade with similar type of entry and stop loss placement as with standard support/resistance breakout trades.

The traditional signal for the trade in the head and shoulder pattern is after that price breaks the neckline. Profit target is derived by measuring the height from the top of the head to the neckline then projecting that height from the neckline breakdown for the profit target. So a good example of a precise profit target is that of the head and shoulder pattern.

In actuality, any type of breakout of these patterns whether in the direction of the continuation or reversal is eagerly watched traded event. Similarly the height of the rectangle is projected up or down to derive the profit target after the breakout in case of the rectangle consolidation pattern. Triangles, flags, pennants and other chart patterns also have convenient build in profit targets.

Japanese candlesticks have recently become popular among the western trading circles. Steve Nison is considered to be the authority on Candlestick Charting. Candlestick patterns are most often used as important trade confirmation tools in conjunction with other technical indicators. Candlestick patterns in themselves are not usually considered as sufficient trading signals.

For example, it should not be taken as a reversal signal to buy low if the hammer candlestick pattern occurs after a steep well defined down trend. However, if this hammer candlestick pattern occurs right at a well established support level, the hammer candle may be taken as a strong signal that a potential long trade may be profitable. - 31391

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!

Stop Loss Orders

By Ahmad Hassam

Risk management is an important part of any trading decision. One important way to control your trading risk is by setting stop loss exits. A stop loss exit is a practical tool used in risk management. However, there is an art of developing the right stop loss exit strategy.

On the one hand, you dont want to get too liberal with your stops that you never lock in a profit. On the other hand, you dont want to set too tight stops that you constantly get bumped out of the market.

The topic of setting stop loss exits generally falls under the heading of trading systems. Your exits must be carefully coordinated with your entries. This is a trading skill that you can only learn with experience.

How many stop loss types you can use in trading? There are a variety of stops that you can incorporate into your trading system. The following sevens are the most valuable:

1. Initial Stop: This is the first stop set at the very beginning of the trade. This stop is identified before your enter the market. The initial stop is also used to calculate your position size. It is the largest loss that you are going to take in the current trade.

2. Trailing Stop: This stop trails the price action and locks in when the price action is reversed. Trailing stops develop as the market develops. The trailing stop lets you lock in profit as the market moves in your favor.

3. Resistance Stop: Trend is your friend as long as you ride it in the right direction. A resistance stop is placed just under the countertrend pullbacks in a trend. This is a form of a trailing stop used in trends.

4. Three Bar Trailing Stop: Many traders cant anticipate a trend reversal and lose the unrealized gains when there is a sudden trend reversal. This stop is used in a trend when the market seems to be losing momentum and you anticipate a reversal in trend.

5. One Bar Trailing Stop: This stop is used when there is a breakaway market and you want to lock in profits. When the prices have reached your profit target zone, use this stop after three to five bars move strongly in your favor.

6. Trendline Stop: Use this stop when you are riding an uptrend or a downtrend. You always want to get out when the prices close on the opposite side of the trendline. Use a Trendline Stop placed under the lows in an uptrend or on top of highs in a downtrend.

7. Regression Channel Stop: A regression channel forms a channel between the highs and lows of the trend and usually represents the width of the trend channel. Stops are placed on the outside of the lows of the channel on uptrends and outside the highs of the channel in downtrends. Prices should close outside the channel for the stop to be taken.

You always need to put your stops in accordance with the underlying market conditions. Try to overcome your fear and place your stops at reasonable places in the market. If you find yourself being stopped out too frequently or if you seem to be getting out of the trend too early then most probably you are trading with a fearful mindset. - 31391

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. Learn These Candlestick Patterns. Try These 1500 Pips A Day Forex Signals from heaven!

Know These Stop Loss Rules

By Ahmad Hassam

Position your stop loss in relation to the market activity. Many traders incorrectly choose a stop so their loss is the same amount each time they are stopped out. Dont pick an arbitrary place to put your stop loss.

You are completely disregarding the meaningful market support and resistance levels where the stops should be placed if you use an arbitrary place for your stops. You need to place the stops in accordance with the market conditions.

Where to place your initial stop loss? Try to set your initial stop 3% below the support level. The important thing in this method is to correctly identify the support area. Test this method and see if it works for you.

Support and resistance is a concept that every trader should understand. Knowing correct support and resistance is very important for a trader. This you will learn with experience. For example, suppose you have a trading system that can determine an entry point. However, your trading system does not provide an exit based on the market dynamics. First you need to identify the support area. Set your stop loss 3% below the support area.

For example, suppose that the support level in a bullish trend is $30. You should set the stop loss at 3% below the support level in a bullish trend if you have an area of support at $30. The formula that you will use is $30 (support price)*0.97 (3 percent less) = $29.1 (Initial Stop Loss Level).

Do not use arbitrary stops based on flat dollar amounts that you are willing to lose. For example to say that you are willing to lose $200 in a trade is to disregard the current market conditions.

If you do not use stops at all, you are inviting failure. Another approach can be to set your stop loss one tick below the support in a bullish trend or one tick above the support in a bearish trend.

For example in trading stocks, you are in trouble if you do not use stops and hang on to a losing trade to the point that you emotionally feel that the loss is so large that you cannot exit the trade.

Some markets have sharks in them. For example in the currency market, the brokers have many tricks up their sleeves. In the currency market it is better not to put the stop actually in the market when you have the position on. Some professional currency traders use mental stops only. Your broker will see your stop and if there are enough similar stops, the broker may try and hit your stop. This way the broker makes money and you do not.

In such a market like the currency market, you can set a mental stop and get out quickly if you are hit. But this will need psychological toughness and discipline to get out when you are supposed to get out.

You can move your stops to lock in profits as new trailing stops are determined. You must adjust your stops to keep your risk in relation to your trade size in case you add on to your winning trade by increasing your trade size. Never move your stop for emotional reasons especially when it is your initial stop.

Learn how to place the stop loss correctly. As the trade progresses learn how to move the stops. Always move the stop closer to the current position to lower the risk in relation to your larger trade size when adjusting your stop due to an increase in trade size. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!

Never Trade Without A Stop Loss

By Ahmad Hassam

Market is a living breathing entity in continuous motion. The market goes in one direction. It has a correction. Then it continues back in its trend direction. It has another correction and so on. Even in sideways or choppy market, there are ups and down in the price action. The market is always ebbing and flowing. Its like the waves in an ocean.

You need to understand how the price action in a market takes place. Price action in the market is like the continuous ebb and flow of the tides. You must learn to ebb and flow with the tides in the market. Setting stops on the key levels of price support are crucial. These key support levels represent significant market realities occurring with enough trade volume to warrant a stop loss level.

There is a continuous ebb and flow in the market. Even in case of a perfect trend this ebb and flow is superimposed on the trend. How do you reduce the possibility of getting stopped out of a perfectly good trend by the normal ebb and flow of the market? The market will continuously fluctuate. The answer lies in the current price, volume and volatility of the market.

You will need to ensure that your trading system and approach take these factors into consideration so as to allow your stops to ebb and flow with the markets. The stops need to protect you from risk but they also need to allow the market freedom to fluctuate.

The market will tell you where to set your stop loss if you know how to listen to the market. To choose a random exit that does not include the crucial information the market is giving you at any time is ignoring what the market is telling you.

Never ever use an arbitrary dollar amount like, I will get out of the trade when it goes against me $200. You need to learn how to identify the correct stop loss based on the market dynamics. Then learn to adjust your trade size to manage your dollar loss.

The value of having the stop loss in place prior to entering the market is that you can unemotionally determine the best exits possible for the different types of risk like the trade risk, the market risk, the liquidity risk, the margin risk, overnight risk and the volatility risk. A stop loss protects you from these risks.

Your stop loss position is determined by how much risk you are willing to take. The position of your initial stop should be based on the rule of 2% risk on your trading account. For some advanced traders it is sometimes beneficial to risk more than 2% of their trading account on a single trade. However, the amount these traders risk must be carefully calculated depending on their proven historical performance statistics.

One of the greatest challenges for any trader is to finally come to the point where he/she firmly believes that a sound money and risk management program is vital. Placing stop loss correctly is an important part of the money and risk management program. Remember the saying that there should be some method to your madness. Learn the yin and yang of trading. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!

You Should Learn The Basics Of A 401K Account

By Joseph L. Franklin

Whether your employer offers one or not, you should learn the basics of a 401k account. This information will come in handy if your company ever switches to a 401k plan or you change jobs and are able to invest in a 401k. These accounts give you the ability to have some control over your retirement fund, unlike pensions where the company controls the funds.

A 401k plan is a retirement plan that is set up as a special type of account to take advantage of tax benefits. With a 401k plan, you can deposit money into the account tax-free. That means it comes out of your check before taxes are taken out of it. Instead of paying taxes on the money you put into your 401k at the current rate, you will be taxed when you withdraw the money from the account.

If you make less than $110, 000 per year, you can contribute up to $16, 500 per year to your 401k, and the total contribution including your employer match cannot exceed $49, 000. The limits increase to $22, 000 and $54, 500 once you reach the age of fifty. If you make more than $110, 000 per year, your employer may be required to reduce the amount you can contribute so that you are not investing a higher percentage of your income than the average worker at your company.

Most companies that offer 401k plans also offer employer matching. That means that if you invest in your 401k plan, your company will also invest in your retirement plan on your behalf. Some employers match the full amount you contribute up to a certain percentage, while others only match part of your contribution. Employers may allow you to choose what the employer match is invested in, or they may invest the employer match portion in company stock or another investment of their choice.

The money that is put into your 401k plan by your employer may not really belong to you right away. Some plans require funds to be vested before you gain full ownership of them. That means the money must be in the account for a certain amount of time before you will be able to access it.

Some companies allow you to borrow against your 401k plan. When you take advantage of these loans, you usually get a pretty good interest rate. As you pay the loan back, you are paying yourself interest. It's best to proceed with caution when considering borrowing money against your 401k. If you quit or are fired from your job, you will have to pay the entire outstanding balance quickly or you will be penalized.

It's good to have a little knowledge about 401k plans in case you ever work for an employer who offers them. They are becoming very popular, and you never know when your employer might decide to start offering a 401k plan to its employees. - 31391

About the Author:
Are you searching for a solid 401k retirement investment strategy that is good for you? Before you waste your time searching for quality retirement investing information, look at BeforeYouInvest.com's guide to invest money online before you do anything else. BeforeYouInvest.com reviews everything from saving for retirement to the 401K direct rollover so take a look.

Market Cycles Explained

By Ahmad Hassam

There are four major market cycles. Knowing these major market cycles is important for you and your trading system. Each market cycle requires a different approach from your trading system. Adapting to market cycles can improve your bottom line.

Lets discuss these market cycles now. The four major market cycles are: 1) Trending, 2) Consolidating, 3) Breaking out of a consolidation and 4) Corrective.

Remember the saying, Trend is your friend. Trending is when the market starts to move consistently in one direction either up or down. An uptrend means each higher high is higher than the previous high and each lower low is also higher from the previous low. Similarly for the down trend!

On a chart, a Consolidation market will look like a sideways horizontal line. Consolidating is when the market is struck between two horizontal support and resistance levels.

After the market has been consolidation for at least 20 bars Breaking out of a Consolidation is when there is a sharp increase or decrease in the price.

Corrective is a short sharp reverse in prices during a longer market trend. In addition to these four market cycles, many traders also use Elliott Wave Theory to determine waves which are also an indication of market cycles.

Elliott Wave Analysis is a full subject in itself. Some traders dont believe in Elliott waves while others are its die hard fans. However, using Elliott Waves is somewhat advanced for most traders. There are five Elliott waves and each one has its own relevance in determining the trading strategy. You need to have a thorough understanding and ability to correctly determine which wave the market is in at that point.

You need to learn how to correctly a market cycle. For example suppose the market is only in consolidation and you incorrectly determine that the market has entered a trend. Incorrectly identifying the market with either the four market cycles or by using the Elliot Waves can be a costly mistake.

How can you learn to determine the market cycle? Your best plan of action should be constant observation. You might enter a trend trade and get immediately stopped out. Market experience is the best teacher and only overtime you will be able to correctly figure out the market cycle.

Right side of the chart is always an unknown quantity for the trader until it reveals itself. Hindsight is always perfect but trying to predict the markets can be an elusive and impossible endeavor.

Remember spring, summer, autumn and winter, the four seasons of a year. The markets have four cycles just as there are four seasons in a year. You need to learn what the different market cycles are in addition to having a trading system. That means you should develop the skill of correctly identifying the different market cycles at the right time.

If you want to become a successful trader than you should be adapt at identifying the market cycle. Effectively identifying the market cycles is a skill that all successful traders have mastered. You need to learn how to adopt your approach to those cycles to remain profitable. For example in a choppy, sideways bracketed market, you need to adopt your system and rules so that you do not get whip sawed and stopped out a lot. - 31391

About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. Learn These Candlestick Patterns. Try These 1500 Pips A Day Forex Signals from heaven!

Which Investment Strategy Is Right For Me?

By Dora T. Thomas

Getting started investing in the stock market can be quite daunting. There are so many questions to consider. Which stocks should I buy? Should I buy stocks or bonds, or something else? Which investment strategy is right for me?

Well, those are all good questions, but we are going to focus on the last one for now. There are many investment strategies, and there is some debate over which one is best. What it really comes down to is which investment strategy fits your personality best.

The most important consideration for deciding on your style of investing is how you feel about risk. If you won't be able to sleep at night worrying that your high-risk investments might be worthless in the morning, then high-risk investments are definitely not for you. On the other hand, if you will be frustrated to receive only a small return on your investments, you will probably have to take some more risk to have a chance at earning the type of return you're looking for.

Most people will be somewhere in between these two extremes. They are willing to risk losing a little, but not a lot. For many of these people, a mutual fund is a great way to get started investing. By investing in a mutual fund, you are purchasing a tiny piece of many different companies. If some of those companies do poorly, or even fail, you still have a good chance at having your investment increase in value because other companies in the portfolio may be doing really well to make up for the ones that aren't.

There is always the chance that the entire stock market may drop, which means that you are likely to lose money no matter what you invest in. However, you really only lost money on paper. If you hold on to your investment throughout the downturn, the value will probably increase again once the stock market recovers from the drop.

If you feel you need a safer investment, you can purchase government bonds or a certificate of deposit from your bank. The downside of low-risk investments is that they usually don't provide a very good return on investment. As a general rule, investments with a greater potential for massive growth also have a greater risk of loss. Only you can decide what level of risk you feel comfortable with.

Nothing is guaranteed, especially when it comes to investing in the stock market. You can reduce the risk by buying mutual funds or by purchasing stock in many different companies, but there is always some risk involved. The good news is that, historically, the U. S. Stock market has always recovered. Even though it has had its ups and downs, it has always bounced back. - 31391

About the Author:
Are you searching for a good investment strategy that works for you? Before you spend your time searching for a good strategy, check out BeforeYouInvest.com's beginners guide to investing before you do anything else. BeforeYouInvest.com reviews everything from typical investment strategies to the best online investing tools so take a look.

Spot Forex Market (Part I)

By Ahmad Hassam

Of all the financial markets, spot forex market maybe considered as the most pure in the sense that supply and demand is strictly what determines the prices. Spot means that both the buyer and the sellers agree on a certain price and make the transaction on the spot without any delay. The spot forex market is an over the counter market. The spot forex market is a decentralized network of buyers and sellers. There is no physical central exchange that acts as a central clearing house.

Stocks, options and futures all are traded on centralized exchanges with a clearing house as the intermediary. This brings a lot of order in these markets. Unlike the forex futures trading that is carried out through the exchange like CBOT, CME etc, over the counter in spot forex means that the buyers and sellers make a binding contract with each other after agreeing on the price and this is not carried through an exchange. The buyer and sellers can agree on any price!

Forex traders in the spot forex market carry out their activities by dialing directly with one another or through brokers on telephone or internet. There are several advantages of a central exchange like the counterparty risk for the trades is reduced. There is trading anonymity something that big players want to hide their trails.

In 2007, Chicago Mercantile Exchange (CME) along with Reuters launched FXMarketSpace; the worlds first centrally cleared global forex market place. In this centrally cleared system, CME will act as the clearing house and guarantee the performance of all the contracts for both buyers and sellers.

However, only sophisticated investors with net worth of more than $20 Million can trade on the FXMarketSpace. Unfortunately FXMarketSpace is an institutional trading platform and is not open to retail forex traders. Forex market is an efficient market. The spot forex market has never been a value creator rather it is a vehicle for other transactions. For example, a US portfolio manager buying Japanese stocks or an Italian company buying raw material from Brazil are inadvertent parts of the forex market.

There are many players involved in the spot forex market. Recently NFA (National Futures Association) had also passed certain new rules that make it more skewed against the small investor like you and me. The spot forex market is still skewed against the retail forex trader. Why is it so?

The spot forex market has always been an unfair playing field for the big boys. It became possible to introduce trading platforms for the retail investors with the advent of the internet. Previously spot forex trading was the playfield of the big banks, multinationals and the hedge funds.

The forex market differs from other traditional financial markets. Things deemed illegal in most of the other financial markets are simply considered part of the game in the forex market. Insider trading, front running, price shading etc are all regularly seen in forex trading and have no legal repercussions whatsoever. Retail spot forex is seeing a lot of growth in the recent years. A mushroom growth of online forex brokers took place. Many did not have even enough capital with them to start the brokerage business. Most of these forex brokers behave like bucket shops. But this is the way; the spot forex market has developed over the years.

It is essential for you that you understand the nature of the spot forex market and who are the main players. Why they trade forex? What type of advantages they have over the retail forex traders?

Over the counter (OTC) means that the spot forex market is spread all over the globe with no central location! Over the counter nature (OTC) of the spot forex market means that currency transactions do not take place at any single place. No government oversight and no central deal book to compare trades means that the banks can pretty much do whatever they want to their unsuspecting customers.

Players in the spot forex market range from those who trade billions of dollars daily to those who only trade just a few thousand dollars daily. A players access to the spot forex market depends on the quantity of transactions of large amounts of money. Now who are the main players in the forex market against whom you as a retail forex trader will be competing? - 31391

About the Author:
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!

IRA's And Retirement Planning

By Doeren Mayhew

Retirement plans have special tax advantages, but they also suffer from tax regulations. Two benefits would be that you are able to get a tax break if you contribute to a retirement plan and you are also able to have your retirement income grow tax free. The regulations include things such as limits on annual contributions, frequency of contributions, and the total size of each contributions. Before jumping into a specific IRA plan it is wise to weigh your options in order to find the plan that is right for you. There are two basic categories to choose from; you can either go with an IRA or an employer-sponsored plan.

Before you can start planning, review the retirement plans that are currently available to you. Generally, there are two categories into which all plans can be sorted: IRAs and employer-sponsored plans. IRAs are perhaps the most widely used retirement plans because they're easy to set up and maintain. You can open up one yourself it doesn't have to be sponsored by your employer and you can contribute as much (or as little) as you want, whenever you want, provided you don't exceed applicable annual limits. Following are descriptions of the three main types of IRAs:

Traditional IRA Options. IRA assets grow tax deferred, meaning that you owe no tax on the earnings until you withdraw funds.

Contribution eligibility depends on earned income, statutory limits, and age. You can only contribute, at a maximum, as much as your earned income. Earned income is defined as income from wages and self-employment income in the period of one year. Earned income does not include investment income. If you are age 50 or older then you may also be allowed to contribute what are called catch-up contributions. Additionally, your spouse can also use your income to make contributions of his or her own. However, you and your spouse are only eligible for make contributions if you have not reached age 70 at the end of the year of the said contribution.

Before contributing to a traditional IRA, be sure you wouldn't be better served by contributing to another IRA type, such as a Roth IRA, or to an employer's 401(k) plan.

One factor that may affect your decision is the deductibility of your contribution. Your income level and other factors will determine if your contribution to a traditional IRA will be fully deductible. If neither you nor your spouse is eligible to participate in an employer-sponsored plan, your contribution is deductible no matter how much income you earn. But if you or your spouse is eligible, your tax deduction for making an IRA contribution may be reduced or completely eliminated depending on your adjusted gross income (AGI).

For those that are not able to make a deduction contribution, making a nondeductible contribution is a viable option. You will still be able to enjoy tax-deferred growth on your retirement account. Additionally, if you wait until you are age 59 you can withdraw your funds and only be taxed on earnings.

Roth IRA. You are able to contribute the same amount to a Roth IRA as you are able to contribute to a traditional IRA. The real difference between the two is their eligibility rules, such as the lack of an age limit with respect to contributions. This disregard for the age limit is only applicable if you meet the earned income requirement.

Note that the total annual contribution to IRAs can't exceed the limit. So, if you're eligible, you can contribute all to a traditional IRA or all to a Roth IRA, or split your contribution between the traditional and the Roth.

If you decide to go with a Roth IRA you will have to remember than you are not allowed to claim a deduction. However, you are allowed to withdraw all of your IRA earnings free of tax after you reach the age of 59. You will have to have your account for 5 years to do this.

Traditional IRAs also have required minimum distribution rules that must be followed, Roth IRAs do not have such restrictions.

The exact formula for calculating the contribution amount is very complicated. However, if you were to use 20% of your net self-employment earnings as a guess it would be a close estimate.The formula for calculating the exact contribution amount is too complex for our purposes, but a rough estimate of 20% of your net self-employment earnings is a good start.

Simplified Employee Pension (SEP) IRA. A SEP IRA provides self-employed individuals a way to make more significant retirement contributions than would be available to them through a traditional or Roth IRA. Funds are treated, for tax purposes, the same as IRA funds; you may claim a deduction for your contributions, and distributions will be taxed. But the contribution limits can be much higher. - 31391

About the Author:
This data is distributed for informational purposes only; Doeren Mayhew is not rendering legal, accounting, or other professional advice or opinions and assumes no legal responsibility. Contact Doeren Mayhew for more information.

Forex, Oil, Gold, Stocks & Bonds (Part I)

By Ahmad Hassam

The New York time between 3:00 PM EST to 7:00 PM EST is best suited for scalping with the counter trend strategy. Off hours between 3:00 PM and 7:00 PM EST is when all the world banks are closed. The U.S. banks are closing their doors and the Asian banks have not yet opened. This is a great time to scalp the market using a counter-trend strategy, because no larger banks are moving money (i.e. the markets) at that time. Just as with the London close, there is no set way in which the New York afternoon market plays out. On more active days where prices have moved significantly, the lower liquidity can cause additional outsized price movements. So traders just need to be aware that lower liquidity conditions tend to prevail and adapt accordingly.

Why do investors need to exchange their domestic currencies for foreign currencies? Many want to invest in foreign assets. For that they need to convert their domestic currency into foreign currency. Companies involved in import and export business need foreign exchange to order new consignments or make payments. Multinationals need foreign exchange to repatriate profits. Big banks need foreign exchange and the list goes on. The forex market does no exist in a vacuum. You may have heard of other markets that exist like the gold, stocks, bonds, oil, futures and commodities.

Is there any relationship or correlation between these different financial markets and the forex market? There is a fair amount of noise and misinformation about the supposed relationship among these markets and the individual currency pairs. You can always find some correlation between two markets over time.

All these individual financial markets function according to their own internal dynamics based on data, news, positioning and sentiment. However, always keep this in kind that all the various financial markets are markets in their own right.

Each financial contract has its own characteristics, functions and markets where they trade. You should view each market in its own right perspective and trade accordingly. These markets will occasionally overlap and display varying degrees of correlation due to various underlying economic factors. Remember the sub prime mortgage markets. Crisis started in the US housing market when the bubble burst and real estate prices came down. It triggered the sub prime mortgage market crisis in 2006. From there it spread to the investment banks that have invested heavily sub prime mortgage securities. Many investment banks went bankrupt. The famous being Goldman Sachs! This made the US stock market crash. The contagion spread to Europe. In the end it developed into a global financial crisis. At times it is just a chain reaction.

However, its always important to be aware of whats going on in the other financial markets. Lets discuss some major financial markets and see what conclusions we can draw for currency trading.

Gold: The combination of currency trading and gold trading is ideal. Both are almost perfect hedges. Gold is considered to be an alternative to the US Dollar and a hedge against inflation. Gold is commonly viewed as a store of value in times of economic and political instability and uncertainty.

Over the long term, the relationship between Gold and US Dollar is mostly inverse or negative. A weaker US Dollar is generally accompanied by higher gold prices and a stronger US Dollar is accompanied by lower gold prices.

In the short term, the relationship between gold prices and US Dollar may not be as solid as it has been historically in the long term. This makes short term relationship between the gold prices and US Dollar generally tenuous. However, in the short term, each market has its own dynamics and liquidity. Overall, the gold market is much smaller than the forex market. There is only a limited and finite quantity of gold. No major gold mine has been discovered in the past many decades. Only the discovery of a major gold mine can bring the prices of gold right now.

Extreme movements in the gold prices tend to attract currency traders attention and usually influence the US Dollar in a mostly inverse fashion. At the same time, gold traders tend to keep an eye on whats happening to the US Dollar.

Oil: The global economy runs on oil. In 2008, crude oil prices skyrocketed from $60-70 to almost $150. It was being predicted at that time that oil prices will reach $200. It made the whole world jittery. Oil prices rise is a cause of inflation in almost every economy in the world. Then all of the sudden the bubble burst in a few months. Were the hedge funds involved in the sudden increase in the oil prices and than their collapse? A lot of confusion is usually spread on the relationship between oil and US Dollar and other currencies like CAD and JPY. Correlation studies show no appreciable relationship to that effect in the short run which is where most of the currency trading is focused. The idea behind these theories is that if the country is an importer of oil, its currency will be hurt by the higher oil prices and helped by lower oil prices. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. 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!

Spot Forex (Part II)

By Ahmad Hassam

There is a select club that really rules 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. The worlds big banks are the main players in the spot forex 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.

The independent retail traders lie at the bottom of the market structure. These big players conduct currency transactions in the interbank market if they have large capital and have credit standing with the large banks. Technology has managed to open up this tight group of big boys although not to the extent that you may think. Most banks now operate their own electronic dealing platforms or provide liquidity to a matching system, prime brokerage platform.

So there is no central exchange in the spot forex market to set the prices. Then who sets the currency prices? The retail forex trades trade through their forex brokers. They generally trade in much smaller lot sizes. Central banks are also occasionally involved in currency transactions.

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.

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.

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.

Most of the trading activity takes place in the interbank market. The transactions carried out by these big banks like the Citigroup, Barclays, UBS, Deutsche Bank etc amounts to the greatest bulk of the total daily forex volume.

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.

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. Unlike the exchange traded markets like the NYSE where the market maker has the responsibility to quote the same price to two different parties, a forex dealer in the interbank market may quote whatever price he wishes to his clients. Good customers receive decent prices but for irregular or complicated clients it becomes practically impossible to receive fair market prices. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. 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!

Understanding Fibonacci Trading (Part I)

By Ahmad Hassam

What is Fibonacci forex? Did you see the movie, The DaVinci Code? You will find a scene in the movie where the characters talk about the Fibonacci number as part of a clue or code of some sort.

The Fibonacci series starts with 0 and 1 and goes out to infinity with the next number in the series being derived by adding the prior two. What are Fibonacci numbers? The Fibonacci number series were made famous by an Italian Leonardo de Pisa. For example, 0+1=1, 1+1=2, 1+2=3, 2+3=5, 3+5=8, 5+8=13, 8+13=21, 13+21=34, 21+34=55, 34+55=89, 55+89=144, 89+144=233, 144+233=377.

Fibonacci trading is based on using those ratios in your trading entry and exit decisions. What is so fascinating about this series is that there is a constant found within the series as it progresses to infinity. This constant is known as the Golden Ratio, Golden Mean or Divine Proportion. The Fibonacci series is like this; 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610, 987..to infinity.

You will find the Golden Mean by dividing the higher number with the lower number by taking any two consecutive numbers in the series after the first few. For example, 89/55=1.618, 144/89=1.618, 233/144=1.618, 377/233=1.618, 610/377=1.618, 987/610=1.618 and so on. The inverse of 1.618 is 0.618.

What is most important to forex traders is that applying these ratios can help identify key support and resistance zone in the market and therefore determine key trading opportunities or setups. The Golden Ratio can also be found in many places in nature like flowers, shells, fossils etc.

Thus the application of Fibonacci ratios can give you the edge as a forex trader if you use the Fibonacci trading technique properly. We have already discussed the Golden Ratios 1.618 and its inverse 0.618. The main ratios used in everyday analysis are 0.382, 0.50, 0.618, 0.786, 1.000, 1.272 and 1.618.

You should be proficient with using the technical analysis program if you want to use the Fibonacci ratios in your trading. It is assumed that you have a computer, a market data source such as quote.com and a technical analysis program to manipulate that data since you are trying to look into a type of technical analysis.

There are three types of Fibonacci price relationship namely, retracements, extensions and price projections (sometimes also called price objectives). We will look into Fibonacci Price Retracements, Fibonacci Price Extensions and Fibonacci Price Projections individually as well. The Fibonacci price analysis calculations can be done by hand as well but they are time consuming and tedious. So depending on a good trading software program is a good thing.

The definition of a support is the price area below the current market where you will look for a possible termination of the decline and where you would consider to becoming a buyer of whatever currency pair you are trading. Each of these Fibonacci price relationships will be setting up potential support or potential resistance in the chart that you are analyzing.

Support and resistance are two very important concepts used in trading. Resistance is price where the sellers overcome the buyers and the price starts to decline after reaching a high. It is the price area above the current market where you would look for the possible termination of a rally and consider being a seller. Fibonacci support and resistance levels as known as the leading indicators! - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Understanding Fibonacci Trading (Part II)

By Ahmad Hassam

Fibonacci Price Retracements: How do you identify a possible support level once the market pulls back from a high? Fibonacci price retracements are run from a prior low to high swing using the ratios 0.382, 0.50, 0.618 and 0.786 to identify possible support levels as the market pulls back from a high.

Similarly you need to identify possible resistance levels when the price action bounces back from a low. Retracements are run from a prior high to low swing using these same ratios looking for resistance as the market bounces from a low. Most basic technical analysis software will run the Fibonacci retracement levels for you when you choose the swing you want to run them from.

How can you calculate these Fibonacci retracement levels yourself? Multiply the length of the swing (from low to high or high to low) by the retracement ratios. Add the results to the low if you are running high to low swings in case you want to understand how to calculate the Fibonacci price retracements yourself. Subtract the result from the high if you are running low to high swings. Fibonacci retracement levels also provide excellent guidance for your setting your stop losses.

Fibonacci Price Extensions: Fibonacci price extensions are almost similar to the Fibonacci Price retracements in that they are run from the prior lows to highs or from prior highs to lows using only two data points to run the price relationship.

The difference between the Fibonacci price extensions and the Fibonacci price retracements is that we are running the relationship of a prior swing that are less than 100% or retracing the price move whereas with the extensions we are running the relationships of a prior swing that are extending beyond 100% of it.

Fibonacci Price extensions are run from prior low to high swings using the ratios 1.272 and 1.618 for potential support. They are run from prior high to low swings using the ratios 1.272 and 1.618 for potential resistance. These two techniques are named differently to indicate whether the price relationship is occurring within the prior swing or extending beyond it.

Fibonacci Price Projections: Fibonacci price projections are run from three data points and are comparing swings in the same direction. They are run from a prior low to high swing and then projected from another low for possible resistance or they are run from prior high to low swing and projected from another high for possible support. We use 1.00 and 1.618 ratios to run the projections.

Price clusters identify key support and resistance zones that can be considered to be trade setups. A price cluster is the coincidence of at least three Fibonacci relationships that come together within a relatively tight range.

Three is just the minimum number required to meet the definition. A price cluster can also develop with a coincidence of more than three price relationships. You may see five to ten price relationships come together in a relatively tight range. There are times when you see these large clusters develop not too far from the current market activity and they tend to act like a magnet for price. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Types Of Employer-sponsored Retirement Plans

By Doeren Mayhew

Many employees are offered with a variety of retirement plans to choose from on a platter by the employer. The selection must be based on the basis of the circumstances of the employee and what they employer has to offer. Some of the more popular methods are mentioned below:

401(k) Under the 401(k), the employees are given an opportunity to defer taxes on a part of their income by making contributions to the retirement fund. 401(k), 403(b) and 457 are the various plans that are similar to these sections under the Internal Revenue Code. 403(b) plans are similar to the 401(k) are applicable to the tax-exempt organizations, whereas 457 is a plan meant for governmental agencies. Employers that present the employees with 401(k) or 403(b) plans may offer them with a Roth version.

The annual contributions to the above plans are more than that for the IRAs, besides giving the employees aged fifty or above to make catch-up contributions to the fund. A lucky employee will be offered with an equal portion similar to what he contributes by his employer.

401(k), 403(b) and 457 plans are expected to follow the minimum distribution rules similar to the IRAs. However, the difference lies in the fact that under certain conditions, you can continue to contribute to these plans even after you turn 701/2.

Solo 401(k) plan The traditional 401(k) plan is not accessible by self-employed individuals. To overcome this, a new plan was developed that takes the features of 401(k) along with other plans forming solo 401(k) that permits them the satisfaction of planning for retirement.

The solo 401(k) is highly beneficial to the self-employed. Under the plan, the individual can make contributions under the 401(k) limit including the relevant catch-up amounts, if any, along with the contributions to a SEP IRA. A three-source contribution, thereby, triples your capital investment towards retirement. But as solo 401(k) is meant for self-employed people, you will have to opt for a 401(k) if you have employees under you. Any contribution, however, needs to possess the requisite amount necessary for the payment. Absence of steady payments into the funds will result in a loss of wealth spent on the cost and administration of the plan.

SIMPLE IRA: The plan, SIMPLE (Savings Incentive Match Plans for Employees) IRA is a program meant for employers with less than hundred employees. Under the plan the employer has to contribute an amount equal to those made by the employees up to a certain percentage limit, typically, 3%, or a flat rate of 2% irrespective of the contribution made by the employee.

Compared to the 401(k) s, the statutory restriction imposed on the contribution and the catch-up limits are a little lower in SIMPLE IRA. Another plan similar to the SIMPLE IRA is the SIMPLE 401(k). The minor differences, however, make SIMPLE IRA superior. For example, while limited testing is essential in SIMPLE 401(k), the discrimination testing is not essential with SIMPLE IRA

Defined contribution plans: It comprises of the money purchase plans and the profit sharing plans that have differing restrictions on the contributions that can be made by the employer and the employee. Where the employer plans are merged with that of the employee, the limit to the annual contribution to the fund by the employee excluding the catch-up amount, if any, brings down what the employer can offer to the plan. .

A defined contribution plan that is ideally suited for the owners of the closely-held business entities is the ESOP.

Defined benefit plans: Although not popular as it once was, the defined benefit plans is a traditional system under which the employees cannot make their contribution to the annual retirement benefit. The complete investment risk attached to the scheme is accepted by the company who offers assurances of payment. Unlike defined contribution plans, funds that are segregated by employees, the defined benefit plan fund is often pooled.

A defined benefit plan is generally more expensive to create than the time-honored defined contribution plan; but they permit the employers to contribute appreciably more than the defined contribution limits as the figure is defined by the amount needed to generate the benefit. Though it is crucial to recognize the amount expected in the future, it's even more vital to identify the factors affecting future income. Remaining abreast of this knowledge can help in making wise decisions regarding your retirement. - 31391

About the Author:
This data is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional advice or opinions and assumes no liability in connection with its use. Please contact Doeren Mayhew for more information.

Understand The Forex Market

By AHmad Hassam

Right now forex trading is being promoted as the Recession Proof Business of the 21st Century. Many investors got their fingers burnt in the recent stock market crash. They are looking for new opportunities to rebuild their retirement savings. Is forex trading the solution? Forex trading has got some benefits. You can trade forex from anywhere in the world. You only need a computer, an internet connection and a few hundred dollars to begin trading. But before you trade forex understand the forex market. The foreign exchange market most often called the forex market is the most traded financial market in the world. Average daily currency trading volumes exceed $2 trillion per day. To give you an idea it is 10-15 times the size of the daily trading volume on all the world stock markets combined. That is a mind boggling number isnt it.

There many players in the forex markets. Big banks, multinational companies and other institutions require foreign exchange to carry out their day to day business. While commercial and financial transactions in the currency markets represent huge nominal sums, they still pale in comparison to amounts based on speculation. By far the vast majority of the currency trading volume is based on speculation.

What is speculation? Speculation is when you invest with the sole purpose of making a capital gain from the market movement in the near future. Almost something like 90% of the volume in currency trading is speculative in nature. Traders buying and selling currencies for short term gains based on minute to minute, hour to hour and day to day fluctuations. It is the volatility in the forex market that makes it so attractive as compared to other markets.

The bulk of the spot currency trading almost like 75% takes place in the so called major currencies which represent the worlds largest and most developed economies. Additionally activity in the forex market frequently functions on regional currency blocs basis where bulk of the trading takes place between the USD bloc, JPY bloc and the EUR bloc representing the three largest economic regions.

Liquidity represents how much faster or easier it is to buy or sell an asset. Forex markets are highly liquid. In other words, liquidity is the level of buying or selling volume available at any given moment for a particular asset or security. A highly liquid market like the forex can see large trading volumes transacted with relatively minor price changes.

The forex market is open and active 24 hours a day from the start of the business hours on Monday morning in the Asia-Pacific time zone straight through to the Friday close of business hours in New York. At any given moment, dozens of global financial centers are open such as Sydney, Hong Kong, Tokyo or London and currency trading desks in those financial centers are active in the market.

New York Stock Exchange is the most famous stock exchange in the world. Trading starts at the New York Stock Exchange at 9:30 AM EST and continues in the evening till 4:00 PM EST. All other financial markets have an official open and an official close. However, unlike the stock markets or the other financial markets, in the forex market there is no official starting time for trading day or week. But for all practical purposes the market kicks off when Wellington, New Zealand, the first financial center opens on Monday morning local time. It roughly corresponds to Sunday afternoon in US, Sunday evening in EU and early Monday morning in Asia.

Forex markets are unlike the stock markets or for that matter any other market. As pointed out above currencies are always traded in pairs. You can go long as well as short on any currency pair. In the stock market, you cannot go short on any stock. There is an up tick rule as well that prevents you to go short on a particular stock. Unlike other financial markets, you can see around the clock action in the forex markets except on weekends. Forex markets are open 24/5. Sunday open represents the resumption of trading after the Friday close of trading in North America. This is the first chance for the forex market to react to news that may have happened during the weekend. Prices may have closed New York trading at one level. However, they may start trading at another level altogether at the Sunday open. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. 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!

All About Free Money Market Fund

By Craig Lipper

Buying a tax free money market fund is a fine method to balance your portfolio particularly when there is more percentage of equity in the portfolio. In present scenario when there is economic slowdown happening, it makes sense to put money in debt instruments like government securities and money market funds which are considered to be more stable and equity.

A money market fund is essentially a mutual fund which puts its assets in short term debt instruments. These instruments are usually like cash or cash equivalent securities. These money market mutual funds are commonly used as short term investments till the time you are able to find a better option to invest your money. This is specially a good alternative in current scenario when the investors are waiting for the markets to improve. Once there is upswing in the market, this money can be withdrawn from money market funds and put back in equity.

There are different types of money market instruments in which money can be invested. These include commercial paper, U.S. Treasuries, Certificate of deposits, repurchase agreement etc. The money market funds are available in two flavors which are taxable funds and tax free funds. As you can make out, the difference between the two flavors is the way tax is deducted. The taxable funds are taxed during maturity while the tax free money market funds are exempted from tax.

When you see them first, you will certainly choose a tax free fund instead of table fund due to obvious tax related reasons. But the fact is that tax free funds have lower returns than taxable funds. When you compare these 2 funds, you should look at the return on investments as well. Usually, the returns are higher in taxable funds. You can use the formula (Taxable Equivalent Yield = Tax-Free Yield / (1 - Marginal Tax Rate)) to find the difference.

There are a variety of tax free money market funds existing in market today. Most of them have similar returns so there is not much difference between them. A few names from good and reputed fund houses are Fidelity AMT Tax-Free Money Fund (FIMXX), Vanguard Tax-Exempt MMF (VMSXX), American Century Tax-Free MMF (BNTXX), and T. Rowe Price Tax-Exempt Money (PTEXX). - 31391

About the Author:
The author writes articles on various topics related to personal finance including best tax free money market funds and money market certificates.

Understanding Fibonacci Trading (Part II)

By Ahmad Hassam

Fibonacci Price Retracements: Fibonacci price retracements are run from a prior low to high swing using the ratios 0.382, 0.50, 0.618 and 0.786 to identify possible support levels as the market pulls back from a high.

Similarly you need to identify possible resistance levels when the price action bounces back from a low. Retracements are run from a prior high to low swing using these same ratios looking for resistance as the market bounces from a low. Most basic technical analysis software will run the Fibonacci retracement levels for you when you choose the swing you want to run them from.

Multiply the length of the swing (from low to high or high to low) by the retracement ratios and then subtract the result from the high if you are running low to high swings or add the results to the low if you are running high to low swings in case you want to understand how to calculate the Fibonacci price retracements yourself.

Fibonacci Price Extensions: Fibonacci price extensions are almost similar to the Fibonacci Price retracements in that they are run from the prior lows to highs or from prior highs to lows using only two data points to run the price relationship.

The difference between the Fibonacci price extensions and the Fibonacci price retracements is that we are running the relationship of a prior swing that are less than 100% or retracing the price move whereas with the extensions we are running the relationships of a prior swing that are extending beyond 100% of it.

Fibonacci Price extensions are run from prior low to high swings using the ratios 1.272 and 1.618 for potential support. They are run from prior high to low swings using the ratios 1.272 and 1.618 for potential resistance. These two techniques are named differently to indicate whether the price relationship is occurring within the prior swing or extending beyond it.

Fibonacci Price Projections: Fibonacci price projections are run from three data points and are comparing swings in the same direction. They are run from a prior low to high swing and then projected from another low for possible resistance or they are run from prior high to low swing and projected from another high for possible support. We use 1.00 and 1.618 ratios to run the projections.

Price clusters identify key support and resistance zones that can be considered to be trade setups. A price cluster is the coincidence of at least three Fibonacci relationships that come together within a relatively tight range.

A price cluster can also develop with a coincidence of more than three price relationships. Three is just the minimum number required to meet the definition. You may see five to ten price relationships come together in a relatively tight range. There are times when you see these large clusters develop not too far from the current market activity and they tend to act like a magnet for price. - 31391

About the Author:
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. Know Forex Rebellion!

Currency Trading Sessions

By Ahmad Hassam

The currency pairs that are heavily traded during the Asia Pacific session are USD/JPY, EUR/JPY and AUD/JPY. The financial centers active during the Asia Pacific session are Wellington, Sydney, Tokyo, Hong Kong and Singapore. Currency trading volumes in the Asia Pacific session account for about 21% of the total daily global volume. Most of the transaction involves JPY as Japanese companies are trying to convert Japanese Yen into other currencies in order to do business with the rest of the world.

In terms of the most actively traded currency pairs during the Asia Pacific trading session that means news and data reports from Australia, New Zealand and Japan are going to be hitting the market during the session.

Because of the size of the Japanese market and the importance of Japanese data to the market much of the action during this session is focused on the Japanese Yen currency pairs. The Japanese financial centers are most active during this session so you can get a sense of what the Japanese market is doing based on price movements.

European trading session is very important for currency traders. European financial centers and London represent over 50% of the total global trading volume. European financial centers begin to open up and the market gets to its full swing about midway through the Asian trading day.

The forex market interest and liquidity is at its peak during the European session The European session overlaps with half of the Asian trading day and half of the North American trading day.

London is the global forex center with the highest volume of foreign exchange transactions. As a result some of the biggest moves and the most active trading takes place in the European currencies (EUR, GBP and CHF) and the euro cross currency pairs (EUR/CHF and EUR/GBP).

Because of the overlap between the North American and European trading sessions, the trading volumes are much bigger. Some of the biggest and most meaningful directional price movements take place during this crossover period.

The North American trading session accounts for roughly the same share of the global trading volume as the Asia Pacific market, or about 22% of the daily global trading volume.

Most US data reports are released around 8:30 AM EST with others coming out later at around 9 AM and 10:00 AM EST. The North American morning is when US key economic data are released and the forex market makes many of its significant decisions on the value of USD.

However, there are some US economic reports that come out at noon or at 2:00 PM EST livening up the New York afternoon market. Canadian economic data reports are also released between 7 and 9 AM EST. Most of this news affects the CAD/USD pair. There are news traders who try to trade around these specific times and take benefit from the volatility caused in the markets by the release of this news.

The London or European close can bring volatile flurries of activity. London and European financial centers begin to wind down their daily trading operations around noon eastern time each day.

Market liquidity and interest falls off significantly in the New York afternoon on most trading days. This can make for challenging trading conditions. On quiet days, the generally lower market interest typically leads to stagnating price action. This is the best time for scalping as the market is moving sideways. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Forex & Other Markets (Part II)

By Ahmad Hassam

Take oil as an inflation input and a limiting factor on the overall economic growth. The higher the price of oil, the higher the inflation would be and the slower the economic growth is going to become. The lower the prices of oil, the lower the inflationary pressures are going to become but this is not always true.

We would like to factor changes in the prices of oil into our inflation and growth expectations and then draw conclusions about the course of US Dollar from them. Above all, oil is just one input among many.

Stocks: Almost everyone is familiar with stocks and the stock markets. Stocks are units of ownership rights that get traded on the stock exchanges. You can take stocks as microeconomic securities rising and falling in response to individual corporate results and prospects.

On the other hand, currencies are essentially macroeconomic securities fluctuating in response to wider ranging economic and political developments. As such there is no intuitive reason that stock market should be related to the forex market.

There was a boom in the Tokyo Stock Exchange a decade back. Many investors wanted to take part in that boom. But in order to invest in Japanese stocks, they needed Japanese Yen (JPY). Heavy buying pressure on JPY made it appreciate. So sometimes a relationship develops between a stock market and a currency for the time being. However, long term correlation studies bear this out that there is no major relationship between stocks and currencies. Major USD currency pairs and the US equity markets over the last five years have almost zero correlation coefficients. However, the two markets occasionally intersect.

The US stock market may drop on an unexpected hike in the US interest rates while USD may rally on the surprise move. For example, when equity market volatility reaches extraordinary levels like when S&P 500 Index loses 2% in a single day, USD may experience more pressure than it otherwise would have. But there is no guarantee of that.

Bonds: When interest rates are on the rise, at some point, doing business becomes difficult, and when interest rates fall, eventually economic growth is energized. The bond market rules the world. Everything that anyone does in the financial markets anymore is built upon interest-rate analysis.

That relationship between rising and falling interest rates makes the markets in interest rate futures, Eurodollars, and Treasuries (bills, notes, and bonds) important for all consumers, speculators, economists, bureaucrats, and politicians.

Both the bond market as well as the forex market reacts to interest rate changes. Bond or fixed income markets have a more intuitive relationship with the forex markets as both are heavily influenced by the interest rate expectations. However, the short term supply and demand fluctuations interrupt most attempts to establish a viable link between the two markets on a short term basis.

Just about every country in the world with a convertible currency has some kind of bond or bond futures contract that trades on an exchange somewhere around the world. Sometimes, the bond markets more accurately reflect the changes in interest rate expectations with the forex market doing the catch up. At other times, the forex markets react first and fastest to the shifts in the interest rate expectations.

Changes in the relative interest rates exert a major influence on forex markets. As a forex trader, you definitely need to keep an eye on the yields of the benchmark government bonds of the major currency countries to better monitor the expectations of the interest rate market. You can keep an eye on the US interest rates by following the yield curves of the treasury bonds. Similarly, you can watch the flow of money between the US and EU economies by watching the differential between the US Treasury Bonds and the German Bunds. - 31391

About the Author:
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!

Forex Trading Sessions Explained

By Ahmad Hassam

The currency pairs that are heavily traded during the Asia Pacific session are USD/JPY, EUR/JPY and AUD/JPY. The financial centers active during the Asia Pacific session are Wellington, Sydney, Tokyo, Hong Kong and Singapore. Currency trading volumes in the Asia Pacific session account for about 21% of the total daily global volume. Most of the transaction involves JPY as Japanese companies are trying to convert Japanese Yen into other currencies in order to do business with the rest of the world.

The three currencies are important for the Asia Pacific region JPY, AUD and NZD. News and data reports from Australia, New Zealand and Japan are going to be hitting the market during the session. In terms of the move actively traded currency pairs during the Asia Pacific trading session this news and data affects their price action.

Much of the action during this session is focused on the Japanese Yen currency pairs because of the size of the Japanese market and the importance of Japanese data to the market. The Japanese financial centers are most active during this session so you can get a sense of what the Japanese market is doing based on price movements.

European financial centers begin to open up and the market gets to its full swing about midway through the Asian trading day. European financial centers and London represent over 50% of the total global trading volume.

The European session overlaps with half of the Asian trading day and half of the North American trading day which means that the market interest and liquidity is at its peak during the European session.

As a result some the biggest moves and the most active trading takes place in the European currencies (EUR, GBP and CHF) and the euro cross currency pairs (EUR/CHF and EUR/GBP). London is the global forex center with the highest volume of foreign exchange transactions. GBP is still the most liquid currency in the world and favorite of currency traders.

Because of the overlap between the North American and European trading sessions, the trading volumes are much bigger. Some of the biggest and most meaningful directional price movements take place during this crossover period.

The most important financial markets in North America and US are located at New York and Chicago. The North American Session basically comprises New York and Chicago as financial centers. The North American trading session accounts for roughly the same share of the global trading volume as the Asia Pacific market, or about 22% of the daily global trading volume.

The North American morning is when US key economic data are released and the forex market makes many of its significant decisions on the value of USD. Most US data reports are released around 8:30 AM EST with others coming out later at around 9 AM and 10:00 AM EST.

Canadian economic data reports are also released between 7 and 9 AM EST. There are some US economic reports that come out at noon or at 2:00 PM EST livening up the New York afternoon market.

London and European financial centers begin to wind down their daily trading operations around noon eastern time each day. The London or European close can bring volatile flurries of activity.

On most trading days, market liquidity and interest falls off significantly in the New York afternoon this can make for challenging trading conditions. On quiet days, the generally lower market interest typically leads to stagnating price action. - 31391

About the Author:
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. Know Forex Rebellion!

Become Successful In Forex Trading With A Solid Education

By Flynn Sanders

Currency trading can be a lot of fun and can make you a lot of money if you know what you are doing. Trading currencies is not only a nice alternative to stock investing, but it seems to be easier to learn and getting involved in. However, before your get into the forex market, you should seek out the best training possible.

While some people leap into FX currencies before they learn to crawl, you will make the most money by learning as much as you can before you take the real-world plunge. This training is the foundation to your success and will propel you forward into unlimited possibilities.

While their stories may excite and inspire you, there's another side to he coin that you have not heard. Most often before they start becoming successful, they learn all they can about the forex market. Once they are confident, they start off by doing small trades and build from there.

So what is Forex trading? It is simply the process of exchanging the currency of one country for the currency of another. When the value of a countries currency goes up, you make money on the difference. Traders invest in various currencies in hopes to make a profit when the currencies of one country increase in value.

You can learn the dynamics of the forex market in one of several ways. The Internet provides a wealth of information on currency investing. This would be the first place that I would start. Many sites offer free forms of training covering all the basics. Some actually have demo accounts that you can you alongside your training.

Visit your local bookstore and ask the sales representative for references to learning forex. A good book should cover all the basics as well as some great starting strategies. College classes also provide a great foundation for learning the currency markets. In most cases the instructors are experienced traders themselves and can provide you wit a wealth of insight.

You forex training should cover all the basics of currency investing. This means learning the dynamics of the markets and how they change as well as what influences those changes. A good course should also teach you all the tools and strategies used by successful traders so you can manage risks properly. This involves learning how charts and signals work as well as the fundamentals of using these tools for maximum profits.

A solid training system will also teach you how to open and manage a basic trading account so you can get some hands on experience. Don't worry, you won't be trading with real money because the accounts you will be trading in are demo accounts. By using a demo account you will gain experience and confidence you need to succeed before you enter a live account. Always remember, you can be successful at forex trading with the right training. - 31391

About the Author:
Hope you enjoyed the forex trading system course article. Please see forex trading system course for more information.

EUR/USD Currency Pair

By AHmad Hassam

EUR/USD is the most heavily traded currency pair in the global currency markets at the moment. Trading currencies can be exciting and lucrative. Its a great market because of the way politics affect the trends. Elections, strikes, and sudden developments, both good and bad, can lead to significant trading profits if you stand ready to trade the euro is a convenient currency because it encompasses the policies and the economic activity and political environment of a volatile but predictable part of the world: Europe.

In the United States, where the free-market approach and a usually vigilant Federal Reserve make more frequent adjustments on interest rates. France, Italy, and Germany, the largest members of the European Union (EU), normally operate under high budget deficits and tend to keep their interest rates more stable.

The general tendency of the Fed is to make the dollar trend for very long periods of time in one general direction. Here are some general tendencies of the euro on which you need to keep tabs aside from the technical analysis:

- The European Central Bank is almost fanatical about inflation, given Germanys history of hyperinflation in the first half of the 20th century and the repercussions of that period, namely the rise of Hitler. That means that the European Central Bank raises interest rates more easily than it lowers them.

2) The US and the EU are two major trading partners. This gives EUR/USD currency pair very interesting characteristics. EUR/USD pair is affected by what is happening politically and economically both in Europe and the US. The European Central Banks actions become important when all other factors are equal, meaning politics are equally stable or unstable in the United States and Europe, and the two economies are growing. For example, if the U.S. economy is slowing down, money slowly starts to drift away from the dollar. In the past that meant money would move toward the Japanese yen; however, because the market knows that Japans central bank will sell yen, the default currency when the dollar weakens is often now the euro. USD is inversely correlated to the gold prices. All these facts should be taken into consideration while forming your bias about a particular currency pair.

3) EUR/USD currency pair is heavily influenced by the political developments in the Eurozone. Especially when the European economy is slowing The flip side is that the market becomes jittery and often sells the euro during political problems in the region.

As usual, you want to closely monitor major currencies and the cross rates. Its okay to form an opinion and have some expectations, but the final and only truth that should make you trade is what the charts are showing you. The direction that counts is the one in which the market is heading.

It is always best to choose only two or three currency pairs and become a specialist in them. Two currency pairs that I would recommend for you are the EUR/USD and the GBP/USD. Both these currency pairs are highly liquid and very popular among the currency traders. Fundamental analysis can help you determine the strong/weak currency pair. Use fundamental analysis to determine if USD is expected to lose value and EUR is expected to gain more strength that means that the currency pair EUR/USD is perfectly timed for swing trading. Use technical analysis to make the entry and exit decision. Combining fundamental analysis with the technical analysis can give you the edge as a forex trader. Sometimes there is a fundamental shift in the direction of a currency pair. As long as you are not following a currency pair like EUR/USD on the daily basis, you wont be able to understand what is happening. - 31391

About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

EUR/USD Currency Pair

By Ahmad Hassam

EUR/USD is the most liquid currency pair in the currency markets. There are four currency pairs that are known as the major currency pairs namely EUR/USD, GBP/USD, CHF/USD and JPY/USD that are heavily traded in the global currency markets. The rest of the currency pairs dont have the liquidity to trade big volumes as these four pairs do. Almost like 90% of the global currency exchange is in these pairs. Out of these four pairs, EUR/USD has the most liquidity and is the most popular among the currency traders all over the world. EUR/USD is the most heavily traded currency pair in the global currency markets at the moment. Most of the currency traders are in fact speculators. Trading currencies can be exciting and lucrative. Its a great market because of the way politics affect the trends. Elections, strikes, and sudden developments, both good and bad, can lead to significant trading profits if you stand ready to trade the EUR/USD is a convenient currency pair because it encompasses the policies and the economic activity and political environment of a volatile but predictable part of the world: Europe.

France, Italy, and Germany, the largest members of the European Union (EU), normally operate under high budget deficits and tend to keep their interest rates more stable than the United States, where the free-market approach and a usually vigilant Federal Reserve make more frequent adjustments on interest rates.

The general tendency of the Fed is to make the dollar trend for very long periods of time in one general direction. Here are some general tendencies of the euro on which you need to keep tabs aside from the technical analysis:

- The European Central Bank is almost fanatical about inflation, given Germanys history of hyperinflation in the first half of the 20th century and the repercussions of that period, namely the rise of Hitler. That means that the European Central Bank raises interest rates more easily than it lowers them.

- The European Central Banks actions become important when all other factors are equal, meaning politics are equally stable or unstable in the United States and Europe, and the two economies are growing. For example, if the U.S. economy is slowing down, money slowly starts to drift away from the dollar. In the past that meant money would move toward the Japanese yen; however, because the market knows that Japans central bank will sell yen, the default currency when the dollar weakens is often now the euro.

- The flip side is that the market often sells the euro during political problems in the region, especially when the European economy is slowing and the economy in the United Kingdom (UK), which often moves along with the U.S. economy, is showing signs of strength.

As a word of caution, its okay to form an opinion and have some expectations, but the final and only truth that should make you trade is what the charts are showing you. As usual, you want to closely monitor major currencies and the cross rates. The direction that counts is the one in which the market is heading.

It is always best to choose only two or three currency pairs and become a specialist in them. Two currency pairs that I would recommend for you are the EUR/USD and the GBP/USD. Both these currency pairs are highly liquid and very popular among the currency traders. Fundamental analysis can help you determine the strong/weak currency pair. Use fundamental analysis to determine if USD is expected to lose value and EUR is expected to gain more strength that means that the currency pair EUR/USD is perfectly timed for swing trading. Use technical analysis to make the entry and exit decision. Combining fundamental analysis with the technical analysis can give you the edge as a forex trader. Sometimes there is a fundamental shift in the direction of a currency pair. As long as you are not following a currency pair like EUR/USD on the daily basis, you wont be able to understand what is happening. - 31391

About the Author:
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. Know Forex Rebellion!

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