Forex Trading Guide To Learn The Fundamentals
The latest buzzword on everyone’s tongue is Forex. Open the business news channel and behold the ticking currency rates. Every single news channel will show the currency value throughout the day. In fact, many people learn about the Forex market through media and then without understanding the concepts and other factors involved in it, dive headlong into it. Another misconception about this market is that it is only for conglomerates, those people who are prosperous and can invest large sums. With the help of a Forex trading guide, you can learn how to invest like the conglomerates and reap the rewards.
Knowledge Is King
In the Forex market, the kings are those who spend enough time to understand the various intricacies of the market. Knowledge here refers to the wisdom gained by making bad decisions. However, before going into the depth of the topic, it is important to be acquainted with the language of the field. A Forex trading guide includes knowing the currency symbols, and how they relate to each other. Staying on the topic of currency, one suggestion is to try to stay with the seven or so stable currencies, rather than experimenting with other currencies at random. Furthermore, Forex trading guide provides concise yet organized information on a few currencies which provide both stable and high return investments.
Forex trading guide teaches the reader the different variables in control of the Forex market. They also talk about how their movements can affect the value of stable and other currencies. Factors such as inflation and currency liquidity are explained in brief such that the amateur investor or currency trader can extrapolate data about these indicators and prepare an informed assumption about the Forex market.
Take Baby Steps
Yes, the tortoise always wins the race. Play the tortoise by investing less cash into a currency market spread over a long duration. Do not, by any chance, harbor the thought of investing rapidly like the hare only to face the possibility of a total loss. Forex trading guide reiterates on this to all amateur traders, suggesting that they gain enough experience on small investments, before experimenting with greater risks.
Instead of emulating conglomerates and mammoth firms and trying to follow their investment patterns, find out one for yourself using a Forex trading guide. These giant institutions employ many economic advisors that guide the investments of the firm using profound and specific knowledge. Obviously, you cannot hire so many economists just to help you increase the Forex investment of yours, but learning about the working on your own will keep you abreast about the current and the future market happenings.
A proactive and smart trader will never keep his hard-earned benefits in the pocket. With each good investment and each bad investment, the knowledge you shall gain will have to be applied smartly and in an intelligent manner. This seems to be the only reasonable way you can stay afloat in the Forex game and actually make some decent earnings.
Today or rather last night, U.S. Stocks Slide to Worst Inauguration Day Drop in Dow Industrial History.
What an ironic situation when Barack Obama is supposed to represent hope and change. So how will this incident impact us?
There is a saying in the market “When the U.S. sneezes, the World catches a cold.” Therefore, if past history serves us right, the market will drop for a short term. And if you like Warren Buffett treats Investment like a Business, this will serve a great buying opportunity. Why? Because when will you purchase more stocks (as in supply) for your business? You are right! When the prices are low! Aren’t the prices low now?
Well, most people invest a huge sum of money (sometimes all their savings) when they see an opportunity. This is no longer an investment but gambling. As we don’t inherit a prophetic thinking to predict the market as accurate. We wouldn’t really know where the market bottom will be. Hence, we should go in on a systematic approach through a Regular Saving Program (RSP) strategy which is a fixed amount across 12 to 24 months period. By doing so, we are taking advantage of the low prices at the same time, reduced the risk of investment.
Lastly, do you know that, looking back at U.S. history… In 1933, there was a 12 percent slide after Franklin D. Roosevelt’s election, gave way to a 75% rally! Past performance is no guarantee of future results but it’s the best indication. What would you do?
This is a great education book about real money. Mike reviews sound money principles that have lasted throughout human history. One thing is consistent and that is Gold and Silver are real money. In today’s world of fiat currencies, Gold and Silver are tools you can use to preserve and protect your wealth. Mike reviews the differences between currencies, real money and fiat money. Fiat currency is basically paper money not backed by anything. We will go into some detail on why this is dangerous and the average investor should at least understand the significance of debased money and bloated fiat currencies. With the 2008 economic meltdown along with Ireland, Greece and other bankrupt countries, we as small investors need to be educated so we can protect ourselves.
Why is this important to me?
This is important because the greatest wealth transfer is happening right now and that transfer is moving away from America and not toward us. This needs to be a priority if you want to protect yourself and your family.
Several things are happening but 90% of the general public does not truly understand it. This is understandable because of the noise between the political bobble heads on CNN and Fox News diverts the real issues. The real issue is this – The Federal Reserve is a private institution that is not regulated and not audited. They control the financial system. These guys are the quintessential king makers running the country in the background. Thomas Jefferson was admittedly against a central bank in the United States. For more information on this subject, you can listen to Ron Paul. He is the congressmen from Texas that is all over this stuff.
The big swings that we have seen from the Internet boom to the housing bust have been a direct result of the Fed. Not many people know this and some will bitch that this is wrong. The Fed has been keeping the interest rates artificially low which spawned the bloated housing market. The relaxed debt to equity and the financial instruments of mass destruction known as CDO’s & MBS’s and other weapons nearly killed the country. Financial education is needed for us little guys to have a chance. Read this book to get your eyes opened. One thing that is not being said in main stream media and is more potent than Terrorism is the following: If the dollar is lost as the world’s reserve currency then our total standard of living will reduce by a minimum of 25%. Right now it is already tough for 85% of American families. Another wealth transfer could put the last nail in the coffin. Get educated.
There is a ton of information in Mike’s book. The history of currency debasement is outlined from every major empire including Persian, Greek, Roman, British and now American. Currency debasement, inflation and taxation are the wealth stealers. If your money is a candle then taxes and inflation are the flames burning at both ends.
1. Ingenuity – I am not a doom and gloom person. I believe in the strength and resolve of the American people. This still does not hinder the fact that we all need to be educated and the only way to change is from the bottom up. There is no way top down government can benefit the country in this light. It is the iron horse ingenuity of the American people that will solve our financial issues.
2. Gold and Silver – Gold has been money for over 5,000 years. Its redheaded step sister Silver has also been known as money. The ratio between the two has been historically 16-1. I have personally seen that spread in the last year go from 80 to 1 down to 30 to 1 and it is back up to about 40 to 1. What this means is that you can by 40 ounces of silver for 1 ounce of gold. Thus silver is $35 per once and Gold is $1,500 per ounce. Now – reality check. Warren Buffett does not invest in Gold. If you have been following any of my book summaries then you know I am a Buffett fan so let’s look at this. Basically Buffett says that if he owned all the Gold in the world then he would have a 67 foot cube of gold (height, width, length for you beginning math majors). He could polish it and kiss it and sleep on top of it. Instead of the gold cube he could have half of the farm land in the U.S. plus 7 Exxon Mobiles plus a trillion dollars in cash. He would rather take the latter as I would. Basically Buffett is arguing that Gold has NO UTILITY. I agree with him. Silver on the hand is different. Buffett has owned silver in the past and still may own some. Silver does have utility because it is used in Cell phones, computers, smart devices and medical gadgets. This is why I love Silver as a means of savings.
3. Cash Flow vs. Capital Gains – We do not want to fall into the great fool theory and invest in Capital Gains. Well in true contradictory fashion, Silver is a capital gains investment. Anyway you need to look at all of you investments in a synergistic approach. This means that we want investments to spit off cash flow but we also want our savings to increase. Robert Kiyosaki states that savers are losers. Translated this means that if you hold onto dollars then you are losing because of inflation and currency debasement. Thus you can hold your savings in Silver.
Now let’s chat about holding “real money” as a wealth life preserver. Note: Get educated, I am not saying go out and invest in silver and gold today. I am saying get educated. I do personally invest in Silver and will continue to do so but it is a very volatile so you need to educate yourself. Also, I am not a financial planner and don’t give advice so please do your own homework. My goal is to simply help you with that homework.
1. Mountain of Debt – This book was written in 2007 BEFORE the subprime crash. Even then the U.S. was buried in a mountain of debt. Since then, the money supply has been TRIPLED by the Fed. Thus that Mountain just became Mount Everest. This happened in the last 3 years and that is why the dollar is at an all-time low in 2011.
2. Unfunded Liabilities – Social Security, Medicare, Medicaid……… These unfunded liabilities along with the mountain of debt just magnify the problem. When you give something to somebody and then try to take it away, all hell breaks loose. Take a look at GM. They had to go into bankruptcy, get a government bailout and renege on all their unfunded liabilities in order to survive. They are now doing pretty well but the little guy lost their pensions and medical care. Get educated my friends. Do not let other people manage your money… The same will happen to the U.S. with the unfunded liabilities. Start planning NOW.
3. Derivatives – We touched on this earlier but in a nutshell here is what happened in the subprime meltdown. Around 100 people sat in rooms and decided to sell MBS (Mortgage backed securities) to investors. The problem was they wrapped up crap and sprayed it with perfume and sold it as triple A rated instruments. The ratings agencies and the leadership of these companies should be prosecuted. What happened was that a 1-2% move in values could wipe out the companies because the Leverage was so deep. These guys were leveraging billions to make tens of millions. There are too many zeros for that to work in the long run. As we know now, it didn’t.
To summarize, what does all this mean? This book and others like it will help you take control of your own destiny. It is recommended that you should hold 10% of your assets outside the financial system. This means that there is no counter party risk. When you put all your money in the bank and there is a run on the bank and it fails, the bank is the counter party. Holding physical gold and silver as real money eliminates the counter party risk.
I hope you have found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days.
One thing you can take away from this book is GET EDUCATED. Please open your eyes and spend a few minutes per day educating yourself. You will be happy you did.
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