Category Archives: Finance Tips

How to Start Trading Using Technical Analysis

There is no doubt that technical analysis is one of the most popular when we talk about online trading. However, even though there are a lot of methods using technical analysis which can be profitable in the run, still, most of the traders fail to understand it properly.

With that being the case, we want to explain a bit how someone could start using technical analysis in such a way that in the long run one could constantly develop skills and achieve the desired results.

Since technical methods are very popular in the forex market, we will stick to it and leave other markets for a future material.

Each technical indicator has its role

There is no indicator better than the others and you will find weak points for each one. What is sure, though, is that each one of them functions in a different way and thus you would need to test them (preferably on a demo account) in order to experience yourself various situations and notice how a particular indicator behaves.

The issue of time frame

Whether you should use a small or big time frame for technical analysis is another dilemma. From a statistical point of view, most of the strategies are performing better on higher time frames, but also, an experienced trader will manage to use them effective on small ones, as well.

Since this is a material for those who are at the beginning, you should pick up 3 different time frames (like 1h, 4h and daily, or 30min, 1h and 4h) and learn how to work with them jointly. This system was described in greater detail in Alexander Elder’s book “Trading for a living”, which is a good lecture if you want to go deeper into the online trading knowledge.

Not too many indicators

An overcrowded chart will stop you from seeing some of the price particularities. Instead of that, try to stick to around two indicators that you like and you have understood the best. Maybe you want to use Bollinger Bands and Stochastic, or maybe you like Fibonacci levels the most. It is up to you to choose the one that you like the most.

Don’t forget that there is no magical technical indicator and the key is to find the things that work the best for you. There’s no point for searching the “Holy Grail” because you will never find it.

 

How Should Ordinary People Invest?

Speculative investments could be profitable on the long run, but for that to happen people must understand that there are some things to be done. When you enter the arena of investing the first thing that you need to realize is that you are entering a competition. We must be straightforward and tell you that those who make money are earning from the ones who lose money.

That how the market functions and there is a small percentage of people who make money on a constant basis and a big percentage of people that do not manage to make it and encounter losses. What you need to ask is:

What are those successful people doing?

And then, copy them.

Simple strategy for ordinary people

Passive investments in the form of index funds represent the best option, according the Warren Buffett, one of the biggest investors of all time.

For those of you that don’t already know, index funds are holding every stock in an index, such as the S&P500, including big companies that have expensive shares which are unaffordable for more of the people. According to Warren Buffett, index funds offer low turnover rates and fees and taxes tend to be also lower.

We agree with Warren Buffett and it is true this is a good strategy, especially for people with low tolerance to risk.

Why is that?

If you have limited capital available, hoping that you will be able to generate huge returns by investing in cheap stocks is a strategy that has very low probability of success.

It is possible to make money work for you, but in order to be able to do that, requires a lot of study, practice and hard work. Keep in mind that you will be competing with others to make money and you need to be better than them.

To summarize, find a way to invest in solid companies, that have a long track record, solid reputation, exceptional products and services and on the long run, you will be able to generate a strong and stable passive income source.

For those of you that have a higher tolerance to risk, you can approach riskier strategies, but be aware that with high profit potential there is high risk involved, as well.

 

Meta description: Investing gest tricky for ordinary people because they do not manage to understand some basic principles. Find out how you could invest in a productive way.

 

 

How to Invest Online

Online trading is the most popular form of investing, and provides you with the fastest and most reliable way to execute your trade.  If you are old school and want to call your broker to place a trade, it will likely cost you more and it will definitely take more time.  Wait time for popular brokers can be 5-15 minutes, where online orders can be executed in seconds.  Here are some of the steps you need to take as you begin online investing.

Opening your account

  • You will need to register, supplying information such as your name, email, and phone number. In some cases you will need to supply your address, proof of address or even your social security or national identification number
  • Many brokers want to know about your trading experience to determine what types of products you are eligible to trade. Many reputable brokers want to avoid providing customers with tools that will allow that to lose all their capital.
  • Once you are registered, you need to fund your account. There are several ways to fund your account including a bank wire, a check, a debit card or even a credit card. This will depend on your domicile. For example, in the U.S. you cannot fund your account with a credit card.

Evaluating Trading Tools

Once you open your trading account, it’s important to evaluate the tools that are available to help you make your trading decision.  This could include evaluating the charting and graphical packages that your broker has available. In addition, many reputable brokers supply clients with economic research including a financial calendar that shows all the different important data points that will be released during the week or the month.

You also want to see if your broker has an education section. Here you might be able to find many different trading strategies and how to use them.  Check to see if your broker offers technical analysis tools and an explanation on how to use these tools to enhance your trading. Your broker might also offer news and analysis. The more information you know the better your trading decision will be.

Order Execution

Each broker will have a different trading platform. Before you risk real capital, make sure you understand how trades are executed.  Many brokers have demo accounts that allow you to execute traders without risking real capital. If your broker has this capability, give it a try so you become familiar with executing a trade. There is no harm with making a mistake with demonstration money.

If you plan on using your broker’s trading app platform, make sure you also take this for a test drive before you execute a trade. If you are on the go, you want to make sure that you can see your balances and position on all platforms offered by your broker. For example, the trades you make on your PC should show up on your mobile device.

Summary

Trading online is the most efficient and cost effective way to execute a transaction. After you register you should evaluate the trading platform before you deposit capital.  Test drive all the platforms you plan on using to make sure you understand all of the nuances of your brokers trading platform.

Tips for a better personal budget management

budget management

As it was already said, creating a personal budget is one of the first steps for healthier finances. Apart from creating it, following it strictly is the next most important thing to do. How much your budget will help you will heavily depend on the things that you do with it.

Unfortunately, a lot of people have trouble following something like this. They are so used to spending their money however they want to, if you are like this, here are some tips that will definitely help you to stay on track.