Tuesday, December 26, 2017
Monday, December 18, 2017
Wednesday, December 13, 2017
THE FORMATION OF INVESTMENT PORTFOLIO
An investment portfolio is a set of investments in some financial objects (in accordance with an investment strategy), which will provide maximum profitability in case of minimum risk.
The main purpose of an investment portfolio is to get an optimal result in the scope of the realization of a developed investment policy through the selection of the most reliable and profitable investments. A portfolio is comprised of various types of investment assets.
The classification of types of investment:
- by the degree of materialization: non-material and material;
- by maturity of investment: short-term, medium-term and long-term;
- by the profitability: high-yield, middle-income and unprofitable investments (investment of the capital in social and environmental projects, which do not seek profit);
- by the characteristic of participation in investments: direct investments (investor directly takes part in the selection of investee), indirect investments ( investment funds, advisors, mutual funds and others determine the investee);
- by the degree of risk: high-risk, medium-risk, low-risk and risk-free investments;
- by type of an investee: real (the purchase of real capital), financial (investment in stocks, bonds and other securities), speculative (the purchase of assets (currency pairs, precious metals, stocks, etc.) exceptionally for making profit through the possible changes of their prices in future);
- by the level of liquidity: highly liquid (in a short period of time they may be converted into cash), averagely liquid (they may be converted into cash from 1 to 6 months), low liquid (they may be converted into cash from 6 months), nonliquid (they cannot be realized on their own, but only as a part of а property)
In the process of his activity, the investor faces difficulties regarding the choice of an investee with various characteristics. Most of them assume formation of a certain set of investees, in other words - creation of a portfolio. There are numerous instruments which form an investment portfolio, but the main ones are: stocks, bonds, gold, currencies and real estate.
The stages of the formation of an investment portfolio
- Determination of the investment policy and type of the portfolio.
- Determination of the strategy of portfolio management.
- Analysis of assets and formation of a portfolio. The general criteria for including assets in an investment portfolio are the ratios of their profitability, risk and liquidity.
- Evaluating the effectiveness of a portfolio in terms of comparing the factually obtained profitability and risk.
- Audit of a portfolio in order not to make its content contradict the already changed economic situation, the investment quality of securities and the goals of an investor.
By the method of generating profit and by the level of risk, investment portfolios are divided into the following types: conservative, moderate and aggressive.
- Conservative portfolio is a moderately risky and, therefore, less profitable portfolio consisting of short-term loans, bonds and other instruments with a minimum risk.
- Aggressive portfolio is a highly risky and a highly profitable portfolio, which consists mainly of stocks. These kind of portfolios are generally managed by investors, who are ready to take risks and who are psychologically resistant to large fluctuations.
- Moderate portfolio is a balanced portfolio and, as a rule, it is comprised of both high-yield and low-income, but at the same time reliable assets.
The main task of the portfolio investment is to get from the set of investment assets such characteristics, which are unattainable in case of investing funds in a separately taken object. The ultimate goal of creating a portfolio is to achieve more optimal combination of risk and profitability. The risk is mostly reduced, when different non-related assets are included in a portfolio. In other words, the diversification should lead to week decrease of the overall portfolio value, when the value of any asset sharply falls.
Portfolio trading in financial markets
With the development of personal composite instruments PCI (GeWorko Method), there appeared a convenient opportunity of trading portfolios of variety of assets in the financial markets instead of trading separately taken instruments. Through this technology portfolio trading is realized on the basis of two portfolios similar to the trading of separately taken financial instruments, when one asset (base portfolio) serves as the base part, and the other asset (quote portfolio) serves as the quoted part. In addition, a trader gets the opportunity of trading his own unique instruments, which are resistant to market volatility, forecasting the optimal combinations of profitability and risk and analyzing the behavior of his instruments on the basis of historical data. Portfolio trading through this technology is possible only on the professional trading platform NetTradeX.
Monday, December 4, 2017
Tuesday, November 28, 2017
Monday, November 20, 2017
Wednesday, November 15, 2017
FIBONACCI RETRACEMENT LEVELS
Fibonacci levels are considered to be important and effective tools of technical analysis for determining the possible levels of trend reversal. By taking them into account the trader can determine the strong support and resistance levels, as well as the possible targets of correction and continuation trends.
Fibonacci Numbers
The Fibonacci sequence of numbers became popular in Europe thanks to an Italian mathematician Leonardo Pisano (Fibonacci), although, this sequence had been known in the East long before him. The sequence presents a series of numbers, where each subsequent number is the sum of the previous two: 3, 5, 8, 13, 21, 34, 55, etc. In addition, if any of the numbers of this sequence is divided into the following number, then the result will be approximately equal to 0.618, and if it is divided into the previous number, then the result will be 1,618. This sequence was used in the financial market by the famous trader Ralph Elliott. In his theory of waves, Ralph noticed that the ratio of the height of the next wave to the previous one is approximately equal to 1,618.
Fibonacci levels: How to use?
Practically, in any platform there is an instrument “Fibonacci Lines” with the help of which one can create correction levels - 0%, 23,6%, 38.2%, 50%, 61.8%, 76,4% and 100%. The Fibonacci lines also allow to determine the target of correction in case the trend continues – it is 161.8%, 261.8% and 423.6%. In case of an uptrend, the lines should be stretched from bottom to top, and in case of a downtrend – from top to bottom.
Trading on Fibonacci levels
Trading on Fibonacci levels involves the opening of a long positions in case of a rebound from the support line, when the market goes up, and the opening of a short position in case of a rebound from resistance level, when the market goes down.
Since Fibonacci levels are supposed to be support and resistance levels then trading based on these levels is conducted in the same way as in trading strategies based on support and resistance levels.
Monday, November 13, 2017
Wednesday, November 8, 2017
BEST CURRENCY TRADING INDICATORS
For forecasting the market and for minimizing the risks professional traders and investors use various tools. Among the well-known tools widely used by Forex traders for forecasting the market are technical indicators. With the help of technical indicators traders can easily decide when the right time is for them to buy or sell the financial instrument. Below are presented the best currency trading indicators that are widely used by professional Forex traders and technical analysts.
Best Currency Trading Indicators by Bill Williams
Bill Williams was a very popular and successful trader, who developed his own trading strategy, which was based on using a rational approach for analyzing the market and irrational logic of chaos. Due to his strategy developed the following indicators came into existence:
- Acceleration/Deceleration (AC) technical indicator
- Alligator
- Awesome Oscillator (AO)
- Fractals
- Gator Oscillator (GO)
- Market Facilitation Index
Best Currency Trading Indicators: Oscillators
In technical analysis oscillators express price changes over time. By their form oscillators are considered to be very advanced indicators, which are mainly used when the market is overbought or oversold. The market is overbought when the prices increase sharply and strongly and the market is oversold when the prices go down too much. Here are the most popular indicators:
- The Average True Range (ATR)
- The Bollinger Bands Indicator
- The Commodity Channel Index
- DeMarker Indicator
- The Envelopes Indicator
- The Force Index Indicator
- The Ichimoku Indicator
- Moving-Average Convergence/Divergence (MACD) Oscillator
- Momentum Oscillator
- Relative Vigor Index
- Relative Strength Index
- Stochastic Indicator
- Williams Percent Range (%R) Indicator
Here it would be worth mentioning about MACD histogram, which is again an important tool to signal the upward and downward momentums. An increasing histogram is used to signal upward momentum while a decreasing histogram indicates downward momentum.
Best Currency Trading Indicators: Trend
The next most important tool for making technical analysis is trend indicator which is used for indicating the direction of the price movements. Trend indicators are really a great help for traders as they help them to avoid many false signals and forecast the appearance of new trends in the market. Here are the most popular trend confirmation indicators:
- Average Directional Index (ADX) Indicator
- Moving Average Indicator
- Moving Average of Oscillator (OsMA)
- Parabolic Indicator
Best Currency Trading Indicators: Volume
Volume indicators are considered to be the main indicators of the market transactions. Volume indicators show the total volume of the orders during a certain time period. Here are the volume indicators:
- Accumulation/Distribution Indicator
- Money Flow Index (MFI) Indicator
- On-Balance Volume (OBV) Indicator
- Volume Indicator
Technical indicators are useful tools for traders. They make trading more structural and accurate.
IFC Markets is a leading innovative financial company, offering private and corporate investors wide set of trading and analytical tools. The company provides its clients with Forex and CFD trading through its own-generated trading platform NetTradeX, which is available on PC, iOS, Android and Windows Mobile. The company also offers MetaTrader 4 platform available on PC, Mac OS, iOS and Android. You may compare the advantages of both platforms.
Monday, November 6, 2017
Tuesday, October 31, 2017
Tuesday, October 24, 2017
Wednesday, October 11, 2017
Risk management as a basis of trading
Proper management of risks is the main principle for successful trading in the Forex market, but most often traders ignore it and it leads to the loss of the whole capital. Basically, newbies do not take into account the risk management, and that is why, wanting to take everything form the market at once, 90% of them quit the market by leaving all their money there.
In trading, the management of risks implies the use of skills, which minimize the possible losses and increase the profit. Risk management is implemented with the help of trading strategies and methods of analysis of the market, which allow, with a certain probability, to forecast the occurrence of unfavorable events and to take measures to prevent them on time.
Methods of managing risks
Yet, on the stage of the development and testing of a trading strategy, the trader should limit his risks by establishing rules of money management.
- Determine the acceptable level of risk
No matter how attractive the transactions are, the maximum risk of the loss of funds should not exceed 5-6 % of trader’s total balance. At the same time, each transaction should not be more than 2% of your deposit.
- Choose an optimum leverage
Keep in mind that leverage may work not only in favor of a trader, but also against him. Its size should not exceed 1:100, no matter how attractive the suggestions regarding the usage of high leverage are. The choice of 1:100 is moderately risky, but it enables to increase the deposit significantly. But this size of leverage is considered to be risky, if the volatility of the price of a traded instrument is high.
- Use stop-loss and take-profit
Each transaction should be protected by placing a stop-loss and a take-profit. Any unexpected news or event may reverse the trend, and without managing to react, you will lose all the money.
- Diversify the risks
Due to the simultaneous work with multiple assets, the level of risk decreases, as, by distributing the portfolio between several instruments, which are independent from each other, you compensate the loss of some instruments by the profit of the other ones. This kind of approach may slightly reduce the profitability of an investment, but, at the same time, it will prevent you from losing all the money, in case the market moves against one of the instruments you have invested all your money in. The effectiveness of the diversification is achieved at the expense of choosing weakly correlated assets. This indicates that their prices should not move in one direction simultaneously.
- Control the emotions
An important part of risk-management is the composure and the ability of controlling your emotions. In any unstable situation, which occurs in the market, it is necessary to stick to your strategy and not to succumb to passion. Even when opening a position, it is a must to determine beforehand under which conditions it will be closed.
However, the most important rule of stock trading is to open an account with a reasonable deposit. By starting with $100 or $200, do not expect to earn big money. In the pursuit of success, almost all the newbies leave their money in the market. Coordinate the amount of your deposit and the volumes of your trading transactions.
Wednesday, October 4, 2017
Why it is necessary to be financially literate
Literate management of your funds is the beginning of the road to financial independence. In fact, the ability to earn is not enough for achieving real welfare, it is much more important to be able to manage money properly. Financial literacy is the ability to keep a record of your earnings and expenses, accumulate savings, orient yourself in the world of finance and be able to choose the right financial services, know when and how to protect your rights as a consumer of financial services. Financially literate person, who can compare his earnings and expenses and who can invest his savings for the further increase of profits, will never face any financial problems.
Here are the simplest rules and anyone, who wants to make profit besides his salary, should follow them:
- Invest the 10% of your monthly income;
- Learn about the financial instruments you are going to invest funds in;
- Study the information about the organization in which or through which you are going to invest funds;
- Compare financial products and services offered by various companies;
- Listen and analyze the economic news;
- anage your risks, do not yield to emotions and temptation.
If you, by having accumulated funds, decide to take up investing actively and generate high profits, note, that you will have to spend much time on studying the market. Active investment involves direct participation of the investor, who deals with all the risks, which are very high, and only in case of having sufficient skills and experience, the risks can be reduced.
In case of passive investment, you can simply give your funds to a professional manager and make a small but less risky profit. But in this case the absence of financial literacy can cause you to come across swindlers and non-professionals.
Even if you decide to take the easy way out and open an account in the bank or keep your money in currency, you will need to be financially literate in order not to lose your savings. Study and evaluate:
- Whether bank interest rates on deposits cover the level of inflation in the country;
- Whether the economy of the country and its national currency in which you are going to keep your savings is stable enough.
For most people the absence of financial literacy leads to the fact that by not having taken into consideration their capabilities, people get caught in a vicious circle called “credit” and they cannot get out of it for many years.
Financial literacy will allow you not to lose your funds and even multiply them.
Monday, October 2, 2017
Monday, September 25, 2017
Monday, September 18, 2017
Monday, September 11, 2017
Monday, September 4, 2017
Wednesday, August 23, 2017
Tuesday, August 22, 2017
Monday, August 14, 2017
Thursday, August 10, 2017
Tuesday, August 8, 2017
Monday, August 7, 2017
Tuesday, July 18, 2017
Wednesday, July 12, 2017
What to trade: Futures or CFDs on Futures?
Futures and CFDs (contract for difference) on futures are considered to be very similar instruments and it is quite difficult for a novice trader to understand the difference between them. Initially, the idea of creating a CFD came to English brokers, in order to make it possible for traders to trade stocks in London Stock Exchange without the payment of a special tax - Stamp duty. Thus, CFD trading is not formally a deal with stocks and it is tax-free.
What is a CFD and futures contract?
A futures contract is a security in the form of an exchange contract on the purchase and sale of a standard amount of a specific asset at a pre-determined price in the future. There are two types of futures:
Cash settlement futures – the parties of the contract make only cash settlements in the amount of price difference between the value of the asset specified in the contract and its current value. Thus, an exchange makes a mutual settlement between the parties, and the physical delivery of the underlying asset on the expiration date of the futures contract is not made. Cash settlement futures are mainly applied for speculative trading.
Physical delivery futures – on the expiration date of a futures contract, the buyer is obliged to purchase, and the seller is obliged to sell the agreed amount of the underlying asset specified in the contract. Physical delivery contracts are not for speculative operations, since their main aim is to protect the buyer and the seller from the future price fluctuations. In case one of the parties refuses his liabilities, an exchange imposes a penalty.
A CFD or a contract for difference is an OTC derivative financial instrument, which allows to make a profit on the purchase and sale of a certain asset without its physical delivery. In other words, this is an agreement between a trader and a broker to exchange the difference from the price fluctuations of various assets. Various instruments may serve as an underlying asset of CFD: stocks, indices, commodity futures, etc.
Thus, by their definitions, CFDs and cash settlement futures are similar, since they both involve payment of the price difference without a direct delivery of the asset, but according to a number of features, they differ from each other.
The differences between a CFD and futures
Futures are traded on the exchange and CFDs are traded on the OTC market.
- An exchange acts as a guarantor for the execution of obligations of a futures contract, and for CFDs - a financial company (for example, a broker).
- Futures prices are determined while stock exchange trades and the prices of CFDs, equal or close to the exchange price, are determined by a broker.
- Futures are traded with the spread of an exchange and with the commission of a broker, while the spread of CFDs is defined by a broker.
- It is possible to trade CFDs with much less amount of money, than futures, since a broker provides the opportunity to trade not only a full contract but also the parts of a contract. .
- In case of CFD trading, the leverage, as a rule, is higher than in case of futures trading.
CFD trading is very convenient and it allows to make a profit from the purchase and sale of securities in case of having a small amount of money. Depending on the preference and the amount of the capital, each one chooses what to trade: futures or CFDs on futures. Before starting to trade, one needs to carefully study the conditions offered by brokerage companies. Today, one of the leaders in CFD market with ideal conditions for trading is IFC Markets, which offers its clients exact quotations and competitive spreads. In addition, it is possible to trade a wide range of instruments not only on MetaTrader 4 trading platform, but also on a professional terminal NetTradeX developed by the company. Moreover, through NetTradeX platform, it is possible to trade separate instruments, as well as portfolios from various assets.
Tuesday, July 11, 2017
Thursday, July 6, 2017
Tuesday, July 4, 2017
Monday, July 3, 2017
Thursday, June 29, 2017
How to become rich today!
Well, many of you when saw the headline of my article thought that it is one of millions useless articles, being published daily to attract you to some website promising to earn 100 USD per hour doing nothing :)
You are mistaken guys, these all is not what you thought about when you saw the title.
I’m sure you will now ask who I am, and if I know how to become rich why I waste my time on writing this article. I wouldn’t like to go into details, but I will state that I am rich; just today is the day I woke up with a mood of sharing with you my vision of business and being rich.
Have you ever thought how all that starts? At which certain moment? It does not start when you earn or invest your first 100 or 1000, or even 10 000 USD, NEVER - it starts when a belief come to you when you truly believe and are confident that Ferrari for 1 000 000 USD is for a guy like you. You should understand the following, if someone produces a million dollar car, it means that there are people who can afford to buy it. Then why you do not think that you can be one of those people?
You will now ask how?
It is simple. Have you ever noticed that sometimes when you are afraid something to happen, and that idea never leaves you, it always happens and it happens in a negative sense.
I’m sure that most of you being a student used to be afraid to fail an exam. Always thinking negative you resulted in a failed exam not because there was no chance to pass it, but because you thought too much about the failure, instead of concentrating on passing it it even if you were not ready for it.
You may now think that it is not serious and this example has nothing to do with becoming rich or being successful, instead of living an average life like the majority does. But you are wrong! Just remember right now your mates who always managed to pass all exams easily at the same time spending less time on examining the materials compared to you. You were always surprised how it was possible - it is all about belief, desire and confidence.
Success always comes to you unexpectedly.
It does not mean that you should do nothing, just sit at home and wait for success, surely no! It means when you find your first job after graduating at a bank as a taller for 500 USD per month, it should not make you satisfied thinking that it is enough for living, paying the utility bills and visiting your favorite bar at the corner to have a beer with your friends.
It means that you won another month to learn as much as you can, to look for something better than you have today (car, home and even your garment) and it does not really matter than you do not have enough money to have that all right now, you should continue believing that the success will come to you and you will definitely have a better chance than today.
Pay attention to details, always. Keep in mind that you will have 3 chances during your life to earn your first million, what you need is just not missing that chances. I also believe that it is important to be at the right place at the right time. I guess you now think that you have already missed one of your chances, but do not give up, keep on believing, since success will touch you during his next trip in your city.
Money is the same, it is always under circulation, passing from one to others, but each owns a certain money only for a certain period, and your mission should be to multiply it during the period you have control on it, as after a certain period it will definitely leave you to give chance to others, so why not take the moment and become rich?!
How to Choose the Right Forex Broker
If you have already made up your mind to enter the Foreign Exchange market, one of the first and most important things you will need to do is to choose a right forex broker. Actually, today there are a great number of brokers and due to the vast diversity of brokers it has become somehow difficult to make the right choice. However, there are some important features each forex broker should have and in case of taking into consideration these features you will be able to make a proper decision.
Here are the main peculiarities you will need to pay attention to while choosing a forex broker:
- Regulation
- Types of accounts offered
- Types of trading platforms offered
- Types of Spread offered
- Commission fees
- Margin requirements
- The number and variety of trading instruments offered
- Deposit and Withdrawal methods
- Customer service quality
So, this was a little hint for those who face difficulties while choosing a reliable forex broker. Surely there are other features that are not less important than those, mentioned above, however, this is the list that will guide you through choosing process and will contribute to making the right decision.
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