Very few traders take the time to see or figure out. As the saying goes... We all look, yet very few can really see.
Looking at a chart and seeing what is really going on is usually the difference between success and failure in trading.
To the Technical Trader, the chart is nothing more than what an x-ray is to a Doctor. It is telling a story… high probably of the next move in the market.
The main reason most traders lose money in the market is they have no idea how to make sense of all that price movement….
• "Where should I get in?
• Where is the safest place?
• How much can I afford to risk?
• How much will I gain?
• Should I wait a little longer?"
Leonardo Fibonacci was a great mathematician who lived in Pisa, Italy around the year 1170 A.D. He wrote the Book "Libre Abaci" (book of calculations) and introduced the numerical numbers to the Romans. He discovered a numerical sequence in adding numbers. The sum of the previous 2 numbers will always equal the sum of the next. This numerical sequence is well known to mathematicians and it is called the Fibonacci sequence.
The Fibonacci sequence goes like this... 1+1=2, 1+2=3, 2+3=5, 3+5=8, 5+8=13, 8+13=21, 13+21=34, etc. all the way to infinity. We arrive at this numerical sequence by simply adding the last two numbers together for the sum of the next.
In our experience we have found that 100% objective fibonacci price projection and retracement methodologies will give you foresight into the potential upcoming moves in time and price in the market you are currently trading whether you trade a daily chart or five-minute bars.
Fibonacci Projections and Retracements
• To predict where the market may go in the future. To determine turning points in advance is important for every trader.
• Fibonacci ratios are common in almost everything in nature from flowers, to the human body, seashells etc.
• Elliot wave is extremely ambiguous and often too difficult for most traders to implement into their trading strategy with any degree of consistency.
• Fibonacci ratios however are just as, if not more powerful and can be done under a more rigid set of rules.
• Fibonacci ratios are easy to use and just as easy to calculate. You take the range from one pivot to the next and add or subtract the ratios.
• The important fact or phenomena is, the market moves in a Fibonacci sequence of ratio price movements. There are rallies, retracements and extensions as well as dips, retracements and extensions.
• Some common Fibonacci ratios (geometric): 0.382, 0.50, 0.618, 1.000, 1.618, 2.000 and 2.618.
• Special Fibonacci ratios (harmonic & pyramid): 0.707, 0.786, 1.414, 1.272 and 2.236.
Types of Fibonacci Price projections
1. Extensions
2. Alternates
3. Expansions
4. Retracements
The Fibonacci Sequence and the Wave Principle
Both the Fibonacci sequence and the Fibonacci ratio appear ubiquitously in natural forms, ranging from the geometry of the DNA molecule to the physiology of plants and animals to patterns of human mentation. Ralph N. Elliott's publisher, renowned investment advisor Charles Collins, first realized that the Wave Principle is connected to the Fibonacci sequence and communicated that fact to Elliott. After researching the subject to the small extent possible at the time, Elliott presented the final unifying conclusion of his theory in 1940, explaining that the progress of waves has the same mathematical base as so many phenomena of life.
The Fibonacci sequence governs the numbers of waves that form the movement of aggregate stock prices in an expansion upon the underlying 5-wave-3-wave relationship. The simplest expression of a corrective wave is a straight-line decline. The simplest expression of a motive wave is a straight-line advance. A complete cycle is two lines. At the next degree of complexity, the corresponding numbers are 3, 5 and 8. This sequence continues to infinity.
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29 June 2009
10 things your bank won't tell you
Do you assume that your bank serves your best interests? That a big bank's products are better? That your online account information is accurate? Don't believe any of it.
By SmartMoney
3. "We change our interest rates all the time."
4. "College campuses are gold mines for us."
5. "In debt? The courts won't help."
6. "We're excited about your trip to Europe, too!"
7. "For all the fine print, we don't disclose very much."
8. "Your money might be better off elsewhere."
9. "When it comes to banks, smaller is sometimes better."
10. "Your online account information isn't necessarily accurate."
This article was written by Jim Rendon for SmartMoney.
By SmartMoney
1. "Our branches are there to sell you, not serve you."
2. "Our fees will only go up."3. "We change our interest rates all the time."
4. "College campuses are gold mines for us."
5. "In debt? The courts won't help."
6. "We're excited about your trip to Europe, too!"
7. "For all the fine print, we don't disclose very much."
8. "Your money might be better off elsewhere."
9. "When it comes to banks, smaller is sometimes better."
10. "Your online account information isn't necessarily accurate."
This article was written by Jim Rendon for SmartMoney.
18 June 2009
Why Futures May be the Better Choice Over ETFs
With the increasing concern of inflation and potential hyperinflation, investors have been looking for ways to diversify their portfolio to take advantage of higher commodity prices and many are deciding between trading ETFs (Exchange Traded Funds) or futures. In this article, we will discuss the differences between trading ETFs and futures to assist you in making an educated decision that fits your risk tolerance.
An ETF is similar to a mutual fund in that it consists of a basket of securities, which makes it much less transparent than futures. The primary difference is that mutual funds can only be bought and sold at the settlement price, while ETFs are traded like an individual stock, with availability to enter and exit throughout the trading day. ETFs are commonly considered when diversifying a portfolio because many are sector-specific. For example, the SPDR Gold Trust (GLD) is often traded by investors looking to increase their exposure of gold in their portfolio. (In SPDRs, each share contains one-tenth of the S&P index and trades at roughly one-tenth of the dollar-value level of the S&P 500. SPDRs can also refer to the general group of ETFs to which the Standard & Poor's depositary receipt belongs.) As an investor, you don’t have a choice as to which securities fall in the basket and your overall exposure may be much smaller than you think.
Futures contracts are the most transparent market that you can find. If you want to increase exposure in gold, you buy a gold or mini gold contract depending on your risk tolerance and trading objectives. Historically, energies, metals, and food markets tend to have the highest risk of inflation, in that order. Futures allow you to enter positions using either futures or options on futures to create your own inflation portfolio with your risk tolerance and time frame in mind.
Some of the fundamental differences in futures and ETFs include how and when they are traded. Futures contracts are traded on a recognized futures exchange that is regulated by the CFTC, and you must have a futures trading account to participate in this market. ETF shares are regulated by the SEC, and traded through a securities account.
When trading futures, you are charged a commission rate that may vary depending on your account service level and a few dollars in fees when an order is executed. When trading ETFs, you are charged a commission rate by your brokerage company as well. According to Yahoo! Finance, the value of the ETF will reflect the payment of fees associated with it, which are similar to those of a mutual fund, since it is run by a fund manager. A fund manager receives a small portion of the fund's annual assets as their fee, which can vary by ETF. The investor or company who loans the stocks to start the ETF earns interest and the custodial bank that holds the shares to start the ETF earns a small percentage. Investor fees should be clearly laid out in the prospectus for the ETF.
When trading ETFs, brokerage firms require that you put up at least 50% of the value of the shares you purchase. The remaining margin or balance that you borrow from the brokerage firm to cover the cost of the shares would be charged interest. If you were to take a short position in the ETF, you would be required to borrow shares from a broker and pay interest.
However, all futures contracts are purchased and sold using the same margin requirement (also referred to as a “good faith deposit”) through the exchange which is approximately 5 to 10% of the full cash value of the contract. For example, if the gold contract is based on 100 troy ounces and currently trading at $930.00 per ounce, the full cash value of the contract would be $930 x 100 = $93,000. According to exchange rules, you would need $5399 of initial margin in the account to hold a futures contract, or 5.8% of the full cash value of the contract. (Be aware that the exchange sets the margin requirements which can change at anytime as volatility changes in the market.) For this reason, traders often choose futures contracts over ETFs because of the ability to trade on leverage and the ease of going long or short the market. However, trading on leverage makes futures more risky due to the amount of capital involved and money management is extremely important.
Finally, at the moment, profits on futures contracts are taxed at a 60/40 split between long-term/short-term capital gains no matter how long a contract is held. The tax law is set up this way because all contracts have expiration dates. Another bonus includes the absence of itemizing each futures trade on the tax return. (Although the 60/40 split is a bonus, we must keep in mind that it may change with the proposed current changes in the tax code.) Since the ETFs do not expire, an investor can hold a position as long as desired. The ETF gains are charged short-term or long-term capital gains like other securities, depending on how long the investor holds the fund and the extent of the distributions.
Overall, futures offer more transparency than the ETFs. They also offer flexibility in creating a portfolio that is more highly-leveraged, with the same costs for trading both the long and short side of the market. As we are all aware, after the huge drawdown in the markets over the past year, it is not always in our best interest to buy and hold. As Dennis Gartman of The Gartman Letter often comments, it is the nature of the markets to ebb and flow.
The risk of loss in trading commodity futures and options can be substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
5 June 2009
Ginsengs
American Ginseng
Panax quinquefolium, more commonly called American Ginseng, stands apart from its Chinese and Korean counterparts as its unique characteristic brings the body into precise balance- whether it is too heaty or cooling. Indigenous to the United States, Panaz quinquefolium was used by North American Indians for healing and as a love potion. A strength-giving and rejuvenating elixir, American Ginseng is particularly efficacious in the treatment of weakness of heart, indigestion, dry throat, mental tiredness, menopausal depression and acne. Although traditional in its natural approach, American Ginseng has modern-day applications as well. For example, the product is helpful in rejuvenating travelers suffering from jet lag. It is particularly suited to those who are constitutionally “yang”- the active, stressed, aged and those who need to improve their general health.
China Ginseng
Chinese Ginseng is well known for its revitalizing properties. The most valuable ginseng is the wild variety which thrives in the remote mountains and dense forests of North-east China, notably those from the Chang Bai Mountains in Ji Lin Province.
Wild Chinese ginseng revitalizes the “qi”, an inherent energy source in the body. It also tonifies the lungs and spleen, promotes the secretion of body fluids and relieves mental stress. It is effective for treating serious exhaustion, anemia, heart weakness, and health problems resulting from the lack of “qi” and blood.
Wild Chinese ginseng improves digestion, calms the mind, sustains alertness and restores strength and energy levels after illness. People prone to nervous or emotional disorders will benefit from its calming effect. Taken regularly, Wild Chinese ginseng keeps the body in good health and is believed to promote longevity.
~ from Eu Yan Sang ~
3 June 2009
Trading Commodities
A commodity is a product that is sold without differentiation by all suppliers. Although any good or service can be a "commodity" if it is sold by many suppliers in an undifferentiated fashion, the term commodity generally refers to physical goods which are the building blocks of more complex products, and which are traded on commodities exchanges such as the Chicago Board of Trade (CBOT) or the New York Mercantile Exchange (NYMEX). Some examples of commodities include iron ore, crude oil, sugar, soybeans, aluminium, rice, wheat, gold and silver.
Investing in commodities is done primarily through the trading of futures contracts.
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