Tuesday, October 9, 2007

Private Annuity Trusts - Supercharge Your Retirement

You have made some great investments in Real Estate or in a Stock Portfolio. Congratulations! Now you are ready to retire on your gains. But wait. To benefit from your investment appreciation, you're going to have to sell some or all of those assets.

If you sell your investment property, you will need to pay capital gains tax to the Federal Government, State, and you will also pay recaptured depreciation. If you're in California, add another 3 1/3% in withholding. That's a huge chunk of change, and a big blow to your savings.

If you sell your stocks, you'll be giving up at least 15% to capital gains. There is also no guarantee that the long term capital gains rate will remain at 15% forever. It could increase down the road.

How can you start receiving income but not get hit with huge amounts of tax?

For real property, there is a 1031 exchange into a tenant in common property. This works well for investors that don't want to manage property anymore, but still enjoy the benefits of real estate ownership. This is a subject covered in many of my previous articles.

There is another powerful concept. It's called a Private Annuity Trust. These trusts have been around since 1939, but until the last few years have primarily been used for Estate Planning purposes. The Private Annuity Trust also works extremely well for Retirement Planning. It is fairly complex to set up and administrate, so many financial planners, real estate brokers, CPAs and Attorneys still don't know much about them.

The procedure is basically this.

1. A Private Annuity Trust is established. You, the seller become the annuitant.

2. A fair market appraisal is done to determine property value.

3. The seller can negotiate a sale price at the appraised value.

4. The property is transferred to the trust and the trust is now the seller of the property and retains the proceeds.

5. The proceeds are invested by trustees (not the annuitant) and an arrangement is made to pay the annuitant (and perhaps their spouse) in monthly payments for the remainder of their lives. The capital gains tax is spread out over the course of your lifetime. If you pass away before your estimated average calculated life span, the remainder of the assets pass to the beneficiaries. The balance will be passed free of Estate Tax, Gift Tax, Generation skipping tax, and Transfer tax. Any capital gains tax still due will be paid before disbursement.

6. Other properties or stocks can be added to the trust at a later time, and recieve the same benefits.

As an example, let's say you have a million dollar gain on a property. You might very well owe 350K in taxes. With a Private Annuity Trust, all one million goes to work for you, and you can receive montyly income for the rest of your life. The exact amount is determined by your age and the time you choose to begin receiving your payments. You have the option to defer receiving payments until the age of 70 1/2. This allows the assets to grow compounding and tax deferred, and allows for greater income in the future.

The trust removes the assets from your estate, as the trust now owns them and the annuitant relinquishes control over how they are invested.

Setting up a Private Annuity Trust can definitely give a turbo boost to your retirement bottom line. Ask yourself, would you rather give a "gift" to the government in a big lump sum, or would you like to pay in small chunks and have the bulk of your profits working for you and earning compounded interest for years to come?

Paula Straub will guide you through the process of keeping your Capital Gains working for you and generating passive income. To receive your invitation to her free teleconference, visit Save Capital Gains Tax

Understanding the Accelerated Depreciation of Assets

Depreciation is a way of deducting the purchase cost of a major capital asset, like the land and buildings of your commercial real estate, from your taxes over a fixed period of time, usually five years. This prevents some interesting accounting bobbles that would otherwise happen for example, if you could deduct the entirety of a building's purchase in the year of acquisition, you'd be underreporting the revenue generated by the property on the year of acquisition, and over reporting its income over the remainder of the time you held it. (This would also create an incredible incentive for owners to churn properties over.)

In an ideal world, businesses with major capital assets would do an annual assessment of what percentage of the asset had depreciated in value and deduct that from their taxes. In practice, this is nearly impossible to do in a cost effective manner, particularly for commercial real estate ventures. As a result, there are several ways to calculate depreciation, ranging from the very simple (straight line depreciation) to the complex (Modified Accelerated Cost Recovery System). We'll cover each in turn.

Straight Line Depreciation takes an end term for depreciation (five years is typical), and divides the purchase cost by that number of years. Thus, if you spent $250,000 on a property, you'd be able to deduct $50,000 of that purchase price each year from your taxes for the next five years.

Straight Line Depreciation is a useful (and simple) approximation, but it's not always the optimum case. Accelerated Cost Recovery is a more complex form of depreciation allowed by the IRS, with numerous advantages. Most accelerated depreciation techniques use one of two methods of calculating depreciation; the aim is to front load more of the depreciation into the first year of ownership than into the latter years. This is an excellent tool if the item is exposed to the weather (as buildings are), or has routine rough use (as construction equipment gets). The two methods are Double Declining Balance (DDB) or Sum Of Years Digits (SOYD).

Double Declining Balance applies double the straight line depreciation percentage as a deduction to the remaining balance for each year of ownership. Thus, for a five year depreciation cycle, the first year would have (20*2) * 100% = 40%. Year two would have (20*2) * (100%-40%), or 24 %. Year three would depreciate at (20*2)*(100%-40%-24%) or 14.4%, year four would have 8.64% and year five, the last year of deduction, would have 5.18% deductions.

Sum Of Years Digits is a Ramanujan function, and uses the series of 1+2+3+4+5+(N+1) and so on., where the numbers in the sequence are the number of years allowed in the depreciation schedule. Thus, for a 4 year deduction schedule, it would get 1+2+3+4=10, and for a 5 year structure, 1+2+3+4+5=15, and for 6, 1+2+3+4+5+6=21. This is treated as the denominator (bottom half) of a fraction, where the numerator (top half) is a decrementing amount that starts with the number of years on the depreciation schedule, minus one per year. Thus, the first year of a 5 year schedule has 5/15=33% depreciation, the second year has (5-1)/15 = 26.67% depreciation, the third year has (5-2)/15=20% depreciation, with year four getting 13.33% and the final year getting 6.67%.

Both of these formats for calculating depreciation give you an extensive boost in your initial year's depreciation, and slowly taper off towards lower depreciation values towards the end of the term. However, to use accelerated depreciation of property values, you need to have an engineering study performed on the property that segregates the costs into four categories: Personal property, land improvements, building components and the actual land itself. These four categorizations allow separate depreciation schedules to be tracked. The typical schedules for the categorizations are:

Personal property is depreciated using a five or ten year recovery period, and the double declining balance methodology. Within reasonable bounds, there is a huge benefit to valuing the personal property as high as possible. This category mostly covers furniture, carpeting, fixtures and window treatments.

Land improvements typically have a useful life of fifteen to twenty years. They can use a declining balance method, but use a schedule of 150%, rather than 200% for determining the rate. This, like the first category, gives a benefit for declaring the value as high as possible. Typical examples of this sort of depreciated items include external decks and sidewalks, concrete pilings and docks.

The building itself should be broken down into individual components (roof, cellar, structural members, siding, interior walls, wiring) and depreciated individually by component. As always, maximizing the value on the initial purchase provides the most significant benefits. One side effect of component level itemization here is that any component that becomes worthless can be written off immediately, for a large cash flow influx.

Anything not accounted for in the first three categories is accrued as the value of the land. Land valued in this fashion may have a very low or insignificant value.

When cost segregation is begun, it's best to decide to do it at the time of purchase. Your accounting service will advise that you get an engineering report to annotate the depreciation schedules.

Tony Seruga, Yolanda Seruga and Yolanda Bishop of http://www.maverickrei.com specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects

Buying Florida Investment Properties and Where It's Hot

Relaxing in Style: Florida Investment Properties

In Florida, relaxing in the sun and sand is a way of life. Theres no better way to experience a slice of Florida living than buying your own space. Florida Investment Property provide just thata place that you can return to year after year for the perfect vacation. One of the pleasures of living and vacationing in this peninsula state is that no matter where you go, the warm, inviting beach is nearby. Floridas attractions can also be in your neighborhood when you decide on a Florida Investment Property.

Inland, youll find Florida Investment Properties in every city and vacation destination. From tiny beachfront flats to grand sky-scraping apartment homes, youll find a range of choices and prices to consider. Florida Investment Properties can be just about any property with a Florida style that becomes your home away from home.

A condominium gives you and your family easy access to Floridas unparalleled beaches and attractions. A comfortable space where you can come and go as you please, Florida Investment Properties offer a way for visitors to get a taste of Florida living. Many of the most affordable condos lie near attractions such as Walt Disney World and Universal Studios. Florida Investment Properties allow families to split their time between the excitement of theme parks and the relaxing calm of the waves.

Finding Florida Investment Property

There are plenty of perfect locations for Florida Investment Properties. From the historic sands of St. Augustine to the urban shores of Miami Beach, the beautiful Gulf of Mexico to the roaring surf of the Atlantic in Daytona. At any of these spots you can find a wealth of properties for sale in central Florida. Below are the hot spots for Florida investment property. In these locations, Florida Investment Properties describe a certain way of living and can be right beside the waves or a few miles inland. In Orlando Florida, a condo near the attractions is still a short car ride away from the beach. As the saying goes, what matters is location, location, location.

Properties for sale in Central Florida

Orlandos central location makes it a perfect fit for vacationers who want it all. In the midst of attractions, beaches and the arts, Orlando is more of an area than just a city. Youll find luxury Caribbean inspired condos central to Disney and the renewed Cypress Gardens. These villas offer families a place to settle near exciting theme parks with a relaxing residence to call home.

Families can find a diverse spread of activities to suit teens and toddlers. Apart from the theme parks, Orlando is home to upscale malls and outlets, museums and clubs. Because Orlando is smack in the middle of Florida, it is an easy place to launch a day or weekend trip. Kennedy Space Center is only an hour away, as well as Tampa Florida and Daytona Beach. When you decide to make Orlando your spot for a Florida Investment Property purchase, there are plenty of choices for your home away from home. Properties located close to the theme parks are a great choice because of their centralized location. One property close to Walt Disney World in Davenport Florida, called the Bimini Bay Resort, gives owners a cool, Caribbean style bungalow complete with all the comforts of home.

Florida Investment Properties like the Bimini Bay Resort are unique in the quiet retreat they offer. Unlike hotels near the theme parks that are often crowded with other visitors, your own Florida Investment Property lets your family relax in a comfortable place thats all your own. Davenport is also minutes from Cypress Gardens, a newly constructed adventure park.

Kissimmee, another Central Florida town close to the theme parks is home to family resorts at discount rates. Kids and parents can both find fun in the Kissimmee area. In the middle of outlet malls, amusement parks and exciting dining experiences like Medieval Times, this is one of Central Floridas best vacation deals.

If you decide on a beachside condominium, New Smyrna, Daytona and Cocoa Beach are Orlandos hotspots. These Florida Investment Properties will still keep you close to Orlandos attractions. A home beside the Atlantic Ocean gives families a true taste of the Florida lifestyle.

4. South Florida Investment Property Purchases

Apart from Orlando, there are plenty of beachside towns to house your perfect Florida Investment Property. Below youll find a snapshot of beautiful beachside cities spread throughout the state. Consider what your family needs in a Florida Investment Property ;a place to get away in a quiet corner of the state or a thriving town with plenty of activities for everyone.

One beach destination in Florida is Sarasota. Located on the Gulf of Mexico, Sarasota is an artsy town home to a lot of condominiums owned by retired men and women. These Florida Investment Properies tend to be in high price ranges though they are beautiful. Sarasota is home to quaint shopping areas by the beach as well as cozy marinas and restaurants. Along the Gulf of Mexico is a saint of a beach perfect for a condominium purchase. St. Petersburg, just below Tampa is another quiet place to own a Florida Investment Property. St. Pete is a relaxed beach town dotted with bed and breakfasts, family owned restaurants and ritzy hotels.

If a spicier place is where you want your Florida Investment Property, then cruise on down to Miami. This non-stop town is the place for a jet set young couple ready to party. Just on the tip of the sunshine state, Miami is a Latin hub filled with nightlife and hot beaches.

5. North Florida Investment Property Purchases

On the opposite tip of the state than Miami is Destin beach. Located in what Floridians call the panhandle, Destin is known for snow-white beaches and quiet vacation destinations near the capital of Tallahassee. Here, Florida Investment Properties are close to the border states of Alabama and Georgia; perfect for border hopping if you so choose. Destin also offers places where you can camp right on the Gulf (that is, if you want to leave your comfy condominium for a night).

St. Augustine is also an exciting place to vacation in a Florida Investment Property. For history buffs, this is the place to find the oldest settlements in Florida. From the Spanish fort made of shells to the oldest schoolhouse, St. Augustine surrounds visitors with nostalgia. There are also plenty of opportunities for golf and tennis at the nearby resort town of Ponte Vedra Beach.

Where to Start Shopping for Florida Investment Property

According to Floridas official website for visitors, www.flausa.com, Florida welcomed 74.5 million visitors from around the world in 2003. Once you decide on Florida as the place for your vacation, the daunting task of finding the right condominium purchase lies before you. Flausa.com is a good starting ground for learning more about everything Florida has to offer. The official website for visiting the state, you can contact the Florida tourism bureau directly with questions. From the site you can also access booking calendars and even keep a list of your familys reservations. Here, industry leaders also keep up with the latest vacation specials. There are many sites which provide a detailed list of Florida Investment Properties with lists of virtually every city available. There are other sites to check out for lists of Florida Investment Properties or you can contact your realtor.

Florida Investment Properties are a unique and relaxing way to spend your vacations. Florida Investment Properties are unlike any other homes in their embrace of carefree Florida living. Whether you breathe in the ocean from your balcony or take in the sun on an inland patio, a condominium gives you a chance to make Florida your home for as long as you and your family can. Florida investment properties are one way to participate in the growing tourism and real estate prices.

All Rights Reserved 2005

Lisa Carson
Florida investment Properties expert

Investment Advice - Why you should start investing in Exchange Traded Funds today

Exchange Traded Funds (ETFs) are the rage today with many investors flocking to purchase them as opposed to the usual mutual funds. ETFs work in this way. The fund manager decides that he wants to mimick the returns of the NASDAQ so he just buys all the stocks that make up the index and then he sells shares in this fund to investors. This means that you have effectively diversified your risk when compared to another investor who buys and individual share. There are three related reasons why there has been an upsurge in recent years in the number of fund managers setting up these funds.

Low Cost

The first reason would be the relative low cost that works both ways. Since we are not stock picking, the fund manager needs just to set up software to ensure that the fund accurately mimics the stock holdings of the index. Some shares have a greater representation in the index than others by virtue of their large clout and number of shares issued in the market and the fund has to respond to that.

The other way the cost factor kicks in is that many investors today are happy and delighted to find an investment options that is cheap in terms of fees. Since the fund manager does very little monitoring or research for this fund, its really cheap to purchase this monthly and this makes a very good investment for the retail investor.

Defensive Investing

Benjamin Graham the value investing guru advocated the concept of defensive investing in an Exchange Traded Fund in his book The Intelligent Investor. In that book he did back calculations back to the days of the Great Depression and if you invested monthly since then, your average return would be 33% on average and its not bad considering the fact that you did not have to spend time wondering whether the index was up or down or whether your latest stock pick was in the money or not. Just buy a small amount monthly whether the stock market is up or down and use it as a rainy day fund that you can rapidly liquidate for ready cash. The reason why this is called defensive investing is that you do not have to spend time actively picking and most investors whether professional or retail lose money actively picking stocks and ETFs remedy this problem by sure probability and mathematical statistics.

Plurality of options

ETFs today are flooding the market with each of the top fund houses in New York setting up new and more fanciful financial baskets each day. Today there is a great plurality of funds that you can purchase from Tech ETFs to Banking ETFs to Energy ETFs and so you have no shortage of options. If you are optimistic on a certain sector and do not want to waste you energy and time picking the right company actively, ETFs with their current plurality of options is the great key to diversified investing in a particular sector. The time saved scrutinising financial data which is often padded up is not worth the effort some times when there is great intrinsic fraud like Enron and WorldComm.

In conclusion, ETFs today represent a cheap, effective way for you to do defensive investing and with that part of your money relatively secured, you can then spend some of your money doing active stock picking if you are so inclined. Take some effort this week to research into this financial instrument and you may find the returns better then your fund manager in the longer term (when averaged over time by virtue of statistical probability).

Copyright 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)

Joel Teo writes on various financial topics relating to Ahwatukee Real Estate Investment. Signup for his free online Real Estate Investing newsletter today and gain access to the Six Day Real Estate Investment Profits Course now at www.realestateinvestment101.info/Ahwatukee.html

How to Select a Forex Broker

Selecting a forex broker is not an easy process. You need to think about what kind of trader your are and select the best forex broker for your style of trading. If you're a day trader and like to execute many trades each day, you may want to find a forex broker that offers low spreads. We pay spreads for exvery trade we execute and the larger the spread, the more commission you will pay to your broker for your trades.

A good forex broker will explain various forex trading systems and strategies to their clients and will assist in their process of putting these strategies to workThe advice from forex brokers will basically. The advice you receive from your broker will basically include technical analysis approaches and research methods followed by experienced traders and brokers that boost the client trader's performance as a forex trader.

In the earlier days of forex trading, the banks and large financial institutions had sole access to the forex market, but now with the advent of the internet technology, things have changed. As more novice traders have taken up forex trading as a home based business, the forex brokers are also realizing the importance of this trend and moving away from the conventional banks. More and more forex brokers hrough internet based businesses and offer their clients a complete suite of services based online. Today's forex brokers recognize that their customers are no longer the rich individuals or large institutions and have tailored their forex trading strategies to conform with the needs of their new, home based, middle class client. They know that the stakes for this type of client are lower and that they wish to maximize their profit but have a different appetite for risk. Also, in terms of certification, it is useful to work with an NFA (National Futures Association) member broking house.

Forex brokers that offer sound advice and have well recognized and verified credentials are, of course, the ones that you should be looking for. Additionally, don't rely blindly on the advice of a forex broker. If it sounds too good to be true, it probably isn't. Learn to trust your own judgment and ask your forex broker lots of questions. A reliable broker won't be bothered by this.

Let your needs guide you and your trading level help you choose the right broker for you. It will typically depend on whether you are a novice or an experienced forex trader. There are many forex trading brokerage firms that are targeted towards the beginner in forex trading. These will generally offer detailed research material and plenty of advice for the newbie trader. Additionally, these types of firms will provide access to forex trading software that will simulate the real trading environment and help to make the forex trader accustomed to using the tools of the trade.

For experienced forex traders, these types of detailed instructions may not actually be required, since these individuals will know their way around the forex market. For them, there are different forex brokerage firms that will offer advice with a greater emphasis on the logic behind the forex trading strategy and will go into greater depth on this matter. To find the best fit, read about various forex brokers, ask friends, ask about the forex broker's package offering and take the trials offered by a few of the online forex trading firms.

Andrew Daigle is the owner, creator and author of many successful websites including a free forex training web site ForexBoost and CashCurve, a resource for making money online.

Why Fall In Love With Your Stocks

Falling in love is easy, but breaking up is so hard to do. After spending hours pouring over numerous trading opportunities, you've found the perfect stock that meets your criteria and place your trade. During the day, you check out the share price, either smiling when it moves up, or losing that grin when it moves lower.

While we can never admit it, sometimes buying a stock is just like falling in love. We spend a long time looking for that one special someone, we get excited with every call, and sad when we can't be with them. Our heart moves on an emotional roller coaster depending on how things went on our last date. Amazing how emotion controls us.

The problem is, when we fall in love, we overlook some of the things that would normally make us avoid either that person, or, in the case of stock market investing, a company. Before long, we're wondering how to get out without causing too much pain.

Don't fall in love with your stocks. Fall in love with your kids, your spouse and other aspects of your life, but do not fall in love with your stocks. If you want to be a successful investor, you need to remove the emotion from your trading. When you have exited your position, do a happy dance or pout if you must, but don't let any emotions cloud your ability to make decisions.

Your mind will follow your heart. It will tell you that you should hold when you should sell, and tell you to sell when you should be holding. Don't fall in love with your stocks.

Where 90% of traders get it wrong is that they convince themselves that if they are down 40% already, there will be a bounce soon. Naturally, there is a small bounce as the shorts cover their positions. This provides a small pop and now our investor is down only 30%. Now emotion sets in, and convinces our trader that the worst is behind them since the trend is moving higher. Problem is, after the bounce, there is often no buying pressure, and the share price tests recent lows, and heads lower, turning a bad situation into an even worse one.

Be smart. Don't fall in love with your stocks. Execute your plan, and then celebrate (either because you made some money, or because you avoided taking a larger loss).

Looking for an online otc financial newsletter? You'll find some great OTCBB listed profiles of up and coming companies. Learn more today at http://www.1source4stocks.com

Futures for a Bright Future

Futures contract refers to a type of financial contract or a derivative instrument, wherein two parties deal in a set of financial instruments or commodities scheduled for delivery on a predetermined date in future at a set price. This means, when you buy a futures contract, you are willing to buy something at a set price in future, which the seller has not yet produced.

Future contracts incorporate all the details pertaining to the underlying assets quality and quality. They are standardized so that they can be traded on a futures exchange and necessitate the assets physical delivery; some of the suture contracts, are however, settled in cash. An investor uses futures contracts specifically to speculate and hedge.


When you are speculative, you do not make profits only when the market is buoyant, but also when it is down. Speculation enables you to track the direction in which the stock is moving and determine the movements timing and magnitude. Consequently, you get a fair idea about how much is the stocks price likely to change and within what time frame. Hence, there are a lit of chances of your predictions being right and you make really big bucks.

When you are a large institution and control as large as a hundred shares with one contract, you are bound to book substantial profits with the slightest upward movement in process.


In financial terms, hedge refers to an investment that is made to minimize the potential risks in another investment. Hedging means a strategy that is specifically designed to limit a stocks exposure to any sort of business risk, while allowing the business to continue to reap benefits from the investment.

A hedger may invest in a security that, according to him, is under-priced in relation with its fair value, and then combine it with a short sale of one or more related securities. The hedger, therefore, is concerned only with under-priced security and its appreciation in relation with the market.

Some risks are inherent for specific businesses and are inevitable. For instance, fluctuations in oil prices are inevitable for oil companies, as they prices of crude is benchmarked to international prices. However, other risks are unwanted and must be hedged; for instance, inventory in a shop must be hedged against fire or any other disaster through a fire insurance or other suitable contracts.

The actual delivery rate of goods under the future contracts is very low because investors avail of speculating and hedging benefits even when they do not hold these contracts until their expiry period and delivery of goods. For instance, if the investor is long on such a contract, he can go short on a similar contract to exit. This is similar to selling a stock in the equity markets closing the trade.

Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.

Business Owners all across the country are joining "The Community of Small Business Owners to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.

The Easy Forex Platform

If you're just looking in to the world of forex trading, the number of available choices can be daunting. The Easy Forex Trading Platform is a good place to start because the volume of free information available there is staggering! What follows is a brief description of some of the features you'll find.

Home Page

When you get there, click on the About tab, which gives you some background about the company behind the site. The minimum trade amount is $25, which is lower than a lot of other services. Of course, if you're just starting, executing a trade is the last thing you should do on your first visit. Do your research and gain a basic understanding of all the risks and rewards before you commit any of your money. Easy Forex doesn't require you to download any software to your computer and makes the set up very easy.


If you're not an expert, spend a little time browsing through the Glossary. You'll find the Glossary button at the top of the left side menu. Give it a click and read for a while. Do you, for example, know what "GTC" stands for? It's in the Glossary.

Financial Calendar

Right near the Glossary button there is a financial calendar tool. It lists the upcoming announcements and reports that are issued on a regular basis and that can be used as indicators for the currency exchange market. It's very important to get familiar with this schedule and have a general idea of what the report contents mean.

Forex Outlook

The Forex Outlook button displays a high-level summary of the current state of the major world currencies and is posted daily. It covers the USD, Yen, Euro, and others.

Guided Tour

Take the tour. It's an invaluable learning tool. It walks you through a straightforward example of a trade (USD against the Euro) and shows you all the steps involved in placing the deal. This is just an example, but you can learn a lot from just walking through the steps. The second example takes you through a futures deal - a little more complicated but again, a good learning experience. By the way, at the end of each example, there is an analysis of the possible outcomes, explaining how you would have gained or lost, depending on rate fluctuations.

The Info Center

Be sure to browse through the items in the Info Center part of the menu on the left side of the screen. There's a Market Overview, a Market History section, and a selection that discusses strategies and risks. You can get a mini-course in the Forex markets in that one section alone.

In summary, the Easy Forex site offers a lot - read and learn, and don't trade until you know what you're risking.

Pete Cullen runs Forex-Trading-Basics.com where Forex products are reviewed and relevant articles are posted. For furrther details please visit: http://www.Forex-Trading-Basics.com/easyforex1.html

How To Make Money Trading Forex

To make money trading forex requires a forex broker to have discipline in following the rules of the game. If you can stay focused and follow a system regardless of the market conditions, then you can make money trading forex.

Forex trading as with other types of financial investing is risky. Since the FX market is volatile, it can be difficult to predict whether the market is going down or up. That is why proper financial practices is important specifically your money management skills.

In my opinion, many new traders often fail to make money trading forex because they are lured by the easy prospects of making millions of dollars and are confused over the hundreds of indicators and forex financial terms. With tons of data and indicators constantly changing, it can be difficult for new traders to grasp the underlying trends and that will lead to poor trading decisions.

In general, the forex market is easier to predict in the long term than in the short term. However, most new traders often lose sight of the big picture and instead concentrate on recent upward and downward trends. They get too caught up with the latest news and focus on the 1 hour and 4 hours charts believing easy money is made by seizing the right opportunity. That in my view is more like gambling and not investing.

Though the forex market is volatile, very rarely do currencies devalue to the point it becomes worthless, therefore if you have deep financial standing, you can easily wait for the currency to rebounce and make a profit. Sometimes, it may take weeks, months and even years. That is why savvy traders often make a large part of your money liquid rather than tied down by anyone currency.

Another mistake some new traders make is believing there are insider secrets or information that can make them rich. Due to the nature of the forex market which is liquid and having such huge transactions (trillions of dollars are transacted each day), it is almost impossible to have any kind of insider information. Plus, with rapidly changing data and indicators updated almost instanteously, there is no chance of even an insider secret.

If you want to make money trading forex, start to take a long term view of forex trading instead of being the opportunistic investor.

Ricky is the owner of learn-forextrading.net where he teaches new traders how to make money trading forex.

Michael Vick - My Game Went To the Dogs - How One Choice Brought An Unexpected Consequence

Most everywhere you turn when looking at sports these days youll see and hear stories about the prosecution of Michael Vick, the Atlanta Falcons football star quarterback. Expecting to be prepared to advance his career, Vick is now considering his options as to whether to accept the governments plea deal.

As stated in the White Collar Crime Prof Blog, A best-case scenario for Vick that the defense lawyers may be seeking is a "Martha Stewart" double-nickel sentence: five months in prison, five months of home confinement. The government's offer would most likely call for a term of a year-and-a-day, which under the Bureau of Prisons guidelines would allow Vick to receive a 15% good time credit, reducing his sentence by 54 days to a bit over ten months. Any sentence under a year that his attorneys are trying to negotiate would have to come in under ten months for it to be an advantage because there is no good time credit if the sentence is a year or less. http://www.chuckgallagher.com

Not only does it look difficult for Vick, but others who were charged in this Federal dog fighting conspiracy accepted plea agreements and decided to cooperate with the government. So, at this writing, it would seem that Vick is in the proverbial dog house. His actions have had multiple and far reaching consequences.

It seems that Nike and Reebok have given Vick the boot. According to ESPN.com news services, Nike suspended its lucrative contract with Michael Vick on Friday, while Reebok took the unprecedented step of stopping sales of his No. 7 jersey. Likewise, Donruss, a major trading card company pulled Vick from future releases and Upper Deck removed autographed material from its on-line stores. And finally, Rawlings decided to end its relationship with Vick due to the conspiracy charges. All of these changes have huge financial implications.

All of the above consequences came directly as a result of Vick seeming to enjoy a non-football passion dog fighting. Now the question that is worth reviewing is did Vick at any time give any serious consideration to the consequences of his illegal actions? I can imagine that he saw this as a sport (perhaps one that isnt recognized), but to him a testosterone filled pastime. After all what harm can come from fighting pit bulls? Apparently a lot!

Once you look past the surface abuse of animals (a big issue for PETA), the fact its an illegal activity, etc., youll find that Vick rationalized his behavior just like any of us who have been convicted of an illegal action. I am convinced that Martha Stewart, for example, had no clue that her choice to sell stock on a tip from her broker was going to end in a prison sentence. The fact is that many an unsuspecting person may make choices that can have immediate or prolonged consequences in unexpected ways. The consequences of actions are not limited to activities that folks even understand are illegal. Take for example, Genarlow Wilson, a young man who is incarcerated for 10 years for his sexual activity with a minor. His case has received national attention, yet, even after the law that convicted him was changed, he remains in prison. Whether the consequence is fair isnt always relevant. What is a fact is EVERY CHOICE HAS A CONSEQUENCE.

The Choices Foundation, a non-profit organization, is dedicated to teaching young people the relationship between choices and consequences. If we can impress on the mind of our youth the direct correlation between what we choose and the consequences that follow, perhaps we can help them avoid consequences like those Michael Vick are facing, stated Choices Foundation founder Chuck Gallagher.

In a presentation to a youth group not long ago, one young man stated, Well, its not dishonest if you dont get caught. Attitudes like that are what empowers people to make unethical decisions and expect no direct consequence. From my personal experience, I know that one can rationalize a choice all day long and it doesnt color the action or change the consequence. My actions left me incarcerated in Federal prison, an experience I will never forget., stated Gallagher.

As a motivational speaker and ethics keynote speaker, Chuck Gallagher shares his experience in a way that connects with his audience, whether a business executive group or a youth group from a university. http://www.chuckgallagher.com Understanding the effect of Choices and Consequences from one who directly knows can be powerful and an influence for ethical behavior. Perhaps, when the smoke clears, Vick can see the effect clearly from the choices he made. And maybe, just maybe, Vick will use his powerful influence for good, helping those who have looked up to him understand that Every Choice Has A Consequence!

Chuck Gallagher is an international speaker and author who shares his life experience in a way that is meaningful for his audiences. For information on Chucks presentations or how to subscribe to his free ezine...visit http://www.chuckgallagher.com

My Experiences Trading U.S. Bonds and Interest Rate Commodity Futures Contracts and Options

U.S. Bonds are the king of interest rate futures and a great trading market! Here's some valuable hints and kinks taken from actual trading experiences.

When it comes to trading interest rate futures, there's no market like US Bonds! It's the most liquid and has the best price swings of the interest rates group. US Bond futures contracts are also called the "long bond" or the "30-year bond, James Bond." Trailing behind are the ten year and five year note futures, though these have gained some popularity due to the real estate bubble.

The full-size US Bonds future contract contains $100,000 of bonds (par value) and is controlled with about $1300 of trading account margin money. Each full point move is equal to $1,000. The mini-contract is one-half the full-size contract and is better suited for the beginning trader. Trading is on the Chicago Board of Trade, a large and reputable commodity exchange. The liquidity is excellent and the volatility makes day trading popular for both advanced and novice traders alike. Because of this deep liquidity, "at the market" stop loss orders are usually triggered with a very little slippage.

A broker friend of mine swears by US Bond option strangle strategies. This is a popular technique selling (writing) both a put and call option outside a price range, looking for them to expire worthless. Option writers look to collect the option premiums from the option buyers. The option writers want the market to stay within a range of prices while the option buyers are speculating on a large move outside this range.

A one-day US Bond contract move of three full points is probably the maximum that you will see. ($3,000 move per contract) This is a rare event usually caused by a big surprise from the Fed, the release of a government financial report or an unforeseen event. Since US T-Bond futures become most volatile around scheduled major reports, it's often wise to take your profits beforehand. Many reversals occur around these times.

The old trading adage, "first way, wrong way" means the first price reaction to a report is usually wrong. For example, a long awaited report comes out and the market immediately runs up. A few minutes later the professionals sell heavily into this rally and the market sells off sharply. This spells opportunity for sharp traders and potential losses to others.

US Treasury bond futures are presently traded electronically through the CBOT. This means you can get order fills almost instantaneously. The days of the screaming commodity pits may be limited.

Fed Fund futures trade the reverse of rates. For example, March Fed Funds futures at 95.00 would equate to traders expecting Fed fund rates to be 5% in March. (100%-95% = 5%)

The 30-year bond is one of the best indications of general interest rate direction. The trend of the fed fund rates is also key. Be sure to consider both US Bonds and Fed Funds trends in your general rates forecasts.

Treasury bonds tend to make double tops. Sell against double and triple tops when they present themselves. These long term tops dont happen very often, so keep your eyes open. Triangles are also popular as well as head and shoulders formations. The bond market often trends well for long periods. Major multi-year government policies put these trends in motion. Fortunes can be made by accurately trading the bond market.

Here's how I look for opportunities in the U.S. Bond market: First I generate a TimeLine forecast that shows a strong move up or down. The TimeLine is based on time cycles and other preprogrammed patterns. I then determine if the move is expected to be choppy, trending, and for how long. This helps us focus on possible directional futures/option positions or writing options in a range, or even writing options with the trend.

Next I use automated option software to search for the best of 1600 strategies based on the expected market move. I compare these option to option combinations against futures to options combinations. At some point I will find a compromise between risk, profit and simplicity in one or two strategies. In hindsight there's always a best strategy we could have used. Keep this is mind when narrowing down the choices. When finished, we want to have one or two potential trades to work with. We call the selected few, "high probability, low risk trades."

Remember there is more to planning a trade than just coming up with a forecast. The market may move as predicted but we can still lose by choosing the wrong trading vehicles. Pick the right vehicles and strategies that will allow us to stay in the market without excessive fear, but still carrying calculated risk.

We NEED to take on calculated risk or the market will not pay us for our services. In addition, the vehicle has to move far enough to make a profit without letting the expense of protection eat us up. Excessive protection (risk avoidance) can come in the form of option premiums, too close-in stop loss orders - and overdone, complex spread strategies. Matching a forecast to a strategy is an important skill to succeed in commodity trading.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his market forecast TimeLine Trading charts and get his complete 44+ lesson, "Thomas Commodity Trading Course - all free." http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com

How Long Should I Backtest An Online Daytrading System?

I am frequently asked how long one should backtest a online daytrading system. Though there's no easy answer, I will provide you with some guidelines. There are a few factors that you need to consider when determining the period for backtesting your online daytrading system:

Trade frequency

How many trades per day does your daytrading system generate? It's not important how long you backtest a daytrading system; it's important that you receive enough trades to make statistically valid assumptions*: If your online daytrading system generates three trades per day, i.e. 600 trades per year, then a year of testing gives you enough data to make reliable assumptions*. But if your trading system generates only three trades per month, i.e. 36 trades per year, then you should backtest a couple of years to receive reliable data.

Underlying contract

You must consider the characteristics of the underlying contract. The chart below shows the average daily volume of the e-mini S&P:

It doesn't make sense to backtest a trading system for the e-mini S&P before 1999, because the contract simply didn't exist! In my opinion it doesn't make sense to backtest an e-mini trading system before 2002 because at that time the market was completely different; less liquidity and different market participants. I believe that a reliable testing period for the e-mini S&P are the years 2002 - 2004.

The problem is that many traders over-use the functions provided by the different backtesting software packages and think more is better. Many so-called system developers try to imply that the longer you backtest the better and more robust your system will be. That's not always true.


When backtesting you need to know these things. It's not enough to just run a system on as much data as possible; it's important to know the underlying market conditions. In non-trending markets like the e-mini S&P you need to use trend-fading systems, and in trending markets like commodities you should use trend-following methods.

Markus Heitkoetter is a 19 year veteran of the markets and the CEO of Rockwell Trading. For more free information and tips and trick how to make consistent profits with online daytrading, visit his website http://www.rockwelltrading.com

Be Cautious of Forex Trading Systems

A forex trading system is a set of rules to follow, calculations to make, decision guidelines and other instructions to create and, supposedly profit from, your forex trading portfolio. They usually feature a process of minimal effort and consistent profits. Be warned, although you CAN find good systems out there for sale, 95 percent of them dont work.

The reason they dont work is not always because the author didnt know his business or was a scam artist. The strategy may very well have worked once. But once many people know a strategy, it ceases to be effective in the forex market.

There are two primary methods of forex trading swing trades and day trades. Most experts will advise you to stay away from day trading. The volatility within a day is mostly random and cant be predicted. Therefore if you spend your money on a day trading system, youll probably end up with an empty account - especially if youre a novice. Even with a swing trading system, there are certain precautions it is wise to take.

For example, always ask for a real time track record. This shows the success or failure of their system as consistently and accurately applied to a portfolio(s) over time. If they, instead, give you a hypothetical track record, ignore it and ask again for the real time track record. The hypothetical track record is a sales gimmick that shows the results that could have been achieved over a certain period. But it was prepared after the fact, knowing what both the buy and sell prices were and picking these entrance and exit points from past known data. This is useless to you. Hindsight is, after all, 20-20. Ill bet you could have this kind of success after the fact, too!

The fact is, many systems cant give you a real time track record, because they dont have one. Ask yourself, do you really want to buy a system that the creator doesnt use himself? If he/she doesnt trade it, why should you? If they do give you one, youd like to see at least two years, it should be audited documentation and the fees should be disclosed or, preferably, for the results to be expressed net of fees.

Look for the biggest peak to valley drop in the real time track record. Be honest with yourself as to whether you would throw in the towel if it had happened to you. Know that many systems can create great gains over time, but their short-term volatility can be discouraging. If you cant tolerate a 50% draw down, you probably arent ready for this kind of risk.

Make sure you understand the forex trading systems logic. If you dont completely understand this, chances are youll lose interest and not work the system as required when you run into a period of losses, which all traders and all systems do. From knowledge of the logic comes confidence. With confidence is discipline.

Check out the systems guarantees and support. If youre having trouble understanding something or need further advice, are they there for you? Try asking the vendor a question about the system? Did he/she get back to you with a reasonable response? What if you try the forex trading system for a short time and decide its not for you? Is there a money back guarantee for the cost of the system? How long does it run? All these things should influence your buying decision.

Pick through the advertising copy and get the facts about any forex trading system. Dont forget the key decider the real time track record. Do your homework and find a real forex trading system that delivers the profits it promises.

Michael Russell
Your Independent guide to Forex Trading

Forex Technical Analysis - 4 Costly Mistakes to Avoid

If used correctly, forex technical analysis can make you huge trading profits. Look at any forex chart youll see trends that repeat themselves. These trends can be traded for profit. However, its not as easy as it seems which is why 95% of forex traders lose money.

Here are the four most common mistakes that cause the majority of traders to lose money:

1. Forex Charts cant Predict the Future

Many traders believe that technical analysis can predict the future but theyre wrong. Think about it - if technical analysis could predict the future, then wed all know tomorrows price today - and thered be no market. Currency prices move due to a difference of opinion - and of course, if we all had the same opinion, prices wouldnt move!

There are several theories, and currency trading systems, that claim they can predict prices with scientific accuracy when forex trading. These include: Elliot wave theory, and trading systems based on the Fibonacci number sequence. Dont fall for them - they dont work!

2. Using Time Spans that are Too Short

Trading is not scientific its an odds game. The aim of technical analysis is to get the odds on your side - and for this you need to work with valid data. This means having enough data to calculate the odds. Generally, you need at least a few weeks data - preferably several months data.

The biggest mistake you can make, is to fall for the myth of forex day trading. To think that its possible to calculate the odds in a day, or less, is laughable. Yet, more novice forex traders try day trading, than any other method - and they get wiped out. If you think that you can make money executing trading signals in day trading, try to find a day trader whos made money in the market. Real money - not a hypothetical track record good luck on your search, I doubt youll find even one.

If you base your forex trading strategy on day trading, say goodbye to your money!

3. Not Using Confirming Indicators

Many traders, when using technical analysis, like to buy into support, or sell into resistance levels - and hope they hold. Do this and youll lose money. Why? Because youre trying to predict prices, by hoping and guessing - and the market will wipe you out.

If you want to trade the odds, use momentum signals to time entry to your trades - so you trade with price momentum. For example, if you were selling into resistance, youd only do so if price momentum turned down below support. This way youre not hoping youre trading confirmation of price weakness - and the odds.

If you dont use momentum indicators in your forex strategy, you wont have the odds on your side.

4. Using Too Many Indicators

Many forex traders assume that the more indicators a forex trading system has, the better it must be - after all, 10 indicators must be better than 4 wrong!

Its a fact that simple systems work best in currency trading - as there are fewer elements to break. All you really need is technical analysis - to help you determine the price trend, support and resistance - and a few momentum indicators.

You dont get rewarded in forex trading for being clever - you get rewarded for being right with your trading signal - and the best way to do this, is to keep your forex trading system simple.

The above technical analysis mistakes, are commonly made by the majority of forex traders. If you want to enjoy currency-trading success, avoid making these mistakes - and youll be on your way to making bigger FX profits by using technical analysis correctly.

Grab 5 FREE Trader PDF's and get the support you need to trade like a pro with our user-friendly multi-lingual learn forex trading. Get up to date financial news, real-time market prices, tight pip spreads, built-in risk management system, and 24-hour professional support.

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Forex Trading Strategies in Forex Market

In order to succeed in forex market, one can follow certain strategies like technical analysis, fundamental and economic analysis, combination of these two, different currency pair relationships etc.

Other more advanced techniques are SAR, CCI, Stochastics, MACD, Liner Regression, Bollinger Bands etc.

One should not be scared of the terminology involved. One should follow a strategy which one can understand and follow well.

The two most important strategies of technical and fundamental analysis are also used in stock markets. It may be advisable to use both of them while some people may use either one.

Fundamental analysis covers economic and financial factors like GDP, inflation, employment figures, devaluation, trade statistics, capital movements etc. In technical analysis one takes help of charts, graphs, bars, trends etc.

Whatever the strategy one adopts, one should learn to be a disciplined trader. For this, one should consider the following:
Always use stop losses of some kind
Dont use all of your balances, but keep some separately available for special situations.
Start with small lot sizes
Always have a win / loss limit
Adjust margin according to market conditions
Always get new training and education

Some people also use intra day strategy. With this, one can use multiple time frames for analysis like one minute, 15 minutes. 30 minutes and 60 minutes frames.

One noteworthy element of forex trading is risk management. This consists of stop losses and trailing stops. One needs to learn how to establish stops, fix initial stops and experiment with trading plans at the margin. One has also to learn trailing, breakeven and time stops.

Risk management seems to have become easier with more flexibility in forex trading rules. There is full transparency now in this, better ability to put bids and offers within narrow spreads and less cost per ticket. Some forex trading platforms automatically close all positions if an account declines 60%. This provides some added safety.

FX trading like commodity trading is always conducted on margin. The general ratio is 50:1 and can go up to 100:1 in some cases. This means that against every margin of $1000, one can hold a position of up to $50,000. In currency trading what one can lose at the most is just the amount of margin while as the potential for profits is substantial.

For more information and for a Free Online Forex Trading Report, please follow the following link:


The author has background in business, economics and finance. He is presently researching in finding ways to make money and working on the following website and blogs:



Stock Brokers

Oh! So you have heard about online trading. But are you aware of the online experience of online brokerage. Well its not your fault if it sounds only faintly familiar. Technology has ensured that one is well acquaint and familiar with traditions of increasing technology while other may be left totally ignorant over the scene. Let me clear this concept.

Online brokerage is the amount charged from online traders to trade online in return of better assistance to deal in stocks. This brokerage is paid to brokers who act as facilitators of trading in stock exchange. Unlike, traditional way of trading, here a trader may trade directly but the firm or individual he is associated with has to be paid off. Obviously not every investor can afford the heavy duty direct licenses to trade in stocks.

Hence, these brokers are mediators to sort out that trading. They are not only mediators but they act as supporters for traders. They guide day trading concepts to add up to better understanding and get optimized profits. They are experienced and provide their expertise to beginners and experts too.

Now the question arises from where these stock brokers can be contacted from. The answer lies in the laps of technology. Yes, they are available online. Most of todays share brokerage firm posses their websites from where the details regarding their brokerage terms and past records are available.

Being a competitive brokerage, the situation gets biased to the investors. The brokerages offered are as low as $3 for each transaction. Deep discount brokerages serve a decent opportunity to grab to. A low as $1 and so is charged per trade that allows investor to cut off the brokerage expenses. These opportunities tend to increase the trading in stock market at low bites from the investments made.

Apart being acting as catalyst, these firms provide useful tips to trade in stocks. These tips may include the forecasted mood of share markets and the expected fluctuation in the price of a share, hence, catering to the need of clearing the cloudy environment while investments.

For all these benefits, all you have to do is to go to the chosen firms website and get an account opened there. With in few clicks you can open your account to trade as enjoy the services provided by online brokers. Opening an account with a firm provides you to access the stock exchange on your PC as the relative software is uploaded by the members of those firm. For beginners, they generally provide guidelines on how to trade and how to use trade persisting softwares. The benefits of online brokers lies in the fact that the useful tips are received sitting at your laptop trading from home.

However, few cautions have to be considered before opening an account with any firm. The past records and the brokerage rates are the most important to be analyzed. The amount of brokerage has to be paid with each transaction; hence, lower brokerage favors the traders. Moreover, the facilities and mode of transferring payments should also be checked so as to avoid any confusion in relative future.

As such, discount brokerages provided by the firm act as sheer combination of meaningful trade at low rates, however, these are generally offered to people with large turnovers, but no more grievance to this clause as increasing competition is letting the brokerage rates fall every time and letting even small investors enjoy the benefits of low commission rate online brokerages.

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Staying In Stocks - Is It Worth The Risk?

You have discovered a rich alluvial gold bearing creek that no-one else knows about. By patiently panning in the river bed, you can extract $1,000 worth of gold a day. There is at least a year's supply there. That's $365,000 worth. Not bad money?

Only problem is theres a dam upstream that has a crack in the wall. This dam spills over into the river when it overflows. And it happens to have been built right on an earthquake fault line. The crack appears to be getting worse, but only very slowly. And there have been tremors in the area. Everyone knows about it, but strangely, each tremor only seems to make the locals even more complacent about the inevitable big one that is coming. There is no doubt the dam will collapse and flood the river in minutes if (when) there is a serious earthquake. And everyone knows it is coming. But when? Nobody knows. And the longer it takes the further away it seems.

If you are in the creek bed when the dam breaks, you will have no chance at all. You will be swept to your death. And you will have little or no warning, except the frequent tremors.

How long have you got? It could be one day. It could be a year. No-one knows. All you have is the tremors for signs and the knowledge of the risk.

Will you risk it? Only you can answer that.

Thats exactly what it is like being in the share market at the moment. Because the walls of these markets have not burst yet, despite the evidence of many cracks, complacency reigns supreme. Unsustainable debt threatens to cause collapse all over, but the solution is to just stick more Band Aids over it and keep the blinkers on.

The longer time goes on and the big one still doesnt arrive, the more we are tempted to go back and buy shares (pan for more gold). Yet now there is even less time until the big one.

Should you do it? Only you can decide. But I will try and re-paint the picture for you so that you know the pitfalls as well as the opportunities. You need to make the decision with the front part of your brain called the neo-cortex, which is the conscious, rational, logical thinking part. But when it comes to investment decisions, the neo-cortex is powerfully overridden by the larger limbic system of the brain, which is driven by impulse and emotion, not logic or common sense. You are not even aware of the unconscious urge you have to herd with others, to follow the crowd. Without even realizing it, most times you buy or sell shares or property because thats what everyone else is doing. And although purveyors of investment products, with a gun held to their head by regulators, pay lip service to the mantra past performance is no guarantee of future results, the reality is that that is totally ignored, by both clients and their advisers, so powerful is the limbic system of the brain. People tend to invest in whatever was hot yesterday.

Heres another way of looking at it: If you are in a herd of lemmings rushing to jump over a cliff to your death, should you leave it until the last minute to separate yourself from the herd, or should you get out when you first realize what lies ahead? And should you be tempted to go back?

But your challenge as an investor is nowhere near as difficult as the gold prospectors dilemma. You have a fantastic aid to help you in your decision. Even if you do not understand socioeconomics or Elliott waves, you have one simple rule that anyone can follow. When in doubt, always fall back on this one: Buy when prices are low, sell when prices are high.

http://www.grahamdyer.com The Graham Dyer Newsletter has not missed a month's publication since July 1983. His track record for forecasting is the envy of many, including the 1987 stock market crash, the demise of the Japanese economy and stock and real estate markets in the 1990s, the bull market for bonds from 1989, and the real estate boom this decade. His book is entitled: How to Profit from the Coming Great Depression. If you want to know the pitfalls of investing as well as the opportunities, Graham Dyer's world class work is a must read. For more of Graham's work you can visit http://www.grahamdyer.com

Hollywood Stock Exchange - The First And Biggest Stock Simulator Is Looking Pretty Shabby

Back in 1993 on a movie tracking newsgroup, a group of guys started a predicting game. They set up a system where they could bid on upcoming films, and then figured out math formulas based on the buzz and the activity of those films in regards to the newsgroup to see if the price would rise or fall. It soon began to expand enough to become a website with an actual program running on it and thus the HSX or Hollywood Stock Exchange was born.

The HSX has gone through a lot of changes since those early beginnings, back in the dot.com boom of 2001, HSX went public and raised a good chunk of capital that it used to finance a TV channel, radio spots, and a whole slew of other market ideas, almost all of which have fallen through now.

Hollywood Stock Exchange is protected by US patents due to the specific formulas and processes they use and they have successfully protected themselves against software pirates who have attempted to nab the code for their own use. The HSX runs on a java platform with active server pages helping to keep the actual process hidden behind a shielded server wall.

When somebody decides to play the Movie market, they open a free account with HSX and are given 2 million Hollywood Dollars or H$. This is the online currency of the market, and is the only way to play the game. Players then buy and sell shares in the market and if they pick the right shares at the right time, their funds increase. I have been playing the HSX for about 18 months and have achieved more than H$43 million so far, which is not too bad.

Some of the biggest gains can come from predicting how much cash a movie will take on it's opening weekend. Because that is applied with a multiplier to the actual stock price, and if it is higher, then the stock price can jump up or down significantly. A big gain I managed to do was put some H$ onto Spiderman 3 before it released to theatres. That stock jumped more than H$43 on the strength of the box office, meaning every share held increased by that amount.

The HSX is a very good example of a prediction market, and the software that runs it is always being adjusted and tweaked by the operators to keep the system running at it's best performance. Thus we come to the big problem with HSX, downtime.

In the 18 months that this site has been monitored, not a week goes by that the site is not down for at least a couple of hours, or sometimes a full day. Quite often it will simply go down and nobody will say anything, then it recovers and people keep playing. Other times, the server will error or the database will fail, or any number of other excuses may occur that will cause the system to stop working, leaving the game's 10,000+ active players out of luck until the game is reset.

Now, even though the site is currently owned by an investment capital firm, I would imagine they would make it a priority to ensure their game, which is known around the world for what it is, would be kept up and stable. But it appears that they don't want to put too much into it. Even though HSX is ranked at 14,731 on Alexa's top 100,000 websites, which means it gets well over 10,000 hits a day if not more. HSX is also associated with the movie speculation site the numbers.com as they share information daily and have cross-links.

I find that quite sad as this type of site has a strong potential and it seems to be being squandered by the owners who seem to have no idea what to do with a concept like this, other than to let it sit without much improvement and let it die a slow death through neglect.

Tim Morrison is the designer of TV Stocks Online, the world's first fully developed television stock market simulator totally functional with live data from Nielson figures and user interactions. Join the growing fantasy market, share your opinions on current TV and see if you can pick the winners and losers out of the current Primetime television lineups.

How To Guarantee A Lifetime Of Long Term Care Benefits For Half The Cost

Heres how to make sure your long term care is taken care of for the rest of your life, guarantee that you will never run out of money and not disinherit your kids.

A tall order, you say. Yes, but in certain situations all three of these can have a happy ending. Heres a more than typical scenario

Ruth is 88. She has been diagnosed with moderate Alzheimers. Other than that, she is in pretty good health for an 88 year old. Her doctor tells her shell live to 100.

Ruth has two children. Ben is an attorney and lives way across the country. Ruth has been living with Karen, her daughter, and Karens husband and three grandchildren.

Ben has already set up the paperwork and has power of attorney over his moms affairs. He has been handling her finances for the last couple of years from afar and that has worked out fine.

Ruth has become more forgetful recently and that has become more of a concern for Karen. On top of that, Karen just got a promotion that will entail her traveling out of town one or two days a week. She doesnt feel it is right to shift the rising care needs of her mom to her husband while she is gone.

Bottom line: Everyone feels it would be better to move Ruth into a health care facility where she can be effectively cared for. Even Ruth agrees as the last thing she wants to do is be a burden on her family.

So Ben puts a pencil to Ruths financial situation. Heres what he comes up with

Ruth has about $450,000 of assets. Most of it came from the sale of her home which she lived in for 45 years. She has $800 a month coming in from Social Security and $1,200 a month from the telephone company pension where she was an operator for 35 years.

Karen has found the ideal care facility for her mom. It is close to their home and it provides all the care Ruth would ever need for the rest of her life. The problem is that it cost $5,000 a month. So she is short to the tune of $3,000 a month. But the problem goes deeper than that.

Even though Ruth has assets totally $450,000, its possible that she could eventually exhaust these funds. After all, other than Alzheimers, she has no major problems. What if her doctor is right and she does live to 100?

Karen and Ben love their mother and hope she lives to be 120, but these are simply the economic realities. However, there is another problem. Ruths life-long goal has been to be the one that educates her three grandchildren. Its pretty easy for her to see that dipping into her estate at the rate of $36,000 a year is not only flirting with her ability to educate the grandchildren, but it is affecting her other goal of leaving her estate to Karen and Ben.

Ben schedules an appointment with his personal financial advisor and explains the dilemma. The first thing they look at is an immediate annuity. Ruths age would give her a good rate of return. The best quote to provide the $3,000 a month short fall for as long as Ruth lives comes back at $215,000.

The good news is that Ruth could live to be as old as Methuselah and the insurance company would send her a check for three grand a month. And $36,000 a year on a $215,000 investment is a 16.7% return on the money. Second, this preserves the balance of Ruths estate for her wishes. $450,000 less $215,000 is $235,000. That should educate the grandchildren and leave a little left over for Ben and Karen.

The bad news is that is quite a chunk out of the total estate. And if Ruth falls and breaks a hip and dies next year, the insurance company keeps the $215,000. Bens financial advisor tells him there are ways to set up different types of refund arrangements with the insurance company so the whole $215,000 doesnt go down the drain, but these options cost more.

Is there a more efficient way? Maybe, read on

Insurance companies issue what are called medically underwritten annuities. Generally there is no physical exam required, but the insurance company does take a look at the persons medical history. The theory here is that people with health impairments have a life expectancy lower than the average for the entire population of people the same age. So providing the same monthly benefit can be provided with less money.

Thats exactly what happened when Bens financial advisor put in an inquiry on Ruths situation. $3,000 a month for life would take only $130,000.

So the shortage of $3,000 a month was taken care of. Ruth wont ever run out of money. Now there is $320,000 to educate the grand kids and leave the rest to Karen and Ben. Nobody gets disinherited and Karen and Ben heave a sigh of relief knowing they will never have to use their own money to provide for Ruth if she lives as long as they hope.

Robert D. Cavanaugh, CLU is a 36 year financial and estate planning veteran and author of the free newsletter, The Estate Preservation Advisor. To subscribe and get a free video of one little known planning concept, go to http://theestatepreservationadvisor.com/freevideo.htm

How to Not DayTrade

So you'd like to earn your living DayTrading?

You have all heard the stories of losing DayTraders running down the streets shooting people?

During the heady .com days prior to 2001, (when Bush became president,) there were stocks, 3 or 4 times a week that went up from 30 to 200% a day.

It was possible, if you knew what you were doing, to check before the market opened to see which stocks were running in real time and why.

And, if you then had a fast electronic brokerage system you could dive into the market, buy a bunch and sell them the same day.

About 1% of people doing this consistently made money.

You could see one private individual make a million in one day shorting Corel. And then there was somebody who lost a bunch hanging on too long to the WWWF IPO.

As a matter of fact the bottom line is that if you take inflation into account you'd have been better off putting your money in an old sock since 2001.

So what to do?

Give up on the Stock Market let alone give up on DayTrading?

Don't give up on the Stock Market, if you use the right system which is a simple set of formulas you can still make 30% or more on your money annually.

Using this simple system $11,000 left in the market for 17 years would be worth more than one million dollars today.

But it is not DayTrading and you still would need a strong stomach to sit out these 17 years, because some of those years would give you negative returns.

The bottom line is this; if you want to DayTrade there is only one way to do this today.

And that is with MINDBLOWING News.

MINDBLOWING News along the lines of:

XYZ corporation finds cure for cancer. ABC Inc invents Eternal Life Pill DreamCar Corp invents car that runs on water.

You get the idea.

And then you should use another qualifier:

You should get this news BEFORE most other people get it.

How to do this:

For about $10 a month you can get a subscription to real-time market news.

Get your Real Time Market News at about 6 AM Eastern Standard Time.

Say you find the real time news that a company has invented a car that runs on water.

Check the time the news was first released, making sure that news item was not available yesterday.

Buy the stock now with money that you can afford to burn ALWAYS USING A STOP LOSS.

Most electronic brokerage firms today allow you to buy stocks on NASDAQ only as early as 6 AM EST.

Sell the stock at 9.28 AM EST to all the traders that are waking up.

You could conceivably double your money.

So would you then trade again in this stock after the market opens officially?

No,you should not.

Too many mindgames will be played by market makers during the first day with the stock that produced the mindblowing news.

Remember the statement above:

"There have been very few days since 2001 that any stocks actually went up more than 30% in one day, the oomph has disappeared from both the Nasdaq and the Dow."

Never hold the mind blowing news stock overnight, because people in most cases will dump it on the second day.

One more tip:

Never buy IPO's on the first day.

The most touted IPO(meaning almost all large brokerage houses were praising this IPO to the sky) cost people the most in decreased value on the second day after the IPO came out.

Who were the winners? The brokerage houses.

So, if you have money to burn, have a cast iron stomach and want to watch market news from 6 AM to 9.28 AM EST, DayTrading may be for you.

J Shipper likes DayTrading. Check out these Sites: http://www.lazytrader.com http://www.stock-trading-now.info

Mortgage Market Meltdown

There is no doubt that what we are experiencing today is unprecedented in real estate and mortgage lending. My name is Darren Meade, and I am a the President of Victory Mortgage.

The purpose of my article is to give you a brief overview of what is taking place within mortgage lending at this time and to offer you insights that you can share with both your sellers and buyers. This information will allow you not only to profit in todays market, but it will help you advise your clients so that they can make educated decisions about buying and selling property.

Have you ever seen on the news, the satellite photo of a hurricane? It looks rather ominous, doesnt it? And, while it certainly seems like its going to be a bad day here, anyone whos been through a hurricane knows that there is a world of difference between a Category 1 bad day and a Category 5 bad day. And, based on this image alone, we cant really say for sure what were dealing with. To adequately prepare for this storm, we need more information, dont we?

What Im going to do for you today is similar to what a pilot of a hurricane-hunter airplane does. Im going to take you right into the eye of this hurricane, so that you can prepare for the kind of storm thats about to come ashore. And, from what I can tell, the storm we are about to be hit with is major, even catastrophic.

The mortgage meltdown of 2007 is one those storms. If you were to try and compare the economic damage of this financial storm to that of the storm in this picture, dont even try. In the past few weeks alone, over $2 trillion was lost in global markets, and I dont think we are anywhere near the worst of it yet. And, to add salt to the wound, we are seeing signs that whats taking place here in the United States is starting to infect other countries as well. Within the global economy, not only are other countries dealing with their own subprime woes, other financial companies in these countries have invested in our mortgage-backed securities as well.

To get an idea of what it is that brought us here, we have to wrap our arms around whats happened. We have to understand the key determining factors. As with anything this major, there wasnt just one thing that brought this situation to light. No, quite the contrary. There were a number of factors that, once aligned, produced the laser-like heat that ignited and culminated in the meltdown we have today.

First of all, we have what is known as Subprime and Alt-A lending. Subprime lending is for people who would like to get a mortgage but havent done a good job of paying their bills. However, as were in the days when tracking ones FICO score has become a hobby for some, lows scores even in conjunction with no late pays can force someone into a subprime mortgage. Other factors mandating the necessity of a subprime loan could be little-to-no down-payment, the inability to validate income with tax returns, or the inability to source funds for a down-payment. Or, it could just be a combination of all of the items mentioned here.

Alt-A lending is a lot like subprime lending, except that the borrower will predominantly have good credit. With Alt-A loans, borrowers are unable or unwilling to provide documentation for income and/or assets. These types of loans are commonly referred to as Stated- or Reduced-documentation type loans, or the infamous No Doc or no-documentation-required loan.

All told, including some A Paper type loans, in which little to no docs were required, these loan types accounted for anywhere between 40%-70% of the mortgage business in the last few years. Folks, these accounted for a lot of the loans that were getting done.

During the time of the real estate boom, rampant appreciation was seen in the housing market. Investors clamoring for ever-higher returns turned to the real estate market and credit markets to take advantage of the boom. This insatiable appetite for new profits led to some pretty wild and loose underwriting guidelines.

To give you an idea of how loose things had become, we were able to provide someone with 100% financing for a $685K purchase this person was recently self-employed, had two foreclosures, and a bankruptcy within two years, all on stated income and stated assets. I dont think you personally would have extended money to this person, but the financial markets were willing to. The person was granted a mortgage based on perfection within the markets, both housing and investment. Today, this borrower would not be granted anything even remotely close. If this person were to slip on a banana peel, do you think he might miss a mortgage payment or lose his house? In short, yes.

I cant tell you whether or not the individual in question is still paying his mortgage on time, but others clearly were not. Consumers started showing problems in the third and fourth quarters of last year, and mortgage delinquencies started to mount. As such, bond investors started pulling back and companies started to fall.

We started to see weakness in the mortgage market last December, when the first of several large companies was set to take a fall. Own-It Mortgage, a subprime company that was set to close over $20 billion in loans in 2007 was hit with a lack of desire by investors to buy the loans they had funded. Unable to fund the loans themselves, Own-It was forced to close their doors, becoming one of the first ten companies to go down the tubes and be featured on the Mortgage Implodes website, which now lists 114 companies that have gone away.

Lets take a brief look into the world of mortgages. Few mortgages are held by the bank or the investor that funds them. Over the past ten to fifteen years, the securities markets have grown markedly as the appetite for higher yield products has grown immeasurably. With this appetite grew a desire for riskier loans that companies package and sell in pools known as mortgage-backed securities. Mortgage-backed securities are sold on the open market and are traded much like any other bond, with the expectation that people with mortgages will pay monthly on their obligations, netting an expected yield for the end investor.

What happens is that a company may package a group of $100 million in loans and sell them on the open market for anywhere from $100-101 million. As investors realized these loans were not performing, they were now willing to pay only $95 million for the same batch of loans. And, in some cases, even less. In addition, as many of these investors used the loans as leverage for other investments, they were used on margin, similar to what you might do in an investment account. As the value of the funds was decreasing, the mortgage companies were also forced to pay into the investment to make their margin calls, forcing additional pressure and cash drains. In a sense, this was the perfect storm for mortgage companies, and they are paying for it with their companys life. This was seen with the recent demise of American Home Mortgage and other companies, as investors decided they didnt want these loans, forcing the companies out.

What happened next is we saw the slowdown in the real estate market, as home prices started to deteriorate in 2006. However, weve never seen a real estate market on a national scale where home prices fell. The investment and underwriting models for which these loans were originated were, in part, based on this.

As home prices started to stagnate, many people who obtained loans based on the premise of continually escalating home prices were caught in a trap, as they were unable to sell and unable to refinance their loan. The homeowner who had been living a lifestyle based on their equity was now maxed out, having spent way beyond their normal means. With no more equity to pull out to consolidate or lower their payments, they were now in trouble.

As a result of these problems, we now have loans in the investment markets where even if a lender were willing to approve them, they wouldnt be able to sell them, effectively turning them into Officer and a Gentleman loans, screaming, I got nowhere else to go!

Whats next for real estate? Lets think about this. With changes to credit tightening, a huge number of people will now be unable to purchase a home. On a percentage basis, were talking about a minimum of 15% of borrowers will be impacted by processing styles and loan availability alone. In a U.S. market where six million people buy homes, you just took 900,000 buyers off the market. It doesnt mean that people wont still need to sell though. Consequently, were seeing increasing inventories and increasing marketing times. I dont think that 12 months of inventory is an unreasonable estimate, as many areas of the country are already experiencing well in excess of 18-24 months. Accompanying this will be more foreclosures. Foreclosure activity in July was double what it was for the same time last year.

Its estimated that in the next 12-18 months, over 2 million people will be faced with their Adjustable Rate Mortgages resetting, resulting in an increase in their minimum payments of anywhere from 30-100%. While this one action will not push people over the top, what it does do is add additional strain to an already over-leveraged consumer. Add in any life events such as injury, loss of job, or increasing payments due to rising interest rates in the consumer arena and you have a recipe for financial disaster.

If I am a seller, I need to be aware of this in light of a slowing housing market. For anyone who has seen rapidly appreciating property values the past few years, it could be difficult to accept the fact that their home is now worth less than before. However, to use a stock market analogy, if you need to sell stock that yesterday warranted $10,000 and today was worth $8,500, would you decide not to sell, even if you were now losing money? Of course not, provided you had the means to absorb the loss. Well, the same beliefs should apply here.

The borrowers who will be caught up in this mess are the ones who were looking to obtain minimal-to-no documentation type loans. This includes those with great, good, and poor credit alike. Some have estimated that these types of loans account for nearly 40%-70% of all the loans originated in 2005-2006. What this means for real estate moving forward is that there will be far fewer buyers who are able to qualify under the terms of their last mortgage. While this wont necessarily take all of these people off the market, obtaining financing going forward will be a much more difficult process for them.

Not everyone is caught up in this mess. For the plain vanilla type of borrower, someone who has a job, savings, and the ability to provide documentation as used to be required these borrowers are still fine. And, with some products, there will still be some stated income opportunities without exorbitant rates. In addition, government loans will pick up a lot of the slack for those individuals with credit issues and minimal down payments.

However, as this situation continues to evolve, things are subject to change. So its important not to get too comfortable.

Let me ask you a question. What would your business look like if you were to close 50% fewer deals over the next 12 months? All of the factors mentioned here so far could very well have that kind of impact on many in our business.

However, it doesnt have to be this way. There are opportunities for everyone in our business. There are opportunities with sellers and with buyers, but we have to act fast, act decisively, and get started now.

For sellers, its important that they get real about their price, and quickly. They cannot afford to wait as pressures will build rapidly, and, when they do, money will be lost. The lowest price that they may be willing to accept today could very well become an unrealistic wish six to twelve months from now. And, if they dont reduce their price, their home may never even get shown. Also, as lenders have now pulled back on second mortgages, sellers may need to consider holding a second in some cases.

Absolutely do not accept an offer from a buyer who has not been pre-approved by a reputable lender under any circumstances. And make sure that the approval is recent. With buyers becoming few and far between, sellers dont want to take their home off the market, only to have the deal blow up six weeks from now.

Finally, get sellers pre-approved. You dont want to have a deal blow up because the seller cant buy later.

What about buyers? For buyers who are seeking 100% financing, where it is available, it will be more expensive either in the form of higher rates or non-available seconds. This doesnt mean that for some programs, as in community homebuyer, etc., that it isnt available. But, for more expensive homes, its going to be difficult in many cases.

With second mortgages cutting back, its time to start thinking about getting PMI again. For many people, its become tax deductible this year.

Before a buyer gets too busy shopping, they need to take a look at their credit. In many cases, improvements to FICO scores can be had through just some minor changes to their profile.

Finally, borrowers should go ahead and start collecting their paperwork. This includes all the traditional information like tax returns, bank statements, and pay stubs. This will always help someone to achieve the best possible rate.

The reason checking credit is essential is that FICO scores are very important. There are some hard, fast lines in the sand when it comes to certain approvals, and the numbers were looking at are 720, 680, and 620. Depending on the loan program, a certain score is needed and, without it, you can forget it. Exceptions are now basically non-existent.

Proper credit repair and maintenance can be the difference between a homeowner and a tire kicker today. When you have control over the buyer, try to get them started on this process 3-6 months in advance. The difference this could make to them and to you is a home priced tens of thousands of dollars higher.

In order to obtain the best-priced loan, let your clients know that they need to get their documentation together. Once we have it in hand, we no longer have to make estimates on what people can afford and qualify for. It will save them money and help them to buy more home.

Now is not the time to go it alone. And its not the time to refer three lenders. Partnerships are critical to your success. Unfortunately, too many people became comfortable with the idea that everyone could get a loan and it wasnt important who a buyer got their loan from. Not today. You need one go to lender who not only has product, but whos also an expert in underwriting and credit analysis, has a great credit repair partner, and is local and accountable. A loan officer from Quicken Loans, or an out-of-the-area lender, doesnt stand to lose much reputation-wise if your deal goes south. I do.

The news isnt all bad though, and there are future possibilities. Instead of focusing on what the media is harping on each day, think about the fact that subprime only accounted for a little over 12% of mortgage production last year. There is still massive opportunity. But Im going to need you to keep your head up and do things a little differently from now on. Whether you work with me or another lender, you need to have them involved from the very beginning with both buyers and sellers. We can present facts together that may be more compelling and also keep the fire under them.

For those who follow the steps Im suggesting here, theres definitely profit for you ahead. However, you need a plan. Part of that plan includes educating your sellers regarding whats taking place today, not just in real estate, but in mortgages as well. Let them know whats on the horizon, and obtain significant reductions. Make sure any buyer, while desirable, is properly scrutinized. By positioning the property appropriately, you can get it off the market and save marketing dollars. And, by all means, make sure your sellers get pre-approved. We dont want them to be the reason why theyre unable to move.

For buyers, many of the same rules apply. First and foremost, dont spend time showing them a home without checking them out first. This will benefit both you and the buyer. Even the best of candidates may have issues we dont know about. Also, keep in mind that investors are more important now than they were during the boom. Cultivate these relationships, they will be important.

What I want you to leave here with is a plan to meet with not only your sellers, but also any buyers you may be working with as well. Have action meetings with them. Inform them of the current crisis, and educate them in order to get them to act. When it comes to sellers, use me to find out what they are really willing to do under a worst case scenario. When you find their dollar amount, market the heck out of it to other agents, letting them know you have someone who is hot to sell, I mean REALLY HOT!

Start to think of buyers as almost the same as listings today. Once you let them know that they may not be able to qualify in the future, they should be more motivated to act today. Get them pre-approved and keep them pre-approved based on current conditions. Once you have them, direct them towards your realistic sellers. Also, be sure to communicate with other listing agents and make them aware that you have a real buyer. Theyll let you know who it is that theyre working with whos hot to sell.

Together, we can work through this and position ourselves to really succeed when this cloud lifts, ensuring great years ahead.

My name is Darren Meade with Victory Mortgage Lenders, and I look forward to working with you.

http://darrenmeade.zaadz.com http://www.victorylenders.net

Darren Meade is a national and local real estate financing expert. He is available for speaking engagements, personal coaching and consultations. He may be reached at (949) 499-1785