Two Big Obstacles to Wealth

It’s ironic that most of the time the solution is right in front of our noses but is hard to see because of our addiction. It is obvious to the alcoholic that all he needs to do is stop drinking. The alcoholic will argue that if he does that he will lose his drinking buddies and also have to finally face those troublesome thoughts that plague his mind. The solution is obvious, stop drinking and live a longer healthier life. Unfortunately, the choice is usually to keep on with the daily grind and fear change.

When it comes to money, it’s no different. Most people want to have more money. The solution is clear, save more money, invest well and educate yourself in finance and investing. The problem is that to do so requires time and effort. For the modern busy citizen, it’s very hard to make time for anything. We all want more things, and not just basic items but the best things money can buy like a Lexus instead of a Honda or a 60″ 4K HDTV instead of a 40″ HDTV. The reality is that most of us can’t afford all of these things but we buy them anyway. This leads us to the first obstacle of wealth, paying interest. Most of us take on lots of debt to buy things we “have to have”. These things usually require credit cards that can charge anywhere from 14-25% interest in addition to penalties and late fees. In addition to these things, we over leverage ourselves by buying cars and houses we can’t afford. We also take on school loans that can never be negotiated down, even in bankruptcy. All of this debt has a cost. This cost is in the form of interest charges. I challenge each one of you to look at your credit card statements and loan amortization charts for loans that you have and figure out how much money you lose each year to pay the bank for stuff you probably didn’t need. Interest charges are a huge consumer of your wealth but there is another one that is even bigger.

We all want a check from the government when we retire. Recently we asked for “affordable healthcare”. That’s fine as long as you realize there’s no such thing as a free lunch. The second obstacle is taxes. The fact is that there was no income tax in America before 1930. Once FDR enacted his policies, someone had to pay for all the welfare programs. In fact, every time you get a free service from the government, you can be sure that taxes will rise. When you begin to add up your federal, state and sales taxes, it’s not hard to pay 35% or more of your hard earned money back to the government to fund these programs that you wanted. This is why the wealthy make it a priority to reduce their taxes as much as possible by investing in tax advantaged investments. Many of the richest people in the world pay either no tax or only about 10-15% when it’s all added up. That’s why the political argument that raising taxes on the rich is political smoke and mirrors. They know they will never pay more taxes anyway as long as the deductions are still in effect. Think about how your life would be different if you got 20% more money each paycheck. That’s how the wealthy play the game.

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Introduction to Pending Orders and Trailing Stop in Forex Trading

Use of Pending Orders & Trailing Stops is one of the basic strategies in Foreign Exchange (Forex) market. You need not to sit in front of computer screen 18 hours a day if you are good enough to make use of these two tools which are available in MT4 software.

There are four major types of pending orders:

1. Buy Limit Order

2. Buy Stop Order

3. Sell Limit Order

4. Sell Stop Order

Let us discuss each one by one:

Buy Limit Order
If you intend to buy a pair at a price which is lower than the current price level, you will have to make use of Buy Limit Order. For instance, the current price of EUR/USD is 1.3750 and according to your analysis a strong support level exists at 1.3700 which may prove to be a good enter point for a long position, you may simply put a buy limit order at price 1.3700 along with suitable Take Profit and Stop Loss limits.

Buy Stop Order
Buy Stop Order allows you to buy a specific pair at a price which is above the current price level; traders frequently make use of Buy Stop Orders in order to capitalize the potential breakout through critical resistance levels. In above example, if your analysis shows a weak resistance at 1.3780, you may consider placing a Buy Stop Order at 1.3790 with an appropriate ‘Stop Loss’ and ‘Take Profit’ limits.

Sell Limit Order
You need to place a Sell Limit Order if you intend to sell a pair at a price which is above the current price level. Such an order is usually placed near a strong resistance level to grab profits from potential retracement or bounce off. In our above example, a sell limit order can be place at 1.3780 if resistance is strong enough and a reversal is expected.

Sell Stop Order
Sell Stop Order allows you to sell a pair at a price which is below the current price level. Such an order is usually place on breakout through a key support channel. In our example, if technical analysis shows a weak support at 1.3730, we may place a sell stop order at 1.3720 to grab profits through possible breakout.

Trailing Stop
Trailing stop is another very effective tool available in trading platform which allows you to trail your profit by adjusting stop loss automatically by a specific number of pips. Following chart explains the concept of trailing stop very well.

It means your ‘Stop Loss’ limit moves forward as the price increases/decreases and stop is ultimately hit when price moves against your order by a specific number of pips as instructed by you.

Trailing stops are only effective in rallies i.e. when the market surges rapidly or nosedives. Manual trailing method should be used in range-bound market. Manual trailing means stop loss should be adjusted manually on the basis of key support & resistance levels. This was all about Pending Orders and Trailing Stop; hopefully it would work for you.

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Things You Should Know About Online Brokerage Firms

Online brokerage firms have gained significant ground thanks to the growing interest in trading. With a market base that is predominantly European and Asian, the services have grown in reputation, and attracted a new range of small scale investors.

Availability
After the relaxation of laws that barred anyone but banks and investment firms from participating in this kind of trading, online brokerage firms started emerging. The growing reach of the internet and the proliferation of smart mobile devices have increased the accessibility of these services, and now anyone who is connected can participate. It was an inevitable step and unarguably one the right direction because the applications now account for the biggest percentage of all transactions.

These service applications come with intuitive designs to make the trading a hassle-free process. With straightforward interfaces, the learning curve for a new user is made really gentle. Introductory videos are offered to give insight to new users on how they are supposed to start. While there is a great variation in how these services are presented to the end user, there seems to be a consistent desire to make them as uncomplicated as possible.

The Trading
The services offer different tradable certificates for differences, within a range of financial markets. They include stocks, different commodities, forex, indices and EFTs. This diversity is celebrated, as the abundance of these instruments means an investor can spread their capital for risk mitigation.

Demo accounts are typically offered, and for good. Some go as far as offering a welcome bonus while others do away with monetary and time obligations to make their accounts compelling.

The banking processes are mostly painless. There’s an array of deposit options, ranging from Visa/MasterCard to Skrill, PayPal and Wire Transfer. There are verification procedures that must be followed.

Regulation
Most, if not all the brokerage firms are under regulation from governing bodies. For instance, within the UK, where the services are popular, there is the Financial Conduct Authority. Within Australia, there is the Australian Securities and Investments Commission that does the same. These regulations lend a sense of assuredness to any trader and are therefore considered a must for any firm in operation.

These online brokerage firms are unavailable to the US, a characteristic that perhaps hinders their growth. Despite this sizeable shortcoming though, the Europe and Asian markets are colossal enough to ensure online trading thrives for many years to come.

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How to Find the Peak Point in Forex

The forex trading market works around the clock unlike the stock market. But this does not mean that you will make huge profits all through the 24 hours. There are certain times when bigger profits could be made while there are other times when there will be a lull in the market and therefore chances of making huge profits will be minimal. It is vital that you know the key entry as well as exit points in a trade if you want to get maximum profit from forex.

Many successful traders usually choose to trade in the forex market when it is at its peak. This is because the high volatility as well as the fast momentum at this time allows them to make good profits. It is therefore important to be updated on the necessary actions that you will need to execute when you are either accumulating profits or the market is not in your favor. If you have a clear plan of action, your appointed broker will keep a close watch on all the potential times that are suitable for entering and exiting the market.

If you have to make changes to the original plan you made, it should be during the heat of trading when you want to adapt to unexpected changes in the market. But if you have a finely tuned plan, be careful when you alter it because you may end up making things worse. Before you make any changes to your trading strategy, be sure to consult your broker in order to get proper advice on how to prepare for different scenarios that usually crop up in the highly volatile forex market.

In order to maximize on your profits or avoid any possible losses, your entry and exit points should be based on a level of resistance within the market. For example, there could be times when certain currencies could be trading very close to the bottom level. In such a case, the best thing you can do is not to be fast to jump in with the hope of taking advantage of the low prices. Instead, you should first of all take your time to determine what the underlying strengths of that particular currency are.

You should always look out for the time when the currency is going to hit the resistance level and slowly begin its fledging uptrend. At this point, it is very crucial for you to set a sell stop that is marginally below the identified support level point that will not be too much below the market. In such a case, if the trend you are following does not sustain you as anticipated such that it takes a spiraling download, your losses are going to be considerably mitigated.

When it comes to mastering forex, there is quite a learning curve. The best way to get started is to know the best times to trade. Once you have memorized these times and you have a clear understanding of how the market works during those times, you will be good to go with forming strategies, trading forex and making money.

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Forex Strategy – Hedge and Hold

Most Forex traders have a strategy or two that helps them win trades. Many traders use Expert Advisors, software or robots to assist them in making trading decisions. Others watch the markets regularly and make trades based on a fundamental knowledge of candlesticks, line graphs, and other indicators. One extremely simple strategy that any trader can use is the Hedge and Hold Strategy.

The Hedge and Hold Strategy is very simple. Wherever the chart is currently sitting, the trader places a simultaneous buy and sell trade. A take profit is placed at an interval that the trader is comfortable with, but no stop loss is placed. On an average day, the market will fluctuate up and down and make the trader a few successful trades… but not always.

As a trader progresses using the Hedge and Hold Strategy, some trades will not execute. The trades which are left open may execute in the next few days, weeks or months. One of the key aspects to using the Hedge and Hold successfully is patience. Eventually the market will reverse and trades will close “in the money.”

The risky side of using this strategy is, ensuring the trades are small enough that the trader’s account isn’t wiped out with a sudden upswing or downturn in the market. When you first start trading, it’s recommended that you start by trading microlots with this strategy. Conservatively, trading.01 of a lot for every $500 in your trading account, will minimize the risk of market volatility.

If traders adopt an investment mindset, reaching their monthly goals becomes very attainable. This strategy was first tested using a $400 account with a goal of 25% Return on Investment (ROI) per month. The 25% ROI, or $100 per month goal was tested over a four month period and showed the following results:

Month 1: $122.71 (30% ROI)
Month 2: $117.54 (29% ROI)
Month 3: $94.76 (23% ROI)
Month 4: $224.33 (56% ROI)

The original $400 account has grown to $959 in four months. This certainly is not a massive amount of money, but the test looks positive. The important point to remember is, the account is very small. If a trader used this strategy on an account that started at $4,000 or $40,000, the results are proportionately larger.

This strategy is excellent for part-time traders as you can set trades in the morning and evening and allow them to execute during the day. As some trades don’t execute immediately, it leaves you in a position to take advantage of volatile markets. For example, if you have five open buy trades and the market suddenly surges upward, it can trigger the buys and you have a good trading day.

The downside of this strategy is, there are always open trades. If traders place too large a trade, market movements can wipe out their account.

If you’re trading the EUR/USD pair with a.02 lot size, setting your take profit at approximately 100 pips, you’ll average approximately $2 per trade. In a typical month, you may average 100 trades for a profit of $200. But it depends on your perspective of what your monthly profit is. Because you also have open trades, your account increase will be less than your profit. For example, your account balance could be $1,000, but you have $150 in open trades, so the actual equity in your account will be $850 ($1000 – $150 = $850).

The advantage of the Hedge and Hold Strategy is you don’t lose money with stop losses. The disadvantage is, you’ll be holding open trades all the time. You may have an open trade with a current loss of $50, that won’t execute for several months. It’s expected that the trade will eventually be profitable, but the trader has to make the personal decision whether their risk tolerance allows a $2 trade to hold out at -$50.

Overall, the Hedge and Hold strategy is profitable, if traders use an investment mindset and are satisfied with conservative results. Aggressive traders may find this strategy is too long-term. The important question that traders have to ask themselves is, does this strategy make sense for them.

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Considering a Re-Mortgage To Get a Better Deal?

The relationship between borrowers and their mortgage lenders is at risk of becoming a thing of the past because so many borrowers regularly re-mortgage in order to get a better deal and cut their monthly repayments. But re-mortgaging could be set to become more difficult when new mortgage regulations come into effect so would consumers choose to remain with their existing lender if the re-mortgage process was tougher? Indeed, should borrowers be so readily able to switch from lender to lender in search of a more competitive interest rate?

Last summer the level of re-mortgaging in the UK rose by 8.6 per cent to £3.8 billion. But according to the Council of Mortgage Lenders borrowers may be obliged to consider the advantages of their existing mortgage rather than switching lender simply for a lower rate in order to maintain a relationship with their lender. And, of course, that relationship is a two way thing so the new rules could also encourage lenders to seek to retain existing customers instead of targeting new business with rates not available to existing customers.

Once the new regulations come into force re-mortgaging is certainly likely to be more difficult than it has been up until now. That is not necessarily a good thing but it will, at least, result in both parties considering the advantages and the importance of retaining an existing relationship.

The other factor to consider is that many mortgage deals are arranged on a short term basis – on two, three or five year fixed or tracker rates so there is a natural point when the deal comes to an end when a borrower might re-consider their options. And, in fact, it is often better at that point to switch to a different lender; an issue that lenders must be aware of but seem to do little to resolve.

A professional mortgage adviser, concerned only with their client’s best interests would always suggest regular reviews of mortgage arrangements to ensure they are still offering the best possible value. A borrower’s personal situation may change significantly over the course of a mortgage period so this approach to regular reviews makes sense.

Indeed, a professional broker would not be doing their job properly if they failed to review a mortgage at key points within the mortgage term or when a client’s circumstances changed.

Obviously, they would only recommend a re-mortgage where it would genuinely put the client in a better financial position. However, many homeowners could benefit from lower interest rates or from releasing capital.

Although any decision to re-mortgage should not be made just on the interest rate alone as there are other aspects to consider with regard to such an important loan as a mortgage; it would be a sorry state of affairs if the only difference between lenders of concern to the borrower was cost. Lenders themselves should be wary of allowing their product offering to reach this point.

A leading London mortgage broker specializing in large mortgages believes that for some clients the relationship with the lender is extremely important as it offers the opportunity for flexible loan arrangements but for other borrowers the most competitive rate is the most important element of a deal.

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Is The Buy to Let Property Market a Good Investment?

Everyone knows that over the past 5 years or so that the returns on savings have been very poor. Borrowers might have benefited from historically low interest rates but saves and investors are suffering. So could now be the time to invest in property? With rental yields high and relatively easy access to buy to let mortgages becoming a landlord could be a good move.

Mortgages are now more readily available, with a much wider choice of options, than at any time in the past 5 years.The amount lent to landlords in the UK reached over £5 billion in a single quarter in 2013, which is a level not seen since before the credit crunch.

With strong rental demand from tenants coupled with many buy to let mortgages at competitive rates, and a greater willingness on the part of banks to lend to investors, now is a good time to consider property investment.

Many investors are pulling their capital out of savings accounts and other investment vehicles in a bid to get higher returns from property. In the second quarter of 2013 there were 40,000 buy-to-let mortgages agreed in the UK. This revitalisation of the property market, from the perspective of investors, is due to the effect of government schemes helping to lower the interest rates charged by the mainstream banks and other lending institutions. And, of course, rents across the UK remain high because demand is still strong.

For these reasons many property investors, both experienced landlords and first time landlords, are using buy to let mortgages to take advantage of higher returns offered by high rents and low interest rates on their mortgage payments. Interest rates on savings accounts are likely to stay low for the near future so it is understandable that more and more people are seeking an investment with better returns for their capital.

The Council of Mortgage Lender’s head of policy, Jackie Bennett, said: “Strong rental demand is contributing to the continuing expansion of the buy-to-let sector, but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages.

The current ease of obtaining a buy to let mortgage at a competitive rate is encouraging existing landlords to remortgage as well as purchase new properties for their portfolios and also it is encouraging aspiring landlords to enter the buy to let market for the first time.

Unfortunately, the downside of this situation is that first time buyers are still finding it difficult to buy their first home because the majority of mainstream banks and building still demand a deposit of around 20 per cent before agreeing a mortgage. With house prices still high in London and the South East 20 per cent of the average property price in these areas is a big chunk of money to save up. However, with the governments Help To Buy scheme that situation is gradually changing. It will be interesting to see what happens to the demand in the rental market as more and more first time buyers enter the market over the coming year.

But with the government’s other scheme Funding For Lending contributing to the low rates of buy to let mortgages it seems likely that investors will still reap rewards in the property market as they benefit from exceptionally low interest rates. House prices will start to recover, in fact they already have in some parts of London and the South East, so not only will the cost of a large mortgager main low but there is also the potential for some capital gains on the value of investment property.

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Airliner Sales And Risky Financing In Economically Challenging Times

When I look at global airliner sales, I quickly realize that it isn’t necessarily the quality of the aircraft being sold, but rather the easy financing terms. Why? Well, servicing the debt of the aircraft is nearly as costly as the cost of the fuel. This concept of “easy terms” in industrial sales is nothing new, it is in virtually every industry. In airliner sales it is truly amazing some of the questionable financing deal made to secure orders. Many of the behind the scenes negotiations have more to do with trade deals ranging from everything from agriculture to intellectual property. Okay so, let’s talk about banking, aircraft leases, airliner financing and trade negotiations.

You see, there was an interesting article in Aviation Today on March 28, 2014 titled; “Airbus Group, Bank of China Sign Aircraft Leasing Agreement,” which stated;

“Airbus Group has a new agreement with Bank of China to collaborate on aircraft leasing, management, hedging and corporate loans. Under the agreement, Airbus customers will have access to increased financing options in China for aircraft purchases. Airbus aircraft first entered the China market in the 1980s, and the company also set up an A320 family assembly line in Tianjin in 2008. ‘As a company that already has a significant industrial and market presence in China, this agreement with Bank of China is a logical step forward,’ said Airbus Group CFO Harald Wilhelm.”

Okay, sounds good in the news, but is it a logical step in this climate, right now, today in China? On first glance, this is a major coup for Airbus or it appears so, but what could go wrong? Everything, have you seen the problems with China and its commercial banking sector, just this week we saw a run on one very large commercial bank, corruption and indictments ensued. Logging airliner sales when Airbus already has a huge backlog is one thing entirely, but partnering with questionables just to show more sales is a very financially dangerous game to play as the competition between Airbus and Boeing heats up in 2014.

If China’s financial sector is in trouble with loads of defaulting loans, and if it is due to their way of doing business and lack of regulation and oversight, then why would Airbus or any other corporation wish to partner with them? Simple, it is politically expedient to sell more aircraft right now in the short-term, but with that said consider the long-term challenges and think about the existing backlog which already exists? Selling or rather taking more orders with the promise to finance those aircraft later perhaps in 7-years when they are actually built and delivered doesn’t make sense to me.

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How Closing A Credit Card Affects Your Credit Score

When it comes to the best ways to increase your credit score, there’s a lot of information (and misinformation) floating around out there about it. For example, many people falsely assume that closing a credit account will automatically increase their score. This could not be farther from the truth. In fact, in most cases, closing a credit account will put a ding in your score. Here’s why:

1. It will affect your revolving credit utilization rate.

Your utilization rate is the percentage of available credit you use across all of your credit card accounts. This utilization rate will change if and when you close an account. Those changes could have a negative impact on your score, especially because the utilization rate is part of the formula used to calculate your FICO credit score (30% of it).

2. It will remove lengthy credit history you have built.

15% of your FICO credit score comes from the length of your credit history. This means that the longer you have had credit, the better. If the card you are removing is one of your oldest accounts, you can expect removing it to cause a significant ding in your credit score. On the other hand, you won’t need to worry about decreasing your score as much if the account you’re planning on closing isn’t the oldest.

3. It could remove an important type of credit from the credit mix.

The mix of your credit accounts comprises 10% of your FICO credit score. This means that ideally, you should have at least one of each of the different types of credit accounts available showing up on your credit report: a revolving account, an installment account, and an open account.

An account that does not have to be paid in full each month and whose payment can vary each month is called a revolving account. Credit cards (whether bank issued or non-bank issued), or home equity lines of credit are all examples of this kind of account.

An account that requires a fixed monthly payment for a fixed amount of time is called an installment account. Examples of installment accounts include a mortgage, a car loan, a student loan, a home equity loan, or a signature loan.

When account that has no “line of credit” and must be paid in full each month, it is called an open account. Because this type of account still shows up on your credit report, you’ll have to be punctual and exact in paying them in order to maintain good credit. A cell phone account, utility accounts, and cable or satellite TV are all examples of open accounts.

A Better Alternative

Instead of closing your credit card, the best way to increase your credit score is to pay off the credit card and leave it open as a revolving account. In addition to keeping an older account on your credit report and adding to the “mix” of available credit that you have, this strategy also gives you a more favorable utilization rate.

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Are You Working With The Right Online Car Leads Provider?

The web is thronging with companies offering automotive lead generation services to assist dealers reach their monthly sales target. Now, as a dealer, you cannot choose any of these without knowing how they operate or the way they work. In this article, we are therefore going to talk about how you can choose an online car leads provider who works professionally and connects dealerships with genuine and interested buyers.

Conversion Rates

The closing ratio matters when selecting a provider. It’s no use getting leads at flat rates but which fail to convert. That’s why a car seller should focus more on the close ratio and choose a company which has been successful in this regard.
Now, to understand this point better, you need a supporting example. Consider the following situations:

Situation 1: A lead generating agency sends the names and contact details of genuine vehicle shoppers at $20 each. And, the conversion rate is 10 percent. These are the customers who are sure to buy from your dealership.

Situation 2: Another company selling at $12 each but the conversion rate is 5 percent.

Of the two situations above, the first one is a better option because you pay $2000 to close ten deals. However, in the second scenario, you have to shell out $2400 to purchase 200 leads and then convert ten of these into sales.

Beware of Offers that Promise Free Leads

Whenever you are lured by a mouthwatering offer stating free auto leads, there is reason to doubt. In most of these cases, dealers are asked to pay for set up costs or hidden charges later. Never ever sign a long-term agreement as that might adversely affect your bottom line.

It is also imperative that you check for the flexibility of your business with that of the online car leads program. For instance, you should inquire whether the agency in question charges any in billing caps or per lead cost. Though some providers promise to deliver leads at flat rates, you should ask whether they will be able to deliver a minimum number of prospects every month. Otherwise, you will end up paying $25- $40 for just getting a lead. And, also ensure that the lead volume does not plummet radically after a month or two.

Quality

The provider you select should be able to deliver quality results. These are names and phone numbers of those customers who are genuinely interested in purchasing a new vehicle and not casual surfers or merely interested in a sweepstake entry. Before signing any contract, inquire how the company filters out the bad or poor quality auto leads. Generally, professional and reputed agencies delete names and other details of those car shoppers who have provided inappropriate details or those customers with inactive phone numbers. The provider should be able to determine the genuineness of the buyers, collect missing details, and avoid working with duplicate leads.

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