Useful Articles and Text Summaries

Ms. Suzanne Lieurance writes a page at Ezine Articles about how writing a book can help one’s business to new heights. As we know, there are dozens of books written by successful business professionals. That’s because they know the secret. She stated three ways in which a book can boost your business.

1. Become a leading expert, as the public immediately sees you as a credible industry expert after you print your own book.
2. Get paid to speak and sell your books. With strategic marketing, once the public knows you’ve written and published a book you can be in big demand to talk about what you do.
   
3. Attract the media and get interviewed for newspapers, radio, magazines, television, and even sites at Internet.  See the accumulated effect?

Read this.

We know the housing bubble has caused many assets’ value turning blur. This is an article Mr. Matt Carter wrote at Inman Blog. He gathered the picture quite well and I found it really understandable.

Well. After the bubble exploded, foreclosures are getting mixed in listings at many sites. Many bargain hunters may end up disappointedly that many properties that turn up in search results aren’t actually for sale. Besides the dollar amount of these properties may represent a borrower’s debt condition instead of an asking or market price. Houses are priced as cheap as $1,000, where banks are selling them at loss. Despite the fact, you might not guess that the sales price on some properties may actually be less than what the realtors/agents on both sides collect in commissions. Why could this happen? It is when potential costs associated with owning a foreclosed property such as taxes, maintenance, and legal liabilities are considered. Check my reference to help you see the game behind. It’s an interesting fact about low valued properties.

Traders in money and equity market tend to analyze price movement by using one of these analysis : technical or fundamental. Sometimes they mix it, but usually there’s only one that make of majority of their forecast. I read a short but useful article about this, which stresses particularly for traders in forex market but applies quite the same for any fraction of money and equity market.

1. Technical traders. These traders make their decisions using two primary tools: charting tools (trend lines, support and resistance levels, etc,) and quantitative models (using mathematical analysis such as moving averages, stochastic, etc.). They aim to study historical data or behavior of the market in order to make prediction about future movements.

2. Fundamental traders. They analyze countries’ economic data including news and government statement and political condition. Besides key economic data, events like military conflicts, natural disasters, market sentiment, and changes in political leadership are also considered.

Futures are becoming more and popular as a derivative product. Investors and traders choose their preferences about which market to focus on, and sometimes it’s between forex or futures. What are main differences below these two markets? See my points from the reference I got.

1. Liquidity. Forex market is the most liquid market in the world. Futures market is just a small procentage of its amount. It’s always easy to find buyer and seller.

2. 24-hour trading. Futures do have overnight market, but they are far from liquid and only thinly traded. While forex is a real 24-hour market.

And more…

See how simple to differentiate their technical characteristics? Take a deeper look at my reference site. It provides more informative and attractive explanation, I really like how they present it.

There are questions about which of these two moving averages (MAs), the simple (SMA) or the exponential (EMA) one, fit swing traders better. A SMA is simply an arithmetic mean, while EMA weights the most recent price data most heavily and thus considered to be more complicated. EMA is useful for faster indicator of price though it can also be a premature one.

An article I found made some principles about their usages for swing traders.

1. MAs provide support and resistance line.
2. Pay close attention to the slope, upward-sloping MAs is more bullish than one that is sloping sideways. The opposite applies for bearish slope.
3. A bullish signal is indicated when price is above an upward-sloping moving average, the opposite applies.

And the list goes up to 7 principles…

Whether foreign exchange (forex) market is a zero sum game has longed debated on forums. Here is a good article from Wikipedia that helps to explain the kind of game, though it doesn’t focus thoroughly on the zero-sum part. It’s written that forex market is actually a zero-sum game, meaning a trader’s gain is another trader’s loss and it sums up to zero. However, brokerage and other transaction cost technically making it a “negative-sum” game or no longer a zero sum’s. The big number of experienced well-capitalized professional traders who devote their attention to full time trading have caused significant information disadvantage compared to inexperienced retail traders. In a fair gamble between two players that continues until one goes bankrupt, the player with the lower amount of capital has higher probability of getting bankrupt. This implies that retail traders should be careful in the game, since they don’t own the “capitalization” as those of big traders.

I came across this light article while browsing information about market efficiency. It’s readable and easy to understand. Take a look.

Efficient Market Hypothesis (EMH) suggests that at any given time prices fully reflect all available information on a particular stock (or on any market nowadays). Thus there’s no advantage of price forecasting effort because prices are not predictable but random.

However there are anomalies that challenge market efficiency such like “January effect”, ‘weekend effect”, etc. And yet, there are many successful well-known investors in the market. EMH argues that market efficiency does not require prices to be at their fair values all the time, instead they may be over or undervalued in random occurrences, but will eventually revert back to the mean values. And there are degrees of efficiency as explained below.

1. Strong efficiency, where price reflects all public and private information.
2. Semi-strong efficiency, where price reflects all public information.
3. Weak efficiency, where price reflects all their historical data.

In the real world, markets cannot be either absolutely efficient or inefficient. However, the age of information technology has made markets all over the world increasingly efficient.

http://www.investopedia.com/articles/02/101502.asp

Spread is a common word we hear in forex spot market. As written in an article I found, spread might be the only factor that affects your trading profitability most. The article gave me insight about it even more than what I was curious to know.

Spread is :

1. The difference between the ask price (the price you buy at) and the bid price (the price you sell at) and it’s always quoted in pips.
2. The way broker earns money from your transaction, since there simply always be higher ask price than bid price.

Spread is so much important in trading because it can significantly distinguish between a profitable or a losing trade, despite the pips figures seem insignificant. It’s in fact the most noticeably transaction cost in this market. Tighter spread is always better for traders, but this should go along with excellent quality of execution. The policies are different from broker to broker, and so you better find the most transparent policy you could get. If they don’t give enough explanation, better run and find another broker.

I suggest you read this article.

Forex market often sounds complicated to those who has no background. I felt this too at my earlier moments. But an article in a site has been so useful in building my understanding of forex market. I read so many others, but this is still the best and simplest I can get. Read the summary before you go to the site linked.

Foreign exchange (forex) is the largest market in the world, with volume of transaction over $4 trillion a day, compared to the NYSE trades of $25 billion a day. It even equates to more than three times the total sum of the stocks and futures markets volume. The Forex spot market has no central exchange or physical location. It’s an over-the-counter (OTC), or called “interbank”, market since the whole market is run electronically. Trading of money in forex market are conducted through broker or dealer, and the currencies are traded in pairs. There are always quotes such as EUR/USD and GBP/JPY. The exchange rate of a currency versus other currencies is commonly a reflection of the condition of a country’s economy compared to the other countries’ economies.

Get puzzled of so many currency pairs in your foreign exchange (forex) trading account? Here is explanation I got from an article.

Currency-cross is simply any currency pair that doesn’t include US Dollar directly, means the US Dollar is neither the base nor counter currency.  It’s also a wide pricing for commodities and approximately 90% of all transactions in the Foreign Exchange market involve US Dollar. So it’s actually pretty much about the dollar. Why then, do we still have to look at the puzzling currency crosses?

Well, many trading opportunities can be exploited when you look at major currencies other than those that cross US Dollar directly. They also make a great use when you want to avoid the unpredictable volatility of US Dollar. Read the complete article.