Author: Elizabeth Goldman

Thinking about FX trading from home ? 5 Common FX trading mistakes to avoid

Trading forex is simple, but it’s not easy. There are only a handful of currency pairs that are traded by most forex investors. However, the nuances of trading in this market are almost infinite. Before you make a single trade, make sure you understand the basics and avoid these five common FX trading mistakes.

Don’t Trade Forex Like You Trade Stocks

Stock traders often employ something called “averaging down.” This strategy is used when a stock position moves against the investor. For example, an investor buys 1,000 shares of a stock for $20 a share, and the share price drops to $15 per share. The investor may buy more of the stock at $15. When   his 1,000 shares at $20 are averaged in with his new share purchases at $15, It produces an average share price that is higher than $15 but lower than $20.

Normally, this is a good thing because the stock trader expects to recover any losses. When he does, he realizes a higher average gain since his cost basis is lower. In forex, however, the market is much larger. The market can move against you and remain in an opposing trend for longer than you can remain solvent. Don’t average down when trading forex. Instead, rely on stop losses to maximize your profit.

Set A Stop Loss

A stop loss is like a safety net. Imagine working on a scaffolding 10 stories in the air without a harness. You might be fine working up there for a while, but the first time you lose your balance and fall, it’s all over. Stop losses limit your loss in the markets so that one bad trade doesn’t wipe you out completely. Use them. Instead of wiping out your entire account, you’ll only suffer small, recoverable, losses.

Stop losses also help to increase your gains. Since you are limiting your losses, you can use this strategy to buy back into the market when the trend reverses and exceeds your original stop loss amount.

Don’t Try To Trade Right After Late-Breaking News

New does affect markets in a dramatic way. However, it’s not always clear how the markets will react. Don’t try to out-think the market. You can’t do it. Instead, wait for a trend to develop. Then, trade on the trend. New forex investors tend to mistakenly believe that late-breaking news stories will have an immediate and predictable effect on the markets.

Often what ends up happening is that the market reacts somewhat unpredictably at first. Disruptive news reports often cause a “whiplash” effect, market orders and stop losses are triggered, exacerbating the issue. If you try to trade on this kind of movement, it’ll be like gambling in a casino.

Wait For The Trend, Forget Revenge

You’ve probably heard the phrase “don’t get emotional when trading.” It’s helpful advice, but many newbie traders ignore it. When you lose money, it’s understandable to want “revenge” on the market. However, the market doesn’t care how much you’ve lost. Revenge trading often involves increasing leverage or investment position to make up for previous losses.

This is an incredibly dangerous strategy. You risk losing even more money because emotions can easily cloud your judgment making it impossible to make any objective investment decisions. Instead, wait for another trend to develop, and trade on that trend. Forget your emotions for a moment, and rely on the goals and rules you initially established prior to trading.

Know When To Cash Out

There’s an old Kenny Rogers song, called “The Gambler” It contains advice that’s actually useful for forex investors. “You have to know when to hold ’em, know when to fold ’em. Know when to walk away, and know when to run.” New forex traders sometimes have the problem of “knowing when to fold ’em” and “knowing when to walk away.” When the market turns against you, don’t let your losses run all the way to your stops. Thinking that you can “handle” the downs and that the market will rebound is a fallacy. The market may rebound, but you’ll be out of money before it does. Walk away from losing trades, and don’t get involved in market trends where you know you can’t win or where winning is improbable.

About the Author: Guest post contributed by freelance finance writer Elizabeth Goldman on behalf of Sunbird FX the specialists in currency trading and trading oil CFDs.

The Best Ways of Incentivizing Your Staff

Making sure that your employees are happy is one way of ensuring that your business thrives and prospers. Happy employees are more productive and willing to work harder for you. Setting goals that are realistic, and that employees understand, is a crucial part of any incentive program. If you want to reward your employees financially, there are a few really good ways to do it.

Retirement Matching Contributions

Retirement matching contributions are one way of rewarding your employees for good performance. A retirement account match is when you contribute money towards your employees’ retirement plan. For qualified accounts, like 401(k) plans, you must match all employee accounts the same.

For example, if you offer an employee a $1 match for every $1 he contributes to his retirement fund, you must also offer the same $1 match to every employee. However, some accounts are considered “non-qualified” and you can offer a paid bonus to select employees. This is an ideal way to offer incentives to employees because you can be selective about who receives a bonus and who doesn’t. The bonus may be set up as a direct payment to the employee or you can pay it to a brokerage account where the employee has limited control over the funds.

Normally, an agreement is signed between you and the employee that stipulates what the bonus money may be used for. If you want to motivate your employees to stay with you for a long time, you can structure the agreement so that the employee has full trading authority over the funds but cannot remove them for a set number of years.

Non-Qualified Stock Options

A stock option is a right, but not the obligation, to buy or sell a specific number of shares of stock for a predetermined price and for a predetermined amount of time. For example, a stock option may give you the right to purchase 1,000 shares of Microsoft for $10 per share for the next 3 months. Stock options that are given as a bonus allow an employee to benefit from the increase in the share price of your company if it is publicly traded.
The employee must pay income tax on the difference between the stock price and the strike price at the time the option is exercised.

Incentive Stock Options

Incentive stock options are more of a long-term investment. While non-qualified stock options benefit an employee if you’re going to issue an IPO and expect your stock to do well “out of the gate,” incentive stock options are meant to be more of a long-term investment. Typically, these stock options are held for more than a year from the date the option is exercised. The shares exercised by the options holder also must be held for more than two years from the date of issue of the stock option.

This gives incentive stock options a tax benefit in that they will always be taxed as a long-term capital gain – a tax rate that is lower than the income tax paid on non-qualified stock options.

Employee stock options can also be “restricted.” This means that even though the individual has the right to exercise the option, he may be restricted from doing so prior to a specific date or before a company has achieved a certain benchmark or milestone. This gives further incentive for employees to perform well so that the company’s share price increases.

In some cases, the employee does not have direct control over the share price of the company because she doesn’t have control over any aspect of production. Even still, stock options can help to energize your workforce and motivate everyone to work together so that the company does well.

About the Author: Guest post by Elizabeth Goldman, on behalf of Sunbird cfd Brokers and currency trading specialists. Home to the advanced MetaTrader platform (see the metatrader 4 user guide). All views and opinions belong to the writer and do not necessarily represent Sunbird FX.

How To Raise Capital For Your Business When Your Bank will not Help

Raising capital for a business seems like it should be pretty straightforward. It’s not. Banks often want you to post significant collateral for your business. If you’re just starting out, you probably don’t have anything that the bank can hold as security for the loan. While that might seem like a major roadblock, you can overcome this by raising capital through other sources.

Angel Investors

Angel investors are people who invest in businesses in exchange for a share of the profits that you generate. These investors are always accredited investors and act as either direct advisers for your company or as major shareholders. You have to be incorporated in order to attract angel investors, but many companies exist to make this process easier for you.

For example, the Go BIG Network Investors’ Circle are networks that connect you to angel investors. Inc.com also publishes an updated database of angel investor networks so that you can stay focused on developing your business.

Reverse Merger

Going public is one way to raise funds for your company. By going public, you can issue shares of your company to the general public, and investors will buy those shares from you. The money you get from those investors can be used for any business-related purpose. Of course, investors become part shareholder in the company, so you’ll need to work for your investors’ best interest by growing the company.

Shareholders can also vote on who remains on the board of directors and can affect the direction of the company indirectly through this type of voting. While going public is often expensive, there is an easier way to do it than issuing an initial public offering (IPO). It’s called a reverse merger. A reverse merger is when you purchase an existing public company that has failed, but is still public. Once you buy the company, you structure it so that it buys out your existing, non-public, company. The result is that you now own a public company and can sell shares to the public and raise the funds you need.

Peer-To-Peer Lending

Peer-to-peer lending is a relatively new form of lending when compared to traditional banking. It refers to the process of borrowing money from private investors, using a traditional bank as the intermediary. Companies like prosper.com exist entirely for this purpose. Investors sign up to the website and loan money to promising borrowers.

The loans are typically repayable within 3 years, but you may negotiate the interest rate on the loan. After you place a loan listing, investors bid on your loan. The bidding process is part of the funding process. With each bid, your loan becomes partially funded. An investor may contribute $50, $100, or $1,000 or more towards your total loan amount. Instead of one bank funding your entire loan amount, many investors make a partial contribution to your loan. When your loan is fully funded, the financial intermediary sends the money to your bank account via a direct deposit transaction.

Factoring

Factoring is similar to a cash advance. A factoring company advances you money based on your current accounts receivables. In other words, you sell your invoices to a factoring company, and that company advances you an amount of money equal to 75 to 85 percent of the total value of the invoices. The factoring company may also charge you a fee on top of the discounted rate it advances you. This is a good option if you need liquidity now, or your company is starved for cash and it normally takes you a long time to collect on your invoices.

About the Author: Guest post written by Elizabeth Goldman and brought to you by Wonga – the short term loan experts.