Forex- Things to know on how to trade

Things we should consider before investing in forex trading. You can not make a million U.S. dollars for this advice, but it can help save a nest egg. Top retailers know that the risk control is as important as knowing how to trade for big profits.

- Do not invest all your money in a trade, no matter how safe you are. An experienced trader will continue to diversify. Diversification is your safety net for the tragic loss. Without diversification you can be out of the game before you have a chance to play.

- You should know how much you are willing to invest in trading. You must enter any market with the amount of money you are willing to accept as a loss without too much damage to your total money. Search for personal comfort level and stick to it.

- Listen to your natural intuitive power. A smart investor follows a plan, and that plan is in place way before the first currency exchange is ever made. It can be difficult to follow your instincts when the emotions living in the development of trade. If you are trying to keep the same state of mind as you developed your strategy, you'll be more successful.

- Control your trade. If you see a trade takes off, stay in control, do not pull too fast or wait for the bottom to drop out. Keep track of your strategy, you should have a projected stop-loss in place. Just let it happen. If you see weaknesses in your strategy, set between trades not during them.

- Trial and error. Always test a new strategy. You can find or have heard of best strategies everywhere, but what your personality does not always work for the others. Try all the new trading strategy with paper trades or your account before taking it live or use a free demo account. You may need to adapt to a new strategy, you do not know until you try it.

These steps should help to avoid costly learning curve because Forex is very risky. Forex market is always there when you're ready, so it will take time to assemble a work plan until you are sure you can do a constant, and then always think positive and be a winner trader.

Little Secret Creates Wealth for Anyone Who Uses It

Oil Trading for Amateurs

I gotta tell ya, the last thing I ever wanted to do was sit in front of a stock or oil chart all day making trades. But I knew that people were making a fortune trading oil and I wanted to learn how.

So I started doing my research into oil trading strategies and nothing sounded appealing to me. Not only did I not want to sit in front of an oil chart all day long, but neither did I want to read all the news stories every day about the price of crude oil and if it was going to go up or down.

I surely didn't want to have to understand how the value of the dollar or the S and P 500 affected the price of crude oil, so I had almost given up on the idea thinking that I had to be an expert analyst in order to trade successfully.

Then I was fortunate to find a small group who taught me the basics of oil trading and all by myself I developed this simple strategy that allowed me to extract five to ten pennies from the market every single week day with almost no risk of loosing.

The strategy is simple and I'm going to reveal it right here right now.

During the first few minutes of the opening US oil trading session I identify the parameters of the range in which the market is moving. Then in anticipation of the morning breakout I place a pending order to buy a long position and a pending order to buy a short position just outside that range.

Now all I do is sit back, relax and wait for the market to go dramatically in either direction until I have gained my desired five to ten cents. Once it reaches my desired profit margin, I close out my trade and leave the session a winner.

After loosing money trading I learned that the only thing standing between me and a fortune was greed. If I could control my greed I could get rich, and if I could not I would loose everything.

Take your time and learn this strategy well and make your fortune trading oil for just a few minutes a day.

Coca-Cola - A Value Stock?

There has been much talk lately about Coca-Cola and its potential as a value stock - as it now spots a dividend yield of 2.6% (which is the highest dividend yield since the late 1980s) and a P/E or less than 21 - right at the bottom of its five-year low. Moreover, the current price of approximately $43 a share is also near the bottom of its nine-year range - (nine years ago, the last former great CEO of Coke, Roberto Goizueta, was still at the helm of the company). Sure, Coke has had its own set of problems, but it is a great company, they would argue - and heck, Warren Buffett is also an owner of Coke shares.

Don't get me wrong. I really like Coke as a company. Its brand is as American as can be, and yet over 70% of all its sales are derived from outside of North America. The country with the highest consumption per capita of Coca-Cola is Mexico. According to Interbrand.com, the brand name of Coca-Cola is worth approximately $67 billion and is the world's number one brand name. Who could forget the famous declaration of Coke's patriarch, Robert Woodruff? When the United States made the decision to enter World War II, he placed his hand on his heart and famously declared that he would "see that every man in uniform gets a bottle of Coca-Cola for five cents wherever he is and whatever it costs." Of course, it didn't hurt that Woodruff's friend, General Dwight Eisenhower, was a great promoter of Coke as well. By the time the war ended, hundreds of thousands of fighting men and women became a fan of Coca-Cola for the rest of their lives.

Under the leadership of Goizueta, Don Keough, and Doug Ivester, Coca-Cola emerged as a growth and must-own stock during the late 1980s and up to the mid to late 1990s. Keough was the great motivational speaker, while Goizueta was unmatched in his ability to "manage" the stock price and the Wall Street analysts who covered the non-alcoholic beverage industry and Coca-Cola. Goizueta had a habit of watching the stock price of Coca-Cola on an intraday basis on a computer in Coke's headquarters. When Warren Buffett was buying shares of Coca-Cola back in 1988, he and Keough figured it out by watching the action of the trading and tracing those purchases to a broker based in Omaha. Ivester, a former accountant, could have been regarded as a great financial alchemist. Under the financial leadership of Ivester, Coca-Cola bought out many of its bottlers and named the entity as Coca-Cola Enterprises. The bottler went public in November 1986.

When Coca-Cola Enterprises (CCE) went public, Coca-Cola (the company) owned 49% of its outstanding shares. Because of this, Coca-Cola had the ability to raise syrup prices at will (the former agreement mandated that Coca-Cola only adjusted its price to match inflation for its syrup in the North American market) - thus squeezing the profit margins of the bottler but increasing its own revenues and profits. The stroke of genius was this: Because of the fact that Coca-Cola only owned 49% of CCE, it did not have to consolidate any of its financial statements with CCE. At the time, not one single analyst totally understood this relationship. Year-after-year, the company delivered. Goizueta carefully (personally) managed all the information that came out of Coca-Cola. He would personally call Wall Street analysts. Any analyst that dared to question him openly or disagree with Coca-Cola's earnings projections would be rebuffed. One such analyst was Allan Kaplan from Merrill Lynch, who at one point wrote a note to his clients observing that Coca-Cola may be depending on Japan for too much of its profits. When Goizueta found out about the note, he responded angrily with letters to both Kaplan and his bosses at Merrill Lynch. Kaplan was banned from attending analyst meetings at Coca-Cola for more than a year. From that point on, analysts knew not to mess with Goizueta and Coca-Cola.

Keough officially retired in 1993 while Goizueta passed away in October 1997 - succumbing to lung cancer. Ivester succeeded as CEO but behind the scenes, the company was in disarrays. People loyal to Keough and to Ivester clashed - with the former group bearing the brunt of the hardship. The current CEO, Neville Isdell (who was loyal to Keough and the only true competitor for the top job back then) was sent into "exile" to Great Britain to head up a bottler. According to a recent Fortune article, "The biggest problem [with Ivester], though, was his tin ear. Ivester was high in IQ but terribly short on EQ. A self-made, stubborn, very shy son of North Georgia millworkers, he had gotten where he was through brains and hard work. He resented Keough's grandstanding, say people who knew him well, and never fully appreciated the importance of Goizueta's almost daily chats with directors. (Ivester declined to comment.) Before long, head-down and full tilt in a turbulent market, Ivester had alienated European regulators, executives at big customers like Wal-Mart and Disney, and some big bottlers, including Coca-Cola Enterprises (on whose board sat Warren Buffett's son Howard). As he raced to put out fires, he became increasingly isolated from his own board of directors. One person was keeping in touch with them, though, even in his retirement--Don Keough."

By December 1999, Ivester was out as CEO, after board members Warren Buffett and Herbert Allen told him that they have lost confidence in his leadership. If anything, the next CEO Doug Daft fared even worse than Ivester. Daft, an Australian and who ran Coke's Japanese operations, did not have a clue about the culture in Atlanta. In a sort of retaliation for Ivester's handling of Keough's loyalists, he also made many of Ivester's favorite executives leave the company. He also looked for quick fixes - for example, by trying to boost Coca-Cola's profitability by simply reducing headcount. By May of last year, Daft was out as CEO, and Neville Isdell - a former darling of Keough - came out of retirement to run Coca-Cola.

Described as "charismatic," Isdell may be the best man for the job, but it is still too early to see what he can do at this stage to revitalize the brand. Under the leadership of the trio of Goizueta, Keough, and Ivester in the 1980s and much of the 1990s, the shares of Coca-Cola were a must-have and Coca-Cola was regarded as a growth stock. Please also keep in mind, however, that the run of KO during that time also occurred in the midst of the greatest bull market in U.S. stock market history.

Again, readers should recall that I have always contended that we are still in a secular bear market - a bear market not unsimilar to the 1966 to 1974 secular bear market. While indices such as the Dow Industrials, Transports, the S&P 400 and S&P 600 have recovered nicely since the cyclical bear market bottom in October 2002, large caps such as Coca-Cola, Microsoft, or even GE have never really covered, and it is my belief that large caps will continue to underperform once the bear reasserts itself sometime this year. The dividend yield of 2.6% may or may not help, but who would want to hold a "value stock" once the Fed Funds rate is greater than its dividend yield (as of right now, the Fed Funds rate is 2.5%)? I really do not see deep value here. While a P/E of 20 is at the low end of its five-year range, it is interesting to note that Warren Buffett started buying his shares of Coca-Cola in 1988 when the P/E was only 13 (with a market cap of less than $15 billion) - and analysts at the time were proclaiming the stock to be expensive! S&P currently projects a fair value of Coca-Cola at $46, so there is really not a great margin of safety here.

While I believe Coca-Cola is a very strong brand and should be a part of every investor's long-term core holdings, I do not believe it is a good time to buy at this point. The growth in the stock price of KO was neither due to luck nor coincidence - it was due to Goizueta's shrewd management of the stock price, Keough's salesmanship of the company, and Ivester's financial genius - along with a roaring bull market more than anything else. Despite the lack of leadership in Coca-Cola during the last seven years, part of the old dream of KO being a growth stock has still hung on - for far too long. For KO to be an attractive stock once again, this author will need to see a more compelling valuation, such as a stock price of $25 to $30 a share. At some point, however, I believe KO may be a glamour stock once again (as it still has a lot of potential in China and India where only a total of about 850 million cases of Coke finished products were shipped in 2004, compared to 20 billion cases for the entire world), but not until some of the weak hands have been shaken out from the stock.

Buy and Hold Investment Philosophy

Wall Street has been preaching the doctrine of Buy and Hold forever. The worst part about it is the small investor (and some big ones) actually believe it. Brokers and financial planners believe it, but when you show them they can get a better return by timing the market they just say, "It can't be done". They are either lazy or stupid.

Most brokers have not learned their trade - investing. Webster says that means putting money into something (stocks) for the purpose of obtaining an income or profit. When people look at their brokerage statements these days they must wonder where their broker went to school. Investors could have done better with a dartboard.

Brokers are not taught to make money. They are taught all the regulations that come out of Washington that must be followed so the brokerage company will not be sued. To my knowledge none of them are taught the basic fundamentals of increasing customers' wealth or protecting the customers' capital from loss.

Brokerage houses hire people to do reports about companies. They call them analysts, but today those jobs have deteriorated into snow jobs to get people to buy stock in a particular company. When you read the report you will find it very professionally done with pretty pictures and graphs and charts. Wow! I'll buy that. And a few months later you will wish you hadn't.
When you have a loss the standard reply is, "Don't worry. You are in for the long haul. The market always comes back". In your lifetime? Today there are hundreds of stocks that have lost 50% to 90% of their value and there is absolutely no hope they will ever recover those losses. But....you are in for the long haul. You now have the Buy and Hold philosophy.

Why do so many people cling to this doctrine?

You have a stock you bought for $40 per share that went up to some profitable number and now is down below $10/share. You're out 75% of your money. You are waiting for it to go back up so you can get out "even" and I will tell you "even" is a loser.

Many years ago I heard a story about how they used to catch monkeys in Africa. A hole was made just big enough for the monkey to get his outstretched hand in a hollowed out coconut shell. Fruit and sweets were placed inside. The monkey put his hand in and gripped the goodies, but could not remove his clinched fist. It refused to let go even when the hunter came to put him in a cage. All the monkey had to do was let go of the candy and he could have escaped.

Many investors are the same way about the stock they bought. They won't let go. The investor does not want to admit he was wrong. You are not wrong until you sell - just broke. Small losses will not hurt you, but holding on can put you in the poverty cage.
Buy and Hold conventional wisdom will break you. Learn to let go of the losers quickly and you will preserve your capital.

1 Billion Reasons To Invest In Resources

The last decade has seen tremendous changes in the global economy. The US superpower has increasingly taken on debt. Then they have turned around and monetized that debt. The result long term will be a greatly devalued currency. Inflation will also be a concern when the economy rebounds a little. This may lead to questions around the validity of the USD as the reserve currency. And that could be very interesting. Contrary, China has been slowly building its economy. With over 1 billion people, China is poised to be a resource black hole. That gives you 1 billion reasons to invest in resources.

Resources cycles tend to move in a very long fashion. But that super cycle can be exploited. People who were investing in resources when the industrial revolution was taking off did very well. But now the US, and other developed nations, are debt laden and waning. China, however, is on the verge of its own revolution.

Per capita GDP has to fall in the range of about $3000-$5000 for an economy to garner a consumer, middle class. Once that happens, resource needs start accelerating as the economy starts developing. That means that China, with 1.3 billion people, will start consuming more and more resources. It's hard to wrap our minds around the enormity of that kind of consumption. But let's make a comparison of the US and China.

The US tallies about 310 million residents thereabouts. China, as we've already seen, weighs in at about 1.3 billion residents. Oil usage in the US runs around 68 barrels per capita. China, on the other hand, runs around 5. Think about the demand side of things when China starts moving to 5, 7, 9 barrels. And we're talking 1.3 billion people here. And that's not even considering all the other resources that China is stockpiling. Likewise, we haven't mentioned India's economy. Though I believe India will lag behind China.

The story is the same with electricity. The US consumes around 12 kWhr per capita. China currently consumes 1 kWhr per capita. Again, the story remains the same with other resources like copper, silver, steel, uranium, etc. And a look at China's nuclear facility proposal would make you blush. It's very,very aggressive. Any way you slice it, resource demand is going to go through the roof.

Resources are great because they are tangible goods. They have intrinsic value. Yes, resources are volatile in the short term. But the super cycle of resources is set and ticking. Once China and India move to prominence, resource usage is going to sky rocket. It would be prudent for an investor to consider resources in one's portfolio.

Knowing The 5 Rules To Wine Investment

If you are looking for the perfect investment then you have found it! Investing in wine is the best way to invest your money and if you play your cards right you will surely succeed. You can easily profit from your wine investment if you follow these five rules. First, choosing the right wine is important and you can never go wrong with Bordeaux. Make sure that they are GREAT vintages, not just good ones, and know where to buy. Once you have purchased it, make sure that you take care of it properly in order to ensure its success. And lastly, but most importantly, follow the critics' reviews, and live by them. Their ratings are highly regarded by your future clients.

When choosing the wine you plan to invest in you have to make sure that you find one that is going to grow. Bordeaux wines are the most popular and are also the most successful. Knowing what you are aiming for is the first step. From there you can continue your search. After that you have to begin looking for the right vintage. If you plan to make a serious investment, you have to find the right vintage.

Yes, you can get a good vintage that some people are aware of, but the true wine lovers look for a GREAT vintage. If you plan on making money with your wine investment, look for the ideal vintages that will guarantee a payoff. Lastly, when looking for the perfect wine consider where you buy it. The history of the wine is extremely important at an auction and the fewer owners from the winery itself, the better.

Once you have an idea of what you want to buy, make sure that you have prepared the way you will store it. You need to make sure that it is in a dark place that is neither too humid nor dry. Also, try to keep it either in a wine cooler or in a separate space specifically made for it as it absorbs outside smells so if it is not stored correctly it will be ruined.

Lastly, and probably most important, make sure that you follow the critics. Follow what they say and base your wine investment on their opinions. Though it may seem obvious, many people do not trust the critics, however, the consumers trust them, and you need their approval. Investing in wine is a growing business that many people are depending on. If you play your cards right and make sure that you do your research and follow the five important steps you can secure your and your families future.

How to Make Big Money Safely in Stock Market

(1) Stock Market is Tough Place to Make Any Money
Consistently

NASDAQ or SP&500 averaged about -6% per year for 5 years
between 1999 and 2003. Many individual investors who made
killing in the internet bubble period got wiped out during
those 5 years. Many who trusted Wall Street experts by
investing their life savings into mutual fund had rude
awakening after the huge loss and scandals in many of the
famous fund names.

Numerous academic studies have shown that more than 90% of
mutual funds failed to beat market over the long run and
that more than 90% of individual investors lost money in the
stock market. Too many people and too many Wall Street
experts or mutual fund managers are buying and selling
stocks like madmen, with no sound strategy or any hope of
long term success. Ironically, they're the ones who create
opportunities for prudent, long term oriented investors.

To be successful in stock market, you either have to become
an expert yourself or to seek help from real successful
experts. Stock market is such a brutal place that there is
no room for half-expert or expert pretenders. The truth is
that only a small percentage of disciplined and experienced
people earn disproportionate huge amount of return, many
times at the expense of the rest. It is an insult to "Wall
Street expert" professional title when so many of such
"expert pretenders" failed to beat index or merely stay
break-even.

(2) Majority of huge performance claims in Ads by "Experts"
are not real

Too many investment newsletters or hot mutual funds touted
their huge past performance and went into disaster later on.
Who do you believe? I have been in this stock market long
enough to know that majority of their claims are not "real".
I will tell you why below.

The first reason is simply due to "cheating". Let's be
honest about many Ads. Many of them do not tell the whole
and true story of their performance. For example, they would
tout huge percentage of gains for certain winning stocks and
hide the losing stocks. If you look deeper into their whole
portfolio performance, their portfolio performance was not
impressive at all. Many investment newsletters will have
multiple portfolios in publication. In their ads, they will
only mention the performance of the winning portfolio and
hide the losing portfolio. The problem with multiple
portfolios is that when you subscribe to their newsletters,
you would not easily know which portfolio out of many will
have best performance in the long run. Which portfolio do
you follow? Most important of all, which portfolio out of
many does the newsletter author invests for his/her own
money? If the newsletter author or the mutual fund manager
does not invest into a portfolio himself or herself, how
would you trust their services?

Even if past performance of a newsletter or a mutual fund
was pretty good, it may not indicate good performance in the
future. Many hot technology mutual funds jumped up 100% or
more in the 90's and dived to their death after 90% to 99%
of loss. Certain investment methods such as growth stocks
investing are known to be risky. Momentum investing or day
trading methods are known to be extremely risky methods that
can wipe out life savings over night. There is simply no
free lunch. While a risky method can produce fabulous gain
in relative short term, over the long run, a risky method is
more likely to make people poorer rather than richer even if
a short term gain was gigantic. Gigantic short term gain is
just a dangerous stock market trap to lure the inexperienced
people into the market. Dreaming for instant satisfaction of
huge short term gain overnight with speculation is just a
recipe for disaster ahead.

(3) Value Investing is the Only Proven Safe Method

Value mutual funds are well known to have lower volatility
than growth mutual funds. Numerous industry and acedemic
studies have shown that value stocks as a group performed
far better than growth stocks in bear market. Many
technology and internet so called "growth stocks" lost 90%
to 99% of value in just a couple of years after 2000 while
many value stocks went up during the same time frame.

In fact, the single most important element to obtain high
investment performance over the long run is to maintain
MARGIN OF SAFETY of a portfolio. That is why the greatest
investor Warren Buffet once quote "Rule No.1: Never lose
money. Rule No.2: Never forget rule No.1.".

(4) Value Investing is the Proven Method to Make Big Money
in the Stock Market

I know that I'm going to catch a lot of flak for saying
this, and that many people will misunderstand what I'm
saying. There are certainly other methods of investing or
trading, which made people rich. There are certainly many
under- performing value mutual funds, which give people
wrong impression that value investing is equivalent of low
performance with less risk.

However, I want to emphasize that in fact value investing is
investment style that can obtain high performance with less
risk. I want to stand by my above statement for the
following reasons:

* In the early years of my investment career, I have studied
and tried all kinds of well known methods of famous
investors or traders, Short term trading, Momentum trading,
Technical Analysis, CANSLIM, growth stock long term buy and
hold, Random Walk theory, etc. I have been there and I have
done there. Evidenced by my past investment performance,
value investing is the only method that delivered gigantic
investment return consistently for me over past many years.
In 2003, I have made more than $150,000 in stock market with
value investing method. In 2004, I have made even more money
than 2003 so far. With the power of compounding, there is
really no upper limit for the investment profit with value
investing.

* In 1984, Warren Buffet gave a speech titled The
Superinvestors of Graham-and-Doddsville, which categorized
performance of many famous value investors who beat market
year in and year out. Many of people mentioned in this
article are legendary multi-billionaire right now. It is
true that only a small percentage of investors can beat
market consistently. However, it is not by chance at all
that so many of students of Benjamin Graham became super
riches in America while other methods have not produced that
many rich people. It is also not coincident at all that the
second richest person in the world is a value investor named
Warren Buffet, a student of Benjamin Graham as well.

(5) Value investing will not distract your regular job

The nicest thing about value investing is that it will not
distract your regular job if you choose not to stare at the
stock market frequently in your office. In fact, it is quite
healthy to forget about stock market in your office and
worry about that only at your home after work.

Many newbies in the stock market still believe that if they
stare at stock price quote closely, they can obtain better
chances of winning. It will not. Staring at the stock quote
is least important part of this game. In fact, staring
closely at the stock price quote is more likely to create a
loser rather than a winner because of greed and fear in the
stock market. The more one is unable to resist the mad mood
of Mr. Market, the more likely one is unable to invest
successfully with value investment method.

I am not saying that successful value investing does not
require time. The time you will need in value investing
depends on the investment vehicle you utilize. If you invest
with a value mutual fund, you will not need much time in
stock market and you only need to follow up quarterly with
your fund's performance. If you are a passive investor of my
investment newsletter Blast Investor Real-time Plus and you
follow my model portfolio passively, you will only need to
pay attention to my infrequent trade alert closely and read
my newsletter issues every 2 weeks. If you invest by
yourself, you will certainly need hours of time every week
to look at hundreds of value stock leads and do your own due
diligence by reading 10Q or 10K SEC filling, or by listening
to conference calls, or by talking to company's management.

(6) Successful Value Investing is Hard, But You can Do It!

I certainly do not want to make you to believe that value
investing is as easy as reading couple of books. Value
investing not only requires tons of knowledge and expertise
in financial analysis, accounting, US tax law, US bankruptcy
law, etc., it also requires real life training of right
psychology to fight against greed and fear in the stock
market. It is hard to do.

However, successful investing certainly can be done and I
have done it over past decade myself. You certainly want to
look at my investing articles of this web site for more
information.

(7) You need to start early in value investing

Let's be honest about value investing, it is not a get-rich-
quick scam and it takes time to really make living with
value investing without need of your regular job. You need
large starting principle if you want to make living from
stock market investment than your salary.

By reading Warren Buffet's article above, you can pretty
much guess that successful value investors can achieve 20%
to 30% per year performance consistently over the long run
regardless of whether market is bear or bull although it is
possible to obtain significantly higher performance in
earlier investment years due to smaller fund size and luck.
20% or 30% more consistent investment return is already very
high return over the long run. Since Peter Lynch retired
from Fidelity, you can rarely find a mutual fund with that
kind of performance over past many years.

The best approach is to treat stock market investment as
side business in addition to your regular job. Your regular
job help you pay your bills and help you earn the initial
principle for value investing. Once your investment net
worth surpasses $100,000, sooner or later you will realize
that your regular job salary can hardly keep up with
compounded rate of investment return. Too many people
naively believe that they can get rich quick with
speculative trading method in stock market rather than a
hard work with a job and value investing at side. It is a
lot easier to make your first $50,000 net worth with a job
rather than speculation in stock market.

Even if you do not have large sum of money right now as
principle to make really big profit out of value investing,
you still want to start value investing early so that you
can learn in and out of value investing in your earlier
years of investing in the stock market. Successful
investment is long term process. The earlier you start
investing successfully, the better off your pocketbook will
be, and the quicker you will reach your financial freedom.
Let's do a quick math, if your starting capital for
investing is $50,000 and your annual compouned rate of
return is 30%, you will need 9 years to surpass $500,000 net
worth. However, to turn $500,000 net worth into 1 million,
you only need 3 more years, think hard!