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Banking sector collapse?

It’s almost impossible to ignore the recent spate of banking “issues”, from Northern Rock and the US Subprime, to the Lehmans Chapter 11, and HBOS/Lloyds Merger – 2008 has been a volatile year for the markets and for banking.

What does it mean?

Well that is the million dollar question.. and what will happen remains uncertain. What can be seen is that past models and assumptions were not correct or had “blind spots”. We’re big fans of the Black Swan phenomenon.. on that one.

So for now.. what should you do?

Well only you can answer that..  but for traders volatility can be a good thing.. if you know your market fundamentals

Types of Economic Indicators

In Forex trading, investors utilize fundamental analysis to help make those all-important trade decisions.  This type of analysis looks at various economic indicators (and political ones as well) to help determine trends in the Forex market, which can then be utilized in developing Forex market strategies.  Without this knowledge, Forex trades would be made in a vacuum, which could ultimately spell trouble.  These vital economic indicators can be divided into three main groups, as shown below.

Leading indicators

Leading indicators are exactly what the name suggests – they lead, or predict future events before they actually occur in the economy.  It’s the stuff that economists love to use to make those famous economic predictions that you often hear in the news.  In other words, if a leading indicator shows decline, then the economy will often decline.  If, however, a leading indicator suddenly improves, then the state of the economy will probably improve.

So what exactly are some common leading economic indicators?  A few of the tops ones are the U.S. housing market (specifically new home sales, building permits, and housing starts) and stock market returns.  For instance, if new home sales plummet in three straight months, it could signal a trend that consumers will be spending less overall, for such things as home furnishings and mortgages.  That, in turn, would negatively affect the economy, and eventually a nation’s currency exchange rate.

Lagging indicators

These types of indicators lag behind changes that occur in the economy.  Even though it might seem pointless to monitor these kinds of indicators (since the economy has already turned), they are valuable for confirming trends.  For example, one of the more important lagging indicators, the unemployment rate, might show a positive change only three or four quarters after an improvement in the economy.  This would then certainly confirm a continuing positive trend in the economy.

Coincident indicators

Coincident indicators occur about at the same time of an economic change.  They don’t predict or confirm economic events.  However, they can still be useful in confirming a particularly new economic movement or event in its first few weeks.  An example of a coincident indicator is personal income:  a higher than average personal income would coincide with a strengthening economy.  The Gross Domestic Product (total market value of goods and services for a country) is another example of a coincident indicator.

Sponsored by: Online Forex trading system platforms provide investors the chance to invest in the largest investment market around.

SaxoWebTrader

SaxoWebTrader has been launched in May 2008.

Saxobank say “It marks a new era in trading. Not only does SaxoWebTrader enable you to trade multiple asset classes, it allows you to personalise your account interface. You can choose from an array of charts, prices, market research, data sources and news feeds. You can also access your Saxo Bank account from your mobile phone or PDA on SaxoMobileTrader.”

Let us know what you think

Remain calm when trading

Have you ever been stressed out while trading? Did it affect your judgement… you bet it did. I remain losing 75% of my portfolio as the dot com bubble burst.. and just thinking why me..

Remaining calm under pressure

There are many ways to deal with pressure and many stressful situations.

  • Stress under fire – in the army or in a war
  • Stress from tiredness
  • Stress in competition

Think about why you get stressed and how you would normally deal with it. Recognise that stress also exists while trading.

We’ve been experimenting with iiYoge Eye Movement therapy, they have a free ebook so check it out if you like.. there’s also UltimateCalm.com

New FX platforms to look at

At the moment there are numerous FX trading platforms being setup.

This is a good thing for many, as there are great offers to be had.

Xforex is a company that we’ve been looking at for a while.. they have a mature platform, and a great offer of a free gift when you sign up..

http://www.xforex.com/ForexTradingTL?tlid=3869

They also have good charts and financial calendars.

You don’t have to add a deposit to register for an account and get the gift.. and you can open an account for as low as $100.

While it does say USD a lot.. they are looking for and after UK customers.. I know.. seemed odd to me too.. but I spoke to Daniel B in their press department and he set me straight.

So .. one to take a look at .. let me know what you think.. we’re keen to help people find platforms that work, easy to use and actually answer their phone.. for me.. Xforex is definitely one to check out.

Ps

I love their graphics..

http://www.xforex.com/ForexTradingTL?tlid=3868 (chart landing page)

http://www.xforex.com/ForexTradingTL?tlid=3869 (gift landing page)

http://www.xforex.com/ForexTradingTL?tlid=3870 (donot work page)

IG Index – Trailing Stop Loss

The Online trading market continues to inovate and for those of you working to a sensible risk focussed approach, stop losses are more and more essential. Now what if the stop-loss was dynamic.. always looking out for you best interest..

 

IG Index have introduced (2008) trailing stop losses.This is similiar to some other facilities but a noticeable step forward. It’s good to see a major platform introducing features we help the customer – i.e. you and me.

Their press release said “We are committed to giving you more. More markets, more trading tools, the best dealing technology. We were the first to offer spread betting on shares in 1995. Now we cover over 7000 individual shares, plus indices, forex, commodities and more….” and continues ” Our new Trailing Stops help you lock in your profits:

  • Your Stop level adjusts with the market
  • Secure your gains as the market moves
  • No charge for setting a Trailing Stop”

We look forward to bringing your more news and feedback as and when we can.  If you have any comments, please get in touch.

Trading Online .. You need a fast Computer

When trading online, what computer should you use?

If you are planning on trading online. It’s important to have a fast machine – ie a fast laptop.

Whichever platform you trade on, most require internet access (or benefit from it), and most will work on Mac or PC format. But if you are thinking of buying a new trading machine, you should check first (note – the new Macs actually let you run PC software!)

Things to consider:

  • Software requirements
  • Desktop/Laptop – I prefer a laptop.. so I can work in the garden, coffee shop, parents house
  • Multi use or just for trading? – Over the years we’ve broken computers – well to be fair we’ve made them go slow, by installing lots of things.. so be clear what you’re planning to do.
  • Firewalls / Data Security
  • Antivirus software is a must
  • RAM – the more RAM, the more things can multitask
  • Internet / Wireless / 3G – how will you get on line?
  • BACK UP .. if you’re trading the system goes down.. then what?

Recommendations:

  • Sony SZ – lovely machines.. once you have them set up right
  • Apple Mac Books – always a favourite
  • Apple Mac Mini – you can plug it into your plasma.. and runs silent

“Groundhog Day” in the Financial Markets

I don’t know about
you, but I feel like I’m trapped in a real life version of the movie
I “Groundhog Day.” That’s the hilarious early-1990s comedy where Bill
Murray’s character travels to Punxsutawney, Pennsylvania to cover the
February holiday. Unfortunately, he gets stuck there, and has to
re-live that day — over and over again.

Just look at what
happened this week: There was yet another move from the Federal Reserve
to save the markets — this time in the form of a 75-basis point cut in
interest rates. That sparked more bottom-calling from many of the
talking heads on TV. And it fueled another 400+ point rally in the Dow.

I don’t mean to sound cavalier, but has anything really changed? Isn’t this the same movie we’ve seen four or five times since last summer?

First, the credit markets seize up in some way, shape, or form.

Second, stocks start falling.

Third,
the Fed, the Treasury Department, or Congress steps in and announces
another plan to fix the housing and mortgage crisis, or to loosen up
the credit markets.

Those interventions keep preventing the stock market from experiencing a big “flush” — a truly nasty decline that cleans out all the sellers and potentially sets us up for a larger, more lasting rally.

Instead, each new
plan helps spur some buying. We spend a few days or weeks working off
“oversold” market conditions. Then we go right back to square one
again.

This
one-step-forward and two-steps-back momentum looks exactly like what we
saw during the 2000-2002 bear market. And so far, there doesn’t seem to
be much lasting evidence of a reversal.

The Latest on Residential and
Commercial Real Estate

Wall Street’s
largest banks weren’t the only ones treated to a gift this week. The
regulatory body that oversees Fannie Mae and Freddie Mac also loosened
capital requirements for the two firms.

The Office of
Federal Housing Enterprise Oversight will now require they hold surplus
capital of just 20%, down from 30%. It also suggested that threshold
will fall with time.

The goal is to free
up money that Fannie and Freddie can use to buy or guarantee billions
more dollars worth of home mortgages. That, in turn, is designed to
lower the spread between rates on mortgage-backed bonds and U.S.
Treasuries — something that would lower the rates borrowers pay on home
loans.

It’s not such a bad
idea for the mortgage market, as ideas go. But home prices continue to
fall, and housing inventories remain extremely high.

Is there any evidence of a turn yet? Not as far as I can see. Just consider …

  • The
    National Association of Home Builders, which tracks how builders
    perceive sales activity and buyer traffic, said its benchmark index
    remains mired in the muck. The index held at 20 in March, just off its
    record low of 18 in December and far below the year-ago level of 36. 
  • Meanwhile, single-family home starts dropped another 6.7% in February to 707,000 units at an annualized rate. That’s the lowest since January 1991.
  • Building
    permit issuance for both single-family and multi-family property
    dropped to the lowest since 1991. That indicates future construction
    activity will be even weaker.

And what about commercial real estate? There is troubling news trickling out of thatside of the market as well.

Author: Mike –  Money and Markets

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