FOREX Entry Strategies

To enter a FOREX trade, a trader must first analyze a currency pair, comprising a base currency and a counter currency. When a trading strategy indicates a profitable opportunity, a trader submits an entry price to buy or sell the currency pair. A trade will not execute unless and until the market price is equal to or more favorable than the entry price. FOREX traders use real-time trading platforms to place trades in their brokerage accounts.

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Entry Point

Traders use technical and fundamental analysis to identify a trade entry point. Exchange rates are expressed as a fraction which specifies how many units of the counter currency (the denominator) are required for one unit of the base currency (the numerator).  Rates are calculated to 1/100 of a percent; this is known as “percentage in point”, or pip, pricing. For example, a DOL/CHF (US dollar vs. Swiss franc) rate of .9507 denotes that $100,000 can be exchanged for 95,070 Swiss francs.  A trader might set a buy entry point of .9505; the transaction will not execute unless the U.S. dollar weakens by two pips.

Order Size

To manage risk, a trader will usually limit the size of any one FOREX order to some maximum percentage of available funds.  A standard contract is 100,000 units of the base currency – in our example, the U.S. dollar.  Accounts set up for min-contracts can place 10,000 unit orders, and flexible accounts can be used for any size order. An example strategy would be to limit any single order to five percent of investment funds.

Leverage

Margin is the amount of cash a trader must use to collateralize a trade – the remainder of the trade amount is lent by a broker. Leverage is the degree to which a trader will borrow trading funds. Higher leverage translates into higher risk and higher returns. A trader’s strategy will dictate how much leverage to use. Leverage levels up to 100:1 are available to risk-seeking traders, but prudent investors may limit their leverage to 5:1 or less.

Trend

Traders forecasting an uptrend in the price of the base currency relative to the counter currency will enter a position with an order to purchase the currency pair – a long position.  Conversely, a short position on a currency pair profits from a downtrend in the base currency. You establish a short position by entering an opening order to sell the currency pair.

Trade Discipline

Trade discipline helps limit losses not only from losing positions but also from failure to promptly close profitable ones. A critical strategic component of successful trading is establishing a stop-loss price coupled to the entry price. The stop-loss specifies how much loss a trader will tolerate before closing a position.  Traders quickly learn never to enter a trade without also entering a stop-loss, as the market may turn quickly against a position.  A further refinement is the take-profit order, which closes out a profitable position at a specified price.

What Is Moving Average Convergence Divergence?

Moving average convergence divergence (MACD) is a technical indicator used to identify the price trend of a FOREX currency pair, such as euro/U.S. dollar (EUR/USD). Currency is always traded in pairs: the numerator is the currency you buy, the denominator represents the sold currency. MACD is a form of technical analysis — the prediction of future prices using past data. MACD relies heavily on moving averages – the running average of the previous n-number of time periods (typically, an hour). To be more precise, MACD relies on two moving averages (“fast” and “slow”) of the difference between two other moving averages to identify a trend.

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Moving Averages

Think first of a simple average, say of the last 26 hourly prices on the EUR/USD currency pair. If you sum the prices in the collection and divide by 26, you have the average price for the collection. Let an hour elapse and do it again. What has happened is that the oldest price has fallen out of your price collection, replaced by the most recent price. Assuming the oldest and newest prices are different, the price collection will have a new average each hour: the moving average of the latest 26 periods. The effect of a moving average is to create a plotted line that “smooths” out the actual hourly price action. The greater the number of periods in the average, the slower the responsiveness of the moving average to changes.

Difference Lines

You start with two primary moving averages of hourly prices of a FOREX currency pair. The first is the average of the last 26 hourly prices; the second is the 12-period moving average. You create the fast average difference line (FADL) by subtracting the 12-period average from the 26-period average. Now, take the nine-period moving average of the FADL and you have the slow average difference line (SADL), which functions to smooth out the FADL.

Histogram

A histogram is a simple XY graph of vertical lines representing the distribution of data. Our histogram plots time on the X-axis and the differences between the FADL and the SADL (the MACD band) on the Y-axis. Superimposed upon the two average difference lines, you will notice that the height of the MACD band will shrink (converge) and grow (diverge) periodically over time. This is the key to interpreting MACD. Note that the different price collections (9, 12 and 26 periods) and the length of the time period (one hour) can be varied, or tuned, as a trader sees fit – the effect is to change the responsiveness of MACD to current prices.

Interpretation

When the FADL crosses the SADL, the difference between the two is zero. As the FADL diverges from the SADL, the histogram height grows. MACD posits that a trend has started when the FADL crosses the SADL and the histogram grows rapidly. When the FADL falls below the SADL on increasing histogram height, MACD is calling for a new downtrend. Conversely, an uptrend occurs when the FADL pierces the SADL from below as histogram height rapidly grows. Because the MACD relies on moving averages of moving averages, it tends to be to lag other technical indicators. Traders therefore view it as a confirmation of a trend that may already have been recognized by other indicators.

Understanding How Personal Loans Work

Everyone needs a little extra money from time to time. There are a variety of ways to borrow needed money, including a home equity loan or a credit card advance, but you might want to consider a personal loan when you find yourself in a position of need. Personal loans are short-term loans and can be used for any purpose, such as consolidation of other debts, purchasing new appliances, or buying a new car. The average personal loan ranges from a few hundred dollars to several thousand dollars. This type of loan is paid in equal installments over a determined number of months or years.

Before You Apply
Before applying for a personal loan, take the time to consider the responsibility that accompanies your choice to borrow money. Financial responsibility dictates you do not borrow more than you can easily pay back. It’s very easy to be tempted to buy something you really don’t need, simply because the cash is available to you. When you obtain a personal loan, you are obligating your future income to the lender. Each time you are paid you will need to set aside a portion of your monthly payment to be sure the amount owed is available to be paid on the loan’s due date, and this requires self-discipline. When an emergency arises, or you need a new refrigerator right away, a personal loan is the perfect solution. As convenient as it is to have ability to borrow money and pay it back over time, remember it is a privilege. Be sure your payments are made on time, as the lender will be adding all your loan repayment information to your credit report.

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When You Apply
Although the application process for a personal loan is less complicated than for other types of loans, there is a certain amount of paperwork that must be completed. Be prepared when you go to apply. You will need the following items to complete your loan application:

You will need a photo identification card. A driver’s license, state identification card, and passport are generally accepted documents for establishing identity. Your social security card will also be required.
You will need to provide proof of residence. This can be done with a tenant-landlord lease agreement or the mortgage payment statement for your home. If you are a student living on campus, you may be required to provide proof of your campus residence as well as your normal home residence.
You will need to provide proof of employment. Be prepared to supply all your current employment information, as well as past jobs for at least three years. The information should include the name, address, and phone number of the company that employs you. Bring your last few pay stubs or electronic transfer deposit statement for the last few weeks.
Be prepared to list all debts you currently owe, such as your car payment or furniture payments.
As long as you have good credit and a steady job, you will probably have no difficulty getting a personal loan.

Marriage And Money – How To Divide?

Before you start reading, realize that this is one man’s opinion on how you should divvy up your money in a marriage. But it does come from someone who has not only been happily married for 20 years, but also has a smooth-sailing financial life.

In other words, my wife and I are very happy with our financial picture, have close to zero debt, and don’t have any real money issues. If you are going to listen to someone financially, we’re a couple who has our ducks in a row.

(**note – stating the preceding is important. I have had debates with people who have strong opinions on this topic, only to find out that they have a terrible financial picture, lousy credit, and couldn’t even buy a set of new tires right now without a credit card. In other words, they may have a certain way of doing this, and even feel strongly about it, but it’s clearly not really working for them.)

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So here’s my advice on the subject – there really is no divvying up the money. It’s ALL “your” money (and by “your”, I mean as both of you as a couple).

In other words, there is no mine and yours. No “I pay these bills, you pay those bills.” Here’s how my wife and I do it:

Two main accounts. One for saving, and for bills. The bulk of both of our paychecks go into these accounts, and ALL bills get paid from the “bills” account (including funding our IRA’s).
We each have a slush fund account to spend on whatever we want. This is where I buy my stereo equipment from, she buys her 106th purse (she likes purses), and so on. We each get $XX a week in cash for whatever, and this is how we fund these accounts. Also, any gift money or money made on the side (etc.) goes into these accounts.
We are both free to use credit cards for most incidental household expenses/gas/etc. Any purchase over $100 gets discussed. In other words, we need to agree before buying a new TV. And if I really want a bigger TV for my rec room, I need to use my slush fund money.
We pay our Credit Card bill in full every month. Period. Except for the house/cars, if we can’t truly afford it that month, we don’t buy it.
So there’s my advice. There is no mine and yours. There is no “I make more than you, so I get more” etc. There is no splitting the bill paying. It’s all together.

This is how we do it, and it works for us. And I mean really works – we have great credit, there’s no resentment, we enough money to do what we wish, etc. We are truly on the same page in our partnership, which if you think about it, is what a marriage really is.

What The Numbers On Credit Cards Mean

Have you ever had to type your credit card number into a mobile phone or computer form? If so, you have probably wondered why the number has to be so long. To answer this question, it might help to take a look at what each digit in a typical credit card number actually means.

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Why Do Credit Card Numbers Have 16 Digits?
This 16-digit number was standardized in 1989 by international agreement. This standardization allows people to use many of their cards almost anywhere in the entire world.

This is a simple explanation of the digits:

First digit: The first number identifies the kind of company that issued the card. For example, banks and financial companies usually use 4 or 5. For a couple of common examples, MasterCard uses a 5 and Visa uses a 4.
Second through sixth digit: These numbers are unique identifiers for the card issuer. In some cases, issuers have different identifiers for various lines of business. As an example, your bank might use one number for credit cards and another number for debit cards.
Seventh through fifteenth digit: These digits are used to identify the person who holds the account, but it’s possible that the same person could have a different number for different accounts with the same company.
Sixteenth digit: This is a check digit that’s used to help verify that cards are entered correctly. It’s not used for security because the algorithm that calculates this digit has been published many times and was developed over 50 years ago.
How Do Credit Card Processors Prevent Entry Errors With Credit Cards?
Simple entry errors are very common with these long credit card numbers. It’s pretty easy to make a simple mistake when you have to key in a long credit card number. However, credit card processors usually have some checks in place to catch these before they go through.

For example, some cards also have a credit verification value, or CVV, on the back. This is a three-digit number that provides an extra check. Online transactions usually also require these. Most credit card processors also require the card’s expiration date, the card holder’s name, and the holder’s address to verify the number against.

These checks are mostly to guard against simple mistakes, and they aren’t intended to actually provide a high level of credit card security. It’s still very important for credit card holders and credit card issuers to monitor their accounts to make sure that they haven’t been used by thieves to commit credit card fraud.

Will Chips In Credit Cards Stop Fraud?

In the past few years, companies that issue credit cards have spent hundreds of millions of dollars to give their customers better security with credit cards that contain microchip technology. Likewise, large retailers have invested even more money in the hardware that they need to read these cards. However, some critics don’t believe that the new cards will really eliminate fraud. In fact, they fear that microchips in credit cards will only shift the way that thieves commit credit card fraud.

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Chip and PIN Compared to Chip and Signature Credit Cards
This new technology makes use of a chip that contains the encrypted information that used to be stored in the magnetic strip on the back of the card. Besides the encrypted data in the chip, the machines that read these cards also generate one-time transaction codes. That means criminals can’t just steal the information and embed it into another card.

The first complaint about the new cards is that credit card companies are distributing chip and signature cards. Executives of the Retail Industry Leaders Association say that chip and PIN cards have proven themselves to be more effective. According to critics, signatures are fairly easy to forge. Also, the new readers aren’t able to authenticate signatures. A criminal might not have any way to know a secret PIN code, but he or she might be able to find a signature to copy from another document in a stolen purse or wallet.

The second problem is that neither type of new credit card will help prevent online fraud. Very often, only a credit card number and expiration date are still required for these. That’s why critics fear that the new microchip technology will just shift the way fraud gets done and not eliminate it. In fact, many places that already have this new technology in place have suffered from an increase in Internet fraud.

With present technology, the only way to truly reduce online fraud might be to require consumers to use a personal card reader to make transactions. This suggestion may not be as outlandish as it seems. With new technology, some of these readers are very small and inexpensive. They can work with computers and mobile phones too. In fact, it’s possible that credit card companies will even consider giving them away to their customers in the future.

Credit Card Users Still Aren’t 100 Percent Safe
It still isn’t time to feel totally secure about the safety of credit cards. Retailers, consumers, and credit card companies all take a hit from fraud. It’s still important to monitor credit card transactions and protect credit card information as well as possible.

The Pros And Cons Of Refinancing Your Home Mortgage

Refinancing is simply a way to replace your old mortgage with a new one. Since mortgage rates have remained fairly low in the past few years, it’s become a popular way for homeowners to reduce their interest rates and in some cases, take some cash out of their home equity. While finding a good deal on a mortgage refinance loan might offer you a good opportunity, there might also be some drawbacks that you should consider.

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Benefits of Home Mortgage Refinancing
The main reasons that people get sold on refinancing is as a way to reduce their interest rate. If you are paying eight percent on your mortgage and could refinance at five percent, you could save lots of money over the course of a 15- or 30-year mortgage term. This might improve your financial situation because you will have more money to save for the future or to reduce other kinds of debt.

Some folks also decide to change the term of their mortgage when they refinance. For example, you might have taken out an original mortgage for 30 years. At this point in your life, you may decide you would rather pay your balance off in 15 years. Typically, interest rates on a 15-year note are cheaper than they are for a 30-year note, and you get to pay your loan off faster.

Alternatively, you may go the other way and decide to stretch your payments out for another 30 years in order to reduce monthly payments. If interest rates are considerably lower for a new mortgage than your old one, the actual payment might be the same or even lower. You will just have to make more payments. Most mortgage companies allow their customers to pay ahead, so you might still end up getting your loan paid off faster. You just have the option to stretch payments out.

Finally, people who have a decent amount of home equity may decide that they would benefit by cashing it out. Equity is defined as the difference between the amount of money that your house is valued at and the amount you still owe on your mortgage. Most lenders require their borrowers to keep about 20 percent equity in their homes, so this won’t work for everybody. Still, it can be a good solution for people who have lived in their houses long enough to build up a good amount of equity and can use the cash to benefit them in some way.

When is Mortgage Refinancing a Bad Idea?
First, you should know that refinancing usually isn’t free. You may have to pay some fees, closing costs, and other expenses to qualify for your new loan. For example, you might have to pay to get your house appraised. It is possible to roll some of these costs into your new loan, but you may end up with a larger loan balance than you started with. It’s always a good idea to shop around to find a broker or lender who will find you the best deal.

Should You Refinance Your House?
It’s important to weigh the costs and benefits of replacing your old loan. If you can save money with lower interest rates or use the money from your home equity to improve your financial situation, it could be a good idea. You might begin by speaking with a mortgage broker to see how refinancing would work for you.

What Will Donald Trump Do To Your Mortgage?

When Donald Trump first started running for President of the United States, many thought it was a joke. When he started winning, many still dismissed his campaign as something of a sideshow, and predicted that more traditional candidates would easily defeat him.

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Of course, we now know this has not proven to be the case. As of this writing, Donald Trump is easily the frontrunner for the GOP nomination, and the threats of a fractured Republican party having a brokered convention are high.

So what does all of this mean for you? And more importantly, what does it mean to your finances, and things like your mortgage? If Trump wins, things could get interesting. But even if Trump doesn’t win, he’s already shaken everything up to a degree, and there’s no going back.

There’s one word I want you to remember – Volatility. Because above everything else, that’s what Trump has brought. He’s shaken up the establishment so much, and proven that many Americans, whether you personally agree with them or not, are incredibly fed up – fed up with politics, fed up with the establishment, and fed up with each other, really.

All of this points to a very uncertain future. It’s not so much the policy of any one candidate or party or ideology – it’s more the unsettled nature of the country that Mr. Trump’s campaign has revealed (no partisan judgement here, mind you. His campaign didn’t create any unsettlement – it just shined a light on it.)

It’s this writer’s opinion that the unsettled nature and volatility is going to continue. And while the most optimistic amongst us things everything will turn out fine economy-wise, I think we’re in for some big waves. Thus, when talking about long term commitments like mortgages, I’m far more comfortable with a fixed-rate mortgage than a variable rate one. I just see a lot of yelling in our future, and for myself, am far more comfortable with knowing what my rates are.

If you have a variable rate mortgage, it’s time to address that. Because waves coming, my friend.

Who Does A Typical Auto Insurance Policy Cover?

Almost all vehicle owners have to pay for car insurance. The problem is that many of these people don’t really understand who their policy will cover. Drivers can be sure that anybody named on a policy is covered for the car that the policy was purchased for. However, policy owners may not be sure what happens if somebody borrows their car or if they rent. In other words, they don’t know if the vehicle or the drivers are covered.

This isn’t totally surprising because states have their own regulations, policies may vary, and a lot of published advice seems pretty contradictory. This article can’t replace the advice from a local car insurance agent or state insurance department, but it will cover some rules about who is typically covered by an auto insurance policy.

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Is a Car Insurance Policy Attached to a Driver or a Car?
Typically, car insurance is attached to the car, but there are some exceptions. For example, a vehicle owner is usually free to let a neighbor or coworker borrow a car once in awhile. If the borrowers are licensed drivers, they should still be covered. If a coworker wants to use the car for business, that particular use might not be covered by a personal auto insurance policy.

An insurer won’t extend coverage to members of the family that live in the same house. Lots of parents would love to skip naming teen drivers on their insurance policies. If those young drivers aren’t named on the policy, an auto insurance company might have the right to refuse to pay the claim. Neglecting to mention that a son or daughter just got a license and is using one of the family vehicles is a very bad idea.

The good news is that auto insurance sometimes follows the driver too. Most policies will cover insured drivers if they rent a car for a few days. Typically, the insurance that covers the rental is the same as the coverage on the owned vehicle. People who only carry liability insurance on an older car might want to buy extra coverage when they rent because they won’t have collision or comprehensive insurance, and renters are usually responsible for damage to the car that they rent.

How to Learn More About Who an Auto Policy Covers?
The exact rules about who is covered by an auto policy might vary by state and insurance company. People who plan to lend out their own car or rent another car would probably be wise to call a local insurance agent and make sure. It’s always better to make certain that a car and a driver are properly covered before an accident and not afterwards.

Why Consider Medicare Supplement Insurance Over Medicare Advantage Plans?

Recently, the Kaiser Family Foundation predicted that somewhat over one out of five Medicare beneficiaries would select a Medicare supplement plan in the coming year. At the same time, almost 30 percent will choose a Medicare Advantage plan. Supplements used to be more popular, and it’s fairly obvious that Medicare Advantage has gained in popularity at the expense of supplements. Given a choice between Medicare supplements and Medicare Advantage, why do some people still choose a supplement?
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It’s fairly easy to account for the popularity of Medicare Advantage plans. For one thing, many come with no additional premium. Even those that do have a premium are usually modestly priced. They might also include prescription benefits. Alternatively, supplements always have a premium and don’t include Part D prescription coverage. People who choose a supplement usually also have to purchase a Part D plan.

Why Consider Medicare Supplement Insurance?
There are many different standardized levels of supplements. They are assigned letter names from A through N. The most comprehensive options, Plan C and Plan F, are the most expensive. The interesting thing is that they are also the most popular. Most people who decide to buy supplements are also willing to buy the most expensive supplements.

When comparing people who decide to have a supplement instead Medicare Advantage, it seems clear that supplement buyers are less concerned about the cost of premiums. It’s very important to realize that the most robust plan levels can also reduce or eliminate concerns about out-of-pocket costs. For beneficiaries who decide to buy supplements, benefits seem more important than premiums. Most Medicare Advantage plans still have deductibles and copays that leave their members vulnerable to out-of-pocket costs.

Also, most Medicare Advantage plans rely upon plan networks to control health costs. People who buy a supplement usually don’t have to worry about HMO or PPO restrictions. Supplement owners can pick any doctor who takes Medicare, don’t need referrals to get to a specialist, and are likely to have many more medical providers to choose from.

Supplements work all over the United States. Some even provide emergency coverage in foreign countries. Medicare Advantage plan members are not likely to enjoy these benefits. People who travel a lot are more likely to enjoy the flexibility of a supplement.

Is a Medicare Supplement the Best Choice?
Both of these types of Medicare health insurance policies have advantages and disadvantages. The right choice is likely to depend upon an individual’s health, budget, and preferences. It’s probably a good idea for beneficiaries to compare options in their own local area to see which choice will be more likely to satisfy their own unique needs.