Trading Gap Strateiges in the Foreign Exchange Market

By James Henderson

Forex, or foreign exchange, trading is an extremely popular way of making money. Due to its unforeseeable nature there are a number of strategies that are widely used as a way of determining the best time to invest and therefore the best chances of making money with the system.

Gap trading is one method that has been used in investment markets for years, and is still extremely popular when it comes to forex. One of the benefits of this system is that it is extremely easy to use. In short, it allows investors to take advantage in the gap in price from one day to the next.

For example, the price will be set at a certain level at the time the market closes, and this price may either remain the same or be higher or lower by the time the market opens the next day.

When using gap strategies you will come across 'gapping up' - when the opening level is higher than yesterday's closing level - or 'gapping down' - when the opening level is lower than the previous day's closing level. If the price is the same then there was no gap.

Forex gap trading strategies have been used to great success for many. Though there is always risk when it comes to forex trading, knowing the gaps and knowing to use this information to your advantage really can help you to increase your profits quicker than you normally would.

The best way of doing this is either to ignore the weekend (therefore creating a gap between the close on Friday to the open on Monday) or by creating artificial gaps for yourself each day.

Forex gap trading strategies have been used to great success for many. Though there is always risk when it comes to forex trading, knowing the gaps and knowing to use this information to your advantage really can help you to increase your profits quicker than you normally would. - 23223

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Property Coaching - A Guide to Signing Up with the Best One

By Daniel Parker

If you want to undertake real estate investing then take a look at property coaching first. The importance of working with a professional who has already seen success in property investment cannot be underestimated. However, not all property coaches are created equal. This document offers 4 tips to help you choose a property coach. At the end, we will also give you contact information for the top company for property coaching.

You need to investigate options if you want to find a great property coach. An RP Data search will tell you how many properties the coach owns. If the person purchases properties through trusts, conduct searches on their trust names as well. By researching his background in buying investment properties, you'll find out if he's capable of giving wise advice when it comes to property investing. It is also important to contact the Department of Fair Trading to see if the coach holds the proper licenses for his services.

Next up: research the company. Establish how long the real estate education company has been doing business and how employees it has. Knowing these details will give you an idea if the company is successful enough to offer sound property coaching. Fees are another factor to consider in your decision so ask about the firm's rates and if they oblige upfront payment. In general, avoid companies that ask for huge up front payments.

Learn if the coach makes positive cash flow property acquisitions in the locale where he is suggesting you hunt for property bargains. If so, then he'll be knowledgeable enough with the suburb to give you astute advice on property buys there. This gives you the confidence that he's giving you solid advice.

Next up, inquire what services comprise the property coaching package. Should you be attending a property investment seminar infrequently? Is support free of charge and unremitting? Learn what services are proffered. Will you receive investment instructions only for the area or are other districts covered? Being aware of all these information ahead of time puts you in a great position to get the most out of the company. - 23223

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Option Trading Strategy: The Vertical Leap

By Jordan Weir

Many traders view options as only a short term trading strategy. The idea of a highly leveraged bet with the potential to make big bucks quickly appeals to the gambler inside all of us. Just like a card counting black-jack player, options strategies can be used to make significant short term profits, provided the trader is careful, and knows what they're doing. But while stock options are usually employed solely by that clique of high-risk, high-reward traders, they actually have enormous benefits that tend to go unnoticed by many a long term investor.

The strategy I'm about to reveal isnt often used. Indeed, I've only briefly heard mention of them on obscure websites, and even then, not in enough detail to give an example. So here it is, what I believe may be the best kept secret from long term investors on wall street. The stock option strategy for the long term investor.

Its the vertical option spread, using leap options. How this technique works is you buy one option, while simultaneously selling another option for the same month, but at a different strike price. While XYZ is often my standard ticker, I will use a real company in this case. Keep in mind, this is NOT a recommendation. In fact, it would probably be a bad idea to invest in the example I'm about to give. Its just an example. Yet to get realistic prices for this strategy, it may be helpful to use a actual company.

note:I wrote this part of the article about a short time ago, prices may not be 100% current. at this time GE is currently at 10.41 per share. In this case, let us talk the January 2011 options, giving GE a large amount of time to go the direction we believe it will. So if you thought GE was a superb long term buy, it would be within reason to think it's going to at least $20 per share by that point. By January 2011, many experts expect the recession to be over, and that single development alone should lead to a substantially higher stock price.

Buy one option to start the vertical spread, and sell a second option at a higher price to complete it. With our price target of around $20, and given the current price, 10.41, I would buy the 12.50 strike call option, and sell the 17.50 strike call option. The 12.50 option can be bought for 2.71 at the moment, while the 17.50 can be sold for 1.40, giving us an total cost of 1.31 per share for the option spread.

Now lets examine this trade for a second. If GE is trading below 12.50 on the January 2011 expiration, both options expire worthless, and the 1.31 per option spread invested is gone. On the other hand, if General Electric is trading above 17.50, then the 12.50 option will be worth exactly $5.00 more then the 17.50 option, and so the position has a value of $5.00 per share. If its between 12.50 and 17.50, the call we sold expires worthless, while the call we bought will have value equal to the difference between the stock price and the strike price; 12.50 in this case. How do you calculate the break even? Well we paid 1.31 for the vertical spread, so if its exactly 1.31 higher then 12.50 (13.81), then well be at break even if the stock is at that point.

That gives us an amazing return of 281% if GE is above 17.50, for an annualized return of 107% (holding period is 22 months). Because of the high potential for risk - a complete loss of investment if GE is below 12.50 in Jan 2011, you shouldn't put more then you're willing to risk in the trade. Definitely a speculative play. Yet with how much time there is, it's a much surer bet then short term options, and significantly more profitable then just buying the shares.

So now that the basic idea is out of the way, what are some examples of vertical spreads I would consider? I'm a strong believer in investing in emerging markets, so I am long term bullish on EEM (IShares MSCI Emerging Markets Investment Index). The January 2011 25-30 vertical on EEM is only going for about $1.88 at the moment, with EEM trading at 25.30 so I think that would be an excellent investment. Above 30 it would be worth $5 at expiration, while below 25 it would be worthless. Unless the economy further deteriorates, I can't imagine that occurring.

Along the same lines, I expect FXI (iShares FTSE/Xinhua China 25 Index) to go up. The "China miracle" isn't over, merely in a subdued state due to temporarily reduced demand. The 30-35 vertical Jan 11 vertical would be worth $5 at expiration if FXI is above 35, which from its current price of 28.51, is perfectly within reason. That vertical spread currently has a $2 price, so that would be an even 150% return from now until January 2011.

A far more controversial play would be Bank of America. While the trader in me screams to short the stock, I foresee it being far more valuable then it currently is a couple years from now. The simple reason is that yes; financial stocks have been hammered by the current collapse. Yes, some banking companies have went bankrupt, or have been on the verge of bankruptcy. Is the financial system going to completely collapse? No. Are out of control bank runs going to drive them out of business? No. Are banks going to be lending and making money again after this recession ends? YES! Is pent up demand in housing going to cause a rush to buy houses at prices not seen in a decade? YES! Are banks going to profit from this? Most DEFINITELY. If BAC is above 10 at the January 2011 expiration, the 7.50-10 vertical for Jan 2011 would be worth 2.50, while only costing about $0.65. That would give a 286% return, or 108% annualized. The risk of course, is that BAC goes bankrupt, or BAC stays under the $7.50 per share mark past January 2011. In either case, you would lose your investment. Yet with prices as low as they are now, that isn't very likely.

For the vast majority of people, the stock market is not the place to make a quick buck. While some short term traders will have great success with these option strategies, long term investors can use these same strategies while focusing on the longer term, to achieve gains vastly exceeding those of the regular stock market, while limiting risk. - 23223

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Learn How To Trade Forex

By Hass67

Learning forex trading should not be difficult. With decent understanding of money management rules and a good trading strategy, you should be ready for conquering the forex markets.

You should always try to understand the big picture. You should start each trading session by looking at the daily charts. After looking at the daily charts zoom into 4hr, 1hr, 30min, 15 min etc charts. Forex trading is about interpreting the past price action as well as about interpreting the future price action.

You need to understand whether the market is ranging or trending. You should try to understand any long term patterns that have developed. By looking at the different charts you will develop a feel of how the forex markets are behaving in the short as well as the long term.

Figuring out the general direction of the currency markets is easy. Candlestick analysis and moving averages are a good way to identify long term patterns and reversals.

Bollinger bands applied to 4hr charts can help you to identify the daily trading range. A daily trading range tells you where majority of price action is expected to happen. Any moves outside the daily trading range can be viewed as short term abnormalities and ignored.

Do some scenario planning, once you have a general overview of the market. Make sure you know what news is scheduled to be released and what is the expected market reaction.

Understanding the big picture does not mean knowing the whole picture. You should only focus on your favorite pairs. It takes a longtime and effort to understand a currencys behavior, how it reacts to things like oil prices, interest rates etc. So concentrate only on a few pairs in forex trading.

You should always try to take notes and keep a daily trading journal. Start each entry in the trading journal by analyzing the general direction of the markets for that day. What you think how the markets are going to react to different news that is expected to be released that day? What should be your entry and exit for the trade. How many pips you are expecting to make?

After each trade, analyze what went wrong and how to avoid it in future! In case of a good trade, analyze how many pips you could have made more and how to tweak your trading strategy for better results in the future trades.

Keep these general tips in mind while you are learning forex trading. Always remember never ever trade without stop losses and practice on the demo account for at least three months. - 23223

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Read about Trend Forex System. Try Netpicks Forex Signal Service.

The Advantages of trading in the Forex market

By Joshua

Trading forex has always been popular, though many lean towards trading traditional stocks and shares. However, there are many advantages to trading forex over stocks, including its great potential for earning without some of the restrictions of the stock market.

This is made easier due to the fact that it is a lot easier to learn about the major currencies than it is to learn the ins and outs of the stock market.

This is just an extremely brief overview of the benefits of forex trading. As you can see, many of these points make it a great choice for beginners who do not have much experience in investing. If you are deciding where to trade, then take a look at the basics of forex and you could find that it is the perfect choice for you.

Forex transactions are generally very quick due to the fact that all trades are done with cash. When you get started with forex trading you will quickly begin to learn about making successful predictions.

This is made easier due to the fact that it is a lot easier to learn about the major currencies than it is to learn the ins and outs of the stock market.

This is just an extremely brief overview of the benefits of forex trading. As you can see, many of these points make it a great choice for beginners who do not have much experience in investing. If you are deciding where to trade, then take a look at the basics of forex and you could find that it is the perfect choice for you. - 23223

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