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Top 7 Reasons To Trade Forex Over Other Financial Instruments

This is a guest post provided by ForexTraders.com

The foreign exchange market has literally exploded over the last 10 years. Before the 1990’s, the only players allowed to speculate in the forex market were banks, large hedge funds, and very wealthy individuals. The reason was simple. The minimum contract size was usually $100,000 and it ranged up to $1,000,000; therefore, most traders simply could not afford to trade in the market. The advance of technology and internet changed that. Today, traders can open an account with as little as $100 and begin trading in the spot fx market. This change has caused traders around the world to rush into the market and the Bank of International Settlements now estimates that average daily turnover in the fx market is around $4 trillion! Let’s examine a few of the top reasons why the fx market is drawing so many traders.

Leverage

In the United States, traders that engage in fx trading can leverage 50:1. Leverage was much higher in recent years, but government regulations have now capped leverage at 50:1 effective late October. This means that a forex trader can control a position of $50,000 with only $1,000 on deposit with his broker. Leverage is definitely a two-edged sword that can help a trader garner very quick and substantial profits, but it can also lead to debilitating losses and should therefore be used with caution.

Liquidity

The huge amount of volume that is present in the forex market each day makes it basically impossible for any single financial institution or even group of market participants to manipulate price movements. It also makes it much easier for large traders to enter and exit the market without trading against themselves, which is a common problem in the stock and commodity markets.

24 Hour Market

The forex market is a loosely connected network of international banks; therefore, the market never closes from Sunday evening until Friday afternoon. Liquidity simply flows from financial center to financial center as time zones open and close business operations for the day. This is a huge advantage for small, retail traders because those who still have full-time jobs can trade at night.

Small Initial Account Size

Traders can open accounts with as little as $1 at some brokers, and then trade positions where each 1 point movement is equivalent to $0.01 (in the U.S. this would be lower since the leverages are capped at 1:50). This will obviously never get a trader rich, but it does allow traders a very low risk entrance into the market. Traders generally need $20,000 in order to day trade the stock market. This very low account size at an online forex broker is a big draw for many traders.

Long Trends

The currency market tends to develop very clear, long trends. It is not uncommon for specific currencies to head in the same direction for 5+ years. Of course, there are many dramatic price swings that make real-time trading difficult and challenging, but a quick look at longer-term currency price charts makes it clear that currencies develop strong trends.

Macro Economics

The currency market is very big picture-based. This means there are not a million and one little things that a trader has to track as is common in other financial markets. Currencies react to major macroeconomic developments around the world. Seasoned fx professionals argue that this makes the job of economic analysis much different in the currency market.

Continued Growth and Volatility

The foreign exchange market is expected to continue to grow in coming years, and volatility is expected to remain quite strong as the world continues to move toward a more globalized economy. As globalization continues to change the world economy, investor interest in currencies will most likely continue to grow steadily.

Jason’s commentary: I’ve never looked into forex trading, mostly because I’m not in the “invest & grow rich” stage of my financial life. Have you invested in the forex market?

Shaving for Real

Life

: Image via Wikipedia

When you look at a safety razor, you see the mostly-unguarded blade. When you look in the mirror, you see your throat and you see this blade–by definition, razor-sharp–and you realize that you are about to put a knife to your own throat. Why?

Because shaving sucks.

For my 18th birthday, I received 2 Mach3 razors. I used them for more than 10 years. It certainly beat disposable Bics, but not by much.

I liked it, but only because I didn’t have anything good to compare it to.

I’ve start using an old-fashioned safety razor. Now, I can shave smoother and with less irritation than I ever could with a modern razor and it only takes a few extra minutes.

Why would you want to abandon modern technology to put a blade against your jugular?

Modernization isn’t always an improvement. There is something about reaching back in time a couple of generations and doing things, not only the way they used to be done, but the way they should be done. It’s the same feeling I get handling an old rifle or sitting in an antique car.

A real shave is 15 minutes of peace and focus. Lock the kids out of the bathroom and focus on the task at hand. The concentration will usually give you a chance to forget about the rest of the world for just a few minutes. This is pure meditation.

As a benefit, when you’re done, you feel refreshed and well-groomed. It feels good to take care of yourself.

What do you need to shave like a real man?

Start slow and ease your way into it. Put a cup in the bathroom. If you shave with a modern razor, the easiest way to improve your shave is to use hot water. Put your shaving cream in the cup and add a bit of hot water. Mix that up and use it to shave. The hot foam will do wonders for your skin and the closeness of your shave. I did that and immediately start trolling antique stores looking for a good, cheap shaving brush.

A brush makes applying your shaving cream a small pleasure. Spreading the hot foam on your face with a brush gets in on all sides of each hair, softening it for the razor. Ideally, you want a badger-hair brush, but I’ve been perfectly happy with boar hair. I found one at an antique store for $5.

Shortly after acquiring my antique shaving brush, I decided to go even older-school and upgraded to an old-fashioned safety razor. I took my life, and my life-blood, in my own hands to shave for real. I went with a Merkur 23C Long Handle Safety Razor. It’s a basic razor with a longer handle, because I have large hands and long fingers. Don’t worry about getting an adjustable razor. There’s no point. It cost $29 at West Coast Shaving*.

You will need blades for the razor. West Coast Shaving sells a variety pack of 45 blades for $15. Try them all and stick with the one that works best for your facial hair. I tend to change blades every 4-5 shaves. More than that, and they get a bit dull and make me bleed. I try to avoid bleeding.

Now that you’ve got a brush, a razor, and blades, it’s time to get rid of the worthless can of shaving foam. Shaving soap works much better. You can get 3 discs of Col. Conk’s soap for $15, and they will last 6 months each, easily. They are almost exactly the same diameter as a regular coffee cup, so guess what? Just drop it in your cup.

That’s everything you need to shave for just $65, and of that only the blades and soap are recurring costs. Your razor and brush will last forever. I figure it costs me about $1 per month to shave, now.

How do you avoid killing yourself while getting ready for work?

It’s all a matter of technique.

Dampen your cheeks with hot water to soften the hair. I prefer to shave immediately after I shower.
Run hot water over your brush. Get it thoroughly soaked, then shake off the excess water. You want it hot and wet, but not dripping.
Briskly brush the soap disk until the brush picks up as much soap as it can. It may or may not form a lather in the cup.
Put the brush on your face and whisk it around. I use a quick circular motion to build up a lather on my cheeks. This works the hot soap into each hair. Keep brushing it onto your face until it forms peaks.
Pick up your razor. I run it under some hot water, just so the cold metal isn’t a shock after the hot foam. From here, you need your full attention on what you are doing.
Shave.

When you are shaving there are a few things to keep in mind.

Take your time.
Never, ever, ever, ever turn the blade while it is in contact with your face. You will bleed. Once the blade touches your face, it goes in a straight line.
Keep the edge of the blade as close to parallel with your face as possible.
The goal is hair reduction, not removal.

I make 4 passes when I shave. First, I shave from the top down. Next, from the back towards my nose and mouth. Then, from the front to the back. Finally, I shave against the grain from the bottom to the top. This results in a closer shave than anything I’ve ever had with a modern razor.

When I think I’m done, I dip my fingers in some warm water and run them around my face, in all possible directions, to see if I missed a spot.

When the hair is gone, wipe of the remaining cream and splash cold water every place the razor touched. This closes the pores and will help prevent infections and razor bumps.

The last step is aftershave. Aftershave disinfects your face. It also prevents infections and makes you stink nice.

There you have it: the secret to a baby-butt-smooth shave and 10-20 minutes of masculine meditation. If you are looking for a present for someone, you could do a lot worse than a real razor set.

*I have absolutely no affiliation with WCS. I am just very happy with the service and the product.

How to make Forex spread betting accessible to you

Finance

Money Easy to start and accessible, spread betting UK wide has grown in popularity. Forex spread betting in particular has attracted interest from traders all over the country, since it is a leveraged (or margined) product, which means that you are only required to deposit a small percentage of the full value of your position to place a forex trade. This means that the potential for profit, or loss, from an initial capital outlay is significantly higher than in traditional trading. They can go either long or short on their chosen currencies and can trade across a number of currency pairs. While Forex spread betting can be exciting, for newcomers, there are a few things to do before commencing trading. With advice from experts such as City Index, there is a possibility of being a successful trader.

The first thing any new trader should do is research their market. A combination of technical and fundamental analysis usually works: some traders follow one more than the other, as it works better for them. Over time, you’ll find which research style works for you, while doing so before each trade will help you when looking at each currency pair.

Creating a clear, easy-to-follow spread betting plan is vital. Doing so will prepare you for each trade you make, while simultaneously eliminating any indecision you may have in the event of not having a plan. When trading, it’s also important to make use of the many risk management tools at your disposal. They mean that any potential losses are limited to a pre-set level.

Tying in with any research you do, following the news constantly is imperative. Monitoring any stories which will have a direct impact on the market you’re spread betting on, and looking at the live market regularly is especially important with Forex spread betting.

For beginners in Forex spread betting, there are plenty of resources available online for anyone with an interest in getting into it. Websites of companies like City Index have everything you need to help get you started.

Make a Budget

Finance

: Image by r.lovewell via Flickr

In the past, I’ve gone through a detailed series of budget lessons demonstrating how to make a budget and showing my personal budget spreadsheet template. If you weren’t here to see them develop, you probably haven’t seen them at all. I’ve never built an actual index for those posts.

This is the master index of my budget planning resources. As I develop more, this will grow.

Budget Lesson #1 – In this lesson, I go over how we handle discretionary income and I explain our modified envelope system. The discretionary budget contains things like our grocery bill, or the clothes we buy. We have near-total discretion over what is purchased, hence the name.

Budget Lesson #2 – Lesson #2 contains the details of our monthly bills. These are the ones that are consistent, predictable, and actually due each month. Most people take these for granted as the bills they have to pay, but it’s not true. You can get almost all of your regular bills reduced just by asking. You would also be surprised what you can do without, when properly motivated.

Budget Lesson #3 – This is where I explain how we deal with the non-monthly bills. That is, the bills that have to be paid, but are not due on a monthly basis. I also share the personal budget spreadsheet template I developed. I am working on a few sample templates to match various imaginary scenarios. If you’d like to be an anonymous case study, and get free help setting up a budget, let me know, please.

Budget Lesson #4 – In this lesson, I describe our “set-aside” funds for things that will need to be paid eventually, but not on a set schedule. Sometimes, they are never actually due. We set aside money for the parties we throw, for car repairs and for a number of other things. A few of these items are outright optional, but they are part of what makes life fun. You can’t make a budget without including some of the extras.

Budget Lesson #5 – This is the companion piece to lesson 2. Learn how I’ve reduced–or attempted to reduce–each of these bills. For the better part of two years, I called Dish Network every few months to ask for a discount. For almost 2 years, it was granted. Then one, day, they told me they were putting a note on our account to keep us from getting any more discounts, so I canceled. 100% discounts help us save more.

Budget Lesson #6 – This is the reduction companion to lesson 3. These bills are harder to reduce. Have you ever successfully gotten your property taxes lowered?

Budget Lesson #7 – This is the reduction companion to lesson 4. Notice a pattern, yet?

Budget Lesson #8 – Here, completely out of order, is the reduction companion to lesson 1. Watch as I magically reduce–or rationalize–our discretionary budget.

So, dear readers, what part of budgeting should I address next?

A Moment of Clarity

Finance

: Image by Matt Stratton via Flickr

Ten years ago, I buried myself in debt. There was no catastrophic emergency or long-term unemployment, just a series of bad decisions over the course of years.

We bought a (short) series of new cars, a house full of furniture, electronics, hundreds of books and movies, and so much more. We threw a wedding on credit and financed an addition on our house. We didn’t gamble or drink it away, we just spent indiscriminately. We have a ton of stuff to show for it and a peeling credit card to prove it.

What changed?

In October 2007, we found out brat #3 was on the way. Don’t misunderstand, this was entirely intentional, but our…efficiency caught us by surprise. It took several years to get #2. We weren’t expecting #3 to happen in just a couple of weeks. #2 wasn’t even a year old when we found out she was going to be a big sister. That’s two kids in diapers and three in daycare at the same time.

The technical term for this is “Oh crap”.

I spent weeks poring over our expenses, trying to find a way to make our ends meet, or at least show up in the same zip code occasionally.

I finally made my first responsible financial decision…ever. I quit smoking. At that point, I had been smoking a pack a day or more for almost 15 years. With the latest round of we’re-going-to-raise-the-vice-tax-to-convince-people-to-drop-their-vices-then-panic-when-people-actually-drop-their-because-we-made-them-too-expensive taxes, I was spending at least $60 per week, at least.

Interesting side story: A few years ago, Wisconsin noticed how many Minnesotans were crossing the border for cheap smokes and decided to cash in by raising their cigarette taxes. The out-of-state market immediately dried up. Econ 101.

So I quit, saving $250 per month.

Our expenses grew to consume that money, which we were expecting. (Remember, we were expecting a baby!) Unfortunately, our habits didn’t change. We still bought too much, charged too much on our credit cards, and used our overdraft protection account every month. At 21% interest!

Nothing else changed for another year and a half. My wife would buy stuff I didn’t like and we’d fight about it. I’d buy stuff she didn’t like and we’d fight about it. When we weren’t arguing about it, we’d just silently spend it all as fast as we could.

Bankruptcy was looming. We had $30,000 on our credit cards and our overdraft protection account was almost maxed out. Have you ever thought you’d have to sell your house quickly?

One day, while I was researching bankruptcy attorneys, I ran across Dave Ramsey. When I got to daycare that evening to pick up the kids, I noticed they had The Total Money Makeover on the bookshelf, so I asked to borrow it.

I read the book twice, had a very frank discussion with my wife about the possibility of bankruptcy, and we set out on the path to financial freedom together.

What made you decide to handle your finances responsibly? Or, perhaps more importantly, what’s holding you back?

5 Reasons to Quit Saving and Start Living

Finance, Life

: Image by owaief89 via Flickr

Life is all about trade-offs. You trade your time for a paycheck. Your trade your paycheck for food, rent, and security. Don’t get so obsessed with saving and security that you forget to live your life. There are many good reasons to put your savings on hold in order to really live. Here are five of them:

1. You have an adequate emergency fund. You will never hear me advise against an emergency fund. If you don’t have one, stop reading this and get one. Go. Without an emergency fund, your budget is a financial crisis waiting to happen. With an emergency fund, you can weather life’s speed-bumps without watching them become total train-wrecks.

2. Your retirement is on autopilot. You are not allowed to stop saving and investing for retirement. Ever. Assuming you have a traditionally scheduled career that involves you working until you hit 65 and deferring a huge chunk of living until then, your income will cease when you retire. Do you know how long you will live? Do you want to spend your retirement broke and bored? Are you relying on the responsible financial management of the federal government to make sure you will still get your Social Security? Invest in your retirement and get this investment on autopilot so you can stop worrying about it.

3. Your income is set. I don’t believe in the fairy tale of a company being loyal to its employees. The aren’t. However, if you have a stable-ish job, an in-demand career, and some side-income coming from alternate sources, your emergency fund can be enough to carry you through the low times. That’s what it’s there for.

4. You have dreams. If you’ve always wanted to travel the world, follow a band on your, volunteer extensively, or anything else, it’s time to do it. Don’t postpone your passion.

5. Deathbed regrets suck. Very few people lie on their deathbed lamenting the things they did. Regrets tend to be focused on opportunities missed, skipped, or indefinitely postponed. Do the things that are important to you before it’s too late to do them. Don’t abandon your future in favor of current pleasures, but don’t forget to live, now.

Do you have any other reasons to stop saving?

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