The Digital Investor

For those interested in getting into forex trading, things can seem a little daunting.  So much so that many decide to quit.  Others get paralyzed for years.  Yes, I said years.  Still others tread forward carefully.  And still others dive in head forward.

Here are some forex trading strategies that you might want to consider as good options in your attempt to get started in this business.  These are ways to reduce your risk while not getting paralyzed.

Automated Trading Software

These software packages automatically trade for you, or at least tell you when to trade.  It is important that you read all of the reviews before you pick and use one.

There are many that have been tested by 3rd parties and have been given a rating.  This should help you decide which ones are good or not.

The best thing to do when you pick one is to test it out first.  Make sure the winning percentages are what it claims to be.  In addition, make sure it’s a system that you will be able to use comfortably.

Testing Strategies

Whether you use an automated system or not, make sure you test whatever system or strategy you intend to use.  Don’t take anyone’s word for it that it works.

In fact, it may in of itself work, but it may be that you don’t know how to execute it properly.  If that is the case, the strategy or system is no good to you.  Make sure you get whatever kinks out by testing it on a forex demo trading account before you use it for real.  It might save you a lot of money.

In any case, you should trade on a virtual trading platform before you do it for real.  It’s sort of just common sense.  Make sure you as a forex trader and your strategy proves themselves before you risk your hard earned money on it.

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I’ve been investing in the stock market for over ten years now and I remember what it was like in the beginning. I spent so much money on books and quick guides none of which provided any real information on stocks for beginners. Well, they offered plenty of information but none of it was all that helpful in navigating my way around investing. That all changed when I discovered a book written by Benjamin Graham called Security Analysis. The weird thing is it was written way back in 1934. I know what you’re thinking. The world has changed quite a bit since then so what on earth can I learn from a book written over 70 years ago?

The interesting part about the book is that although the world has changed, the process of identifying undervalued stocks has not. The teachings of Benjamin Graham still hold true today and that’s why I follow this model. The other reason I value this book so highly is because it’s also the model the most successful stock market investor of all time, Warren Buffett follows. If it’s good enough for Warren Buffett then it’s certainly good enough for me.

Security Analysis is quite an in depth book and I certainly won’t suggest it’s a guide on how to buy stocks for beginners. I feel that if you’re going to start somewhere why not with the best book available. The teachings held within it’s pages will set you up with good habits for the rest of your investing life. There’s no more chopping and changing your portfolio. You identify undervalued stock and stick with it, perhaps for a lifetime. It goes against human nature to do this as so many people panic when they see their share price sliding. The idea’s in Security Analysis are all about forgetting that and knowing that you have a valuable stock that will stay that way for a long time.

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There are many inherent risks in trading on the forex market.  You see the disclaimers all the time on brokers’ websites, analysts’ newsletters and forex news sources.  There is indeed great risk in this business, but there are some tactics that you can use to limit some of your risk.

Forex Managed Account

This is a great option for those who have money but no time to learn the forex trade.  It’s similar to putting you money in a mutual fund.  You get a managed account and you let someone else trade for you.  Each has their own forex trading strategy and approach that they use.  Some even have very expensive proprietary trading platforms and systems.

It’s a way to do forex investing without becoming a day trader.  If you still want to eventually trade your own account, this is a great way to get started.  You can learn the ropes while you are profiting from someone else’s expertise.

Currency Option Trading

This is a method for you to limit your risk.  Currency option trading works similarly to options contracts in the stock market.  You by the option of buying a specific number of lots of currency at a certain strike price. By using forex options, you are limiting any losses you have to the premium you pay for the contract.

Forex Arbitrage

This is a way to profit from price inefficiencies in the forex market.  Usually you do it across three different currency pairs.  You can also execute arbitrage trading tactics across different forex brokers.

Usually forex arbitrage trading happens very fast.  Once an inefficiency in the price is identified, trades will converge on that opportunity to make their cut.  If you do it correctly, it is essentially a risk free method of trading.

Conclusion

Having an open trading position can be very risky.  These are some alternatives that can limit your risk and potential losses.  There are other ways to profit from the market.

Stephen Forex Investing currency option trading, currency options, forex arbitrage, Forex Investing, forex managed account, forex options trading, forex trading, forex trading strategy

Have you thought about being a social lender?  You might not be sure what that is but social lending is the process of lending you own personal money much in the same way banks do to borrowers who need the money for a multitude of different reasons like, consolidating credit cards, medical expenses, or even a car loan.

In fact companies like Lending Club make this process very easy and simple to do.  In this article I’m going to show you how this all works and why social lending could be a big benefit to you.

How It Works

If your currently investing you money into a CD at the bank your probably not seeing much in return for it right now.  In fact a one year CD on BankRate.com is only going for around 1.55%.  With Lending Club and other social lending business you could be seeing an average of 9.5%.

This high return investing strategy is done by investing your money over several personal loans.  For example if you would have $5000 they would be able to diversify you loan over as many as 200 different loans at $25 a piece.

On the other end of the stick borrowers will apply for loans from social lenders to clean up their debt since Lending Clubs rates start out at 8% fixed and these rates are much lower than going out to get an unsecured credit card when rates with them can run as high as 33%.

The Benefits

A couple of benefits to doing this is that first you will be able earn returns much higher than the a normal CD at the bank, Lending Club averages 9.5%

Second, you will be a lot more stability and a lot less volatility than the up’s and down’s that you get when having your money invested in the stock market.

Finally, as a borrower you will be able to get high grade fixed loans with lower rates to help you accomplish the things you want to accomplish in life.

Last Thoughts…

As you can see if your looking to achieve better returns on your money social lending with Lending Club can be the way to go.  When getting started Lending Club will be able to help put together a portfolio that will fit your risk level and lending ability, and in the end this strategy can be a win/win for everybody.

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If you are enrolled in an existing 401(k) plan, then should you leave your present employment you are presented with the issue of whether to transfer your 401(k) to a Roth IRA or whether to leave the 401(k) it with your former employer. The former employer is entitled under law to charge a higher management fee to maintain the 401(k) plan for former employees. There are several benefits of such a transfer, which includes having far greater control on how the funds are invested, lower management fees and consolidated accounts making asset allocation decisions easier. Furthermore, if you have more than one former employer where you have an existing 401(k) plans, then there is even more good reason to consider consolidating them into a Roth IRA.

401k Rollover to Roth IRA can be a good idea if you bear in mind the tax consequences. A 401(k) plan is funded from gross income, not taxed income, whereas a Roth IRA only receives taxed income. To account for this difference, the IRS levies some taxes in order to re-balance things from a tax perspective. Therefore, you will need to pay for this tax cost in that current tax year, and depending on the size of your balance being rolled over, this cost could be substantial.

Once this is factored into your calculations and you have decided you still wish to go ahead, then you will need to find a home for your Roth IRA. Stock brokers, banks and mutual fund families can all act as hosts for your Roth IRA. Fees and offerings will vary from provider to provider, so check the terms carefully. The financial institution that will host your Roth IRA needs to be informed that you are planning to rollover a balance from an existing 401(k) plan. Your 401(k) sponsor will also need to be instructed to commence the rollover to your new Roth IRA and you will need all the appropriate details to hand for all parties involved in the move.

A Roth IRA withdrawal is expensive prior to the retirement age of 59½. It is best avoided if at all possible. Similarly, you will want to determine if a rollover from a 401(k) to a Roth IRA is in your best financial interests. This will depend largely on your personal circumstances and plans for the future.

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