Wednesday, June 10, 2015

What expects US dollar, gold and oil in 2015 year?

The past 2014 will undoubtedly take its place in the history. That year risks had been growing around Ukraine and the Middle East. One of the main events was the collapse of oil prices. As early as in June, 2014 barrel costed about 115$, but in the last days of the year quotes slumped to  56$.

What shall we expect in 2015 year?

Oil market

Main reasons of oil prices collapse in 2014:

- Increase of hydrocarbons production in the USA from 9.8 to 11.5 mln barrels per day;
- Recession in countries of the European Union led to decrease in consumption and prices of hydrocarbons;
- Growth of supply in Iran planning to increase production twice and Libya’s return to the market;
- Technological factor: improvement of technology of production and decrease of prime cost as the result.     

Now you can witness disproportion between demand and supply - each day, it is produced for 600-700 thousand of barrels more than is required by market.

Analytics of the US investment banks assume that within two first quarters of 2015 year this index can grow up to 1,25 mln barrels per day. This factor will put a strong pressure on oil quotations so that we can see how Lows of 2008 year are refreshed. At that time, cost of Brent was 36$ per barrel.

US dollar

The main global currency was boosted by growth of the US economy which was growing with the fastest pace for the last 11 years. US department of commerce revised its GDP estimation and defined it up to 5% per annum. Such estimation was justified by a higher consumer demand  and expenses of business. It was the fastest pace since 2003. It was reported earlier that US economy grew for 3.9%.
Its intensive growth in 2014 lays a solid foundation for 2015 and we can expect that the US currency will be consolidated against its major competitors.

Gold

In conclusion let’s talk about gold. Since there is no inflation risk in the USA and on the contrary, deflation presses Europe, there is no ground for traders to invest in gold: savings are not depreciated. It can make precious metals less popular and quotes of gold may get to 1100$ per ounce.

Confident growth of the US economy will support global markets through 2015, whereas low oil prices will have a positive effect for the economic growth in general.
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Monday, June 8, 2015

How to use Pyramiding for Better Forex Profits

As a retail forex trader, your end goal is always to get as much out of a successful trade as possible and minimise your losses on unsuccessful trades. Most beginner traders will essentially open up a position when they think they have seen a favourable entry point, then let it ride until it is time to close the trade. A more experienced trader will open a position then watch the price action on that trade and if things are moving favourably, they will increase the size of their position on that trade, somewhat similar to doubling down. This technique is called pyramiding and has the potential to greatly increase profits from a successful trade, without a concurrent increase in risk.


Pyramiding Explained
The simplest way to explain pyramiding as a forex trading strategy would be to say that when you’ve opened a position and the price has move successfully for you, you will then reinvest those profits back into the position. If the price keeps moving in a favourable direction, your profits are greater than if you had just kept the original trade amount. If the price then moves against you, you can simply close out the trade and not have lost any of your funds.

An Example Pyramid Trade
Let’s assume that USD/CAD is trading at 1.3215. Since the Canadian dollar has not been strong recently, there is a very strong uptrend in the USD/CAD pair. Your analysis of the market leads you to believe that this trend will continue, so you enter the market with a $1000 position.
Now, the price rises to 1.3315. At this point, you are up $1000. You move your stop loss up to 1.3215, and buy a second mini-lot. Essentially what has happened now is that you have a trade which risks only $1000 in total, but has a $2000 position. You have doubled your position without any increase in risk.

If the trend continued and the price moved to 1.3415 you could then move your stop loss up again – this time to 1.3315 – and buy a third mini-lot. You are now guaranteed a $1000 profit on your first mini-lot and to break even on your second mini-lot. Your risk on the third micro-lot is $1000. In other words, your total risk is zero – this is now turned into a free trade.

If the trend continues and you exit your position at 1.3515, you are well into profit. You’ve made $3000 on your first $1000, $2000 on your second $1000 and $1000 on your last $1000. That is double the profit you would have taken on your initial entry.

The Risks of Pyramiding
This technique is only viable in a strongly trending market, for obvious reasons. Also the stop loss here is hugely important, if you forget to set the stop loss, any market movement could completely wipe out your trade.

Lastly, as with all trades, have an exit point in your mind. Just keeping a position open and hoping for the trend to continue is not trading, that is gambling. Be disciplined, close your position when you plan, and enjoy having a profitable trading career.
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Saturday, June 6, 2015

Best Roth IRA Investments

The Roth IRA is an alternative to the Traditional IRA that originated in the 1990s in the United States. A Roth IRA differentiates itself from a Traditional IRA in that it is funded with after-tax dollars rather than pre-tax dollars. Due to this unique feature, distributions taken from a Roth IRA after one is 59.5 years of age or older are tax-free. (Distributions taken before age 59.5 are subject to a 10 percent penalty from the IRS).

A Roth IRA has many different investment options. This article will discuss the merits of investing in two specific investment options for a Roth IRA: mutual funds and stocks.



Mutual Funds

Mutual funds are the most popular investment option for a Roth IRA, chiefly because they provide so much diversification. Unlike stocks or bonds, which only invest in a single asset, mutual funds have their hands in multiple assets. Mutual funds-- both within and outside Roth IRAs-- reached $15 trillion in assets in the United States in 2013. 

An astounding 62% of all Roth IRA investments are done within mutual funds; the investment options within a Roth IRA mutual fund include funds with an equity, bond or balanced outlook. Of these three options, mutual funds with an equity outlook are by far the most popular-- 
according to the Investment Company Institute,they account for more than half (52%) of the mutual funds in Roth IRAs. Equity funds invest in both domestic and international stocks, and are either actively managed or track a stock index. Equity funds typically focus on growth rather than income, and are for more aggressive investors.


Stocks
31 percent of Roth IRA investments are within individual stocks. Like equity mutual funds, there is the possibility of great appreciation over time. However, since individual stocks are volatile and rarely provide the diversification of mutual funds, they are very risky. They should only be invested in by individuals with a high risk tolerance and a long time horizon. Usually the stock market will provide consistent growth over time, but no guarantees are made.

Conclusion

There are a number of ways in which to allocate Roth IRA funds, but stocks and mutual funds are two of the more rewarding. Do your research, be patient, and stay on top of your investments, and you should be fine.
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