1. You must first learn how the stock market works. Whatever you are using to trade the stock market, fundamentals, technical analysis or something else, you should first learn about it. Learn how you can decide if a stock is a good buy. To do this you should read websites and books that are written by people who are already making money in the stock market. See what they think is important and try using their systems yourself.

2. After you have a firm understanding of how the stock market works it is time to develop your own system. Make a set of rules for you to follow when trading. Buy when a stock does this, sell when a stock does that. These rules need to be precise so you will not have any trouble down the road.

3. After you have developed a set of rules for yourself the next step is to open a paper trading account. Practice trading with your rules in your paper trading account. Follow your rules strictly. If you make money in your paper trading account, great, it’s time to move on to step 4. If you haven’t been able to make money with your rules go back to step 2 and develop a new system. Keep doing this until you are making money.

4. If you have a system that is making money in your paper trading account it is time to trade real money. Be careful when trading real money. Most traders will let their emotions control them when they are trading with real money. If you want to make money you have to get in and out when your system tells you to. It might be good to start trading with just a small amount of your portfolio until you can trade your system without letting emotions get in the way.

What is benchmarking? The performance of a mutual fund scheme can be gauged in comparison to a benchmark index or indices. For such purposes, a benchmark index is one which contains broadly similar instruments to those that a scheme sets out to invest in. So, for instance, an equity fund may be benchmarked against the BSE 100 if its objective is to invest in a portfolio of stocks that are similar to those comprised in the index, in terms of diversity, market capitalization, etc. Similarly, a sector specific fund may choose to compare its performance to an appropriate sector specific index.

If the fund offers returns that are better than those presented by the index, it can be said to have outperformed its benchmark. Conversely, if it has given returns that are lower than the index, it has underperformed.

Benchmarking of diversified equity based funds can be done against the Sensex, Nifty, BSE100, BSE 500, CNX S&P 100, etc., depending on the stated objective of the scheme itself. Similarly, the performance of a sector specific fund can be compared to that of the CNX IT, Bank Nifty, BSE Pharma index, to name a few, according to the sector which it invests in. There are also a number of debt fund indices designed by CRISIL and other neutral agencies. These can be used to benchmark the performance of debt funds.

Importance of benchmarking Over the past four years, benchmarking has gained prominence due to the spectacular growth in the AUM of mutual funds and the importance attached to the rate of return generated by schemes in the context of the category to which they belong.

For example, let’s say you have invested in ABC mutual fund and have been rewarded with a CAGR of 25 per cent in the NAV of your fund. In isolation, an appreciation of 25 per cent per year would make any investor more than happy. However, when the performance of the fund is compared with the benchmark index as well as the performance of other funds following the same benchmark, it may create a completely different impact. You may realize that the index as a whole has displayed a CAGR of 40 per cent and other similar funds have also delivered returns in that range. Suddenly, your 25 per cent growth may not look so good any more. What you can draw from the comparison is the fact that good market conditions and not efficient fund management has been responsible for your return.

Caveat While benchmarking can give you some good insights about the performance of your mutual fund, it cannot be your only yardstick for measuring performance, especially if the composition of the benchmark index varies substantially from that of the portfolio holdings of your fund. When a diversified equity fund, which is temporarily overweight in the mid cap segment, is being compared with the Sensex it is bound to result in an inaccurate conclusion. This is because the Sensex is mainly comprised of large cap stocks. Accordingly, be sure to do a benchmark comparison alongside other performance indicators to get a truer picture of where your fund stands.

This plan is all about using a small stake and building it quickly – for this we need to leverage our money.

In this instance put down $500 and you will be able to leverage at least 200:1 and that means you can invest $100,000. No credit checks are required to get this leverage its yours as soon as you deposit the money – so what’s the method?

The method is becoming a forex trader from home – before you say, that’s to complicated, let me give you some points to consider that will change your mind:

- Forex trading can be learned by anyone – it’s a specifically learned skill

- You can learn to trade in a few weeks

- You only need a small stake to get started

- The only tools you need are an internet connection and a computer

- You can trade in 30 minutes a day

- As one currency rises another must fall so there is never a recession

- Currencies are volatile and create profit opportunities all the time

Ask yourself this question – Can you spot repetitive patterns on a graph?

If you can you can become a forex trader by simply following and locking into trends on a forex chart.

This is the best way to trade you need to know nothing about the background to how and why currencies move you simply want to make profits when they do, by following market action.

Of course, leverage is the key to building wealth fast – but it’s a double edged sword, it can create big gains but also create losses.

By using forex charts, your aim is to run the big profitable trends and liquidate losers quickly.

Trends occur that last for months or years and you can see this by looking at ANY forex chart.

You must lose, to make long term gains, so you need to be totally disciplined in your approach to trading.

Is it really that easy?

Yes and no.

The fact is 95% of traders lose all their money – but this is not because they can’t learn to trade correctly they can.

The problem is they make basic errors. In most instances they come from laziness or believing some guru or expert can make them rich.

Avoid the above trap!

Forex trading success is down to you and you alone.

You need to learn the knowledge so that you have the discipline and confidence to trade correctly – keeping losses small and running profits.

If you have a desire to succeed, a willingness to learn and some seed capital, you can trade successfully.

But where do you start? Which retirement plans should you focus on? What are the differences between the various retirement plans out there?

Many Advisors would agree; that if the company you work for offers a 401(k) plan, a pension plan or a 403(b), you should take advantage of the opportunity to enroll. Typically, employers make monetary contributions towards these plans and the internal fees associated with these types of accounts are usually lower than with individual retirement plans. Because of these features, over time, it benefits you two-fold to put your money into them.

Though investing in an employer-sponsored plan has its advantages, it has some disadvantages as well. The investment options you have are usually very limited. And more often than not, you are required to name a spouse or child as your beneficiary. This being said, it is still an excellent way to save and acquire for retirement, it just shouldn’t be your only investment vehicle.

With the current trends of changing careers every 5 to 10 years, many of us will need to roll our 401(k)’s long before we actually plan to retire. Transferring or “rolling” your employer-sponsored retirement plan to a self-managed IRA may be the best option for you. Keep in mind that some companies will automatically cash out your retirement plan if the balance is under a certain amount. If this happens, they will be required to hold back 20% for taxes, and you may get hit with a 10% penalty for withdrawing the cash before 59 ½ years old. Though generally, your former employer would simply perform a direct transfer (called trustee-to-trustee exchange) to your IRA, incurring no penalties or tax ramifications.

A major benefit to IRA’s (individual retirement account) is the tax break. Contributions to an IRA reduce the income you need to pay taxes on at the end of the year. At the same time you receive this tax break, your money is also growing tax-deferred. (Meaning you do not have to pay taxes on the growth as long as the money is not being withdrawn.)

There are technically five (5) types of IRA’s: Traditional IRA, Educational IRA, SEP IRA (simplified employee pension), Simple IRA and Roth IRA.

SEP IRA’s and Simple IRA’s are employer sponsored, and Educational IRA’s are designed for college planning. So for the sake of this article, we will only discuss Traditional IRA’s and Roth IRA’s as they relate to an individually managed retirement account.

A Traditional IRA grows tax-deferred, meaning you do not pay taxes on any of the money growing within your account. Because you are funding your IRA with money that has already been taxed, you will only pay taxes on your investment gains as you take withdrawals. Some, who qualify, may even be able to deduct their IRA contributions.

A ROTH IRA is different from a Traditional IRA in that your contributions grow tax-free. Meaning, you do not have to pay tax on your investment gains even when taking them in the form of withdrawals. Your contributions are also not deductible. If you choose a ROTH IRA, you must first open a traditional IRA, and then roll those monies into the ROTH account.

College professors and teachers have a special retirement plan or pension called a 403(b). This plan is not tied to their specific employer and can move with them as they transfer from school to school. If you’re vested (meaning you have the right to keep all the money in the account) and change schools or even careers, the amount in your 403(b) plan continues to grow tax-deferred.

If your retirement plan/pension includes stock options (ability to purchase shares of company stock), or if your employer gives shares of stock to your plan, you can keep them as the shares will be in your name. You can also sell the shares of stock for the going market rate. You have two choices should you decide to keep your shares of stock: you can continue to use your former employer as your housing agent, or you can roll the stocks into an IRA that you have opened with a brokerage firm.

There are many choices and options for your retirement investing. In addition to the research and articles you will read on your own, it is still always prudent to sit with a Financial Planner or Accountant to thoroughly review and assess your current financial situation, to determine where you are now, and how to achieve your financial goals in the future.

If you make $100 from $500 that is a 20% increase. That may be a little hard to pull off in 1 month. But if you make $100 from $1000 that is only a 10% increase in a month. Now I’m sure you all realize that the more money you have in the market the more you can pull out. So let me give you an example on how margin does just that.

Tom wants to buy stock ABC. It is a good stock that he believes will go up. The stock is currently trading at $85. He buys 100 shares of ABC. 2 years go by and ABC is trading at $170. Tom is excited and sells his stock. This gives him a 100% increase in 2 years.

In this example Tom made a good profit of his investment. But there is a way in which Tom could have made even more money. What is it?

It involves borrowing money. If Tom not only bought 100 shares of ABC, for $8500, but also borrowed an additional $8500 what would have happened. Well when the stock went up to $170 because he owned 200 shares he would have had $34,000. After he paid the money back Tom would have had $25,500. This would have given Tom a 200% return on his money.

How can Tom do this? Well Tom’s broker has a lot of money. The broker doesn’t mind loaning Tom some money to make a few trades. In fact Tom’s broker will loan him 100% of his account value.

Now there are a few bad things that can happen. Because when you buy on margin it is a loan you will have to pay some interest on it. Tom borrowed $8500 and maybe paid back $9000. Tom paid back so much because he held the stock for so long. If he had only held the stock for a few month he might have paid back only $8600. Every broker has a different interest rate they charge. To find out what your broker charges you can always call them up and ask.

Worst than the fee’s you might pay for buying on margin are margin calls. If Tom’s stock had gone from $85 to $50 his broker would worry and for a good reason. If Tom doesn’t have any money than he can’t possibly afford to pay them back. At this point your broker may call you up and tell you to sell your stock within a couple days. Tom would have had to sell his stock for $40, took a loss, and most of what he had would have had left would have gone to the broker, Owe.

There are a few things you can do to prevent margin calls.

1 You can watch your stock. Don’t let your stock go from $85 to $50 in the first place. If it starts to head down it would be better to get out at a small loss than to accumulate a bigger one, especially if you bought the stock with margin.

2 Put more money into your account. If your stock starts to fall and you still like it in the long term. You can always put more money into your account to pay your broker if he starts to get nervous.

3 Don’t buy on margin. If you want to invest in the long term and don’t want to take the chance that you might get a margin call, don’t borrow money. It is as simple as that. You can still make money without it.

Buying on margin can be a very effective way to leverage your money. I still borrow money every time I make a trade. It can help small profits become big profits. If you don’t know if it is right for you maybe paper trade with it. Just to get used to it. You never know if it works well for you until you try.

There are more than 2,700 companies, worth over £1.4bn, quoted on the London Stock Exchange’s markets! If you are planning to buy shares it is worth knowing which type of company is quoted on each of the markets run by the London Stock Exchange as it will help you make the best decisions about your investments. It could even introduce you to a world of investing you never knew existed. There are also other markets you may wish to consider.

London Stock Exchange markets:

The Main Market Alternative Investment Market (AIM) Overseas markets OFEX

The Main Market

Undoubtedly the market most people would identify as ‘the UK stock market’ is the London Stock Exchange’s Main Market. This is the world’s most active international equity market with companies from all areas of the business world, including retailing, technology, finance and manufacturing. More than 2,000 companies, including more than 500 overseas companies, have securities which are quoted on this market.

Some international companies prefer to list Depository Receipts, which represent ownership of the underlying securities and can be listed and traded independently. These shares are usually denominated in US Dollars (ADRs) or Euros (EDRs)

Under the Main Market’s umbrella there are special groupings for certain sectors. One of the most well-known is techMARKTM, the international market for cutting edge technology companies that was launched in 1999. There is also techMARK mediscienceTM, a market for healthcare companies.

Professional and private investors alike track the performance of securities admitted to trading on the Main Market using a variety of indices.

The index that covers all securities listed on the Main Market is the FTSETM All Share but there are other indices covering various sectors, e.g. the FTSE 100, which tracks the performance of the biggest 100 companies listed on the market. These firms, often known as blue chips, are often household names, including Marks & Spencer, HSBC, BP and Glaxo Smithkline. Read more about Indices.

A two-stage admission process applies to companies who want to have their securities admitted to the London Stock Exchange’s Main Market. The securities need to be admitted to the Official List by the UK Listing Authority (UKLA), a division of the Financial Services Authority, and also admitted to trading by the London Stock Exchange. Alternative Investment Market (AIM)

More commonly known as AIM, the Alternative Investment Market was launched in 1995 and is more lightly regulated than the Main Market.

More than 1,500 companies are traded on AIM and represent a variety of industries, including information technology, leisure and hotels, healthcare and biotechnology stocks.

While there are no specific suitability requirements for companies seeking to admit securities on the AIM market, there are some controls. The company must produce an admission document that gives potential investors information on, for example, directors, business activities and the company’s financial position.

The company must also get the support of a nominated adviser approved by the Stock Exchange. This adviser is responsible, amongst other duties, for ensuring the company is suitable for an AIM quotation. Introducing a market such as AIM has enabled these companies to raise money from investors who, in turn, have the ability to invest in a wider range of companies.

But investors must also recognise that the lighter regulation afforded these companies does make AIM a potentially riskier place to invest than the Main Market.

Overseas markets

As well as investing in UK registered securities you may also wish to consider investing in foreign securities. Buying foreign securities diversifies your portfolio, which is an important way of reducing risk while maximising returns. For more on diversification, read Allocating your Assets.

Buying shares in foreign companies has not, historically, been practical for the vast majority of investors because of cost, lack of information and the extra risk of currency fluctuations.

But in recent years overseas trading has become easier, particularly as so much information is available on the Internet. Since the introduction of CREST Depository Interests (CDIs), which you can buy on the London Stock Exchange’s International Retail Service, it has also become cheaper.

There are a tremendous number of international markets but it is harder to buy shares on any but the larger exchanges. Among the most popular are DAXTM 40 index, the French CAC TM -30, the American S&P TM 500 and Japanese Nikkei TM 225. For more on buying foreign shares, click here. (link to Buying shares article)

OFEX

The ‘Off Exchange’ or OFEX market established in 1995 is another market for more adventurous investors to buy shares. It is not a regulated market and securities traded on it are unlisted and unquoted, although most members, as UK companies, are subject to the same company legislation as the biggest blue chip firms.

OFEX has existed for 35 years but has only been known under its present name since 1995. It is seen by some firms as a springboard to listing on AIM and the Main Market but others decide to remain with OFEX. stay with the Exchange permanently.

While the requirements required for trading shares on OFEX are not as stringent as for AIM and the Main Market companies must follow official rules. Shares can be suspended if they breach any of these regulations.

What not to do.

1. Do not buy what the news media tells you to. Too many people will buy stocks based on what they heard on CNN last night. This type of investing is risky. You should always decide for yourself with stock is the best pick.

2. Do not buy what a friend tells you is the next hot pick. This can be even more dangerous than relying on the news to make your investment decisions.

3. Do not overtrade. This is a mistake many professional traders will make. They will have developed a system that turned their $30,000 into $100,000 in 1 year. Then the market changes. They continue to trade their same way and lose it all in the next 2 months. When money is not easy to make in the markets do not trade because you will probably lose what you have now.

4. Do not risk too much on 1 trade. As a rule of thumb you should not risk more than 2-5% of your portfolio in any 1 trade. Also do not risk any more than 10% of your account in option trades. Risking any more than this can be dangerous to your financial future.

5. Do not bottom fish. This goes for top picking too. I am sure many bottom fishers lost a lot of money buying Enron stock.

6. Do not stay in a losing trade. This is something I have seen a lot. Someone will buy a stock at $56 and stay with it even as it goes lower. First to $45, then to $35 and then $20. If you are in a stock that goes against you get out. What to do

1. Do develop your own system. No one cares about your money more than you do. Creating your own trading system is the best way to go about investing your money.

2. Do paper trade before risking any of your own real money. If you can not make money on paper chances are you will not make money when you put real money in the stock market either. Best to figure it out on paper.

3. Do always use proper risk management. Remember never risk more then 2-5% of your portfolio in any 1 trade. Cutting your loses short should be your concern.

While it is a common belief that any money you put into your house will add value to it, this is not always the case. There are really two different reasons that people invest money into their home- Repairs and Renovations.

1) Repairs- Projects like replacing your hot water heater, patching a leaky roof, repairing damaged siding, or sealing up cracks in the foundation are not going to show you a return on your investment but they are going to be required to keep up the overall condition of your home.

Regular maintenance can help extend the life of your home but at some point there are things that are going to be replaced. By avoiding repairs or maintenance on items like this will just make the condition worse and will result in even more money being needed for repairs

2) Renovations- This is where investing money into your house is going to pay off. Projects like renovating a bathroom or a kitchen, finishing off a basement, adding a deck, or even landscaping the yard will not only spruce up your home but they will also add value

That being said, not all of these projects will yield the same return. For the same amount of money, finishing off a basement might yield a 20% return on your investment while renovating your kitchen or bathroom could yield a 75-90% return on your investment.

Even though the rule thumb says that you will see a return on your investment by renovating a kitchen or bathroom, or by finishing off a basement, that is not always the case. If you are planning on selling your home in the immediate future or down the road, putting too many personal touches on a space can actually have a negative affect.

The same thing can be said for spending too much on a given space. If the average kitchen in your neighbor is estimated at $25,000 in value and you spend $60,000 on your kitchen, odds are you will have a hard time convincing buyers that the house is worth that much more than your neighbors.

Adding additional bedrooms or an extra bathroom is always a good investment provided it is not taking space away from other usable space. Be careful when taking usable space to create two spaces. Sometimes taking a bedroom and cutting it in half will actually take value away from the house if it wasn’t big enough to start with. It is always a good idea to have a real estate agent give you some advice as to the impact a renovation will have on the value of your home.

By investing wisely, you can see some significant returns on your investment, whether it is a more comfortable living space for years to come or a more attractive home for potential homebuyers.

1. Trend traders, these are traders that simply buy up trending stocks and sell down trending stocks. An up trending stock is a stock that keeps making higher highs and higher lowers. What a trend trader would do is get into this stock at their low and hold onto it until it stops making higher highs and higher lows. That is it. They do not necessarily have to look at the company’s fundamentals. If it is going up it probably has good fundamentals anyway.

2. Swing traders, these traders play off of support and resistance. Support and resistance are imaginary tops and bottoms of stocks. For example if a stock is bouncing between $51 and $60, $51 would be its support and $60 would be its resistance. What a swing trader would do is wait until this stock goes down to $51 then buy it. They might place a stop at around $48 so if it breaks lower they will only lose $3. Then the swing trader waits until it either hits his stop or resistance at $60. Let us look at what could happen here. If you are right you make $60-$51=$9 if you are wrong you lose $51-$48=$3.

That means you have a 3/1 risk reward ratio. If you win only 30% of the time with a 3/1 risk reward ratio you still make money. Risk reward is very important in swing trading most traders will not take less than a 2/1 risk reward ratio. Also because in a swing trading you will be wrong more than you are right you will need to only risk a small amount of your money in any 1 trade.

3. Break out traders; these are the opposite of swing traders. They want to buy stocks that break above resistance and sell stocks that break bellow support. Let us say the stock in the example above broke out to $62. It is now above its resistance of $60 now old resistance becomes support and it will probably go higher.

A break out trader would buy it here and follow the stock up. They would a stop bellow $60 and move it higher and higher as the stock goes up. Your trade ends when you get stopped out. How much higher to place your stop when a stock moves up depends on the trader. Some traders use a trailing stop that can put a stop a certain percentage below the stock’s price. Others, like myself, prefer to manually set the stop were they think is best. It depends on the trader.

The chronic failure of market value indices and indicators to move ever upward with less amplitude is a function of both fact and emotion. The basic facts involved are economic, and there has never been a stock or bond market cycle that has not been affected by the natural movements of the world economy. (The China syndrome, by the way, is evidence of the strength of capitalism— a pat on the back as opposed to a slap in the face.) It is the emotional realities of the investment world that have led to the rise in volatility. Greed and fear have always had in impact on markets, but as the numbers of individuals with self-directed portfolios has grown, so have the magnitude of the ups and downs.

There is less stability now in even the most conservative investment portfolio structures, as evidenced by the current weakness in fixed-income-content securities despite major reductions in interest rates. Even though interest and dividend payments have been maintained throughout the credit difficulties, these securities have lost some of their market value. But it was investor demand and investment institution greed that led to the creation and distribution of the securities that led to these problems. The problems will be resolved eventually, income security market values and the market indices will move ahead to new high levels. Only the ulcers will remain, while Wall Street creates the new products that will fuel the financial crisis of 20XX.

The Working Capital Model (WCM) approach to portfolio performance evaluation eliminates the tears and fears because it is based on more than the current market value illusion of wealth— a number that won’t sit still long enough to ever be meaningful. Market value, within the WCM, is used only to determine what to buy and/or when to take profits, but all structural decisions are based on Working Capital and all performance evaluations are based on investor goals and objectives. Working Capital is the cost basis of your securities plus any uninvested cash that is looking for a productive home. Its movement reports on the effectiveness of decision-making during the markets’ gyrations. Since 1999, both Working Capital and income production should have grown considerably.

Understanding Working Capital is easiest with bonds, the primary purpose of which is to generate income that can be spent if you choose to, without dipping into principal. Principal, by the way, equals cost basis. A bond portfolio whose market value is below (or above) cost basis pays the same amount of interest as it does when the market value hasn’t changed. In other words, the bonds do their job regardless of what their current price happens to be. In most instances, the only way you can actually lose money is to sell them when your emotions get the best of you.

Variables in the stock market are more numerous, but all the charts will tell you that IGVSI companies almost always survive market corrections and move forward to new market value highs, eventually. Since the purpose of equity investing is to generate growth in capital (profits are called capital gains, aren’t they) when the market value exceeds the cost basis by a reasonable amount. The key to finding a comfort level with equities is to look at the fundamentals (P/E, profitability, debt-to-equity ratio, dividend payment, etc.) of the companies you own and to avoid the current news analyses. Avoid looking at current market value, particularly when the market is in a cyclical downturn, unless you are thinking of adding to significantly weaker positions to reduce the average cost of your position— an integral part of the WCM.

None of the numbers on your Wall Street designed statements reflect your personal deposits to your portfolio, but the Working Capital total, which should always be higher than your net deposits, is unintentionally clear. Your statement compares market value to cost basis and does not consider the gains and income that you have reinvested in your holdings. Perhaps even more insidious is the fact that withdrawals from your accounts are not reflected. If you are purchasing stocks when they move lower in value and selling any of your securities when they move higher, the securities reflected on your portfolio should always be unimpressively black or green. Seeing red should not make you see red.

The WCM focuses on the purpose of the securities an investor holds. The performance of income securities is evaluated by measuring growth in income while the performance of equities is based on the amount of capital gains dollars that profit taking adds to Working Capital. Even when both investment markets are correcting to lower valuations, contributions to Working Capital will continue. Working Capital will grow constantly; the rate of growth will vary with rallies and corrections. If you can embrace the WCM focus on non-market value issues, you will sleep better in all markets.

Most investors are either preparing for or have arrived at the point in time where they want their portfolio to provide the income they need to retire or to fund other activities. The WCM assures that the asset allocation will support the income production efforts, but only when the actual cash withdrawals remain a smaller number than the total income. If you withdraw more than you make, including any commissions that you choose to treat as a flat fee, your Working Capital total will fall and your portfolio’s ability to produce a growing level of income will fall with it. In most cases, the amounts you withdraw from your portfolios are totally under your control and can be kept below the amount of income produced. The longer you can keep it that way, the more secure your retirement income will become.