Futures trading is a trading system done in standard form contracts which includes commodities trading, stock indices and other derivative products that could be traded before the contract matures. The contract can be traded repeatedly by Java Global before the due date of delivery, in accordance with the wishes of market participants, both in the physical and non-physical markets.
Futures trading have become very attractive among clients who had previously invested in tradable stocks, mutual funds or other forms of physical trade. Futures trading amongst individuals have blossomed, after a long time being under the jurisdiction of the banking institution and fund management companies.
Having global access, reliable means of support and high human resource capital, Java Global encourages clients to take advantage of futures trading as a means of investment, transfer of risk through hedging measures, as well as a reference price transparency of price inflations.
Trading transactions by using margin trading facilities provided allows for one to make transactions in excess of one’s paid-up capital The trading margin is considered as collateral remitted to the futures brokerage firm which holds it as a security deposit to ensure that one is able to meet payment obligations, while conducting transactions through the brokerage firm.
How to make profit with Futures Market?
Many traders would have the wrong understanding on how to make money with Futures market on the moment they open their real trading account. Making money in Futures market does not solely depending on the reality might be different from the expectation of all beginner traders.
There is not free money or easy money in this world especially in Futures market as everyone commonly understands that there will be no free lunch unless one was born with golden spoon. Surely it is very likely to make consistent money or profit in the futures market, and it can be a relatively easy way to augment the monthly income if a trader uses the right approach and with the right mindset.
The first thing that each trader must embed in their mind is to make profit or money in Futures market with consistent paste instead of always aiming for huge gains followed by huge losses. Traders will need to be always be aware of their emotions and make sure their trading routine is consistent and that it reflects their consistent mindset (*Emotional Control in Investment). The reason is because it will be easier for them to diagnose their mistake and to find out the next best approach to be able to continuously making profit and covering losses.
In order for a trader to learn to make money in Futures market, he must also learn how to trade effectively and must learn an effective trading strategy that isn’t too complicated. Once he does this, he will have to actually learn to manage himself in a responsible manner in the markets. This means constantly being aware of his emotions and actions, and making a Futures market trading plan and keeping a Futures market trading journal.
Traders who don’t do these things are typically going to lose money, sooner or later. The best way to learn how to trade the markets is to obtain training and guidance from an experienced and successful Futures market trading mentor, just as learning any any other skills or profession is best learned from a mentor as well.
Investment Capital vs Profits
Investment Capital vs Risk
TYPE OF MARKET ANALYSIS
To begin, let’s look at three ways on how you would analyze and develop ideas to trade the market. There are three basic types of market analysis:
- Technical Analysis
- Fundamental Analysis
- Sentiment Analysis
There has always been a constant debate as to which analysis is better, but to tell you the truth, you need to know all three. It’s kind of like standing on a three-legged stool – if one of the legs is weak, the stool will break under your weight and you’ll fall flat on your face. The same holds true in trading. If your analysis on any of the three types of trading is weak and you ignore it, there’s a good chance that it will cause you to lose out on your trade!
Technical analysis is the framework in which traders study price movement. The theory is that a person can look at historical price movements and determine the current trading conditions and potential price movement.
The main evidence for using technical analysis is that, theoretically, all current market information is reflected in price. If price reflects all the information that is out there, then price action is all one would really need to make a trade. Now, have you ever heard the old adage, “History tends to repeat itself”? Well, that’s basically what technical analysis is all about! If a price level held as a key support or resistance in the past, traders will keep an eye out for it and base their trades around that historical price level.
Technical analysts look for similar patterns that have formed in the past, and will form trade ideas believing that price will act the same way that it did before.
In the world of trading, when someone says technical analysis, the first thing that comes to mind is a chart. Technical analysts use charts because they are the easiest way to visualize historical data! You can look at past data to help you spot trends and patterns which could help you find some great trading opportunities. What’s more is that with all the traders who rely on technical analysis out there, these price patterns and indicator signals tend to become self-fulfilling. As more and more traders look for certain price levels and chart patterns, the more likely that these patterns will manifest themselves in the markets.
You should know though that technical analysis is VERY subjective. Just because Ralph and Joseph are looking at the exact same chart setup or indicators doesn’t mean that they will come up with the same idea of where price may be headed. The important thing is that you understand the concepts under technical analysis so you won’t get nosebleeds whenever somebody starts talking about Fibonacci, Bollinger bands, or pivot points. Fundamen
Fundamental analysis is a way of looking at the market by analyzing economic, social, and political forces that affects the supply and demand of an asset. If you think about it, this makes a whole lot of sense! Just like in your Economics 101 class, it is supply and demand that determines price.
Using supply and demand as an indicator of where price could be headed is easy. The hard part is analyzing all the factors that affect supply and demand.
In other words, you have to look at different factors to determine whose economy is rockin’ like a Taylor Swift song, and whose economy sucks. You have to understand the reasons of why and how certain events like an increase in unemployment affect a country’s economy, and ultimately, the level of demand for its currency.
The idea behind this type of analysis is that if a country’s current or future economic outlook is good, their currency should strengthen. The better shape a country’s economy is, the more foreign businesses and investors will invest in that country. This results in the need to purchase that country’s currency to obtain those assets.
HOW TO INVEST IN GOLD
- Understand how investing in gold differs from buying gold. When you buy gold coins or bars, you are purchasing the metal. A futures contract of any kind is an agreement that you will pay the current price at some point in the future, regardless of the price at the time. If the price goes down you will lose money; if the price rises, you make money. This is a “call” contract; you can do the same thing in reverse with a “put” contract. What makes investing in gold so potentially profitable and so risky is the margin. Futures contracts are bought and sold with the trader putting up a small amount of the actual price (perhaps 10 percent). When you invest in gold costing $100,000 you put up $10,000 (or even less). If the price goes up 10 percent you can double your money. But if the price goes down 10 percent you lose your entire investment.
- Educate yourself about the factors that affect the price of gold. Three types of economic forces are important to the price of gold. Demand can increase because new buyers are entering the market. We have seen this in recent years as newly emerging industrial nations like China are creating growing demand for gold. Another important factor is the value of the dollar. When the value of currency falls, either because of inflation or a weak dollar on the currency exchanges, it takes more to buy gold, so the price rises. Economic uncertainty is also a major factor. Gold is a good hedge and a relatively safe investment. When economic news is bad, investors pull out of stock markets and put their money in safer investments–and gold is a perennial favourite.
- Open a brokerage account to invest in gold. Most traders use a discount brokerage. Buying and selling gold depends on small changes in price most of the time, so experienced traders keep overhead to a minimum by using discount brokerage firms.
- Keep track of the price of gold and gold futures. Up-to-date information is essential when profit or loss depends on small changes in price. You can get daily quotes on the price of gold using the links available online. Futures contracts are always somewhat different in price and you will watch those prices separately. Most brokers have online sites where you can monitor prices in real time.
- Study the markets and trading patterns for a while and practice by making mock trades. When you are ready, try your hand at trading gold. Successful traders in gold are the ones who can limit their losses while taking advantage of profit opportunities.
Why commodities still belong in your portfolio
Recent weakness masks positive trends, long-term demand
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — The recent nosedive for many commodities has done little to shake money managers’ belief that natural resources are on track for long-term gains as China and other developing countries grow richer.
Commodity futures prices hit the skids in May, in some cases losing more than at any point in the last two years and giving back much of 2011’s gains.
“Dramatic gains that we’ve seen, primarily liquidity driven, are unlikely to be repeated” in the next three to six months, said Mihir Worah, a portfolio manager and managing director with Pimco, the mutual fund giant. Worah leads several of the firm’s top performing commodity-based funds.
Yet commodities still play an important part in an investment portfolio, offering some diversification from traditional stocks and an avenue to the long-term growth of the world’s developing markets.
Greater numbers of people in China, India, Brazil and other emerging economies have more money to spend — a global force that requires more commodities and materials for both infrastructure and consumer needs.
“Metals are a proxy for standard of living,” and as China and other emerging markets grow, they will need metals to build infrastructure, said Wayne Atwell, a metals and mining analyst with Rodman & Renshaw investment bank in New York.
“Large parts of the global population, particularly in China and India, are going through a particularly commodity-intense growth phase,” which bodes well for commodities’s longer-term prospects, Worah added. “We see significant supply-and-demand mismatch.”
Demand — or the lack of it — has been worrying commodities investors over the past few weeks. Commodities futures went south after a flare-up in eurozone sovereign debt concerns boosted the U.S. dollar and pushed traders to unwind positions linking a weak dollar to higher commodities prices.
In addition, a series of increases in the amount of money required to trade silver, crude oil, and gasoline, among other commodity futures, unchained steep selloffs for commodities. Moves by China and India to cool their economies and raise interest rates also pressured commodity prices.
The Dow Jones UBS Commodity Index has lost 0.2% this month, on top of a 5% decline in May. The benchmark is still up 2.4% for the year so far.
Commodities investors may be in for more rough times. With the U.S. job and housing markets still ailing, and manufacturing showing signs of slowing, many buyers are bracing for slower global growth. The U.S. Federal Reserve’s asset-buying program, known as QE2, is drawing to its June 30 close without a clear replacement despite the slowing economy, and that is also worrying investors.
In this climate, Pimco has avoided or cut back on commodities “overly influenced” by liquidity factors, Worah said.
That means trimming oil and gold positions in favor of commodities that are “underpriced relative to growth potential,” he said, such as natural-gas futures. Worah also is bullish on corn, which faces potential shortages in the near term.
Pimco recently took profits and unwound positions in Brent oil futures, the European benchmark, to buy more of the U.S.-traded oil benchmark, the West Texas Intermediate product.
One reason for this move, Worah said, is Pimco’s expectation that over a two- to three-year time horizon, new pipelines will relieve bottlenecks in WTI’s delivery point in Cushing, Okla.
The premium of Brent over WTI is still justified in the short-term, “but the market is pricing it like it’s permanent,” Worah noted.
The outlook for commodities also depends on whether your investment is above- or underground.
For gold and other precious metals, escalating arguments in Washington over raising the federal debt ceiling and concerns about inflation are likely to provide short-term support, fund managers said.
Yet for energy commodities, disappointing news from this week’s meeting of the Organization of the Petroleum Exporting Countries has muddled both the short- and medium-term outlook.
OPEC members meeting in Vienna failed to reach an agreement on rising official production targets, pushing prices higher on fears of constrained supplies. Markets widely anticipated an increase in quotas, and worried about a divided OPEC.
“That was a hugh shock to the market,” which expected OPEC to at least bring the official quotas closer to its actual production levels, said Michael Yeung, head of research at Casimir Capital in New York. Accordingly, oil in the second half of the year is likely to trade in a tight range with few price spikes, he said.
While there’s uncertainty about 2012, one thing is clear — “the world is accustomed to oil at $100” a barrel, Yeung said. For agricultural commodities, meanwhile, the latest report from the U.S. Department of Agriculture made it all the more clear supplies are a concern. The USDA on Thursday rattled grain markets, slashing previous predictions for corn and increasing global demand expectations. For example, an exchange-traded fund that tracks corn, Teucrium Corn (NAR:CORN) , is up 8% in the past month and almost 24% for the year so far, according to investment researcher Morningstar Inc.
“There’s just not any room for error, it’s very tight,” said David Hightower, an analyst and principal with The Hightower Report in Chicago, about the supply of agricultural commodities. He recommends that retail investors invest directly in commodity futures but temper such trades with options.
Hightower doesn’t favor exchange-traded funds, saying the way some of them roll over their positions when futures contracts expire cuts too much from profits.
The history of gold investment
Gold is a chemical element with the symbol Au (from Latin: aurum “gold”) and an atomic number of 79. Gold is a dense, soft, shiny metal and the most malleable and ductile metal known. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a transition metal and a group 11 element. With exception of the noble gases, gold is the least reactive chemical element known. It has been a valuable and highly sought-after precious metal for coinage, jewelry, and other arts since long before the beginning of recorded history.
Gold resists attacks by individual acids, but it can be dissolved by the aqua regia, so named because it dissolves gold. Gold also dissolves in alkaline solutions of cyanide, which have been used in mining. Gold dissolves in mercury, forming amalgam alloys. Gold is insoluble in nitric acid, which dissolves silver and base metals, a property that has long been used to confirm the presence of gold in items.
The native metal occurs as nuggets or grains in rocks, in veins and in alluvial deposits. Less commonly, it occurs in minerals as gold compounds, usually with tellurium. Gold standards have been the most common basis for monetary policies throughout human history, being widely supplanted by fiat currency only in the late 20th century. Gold has also been frequently linked to a wide variety of symbolisms and ideologies. A total of 165,000 tonnes of gold have been mined in human history, as of 2009. This is roughly equivalent to 5.3 billion troy ounces or, in terms of volume, about 8500 m3, or a cube 20.4 m on a side. The world consumption of new gold produced is about 50% in jewelry, 40% in investments, and 10% in industry.
Besides its widespread monetary and symbolic functions, gold has many practical uses in dentistry, electronics, and other fields. Its high malleability, ductility, resistance to corrosion and most other chemical reactions, and conductivity of electricity lead to many uses of gold, including electric wiring, colored glass production and even gold leaf eating.
Gold has been widely used throughout the world as a vehicle for monetary exchange, either by issuance and recognition of gold coins or other bare metal quantities, or through gold-convertible paper instruments by establishing gold standards in which the total value of issued money is represented in a store of gold reserves.
However, production has not grown in relation to the world’s economies. Today, gold mining output is declining. With the sharp growth of economies in the 20th century, and increasing foreign exchange, the world’s gold reserves and their trading market have become a small fraction of all markets and fixed exchange rates of currencies to gold were no longer sustained. At the beginning of World War I the warring nations moved to a fractional gold standard, inflating their currencies to finance the war effort. After World War II gold was replaced by a system of convertible currency following the Bretton Woods system. Gold standards and the direct convertibility of currencies to gold have been abandoned by world governments, being replaced by fiat currency in their stead. Switzerland was the last country to tie its currency to gold; it backed 40% of its value until the Swiss joined the International Monetary Fund in 1999.
Pure gold is too soft for day-to-day monetary use and is typically hardened by alloying with copper, silver or other base metals. The gold content of alloys is measured in carats (k). Pure gold is designated as 24k. English gold coins intended for circulation from 1526 into the 1930s were typically a standard 22k alloy called crown gold, for hardness (American gold coins for circulation after 1837 contained the slightly lower amount of 0.900 fine gold, or 21.6 kt).
Many holders of gold store it in form of bullion coins or bars as a hedge against inflation or other economic disruptions. However, some economists do not believe gold serves as a hedge against inflation or currency depreciation.
The ISO 4217 currency code of gold is XAU.
Modern bullion coins for investment or collector purposes do not require good mechanical wear properties; they are typically fine gold at 24k, although the American Gold Eagle, the British gold sovereign, and the South African Krugerrand continue to be minted in 22k metal in historical tradition. The special issue Canadian Gold Maple Leaf coin contains the highest purity gold of any bullion coin, at 99.999% or 0.99999, while the popular issue Canadian Gold Maple Leaf coin has a purity of 99.99%. Several other 99.99% pure gold coins are available. In 2006, the United States Mint began production of the American Buffalo gold bullion coin with a purity of 99.99%. The Australian Gold Kangaroos were first coined in 1986 as the Australian Gold Nugget but changed the reverse design in 1989. Other popular modern coins include the Austrian Vienna Philharmonic bullion coin and the Chinese Gold Panda.
The consumption of gold produced in the world is about 50% in jewelry, 40% in investments, and 10% in industry. India is the world’s largest single consumer of gold, as Indians buy about 25% of the world’s gold, purchasing approximately 800 tonnes of gold every year, mostly for jewelry. India is also the largest importer of gold; in 2008, India imported around 400 tonnes of gold.
Like other precious metals, gold is measured by troy weight and by grams. When it is alloyed with other metals the term carat or karat is used to indicate the purity of gold present, with 24 carats being pure gold and lower ratings proportionally less. The purity of a gold bar or coin can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995 being very pure. The price of gold is determined through trading in the gold and derivatives markets, but a procedure known as the Gold Fixing in London, originating in September 1919, provides a daily benchmark price to the industry. The afternoon fixing was introduced in 1968 to provide a price when US markets are open.
Historically gold coinage was widely used as currency; when paper money was introduced, it typically was a receipt redeemable for gold coin or bullion. In a monetary system known as the gold standard, a certain weight of gold was given the name of a unit of currency. For a long period, the United States government set the value of the US dollar so that one troy ounce was equal to $20.67 ($664.56/kg), but in 1934 the dollar was devalued to $35.00 per troy ounce ($1125.27/kg). By 1961, it was becoming hard to maintain this price, and a pool of US and European banks agreed to manipulate the market to prevent further currency devaluation against increased gold demand.
On March 17, 1968, economic circumstances caused the collapse of the gold pool, and a two-tiered pricing scheme was established whereby gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to fluctuate; this two-tiered pricing system was abandoned in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a store of value although the level has generally been declining. The largest gold depository in the world is that of the U.S. Federal Reserve Bank in New York, which holds about 3% of the gold ever mined, as does the similarly laden U.S. Bullion Depository at Fort Knox. In 2005 the World Gold Council estimated total global gold supply to be 3,859 tonnes and demand to be 3,754 tonnes, giving a surplus of 105 tonnes.
Since 1968 the price of gold has ranged widely, from a high of $850/oz ($27,300/kg) on January 21, 1980, to a low of $252.90/oz ($8,131/kg) on June 21, 1999 (London Gold Fixing). The period from 1999 to 2001 marked the “Brown Bottom” after a 20-year bear market. Prices increased rapidly from 1991, but the 1980 high was not exceeded until January 3, 2008 when a new maximum of $865.35 per troy ounce was set. Another record price was set on March 17, 2008 at $1023.50/oz ($32,900/kg). In late 2009, gold markets experienced renewed momentum upwards due to increased demand and a weakening US dollar. On December 2, 2009, Gold passed the important barrier of US$1200 per ounce to close at $1215. Gold further rallied hitting new highs in May 2010 after the European Union debt crisis prompted further purchase of gold as a safe asset. On March 1, 2011, gold hit a new all-time high of $1432.57, based on investor concerns regarding ongoing unrest in North Africa as well as in the Middle East.
Since April 2001 the gold price has more than quintupled in value against the US dollar, hitting a new all-time high of $1507.70, prompting speculation that this long secular bear market has ended and a bull market has returned.
Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream of retiring early (or of being able to retire at all)? Do you know that you should invest, but don’t know where to start?
If you answered “yes” to any of the above questions, you’ve come to the right place. In this tutorial we will cover the practice of investing from the ground up. The world of finance can be extremely intimidating, but we firmly believe that the stock market and greater financial world won’t seem so complicated once you learn some of the lingo and major concepts.
We should emphasize, however, that investing isn’t a get-rich-quick scheme. Taking control of your personal finances will take work, and, yes, there will be a learning curve. But the rewards will far outweigh the required effort. Contrary to popular belief, you don’t have to allow banks, bosses or investment professionals to push your money in directions that you don’t understand. After all, no one is in a better position than you are to know what is best for you and your money.
Regardless of your personality type, lifestyle or interests, this tutorial will help you to understand what investing is, what it means and how time earns money through compounding. But it doesn’t stop there. This tutorial will also teach you about the building blocks of the investing world and the markets, give you some insight into techniques and strategies and help you think about which investing strategies suit you best. So do yourself a lifelong favor and keep reading.
One last thing: remember: there are no “stupid” questions. If after reading this tutorial you still have unanswered questions, we’d love to hear from you.
What Is Investing?
The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
It’s actually pretty simple: investing means putting your money to work for you. Essentially, it’s a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And that’s exactly what most of us do. There’s one big problem with this: if you want more money, you have to work more hours. However, there is a limit to how many hours a day we can work, not to mention the fact that having a bunch of money is no fun if we don’t have the leisure time to enjoy it.
You can’t create a duplicate of yourself to increase your working time, so instead, you need to send an extension of yourself – your money – to work. That way, while you are putting in hours for your employer, or even mowing your lawn, sleeping, reading the paper or socializing with friends, you can also be earning money elsewhere. Quite simply, making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime or look for a higher-paying job.
There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your own business. Sometimes people refer to these options as “investment vehicles,” which is just another way of saying “a way to invest.” Each of these vehicles has positives and negatives, which we’ll discuss in a later section of this tutorial. The point is that it doesn’t matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it’s the most important concept for you to understand.
What Investing Is Not
Investing is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money. Part of the confusion between investing and gambling, however, may come from the way some people use investment vehicles. For example, it could be argued that buying a stock based on a “hot tip” you heard at the water cooler is essentially the same as placing a bet at a casino.
True investing doesn’t happen without some action on your part. A “real” investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. Yes, there still is risk, and there are no guarantees, but investing is more than simply hoping Lady Luck is on your side.
Why Bother Investing?
Obviously, everybody wants more money. It’s pretty easy to understand that people invest because they want to increase their personal freedom, sense of security and ability to afford the things they want in life.
However, investing is becoming more of a necessity. The days when everyone worked the same job for 30 years and then retired to a nice fat pension are gone. For average people, investing is not so much a helpful tool as the only way they can retire and maintain their present lifestyle.
Whether you live in the U.S., Canada, or pretty much any other country in the industrialized Western world, governments are tightening their belts. Almost without exception, the responsibility of planning for retirement is shifting away from the state and towards the individual. There is much debate over how safe our old-age pension programs will be over the next 20, 30 and 50 years. But why leave it to chance? By planning ahead you can ensure financial stability during your retirement. (For more, see Retirement Planning tutorial and for Canadians the Registered Retirement Savings Plan (RRSP) tutorial.)
Now that you have a general idea of what investing is and why you should do it, it’s time to learn about how investing lets you take advantage of one of the miracles of mathematics: compound interest.
The Concept Of Compounding
Albert Einstein called compound interest “the greatest mathematical discovery of all time”. We think this is true partly because, unlike the trigonometry or calculus you studied back in high school, compounding can be applied to everyday life.
The wonder of compounding (sometimes called “compound interest”) transforms your working money into a state-of-the-art, highly powerful income-generating tool. Compounding is the process of generating earnings on an asset’s reinvested earnings. To work, it requires two things: the re-investment of earnings and time. The more time you give your investments, the more you are able to accelerate the income potential of your original investment, which takes the pressure off of you.
To demonstrate, let’s look at an example:
If you invest $10,000 today at 6%, you will have $10,600 in one year ($10,000 x 1.06). Now let’s say that rather than withdraw the $600 gained from interest, you keep it in there for another year. If you continue to earn the same rate of 6%, your investment will grow to $11,236.00 ($10,600 x 1.06) by the end of the second year.
Because you reinvested that $600, it works together with the original investment, earning you $636, which is $36 more than the previous year. This little bit extra may seem like peanuts now, but let’s not forget that you didn’t have to lift a finger to earn that $36. More importantly, this $36 also has the capacity to earn interest. After the next year, your investment will be worth $11,910.16 ($11,236 x 1.06). This time you earned $674.16, which is $74.16 more interest than the first year. This increase in the amount made each year is compounding in action: interest earning interest on interest and so on. This will continue as long as you keep reinvesting and earning interest.
Consider two individuals, we’ll name them Pam and Sam. Both Pam and Sam are the same age. When Pam was 25 she invested $15,000 at an interest rate of 5.5%. For simplicity, let’s assume the interest rate was compounded annually. By the time Pam reaches 50, she will have $57,200.89 ($15,000 x [1.055^25]) in her bank account.
Pam’s friend, Sam, did not start investing until he reached age 35. At that time, he invested $15,000 at the same interest rate of 5.5% compounded annually. By the time Sam reaches age 50, he will have $33,487.15 ($15,000 x [1.055^15]) in his bank account.
What happened? Both Pam and Sam are 50 years old, but Pam has $23,713.74 ($57,200.89 – $33,487.15) more in her savings account than Sam, even though he invested the same amount of money! By giving her investment more time to grow, Pam earned a total of $42,200.89 in interest and Sam earned only $18,487.15.
Editor’s Note: For now, we will have to ask you to trust that these calculations are correct. In this tutorial we concentrate on the results of compounding rather than the mathematics behind it. (If you’d like to learn more about how the numbers work, see Understanding The Time Value Of Money.)
TOP REASONS TO TRADE GOLD
- Trade up to ratio Leverage
- Trade Anytime of the Day
- Massive Liquidity
- Trade up or down
The use of leverage (more buying power) means that you can trade in a facilities which your possible financial gain with a smaller initial risk of funds. For example if you were to open a trade with a 1,500 and you used leverage of 1:350, you would be able to trade $550,000 in value of gold through the company platform.
Trading gold in the market enables you to trade 24 hours a day during the weekdays between 7:00am local time to 4.30am local time everyday and to 12.30am on Friday. The gold trading market is an international market unlike traditional stock exchange markets which are limited to their specific business hours of trading.
As a trader, one of the most important things to consider before entering any trade is will you be able to exit the trade. Every market trade in any investment requires a buyer and a seller. The gold market is the world’s largest marketplace with over $3.2 trillion dollars of trading activity per day. That is good news for whenever you want to exit your gold trade.
In gold trading, you can trade gold both up and down. Most people when trading only think in one direction and usually that direction is up. However, as a gold trader, you have the ability of trading both for and against the price of gold. In other words if you think that the price of gold is going to go down rather than up you could buy the US dollar against the price of gold.
- Line chart
- Bar chart
- Candlestick chart
- Gold Verses the US Dollar
- Gold Verses Other Currencies
- Gold Verses Oil Prices
- Gold Verses Other Commodity Prices
- Gold Verses Inflation
- Gold Verses Other Economic Indicators
Gold traders tend to think of gold prices in US dollar terms and hence, they will tend to begin by chart gold prices in terms of US dollars. However, gold traders must remember that gold price movements may or may not be directly caused by movements in the value of the dollar.
By charting the price of gold verses other currencies, a gold trader can also assess whether or not gold prices movements are being caused by dollar movements or whether the price of gold is moving in a more currency-independent way.
A sizable percentage of oil revenue will tend to end up invested in gold. Hence and when oil prices rise, much of the increased oil revenue will be invested in either gold or hard assets. This can create more inflation and enhance the appeal of gold as an inflationary hedge.
As with the price of oil, the price of gold may also have some correlation with or relationship to the price of other commodities such as silver. Hence, a gold trader may want to consider charting the price of gold verses several other commodities find any potential correlation in price movements.
Since gold is considered a hedge against inflation, there tends to be a correlation between the price of gold and inflation or expectations about inflation. Hence, a gold trader may want to chart the price of gold verses inflation.
Likewise and since gold is often hoarded in uncertain economic times or conditions, a gold trader may also want to chart gold against several other economic indicators such as interest rates or perhaps unemployment.
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