Sunday, September 16, 2007

Forex Trading - 10 Common Losing Mistakes That Wipe Out Equity

In forex trading over 90% of traders lose ALL Their money. If you dont want to join this group and enjoy currency trading success, you need to avoid them all.

Here are the 10 common mistakes forex traders make and how to avoid them:

1. Day Trading

The biggest error made by novice traders is to think that day trading works it doesnt.


Because all short term price movements are random.

It is impossible to calculate the odds of where prices will go in such short time frames and the result is a loss of the traders equity.

Ever seen a day trading record in real time? Neither have I and you wont because it doesnt work.

2. Buying Systems From Vendors

Leads on from the above point.

There are plenty of Vendors on the net prepared to sell you their secrets for $100 odd dollars dont fall for them!

They normally come with hypothetical track records done in hindsight and anyone can make money knowing the closing prices.

The problem is you have to trade not knowing them!

Its obvious most currency trading systems sold are junk and the vendor makes money appealing to greed of the buyer NOT trading the system themselves.

3. Trading off News Stories

There is more news than ever and its all so convincing, the problem is its impossible to trade it.


Because the currency markets discount news instantly and move on future perception so trading news stories is futile.

4. Predicting the market

Another great myth in currency trading is that markets can be predicted with scientific accuracy. Well, if this was true there would be no market, as we would all know the price in advance!

King of the theories is Elliot wave, which claims to be objective and scientific, yet leaves the user to make subjective judgments!

5. Being to subjective

Many traders like to be subjective when executing forex trading signals with their currency trading systems, but this simply allows their emotions to get involved.

They really should use indicators that are objective and have specific rules in their forex trading strategy, but they like to shoot from the hip and lose.

6. Making a system to complicated

Many traders think that the more complicated they make their forex trading system the better; after all 10 indicators must be better than 3 or 4.


In forex trading, its a fact that simple systems work best, as they are more robust in the brutal world of trading.

7. Poor Money Management

Most traders have no money management strategy at all.

You need to execute your trading signals, then the hard part begins - preserving your equity and making it grow.

Initial stop placement and how you move them are critical to your success and most traders dont have a clue about how to do this.

8. Chasing the tail

Many traders have perfectly good trading systems, but cant handle drawdowns, so they simply try a new system.

If of course they had stayed with the system they had in many cases they would have made money, but they lack patience.

9. Poor Discipline

Most traders have heard the word, but have no idea what it is and trade with their emotions involved and lose.

Discipline is based upon knowledge, understanding and confidence and as most traders fail to develop their own forex trading strategy properly (most try and buy success from a vendor) the result is failure.

10. Trading to much

Most traders simply lack patience and trade to much.

This of course goes for the losing day trading crowd, but also a lot of other traders they try and force the market to give them profits, trade when they shouldnt and lose.

Most people who trade forex shouldnt, as they have no chance of winning from the start and will make one, or more of the above 10 mistakes.

If you think you can win at forex trading, ask yourself this simple question.

What is my edge that will enable me to enter the winning minority of traders?

If you dont know what your edge is you dont have one, so get one or forget forex trading.

The good news is:

Everything about forex trading can be specifically learned for those traders willing to put in the time and effort to do so and the rewards are immense.


On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE Forex Education visit our website at

Ah Yes, The Old Where Is The Next

In my 28 years in the investment industry, whether advising professional portfolio managers , or serving as a financial coach to individual investors, the question always seems to come up-- where are and who are the next Microsoft's, Wal Mart's or General Electrics. Who has that better mousetrap that will captivate investors and take them on the 10-15 year ride?

Well, I think I have identified 2 such companies and they are outright buys. The first one I have written about in an earlier article titled "Bigger Than McDonald's? Yes, Bigger than McDonald's", and that company is Starbucks, ticker symbol SBUX. Since I wrote that article about a month ago, the stock has moved up about $4 per share and Starbucks has communicated their ambitious plans to have a worldwide store base of 40,000 units, up from earlier plans of 30,000-35,000 units. I could write a book on the Starbucks mystique and their relentless pursuit of perfection.

But, let's get to the second company. That company is Costco Wholesale Corp., ticker symbol is COST. They just reported their fiscal 4th quarter results ending August 31, 2006, and the quarter was $.75 per share versus expectations of $.72 per share. The 2006 fiscal year ended with earnings per share (EPS) of $2.30 with revenues at $58.9 billion. The expectations for August 31, 2007 are for revenues of $66 billion and EPS of $2.67-2.70, and fiscal year 2008, look for EPS at $3.10 and revenues of $74-75 billion. The market capitalization of Costco is just under $25 billion. Subscribers to were advised to buy the stock earlier this week before the earnings were released. The stock has moved up $4 this week.

Great, but where do we go from here? COST has the opportunity to be one of the two great companies that re-defines the retail space (along with Starbucks) over the next decade. If you have not been to a Costco store, go to one. I am not your usual type shopper, i am- a -get- me- in and get- me -out type shopper, except when it comes to Costco. My wife thinks I am nuts, but I love that place, have bought lots of unnecessary things and cannot wait to go back. I have happily paid my $100 membership fee for 3 consecutive years now. The experience is very worthwhile.

COST has 480 no frills warehouses, mostly in the United States, where the selection and quality are superb. Whether its fresh produce, a huge choice of fresh meat and fish, furniture, books, electronics, groceries, clothes (nice clothes too) or vitamins, the prices are low and the quality is the best. Costco consistently beats Sam;s Club of Wal Mart month in and month out in same store sales comparisons.

I actually did a "man on the street" interview at Costco earlier this week, unscientific, but the answers were consistent: people enjoy shopping at Costco, while Sam's Club customers (all 8 that I spoke too!!) said they were there for the quick in and out. People linger at a Costco, and because of the free samples available everywhere you turn and the wide selections. You buy tons of great and unique foods that you did not plan on. It's awesome and some would say, even addicting!!

From the investment perspective, this $24.9 billion market capitalization company could become a $100-150 billion market cap company. They will add another 80+ warehouses in 2007-2008, and a total of 200-250 over the next 5 years. The average Costco does $130 million of volume, compared to Sam's Club average of $75 million. Costco has a loyal group of employees because they pay the best and offer proper benefits. Loyal employees is one reason for the incredible service-levels at Costco.

Costco has their own signature private label brand of Kirkland. Kirkland maintains very high standards whether it be dog food all the way to vitamins. Costco is offering deals to its members on auto insurance and actual specials on automobiles. The home furnishing division offers high quality blinds, curtains and furniture. Costco does not cut corners on quality. They are lean and very efficient, and their employees are extremely motivated and helpful.

Well, asked about the next.... Starbucks and Costco...

For more information, please go to

Georges Yared has been in the investment industry for 28 years. The first 15 advising individual investors with Dean Witter Reynolds (now, Morgan Stanley), and the last 15 years with two research boutique firms, advising professional money managers and growth companies. Georges was in charge of international sales at Wessels, Arnold and Henderson from 1992-2002, and from 2002-2006, with researchand investment banking boutique ThinkEquity Partners. Georges has advised over 5,000 individual investors, over 100 professional portfolio managers, 200 publicly traded growth company managements, and has worked with over 150 world class research analaysts. His passion is financial coaching and intelligent, informed growth investing. Georges lives with his wife Cindy and their children in Minneapolis, Minnesota

Hedge Fund Advertising

Have you seen all those big full page ads for hedge funds in the Wall Street Journal, the Financial Times, Investors Business Daily? You havent. Maybe they are being drowned out by the regular mutual funds who continually tell you how great they are.

Shucks! I forgot. Hedge funds are not allowed to advertise. I wonder why. Maybe they think that their potential customers are too dumb to know that hedge funds are a poor investment. Could be. The Securities and Exchange Commission is trying to protect investors I think?

To be able to buy into a hedge fund the smallest investor must have a net worth of $1,000,000 and an income of more than $200,000 per year. Maybe the SEC doesnt think these folks are bright enough to know a good thing when they see it.

There are other groups that are major investors with the hedge funds. Literally billions of dollars are invested by university endowments, charitable trusts, state and corporate pension plans. Could it be that they have a better return than regular mutual funds? Naw! The media would tell you wouldnt they?

The media is there to report the facts. It is hard to believe that just because a large portion of their income is from advertising revenues of mutual funds that they would be lax about this.

If you were a fund manager and your fund was under performing and it was reported in the local paper, TV, or radio would you pay them to carry your advertising? You sure would not want to be compared with performance of a hedge fund.

What is it that makes the difference of a standard mutual fund with a hedge fund? Why does the smart money gravitate to them? One word. Performance. A regular hedge fund manager is paid on HOW MUCH money he has in his fund and not on how much he makes for the investor. The hedge fund manager is paid a percentage of the PROFITS he makes for the investors. No profit means no bonus so he better do the job or he will be out of a job. Smart money moves. It moves to where the profit is being made.

The SEC will not allow standard mutual fund managers to be compensated in this manner. Their claim is that it will be too dangerous for the small investor. Hog wash! If a fund is losing money the little guy should be selling his current funds like the smart money and finding a better performing fund. None of the media recommend this to the little guy.

My guess is there are enough intelligent fund managers who would like to be paid for performance and would set up no-load funds to attract investors. The SEC seems to think more of the funds than they do of the smaller investors.

It is a shame you cant check the advertising claims of standard mutual funds against the returns of hedge funds.

Copyright 2005

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

Add A Style To Your Dining Set - Be Different

People with good taste and preferences always prefer a dining set which is exclusive as well as functional. That explains the opening of so many showrooms and boutiques of dining furniture on every nook and corner. Are you also the one looking for some awesome pieces of art for your dream home? Well, there are options now which are just waiting to be explored.

Do the words dining set ring a bell somewhere? If not, do not worry, I will explain it for you. A dining set is a combination of all the things which form part of your dining room furniture. This includes a dining room table for having a cozy family meal, dining room chairs for relaxation, a dining hutch to place your crockery and table pads, corner chairs for adding value to your place and a relaxing sofa to go with the whole setting.

If you have so many things which form part of a dining set, you really are sometimes at your wits ends as to what to choose and from where. You have online stores as well as your local showrooms, all vying for your attention as well as your wallet. Even the variety of options does not make things any easier. You can choose from a glass top dining set or the one having an oval shape and carved completely in wood. What if you seek something different and ethnic? Do not worry, you can choose the retro style for your dining set. A rectangular dining set is most appropriate for dining rooms lavish in space and looking for a large number of people to sit and cherish the sumptuous meal. If you have a smaller pad available to you, try the round shape or a folding table set. These sets seem most appropriate for being space efficient and functional at the same time.

Dining sets come in a variety of design and style, and the choice is entirely yours. No design is better or worse than its counterpart is its how you perceive it. One major change seen in recent times is the increased use of glass while designing the furniture. Glass adds to the glamour quotient of your room and adds sophistication and class. Another advantage of glass furniture is ease of cleaning and almost spotless performance year after year. Wooden furniture, on the other hand, while tending to be more expensive and needing more maintenance, compensates in its traditional looks and long life.

While going for a glass top dining set, make sure that the glass is safely perched over the base with adequate protection. It should not have any sharp edges. You can have your dining chairs made with unpretentious style to go with your glass furniture. This will add the fusion element in your choice and will be appreciated. If you can get colored glass, that can add to the brightness and ambience of the room.

No dining furniture is complete without the right crockery going with the theme of your place. Thus if your style is chic and modern, do not go for the traditional old and simple crockery, which can destroy the whole ambience. Choose something flashy and upcoming to go with your furniture.

Spend a few minutes putting the knowledge you just gained into practice, and welcome to a happier, more satisfying world!

The author is a home improvement expert. Your dining room furniture should reflect your personal style. Buy Amish made furniture for that regal look. Buy a dining room hutch to go with the table and chairs.

How To Conduct Successful Fundamental Analysis

When an investor is scouting for potential bargain's in the markets, fundamental analysis will always take a top-down approach. Fundamental analysis will generally look at a number of different area's and these will be the national economy, at industry level, and at company level. Generally the term simply refers to the analysis of the economic well-being of a specific entity as opposed to only price movements.

By no means take this article as a be all and end all explanation of the process as it is a very broad discipline, but use it as a guideline on how to conduct the basics. Below I will briefly set out the basis for fundamental analysis for the three area's mentioned above earlier.

National Economy
Fundamental analysis in this instance is likely to focus on economic data principally produced by governments to assess the present and future growth of the economy. There are a wide variety of factors relating to fundamental's within the economy. Obvious economic indicators would include inflation, exchange rates, interest rates, debt and saving levels and consumer confidence. If you are already an investor you will know that publication's from the Fed or the Treasury with reference to any of these can have a profound affect on the stock market as a whole.

At the Industry Level
Fundamentals within this area are likely to focus on an examination of supply and demand forces for the products or services offered. Although this may seem vague in essence what the investor will be doing is trying to ascertain if it is viable to enter (invest his money) within a certain sector or industry. For example here in Britain the coal mining as well as ship building industries are both in major decline but there are still companies out there. Now if an investor was not made aware of this or did not conduct the appropriate research with reference to these sector's then they would have a higher risk of losing money.

At the Company Level
When a potential investor is conducting fundamental analysis this is the area that they will want to dedicate most of their time too. That is the individual company (the stock) they are looking to invest in. What an investor will be trying to do is determine if a stocks price is over or undervalued by focusing on underlying factors that affect a companies actual business and its future prospects. There are a variety of factors that a potential investor will be investigating. Examples of these will include business concept, management, competition and financial data. The majority of this information is readily available in the public domain through a variety of sources helping the investor to make a more informed decision.

So in this article we have gone over briefly the top down approach that an investor savvy in the process of fundamental analysis would use to pick a stock that the data would lead him too.

Oliver Gillies is a Trainee Sales Trader who has been working for a firm of stockbrokers in the City Of London for the last year. He also trades his own successful portfolio (11.5% in the last two months June-August). You can learn more by visiting his blog successful investors

Software Application For Mollier's Diagram

Most extensively used thermodynamic fluid for heat power industry is water since it is cheap and easily available and has very good thermal and chemical properties. But thermodynamic properties of water in its different phases vary extensively with the variation in temperatures and pressures adding complexities. Important steam and water properties used in industry are pressure, temperature, enthalpy, entropy, quality, specific volume and also thermal conductivity, specific heat and viscosity.

Determination of those properties from basic formulae is cumbersome for regular engineering calculations due to computational complexities. For many years steam tables and charts have served industry and academics for finding out such properties. In steam tables, properties of steam and water are displayed in tables at certain intervals of temperature, pressure etc. Charts (graphs) or diagrams are of many types as in two-dimensional plane, only two major properties can be used as axes and others are shown as lines of constant values at different intervals. For example, in an enthalpy-entropy plane (generally called Mollier Diagram), constant pressure lines, constant temperature lines and constant specific volume lines are shown at different intervals. Charts like temperature-entropy, pressure-temperature, pressure-enthalpy, etc. are also available with different properties shown as constant lines. Both standard printed steam tables and charts give rationally accurate output but they usually require interpolation resulting in some inaccuracies, although small in nature. Software for steam and water properties has eliminated this accuracy problem and has minimized the use of steam tables and printed charts in the industry. However the use of charts (generally called Mollier diagrams) still continue to be important in academic world where understanding of the fundamentals and conception is of primary importance.

Software for steam and water properties and steam tables give property valuse at a particular point with input of at least two properties for that point and mostly helps in further calculations etc. but fall short of providing an insight regarding the relative position of the point in entire range. There comes the importance of the Mollier diagram. In Mollier diagram a point can be conveniently located in the desired plane and the consequence of change in input properties can clearly be understood giving a perfect insight rather than trading only with numbers. It also explains graphically how the phase of water changes with the change in their properties.

Handling big size Mollier diagram with proper resolution is burdensome and that indulges teachers, students and practicing engineers to restrict the diagrams use in day-to-day computations even though they provide more insight. Under such circumstances the software for Molliers diagram has come as an advantage. It may sound little unusual to use software for generating a Molliers diagram, but it is true and very handy as well. It is a perfect blend of both the power of computers computational skills and graphic facilities. In fact the same steam and water properties software is opportunely used to generate the Molliers diagrams using a package that can handle both graphics and commutations.

There are many benefits of using the software for generation of Molliers diagrams. This eliminates the necessity of possessing and use of the printed diagrams. The diagram can be viewed right on the computer screen and that can be saved in a file and printed as per requirement. With the help of the software, diagrams can be created in interactive way to suit any range with as many constant line properties as desired. Any constant property line for any value can be drawn on the diagram totally eliminating the requirement of interpolation as usually required in printed diagrams. A point with two input parameters can be easily located interactively on the diagram giving comprehensible picture of its position in the entire range. The clarity of the diagram can be highly enhanced by using available many colors of the computer display. In the academic world the software can be extremely useful as it may greatly help academicians to explore, investigate and explain the nature of variation of the properties with respect to one another just by few commands. An example can divulge the supremacy of such software. We are aware that by using the software for steam/water properties or steam tables or printed Mollier diagrams, the properties of steam can be determined by providing two input parameters say like pressure and temperature. By using the software for Mollier diagram, the point can also be located on the diagram and all the properties may be obtained. But additional advantage can be taken by using the software to demonstrate that constant lines generated on the diagram using the input value of any property, say specific volume, passes through the point already located on the diagram. This decisively proves the correctness of the software and comprehensive understanding of the subject. Such methods assume vast importance in the teaching and academic field.

The Molliers diagram software is not widely available like steam and water properties software. Searching over the Internet reveals that only few of them make available all the options as described earlier. Some of them are linked with the steam and water properties software and display sketchy diagrams with only the saturation line and the facility to locate the specific point without the provision of printing. Some of them display pre-laded standard diagrams and only with the ability of locating the specific point. Only few of them provide total freedom of generating the fully tailor made diagrams as per users specific requirement using any value of users choice.

It can be summarized that there is high potential of using Molliers diagram software especially in institutions and academic world provided a proper one is chosen. It can be a substitute of printed diagrams and can be very helpful in conceptualization and regular use by professionals, students, teachers and academicians.

To know more on Mollier's diagram software please visit

The author is a mechanical engineer from Calcutta University and has more than 30 years experience in power plant engineering. He has been developing engineering software for regular use for the last 15 years. Read his article Software For Steam And Water Properties and visit

Why Managed Funds are Bad for Your Wealth

We are bombarded with advertisements for managed fund (mutual fund) investments. They implore us to entrust our hard earned cash to them with the promise that their expert managers will reward us with above average returns.

On the face of it managed funds do appear to offer benefits. They allow the smaller investor to diversify (and thus reduce risk) to a much greater degree than if they invested in individual stocks. A managed fund can spread an investment across 30 or more stocks whereas the small investor might be limited to just 2 or 3 by direct investment. And they should ensure that the stocks are being chosen by intelligent individuals with access to the latest and best information.

But all of this comes at a cost, ie the managers commission.

And theres the rub. By the time the managers fees are taken out the average returns dont beat the the market average.

An example of this is reported by the U.K. Daily Mail (Oct 25, 2006) - Research from independent advisers Bestinvest shows that over the past three years 73pc of actively managed funds investing in UK companies to increase your capital have failed to beat the FTSE All Share Index.

As a further example, Clive Briault of The United Kingdom Financial Services Authority says: Our research shows there is no evidence, on average, over time, that actively managed funds outperform tracker funds if you take into account the difference in charges between the two. (The Mail on Sunday, Financial Mail, January 28, 2007)

Burton Malkiels classic A Random Walk Down Wall Street describes academic analysis that says the same.

Of course there are star performers, but these may be explained by chance. Of all the gamblers playing the casino slots, some will (by chance) emerge as winners. It doesnt mean they can repeat their success. Thats why funds carry the wealth warning that past performance is no guarantee of future results!

Best way to achieve the benefits of diversification is through low-cost tracker funds or Exchange-traded funds (ETFs).

Johnny Finnis is editor of, a simple and unbiased introduction to finance and investment for ordinary people to make the most of their money. Have your say on our blog