Are you a beginner when it comes to the stock market? No problem! This series of articles on mutual funds will make it easy for you to understand what a mutual fund is, what it is all about and whether it is worth your while to invest in one. My first three articles are called “Mutual Funds For Beginners” and they lay down the basics.

The next one is titled “Expenses Associated With Mutual Funds” and it goes over the general things you can expect to be charged for if you make the choice to invest in a mutual fund. The last two are called “Is Investing in a mutual fund worth your while?” and they cover the pros and cons of mutual funds. First let’s break things down to a molecular level and talk about securities. The fancy definition of a security is a negotiable instrument representing financial value.

This definition is kind of hard to grasp so let us take a look at an example of a security to help you get a better idea of what one is. A stock is considered a security. Stocks can be purchased or sold, and therefore have financial value, and a share of stock literally means that as a stockholder you “share” a fraction of ownership in the company whose stock you own. Bonds, which are contracts to pay back money with interest on specified dates, are also securities. If you hold a bond, you know that you are going to receive money on these set dates, so bonds have financial value as well.

Stocks are bought and sold at exchanges called stock markets, and bonds at bonds markets. A bonds market is usually very different from a stock market. If you were looking to invest in stock, or sell the stock you have, you would enlist the help of a stock broker who would charge you a commission for performing this work for you.

Usually you are going to need some sort of a broker to help you do this, unless you already own stock from the company you would like to purchase from. The same goes for bonds – you are going to need a dealer. Now that we have the very basics down, let’s go over mutual funds. See my article “Mutual Funds For Beginners Part Two!

Mallory Megan works for Rapid Recovery Solution and writes articles on commercial collection agencies.

The party starts in December and continues in the early part of January with some hangover effect. October is the month in which the most famous crashes historically took place. So what is the January Effect?

The January Effect can be quite a rally but much depends on the strength of the economy, how good December was and is there any catalyst to move the markets. There is usually a significant rally in the early part of January that actually sets the tone for the rest of the month and sometimes for the rest of the year. The most profitable period as measure statistically has been found to start from December 31st and end around February 28th with an average rate of return of 6.6% on smaller stocks. So what is this January Effect? January Effect actually starts in the mid December and tends to favor small stocks.

Now January Effect may happen or may not happen but the turn of the month that is the last day of the month and first five days of the next month form a very good seasonal pattern. Now, you must know this fact that the January Effect is not guaranteed every year. The best example is the year 2007 when the market became bearish and didnt start to look to bottom out until March 2008.

But the end of each month tends to be good for trading. Turn of the month is a very good seasonal pattern that actually holds up more often than not. Chances are you are going to make some profit if you buy stocks at the last day of the month and hold them for the first five days for the next month. This can be a good swing trading strategy. At the end of the fifth day you move your money back into the money market funds.

You can do the same on the holidays. Move your money in on the day before the holiday and sell it on the day after the holiday. This system works because the pension funds tend to put new money to work during the holidays and the overall tendency of the market to rise improves.

Holidays are good for your mood. Everyone is happy to escape the drudgery of their daily routines. People want no worries in the holidays. People start to feel happy when the holidays approach and buy stocks before they run off to celebrate Christmas, the fourth of July, the Labor Day and so on. After the party the reality sets in the stocks are usually sold off. The holidays and those times when people traditionally take vacations often lead to higher prices. Fewer traders lead to lower trading volume which in turn tends to exaggerate price moves.

Thats because these days fall within the most bullish time period of the year, winter! The three days before the New Year Eve and the first three days trading days after the New Year are your best holiday bet for making money. You must learn these patterns in the market that you can use to make good profits when the end of the month comes and when the holidays come. Nothing is guaranteed. But if you follow these patterns you will definitely find something in them.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service! Know These Candlestick Patterns!

The day before the Presidents day is the worst day and the day after the Easter is the worst day after. However, you should keep in mind that a lot of other factors also come into play and you have a lot of room for error. The next best holiday bets are the Labor Day and the Memorial Day because they fall before the first day of trading in September and June respectively.

Children love Santa Claus. Do the markets love Santa Claus? You must have heard about the Santa Claus Rally? Most of the folks usually feel fairly good about themselves around this time of the year. The best time of the year to own stocks is the Santa Claus rally which for all practical purposes is the 17 day stretch from December 21 to January 7. This is the best time of the year. People are happy and the markets are happy.

FED tends to lower interest rates during holidays in order to go into the New Year with less of a worry if the economy is slowing down. There is a low trading volume which tends to exaggerate the trend if the economy is not doing well and is slowing down. However, when you are dealing with seasonality, you should keep these facts in your mind:

1) The market is not longer static. The seasonal effect may get interrupted by other events. More and more people have real time access to information and larger amounts of capital than at any time in the past.

2) End of the year is special. Companies want to show good performance at the end of the year. At the end of the year, institutional investors want to make their results look as good as possible to their shareholders and tend to buy the stocks and so on. Institutional investors like mutual funds, hedge funds and insurance companies have become important players in the markets. So in case of an event free environment, seasonal tendencies may hold up fairly well.

3) People want quick profits. Many people make a living from investing and trading. These are the times for day traders and swing traders. With fewer people willing to hold stocks for longer periods, it is very difficult to predict seasonality. The days of long term investing or what you call buy and hold are dead! Frequent market crashes have taught the investing public that investing for the long term is fairly risky. So there is more short term trading going on. Value investing is gone and speculation is in.

4) Derivates and outside the market trading activities can result in highly unpredictable patterns. The recent market crash was the result of CMO and Default Swaps bringing down the banks and Insurance companies in ways that had not been anticipated or foreseen by the analysts. Many had assumed that derivate securities are safe. Infact they have highly unpredictable tendencies.

Many things are changing. The world is always changing. There is a change in demographics also taking place. With the aging of the population, the overall trend will be towards more income producing investments. So with everyone talking about the seasonal tendencies in the market, it reliability becomes less diminished.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service! Know These Candlestick Patterns!

Our lives are affected by the seasons during the year. Spring makes you happy! Autumn is sad. Winters are good. Summers are hot. Do the seasons affect the markets too? Are there any seasons in the markets too? Do the markets become exuberant too? Are there any gloomy days in the market? Yes, for the last one year the markets are gloomy. The first question that comes to your mind is that are these seasonal cycles real in the markets and how you can time your trading with these cycles? The stock market is full of sayings like, Sell in May and go away, as well as the conventional wisdom about the, summer rally, the Santa Claus rally, the dark days of autumn, the presidential cycle, and so on.

Markets are always changing; money keeps on moving in and out of stocks, bonds, currencies, commodities and so on with the stroke of a mouse and speed of electron thousands of times every day. Markets are about big banks, insurance companies, hedge funds, sovereign wealth funds, governments, mutual funds and individual investors creating a very diverse and dynamic environment.

Still such fast action, there is some seasonality in the markets that you should know if you are trading these markets. In 1960s when big Wall Street players would go on summer off, volume dried up and the market tended to have a slight upward bias. Now, with the high speed internet connection and satellites, any money manager can stay in touch with the market on his laptop or mobile phone even on family vacations in a remote island of Pacific!

Technology and innovation always bring change and new things. Past is gone. Everything is now real time. Breaking news is being flashed across the world in minutes if not in seconds. Twitter recently broke the record and spread the news of the death of Michael Jackson so fast that even search engines could not live up to the speed of Twitter. With globalization and the ability to communicate in real time, money has started to move in a less predictable fashion. This has altered the trading patterns. What used to work yesterday does not work today. Money flows very fast now days! In the past markets were a whole lot less complicated. Most of the money moved between US and Europe.

So the world has changed. Life is faster now. Money has no borders now. It flows where it finds the best rate of return. This is a more integrated world now. We are living in a global village. Are there any seasons left in the market? The seasons are still there but they tend to be mostly overshadowed by the fast paced nature of our world now. Everyday there is new breaking news so the seasons tend to get overshadowed. At the same time, you should be aware that there are times when the markets do tend to follow these seasonal patterns. You shouldnt rely on seasonal analysis as your main method of trading stocks, bonds, currencies or commodities.

September tends to be the toughest month of the year. For the past 50 years, the average return on S…P 500 for the month of September has been around 0.6%. Dow Jones Industrial Average has even preformed worse with return of -1%. Now stock markets have a certain tendency to move in certain directions during certain months of the year. This general seasonal trend is a good one to keep in the background of your mind.

September has been traditionally a bad month and November has been a good month for the bulls. The S…P 500 Index has the general tendency to rise in the month of November. December is another typically strong month. December is the month of holidays and the end of the year. Holidays means investors are in a cheerful and exuberant mood and the money managers want to show a good performance at the end of the month.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service! Know These Candlestick Patterns!

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Pattern trading can be sometimes very profitable. However, first you should be well conversant with the different chart patterns. There are basically two types of chart patterns. One are the chart patterns that generally represent price consolidation and include patterns like triangles, flags, pennants, wedges, rectangles and the head and shoulder pattern among others. Pattern trading may be considered one form of breakout trading.

For the most part, these chart patterns are traded when a breakout of one or another kind occurs. Now dont confuse the head and shoulder with the name of a shampoo. It is a chart pattern that you must be familiar with if you want to continue reading this article otherwise first make yourself clear about these chart patterns and then continue reading this article.

Now when we talk of pattern breakouts it should be clear which chart patterns constitute a continuation pattern and which chart patterns are considered reversal patterns. The second type of chart patterns that are the Japanese Candlestick patterns! Candlestick patterns are not tied as closely with breakout trading.

Trend reversal means a breakout and a profitable trading opportunity. What chart patterns constitute a trend reversal? The most common chart patterns found on the currency charts that are generally considered to be reversal formations include double tops/bottoms, triple tops/bottoms and head and shoulder tops and bottoms.

The most common chart patterns that are generally considered to be continuation patterns include flags, pennants, triangles, wedges, rectangles and others. When a continuation pattern approaches breakout on the side of the pattern that would denote a continuation, technical traders patiently wait for a breakout.

Pattern trading is like playing with shapes and is very similar to the general support/resistance breakout trading in terms of entries and exits. One benefit of pattern trading lies in the precise profit targets. This type of trade is treated as a breakout trade with similar type of entry and stop loss placement as with standard support/resistance breakout trades.

Profit target in the head and shoulder pattern is derived by measuring the height from the top of the head to the neckline then projecting that height from the neckline breakdown for the profit target. The traditional signal for the trade in the head and shoulder pattern is after that price breaks the neckline. So a good example of a precise profit target is that of the head and shoulder pattern.

Similarly in case of the rectangle consolidation pattern, the height of the rectangle is projected up or down to derive the profit target after the breakout. Triangles, flags, pennants and other chart patterns also have convenient build in profit targets.

Candlestick patterns are most often used as important trade confirmation tools in conjunction with other technical indicators. Candlestick patterns in themselves are not usually considered as sufficient trading signals.

For example, the hammer candlestick pattern occurs after a steep well defined down trend. But it should not be taken as a reversal signal to buy low. However, if this hammer candlestick pattern occurs right at a well established support level, the hammer candle may be taken as a strong signal that a potential long trade may be profitable.

Mr. Ahmad Hassam has done Masters from Harvard University. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!

An increase in trade size is usually caused by adding on or scaling in to a winning position. When adjusting your stops due to an increase in trade size, always move the stops closer to your current position. This lowers the risk in relation to your larger trade size.

As a rule, always set your stops on the same time frame as you entered your trade. Many traders want to know about moving stops based on different time frames. For example, if you had used a daily chart to enter your trade, use the daily chart to set your initial stop.

In day trading, you are supposed to close your position at the end of the day. Sometimes an opportunity arises and you decide to continue the trade overnight. For day traders there is a risk when holding a trade overnight. There is always a possibility of unforeseen event occurring during the night.

There will always be one time frame that is your hot favorite. Suppose you are trading a 15 minute time frame. Therefore your stop loss and position size are based on the 15 minute time frame. In stock trading, unexpected event may create a gap open. This may adversely affect your account value.

Your trade is profitable and you see much more profits if you hold the position overnight based on your 15 minute chart 5 minutes before the close of the day. How do you decide to take the decision to let the trade continue overnight?

Consider the following 5 rules. 1) The 15 minute chart must indicate a solid trend in place. 2) You should place a new stop loss based on your daily chart. 3) The trade must currently be profitable. 4) Your risk should be no more than 2% of your trading account based on your new adjusted stop from the daily chart. Reduce your trade size. 5) When the market opens the next day, be sure to monitor your trade.

The most common thing that can happen in case of a poorly placed stop loss is that you will get stopped out on a correction. After being stopped out, the market will race back in the direction you were initially betting on. Continuously tweak your trading strategy to get the maximum returns. It is crucial from the profit point of view to refine your strategy. The more profitable you will be, the better your stop strategy is.

Now you should keep this in your mind that there are no perfect stops. There is also no way to time the market perfectly. Your goal should be to get the probabilities in your favor by choosing a risk/reward ratio of at least “. This risk to reward ratio will also tell you about the placement of your initial stop loss. Just dont forget, getting repeated stopped out will add to your commission fees and spreads making your trading cost higher.

Mr. Ahmad Hassam is a Harvard University Graduate. Try This 1500 Pips A Day Forex Signal Service from heaven! Learn These Candlestick Patterns!

There are four major market cycles. Knowing these major market cycles is important for you and your trading system. Each market cycle requires a different approach from your trading system. Adapting to market cycles can improve your bottom line.

So you need to understand how to determine market cycles if you want to become a successful trader. Lets discuss these market cycles now. The four major market cycles are: 1) Trending, 2) Consolidating, 3) Breaking out of a consolidation and 4) Corrective.

Remember the saying, Trend is your friend. Trending is when the market starts to move consistently in one direction either up or down. How a trend is inherently defined? A trend can be defined as progressively higher lows and higher highs. If price movement consisted of a straight line either up or down, identifying a trend would obviously be too simple. In reality, currency prices move around incessantly, often denying the technical analyst an easy trend read. There are primarily three modes of price movement that can be readily identified. They are uptrend mode, downtrend mode, and non -trending (sideways) or consolidation mode.

Consolidating is when the market is struck between two horizontal support and resistance levels. On a chart, it will look like a sideways horizontal line.

Breaking out of a Consolidation is when there is a sharp increase or decrease in the price after the market has been consolidation for at least 20 bars.

Corrective is a short sharp reverse in prices during a longer market trend. In addition to these four market cycles, many traders also use Elliott Wave Theory to determine waves which are also an indication of market cycles.

There are five Elliott waves and each one has its own relevance in determining the trading strategy. However, using Elliott Waves is somewhat advanced for most traders. You need to have a thorough understanding and ability to correctly determine which wave the market is in at that point.

Incorrectly identifying the market with either the four market cycles or by using the Elliot Waves can be a costly mistake. For example suppose the market is only in consolidation and you incorrectly determine that the market has entered a trend.

Your best plan of action should be constant observation. You might enter a trend trade and get immediately stopped out. Market experience is the best teacher and only overtime you will be able to correctly figure out the market cycle.

When you trade, you base your trading decisions on technical indicators most of which are lagging. Hindsight is always perfect but trying to predict the markets can be an elusive and impossible endeavor. Right side of the chart is always an unknown quantity for the trader until it reveals itself.

Just as there are four seasons in a year, the markets have four cycles. So in addition to having a trading system, you need to learn what the different market cycles are. That means you should develop the skill of correctly identifying the different market cycles at the right time.

You need to learn how to adopt your approach to those cycles to remain profitable. For example in a choppy, sideways bracketed market, you need to adopt your system and rules so that you do not get whip sawed and stopped out a lot. Effectively identifying the market cycles is a skill that all successful traders have mastered.

Mr. Ahmad Hassam is a Harvard University Graduate. Learn These Candlestick Patterns. Try These 1500 Pips A Day Forex Signals from heaven!

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Never ever trade without a stop loss in place, this is the most important lesson a trader needs to learn from the very start of the trading career. Risk management is an important part of any trading decision. One important way to control your trading risk is by setting stop loss exits. A stop loss exit is a practical tool used in risk management. However, there is an art of developing the right stop loss exit strategy.

Placing your stop loss requires fine tuning on your part. On the one hand, you dont want to get too liberal with your stops that you never lock in a profit. On the other hand, you dont want to set too tight stops that you constantly get bumped out of the market.

Your exits must be carefully coordinated with your entries. The topic of setting stop loss exits generally falls under the heading of trading systems. This is a trading skill that you can only learn with experience.

How many stop loss types you can use in trading? There are a variety of stops that you can incorporate into your trading system. The following sevens are the most valuable:

1. Initial Stop: This is the first stop set at the very beginning of the trade. This stop is identified before your enter the market. The initial stop is also used to calculate your position size. It is the largest loss that you are going to take in the current trade.

2. Trailing Stop: This stop trails the price action and locks in when the price action is reversed. Trailing stops develop as the market develops. The trailing stop lets you lock in profit as the market moves in your favor.

3. Resistance Stop: Trend is your friend as long as you ride it in the right direction. A resistance stop is placed just under the countertrend pullbacks in a trend. This is a form of a trailing stop used in trends.

4. Three Bar Trailing Stop: This stop is used in a trend when the market seems to be losing momentum and you anticipate a reversal in trend.

5. One Bar Trailing Stop: When the prices have reached your profit target zone, use this stop after three to five bars move strongly in your favor. This stop is used when there is a breakaway market and you want to lock in profits.

6. Trendline Stop: You always want to get out when the prices close on the opposite side of the trendline. Use a Trendline Stop placed under the lows in an uptrend or on top of highs in a downtrend.

7. Regression Channel Stop: Stops are placed on the outside of the lows of the channel on uptrends and outside the highs of the channel in downtrends. A regression channel forms a channel between the highs and lows of the trend and usually represents the width of the trend channel. Prices should close outside the channel for the stop to be taken.

You always need to put your stops in accordance with the underlying market conditions. Try to overcome your fear and place your stops at reasonable places in the market. If you find yourself being stopped out too frequently or if you seem to be getting out of the trend too early then most probably you are trading with a fearful mindset.

Mr. Ahmad Hassam is a Harvard University Graduate. Learn These Candlestick Patterns. Try These 1500 Pips A Day Forex Signals from heaven!

In the past before the adoption of Euro as a single currency by EMU, it was necessary for many countries to hold large amounts of every individual European currency. As a result the currency reserves tended towards US Dollar. In 1990s, 65% of the global reserves were in US Dollar.

As EU becomes one of the major trading partners for most countries around the world, Euro will become more and more popular and this trend is expected to continue. With the introduction of Euro, foreign reserve assets are shifting in favor of Euro. Euro is in direct competition with the US Dollar as regards the market share is concerned.

The European Central Bank: Forex traders keenly watch the policy announcements of European Central Bank. The European Central Bank (ECB) comprises the Executive Board and a Governing Council. The Executive Board implements the policies made by the Governing Council. The Executive Board of ECB comprises the president, the vice president and four other members. These individuals along with the governors of the member national banks comprise the Governing Council. ECB is the governing body that determines the monetary policy for the EMU countries.

The policy meetings are biweekly. Although ECB meets biweekly and has the power to change the monetary policy in any of these meeting, it is only expected to do so where an official press conference is scheduled afterwards. New monetary policy decisions are usually taken by a majority vote. The president has the deciding vote in the event of a tie.

The EMUs primary objective is price stability and growth. So ECB has a strict mandate based on inflation and deficit. ECB tries to keep the Harmonized Index of Consumer Prices (HICP) below 2% and M3 (money supply) annual growth below 4.5%.

ECB is supposed to coordinate its policy decisions with the respective central banks. You should understand that the ECB and the European System of Central Banks (ESCB) are independent institutions from both national governments and other EU institutions. This operational independence is granted to them as per Article 108 of the Maastricht Treaty. Without this independence, meaningful monetary policy is out of question.

There are many factors that have to be taken into consideration while setting the targets for inflation and growth. There was EMU criteria that were used as a precondition for any EU member state joining the EMU. How ECB achieves its policy targets of price stability and growth? The primary tools the ECB uses to control monetary policy are the Open Market Operations. ECB has at is disposal four categories of open market operations that it can use to manage interest rates, control liquidity and signal monetary policy stance.

Bulk of refinancing for the financial sector is done through these main refinancing operations. These refinancing operations are conducted weekly with a maturity of two weeks. These operations are regular liquidity providing reverse transactions.

In order to smooth the effects on interest rates caused by unexpected liquidity fluctuations, fine tuning operations are executed on an ad hoc basis with the aim of both managing the liquidity situation in the market and steering interest rates. Longer term refinancing operations are liquidity providing reverse transactions with a monthly frequency and a maturity of three months. These operations provide counterparties with additional long term liquidity.

Structural operations involve the issuance of debt certificates, reverse transactions and outright transactions. The ECB minimum bid rate is the key policy target for the ECB. It is the level of borrowing that ECB offers to the central banks of its member states.

ECB is not constrained from intervening in the forex markets if it believes that inflation is of concern. Therefore, ECB does not usually have the exchange rate target but can factor in exchange rates in its policy deliberations as exchange rate impacts price stability.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

What is Fibonacci forex? Did you see the movie, The DaVinci Code? You will find a scene in the movie where the characters talk about the Fibonacci number as part of a clue or code of some sort.

So what are Fibonacci numbers? The Fibonacci number series were made famous by an Italian Leonardo de Pisa. The Fibonacci series starts with 0 and 1 and goes out to infinity with the next number in the series being derived by adding the prior two. For example, 0+1=1, 1+1=2, 1+2=3, 2+3=5, 3+5=8, 5+8=13, 8+13=21, 13+21=34, 21+34=55, 34+55=89, 55+89=144, 89+144=233, 144+233=377.

What is so fascinating about this series is that there is a constant found within the series as it progresses to infinity. The Fibonacci series is like this; 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610, 987..to infinity. This constant is known as the Golden Ratio, Golden Mean or Divine Proportion.

Take any two consecutive numbers in the series after the first few and you will find the Golden Mean by dividing the higher number with the lower number. For example, 89/55=1.618, 144/89=1.618, 233/144=1.618, 377/233=1.618, 610/377=1.618, 987/610=1.618 and so on. The inverse of 1.618 is 0.618.

Identifying support and resistance is very important in forex trading or for that matter any other trading. How do you identify support and resistance? Fibonacci ratios are usually used by traders to identify support and resistance. What is most important to forex traders is that applying these ratios can help identify key support and resistance zone in the market and therefore determine key trading opportunities or setups. The Golden Ratio can also be found in many places in nature like flowers, shells, fossils etc.

Thus the application of Fibonacci ratios can give you the edge as a forex trader if you use the Fibonacci trading technique properly. We have already discussed the Golden Ratios 1.618 and its inverse 0.618. The main ratios used in everyday analysis are 0.382, 0.50, 0.618, 0.786, 1.000, 1.272 and 1.618.

You should be proficient with using the technical analysis program if you want to use the Fibonacci ratios in your trading. It is assumed that you have a computer, a market data source such as quote.com and a technical analysis program to manipulate that data since you are trying to look into a type of technical analysis.

There are three types of Fibonacci price relationship namely, retracements, extensions and price projections (sometimes also called price objectives). We will look into Fibonacci Price Retracements, Fibonacci Price Extensions and Fibonacci Price Projections individually as well. The Fibonacci price analysis calculations can be done by hand as well but they are time consuming and tedious. So depending on a good trading software program is a good thing.

Support is when the buying pressure overcomes the selling pressure and the decline in the price is reversed at the support level. The definition of a support is the price area below the current market where you will look for a possible termination of the decline and where you would consider to becoming a buyer of whatever currency pair you are trading. Each of these Fibonacci price relationships will be setting up potential support or potential resistance in the chart that you are analyzing.

Similarly resistance is price area above the current market where you would look for the possible termination of a rally and consider being a buyer.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!