Category Archives: Getting Started

The World Bank’s All Important World Development Indicators (WDI)

Buying Gold

The World Bank collects the most current and accurate development indicators from official and reputable international institutions, which it compiles and tabulates comparatively to assess the development level of different nations, regions as well as the global outlook. These are the World Development Indicators (WDI). The WDI consist of many indicators but they fall in to the following broad categories:

World View
These indicators help access how various nations have succeeded in attaining the millennium development goals adopted by members of the United Nations General Assembly in 2000. These goals are eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality, reducing child mortality, improving maternal health and combating HIV/AIDS, malaria and other diseases.
The indicators under this category include poverty gap ratio, net enrollment in primary education, ratios of boys to girls in primary, secondary and tertiary schools, infant mortality rate, maternal mortality rate and HIV prevalence among population ages 15-24years.

People
These indicators give a broader picture of various nations’ progress and trends as regards to human development. They indicate demographic patterns, social protection, sanitation, jobs as well as distribution of income.
The indicators under this category include child malnutrition, under-five mortality, maternal mortality, adolescent fertility, primary education completion, youth literacy, labor force participation, vulnerable employment and unemployment.

Environment

The millennium development goals also called for sound environmental management, reversal of environmental degradation and mitigation of the effects of climate change. The indicators under this category show how human activities impact the environment, the level of environmental degradation as well as adoption of appropriate technology.
The indicators under this category include urbanization, water and sanitation, habitat protection and biodiversity, traffic and congestion, loss of forests, fresh water resources, carbon dioxide emissions, electricity production and energy use.

Economy
Indicators under this category give a broad picture of the world economy as well as the various individual countries. These indicators measure macroeconomic performance, various aspects of incomes and savings as well as trade and consumption levels.
These indicators include economic growth, balance of payments, adjusted net savings and government finance, growth of consumption and investment as well as rebasing national accounts.

State and Markets
A functional state ensures that economic markets are stable and developing. Such a state also appreciates the important role the private sector plays in development and provides the right environment for the sector to operate efficiently. Indicators in this category assess the performance of governments and their policies, the broader business environment, performance of economic markets and information and science technology.
The indicators under this category include stock markets, public policies and institutions, tax policies, high-technology exports, military expenditure as well as infrastructure.

Global links
The world economy is interconnected. Increased movements of people, financial flow and trade have all contributed to this. As nations develop, they also widen their global links thus increasing their economic and risk exposure. These indicators show the size and direction of trade and financial flows and they also assess the impact individual nations’ policies have on the global economy.
The indicators under this category include travel and tourism, foreign direct investment, equity flows, external debt and movement of people.

Conclusion
World Bank’s WDI provide high quality, current and accurate data as regards to global and individual nations’ development. This data helps in monitoring and the comparison of various nations’ development. In addition, the World Bank’s WDI is used by investors, companies, governments, non-governmental organizations as well as many other institutions when making very important trading decisions.

Binary Options – A Practical Perspective

Binary Options

There is an enormous amount of hype about trading in binary options which is not unusual for an investment medium that offers big profits to the potential investor. You need to have a practical understanding of exactly how binary options work and an appreciation of the risk versus reward scenario. All investors will agree on two facts, these are that the higher the potential profit the greater the risk, and that no risk investments give a very small return. We will now examine binary options trading to determine why so many investors are choosing this as their investment method.

The Principle of Binary Options

The word ‘binary’ means two and with binary options there are only two outcomes to any trade, your forecast is either right or wrong. When buying or placing a binary options trade, you are forecasting whether the asset you have selected is going to go up or down in value within a specified time period. The broker will offer you a return on investment of anywhere from 50% to as much as 90% for a successful forecast, while you forfeit your entire investment if your forecast is wrong. That sums up what you can expect in a binary options trade although there are variations’ such as touch, one touch, pairs and other trade types on offer, but the underlying right or wrong result applies to all of them.

Trading with Knowledge or Just a Guess

Whatever form of asset trading you are engaged in, you would never just rely on guesswork when projecting an asset’s anticipated performance. You take any news items regarding the asset into account, you follow its trading pattern, current as well as historic; then having assimilated the information, you decide on the future trend you expect the asset to follow. Having done this, you are now ready to place a trade in your selected asset and having prepared properly, you are now relying on your interpretation of the facts surrounding the asset and not just guessing. The more thorough the preparatory work you put in, the better your chance of ending in the money.

Predetermined Profit or Loss

Trading in assets on the market, you are generally obligated to purchase and pay for the assets in question, which involves holding costs, brokerage and other charges. You hold the stocks in the anticipation of prices rises, giving you a small profit potential, while if the price drops, your loss is unlimited, depending on how far the price falls. Trading in binary options, you never have to lay out big amounts to purchase the assets, but by trading on their potential movement, you are able to risk small amounts with a predetermined profit for a successful trade. Should your trade not succeed, your loss is limited to the cost of the binary options trade you placed and the money invested on this trade only.

Conclusion

By not having to commit funds to asset purchase for indeterminate periods, you have the freedom to make your money work harder when trading binary options. The homework you have to do is the same if you are buying the assets or if you are trading binary options in these assets. The difference is the capital outlay, the profit potential and the capping of any possible losses. From a practical perspective, binary options trading makes good sense.

The Portfolio

Portfolio

What is a Portfolio?
A portfolio is a grouping of different financial investments that include financial assets such as stocks, bonds, futures and other monetary equals. Investors build these portfolios in order to have an organized look at their investments as well as to see how much risk they have exposed to the markets.
An investment market is similar to a menu that is given to the customer in a restaurant. There are different styles of foods that can be eaten that have different flavors and prices. The different styles of food would be the different stocks and assets that can be traded and invested in. The flavors would be the specific type of financial instrument that is utilized when trading each underlying asset i.e. Options, Bull Calls, and Bear Puts.

What is included in a portfolio?
The food that the customer picks to eat and is placed before him on the table would be the assets in his portfolio that are invested in the markets. Each specific type of food that the customer choses to purchase and has placed on his table is based on his preferences. Customers all have different cravings each time they decide to grab a bite to eat. Similar to that, each investment that an investor has in his portfolio can change based on what they want to trade at the time period.
The satisfaction that the customer has after they are finished consuming their meal is a representation of the amount of profits that a trader looks forward to when they are done holding on to an investment position.

Important Facts on Portfolios
Depending on the investor, there are certain types of portfolios that are very common. There are two types of investors: conservative investors and aggressive investors.
Conservative investors prefer to have their portfolios with investments that have a low risk exposure. They prefer to allocate their assets towards long term investments that will provide a stable income and gain profits that will be claimed in the future.
Aggressive investors are the complete opposite. They have a high risk tolerance and are more than capable of taking high risk investments in their portfolios in order to achieve quick gains in a short time period.
Similar to the customer analogy, conservative and aggressive investors have a different tastes and preferences. Portfolios reveal the style of trading that an investor has.

Diversification
Another important concept that investors have in their portfolios is to keep their assets diversified. Having a portfolio isn’t simply to have all your assets in only one type of asset groupings; there needs to be different types of investments because this ensures that the investments have different risk exposure and are spread out among different industries and derivatives.

Conclusion
A portfolio is an important organization tool that investors use to maintain their risk levels at low levels as well as to diversify their assets to different industries in the markets. Just like the food pyramid, having a portfolio helps investors have a well-balanced diet.

ETF Investors and the Daily 1%

ETF

Looking back at the 52 week charts of most of the indices, there have been large turns in prices that are enough to cause a churn in one’s stomach. Investors became more fearful of the future outlook of the global market and began to trade without fundamental attitudes. But this doesn’t mean that there is no silver lining.
The ETF, or exchange trade fund, is primarily traded on stock exchanges, similar to stocks themselves. ETF’s are analogous to an index fund. They provide investors with the same goal in mind: Make profits at a minimum cost to the investor. ETF’s allow investors to diversify their portfolio over a large sector of the market with just a single investment.
The question you may be asking is, “what should the ETF investors do about the daily 1%?”
The answer is quite simple.
Before the middle of October of this year, many indices took a few dips in price and retraced back closer to the long term moving averages (MA). Following suit, the ETF’s also followed the same motion similar to the indices. The reason this occurred is because the economic yield from all the nations around the globe has not gained the rigid strength that it used to have. Different corporations in nations where there are horrible economies were looked at as good investments in the hope that they will obtain government stimulus that will boost their economic engine back into gear.
Sadly, that’s not always the case.
Just because the stocks in one year perform well during an increase in productivity in a country’s economy, does not mean that it is immune to any phases of turmoil in the future.
In the past few months, the global stock market took a stomach churning turn that left investors in anxiety and markets selling off on fear, rather than on discipline and fundamentals.
Yet despite those outcomes, there has been a slow growth in the US market that is a positive for ETF investors. Although the growth is slow in progression, it still exists. That is, it isn’t in a non-growth situation. The fact that the growing potential of the US market exists means that there is a high probability of the markets pulling back.
The data shown from the Global markets last week showed proof of the pullback. Apple (AAPL) stocks revealed a large percentage increase in their price level as well as Caterpillar stocks as well as many more stocks. Just like the stock performances, many indices such as the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) rose in percentage and gave hope to ETF investors that were reluctant of investing. Even though not all ETF’s follow the index funds in parallel, the more commonly traded ETFs are the ones that investors should put their investments in to since they have better historical records of precision. ETF investors can be less weary of a downturn in prices and can focus more on investing primarily without fear and more with fundamentals and sound discipline.

What is a Bull Put?

Bull Put

A Bull Put is a type of options strategy where an investor makes two different option purchases. The investor will purchase a Put option and sell another Put option at a higher strike price than the former.

This strategy is used in order to allow the trader to use the profits made from selling the Put option at a higher price in order to cover the cost of the purchase with a lower strike price. While the trader will lose the shorter option, he will still get to keep the premium. An investor would use this strategy only when their stand on an index or stock is reasonably bullish. Their goal is to make a short term profit while keeping a low risk.

In order to utilize this strategy, there are a few things to look out for.

  1. Find an asset that is believed to remain constant or increase moderately over a specific duration of time.
  2. Find an expiration time that will match your expected time frame.
  3. Find two different strike prices for both Put options that will bring the most potential return in profits.
  4. Inspect the strength of volatility in the market of the underlying asset. With no volatility, there won’t be a lot of spreads over the course of time. Volatility is an important step in analyzing option trades.

Once the position is executed, the trader will need to monitor the trade before the expiration date in case of any actions that may occur that will alter the trades from reaching their profit goals.

Example

A trader was observing the Intel Corp stock (INTC) and had a feeling that the stock was bullish for a short term period. The stock was trading at a price of $33.89. The trader decides to put a Bull Put by selling the 34 Put for $5.25 and buying the 30 Put for $1.50. In this scenario, the maximum profit that the trader would receive would be the $3,75 that the trader got when he executed the trade position.

The amount of loss that the trader would have is the difference between the strike prices minus the $3,75 that was credited towards the trader. The maximum loss in this trade would be $250. This was calculated using the following equation: (((34-30)*1000)-$3750).

A rule of thumb that is used of when to exit a Bull Put spread is when a certain level of the asset or futures is touched.

When trading Bull Put spreads, the effect of time decay affects the value of the option. While having more time for the option to continue its course, the value of the option that was sold will also corrode which has a higher value than the first purchased option.

Conclusion

The main benefit of buying Bull Put spreads is that the maximum loss and the potential profit are both known in advance towards the investor. They provide a significant leverage on a meek gain that a stock price achieves.

A Guide to Double Diagonal Spreads

A Guide to Double Diagonal Spreads

At the outset, traders using double diagonal spreads are simultaneously running a diagonal put spread and a diagonal call spread, both of which are time-decay trades. The aim of this strategy is to take advantage of the passage of time. Only experienced traders should attempt this advanced options strategy. Inexperienced traders, on the other hand, should paper trader for at least half a year before going live. A crucial element of this strategy is the implied volatility.

Trade Setups
Typically, traders would enter a double diagonal spread if they expect minimal price movement in the underlying asset over the next month. Since this is a long Vega trade, they may also anticipate that implied volatility will go up over the course of the next month. This is the challenge for traders who use this strategy. They want volatility to rise or remain flat, yet they need the underlying asset to remain within a specific range. Usually, large movements in the underlying cause spikes in volatility.

When entering into a double diagonal spread, the underlying should be halfway between the two sold strikes. Traders can run this strategy with a bearish or bullish bias; however, most traders set it up as close as delta neutral as possible. A trader would want the stock to stay between the two strikes for the sold options to expire worthless and he/she will take in the full premium.

Potential Profits
Most standard strategies have a definite maximum profit. However, working out the maximum profit, break-even and maximum loss for advanced strategies such as the double diagonal spread is an imprecise science. This is because traders are running options with two separate expiry months. Therefore, profit is usually limited to the net credit the trader receives for the sale of the options for the front month, plus the net credit earned when closing the options for the back month, minus the original net amount paid for the back month options. For maximum profits, one would want the underlying to stay in the middle of the short strikes. However, there is an increased risk of the stock blowing past the short strike.

Maximum Potential Loss
The maximum potential loss for traders who are able to open a position for a net credit is restricted to the difference between the strike price and the total premium received. Alternatively, the maximum loss for traders who open for a net debit is the difference between the strike price and the total premium paid.

Break-even
Calculating an exact break-even at expiry is not possible because there are too many variables. Most brokers use profit and loss calculators that allow investors to account for potential changes in IV levels. The best way to analyze the expiry graph would be to presuppose no changes in volatility. However, traders should remember that a rise in IV would move the break-evens further away from the short strikes while a decrease in IV will bring them closer.
Trading double diagonal spreads by themselves may not be the best strategy when trading in isolation. To solve this problem, traders should use them as part of the overall combination strategy.

Binary Options Technical Analysis Workshop

technical analysis workshop

It does not take special means to correctly predict the movement of an asset from time to time. Even beginners can strike gold on binary options if they had luck on their side. The problem is that luck tends to be rather finicky and cannot be relied upon for long. Those who wish to make a long-term commitment to trading must therefore find more dependable ways of enhancing their chances of success. For most experienced investors, this came in the form of technical analysis. The following is a brief technical analysis workshop for beginners that are aiming to raise their game.
Technical analysis can sound intimidating to novices but this should not be the case. There are a number of strategies that fall under this category with some being quite easy to implement. Although strategies that use intensive calculations can yield more consistent results, low level technical analysis can go a long way towards the improvement of predictive accuracy. They force investors to shed their bias and superstitions in favor of hard data, resulting in larger gains over time.

Trend Monitoring

The majority of technical analysis revolves round the study of charts and individual elements within them. Trend monitoring, for instance, calls for the vigilant observation of the asset price. The goal is to spot trends as they emerge for rapid assessment and possible utilization. Trends are pronounced movements that go either upwards or downwards over a considerable timeframe. A trend is said to be aggressive if the diagonals are steep and strong if the direction is maintained for a long period. The behavior of asset prices is better understood through the study of past charts. Going back as far as one year is not a bad idea.

Mean Reversion
Since the price of assets can be rigorously tracked, the average for specific periods may be calculated with certainty. Knowing the mean of share prices will allow traders to have a basis for comparison. Every time the share rises above the average, people can expect it to eventually go down. Every time the share falls below the average, it can be expected to gain momentum soon enough. The higher it goes up, the more likely it is to go down eventually. How quickly the reversal will happen will depend on a lot of factors including historical trends, relevant news and disruptive events.

Screening Asset Dynamic
Seasoned traders who are ready to take on more challenging calculations may wish to learn about screening asset dynamics. This is a multi-step process that usually begins with the computation of the MACD or moving average convergence divergence indicator. This is a handy tool for comparison in checking whether the asset dynamic is going up or sliding down. The knowledge gained is invaluable for correct predictions when buying binary options and should be a staple in any technical analysis workshop.

The World of Global Trading

The World of Global Trading

The World Trade Organization (WTO) released its annual report on global trade on Oct. 20, 2014 in Geneva. The main highlight of the report was that the outlook for the world of global trading in the current year is somewhat better than last year. The bad news, however, is that Europe continues to be a weak spot and will continue dragging down the overall global economic growth. Trading growth has never fully rebounded since the recession of 2008. This trend has limited the ability of countries to allocate products and resources in ways that can maximize growth. Trade in merchandise increased just 2.1% during the first quarter, at par with last year’s full-year growth, but well below the 20-year average of 5.3%. Trade during the second half of the current fiscal year is expected to pick up a bit to hit 3.1% by year-end. Here are the key takeaways of the WTO report:

1. The U.S. Is Still a Bright Spot
The overall economic outlook for the world’s largest economy, the U.S., remains good despite the economic contraction that took place early in the year due to severe winter. The country’s growth compares well with those of other developed economies. Lower unemployment rates and prevailing low interest rates are all expected to act as key catalysts that will drive the economy.

2. Europe Is Still Disappointing
Eurozone and the EU are responsible for about one-third of the global economy. Persistent high unemployment rates in the region are expected to continue impinging on imports and trade in general. Trade in the EU region has generally been stagnant during the current year, even though Germany saw good growth in the first half of the year.

3. China Becomes a Major Trading Force
China overtook Germany in 2013 to become the second-largest importer of commercial services, valued at a whopping $329 billion in 2013. China is now the world’s largest merchandise trader (imports plus exports). This is connected to the rapid shift of the Chinese economy from being an export-driven manufacturing economy to a consumerism economy where much of what is produced in its factories is consumed locally. Additionally, the U.S.-China trade deficit has been gradually narrowing, while Beijing is giving the Yuan greater leeway to fluctuate according to market forces, which might increase the competitiveness of the country’s exports.

4. Emerging Markets Chugging Along
The WTO predicts that trade in the emerging economies will continue to grow faster than those of their developed peers. The risks, however, that could slow down this trend are civil and territorial conflicts in Eastern Europe, Middle East and Asia, which might lead to higher energy prices and disrupt trade if they escalate.

5. Russia Still Declining
The Russian economy had begun to slide well before the Ukraine crisis took the helm. Since the advent of the crisis, the decline has accelerated as a combination of sanctions from various Western powers and counter-sanctions by Moscow continue to threaten trade in one of the World’s largest energy producers. Russia has recorded one of the steepest declines in exports this year among the leading trading nations, along with Thailand that is also affected by internal political turmoil.
As an investor, therefore, the world of global trading continues to hold out promise which is a positive indicator. If world trade continues to pick up next fiscal year, then expect even better times ahead.

Advantages of Using a Forex Robot

Forex

A Forex robot provides binary options traders with the opportunity to make money with very little effort on their part. The robot handles all an investor’s Forex transactions while they are occupied with other matters or even when they do nothing at all. The point of using a robot is to ensure that you have complete control of all your trades while you are left free to focus your attention on other matters. Robots take out the guess work when it comes to market analysis so you no longer have to make your trading predictions simply on a gut feeling.

How the Forex Robot Works

The Forex Robot completes automated transactions on your behalf based on its analysis of current trends related to your limits. It searches for the most profitable exchanges available and – using the parameters you have established – completes these exchanges. Although there are definite advantages to using Forex Robots for trading, it should only form a part of the overall trading strategy. The right robot, when properly used, can significantly pad your bottom line.

The Robot Never Sleeps
The Forex markets are open to trade 24 hours a day, 7 days a week. You, on the other hand, cannot sit at your computer trading indefinitely. However, this does not mean that you should miss out on a profitable trade because you have other matters to attend to. Instead, the Forex Robot is always on and available to do exactly what you ask of it at any time, day or night. All you need to do is set up your trading parameters and the Robot uses them to place trades on your behalf. It will do all the number comparisons and carry out the necessary analysis in order to accurately reach a solution and to make a trade.

Accurate Monitoring Of Large Numbers of Trades and Multiple Accounts
If you have placed a large number of trades or have several active trading accounts, following the performance of all of your positions can be a headache. With a quality automated trading system, you are able to place a large number of trades and to utilize different strategies without having to personally monitor all the movements in the market constantly. Monitoring and trading in multiple accounts is also made much simpler by using a Robot than handling them manually.

Eliminate the Influence of Emotion
One of the most important advantages to automated trading using a Forex Robot is that, unlike humans, software does not make any decisions influenced by emotions or on the spur of the moment. People are prone to make sudden, impulsive decisions based on fear, rumor, stress or panic. An automated system only acts within the parameters that have been provided and only takes the risks allowed by your limitations and based only on facts, calculations and compiled data.
Although it is not advisable to have a robot execute all of your trading, it can help you become a better trader. While you gain the basics of the market, a Forex Robot will take those basics, amplify them and use them to potentially increase your profits.

7 Steps to a Successful Investment Journey

Successful Investment Journey

Becoming a successful investor in any trading venture does not happen in a day or even a fortnight. It takes a lot of time and a great deal of patience. To succeed in binary options trading, a series of steps has to take place. The steps are rather like a guide of what to expect along the way and how best to emerge a victor with profits in your pocket.

1. The Basics
A successful investing journey is like any other journey and it has to start somewhere. Before investing, a trader should at least define parameters like: The duration expected for the investment to last, the investment amount, the asset to trade, the type of trade option etc. Most importantly, a trader should evaluate the long term gains associated with the investment. If the investment conflicts with the set goals, the trader must abandon that particular investment and look for another venture.

2. Research
At this juncture, the investing procedure is at its incubation. A trader should fully utilize the available resources to research for ideas that can be utilized in the investment process. He/she can access resources which are available both offline and online such as price charts and graphs, eBooks, trading videos and more. The reason for the research is because ever investment has two aspects: the financial aspect and the qualitative aspect. Ignoring any one dimension of the investment can prove to be disastrous in the long run.

3. Self-Evaluation
In this step, a potential investor is supposed evaluate himself to see if he has what it takes to be a part of an investment venture. For instance, in binary options, a trader should determine whether he can handle the risks of trading as well as the losses. If the self-evaluation turns out to be negative, then it is time to abandon the investment idea until the trader is emotionally ready.

4. Choosing a credible trading adviser or broker
No one can make it alone in trading. The main reason for choosing a financial adviser is because a trader can’t exist in a vacuum, in that; there will be a lot of competition from other investors. A financial/trading adviser provides resources and vital information on managing the investment in question. In binary options trading, choosing a broker is the most important step since it determines the percentage returns on the investment and it provides access to the trading platform, among other many variables.

5. Finding the right strategy
Finding a suitable way to approach your investments is not only important but very crucial. A trader should evaluate the strategies in the market and if he/she finds none, he /she should improvise. However, a trader should not rely on only one approach, but should have various options in case the first one fails and is not suitable for the market conditions.

6. Exercise trade discipline
It is not a surprise to see a trader being overwhelmed by emotions and ending up making a fatal mistake. The emotions are usually derived from an investment success or a loss on the investment. Discipline simply means that an investor is entitled to stick to his investing “manifesto” to avoid making drastic decisions. Money management is a vital part of trading successfully.

7. Adapting to changing environments
This is the last basic step for any investment. An investor should be able to adapt to changing market environments to ensure his/her investments stay on track. An investor should allow space for learning new tricks or strategies in order to survive in this dynamic world of trading.

Last Word
To invest is not really a problem, but to make an investment a success is the real challenge. An investor should always keep his/her eyes on the prize and should not be distracted off his/her track. In order for an investment to be successful, a lot of input and patience is of utmost importance.

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