(R)Evolution In Home & Personal Accounting

'Accounting for a Better Life’ is a book in which John Passmore proposes a new, simplified and fun approach, to home and personal bookkeeping and accounting.

The new methods, based on what he calls, domestic well-being accounting, enable people to gain control of their personal and domestic, financial affairs. The system provides the necessary visibility so that users will know exactly what their money is being spent on, and how well balanced their spending is, in relation to its distribution.

The balance is across basic domestic needs and responsibilities, discretionary spending on holidays, leisure and entertainment, and provision for future well-being. Knowing about the current and past spending patterns, users can determine where and by how much, changes might be needed. Budgeting and associated feedback, facilitate the monitoring of such financial planning.

The author believes the new methods have the potential to be adopted as a formal, sub-discipline of business accounting, eventually perhaps, with suitable certificates and diplomas for those who learn how to use it successfully.

With such recognition, the motivation for appropriate investment from industry and the state becomes real, so that domestic accounting, its further calibration and an associated training infrastructure, can all be further developed and refined.

He proposes that in time, such methods should become an established part of the school curriculum. Through this, youngsters will be able to achieve the best possible foundation to accept and take on the financial responsibilities that are associated with success, in modern life.

In the prevailing UK situation, of a very severe debt crisis, the new approach, almost in passing, provides the required visibility on the state of a family's financial affairs, to provide warnings of potential difficulties so that the necessary defensive actions can be taken, to prevent falling into the debt trap. For those already experiencing some debt, the new methods provide the necessary visibility on their finances to facilitate the required planning and control, required to best manage debt recovery.

If people realized the extent and value of the average, domestic, cash turnover, in the course of a lifetime, it seems amazing that serious, financial management is not already, demanded. If an equivalent, small business, with similar turnover was not effectively managed, the owners would probably have shareholders, accountants and Company House, knocking on their doors.

Accounting has traditionally been thought of as a rather boring, difficult and tedious activity by most people. It is also recognized as somewhat of a challenge, in considering the length of training required to achieve professional status, as a Chartered Accountant, or similar.

Having started to manage his own accounts at home, soon after the arrival of the PC, in the late eighties, John Passmore tried to adapt the traditional, business-oriented way of using accounts, with all the usual, end-of-period reports. He uses commonly available, general purpose software, an accounting package (Microsoft Money) and a spreadsheet package. He has adapted the maturity of double entry accounting and has also had to ensure his methods could cope with multiple currencies in use, whilst working overseas for thirty years.

Although it was basically satisfactory, in so far as it produced the overall figures on net worth, John realized two things; first, the traditional business focus and motivation on profits and shareholders’ value, understandably, had little relevance to the domestic situation, and second; there was no visibility on the nature of the bulk of the day-to-day, domestic income and expenditure. In addition, the terminology and the overall style of business accounting, he found, not at all conducive to successfully and easily running accounts, for a home environment.

Over a decade, John Passmore has gradually evolved a new approach to personal and domestic accounting. At a fundamental level, he has made everything much easier to understand and use. This was achieved by a range of simple techniques, such as rigorous naming conventions and a simplified version of the so-called, accounting equations. More importantly, he introduced a new focus for home and personal accounting, which he calls, domestic well-being. Essentially, domestic well-being, or DWB, provides a hierarchical structure for defining and recording, the increases and decreases, making up day-to-day, domestic financial activity.

At the top level, there is a 3-way split into Basics, Discretionary and a catch-all, of Others.

The Basics are sub-divided into Essentials (utilities, food and drink, clothing, health, etc.), Responsibilities (taxes, mortgage, licenses, maintenance, insurance, etc.) and Family (presents, and personal commitments, etc.). Similarly, Discretionary includes asset purchases and sales, Nice to Have (holidays, leisure, entertainment, etc.), Investment for the Future (Home improvements, pension contributions and other investments, etc.). Others are for uncontrolled changes, such as prizes, inheritance, gains and appreciation, fines, losses and depreciation, etc.

This DWB structure is used as the basis for the domestic reports and for categorizing all the transactions, as they entered into the accounts, as part of bookkeeping.

A sub-title of his book 'Accounting for a Better Life', is 'Gain Control of Personal Finances'. Following an overview of control and a comparison of a number of typical control environments, the book describes how control can be applied to financial situations. The visibility now afforded by DWB means that a new set of financial reports can be defined. These replace the business style, Trading Account, Profit & Loss Account, Balance Sheet and Cash Flow Statement. The new set of statements, tailored directly for the domestic situation, include the Domestic Well-Being Statement, the Domestic Balance Sheet and the Domestic Cash Flow Statement.

Readers will be generally aware of the typical, business ratios such as Gross and Net profit margins, Return on Capital Employed, and over twenty other ratios. Although vital for management and control in business, these ratios have absolutely no bearing on domestic finances. However, with the visibility provided by DWB, a whole new group of Domestic Financial Factors suddenly become evident. John has defined five, major new factors and a host of secondary factors. For example, the Basic Cost of Living Factor (BCLF) is the ratio of Basic Domestic Decrease to Total Household Increases, whilst the Well-Being Contribution Factor (WBCF) is the proportion of Discretionary Domestic Decreases, compared to the Total Household Increases. These factors provide the yardsticks, by which various characteristics of domestic life can be both qualified and quantified.

These factors open up new areas for comparison, measurement and control of domestic, financial situations, based on family size. Their real benefit however, has to await calibration and an accumulation of data, so that a parallel can be achieved with the business concepts of comparison to industry averages, or norms. The domestic averages will have to be built-up, over time. In the future, a BCLF 3 of 0.43, for a family of three for example, could be compared with the value of the factor, found for other families of three, across regions, or internationally, across continents.

Even without this capability until later, other forms of financial control suddenly become immediately feasible, in a practical way. For a start, with the new visibility provided, balancing or redistribution of expenditure across the Basic and Discretionary categories for example, now becomes possible, with due attention always being given to Investment for the Future (IFF).

John Passmore provides the necessary background and information for anyone to get started with setting up and running their own, domestic accounting system. Because of the simplification and visibility provided, which gives relevance to the financial activities of each and every domestic environment, with its own character and content, the author believes he has developed a system which can be fun to use. Once familiar with the set-up, a couple of hours a month is all that is required to keep the bookkeeping under way; and a couple of half-days at the end of any financial year, to produce the annual reports, should be all that is required at that time.

With basic computer literacy, access to a computer with preferably, an on-line connection, and maths competence, no higher than GCSE level, John believes that benefits are potentially available for a domestic situation with a shared annual income, of around £20,000 and upwards. It will also be appropriate for accountants in their work on behalf of domestic clients.

A sense of personal responsibility towards the members of the domestic situation is paramount.

The benefits are that with the accumulation of a few months' worth of figures, a realization of the actual spread and balance of the family outgoings will become apparent. With this, decisions can be made on any changes required to the pattern of financial activity, in order to obtain a better balance. The whole purpose is to achieve an overall and improved sense of domestic well-being.

With the new-found information, family members will know in detail about what has to be done in order to achieve a better life-style. Accounting, in itself, will not achieve this. Discipline will be required to change spending patterns to obtain the desired changes. The new accounting system can help keep track of progress, using budgets and targets. In this way, users will obtain early warnings of where and when they are not keeping to target, so that concerted efforts can be directed at coming back, on track.

This authoritative book, written with rigor and thoroughness is being published by Matador, Troubador Publishing Ltd (http://www.troubador.co.uk) and further information can be found on the author's web site at http://www.dwba.co.uk

copyright © 2006 John Passmore

"short And Fat" Ltc Policies Beat "long And Skinny" Ones

Long term care insurance policies have an important component called a benefit period which greatly affectspremium costs. This article discusses what I call "Short and Fat vs. Long and Skinny LTC Policies".

That is right -- Short and Fat LTC policies! So what is a benefit period anyway?

The benefit period is the number of years that ONCE you go on claim (need help in bathing and dressing or have some cognitive impairment (Alzheimer's or similar ailment) that the insurance company will pay the daily or monthly benefit that you chose when you applied for the policy.

So if you bought a benefit period of say 5 years, once you qualified for benefits, and satisfied the deductible (how many days of care that you need to pay out of pocket), the insurance company will pay those benefits for a maximum of 5 years in this case.

The benefit period, whether a set number of years, say 6 years for example or unlimited years are the MAXIMUM amount of time, if you used your FULL chosen daily or monthly benefit that your policy would pay on a claim.

If you had Alzheimer's for 9 years, the policy benefits would have been exhausted after those 5 years and you would be paying for the last four years from your own money.

Most insurance companies have a number of benefit periods to choose from. Typically they are 2, 3, 4, 5, 6, 7, or 10 years OR an Unlimited benefit period (say you went on claim for 35 years due to being in a wheelchair or something).

Most LTC policies have at least four or five different benefits periods from the above choices which you can choose from for your policy.

The benefit period, whether a set number of years, say 4 years for example or unlimited years are the MAXIMUM amount of time, if you used your FULL chosen daily or monthly benefit that your policy would pay on a claim.

Now for the "Short and Fat" part...

Long ago there wasn't too much difference in the premium prices for a 5 year benefit period compared to an Unlimited policy. So since there wasn't much of a cost difference, many clients chose the Unlimited benefit to protect against a HUGE potential disaster of needing help in bathing/dressing, etc. for DECADES -- not just a few years.

But today, there is a much larger difference in the premium prices for unlimited. So what to do?

First of all let me say that one of the largest LTC insurance companies has statistics that show that only 11% of their claims last longer than five years. Of course this means that about 90% of the claims last shorter than five years. So the odds are very much in favor of never needing a policy that would pay unlimited years.

So compared with a policy that offers an Unlimited benefit period, you can get a much higher daily/monthly dollar benefit that you are MUCH more likely to actually use and benefit from. Any unused dollar benefits will extend the number of years of your benefit period and not be lost.

Also you are much more likely to use a higher dollar amount for 2-4 years than having to pay extra money out of your pocket during care with a benefit period that is probably never going to be reached.

But... if you are pretty young (30-55) an Unlimited policy still might be a choice to look at. Older ages will find Unlimited years of benefits very expensive and there is likely a better way to structure a policy.

So knowing the above statistics, would it make more sense to you to have a Short and Fat policy (one with a larger daily or monthly dollar benefit for a shorter period of time)verses... a smaller daily or monthly dollar benefit for a longer period of years?

I'd put my money on Short and Fat!!

So if you would normally consider a policy that pays $150 per day for 7, 10 years or an Unlimited benefit period... you MIGHT seriously consider a policy that would pay $180-$200 per day for three to five years instead.

No sense in paying money out of pocket during the 3-5 years you are most likely to remain on claim.

Keep in mind that in 20 or 30 years the compounded inflation policy rider will work in your favor by giving you much more purchasing power to pay for care by starting out with a bigger initial benefit!

The odds are pretty good that the insurance company will pay more out for your care under these conditions.

“How To” Start Trading The Forex Market? (Part 8)

HOW TO predict the Future ?

by studying the Past (Technical Analysis):

1) The best traders don't discount one or the other but understand that having an understanding how the fundamentals influence market sentiment gives him/her an edge over those traders who don't.

2) In my opinion, TECHNICAL analysis is the easiest and most accurate way of trading the FOREX market.

3) "The number's don't lie" - all available information and its impact on the market, are already reflected in a currency's price.

4) Prices move in trends - the foreign exchange market is mostly composed of trends and therefore a place where technical analysis can be very effective.

5) History repeats itself - over time, certain chart patterns become consistent, predictable and very reliable. The question is SEEING them.

PRICES MOVE IN TRENDS

The traders who don't believe this obviously have no need to implement a trading methodology on technical analysis. But, research has shown that those who trade "with the trend", greatly improve their changes of making a profitable trade.

Finding the prevailing trend will help you become aware of the overall market direction and offer you better visibility,especially when shorter-term movements tend to clutter the picture.

HOW does technical analysis help to determine what the trend is and HOW to trade with then trend versus against it?

Even though, you learn you how to use and read various technical indicators to identify a long- term trend, spot predictable chart patters and use certain rules to enter and exit a high-probability trade, and even though a ll this involves sound logic, parameters, methods, formulas, data, and research, these technical indicators, by themselves, are not the Holy Grail of FOREX trading.

It takes discipline and emotional control to stick with trading following through the inevitable market ups and downs. Keep in mind, good technical traders expect ups and downs.

Which technical indicators are the BEST?

NONE - technical indicators should simply be components of your overall customized, personalized trading system, and not a stand alone system.
The objectives as a FOREX Technical Trader are:

1) To figure out the price action of the currency pair. Price is the main concern. If the EUR/USD is at 1.2224 and goes to 1.2020, 1.1980, 1.1940- the market is in a down trend.

Despite what every technical indicator might predict, if the trend is down, stay with the trend. Indicators showing where price will go next or what it should be doing are useless.

A trader should only be concerned with what the market is doing, not what the market might do. The price tells you what the market is doing.

2) Always remember that technical indicators are only giving you confirmations based on what the market is telling you. So listen to the market and let it tell you which method, strategy or techniques you should use.

"A Sucker Born Every Minute": Avoid These Debt Consolidation Scams

The web communications revolution has provided many unprecedented opportunities for commerce – and unfortunately, quite a few opportunities for swindlers to prey on the gullible. This is just as true for debt consolidation as for anything else. Here are some debt consolidation scams to stay away from:

1. “Free Debt Consolidation Services”

Why are these guys doing it for free? How are they making money? Do be aware, though, that cheap debt consolidation services are not always a rip-off, although it would be a good idea to take a second look at anything that sounds too good to be true.

2. Consolidate Your Debts Using Free Government Grants

Yeah, right. The woods are thick with companies that offer information about “free government grants”. Haven’t you heard? Uncle Sam is giving away money like candy (which explains our high taxes!). And you can use this money any way you like – for example, to consolidate your debts. It’s true that the government gives loads of grant money, but I have yet to hear of a Citizen Lifestyle Enhancement Fund. It’s not easy to qualify for government grants, you have to spend the money for a particular purpose, and using it to consolidate your bills might just win you a free bonus – a five-year vacation at the Club Fed.

3. “No Repayment Necessary”

I don’t quite know quite why I included this one, except for entertainment value – if you can read then you’re probably too smart to fall for it. Anyway, here goes: Did you know that banking laws prohibit the charging of interest, and that the Supreme Court has backed this up with several decisions? You can borrow money, fail to pay it back, and then retain a smooth attorney to get you out of paying it back – after all, they had no legal right to lend you the money. Would you like to know how? Well, for the low, low price of $69.95…

If you fall for this one then I’ve got some swampland in Florida I’d like to sell you sight unseen. Oh, and by the way, even if banking law DID prohibit the charging of interest, you’d still have to pay back the principal.

Most debt consolidation swindles are see-through because they aim to take advantage of somebody in financial and emotional distress. As P.T. Barnum said, “There’s a sucker born every minute”.

$82,000 Penalty Tag For Bad Credit Mortgage

It is natural for people to ask for help when they are in trouble and it is within our nature to offer a hand when we can. What throws this natural human relationship off its kilter is our ego that impacts our decision as to when we ask for help and when to extend a hand.

We often wait until we are in serious trouble before we ask for help and by that time the kind of help we receive is very very expensive and sometimes too late. On the other hand when we offer a hand too soon, we come across as interfering busy bodies who do not know the first thing about free will. Parents know what this is like when they talk to their children. But we leave the eagerness to help alone for now and concentrate on asking for help too late.

Let’s take the term "bad credit loan" for instance. According to a segment of Yahoo that keeps track of what people search for, in December of 2006 over 100,000 people searched for bad credit loan. On the other hand a little shy of 5,000 people looked for the term "bad credit repair."

When I added all the people that were looking for various loans related to bad credit, the number was over 500,000. But the number of individuals who looked for bad credit repair still remained under 5,000.

This seems to mean only 1 out of every 100 person look to cure the problem and the rest look to cure the symptom.

Wouldn't you think that the "bad credit" problem arises much before the need to get a "bad credit loan?" If this was the case, more people should have been searching for ways to repair their credit than those who seek to remedy the bad credit problem with a loan.

We as a society seem to seek remedy more than prevention. We live the dream of buy now and pay later and it is costing us dearly. Let’s look at two other examples of “bad credit mortgage” and “bad credit home loan.” 79,000 individuals looked for these services in December of 2006.

According to Fair Isaac Corporation as of January 11, 2006 and on a national basis, a person with a poor credit score of 500 – 579 is expected to pay $819 for a $100,000 thirty year fixed bad credit mortgage loan. For the same loan amount a person with an excellent credit score of 760-850 expects to pay $589 per month. That is $230 per month difference. This difference amounts to an $82,000 penalty tag for a bad credit mortgage loan.

The amazing part is that there is help in form of books, tapes, ebooks, firms and so on and it costs much much less. But when you look at the numbers most people chafe at $30, $50 or $100 one time fee but they flock to get solutions that cost them hundreds of dollars per month for a very long time.

You have these numbers, you know your situations, likes and dislikes better than any one else. I hope that you are reading this article and do not have to deal with bad credit. But if you are, consider placing some of your attention on bad credit repair and don’t let obtaining a bad credit mortgage loan consume all your attention.

William F. Halsey once said, “All problems become smaller if you don’t dodge them, but confront them.

© Vishy Dadsetan

* DISCLAIMER: Vishy Dadsetan, http://MyPersonalFinance.com or My Favorite Shop, Inc. do not endorse any product or company. This article and website do not provide legal, insurance, or other professional services. If expert assistance is required, the services of a competent professional should be sought. Although Vishy Dadsetan has made every effort to ensure the accuracy and completeness of the information contained in this site, he assumes no responsibility for errors, omissions, inaccuracies, or inconsistencies.

Bigger Fund Managers Are Not Necessarily Better

When it comes to selecting top-performing investment funds and unit trusts the bigger brand is not necessarily better. Choosing the wrong fund by investing with big brand fund managers could cost investors dearly.

Many investors are deluded into thinking that buying from a big brand fund manager will in some way protect them against selecting a poorly performing fund. The big brand managers offer many great funds, but they're also marketing plenty of duds. Just because one fund is a top performer, doesn't mean it applies across that fund manager's range. Investors need to look beyond the brand and more closely at the underlying fund.

Over recent years, the UK market has seen a rise in popularity for boutique investment houses, and, given their track record of consistent positive performance, it's hardly surprising. There are many ways to classify a boutique, but generally speaking, boutique fund managers are independently-owned or employee-owned, and relatively small in size. They often invest in specialist areas of expertise, rather than attempt to be all things to all men and run funds across each and every sector.

Recently, boutiques have even been stepping on large firms' toes when it comes to servicing retail clients. Last year boutiques outshone their larger counterparts in the UK, taking the top four places in the ‘best overall fund manager rankings'. Big brands such as UBS and Standard Life slipped down the rankings, while boutiques Rathbone, Neptune, Dalton and Artemis took the top spots.

The last quarter of 2006 was hair-raising for investors, as millions were wiped off share prices and markets. However, the boutique fund management houses continued to outperform their larger rivals.

The disappointing reality for most private investors is that neither they, nor in some cases their financial advisers, would have heard of some of these relatively unknown smaller investment houses, and are therefore missing out on great investment opportunities.

The same caution applied to big brands should also be applied to big names - or the so called ‘star fund managers'. Is it wise to stake your money on the reputation of an individual big-name fund manager when there's no guarantee they will stick around?

Research shows that just 15% of managers have run the same fund for over six years, 43% for four to six years, and 39% for two to four years. Similarly, 80% of fund managers at the top 50 UK fund providers have left their funds in the last three years. Around 60% of managers move because of offers from competitors.

In investment terms, familiarity doesn't always necessarily breed content. Investors should monitor their investments very closely and ensure that they have the tools to hand to spot strong investment opportunities that would otherwise pass them by.

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Better Trades Momentum Part 2

In Part I of this article, I taught you to trade momentum that occurs after an earnings announcement. In this article, I am going to go into some of the chart patterns we can use to trade momentum that is unrelated to earnings or news. And in Momentum Part III, I will show you how to combine news and chart patterns to trade momentum. But, before I get too far ahead of myself, let me recap what momentum is and why I trade it.

I love to trade options on stocks with a lot of momentum. What this means is that I want to trade those stocks, Exchange Traded Funds or Indexes that are moving fast and far. The way I see it, if I am going to put my money in the market, I want to place it where it will work as hard as possible for me. You may have attended my free webshop on Monster Momentum plays during which I introduced a couple of the technical tools that I use to find and trade this strategy, but let me show you today some other pieces to this strategy and how this can be a boost to your trading account.

The first step to trading momentum is that you need to find a stock that has the capability to move fast and far. These stocks generally have a dollar to two dollar average daily range during normal trading. Once the momentum picks up, they can trend twenty to thirty points or so in a matter of a few months. Sometimes this momentum is sparked by news announcements such as earnings or a new drug approval and sometimes it is just a stock that becomes heavily bought or sold by institutions. Whatever the case, once you learn to read technicals, you will be able to spot the building momentum in time to profit from the big move.

Many of my most profitable momentum trades took place not because of any news but just because the chart began to show signs of big buying pressure or big selling pressure. I look for things like breakouts, long candle bodies, and various candle patterns combined with the six indicators I use to signal a momentum trade. The best way I can teach you to trade momentum is to show you some of the patterns that I and others in my Traders’ Talks have recently traded.

The first thing to keep in mind with momentum is that once a stock has made a big momentum move, you know it has the ability to do it again in the future. It will probably take a breather for a while and it may not move in the same direction, but the momentum will almost always pick up once again.

Take Goldman Sachs (GS) for instance. This stock ran with a lot of momentum from $155 to about $205 before it started trading sideways.

If you had been to my Technically Speaking classes or in my Traders’ Talks you would have traded GS all the way up through that run. But at the end of the run, Goldman took a breather for almost a month while it traded in a sideways range between $198 and $203. During this sideways movement, I put my money in other stocks and ETF’s that were moving with more momentum. Don’t forget what I mentioned earlier, that stocks that have moved with momentum in the past will almost always move with momentum again. So when a momentum stock slows down make sure you are ready to trade it once it begins to move again.

I find momentum trades from my Momentum Scans (you can learn more about these in the Ultimate Scans free webshop), and on January 8th GS showed up on my Momentum Scan as the stock started moving toward that resistance level. By the time it had rallied through the $203 resistance level I had entered a bullish trade. There is no trade that is more fun than a momentum trade. When all the technicals are bullish and my momentum entry was hit, all I had to do was kick back and watch the buying pressure drive this stock up to almost $214 where it sits at the time I write this article. You can see how profitable these breakouts can be on momentum stocks. Goldman has run more than $11 in only five days!

Intercontinental Exchange (ICE) is another momentum stock that we traded in the past as it ran from $68 to $113. That move took nearly three months and then ICE began to slow down and consolidate. The stock was not attracting enough buying pressure to push it through $110. That resistance became an important price target for the stock. If buyers came back willing to pay higher prices for ICE the stock would rally above the $110 resistance and mark our next momentum entry.

You can see below that ICE broke out on January 3rd , prompting a bullish momentum entry. The stock then rallied to a high of $137 giving us a gain of 27 points in seven days.

ICE and GS are just two examples of the many momentum trades out there. I have shown you a couple important technicals pieces that need to be present to make this strategy work. Make sure the stock has the ability to move at least a dollar or two every day and then look at the price chart to see if the stock has moved with momentum before. Then wait for a breakout from a consolidation area to give you one of the safest, easiest and most profitable entries into the momentum trade. And remember, you may have missed these trades, but there are plenty more momentum trades to come. Learn to read momentum signals in a price chart with my six indicators adding confirmation and you will be prepared to catch the next big momentum trade

Hope to see you soon!

Markay Latimer with Better Trades

Better Trades Momentum Part 1

I love to trade options on stocks with a lot of momentum. What this means is that I want to trade those stocks, Exchange Traded Funds or Indexes, that are moving fast and far. The way I see it, if I am going to put my money in the market, I want to place it where it will work as hard as possible for me. You may have attended my free webshop on Monster Momentum plays during which I introduce a couple of the technical tools that I use to find and trade this strategy, but let me show you today some other pieces to this strategy, and how this can be a boost to your trading account.

The first step to trading momentum is that you need to find a stock that has the capability to move fast and far. These stocks generally have a dollar to two dollar average daily range during normal trading. Once the momentum picks up they can trend twenty to thirty points or so in a matter of a few months. Sometimes this momentum is sparked by news announcements such as earnings or a new drug approval, and sometimes it is just a stock that becomes heavily bought or sold by institutions. Whatever the case, once you learn to read technicals, you will be able to spot the building momentum in time to profit from the big move. As we are heading into the thick of earnings season, this article will show you some ways to trade the post earnings momentum. Watch for part II of this article to learn more about other technical momentum plays.

Holding a directional trade over earnings can be risky, but after the release the uncertainty of what direction the stock will move is gone. I like to trade after earnings because we often have an unusually large amount of trading activity that moves many stocks faster and further than they would normally go. It may be that earnings numbers were a big surprise, (they might be much stronger or weaker than expected) or it may be that traders were waiting to see what the quarter was like before they put more money into or took money out of the stock. It truly does not matter what the actual number are, mind you, because we are not trading the numbers, we are trading the reaction to the numbers. Checking a chart the evening after a company announces will show us if we have tradable momentum. If there is a great amount of buying pressure, I trade it up and if I see a lot of selling pressure, I trade it down.

One of my more favorite post earnings plays is Goldman Sachs (GS). In fact, this trade has worked out extremely well on Goldman a couple times already this year. HINT: this is a stock to watch the next time they release earnings!

Goldman Sachs announced earnings in September and gapped up above resistance. In my Technically Speaking workshops, I will show you how to use an intraday chart to trade on the first day after news is released, but for the purposes of this article I would like to teach you how to make money on this strategy even if you do not have the time to watch the intraday chart. To do this, you need to recognize momentum as it develops on a daily chart. Many momentum plays begin like GS did, as a breakout. Goldman formed a bullish Opening Marubozu candle September 19th after the earnings release. The stock closed that day above a previous $155 resistance level. A close above resistance should be viewed as a strong signal for the stock. After such a signal, I confirm with my indicators (for more information on the technicals I use, join me in one of my live Technically Speaking workshops or watch the class on DVD). I am trying to find any excuse to stay out of the trade. Any bearish indicator or bearish price pattern will prevent me from entering the trade. But, if all technicals confirm a bullish trade I enter the following day. One note of caution here: news may only have enough influence to move the stock for one day. Because of this, I prefer to enter my trades above the high (or the low if it dropped) of the day the news is announced.

Using this technique, Goldman got us into a post earnings momentum trade around $159.75. The price graph and the indicators I teach you to use were all bullish so we had the OK to enter a trade that day. Once our entry in this type of trade is triggered, you want to stay in as long as there is continued buying pressure. Often the buying pressure and momentum will move a stock for only three to five days. In the case of Goldman, the stock had post earnings momentum for three days but it barely took a breather on days four thru six before gapping up and taking off once again. The technicals have remained strong enough to keep providing bullish trades for the past couple months for a run from $159.75 to $186 where the stock is currently trading at the time this article was written. These momentum plays can be traded as one trade that you will stay in as long as you have enough time in your option or as something you can position in and out of to pull profits out along the trend.

The entry on this type of trade can feel risky because of the gap. The danger with gaps is that all the trade may be taken in the gap and there may not be enough buying or selling pressure to move the stock further. For example, when the Chicago Mercantile Exchange (CME) announced they were buying CBOT Holdings (BOT), the CME gapped to an all time high. The opening price was over ten points above the long day candle you see earlier that month.

After the open, no one was willing to pay a higher price for the CME and the stock dropped like a rock. When a stock gaps beyond a price at which it was comfortable trading, you can rest assured that much of that play was taken in the gap and the safest way to trade it may be to trade the retracement. One thing you can do to make trading a gap on news more safe is to avoid the trade unless the gap puts the stock near its recent trading range. In the case of CME, the stock was so far above where traders were comfortable buying it that people took profits out very quickly. With Goldman, just the opposite was true. Because it gapped to $155, a price that people had paid for the stock many times in August, traders were much more comfortable piling in at that price after earnings. All the buyers willing to pay $155 or more for GS helped push it much higher.

A news announcement such as earnings can present wonderful trades. The momentum associated with the news may create a lot of buzz around the stock and draw more buyers into the stock, or motivate people to sell the stock in droves. Either way we can trade it. Check the technicals first to make sure everything is bullish before buying calls or that everything is bearish before buying puts. And remember that as long as the stock gaps to a price that is has traded recently, there may be plenty of room left for the stock to move. Enter the trade and manage your risk by placing your stop. This is one easy way to build your account up trading momentum during earnings season.

Hope to see you soon!

by Markay Latimer with Better Trades

Better Trades Inc

BetterTrades™ is the solution to your trading problems. If you have any questions about trading or any doubt that you have the knowledge necessary to compete in today's trading world, BetterTrades™ is the place to turn for helpful classes and useful advice as well as articles and workshops that will allow you to improve your trading strategies and techniques.

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Taking a  Better Trades class is as easy as signing up, and signing on for the class session. You will be able to communicate with your instructor, ask questions, and refine your knowledge of the topic at hand. With BetterTrades, it is easy to work with the system to pick the classes that are interesting to you so that you can get the information you need to trade at your best. Consider starting with our Marketing Essentials course, an amazing overview to help get you off on the right foot.

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Better Trades

There are few jobs in the world that don't require training, yet many people believe that trading should require little to know training. Trading on the stock market gives you an unlimited potential for earning money, but all too often, people lose thousands and sometimes hundreds of thousands of dollars simply because they didn't have the knowledge to make effective trades. Instead of just taking a chance, why not learn how to trade the right way? Allow stock market professionals to teach you the strategies that will work for you.

BetterTrades.com is a method unlike many others. Most online sites that promise to teach you how to navigate the stock market are simply regurgitated information from older sites. They are "canned" presentations that deal with simple techniques you can pick up anywhere.

 BetterTrades is something entirely different. Instead of being a website where you can get the same information that is posted everywhere, BetterTrades.com is a method that caters specifically to the individuals enrolled in their courses. The Trading Webshops, the key to this program, are live, interactive courses that you can take in the comfort of your own home. These Webshops will not only teach you the basics of trading, they will teach you how to trade in a way that is beneficial for you.

Wondering how these Webshops work? At BetterTrades.com, you simply sign up for the Webshops that you feel will help you to become a better trader. It doesn't matter if you're looking for beginner courses or more advanced techniques, Better Trades(http://www.better-trades.com/)is sure to have the course for you. Take as many courses as you like. You can even take a webshop again for refresher purposes.

Why should you work hard everyday and invest in a market, only to lose all of your money? Your money is valuable and taking courses from Better Trades can teach you how to intelligently trade your money and how to use the markets to increase your investment. Because they are invested in making sure you can truly use the training they provide, BetterTrades.com is different than the others. If you need a stock market training you can truly use, you need Better-Trades.com.

Best CD Rates

Certificate of deposits with longer maturity periods pay higher rates than those with shorter maturities. It could be said that the best CD rates have the longest maturities. Some investors believe that a certificate of deposit is the best and safest investment. Others invest in a certificate of deposit to supplement their retirement income. Regardless of the reason, all types of investors want to earn the highest CD rates i.e., best CD rates.

In order to achieve best CD rates, investors need to shop around either online, through newspapers, banners on local institutions, or with the help of brokerage firms to find out which banks and credit unions offer best CD rates all the time. Before purchasing CDs that offer best rates, customers need to consider two factors, the length of the maturity period and the current interest rate environment.  Investors who lock up their money in long term CDs will earn a better rate of interest than those who buy short term CDs. This is due to the fact that when customers purchase CDs with longer maturity periods, they commit their funds in the investment for the entire maturity period before they can withdraw. The investor foregoes alternative courses of investment. For all these risks that investors experience, banks pay best CD rates on such units. Similarly bulk buying also fetches investors best rate because banks may insist on meeting minimum requirement for offering best rates.

It is not advisable for the investor to stay with the same bank for more than one year. By sticking with the same bank, investors lose the chance of getting the highest and best CD rates offered by other banks and credit unions. Generally, the interest rates offered by credit unions, which are non-profit organizations, are the best when compared to those offered by commercial banks.

Beginners Information About Trading Penny Stocks Online

Since writing about trading penny stocks online over at my blog, I received several emails about the subject and it seems to have generated a good deal of interest.

People have been trading stocks online since the very early days of the internet, and nowadays it is a simple matter for anyone who decides they want to get involved to start online trading.

However, there are several things you should be aware of before deciding to start trading stocks, not least of which is that it is a gamble, and this applies regardless of your knowledge or experience. You need to have some money to invest and it should be money that you can affors to lose. Bear in mind the worst case scenario - i.e. that you could get it horribly wrong and your investment could disappear overnight. Fair warning if you don't want to read any more.

Much has been written about trading stock online, in particular penny stocks, and by far more qualified people than me.

If the idea of an exciting risky investment strategy appeals to you, trading penny stocks could be the adrenalin fix you are seeking. It's pretty simple to get started, but success or failure are equally possible results.

Firstly, penny stocks are usually defined as stocks trading at below $5 a share. Some people consider this arbitrary amount differently and would say that $2 would be a better yardstick, but, whatever the definition, these are shares usually traded outside of the major exchanges. They are often volatile and unpredictable and their performance is very difficult to monitor or foresee.

It is fair to say that stock trading at a few cents a share is the most risky investment anyone could make - many experts would say foolhardy in the extreme. The temptation to buy thousands of shares for a few cents is one that often results in many people getting their fingers burned. What you have to remember is that there is a reason the stock is so cheap - it really isn't worth much and the likelihood of making a killing on such shares is far from the foregone conclusion that some people will try to convince you it is. Establishing the likely performance of these stocks is usually virtually impossible as often there is very little information available on the companies to do any kind of meaningful analysis.

Don't be lured into buying stocks just because a newsletter or email tells you it is a sure thing. There are plenty of sharks out there who will engange in the practice known as "pump and dump", whereby they will attempt to generate unsubstatiated hype about a particular stock in the hope that there will be a rush to buy, enabling them to sell on their worthless holdings to unsuspecting hopefuls. You really must excercise caution and do your own "due diligence" - if you don't, you will soon end up regretting impulsive penny stock purchases.

Trading stock online is not difficult, and once you have a basic understanding of how it works and decide to give it a try, you will need an account with an online stockbroker.

For penny stock trading Lowtrades.com offer a very good service. To set up an account you will need to submit an application form by post. This can be downloaded in PDF format from their site. Once you have opened an account you will need to fund it (more details of how to do this are listed at the site too) and then, you are ready to trade.

In very simplistic terms you will place orders with your broker via the online trading interface and they will carry out your buying and selling instructions. Each trade you carry out, buying or selling, will cost you a small commission to the broker. With Lowtrades usually around $5.

Presumably your interest in penny stocks means that you are looking to make quick returns. It is true that he rewards can be tremendous - it is entirely possible to make hundreds of dollars in a day. By the same token, get it wrong and the losses can soon mount up too. Day trading is not always profitable, but it's always risky. Day traders buy stock and aim to sell it on the same day for a profit - the age old buy low, sell high strategy. Of course, if the stock price falls, you have a decision to make - sell it at a loss, or hold on in the hope that prices will recover and you can mitigate your losses.

You have to understand that not every stock you buy will appreciate in value during the course of one trading day. This means you could end up with your risk capital tied up in one company, leaving you unable to make any other trades until you offload the stock. Having all your eggs in one basket is therefore not a great trading strategy.

For those with limited funds to invest, this can present a bit of a dilemma. There is little point buying so few shares that even if the price rockets upward, you will make only a few dollars - you must also remember to deduct brokerage fees from overall profits too. If you are working with only a small amount of capital, you are going to need to find resonably priced stock that allows you to buy a few hundred shares, certainly not less than 100. For example, if you can secure 300 shares and the price rises by 25 cents, you will net yourself only $75 less any commissions - hardly earth shattering. On the other hand if the stock value increases by a dollar, you have $300. The basic math is simple enough, so you need to look carefully at whether an investment is likely to be worthwhile relative to the amount you are able to invest.

It goes without saying that the more investment capital you have, the more you stand to make, or lose.

Opening a trading account is straightforward enough once you know the kind of account that you need. For a simple individual cash account some brokers will require a minimum deposit and others will not. Shop around to find the best deal for your own personal circumstances. Charges will vary too, and these all affect your bottom line, so make sure you know how much each trade is going to cost you.

Finally, I will repeat my earlier advice - never invest anything that you can't afford to lose. Penny Stocks are a gamble, and if you don't have the constitution for risking the purchase price, don't start with online trading of any kind. Sit back and have a good think about what you are planning to do and what you hope to achieve through your investments. If you are thinking of day trading you will need to be in a position to monitor your stocks throughout the trading day - if you are not going to be able to do this, you will not be able to sell when the need arises - i.e if the price should spike briefly.

If you want to start trading penny stocks online, read up on the subject carefully and learn as much as you can. There are plenty of helpful websites such as AllPennyStocks.com where you can begin to learn and I have also included some useful resources below for those wanting to learn more. Never let anyone tell you that it's as easy as falling off a log though - if it was, we's all be millionaires by now!

Be Cautious When Studying Mutual Fund Ratings

Wherever you look, you will find various rating systems on mutual funds, each of which uses a different approach. All of them are designed to weed through the thousands of funds to get to the best ones. But is there really such a thing? Does a high rating really mean a fund will do better in the future? Many people seem to think so. A recent study showed that Morningstar, North America's most recognized rating system for funds, has a tremendous influence on fund sales. If Morningstar gives a five-star rating, those funds typically enjoy increased sales as a result.

While ranking providers are careful to warn investors that their ratings don't foretell the future, the star system is, unfortunately, used by some investors as if they were reading Consumer Reports to purchase a new drill. Supporters of the ranking approach argue that there's no subjective component to the star rating. It isn't determined by an analyst's review, and can't change simply because the service dislikes the fund's manager or its investment strategy. And that's good.

Performance will vary. Fund performance often falls off and risk levels rise during the subsequent three years after a fund is given an initial five-star Morningstar rating, suggests another recent study by Matthew Morey, a professor at Pace University. One reason for this is that after receiving a five-star rating the size of the fund grows dramatically, which then makes the fund unwieldy to manage, he suggests. Since Morey's study was completed, Morningstar also has changed the way it doles out top rankings to make them more precise. One of the biggest problems with all rating systems is that they are not necessarily predictive in nature. This means they're not really set up to tell you whether certain funds will necessarily do better in the future. For the most part, the ratings indicate how much you might have made and how much aggravation you faced in the process.

Combining risk and return. For example, one five-star fund might post moderate return scores, but incredibly low risk scores. Another five-star fund might have much higher-risk scores, but its return score could be strong enough to help it still rank in the top 10% of the pack.

In some cases, in fact, it's not even the same fund to begin with. Remember, after a management change, the rating stays with the fund, not the portfolio manager. Therefore, a fund's rating might be based almost entirely on the track record of a manager who is no longer with the fund.

Understand how the ratings were developed. Too many people put emphasis on the results without knowing how the results were achieved. If you are going to use ratings, take the time to understand how they were developed and what they really mean. It is not the destination but the journey that counts.

Past performance is no guarantee of the future. You have probably heard this disclaimer a thousand times before, but it is really important to understand. Most rating systems have little to no predictive element in them. It's natural to think that the best performer of the past will be the best performer in the future. Unfortunately, it's not that simple. Just think about it; if it were that easy, investors would just continue to buy last year's winners knowing that they will be this year's winners. And that seldom works.

Ratings are a very important element in trying to distinguish between good and bad funds. Good research, however, goes far beyond just looking for five stars or an A+. When evaluating funds, look at the quantitative, measurable characteristics of a fund: returns up against the benchmark, costs, risks, taxes and manager tenure. Use rating systems as part of your research, but remember: just because the analysts give them top marks, it does not mean they will be the best investment in the future, and doesn’t it mean that they'll be the best investment for you in particular. Take the time to understand how the ratings were achieved. This will be the first step to educating yourself about funds.

Basic Principles Of An Investing Club

Investment clubs are created by individuals who not only want to pool their funds together to make a joint investment but would also like to gain knowledge on the various types of viable investment opportunities that are available in the market. Each member of the club contributes periodically an agreed amount of money to purchase growth stocks by means of a dollar cost averaging approach.

The dividends as well as the capital gains are usually reinvested to gain more interest. The security purchases are voted upon by the club members. This is also one way of decreasing personal risk of club members. There are also investment clubs that allows non-club investors to participate in larger investments of the club provided of course that the non-member investors receive a much lower share of commissions.

Likewise, it is also the role of investment clubs to assist their club members in becoming more knowledgeable in all aspects of investments. A well-known trade group for investments clubs is the National Association of Investors Corporation (NAIC) which is a non-profit organization that provides guidance as well as imparting investment knowledge as part of its membership.

A good choice of investment clubs are those that have been around for many decades already and have a track record of having a continuous increasing interest in the stock market. By joining investment clubs, small investors are given the opportunity to increase their buying power, share their collective knowledge and socialize while earning from their investment. Another good benefit derived from investment clubs is the fact that investors are not expected to invest a great deal of money but still will be able to receive a greater amount of interest that is usually possible if you have similarly invested a big lump money.

A typical investment club usually meets once a month and members are given individual responsibility of researching investments and then sharing their ideas with the other members of the club. Likewise, these meeting also served as an occasion for members to contribute to their monetary fund, which is intended for purchasing stocks, mutual funds as well as other types of feasible investments.

One of the main goals and objectives of an investment club is the opportunity to learn. Most investment clubs spent a great deal of effort and time in research since they believe that a well-researched investment plan has a much greater chance of success. This is also the reason why risk is minimized when joining an investment club.

Starting an investment club is not really that difficult and does not require any special knowledge. In fact, a group of friends or even co-workers can decide to set up an investment club. This is usually a good place to start as you will know the people you dealing with.

Basic Investing Rules

Investing your money can be a great way to ensure your financial future. With the right investment choices, you can be sure to have money for emergencies, to put towards the education of your children, and to have available when the time comes for you to retire. There is a key word in the preceding phrase however- “right”. If you make the wrong investment choices, you may just end up where you started or worse, flat broke. Most people who invest wisely by making the right decisions with their money follow the same basic investment pattern, although they may define it by another name. It might be that you are the cynical type who chooses to believe that the basic rules could not possibly be as easy as they seem, in an area that seems so complex. It is true. However, that these rules have withstood the test of time.

First of all, make sure that the money you choose to invest is indeed earmarked for the purpose. As in any form of gambling, there is nothing to be gained and everything to be lost when it comes to investing. Do not put up money that you cannot afford to lose should the market take a downturn.

One rule that people seem to refuse to apply in any area of their lives, including the world of investing, is lean not on your own understanding. Most of the time, this is the result of people balking at entrusting another person with their money, believing that with a little understanding they can work the market themselves. This reasoning is fundamentally flawed. In the first place, most people will not be able to begin to unravel the complicated graphs, pie charts, and statistics by which the investment world relates its information. In order to understand what the numbers mean, you will need to have some basic training. There may come a time after you have had some experience in the market that you will be able to make sound decisions on your own, but the initial get-your-feet-wet phase is not the time to attempt it. Check the background of the advisor you choose, as there are a lot of brokers out there looking for a quick fleece. The best brokers will have years of experience, a variety of investment backgrounds, and will probably cost you much less than you might think.

Think long term. Unless you invest millions of dollars initially, it will take time for your investments to mature and begin to accumulate substantial gains. The best investments are proven over time, and thus it is best to place your funds in long term choices. The details of this are plain- it is best to forget about this money in terms of a cash fall back, at least for a number of years.

Diversification is an oft-flogged truism of the investment world. A good portfolio will include cash and cash equivalents (GICs, fixed annuities), growth investments (stocks), and growth and income investments such as mutual funds. Diversification ensures that you do not have all your eggs in one basket should any part of the market experience a downturn. Note that diversification means not only investing in several areas, but also making sure that no one area contains a disproportionate percentage of your funds.

Bank Foreclosure Profit Opportunities

<b>In Many Cases, The Lender Or Agency Simply Wants To Get Rid Of Foreclosure Bank Owned Properties Quickly – Even If It Means Selling At A Low Price</b><br>
Upkeep of foreclosure bank owned properties costs more than selling them cheap. Whether you are a homebuyer or a foreclosure homes investor, foreclosure bank owned properties allow you to buy properties at a fraction of their market value. Lenders aren't chartered to own and manage property, so they face close scrutiny and pressure from state and federal regulators to dispose of foreclosed properties quickly - especially if they're on a regulator's "watch list".

The second reason why foreclosure bank owned properties are sold at below market value has to do with their condition. And because they're dealing directly with the bank they can eliminate the 6 percent sales commission if they act fast - before the bank lists the property with a real estate agent. Bank foreclosed homes are sought out by investors because of their profit potential.

In many cases, the lender or agency simply wants to get rid of foreclosure bank owned properties quickly – even if it means selling at a low price. Foreclosure bank owned properties are an excellent opportunity for anyone who wants to save money on their next real estate purchase. It is not uncommon to find bank foreclosed homes sold at prices much lower than their market value.

Foreclosure bank owned properties are priced at up to 5% to 50% off their market value, simply because of the way you can buy and sell foreclosure bank owned properties. It is possible to gain a nice return on your investment when you invest in bank foreclosed homes. Foreclosure bank owned properties are homes that have been repossessed by a government agency or lender due to non-payment of the mortgage. When their REO departments are loaded with foreclosures, investors are able to finagle below-market interest rates with little or no cash down.

<b>When A Homeowner Cannot Pay The Mortgage For A Few Months At A Time, The Bank Will Initiate Foreclosure Proceedings Against The Owner</b><br>
In order to get the best deals on foreclosure bank owned properties, you need to be prepared and shop wisely. The owner will be anxious to sell to avoid having a foreclosure as a black mark on their credit report. Bank foreclosed homes are homes that are owned by banks or other lending institutions because of the lender having foreclosed on the property. Once you find some foreclosure bank owned properties you like, though, you still need to research.

Researching foreclosure bank owned properties can help you tell the deals from the duds. After the foreclosure is final, the bank foreclosed home will be offered for sale, either directly by the bank, or through real estate auctions. When a homeowner cannot pay the mortgage for a few months at a time, the bank will initiate foreclosure proceedings against the owner.

You cannot let emotions rule your purchase, and you cannot assume that all foreclosure bank owned properties are sold at below market value. If the property has accumulated enough equity, the investor will make a very nice profit. What Are Bank Foreclosed Homes?

<b>Bank Foreclosed Homes Auctions</b><br>
Bank Foreclosed Homes Auctions. For each home you consider, determine your closing costs, actual house costs, incidental costs, and financing costs. Sometimes the bank foreclosed homes will be sold at real estate auctions.

Once you calculate the cost of any repairs needed, add it to the total cost of the property. Remember to account for the time that it will take to repair the bank foreclosed home.

This approach means that you wouldn't reimburse them for any accumulated charges such as interest, late charges, foreclosure fees, legal fees, nor any advances they might have made toward senior loans, property taxes, insurance. Sometimes an inspection is not possible, so you should only make bids that leave a nice margin for any unknown repairs. Get a market value for the home and an estimate for the repairs that need to be done.

To figure the number of loan payments made, start when the deed of trust recorded and end with the delinquency date that's listed on the recorded Notice of Default. On the other hand, if you do it carelessly, you could end up paying a lot more for the bank foreclosed home than it is worth. Hiring a professional assessor and inspector to examine the property for you.

Find out how much homes in the same neighborhood sell for as well. At the most, you shouldn't pay the bank any more for their equity in the property than what they originally lent on it minus the payments that were actually made on the loan.

<b>If You Are Looking For An Investment, Make Sure That You Will Get At Least 15% Or More In Profit Through Renting Or Selling, And Remember That Many Foreclosure Bank Owned Properties Allow You To Earn More On Your Investment</b><br>
An important aspect of investing in bank foreclosed homes is having good listings so that you can get to the properties before they are gone. Good bank foreclosed homes do not stay in the market long.

If you are seeking a home, look for foreclosure bank owned properties in areas you would like to live that have the amenities you want. A better use of your time and money is to sign up with an online bank foreclosed homes listings service.

Whether you are looking for foreclosure bank owned properties that are investments or a home will determine which foreclosure bank owned properties are deals for you. These foreclosure bank owned properties you are considering should save you money on your home so that you can enjoy equity fast. If you are looking for an investment, make sure that you will get at least 15% or more in profit through renting or selling, and remember that many foreclosure bank owned properties allow you to earn more on your investment.

Bank Foreclosed Homes Listings. Buying up lenders' REO's (real estate owned) is a workable approach when it's a Buyer's market and lenders have lots of REO's they are anxious to get rid of. Finally, insist that the lender provide you with all the customary buyer safeguards such as escrow, title insurance, homeowner's warranty, termite clearance. You can get bank foreclosed homes listings from courthouses, lending institutions, government agencies.

<b>And Lender Deals Typically Include Title Insurance, Which Removes Much Of The Risk That Accompanies Buying Homes Earlier In The Foreclosure Process</b><br>
If the property fails to sell at auction, or if the lender ends up as the highest bidder, the home becomes REO, or "real estate owned" by the bank. Often these homes are sold to buyers who don't even know they are buying a foreclosure, and go through the entire process as they would with any other home. And lender deals typically include title insurance, which removes much of the risk that accompanies buying homes earlier in the foreclosure process.

BALLON STRANGLES, A BETTER TRADES STRATEGY

I have often taught that there is a countermove for everything that a market or stock can throw at you. You may not know it but there is one. This is generally a true statement because if you wait too long, there are some situations you can't get out of but for the most part there is a way to respond to and survive just a bout anything. IF YOU KNOW WHAT TO DO AND HOW TO DO IT. The emphasis is to make the distinction that knowing is not enough. You must know how and that takes training. However it does start with knowing what.

I developed the Balloon Strangle as a way to counter the effects of high volatility and unpredictability (ie. Danger) of news announcements that happen when the market is closed. This would be like earnings after hours or an anticipated Board meeting or a court ruling. Something that could move the stock in a big way but you don't know for sure which way. Conventional wisdom (and it is good advice) is to avoid this like a plague.

A conventional strategy to mitigate the effects of volatility is the strangle or straddle play. Traditional positions for a strangles and straddle are at or near the money. You take opposing positions so that either way it goes you have a winning position. You hope that the move is big enough that the losing position goes to zero and then the winning one can make money. Problem… near the money position are expensive and the move must be quite large to erase one position and still move far enough to make money on the other one. But the idea is that you are somewhat insulated from the unknown. At least you can stay even as one goes up in value and the other goes down.

The Balloon Strangle was a twist using the leverage of Out of the Money positions. If you use a graphic to show the option prices you will often see a leverage point in the curve created by plotting the option prices. It occurs in the Out of the money positions. It represents a spot where the value of the option changes much faster in one direction than the other. In other words if the stock moves one way the value of the option changes very fast but very slow if it moves the other way.

Here is an example of a Balloon Strangle on an earnings play with YHOO. I played this because of the potential YHOO had to move far enough to make the cost of both an Out of the money call and a put pay off. The potential was for a double of my money.

Now YHOO sits ½ way between the important price levels. This is the perfect setup for this play. The YHOO earnings usually has a big move and it is has clear targets.

Now here is what happened. YHOO moves like it was following a script. The upside move goes right to resistance.

Now the results… YHOO moved up to resistance and hesitated. 2 hours into the trading day and at the next sign of hesitation I pulled the plug on the trade. Resistance seemed to be holding, I got what I was looking for in an up side move so I sold both positions. The net of $1.75 was very close to the estimate of $1.70.

By the way, as the day wore on and YHOO did not make any attempt to move higher, the Oct 42.50 began to drop in value much faster than the stock sagged. This dropped the 42.50 calls over .50 while the stock pulled back .60. Waiting for the end of the day would have cost me over .50. The play was to be in only to catch the reaction to the news.

This strategy takes practice and applies to potentially good sized moves. Always practice with out funding first.


Ryan with Better Trades

Avoiding suspicious activity reports in cash transactions

Many people ask "just what is considered illegal or suspicious activity when moving cash?" Some people have gone to the bank with the cash proceeds of a garage sale or a car sale on the weekend, and recounted horror stories of multiple questions by bank employees and have sometimes been reported to the government as suspected criminals.

The reality is that such reporting is very plausible. Most western countries have enacted cash transaction legislation that mandates it. In Australia, anything over $10,000 must be reported to regulators, and any amount under that that bank staff deem suspicious. Likewise in the U.S. So, if you’re unusually scruffy-looking and wander into a bank with $4,000 cash to deposit, it’s very possible you will be reported by the teller. (See our article Money Laundering Defined on the web site www.powerprivacy.com for details on U.S. Currency Transfer Reports, or CTRs.)

Here’s a list of most things that can trigger staff’s suspicion and get you reported next time you go to the bank. Banks will not give you a list of or even admit the existence of these criteria, regardless how much you ask:
- A customer refuses to provide identification or explain the purpose of a transaction.
- A customer has a known criminal background and engages in substantial transactions.
- A customer is ignorant of basic facts regarding the transaction or is unconcerned about rates, taxes, etc.
- A customer is controlled by another person, particularly where the customer appears unaware, infirm or elderly and is accompanied by a non-relative.
- A customer conducts cash transactions when his/her employment or business does not ordinarily generate or require such amounts of cash.
- A customer repeatedly sends or receives wire transfers of any dollar amount when his/her business does not normally require or originate such wires.
- A customer has no apparent source of income, yet conducts repeated transactions.
- A customer offers a seller a gift, gratuity or bribe to complete a transaction.
- A customer divides transactions into smaller amounts to avoid identification or reporting requirements.

Suspicious Customer Behavior
- Customer has an unusual or excessively nervous demeanor.
- Customer discusses your record keeping or reporting duties with the apparent intention of avoiding them.
- Customer threatens an employee attempting to deter a record keeping or reporting duty.
- Customer is reluctant to proceed with a transaction after being told it must be reported.
- Customer suggests payment of a gratuity to an employee of the financial institution.
- Customer appears to have a hidden agenda or behaves abnormally, such as bypassing the chance to obtain a higher interest rate on a large account balance.
- Customer who is a public official opens account in the name of a family member who begins making large deposits not consistent with the known legitimate sources of income of the family.
- Customer makes a large cash deposit without counting the cash.
- Customer frequently exchanges small bills for large bills.
- Customer's cash deposits often contain counterfeit bills or musty or extremely dirty bills.
- Customer who is a student uncharacteristically transfers or exchanges large sums of money.
- Account shows high velocity in the movement of funds but maintains low beginning and ending daily balances.
- Transaction includes correspondence received that is a copy rather than original letterhead.
- Transaction involves offshore institutions whose names resemble those of well-known legitimate financial institutions.
- Transaction involves unfamiliar countries or islands that cannot be found in an atlas or map.
- Agent, attorney or financial advisor acts for another person without proper documentation such as a power of attorney.

Suspicious Customer Identification Circumstances
- Customer furnishes unusual or suspicious identification documents and is unwilling to provide personal background data.
- Customer is unwilling to provide personal background information when opening an account.
- Customer opens an account without identification, references or a local address.
- Customer's permanent address is outside the bank's service area or outside the country.
- Customer's home or business telephone is disconnected.
- A business customer is reluctant to reveal details about the business activities or to provide financial statements or documents about a related business entity.
- Customer provides no record of past or present employment on a loan application.
- Customer claims to be a law enforcement agent conducting an undercover operation, when there are no valid indications to support that.

Suspicious Cash Transactions
- Customer comes in with another customer and they go to different tellers to conduct currency transactions of less than $10,000.
- Customer makes large cash deposit containing many $50 and $100 dollar bills.
- Customer opens several accounts in one or more names, then makes several cash deposits that are less than $10,000.
- Customer conducts unusual cash transactions through night deposit boxes, especially large sums that are not consistent with the customer's business.
- Customer makes frequent deposits or withdrawals of large amounts of currency for no apparent business reason, or for a business that generally does not generate large amounts of cash.
- Customer conducts several large cash transactions at different branches on the same day, or orchestrates persons to do so on his behalf.
- Customer deposits cash into several accounts in amounts below $10,000 and then consolidates the funds into one account and wire transfers them outside of the country.
- Customer attempts to take back a portion of a cash deposit that exceeds $10,000 after learning that a currency transaction report will be filed on the transaction.
- Customer conducts several cash deposits below $10,000 at automated teller machines.
- Corporate account has deposits or withdrawals primarily in cash rather than cheques.
- Customer frequently deposits large sums of cash wrapped in currency straps, stamped by other banks.
- Customer makes frequent purchases of monetary instruments for cash, in amounts less than $10,000.
- Customer conducts an unusual number of foreign currency exchange transactions.
- Customer frequently uses foreign currency to purchase bank cheques under $3,000.

Suspicious Non-Cash Deposits
- Customer deposits a large number of traveller's cheques often in the same denomination and in sequence.
- Customer deposits money orders bearing unusual markings.

Suspicious Wire Transfer Transactions
- Non-accountholder sends wire transfer with funds that include numerous monetary instruments of less than $10,000 each.
- An incoming wire transfer has instructions to convert the funds to bank cheques and mail them to a non-accountholder.
- A wire transfer that moves large sums to secrecy havens such as the Cayman Islands, Hong Kong, Luxembourg, Panama or Switzerland.
- An incoming wire transfer followed by an immediate purchase by the beneficiary of monetary instruments for payment to another party.
- An increase in international wire transfer activity, in an account with no history of such activity or where the stated business of the customer does not warrant it.
- Customer frequently shifts purported international profits by wire transfer out of their home country.
- Customer receives many small incoming wire transfers and then orders a large outgoing wire transfer to another country.
- Customer deposits bearer instruments followed by instructions to wire the funds to a third party.
- Account in the name of a currency exchange house receives wire transfers or cash deposits of less than $10,000.

Suspicious Safe Deposit Box Activity
- Customer's activity increases in the safe deposit box area, possibly indicating the safekeeping of large amounts of cash.
- Customer often visits the safe deposit box area immediately before making cash deposits of sums less than $10,000.
- Customer rents multiple safe deposit boxes.

Suspicious Activity in Credit Transactions
- A customer's financial statement makes representations that do not conform to Generally Accepted Accounting Principles.
- A transaction is made to appear more complicated than it needs to be by use of impressive but nonsensical terms such as "emission rate," "prime bank notes," "standby commitment," "arbitrage" or "hedge contracts."
- Customer requests loans to offshore companies or secured by obligations of offshore banks.
- Customer suddenly pays off a large problem loan with no plausible explanation for the source of funds.
- Customer purchases certificates of deposit and uses them as collateral for a loan.
- Customer collateralises a loan with cash deposits.
- Customer uses cash collateral located offshore to obtain a loan.
- Customer's loan proceeds are unexpectedly transferred offshore.

Suspicious Commercial Account Activity
- Business customer presents financial statements noticeably different from those of similar businesses.
- A large business presents financial statements that are not prepared by an accountant.
- Retail business that provides cheque cashing service does not make large withdrawals of cash against cheque deposits, possibly indicating that it has another source of cash.
- Customer maintains an inordinately large number of accounts for the type of business purportedly being conducted.
- Corporate account shows little or no regular, periodic activity.
- A transaction includes circumstances that would cause a banker to reject a loan application because of doubts about the collateral's validity.

Suspicious Trade Financing Transactions
- Customer seeks trade financing on the export or import of commodities whose stated prices are substantially more or less than those in a similar market situation.
- Customer makes changes to a letter of credit beneficiary just before payment is to be made.
- Customer changes the place of payment in a letter of credit to an account in a country, other than the beneficiary's stated location.
- Customer's standby letter of credit is used as a bid or performance bond without the normal reference to an underlying project or contract, or in favor of unusual beneficiaries.

Suspicious Investment Activity
- Customer uses an investment account as a pass-through vehicle to wire funds, particularly to off-shore locations.
- Investor seems unconcerned about the usual decisions to be made about an investment account such as fees or suitable investment vehicles.
- Customer wants to liquidate a large position through a series of small transactions.
- Customer deposits cash, money orders, traveller's cheques or bank cheques in amounts under $10,000 to fund an investment account.
- Customer cashes out of annuities during the "free look" period or surrenders early.

Suspicious Employee Activity
- Employee exaggerates the credentials, background or financial ability and resources of a customer, in written reports the bank requires.
- Employee frequently is involved in unresolved exceptions or recurring exceptions on exception reports.
- Employee lives a lavish lifestyle that could not be supported by his or her salary.
- Employee frequently overrides internal controls or established approval authority or circumvents policy.
- Employee uses company resources to further private interests.
- Employee assists transactions where the identity of the ultimate beneficiary or counter party is undisclosed.
- Employee avoids taking holidays.

AVOIDING DAY TRADER STATUS WITH BETTER TRADES

Due to an overwhelming request of questions about Day Trader Status I have decided to write this newsletter to look at these issues. Whether you know about it or not, you don't want to accidentally learn about Day Trader Status by a notice from your brokerage firm saying that you are now tagged as a Day Trader!

WHAT IS A DAY TRADER?

A Day Trader is someone who does four intra-day trades in five consecutive trading days. Let me address some terms here to help you understand this better:

      Intra-day trade: A trade that is opened and closed in the same trading day (round trip).

      Five Consecutive Trading Days: These are calendar days that the market is open, all in a row. For example:

            If the market was open on Monday through Friday that would be five consecutive days.

Then we would have Tuesday through Monday for the next five consecutive days (unless Monday was a holiday in which case it would then be Tuesday through Tuesday.

            Next, we would have Wednesday through Tuesday, and so on. The key is five trading days in a row.


HOW TO AVOID IT

One of my favorite students, Debi D, taught me to use a calendar to record my intra-day trades. By placing an "X" on the day

you do intra-day trades, (2 X's if you do two, 3 X's if you do 3 in that day) you can avoid accidentally getting to four by

looking at your calendar. Make sure you mark the days the market is closed on your calendar.

WHY DOES IT MATTER?

I thought it mattered a lot, but after my research for this newsletter, it appears there actually are some great benefits

being classified as a "Day Trader" if the $25,000 is not an issue for you. Basically there are two issues at hand:

      ISSUE ONE: Your brokerage firm will likely impose the NASD requirements of maintaining at least $25,000 in your trading

account - and you have 5 days to comply. If you have this kind of money there is no issue! However, if you are starting out

with limited funds to trade it could be a big issue! One important note - always ask for one time of forgiveness! Many

students told me they did and the status was removed - so ASK! There may be a way around it, but I am not sure. From my

reading of the requirements, the penalty for not complying is that you are subject to cash only trades, (which are what we

were doing anyway with options)!

      There is a really incredible benefit though if you are tagged a Day Trader and maintain the $25,000 minimum value in

your account. You may be eligible for day-trading margin, which is 4 times account buying power. WOW DO I EVER LIKE THIS

ONE!! This buying power may only be used intra-day and may not be held past market close. Orders exceeding Day-Trading Buying

Power will be rejected.

      ISSUE TWO: Tax Consequences with the IRS

            Actually upon my research into the IRS Publications it does not appear as bad as I thought. A tax firm specializing in trading activity, says:
          o They allow a full deduction of all trading losses in the year they occur, thereby circumventing the historical $3,000 net capital loss rule.
          o They allow full current expensing of trading expenses without limitation, thereby circumventing the limitation on miscellaneous itemized deductions.
          o They enable the active trader to still take advantage of the beneficial long term capital gain rules.

          o They enable the active trader to circumvent the restrictive "Wash Sale" rules normally applied to investors, thereby alleviating a huge record-keeping nightmare.

          o They allow the active trader to deduct losses on open as well as closed positions.

      Continuing on with my IRS research:

      You would report your trader's activity as a business on Schedule C of your 1040, possibly allowing all the deductions for your classes and tools, versus a limitation on deduction for passive trading that would have had to be reported on your

Schedule A with a 2% AGI limitation deduction. But here is the sweet deal: you can still elect to report your gain or loss on

Schedule D as a capital gain unless you made the mark-to-market election, (which has you claim the income as ordinary income on Form 4797 instead of Schedule D - see IRS Publication 550 for more information on this). Just to be safe, you better talk to an accountant that specializes in stock market trading. Being a retired accountant, I want to tell you that most accountants will not know how to treat your trading income properly - you need to understand this.

The proper classification of your investment activities is important to determine how income and expenses are to be reported.

Traders that buy and sell securities frequently can report their purchases and sales result in capital gain and loss, and their deductible expenses are trade or business expenses.

Happy Trading!

Darlene Powell with Better Trades

Angel Investors Definition

Angel investors are one of the financing options that you can look into when you decide to start your own business venture. Business start-up is not only a crucial process it also requires a lot of time, effort, and of course money. If you do not have the money needed to fund your business, then how can you start your operation? That is why, when you start planning your business venture, you have to carefully consider your capital. And if you do not have a large amount to start with, you can rely on angel investors to provide you capital. But before looking for one, you have to make sure that you understand the angel investors definition.

Angel investors are high-net worth and accredited individuals that give financial aid to future business owners who are in need of start-up money. They are well-educated, have valuable experience in business, and possess a large sum of money which they invest in exchange for ownership equity. They are usually the best financing option during the early stage of the business. Nowadays, lots of individuals choose to become angel investors. And so when you start your search for the right angel investor, it is important that you know the angel investors definition of each type.

Corporate Angel Investors Definition

Corporate angels are former business executives who have retired early or have been replaced. Although investment is one of their goals, they look for personal opportunity at the same time. So, usually they want to acquire a position in the business as part of the deal. But this should be thoroughly discussed since some corporate angels can be too controlling.

Entrepreneurial Angel Investors Definition

Entrepreneurial angels are successful business owners themselves. Unlike the corporate angels, they can take bigger risks and provide larger amount of money since they have a steady income source. Usually, these businessmen want to assist future business owners to have a successful start-up and eventually a competitive business. The major advantage of these angels is that they are less demanding and they allow the business owner to grow in his own, with them only as financial back-up.

Enthusiast Angel Investors Definition

Enthusiast angels are retirees who simply enjoy getting involved in different business deals and transactions. They are mostly above 65 years old and are already wealthy even before they start their own businesses. Just like the entrepreneurial angels, they also don’t want to play any role in business management. 

Micromanagement Angel Investors Definition

Micromanagement angels are individuals who have exerted their own efforts in order to become wealthy. Because of their experience, they believe that they know exactly how a business should be managed. Although they are not active participants in management, they can be very visible when the management of the business starts to have problems and is not doing well.

Professional Angel Investors Definition

Professional angels are lawyers, accountants, and doctors who want to make investments in companies that offer a service or product with which they have little experience. Their main goal of investing is to be hired by the business at the same time as consultant in their area of expertise.

These are the different types of angel investors that you might encounter when you start looking for the right angel investor for your business. By keeping these angel investors definitions in mind, you can easily decide which one is appropriate for you.

Angel Investors Bring Big Ideas To Reality/Radio

If you're an emerging company with the next great product, sometimes you need an angel on your side.

A study by the University of New Hampshire's Center for Venture Research showed that "angel investors" - high-net-worth individuals willing to invest in entrepreneurial companies at an early stage - shelled out more than $18 billion into early-stage companies last year alone, compared to $304 million by venture capitalists.

Finding an angel investor, however, is not an easy task. Safer Smokes Inc. is one company that understands the challenge of attracting the right investors.

This development-stage company is tapping the smoking cessation market with a unique tobacco-free, nicotine-free smoke called Bravo, which has the appearance of a traditional cigarette and burns like tobacco, but is actually made from lettuce fibers.

"Bravo lets you smoke your way out of the tobacco habit gradually," said Puzant C. Torigian, chief executive officer of Safer Smokes.

For companies like Safer Smokes, it may be too soon to approach large venture capital firms, yet time to move beyond networking with family and friends. Angel investors to the rescue.

"The challenge for raising capital in today's market is in harnessing the courage and vision of the angel to see through to the real investment opportunity," said Torigian.

So how do companies like Safer Smokes attract their angel?

* Have a clear-cut target market for your product or service. For example, Safer Smokes is targeting the smoking cessation market, which has sales approaching $10 billion per year, up from $6 billion just three years ago.

Most angel investors prefer companies that are likely to show positive cash flow within their first 18 months, so having these kinds of statistics about your market can be an incentive.

* Match the business plan objectives to the angel's risk tolerance. Investors want to know the product or service will be unique and well-cultivated. Safer Smokes has a patented solution that company officials say will "affect the landscape of the health care industry."