Do Your Trading System Include Sound Money Management?

By Maclin Vestor

How to manage money when buying stocks, futures, or options -- what you must know before you buy.

Many people have a very crucial problem, they take on more risk than they can. It really doesn't matter if you're very young, if you take risk to the extreme and continue down that path, you will by mathematical law in all probability lose money.

Lets say you had an almost sure investment that was 85% likely to succeed. When it succeeded you double your money. You put all your money on it. The problem is, when the investment fails, you lose everything. Now it is just a fact that you will eventually lose everything if you continue to invest everything. You only need one trade and you are wiped out completely. Now, even if you invested 90% of your money on an investment that would win 80% of the time, you still are taking on too much risk to win in the long run. If you lose once, you will need a 1000% return just to get back to even. That simply will not happen forever, and even if it did, the large loss would limit your potential for gain so much, that you'd be better off not taking on the maximum risk.

Now, your risk of losing everything can never be completely 100% eliminated, even with conservative strategies. If you flip enough coins, eventually you'll get a very rare event such as 100 heads in a row. However, you'll also get 100 tails in a row. The idea is that you have a strategy that yields you more when you win, and/or wins more than it loses. in this case there will be several losses in a row, but there will also be several wins in a row. If you manage your money properly, you will still have enough money if you get several losses in a row, to be able to more than make up for it when you get several wins in a row. If you are forced to limit the amount of capital after so many losses, that you cannot invest with the same amount after the losses, you may be unable to win enough to make up for those losses. The idea is to keep your investments small enough to limit the chances of that happening. Although almost nothing is a sure thing, by using proper money management, you tip the odds in your favor.

Even if you have a profitable method, if you do not manage your risk, your profitable method becomes unprofitable. It's not usually the investment vehicle, it's the investor that ultimately determines how quickly you fail, and ultimately whether you are able to succeed. Under the same context, it's not usually the type of car, but the driver that determines whether you cause an accident. In order to protect yourself, you must keep your positions at a manageable level, and make sure to keep yourself limited by these rules that will limit your risk of ruin and keep the odds in your favor so you can stay in the game.

So how exactly does one manage money in a trading system? You need to determine probability of a move taking place. If you buy OTM option, the stock will have to move larger for success to occur. Of course if it does, the reward will be greater. There are probability curves based on a random walk theory that will assist you in determining the probability of a move taking place, until you know any better, use these. However, you also should use your own records of your system Determine both your risk/reward (your average % win divided by your average percentage losses, and in addition figure out your likelihood of success. When you do this, you can use what's known as the Kelly Criterion By using the formula as follows Kelly % = W - [(1 - W) / R] Kelly % = The maximum percentage of your capital you should invest per position. W = Winning probability R = Win/loss ratio

A trading system that contains good money management rules will not only outperform one without, but it will also help protect your capital, and keep you in the game. - 23159

About the Author:

Maclin Vestor teaches about varioustrading systems and teaches you how to buy stock online.

How can you the home - owner elude forclosure and save your house?

By Juniper Jenkins

Can foreclosure be avoided? For many individuals, the worst something that can happen to them is foreclosure on the house that they keep dreamt about all their lives. But, there are things that you can do to save yourself this painful experience even if you are in the midst of it. Foreclosure is the bank foreclosing or fascinating back your home and property due to need of payment. For many mortals, foreclosure is an event that just hurts.

For those who are in foreclosure now, you could be facing the detail that you may just never obtain out of it. But, during every stage of foreclosure, you keep the opportunity to pament up. If you can not do this, conceivably you have taken on too much of an investment. In any situation, getting out of it cede be arduous, but it can be done.

It is important to missive that banks are not in the business of owning homes. They smartly want to make the money off the welfare you wages in the mortgage loan you take out. While this may not seem of emphasis, it really is. The banks leave often do everything they can to keep you out of foreclosure as well. So, if you are in the circumstances where you can not afford a charge that month, christen the bank and see what they can do for you.

Foreclosure is a serious body. Do not bring it lightly. If you foreclose on a home, you consign entirely harm your conjecture. There is tidily nothingness that you can do worse for it. If you are in the position that you no longer can afford your home, take the opportunity to doorstep it best. At least you consign own cleared your debt in a good way and left your credit in discretion. If you are currently in foreclosure, you want to take steps to secure the correct advocate to assistance you through it. - 23159

About the Author:

This article has been composed for the residents of eugene oregon interested in finding deals on real estate eugene oregon from Iverson and Company eugene oregon

A Guide to Gold Basics

By Lawrence Reaves

With the soaring prices of gold it is a good time to consider buying or selling your gold jewelry. You need to have some basic knowledge to make smart decisions. Gold jewelry seems like it never goes out of style. This is because it is beautiful and easy for most people to afford and wear.

Pure gold will not tarnish, rust or corrode and is the most malleable of all metals. Pure gold is too soft for jewelry so it is mixed with other metals, including silver, copper, nickel and zinc to give it strength and durability. The color of gold is determined by the type of metal alloys it is mix with and the percentage of each metal alloy.

Most people think all gold is yellow, but the fact is there are many variations of color that gold can be. Colored gold is just as "real" as golden colored gold. The color depends on what the gold is mixed with. Other alloys are mixed with gold to make it strong and to hold up under every day wear and tear that jewelry goes through. Craftsman learned through the ages that mixing gold with copper, silver and platinum would increase its durability. When gold is alloyed with other metals it changes the color of the finished product. An alloy of 75% gold, 16% silver and 9% cooper makes yellow gold. White gold is 75% gold, 4% silver, 4% copper and 17% palladium. Other combinations of alloys can make pink, green, peach and even black gold.

The alloys of gold have a lesser value per unit weight than pure gold. The standard in the gold trade is known as karatage which is commonly called karat. Pure gold is known as 24 karat gold and is usually marked with 24K. An alloy that is 50% gold is 12 karat gold and is marked with a 12K. An alloy that is 75% gold is 18 karat gold and is marked with 18K. High karat gold jewelry is softer and more resistant to tarnish; on the other hand, lower karat jewelry is stronger, but less resistant to tarnish.

Gold is highly valued and there is a limited supply and has been used as a medium of exchange or money for centuries. 6000 years ago is when the first transaction was done using pieces of gold and silver. The reason that gold has been used for this purpose for so long is because it has high value, durable, portable and can be divided easily. At one time the United States used a gold standard and maintained a stockpile of gold to back every dollar in circulation. It became too cumbersome and is no longer used by any nation. Gold coins were commonly used in transactions. Gold coins were issued in two types of units. Some were units of currency and some were issued in standard weights.

Today gold coins are no longer in wide use for financial transactions. Gold coins issued in specific weights are popular for people who want to purchase and invest in a small amount of gold. Gold coins are also collected and issued as commemorative coins. These types are a good investment because gold retains its value overtime. These are just some informative basic facts about gold. As you can see gold is a good investment whether it is in fine jewelry or coins. - 23159

About the Author:

The best online resource to sell gold or sell gold coins can be found at http://www.refinity.com

Prosperous Home Based Business Opportunity With Currency Trading

By Richard U. Olson

An increasing number of people are choosing to go to work for themselves by becoming involved in home based businesses. These businesses allow people to ditch their long commutes, work for themselves and achieve personal autonomy and make more time for their families in the bargain. There are also the financial rewards to consider. Whole there are a lot of different possibilities when it comes to home based businesses, one of the most lucrative of all is online currency trading in the Forex market.

The Internet revolution has driven this explosion of home based business opportunities and possibilities, and the Forex market is no exception to this trend. Online currency trading is more popular than ever, and more people than ever before can have access to this amazing way to make very large amounts of money.

You see, there is software that helps people track the currency trading market online. This makes the unique and powerful business of Forex trading more accessible to more people than ever before. All they need is a computer and an Internet account--things that the vast majority of adults in the Western world have nowadays.

When you are serious about making money in the Forex market there are various strategies and tools you will use to achieve your success.

You have to do your homework! It will take research and study to understand the parameters of trading that you will apply. Some investors permit a great decline in an assets price before the kicking in of a stop-loss order. Some of them want to see 38 percent retracements, yet others wait for the 50 percent before buying or selling. In order to succeed one must control their selves while not being carried away by their emotions.

If you are a beginner in the Forex trading world, you should give some serious consideration to a mentor. Your mentor has been there, done that; you can learn from him so that you don't have to make all the mistakes he did, or so you can increase your profits faster than you otherwise would be able to.

Master your automated Forex trading software. Don't take any shortcuts with this learning process.

Learn about trading strategies used by master currency traders so that you truly understand what you are doing--even if you do plan to make heavy use of your software.

Develop a solid trading strategy and stick to it. You can fine tune this strategy as needed, but always do so only after careful consideration. When your plan is in place and working well for you, don't make any trades which deviate from this plan - this is the key to long term success in the Forex market.

There is a lot of money which can be made in online currency trading. This is a home based business which can perform extremely well for you, as long as you have a plan and good automated Forex trading software. Do your research and learn your software thoroughly before you get started making trades. - 23159

About the Author:

Richard U. Olson recommends the state of the art Fully Automated Trading System that he uses to make consistent profits in the Forex markets. Grab his FREE e-course on Forex Trading Tips to realize your financial dreams.

Why Investing Online Is For You

By Julie T Anderson

The Internet has changed the way we get our news, entertain ourselves, plan our vacations and pay our bills. It can also change the way we invest our money. That's because investing money online has become easier and more efficient than ever.

Several online brokers dot the Internet today. They offer consumers the chance to quickly open accounts and begin investing their money in the stock market. Most charge low commissions. And most sites are easy to use.

The problem is that investing your money online can be risky. Playing the stock market is always risky, of course. There is never any guarantee that your stocks will rise in value. You could lose your investment.

You can ease any concerns you have with investing money online by doing some simple research. The best place to start is with the financial press. Financial print magazines and Web sites often contain rankings of the top online brokerage houses. Working with a top-ranked online broker can help ratchet up your comfort level.

But investing your money online does come with its own risks. When you invest money through an online brokerage, you aren't meeting in person with a stockbroker. You aren't even talking to a broker over the phone. You have no idea who is behind that online home page.

That's why it's important to only do business with online brokerages that have earned a reputation for engaging in honest and ethical business practices. Read the financial press. Visit Web sites devoted to consumer interests. And when you do, read up on the online brokerage houses. It's not difficult to find reputable Web sites and magazines that provide annual rankings of the top online brokers.

Once you select a group of online brokerage houses that can be trusted, look into the commissions each one charges. You want to work with an online broker that doesn't charge exorbitant fees for transactions. Remember, these fees can significantly eat into your profits.

Next, be sure to research the companies and businesses in which you want to invest. The easiest way to make a poor investment is to sink your dollars into companies about which you know little. Do your research before making any trade. The more information about a company and its stock performance, the more likely you are to see your online investment grow.

Finally, it's important to realize that investing money online isn't for everyone. Not everyone is comfortable working with brokers they'll never see. Online investing is easy and quick. But you should only consider it if you're comfortable with doing business over the Internet. - 23159

About the Author:

Spare Dollars is a save money blog featuring information on saving money, making money and investing money. For more information on these topics, including how to invest money online, check out our site today at SpareDollars.com.