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Real Life Affects Asset Prices

Political environments have a direct impact upon the financial markets. The effect can be more severe than others–depending upon the instance–but politics go hand in hand with the economy, and understanding this relationship can only lead you to making more money down the road.

Trading TimesLet’s look at a recent example so that we may see just how these two separate facets of life interact with each other. You’ve probably heard in the news about the Malaysian airline being gunned down over Ukraine. The threat of a war in this area has negatively influenced assets all throughout Europe. The European stock markets have dropped over the last week or so, and assets considered to be safer to Europeans have gotten stronger. Gold, the Japanese yen, and government bonds have all risen in popularity over this time. But because the Pro-Russian separatists have recently handed over the black box of the plane that was shot down–a signal of cooperation between different political beliefs in the area–the European stocks on Tuesday went up in rebound fashion. [Read more...]

Prepping for a Downturn in the Market

Recently, a team of U.S. regulators warned major banks about a potential for an increase in the amount of defaults on home equity loans. If you remember correctly, this is one of the big things that happened right before the recession that began in 2008. Housing markets crashed, largely because of the fact that loans were being made that were not being paid back. Before, the loans were not being paid partially because of the fact that the practices in which the loans were made were less than reputable. Tighter restrictions have been made since then, but borrowers are still seeming to have difficulty making payments.

It might be tough to understand at first. The stock market is doing better than ever right now, so why are there so many economic problems at the individual level? [Read more...]

Why Hedge Funds are Losing Out

Hedge funds have long been seen as an investment strategy reserved for the rich, something with a strong likelihood of making these elite investors even richer. In reality, all that a hedge fund actually is a loosely regulated investment fund, one that is legally allowed to trade different types of securities and use non-traditional trading methods, all for the purpose of creating a profit when other markets are struggling.

In that light, it doesn’t make much sense that many hedge funds are struggling in today’s economy. With Wall Street hitting record highs on a routine basis right now, why would an investment tool that is designed to outperform the stock market be losing money when stock indices keep going higher and higher? [Read more...]

Taking Advantage of the Post-Holiday Boost

The rest of the world seems to be very optimistic about the U.S. economy right now. For U.S. based traders, this is something that you should be taking advantage of to the best of your ability in order to max out the amount of profits you are making.

It really doesn’t matter if you are based within the U.S. or not, though. When the U.S. economy is doing well, the rest of the world tends to follow along, too, since this is the world’s most active and biggest economy. When the U.S. is healthy, so is the rest of the world. But the fact is, there are fewer obstacles and more doors are opened for trading opportunities when you are based in the United States. Even if you live in China or somewhere else, odds are you can be just as successful. [Read more...]

What Does the Beats Acquisition Mean for Apple?

Apple is close to buying the headphone maker Beats Electronics, reports are now saying. This isn’t exactly a surprise to those that are tech savvy, but for short term traders, what does this mean? Beats has made a big name for themselves over the last few years by manufacturing trendy high quality headphones, so it makes sense that Apple wants to take advantage of this, and there’s no reason to think that they would do so if it wouldn’t make a long term profit for them. The big question that remains, though, is: how should this action–if it happens–be treated by those who want to trade Apple’s stock over the short term?

There are two approaches to figuring this out. First, what does a buy out like this financially for Apple? To do this, you need to look at the reports and papers involved. Right now, Financial Times is saying that the purchase price will be around $3.2 billion. [Read more...]

The Coffee Affect When Trading

There is a direct link between stocks and commodities, although at times it’s not always that obvious. For example, when oil is selling well, companies like Exxon see profits go up. That’s an easy one to understand. But what about when something else happens, something a lot less obvious? To better understand this, let’s look at a current example that you might not have thought of before.
Coffee Trading on the Binary Market
It’s easy to imagine why oil is the world’s most popularly traded commodity, but did you know that coffee is number two on the list? The raw beans that are roasted and ground up to become the drink can only be grown in certain areas of the world, but the demand for this beverage is worldwide and immense. There is little supply (relatively) and a huge demand, thus driving the price up for this crop. However, a large number of publicly traded companies rely on coffee for their survival. So when coffee is cheap, these companies can charge less [Read more...]

Same Event, Different Actions

It’s no secret that the banks all throughout Europe are having difficulties. And it’s also not a secret that elections all throughout the EU take place next month. There is reliable speculation that governments throughout Europe will be approving a bunch of bank reform laws quickly in order to get them out of the way before the elections take place. Political reasons for this aside, this could have a profound impact upon both the euro’s price in comparison to other major currencies and the prices of stocks of the major European banks.
Taking on the EURO
First, you need to expect the impact to come in two different parts: immediate and long term. The immediate impact will be based upon how the public reacts to these changes, and this will largely be determined by what the media says. [Read more...]

Riding on the Coattails

The big news of the day is that the NASDAQ Composite Index went down well over 1 percent on Monday, mostly because of the sudden and huge decline of biotech companies. As of 2 PM Eastern Time, eight of the nine companies that declined in value the most were either pharmaceutical or medical research companies. The healthcare field and related industries are usually a pretty safe investment since this is a service that will only go up in demand over time. The combination of a growing population plus the need for ongoing medical and scientific advances will always make this industry grow. So, why the big decline all of a sudden?

The first thing to note is that companies may come and go. [Read more...]

Day Trading the Markets

Day traders are always under strict scrutiny. In the stock market, this scrutiny can be quite rough at times. There are regulations in place to protect companies from malicious day trading activity, and although this type of trading is rare, it does happen, hence the SEC protections in place. The definition that comes under scrutiny is “pattern day trader,” and it can be described as someone that executes four or more day trades in five or fewer days. Unfortunately, this can be really easy to do, even if it is an accident. All you need to do is buy and sell the same security over the course of a single trading day. It is a stock broker’s job to identify and label these traders in order to avoid fines and punishments of their own. [Read more...]

Using Our Resistance Levels for Trades

We found a nice put option early this morning on the EURUSD. It didn’t take long for this trade set up to occur after we opened our charts. We noticed how price action had fallen off from pivot all the way down to support level three. This area was also the 1.3842 level. The bounce occurred earlier in the morning back up to the area where we took our trade. We were looking for price action to consolidate and it did.

As price was climbing up to this level we were looking for more than just a line as our resistance. We had several hours of consolidation around this price point that gave us more of a conclusion to take this trade. [Read more...]

Tom’s EA is Coming

Toms EA Review and DownloadA Forex trading robot has the potential to not only simplify your life, but help you make a lot more money in your free time, too. The big caveat here is that it needs to be a high quality robot. An expert advisor (EA) is perhaps the best kind of robot out there thanks to its use of MetaTrader software and highly sophisticated trading algorithms. Of course, this doesn’t guarantee that every EA is going to make you money and no other trading system will, but it is definitely a good place to begin your search.

Tom’s EA is currently one of the most popular robots out on the market, and for a good reason. It has been around for several years now and has had very positive results month after month, year after year. But just because it’s worked for a lot of people in the past does not necessarily mean that it’s going to work for you, too. There are still a lot of factors to consider before you spend a lot of money on a piece of trading software. Let’s start with the big one. [Read more...]

Using the Bull Market to Trade

You’ve probably heard the saying, “what goes up must come down.” While this is certainly true in matters of measuring gravity, it’s not always true within the financial markets. The stock market has been going up consistently year after year since the beginning of the Great Depression. Sure, there have been a few years here and there when the markets have ended down for the year, but the general theme has been upward motion.

So the fact that the U.S. markets are about to enter their fifth year of bull momentum isn’t really a surprise. [Read more...]

Finding Tops is Fun

Our trade didn’t come until after the US markets got going. Over the course of the night, price action stayed in a pretty tight range. Price started at the pivot level and only climbed up to resistance one. The interesting thing was, it did turn on the line in true trading fashion. You could’ve traded a put option at resistance one and two call options at the 1.3742 level as well. Another put option near resistance one was a great looking trade. This was the trade we took and it worked really well at Redwood options. From the moment we started watching the markets, we noticed price was starting to consolidate. We didn’t see much movement, so we hung tight and waited for our moment. [Read more...]

Trading Exxon Binary Options

Exxon Mobil (XOM) is one of the world’s largest companies, specializing in oil production and transportation. For a very long time it has been considered to be a safe investment; almost everyone in the world uses oil in some way, mostly for driving around their vehicles. It’s long been considered a “blue chip” stock simply because of its nature for slow and steady earnings. Blue chips are established companies that have a very reliable nature, and Exxon fits this description beautifully. If you are looking to buy and hold, this is a great stock to own. Five years ago, this stock was around $75 per share. Not too long ago, it was around $100 and it currently resides at around $91. There’s been lots of growth, and as long as oil is the world’s most popularly traded commodity, there will be lots more. [Read more...]

Flip Flop Market Conditions

Today setup some interesting price action on the EURUSD. After yesterdays climb up to resistance three from the purple line of 1.3642, we were trying to figure out what would happen next. Usually when you see a big move late in the trading day, where most traders are not active, can lead you to think something is happening overall. We watched price climb up to resistance three on three different occasions. This occurred over the course of about 14 hours. Although the move was only 40 to 50 pips, it still showed signs of weakness. Every time the price tried to make a new high, it pulled back. On the third time, price action tried to make the new high and dropped all the way down to the pivot level. This is when we decided to take our put option. [Read more...]