There are things that we essential to mull when we necessity to put our guardianship in the business of Forex trading. It is pretty often a profitable venture but I must warn you that there are many primary errors that forward abstraction traders e’er eliminate. The 10 mistakes that you need to abstain in Forex trading are as follows:
When you are venturing on a playacting, you ever essential to be certain if that commercialism is something that would get what your money is couturier. We all requisite to get the advantage that we suppose would be a big success to us. So, I equivalent to cover Forex trading, cured as you bed umpteen bonk already started to adorn in this kindly of activity proceed because one attribute is for certain, you are chained to get your money’s worth in this. You can fundamentally variety money every case Forex trading moves and one object is for trustworthy, it never disrupt on squeaky. However it is not fair an comfortable way to adventure this commercialism path as similar added businesses there is often to learn on this because it is a commercialism that deals with a lot of force that stems to assorted reasoning that can get you misled if you are not elaborate. Forex trading knowledge involves a probability, and it is a nature on any commercialism move that you go for.
The key on Forex trading is to denigrate and minify those risks and be competent to decide asset of whatever possibleness that would turn up your way. Shaft, to be healthy to win end on Forex trading you must be healthy to get many tried thing in which can ameliorate you out and feigning you the slipway on how you can tally pinched show in the trading mart. If you are turn you might vindicatory centre to your friends who is in the trading concern and work what they good you are wrongdoing, it may get you into problem if you don’t fuck exceed, so you pauperization to piddle many in depth psychotherapy and search on methods for which can work you out. The internet is a nifty sufficiency tool for careful and with that you inform statesman. Here are 3 construction in which I expect can really fit meliorate you out on your way:
Forex Trading Pedagogy - By attractive a Forex trading course, you tap your possible and learn the ropes on it. Judgment favourable enough e-books and paid for a bed that would rank by locomote teach you structure on how to be successful in trading is ever a angelic punctuation.
Forex Trading Helper - What makes it really favourable with this is it gives you signals when to follow and move the marketplace. Basically, purchase software that would assist you on your trading sector is ever a healthy service. The grouping is intentional to cogitate you some favorable signals to command your moves up.
Automated Forex Trading Grouping - Rise, for trusty this is the solon suitable selection. You gift bonk to acquire certain software fashioned to set trades and also tight out deals as fine automatically. It is really overmuch handy to say the littlest and has 90% in success grade compound on the things I acquire heard from it.
So, at the end of the day it is your choice, acquisition writer virtually it is ever a great organization but to jazz automatic systems can be an comfortable way out. But, it goes kill to your resoluteness whether or not you are fit to excrete assets on serving yourself out in the Forex concern noesis.
Forex brokers offer great services but many of the services they offer will make most traders lose. Lets examine this in more detail. Here they are in no particular order of importance - they are all important!
Leverage
More traders wipe themselves out because they use to much leverage than any other reason sure you can get up to 400:1 in leverage but on a small account ( and most traders are under $10,000 in retail ) you will see your account blown out the water by normal market volatility.
For a new trader on a small balance no more than 20:1, otherwise you may as well flip a coin.
Deposits
You can trade $50.00 but this is not enough to trade seriously and no trader should consider starting with less than $1,000 and preferably more. If you trade a small balance you are relying on luck and not getting knocked out the market and that’s not a good idea.
If you want to win at forex commit enough money to have a chance and use leverage wisely otherwise your account will be toast.
Demo Account
These are only useful for showing you how the trading platform works and tell you nothing about your potential in real time trading, simply because there is no pressure and trading is a pressure experience.
Research and FREE Guides
Are always used to entice you into trading but really you can get most of what they say for free online. There mostly, cut your losses run your profits, be disciplined etc etc and if you don’t know that before you open a trading account - you should!
Also research they offer daily wont help you either and is the same old technical levels you can see yourself
Choosing a Broker
You only need to choose on 3 criteria
1. Security of your money and make sure they are a broker of high standing
2. Pip spreads the lower the better this is your cost of doing business and needs to be low
3. The reliability of the trading platform and how comfortable you feel with it
Brokers don’t set out to harm you but many of the services they offer can ensure you lose and many traders don’t think anything of putting up 100 dollars and leveraging 400:1. Mostly be traders are not serious about making money and gamble.
If you get the right forex education you can use your broker to make you a lot of money and not get wiped out and believe me the services offered and used wisely, you can make a lot of money.
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The forex market has several advantages, which make it an
ideal trading market for many people who do or do not have
any knowledge of other markets. It takes only a short
tutorial to have you playing like a pro. In addition, the
forex market is fast. The prices can go up and down several
times a day, and there is no end to the combinations that
you can get. In addition, in time, with the proper
training, you can become a professional Forex trader and
even help other people come into the exciting world of
Forex. What is best of all is that the Forex trading market
is today the biggest market in the world, and there is no
end to the number of trades and transactions that you can
make. Advantage of the Online Forex Spot Transactions
The Forex spot market has a huge advantage because after
you see a price of a certain currency on your computer
screen, you can immediately buy or sell that currency and
get the current price for your trade. This gives you a spot
on connection to the online Forex market, and you are sure
that you are not missing anything, because it’s real time.
The fact that the online Forex spot market is concurrent,
allows for the many trades to take place each day, and
eventually is one of the reasons why the online Forex
market is a very quick option to make money. Unlike the
regular stock market, the Forex market is much more
dynamic, so you don’t have to sit and wait for changes in
your stock. You can view your currency on the spot, and if
you don’t like it from one minute to the next, you can go
and sell it immediately and not suffer any unnecessary
losses.
Accordingly, once you have noticed that the currency you
invested in has risen enough, and is saturated, you can
decide to sell it and reap the profits. The Forex spot
market is seen in it’s real time glory through the charts
offered by technical analysis, so you can view the dynamics
by yourself.
Trend lines
The basic trend line is one of the simplest of the
technical tools employed by the chartist, but by any
standard the most powerful and valuable tool in trading.
The trend line is constructed when there are three higher
or lower points to be connected. This forms a channel which
the price action can be monitored. As discussed, one of the
obvious presumptions derived from chart studies is that
prices have a prevailing tendency to move in a particular
direction. This trend frequently assumes a definition
pattern which evolves along a straight line. This ability
of prices to adhere extremely close to an imaginary
straight line is one of the most extraordinary
characteristics of chart movements.
Drawing a Trend line
The correct drawing of trend lines is an art like every
other aspect of charting and some experimenting with
different lines is usually necessary to find the right one.
Sometimes a trend line which appears to be correct may have
to be redrawn. With practice, the art of drawing trend
lines becomes easier, but initially there are some useful
guidelines in the search for the correct one. There must be
evidence of a trend. This means that, for an up trend line
to be drawn there must be at least two reaction lows with
the second low higher than the first. Once two ascending
lows have been identified, a straight line is drawn
connecting the lows and projected up and to the right. Once
the third point has been confirmed and the trend proceeds
in its original direction, the trend line becomes very
useful in a variety of ways. One of the basic concepts of
technical analysis is that a trend in motion will tend to
stay in motion. Therefore, once a trend assumes a
particular slope or a rate of speed, as identified by the
trend line, then it usually maintains the same slope. The
trend line then helps not only to determine the extremities
of the corrective phases but also importantly, when that
trend is changing. Very often the breaking of the trend
line is one of the best early warnings of a change in
trend.
The Significance of the Trend line
It is very important to discuss how to determine the
significance of a trend line. In every market and on every
chart you see there are many trends in motions, short term,
mid term, long terms, hourly and so on. However, not all
these trends will be significantly strong. If they are not,
a trader runs the risk of entering or exiting the market at
the wrong time. The more significant a trend line, the more
confidence it inspires and the more important its
penetration. There are two factors that determine the
significance of a trend line. Firstly, the length of time
it has been intact, and secondly how many times it has been
tested. A trend line that the market has tested 8 times for
example, but keeps pushing the price away, is obviously a
more significant trend line than one that has only been
tested twice. As a rough estimate after the third bounce
off the trend line will be when the market will start to
offer trading signals. Similarly, a trend line that has
been intact for the last 9 months is of more importance
than one that has been intact for 9 weeks. There is no
standard as to what duration one needs to wait before
relying on the trend, as some trends will only stay in
motion for short periods of time. To catch these, you have
to use the time in conjunction with the testing of the
line.
Support and Resistance
Support and resistance levels are ones of the most basic
but essential components of technical analysis. Support and
resistance are price areas where an abundance of trading
has taken place and where considerable buying or selling
pressure exists. Underlying support (buying pressure) keeps
a market in an uptrend, and overhead resistance (selling
pressure) keeps a market trending lower. Once a trader can
accurately determine where these levels are, they can be
used very effectively to manage risk, and identify profit
opportunities. By entering trades at price levels at which
a significant move is likely, the probability or reward
over risk is improved. There are support and resistance
levels that are applicable to every traders time frame.
Observing how the market reacts when encountering these
levels is a very good barometer to measure the strength of
the underlying trend. They are also key points for breakout
moves. Large quantities of stop loss orders will usually
accumulate at key support and resistance areas and will
often contribute to a dramatic surge in the market in the
direction of the breakout once these areas have been
penetrated.
Support Levels
A support level is a price area at which there should be an
increase in the demand for that product. A support area is
not difficult to find in a chart. When the market is in an
uptrend, any previously established congestion area is the
uptrend is usually an area of support. To draw a support
line you need to find at least 2 points on the chart that
adhere to this criteria. This then forms a line that can be
extended across the chart.
When a support area is penetrated on the downside, it then
may become the nearest resistance area to a subsequent
advance.
Resistance Levels
A resistance level is a price area characterised by
increased selling pressure or increased supply of a
particular investment product which tends to level off
advances. If the market is in an uptrend, any point at
which new highs are reached or any congestion on the upside
will act as resistance. To draw a resistance line you need
to find at least 2 points on the chart which adhere to this
criterion. This then forms a line which can be extended
across the chart.
When a resistance area is penetrated on the upside, it may
become then the nearest support area to any subsequent
decline.
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Forex Killer and software programs like it are designed to be used by both beginner and experienced traders. As a result programs like Forex Killer are filled with ways of automating the trading process. This makes learning to trade Forex faster and easier than the traditional way.
The traditional way of learning Forex before software programs like Forex Killer were created was to study economics, business, marketing and politics along with dozens of other factors and to be aware of trends and the effects of various situations on the currency. It meant that only large companies with resources were able to trade in the Forex market. However, that has changed and through the use of a variety of methods such as software like Forex killer and brokerage houses individuals are now able to trade on the Forex market.
Prior to the creation of software applications like Forex Killer even individual traders had to amass a great deal of knowledge in order to be able to trade on the market. Even the beginning software applications required the knowledge and background and were anything but easy to use and learn. However, thanks to the advances in technology and the creation of applications such as Forex Killer, individuals with little to no experience in the market are able to trade in currency.
Software applications are designed to automate a good deal of the process which means that traders no longer have to spend all day in front of the screen looking at the market and manually going through the trading process. Software applications now take care of the majority of this for the traders and that makes learning to trade Forex that much easier.
Most software applications such as Forex Killer come with either tutorials which teach you how to use the program or they will come with a demo version or demo applications. The tutorial is going to probably be best used by individuals with some experience in the Forex market who just need to learn how to use the software. for those people who are just beginning to learn how to trade on the Forex market. The supplied Demo allows individuals to use programs like Forex Killer with real market data prior to stepping into the market with an actual investment.
To learn to trade Forex in these days of technological advancements and electronic everything all one needs is the investment, the time and a software applications such as Forex Killer. The automated features and the training program alone make it well worth the purchase. There are also a variety of other features that are available with these types of software applications. The most common additions to these programs is the tracking systems and reports. These allow an individual who is learning how to trade on the market to see where successful trades were made and where not so successful trades happened and track their progress as they learn. Not everyone is going to be a perfect trader right out of the gate but software applications can make it significantly easier to succeed when learning the market.
I recommend you visit Smart Forex Live for more information and tips on Forex Killer.
The trend in globalization will lead to greater integration of large number of producers and consumers in the global economy according to M. K. Pralahad in his book ”Fortune at the Bottom of the Pyramid’. IT continues to played an important role enabling democratized commerce.
Because of technological advances; information is getting more and more democratized. Today, on a global scale everyone has access to the same information and the potential to translate that information into intelligence. In the past, the profit was made mainly from ‘Information Arbitrage’. If you had access to privileged information, you could take advantage of that information to make a profit. Also, since information traveled slowly, the first movers had a huge advantage when it came to competition. But, with the coming democratization, the velocity of information has dramatically increased and thus decreasing the period when the organization can market product based on differentiation strategy.
The competition will be able to catch up quickly and offer the same product or service, thus pressurizing the company to reduce cost. This intense pressure from competition leads to ‘commoditization of product/service’ which in turn leads to what Economist call ‘Perfect Competition’. Economists have always loved ‘Prefect Competition’ model because from their perspective that it increases economic efficiency which is good for the society at large.
Thus, trend towards commoditization has accelerated and will continue to accelerate due to technological innovation. This accelerated commoditization which is at the heart of Nicholas Carr’s argument in his infamous HBR article ‘IT Doesn’t Matter’ where he makes an argument that in a ‘perfect competition’ model of future, your investment in IT cannot be leveraged for differentiation strategy.
So, can IT be used for differentiation strategy? The answer is unequivocally YES. First of all, there is always a lag in the availability of information. Even though, the technology continues to enable sharp increase in the velocity of information, the information cannot be made available instantaneously. A ‘business idea’ in an organization will not be known instantaneously to the competition. There is that lag time. But with the increased velocity of information, slow decision will be punished. Organizations need to set up agile business processes and streamline decision making ability if they want to take advantage of first mover strategy. IT can play a major role in this effort only if the core competencies of the organizations are identified and automated.
While the technology can be blamed for commoditizing of products faster, same technology can be leveraged to expedite creation of Network Externalities. Let’s take eBay as an example. While it is simple to copy eBay’s business model, it will be extremely difficult to create a value for the sellers because all the buyers have become eBay’s captive audience. So, in this example IT that enabled Network Externalities has created differentiation strategy for eBay.
IT can also enable seller identify the Long Tail aspect of the supply demand curve. Lets say the Company X is involved in selling music video downloads an specializes in ‘Fusion French Rap with Middle Eastern instruments with Hawaiian Hula dance’. Before large scale global IT adoption, it would have been difficult to identify the demand for that kind of specialized music video. Now, with the advances in IT infrastructure, the company X can reach the global customer base and find enough demand to be profitable. With the advent of social media, technology can be used to build community around that specialized product thus adding more ‘value’.
Thus, IT acts as a double edged sword. On one hand it has the power to force rapid commoditization of products. On the other hand IT can be leveraged as mentioned above to differentiate products and services for an organization. Even with democratized information availability, IT can help create first mover’s advantage. It all depends on how organizations use IT.
Raj Sheelvant is currently working as a Project Manager at a Large Multinational Computer Manufacturing Company. He holds MBA from W.P. Carey Business School of Arizona State University at Tempe, Arizona and MS in Engineering Science from University of Toledo, Toledo Ohio. He has a passion of leveraging IT to create and sustain competitive advantage for the Corporations. He strongly believes that IT can be used to ‘expand economic moat’ for the corporations but one need to make sure that the IT projects are always used to enable corporate and business strategy. He writes his blog on IT Strategy at http://itstrategyblog.com
He is also the author of several papers
“A Parallel Architecture for MUSIC Algorithm.”
International Conference on Signal Processing Application and Technology, Boston-92.
“Hypercube Architecture for Householder Algorithm.” 1992- Modeling and Simulation Conference, Pittsburgh.
You can check his LinkedIn profile at http://www.linkedin.com/in/rsheelv
It is so easy to become completely bogged down trying to keep up with the company news updates, you know, the feeds you get on the financial news channels. This causes you to get frustrated and often confused. There’s a lot of very interesting information, but does it serve to help our trading decisions? Remember, no two people have the same perspective on anything, and that includes the stock market. The analysts you watch and listen might well have very good and valid reasons for talking a stock up or down, depending upon their own investment criteria.
Here are 3 reasons to help you see why technical analysis works:
1. Every day trading decision, and I mean every one of them, without exception, ends up in one and only one result; price. The price of the stock at close of trading is where the whole picture finishes. You can do anything you like with company data; analyse it, pull it apart, listen to speculators, traders, journalists, but the result a closing is always the same.
2. It is correct that history does not necessarily reflect the future, and that’s quite right, no one would argue the case. But, and it’s a big but, it has been proven time over, that human psyche does repeat itself, the brain functions the in the same manner all the time. What you see on technical day trading charts is the result of past thinking, of past psyche. It will be argued until the end of time that you cannot trade for the future, based on historical data. But the technical data that is delivered and shown by these charts does lend itself to narrowing the odds enormously in our favour, IF used correctly. There are too many successful technical traders to suggest otherwise.
3. To see an excellent example, watch the price of a stock that’s moving in a trend, or range, and you can see that same patterns, by and large being repeated, day in, day out. All of a sudden, the price pushes beyond the upper and lower price boundaries that it’s held for the past few days or weeks, and you have a potential buy or sell trading opportunity.
There are traders who use only fundamentals, and still argue against technical trading, but if you have the time, a blend of both is best. The advantage of using chart set ups is that you can better gauge, and fine tune, where you are going to place you entry and exit positions.
How would you like to discover more about the techniques successful traders use to make profitable trades?
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Every day hundreds of savvy network marketers and even the old-school MLMers purchase Ann Sieg’s Renegade System–a funded sponsoring proposal lead generation system–but a lot of them do it unknowingly.
What they initially picked up was a copy of her e-book, The Renegade Network Marketer, but after they read the book they realized they get a lot more than just words and ideas.
Just as Mike Dillard has done with his Magnetic Sponsoring, Sieg’s book comes with her Renegade System. Although different in many ways, both books and systems have empowered network marketers to move into a new era for the networking industry-the era of marketing.
First & Second Impressions about The Renegade and Magnetic Sponsoring…
Many progressive networkers, and even some of the old-school MLM types, fumble through the first pages of The Renegade feeling a bit anxious because there’s a sense you just found the mother-load… like stumbling into a goldmine but realizing you can’t carry anything home until you do some heavy lifting.
And it’s true. The Renegade introduces you to an entirely new fascinating world, where people come to you instead of the other way around… where you can monetize like a real business for much needed cash-flow… and where you can get in front of a huge trend whereby millions of people are moving online.
But making the switch from old-school to new-school will require some work and there’s a sense you can’t move fast enough. Most networkers have quite a bit to learn about marketing before they ace the new model… with that said, it’s light-years easier than building the business the old way.
But the feeling of ‘overwhelm’ is there… and it’s similar to how many people felt when they found Magnetic Sponsoring… overwhelm and excitement.
Between the two books, the Renegade had the greatest impact because I saw a missing component that I did not see in Magnetic Sponsoring–I was looking for the best way to teach my clients and team.
I had read Mike Dillard’s Magnetic Sponsoring and had employed some affiliate marketing strategies and the funded-sponsoring proposal out of what I learned in his MLM Traffic Formula course, but it wasn’t until I found The Renegade Network Marketer and its ’sister’ System, that I felt I could teach any of this stuff to my team.
This is what’s most important to me because in network marketing it’s about duplication.
I had been teaching network marketing (the old-school way) for years, and coaching is a passion. So when I saw how well Ann had put her Renegade package together specifically for beginners, I was excited to expand upon it. I started planning how I’d gather my team and clients and come back to mine the gold together. And that’s what we did.
Within weeks, people who had been wasting thousands of dollars on leads to build their network marketing business and getting no where, who were afraid of Internet marketing up to that point, were employing The Renegade System strategies by following simple tutorials we had set up.
Click here for a video overview of The Renegade Network Marketer
Over a hundred people on our team made the switch within weeks. We threw out the cold-calling and warm market stuff forever, and started generating leads and new income with the Renegade. The prospects started calling people on my team and they were thrilled. Over a hundred of my clients (many from other network marketing companies) started generating their own leads list, and then monetizing it. The whole ‘training experiment’ was a smash.
What’s Next for The Renegade’ers and Magnetic Gurus?
The next big movement in this new model for network marketers is teaching others how to set it all up in step-by-step tutorials like we’ve done. I’ve seen proof of its power. People flock to you by the thousands to learn.
If you want to create your own system to do this make sure it is set up for the beginner in very small bite sizes, and that it’s visual so they can literally follow along.
Also, remember how much Ann Sieg emphasized monetization in The Renegade Network Marketer. Make sure your training system increases monetization not just for you, but also for your team and prospects who should be able to use your training system with the same benefit you do.
I think you’ll see this kind of training take the MLM industry by storm, and to the next level of maturity because it’s exactly what the majority of network marketers who have read The Renegade (or Dillard’s stuff) need.
So find a system that does this, like one we’ve created called Renegade University, or create one that meets the criteria above and you’ll be ahead of the curve, positioned to attract a huge number of prospects to you, while earning a lot more cash flow if you monetize it properly. Then, you can lead those prospects to wherever it is you want them to end up (like your MLM business, for example).
“It’s a whole lot easier when the prospects are coming to you, Mike says.”
Mike teaches network marketers Internet attraction marketing, emphasizing “no and low cost” strategies with Social Web 2.0 Media.
Get Click-by-Click Help Setting Up Your Marketing & Attract More Prospects to You
Learn with Mike to generate your own prospects list, and how to monetize with cash-flow strategies that allow you to afford to keep building the network marketing business you’re in right now.
titleForex Trading For Beginners - 10 Facts You Need to Know For Forex Trading Success/titlepThis article is all about forex trading for beginners and facts you need to know before you start trading. You can make a lot of money but keep in mind most traders lose but by being aware of these facts and getting the right forex education, you can win…/ppLets look at our list of key facts for forex traders for beginners./pp1. Forex Robots are NOT a Route to Success/ppMore novices buy a robot and think it will give them riches with no effort and they end up disappointed - Why? Because most have never even been traded and present worthless paper simulations which mean nothing in the real world. There not real profits so avoid them at all costs./pp2. Forex Day Trading Doesnt Work/ppIts obvious that you cant tell what countless millions of traders, will do in short time spans. Its a good story and vendors know this but like the robots they only have paper simulations./pp3. Anyone Can learn to Succeed/ppThis the good news! Forex trading is a learned skill and if you get the right forex education, you can win./pp4. You Need to Have Confidence and Discipline/ppThis means accepting responsibility and learning the right information. Only then will you have the confidence to trade with discipline. So by all means get education from other - but success rests on your shoulders./pp5. Big Forex Trends are Always Present/ppThey last for weeks, months or years and if you use a long term forex trend following strategy, you can make huge gains./pp6. Leverage is an Advantage and Disadvantage/ppForex brokers will give you 200:1 as standard and most traders use it all. This is a mistake, over leverage simply wipes out more traders than any other reason. 10 - 20: 1 is plenty for most traders./pp7. Markets Dont Move to Science/ppYou will read a lot about how they do and how you can follow a system that predicts and win, no you cant. Markets dont move to science, they are simply an odds based game and you need to trade the odds to win./pp8. You are Going to Face Periods of Losses/ppAll the best traders do and its how you handle them that will determine your trading destiny. Make sure you have strict money management and the confidence and discipline, to ride these periods out./pp9. You Dont Need to be Clever or Work Hard/ppIts a fact that a simple trading strategy can be developed by anyone and you can make a lot of money with it. A few weeks to learn and about 30 minutes a day is all you need - if you get the right education. No other business, gives you such great rewards for your effort. You get rewarded for being right, not effort in forex trading and that means working smart NOT hard./pp10. Ignore the Majority View and You Will be Successful/ppForex trading success is all about ploughing your own path and ignoring the frequent myths you see online and also be prepared to not run with the majority - the majority of course lose, go your own path./ppYou Can Achieve What You Want/ppWant a good second income or even a life changing one? Well the opportunity is there for you and its up to you what you achieve. Forex trading for beginners, sometimes seems daunting - but if you have read the above, you know what to do and can get on the road to financial success./ppNEW! 2 X FREE ESSENTIAL TRADER PDFSbr ESSENTIAL FOREX TRADING COURSE/ppFor free 2 x trading Pdfs, with 50 of pages of essential info on a target=_new href=http://www.learncurrencytradingonline.com/subscribe.htmlBecoming a Currency Trader From Home/a visit our website at: a target=_new href=http://www.learncurrencytradingonline.comhttp://www.learncurrencytradingonline.com/a/pbrbr
Does a buy and hold strategy still work well for unit trust funds? There’s an argument that buy and hold is not a strategy, but is the same as not doing anything. To make it worse, your investment may ’sink’.
Given an example, let’s say, you bought into an equity fund in December 1998 and kept it until December 2004 and had a return on investment (ROI) of -2%. If you had actively managed your investments and switched to a bond fund (during bull bond market) and returned to equity later (during bull equity market), your ROI would have been 15%. Thus, some analysts suggest a buying, monitoring and rebalancing strategy.
The buy and hold strategy is based on an assumption that over the long run, markets will go up eventually. It’s a strategy that helps the investor save on transaction costs, taxes on capital gains and avoid the hassle of buying and selling.
There are a number of factors concerning this strategy. First, it’s assumed that the portfolio is diversified into different stocks and asset classes. If the investor only invested in one stock, he won’t even recover the cost today. He needs to invest across the asset classes (bonds, gold, cash etc.). In the long term, the portfolio will give good but not necessarily the best results.
Second, the investments must be fundamentally sound. In developing countries, a buy and hold strategy may not produce the best results many changes are still taking place. Thus, business cycle, the economic and investing environment and government policies will change, in line with the country’s development. When change happen, you can’t ignore the impact.
That being the case, investors are advised to review their investments regularly (at least once a year). But should unit trust investors try timing the market? As you know, a unit trust fund is a medium to long term investment vehicle. However, you can’t just invest and forget about it. Investors should monitor them closely and not easily give up control of their hard earned money.
Not all investors are literate enough to know when to enter and exit asset classes. Investors’ emotions come into play, making it hard for them to sell and take profit or cut losses, especially those who invest directly in the market. Thus, leave it to the professionals if you’re clueless and illiterate about financial markets, although even professionals can’t get it right all the time too as timing the market is never easy.
Another critical element of unit trust investing is to figure out if you’re comfortable with the fund manager’s style. If the investor were to rebalance his portfolio himself, in this case, the asset allocation decision is made by the investor himself. When markets move, he decides whether to buy, hold or sell.
For you those of you who prefer taking control of your investment, even if it’s a small sum, make sure you go into a fund that charges minimal entry and exit fees or allows free switches between funds in the same company and in the same year. Only move your investments when you believe market fundamentals have changed, otherwise don’t get caught up with investor sentiment.
Even if there were no changes in the investing environment, your own objectives may have changed, so it’s wise to review your portfolio at least once a year.
For investors who prefers to let the fund manager decide so long as they get a reasonable return on investments, there are funds that allow you to just sit back and watch your investments grow (if you’re lucky!). Go with funds and fund managers whose investment style suits your risk profile.
Finally, investors need to be educated. Get literate in your finances or make sure your investment consultant is literate.
Michael Russell
Your Independent guide to Investing
