How to value a mining company

By Paul van Eeden

I received an interesting question about company valuations from one of my newsletter subscribers that I thought I would address as a Commentary. It is a multi-part question that will take more than one Commentary to address; this week is part one: Valuing Mining Stocks.

Mining is a finite business. Mineral deposits contain a certain amount of ore and when that ore is mined out the deposit is depleted, no matter what you do or wish.

That is in stark contrast to say, an auto parts manufacturer, who can adapt to new demands and specification changes and (hopefully) stay in business for many decades. When you value an auto parts company, you can compare the companys price to earnings, price to cash flow, operating margin and net profit margin (among other things) to the companys peers to assess whether the stock in question is relatively cheap, or relatively expensive. You can also get a sense of whether the stock is cheap or expensive in an absolute sense by looking at the book value per share and comparing things like the profit margin and dividend rate to prevailing interest rates. But, embedded in all this (except book value per share) is the implicit assumption that the earnings and cash flow are for all intents and purposes infinite. When you are dealing with a business that can be reasonably expected to continue in a similar fashion for many decades, earnings per share, cash flow per share, dividend rate, etc. are meaningful. That is not the case with mining.

Take a hypothetical mining company that has only one mine as an example. Let us assume that mine is going to produce for another five years before the ore will be depleted. Now, let us say that the companys price to earnings ratio is ten. A hypothetical auto parts manufacturer also has a price to earnings ratio of ten. Based on just this one metric, we cannot differentiate between the two stocks. Let us also assume that the prevailing ten-year interest rate is five percent.

This means that you can invest your money in a ten-year bond and earn five percent per year while taking relatively little risk (other than the risk of interest rates rising, which could negatively impact all the investments under consideration and is therefore not considered).

The auto parts manufacturer has a price to earnings ratio of ten. That means for every dollars worth of stock you buy, you expect to earn ten cents, or ten percent, in earnings. It does not really matter for our purposes whether those earnings are retained by the company or paid out as a dividend since, either way, the earnings accrue to the benefit of shareholders. Furthermore, you can reasonably assume that the auto parts manufacturer is going to be in business for several more decades and, because you have done lots of due diligence, you can also assume that the future earnings are likely to be the same as the current earnings. So, if you buy the auto parts stock, you will earn ten percent per year as opposed to five percent on your bonds. The auto parts stock is probably riskier than a bond; however, if you can make twice as much money it might be tempting.

Then you look at the mining stock and notice that it, too, has a price to earnings ratio of ten and, therefore, you can also make ten percent a year if you bought that stock. But you would be wrong. The mining companys mine only has a five-year life ahead of it. So, if it has a price to earnings ratio of ten it means that for every dollar of stock you buy you get ten cents in earnings. But the earnings are only going to last another five years, so your total earnings per dollar of cost will only be fifty cents — - half of what you paid for the stock — - and then the mine is depleted. Thats why comparing a mining stock to other investment opportunities on the basis of price to earnings, price to cash flow, or dividend yield is complete nonsense. It is just as futile to compare mining stocks to each other based on these metrics because mining companies have different mine lives in their operations.

The only reasonable way to evaluate a mining company is to look at the net present value of the potential future cash flow, discounted at an appropriate discount rate. You have to take into account not just the cash flow that the mine(s) is generating, but also sustaining capital costs (including future exploration and development costs) associated with keeping the mine in production. Assuming you can derive a suitable cash flow model for each mine that a company owns you can then calculate the net present value of future cash flow by using an appropriate discount rate to represent the geological, political, social and financial risks. If you sum all the net present values together, add any other assets on the balance sheet and subtract any debt, you will arrive at the net asset value per share. In a rational world you would expect to pay no more for a mining stock than its net asset value per share — - how do you expect to make money if you consistently pay more for stocks than what they are worth? But, in the real world, mining stocks almost always trade for more than the net asset value of their constituent mines, and for a good reason.

Mining stocks also offer leverage to commodity prices. Take a gold mining company as an example. Assume we have a company that mines gold for a total cost of $400 an ounce, and let us pretend the gold price is $500 an ounce. The net present value of the mine would be calculated based on the $100 margin. If the gold price increases by 20% to $600 an ounce the net present value of the mine will double, since the margin would now be $200 an ounce. Thus the value of the company increased five times more than the increase in the gold price. Most people buy mining stocks because of this leverage.

What should be immediately evident is that if you pay more for mining stocks than what they are worth, on the speculation that the price of the underlying commodity will increase, you are merely gambling on the commodity price. Fortunately there is a way to quantify the premium that one should pay for a mining stock to incorporate the leverage it has to the underlying commodity price. There is a formula called the Black-Scholes Model that can be used to calculate the "option" value of a mining stock [Editors note, you can find more information on the Black Scholes model and further links at http://en.wikipedia.org/wiki/Black-Scholes ]. What should be done is to calculate the discounted net present value of the all the companys mines and then add the "option value" of the mines as calculated by the Black Sholes formula to obtain a more realistic asset value per share. By adding the optionality of mining shares to the net present value of the mines themselves we can account for the fact that mining shares trade at a premium to their net asset value because of their leverage to the underlying commodities.

If you calculate the net asset value of a mining stock as described above you will get a result that can be used to compare different mining companies to each other, and mining companies to investments in other sectors. Unfortunately, very few mining analysts employ the Black Sholes model to calculate mining net asset values, so for most people buying mining stocks really comes down to blind speculation on commodity prices.

Diposting oleh Unknown 05.30 0 komentar

Let It Fall Let It Fall Let It Fall!

Last Friday Japan Earthquake was an unexpected event, and this will definitely cause panic selling on the next trading day which is on Monday. Usually for an unexpected event like this our Bursa Malaysia will undergo a period of correction. Ill usually wait for three weeks before Ill go into the market for bargain hunting. Always remember, the stock market will undergo a cycle but on the long run, it will be on an uptrend. So my advice is stay calm, let the market fall for 2-3 weeks, before you go in again. Unless there is another unexpected event happen, things will be different. But for now, that should be my strategy!

Happy investing

Pauline Yong

Diposting oleh Unknown 19.30 0 komentar

Forex Trading Systems The ultimate forex edge an Unbiased Review

As you know, I regularly review automated trading systems for the forex market but I have recently been asked by a website reader to review the ultimate forex edge trading system. Of course, as my website is called "reviewing everything forex" I am also interested in the review of regular trading systems and signal services so I decided to give this a go and review the ultimate forex edge trading system.

The forex ultimate edge website seemed to be just another cheesy marketing website that attempts to bond with the websites visitor by appealing to his likely current situation. The author first describes how he was broke and desperate (as many are likely to be when entering the website) and then he says that he saw the light and started to profit from forex trading. The story of course, has just no back to it, the trader does not mention the actual name of the company that allegedly gave him the chance to trade a 10 million dollar account or any information on any managed account or account he traded before or after this.

As a matter of fact, this is the most important thing. We have this guy telling us he can walk the walk and trade the forex market profitably but where is the proof ? Where are his account statements with all the profits he has been able to make with his trading system ? If anyone was going to learn a trading system from someone they would want him to show his trading statements right away. Why should you be different ? If he is claiming he can do something then he shouldnt have any hard time proving it if it is actually true. Now if it is, Ill be glad to take a look at the new evidence and redo this review to reflect that, but up until now, its just bunch of made up graphs and blablabla anyone can talk.

Being an account manager or selling a trading system is not supposed to be about being able to talk BS but it is supposed to be about being able to convince people through evidence and logic that your system is able to do something good with their money. Of course, up until now, this website is just a bunch of non sense which I would never consider worth buying.

If you would like to learn about automated trading systems and how there is the possibility to trade profitably with automated trading with real profit and draw down expectations please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed this article !

Diposting oleh Unknown 11.15 0 komentar

Expert Advisors The neighborhood full of loose dogs

When I think of the forex automated trading market right now and the way in which it has worked for the past couple of years one analogy always comes to mind. I tend to imagine this expert advisor market as a neighborhood full of loose mean dogs in which you are alone and trying to get across. I think that this perfectly portrays the confusion, misinformation, exploitation of ignorance, unethical behavior and other "properties" of this forex automated trading world.

Why is this market so uncontrolled ? Why is this happening ? For me it is pretty obvious, large sums of money are involved and whenever large sums of money are involved it doesnt take long for the predators of our race to go against their "prey", that is, retail traders who have just begun and are just desperate or wishing to earn financial independence. These people will go to great lengths to deprive everyone of their hard earned money. People will give their money willingly because they dont know any better and they trust the people that lie to them to be honest. The more and more I spend time roaming around this smelly market, the more I realize how people are tricked and how low and dishonest these marketing tactics the use are.

For me there is just one solution to this problem, which is summed up in a single word : regulation. The expert advisor market is in desperate need of some kind of regulation of what can and cannot be sold. People would argue against this since people are free to buy whatever they want and everyone is allowed to sell whatever they want. That is true, but to lie bluntly in order to sell something is an entirely different matter. This EA creators sell you an expert they say can "triple you account every month", "turn x into 100x" and they say this systems have been "battlefield tested", "proved", etc, without any actual conclusive evidence to backup their claims. I did not go to law school but I do consider that tellings lies to sell people things is immoral and should be punishable by law. Specially if it causes these people to lose their money because of their purchase.

My request is simple, have a necessary degree of proof for each claim established so that they are forced to show some realistic, convincing proof of anything they want to claim. It is not that hard, I am just asking for these people to show us the truth, plain and simple. Of course, this will only become true if people gain knowledge and start to demand this in a massive fashion, in no other way will the expert advisor sellers listen. Mainly because most of them cannot backup any of their claims (as you see within my reviews). Sadly, as with the informmercial market, this is likely never going to happen because most people that enter this market are ignorant about this situation and ignorance my friends, turns people into blind men driving.

If you would like to know more about what I have learned about this market, how you can evaluate experts and their proof, build, test and program your own systems and start trading the forex market profitably using automated trading systems please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 01.15 0 komentar

Herd Mentality

“Although markets do tend toward rational positions in the long run, the market can stay irrational longer than you can stay solvent.” - John Maynard



Today I would like to share with you a mental bias that concerns every investor, which is known as "herd mentality". But before that, lets acknowledge that the phenomenon of the herd mentality can be useful in many ways. For example, research shows that although 5% of the animals in a herd know the location of the water source, the entire herd is able to find it. In our daily lives, we use this instinct to navigate to the exit in cinemas and crowded streets.

We have to admit that herding is our human instinct. Herding always makes us feel comfortable, and being the odd one out make us feel uneasy. We are programmed to feel that the consensus view must be correct one; and this mistaken belief has led to many disastrous decisions such as the “Four Dragons” and “Four Tigers Era” of the 1990’s where many investors who were initially sceptical ended up buying into the hype under the mistaken belief that not everyone could be wrong. And yet, most people were wrong.

Some researchers theorise that investors follow the crowd and conventional wisdom to avoid the possibility of feeling regret in the event that their decisions prove to be incorrect.

Fear of Regret
People tend to feel sorrow and grief after having made an error of judgment. Investors deciding whether to sell a security are typically emotionally affected by whether the security was bought for more or less than the current price.

For example, most investors avoid selling stocks that are making paper losses in order to avoid the pain and regret of having a bad investment. The mentality is: after all, it’s only a paper loss, as long as I don’t realise the loss, it doesn’t count!

In addition, investors have the mindset of “what if the price goes up after I’ve sold it”; hence they would rather hold on to bad stocks hoping one day it will turn into a star.

However, some professional traders even advocate trend following as their winning trading strategy. They would apply technical analysis to help them in identifying the prevailing trend and trade with the trend. The biggest pitfall of this method is that it ignores fundamental analysis totally.

Herd mentality can be for good or bad. It is not totally wrong to follow the herd, but we must know when to follow and when not to. The challenge is in making an educated guess about when a turning point will occur and developing a trading plan to capitalise on it.

Happy investing,
Pauline Yong

Diposting oleh Unknown 16.00 0 komentar

Experts Views on US Dollar and Gold

The US dollar ended 2010 about where it started; does it resume its downtrend in 2011, or are fears about its demise overblown?

Jim Rogers: No, but further down the road.

Bill Bonner: No opinion. But there is more risk in the dollar than potential reward.

John Williams: There remains high risk of a dollar selling panic unfolding in the year ahead, as the US economy tanks anew, as the Fed continuously expands its easing, and as dollar holders dump the US currency and dollar-denominated paper assets. Such would be a precursor to the inflation problem.

Steve Henningsen: Similar to my thoughts last year, I still believe the dollar is headed down long-term, but it could bounce around over the next year. If sovereign debts become a problem again, like I think they will later this year, then everyone will go running back to "Mother Dollar" once again for one last hug before she lies back down on her sickbed.

Frank Trotter: As the economy waffles and the global investing communitys attention is drawn from one crisis to the next, I expect the US dollar to bounce up and down in the current range. After that, however, my analysis suggests that measured by the key factors of fiscal and monetary policy, combined with a significant trade deficit, the US does not look as good as our major trading partners, and I thus expect the dollar to decline, perhaps significantly, in the intermediate term. Big geopolitical events may accelerate this or create a flight to US dollar quality, so hold on to your hats.

Krassimir Petrov: I think the dollar resumes lower. I expect QE3 and QE4 - a dollar-printing fest that will eventually sink the dollar. Sure, all fiat currencies are in deep trouble and prone to overprinting, but the reserve status of the dollar actually makes it more vulnerable now. Whether the dollar sinks against other currencies is a fools game not worth playing. It is like being in the hospital, where all patients are suffering from cancer, and trying to guess who will feel best at the end of next year, or trying to guess who will succumb first. Thats why it is so much safer to play the dollar against gold.

What to watch in 2011: stay focused on the sovereign debt crisis and bond yields. Spiking yields will trigger the next stage of the crisis.

Gold has risen 10 years in a row, so some are calling it a bubble, yet its roughly $1,000 below its inflation-adjusted high. Whats your outlook for the metal in 2011?

Jim Rogers: It is hardly a "bubble" when very few own it still. Who knows? Overdue for a correction, but who knows?

Bill Bonner: The smart money is in gold. It will stay in gold until the bull market that began 10 years ago finally reaches its peak. It is extremely unlikely that the top will come in 2011; its probably years in the future. In the meantime, gold is bound to have a losing year or two. Dont worry about it. Buy gold. Be happy.

John Williams: As the US dollar increasingly is debased, and where gold tends to preserve the purchasing power of the dollars invested in it, the upside to gold in the year ahead is open-ended, restricted only by any limits to the massive downside potential for the US dollar. Any intermittent gold price volatility, extreme or otherwise, will be short-lived. There is no bubble - only increasing weakness in the US dollar - with the gold price fundamentally headed much higher in the years ahead.

Steve Henningsen: I believe gold will once again prove the bubble-boys wrong and end the year positive (I have no idea by how much and dont really care). However, I think this year will be more volatile and that Gold Bugs better remain seated on the precious metals express or they might get squished.

Frank Trotter: I still think that with price inflation on the rise and big political events occurring, there may be room to continue to rise. If stock markets take off, then there will be a reduction in appreciation or even a significant decline, but based on the factors I mentioned above, I dont see that as highly likely.

Krassimir Petrov: Gold still has outstanding fundamentals. I believe that over the course of 2010, the fundamentals have strengthened significantly: (1) "No Exit [Strategy] for Ben" as he unleashed QE2, and will likely unleash QE3, QE4, etc., (2) no more central bank selling of gold, (3) more central banks become buyers of gold, and (4) trial balloons for a global gold-backed currency.

I have no idea how people could even claim that gold is in a bubble - barely 1 out of 100 people have any idea about investing in gold. During the real estate bubble, every second person was involved in it. Maria "Money Honey" Bartiromo has yet to report from the COMEX gold pits; gold fund managers and analysts have yet to obtain rock-star status; and glamorous models are not yet dating the gold guys. Who is the Henry Blodget [co-host of Tech Ticker] of the gold sector, do we have one yet?

Yes, gold will eventually become a bubble, but that feels 5-8 years away.

Whats your best investment advice for 2011?

Jim Rogers: Buy the rmb [renminbi, the Chinese currency].

Bill Bonner: We are in a period much like the period following WWI, in which the great debts and losses of the war had to be reckoned with. It is an era of great risk. The US faces many of the same challenges faced by Germany and England after WWI. Like England, it has huge debts. It is a waning imperial power. And it has the worlds reserve currency. And like Germany, it is attempting to fix its problems by printing more money. This is not a good time to be long either US stocks or US bonds.


John Williams: As an economist, I look for the US dollar ultimately to lose virtually all of its current purchasing power. Accordingly, for those living in a US dollar-denominated world, it would make sense to move to preserve wealth and assets over the long-term. Physical gold is a primary hedge (as is silver). Holding some stronger currencies outside the US dollar, as well as having some assets outside the United States, also may make sense.

Steve Henningsen: Dramamine (for volatile markets), a stash of cash (for potential investment opportunities), and move some of your assets offshore if you havent already.

Frank Trotter: My advice is first to look at the other side of your balance sheet - the liability and risk equation - before seeking out absolute gains. What are your goals, what resources do you already have to meet those goals, and what events (health, income stream, upheavals) might impact these risks? Place some assets to hedge these risks directly, then look to diversify globally into markets with higher growth potential than we see here at home, and that may balance your global purchasing power risk. Almost like a religion, we have had the phrase, "Stocks are the only legitimate hedge against inflation" beaten into our heads. I say, look at assets that define inflation like commodities and currencies and evaluate where these fit into your risk portfolio.


Krassimir Petrov: Last year I recommended silver, and I would stick to silver again, despite its phenomenal run. Then it gets tricky. I usually dont recommend diversification, but now I would again recommend a broad portfolio of commodities. Investing during the rest of 2011 should be easy: stay out of real estate, out of bonds, out of fiat currencies, and out of stocks; stay fully invested in commodities, overweight gold and silver.

Diposting oleh Unknown 08.01 0 komentar

No Stoploss or Limit Orders for US brokers

I was a little bit shocked and surprised when a customer sent me an email earlier today regarding a new regulation that will be taking effect on July 31, 2009 that forbids the use of Stoploss and other limit orders on US forex broker accounts. After reading a lot more on the subject I realized that apparently only FXCM has issued a warning to their customers telling them that they will be unable to use these type of orders from July 31. What does the regulation exactly do and what can you do to protect yourself and your automated trading system ?

Well, as I said before the regulation prevents you from assigning any stoploss or takeprofit levels to your orders, that is, you cannot issue any pending orders with these values or place these values on existing trades. This means that in order to avoid risk, if you are manually trading, you are required to stay in front of the screen a longer amount of time. Expert advisors can also emulate the stoploss and take profit values simply by closing orders at predetermined price levels calculated by their logic but this is quiet risky and requires you to have an extremely reliable internet connection (that is, you need a very robust vps) because a failure to do so may leave your account opened to terrible loss levels and unmanaged risk.

What options do you have ? You can either migrate to a non-US broker and continue trading in the same fashion, you can simply use expert advisors to manage your stop loss and take profit levels (if you are manually trading) or you can modify your current expert advisors if you are auto trading so that they too can emulate and manage your orders according to the takeprofit and stoploss levels.

As retarted as this regulation may sound, it does provide a safer trading level for traders in that it absolutely prevents the ability of brokers to stop hunt trading positions and thus eliminates whatever influence brokers may be having in price, that is, it eliminates the artificial movements some brokers may be creating in order to make trades reach stop loss levels. This will probably make the market easier to trade on US brokers with the added pain of having to manage your risk in alternative fashions. Nonetheless, these brokers will lose a fairly good amount of their customers to off shore brokerages.

As far as my expert advisors go, I will modify the gods gift ATR to comply with the rule and use an internal mechanism to close orders according to stoploss and takeprofit values. Other expert advisor creators should do the same in order to maintain their systems at a good level. What do you think, will you adapt or migrate ?

If you would like to learn more about the gods gift ATR and other expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article!

Diposting oleh Unknown 23.00 0 komentar

Double Dip Economy

Recently many economists have warned that the global economy may suffer a double dip economy in the near future. There are reasons for their worry. Firstly, governments around the world have been pumping billions of dollars into their economies for fear that their economies will undergo a prolonged recession like the 1929 "Great Depression". The aggressive fiscal stimulus policies have been doing the wonders of a speedy V-shaped recovery for most of the economies in the world, especially the Asian countires.

Secondly, the "Fear and Greed" factor in humans emotion has started to build bubbles in the stock markets and property markets around the world. Since the subprime crisis, Singapore STI up 77%, Hong Kong HSI up 65%, Indonesia JKSE up 100%, Bursa Malaysia up 50%. And property market in Singapore also see sales volume reaching its pre-crisis level. Its 2Q 2009 almost doubled 1Q 2009’s level to reach an eight-quarter high of 4,714 units. A year ago, "fear" has caused many investors to dumped their shares at cheap sale, now "greed" has taken over control and everyone is in for a quick profit.

Third is the threat of the commodity prices. With speedy recovery in the Asian economies, the demand for commodities is rising. Most likely we are going to see another round of cost push inflation, like the one in 2007.

And finally, the interest rates. With rising oil prices and overheated economy, very soon we will see rates hikes which will drag down the stock markets and the property markets. And when all these happen, well see a "W" formation for our GDP which is also known as the "double dip" economy.

As an investor, we do not need to feel fearful about this situation. We should treat it as part of the economic cycle, there are bounds to be ups and downs. The important lesson here is cash management: (1) Do not invest with borrowed money and (2) Do not invest all your funds at one time. Space out your investment, if its a down market, youre practicing lower cost averaging; if its an uptrend, youre averaging up. And remember to take profits when youre happy with your gains.

Diposting oleh Unknown 13.48 0 komentar

Cycle Analysis and The Stock Market

When we talk about cycle analysis we will definitely think of WD Gann, the legendary stock and commodity trader who had made tons of money from the financial markets. It was estimated that in his lifetime he made $50 million from stocks and commodities. Imagine how much is $50 million 80 years ago translated to todays money. What was his secret?

He had the ability to forecast the market by studying the historical prices. He said, "Everything works according to past cycles, and that history repeats itself in the lives of men, nations and the stock market." (more quotes from him)

In 1928 the year before the crash he successfully predicted the crash in 1929 and said that it would take years for the stock market to recover. You may read his detail prediction  here.

Today I want to talk about one of his famous theory on the cycle analysis, its known as the Decennial Cycle or the 10 year cycle. According to Gann, he compiled the past 100 years of price data and put them on a chart. He plotted the y-axis as the price while the x-axis as the year ending with 1,2,3,4,5,6,7,8,9,0. The actual chart was very blur as it was a very old chart, so I try my best to illustrate on the chart below:

From the above chart, we can see that the year that ends with 1,2,3 such as 1981, 1982, 1983, 1991, 1992, 1993 and 2001, 2002, 2003 have a similar price pattern, they start from low price levels. Year that ends with 7 or 8 usually experience crashes.

Below is an extract from Ganns teaching:

Each decade or 10-year cycle, which is 1/10th of 100 years, marks an important campaign. The digits from 1-9 are important. All you have learn is to count the digit on your fingers in order to ascertain what kind of a year the market is in.

No.1 in a new decade is a year in which a bear market ends and a bull market begins. Look up 1901, 1911, 1921, 1931...

No.2 or the second year is a year of a mirror bull market, or a year in which a rally in a bear market will start at some time. See 1902, 1912, 1922...

No.3 starts a bear year, but the rally from the second year may run to March or April before culmination, or a decline from the second year may run down and make bottom in February or March, like 1903, 1913, 1923...

No.4 or the fourth year, is a bear year, but ends the bear cycle and lays the foundation for a bull market. Compare 1904, 1914, 1924...

No. 5 or the fifth year is the year of Ascension, and a very strong year for a bull market. It can be a new bull market or a big correction in an existing uptrend. See 1905, 1915, 1925...

No. 6 or the sixth year is a bull year, in which a bull campaign which started in the 4th year ends in the fall of the year and a fast decline starts. See 1896, 1906, 1916, 1926...

No.7 or the seventh year is a bear number, and the seventh year is a bear year because 84 months or 84 degree is 7/8 of 90. See 1897, 1907, 1917, 1927...

No.8 or the eighth year is a bull year. Prices start advancing in the seventh year and reach the 90th month in the eight year. This is very strong and a big advance usually takes place. Review 1898, 1908, 1918, 1928...

No.9 the highest digit and the ninth year, is the strongest of all for bull markets. Final bull campaigns culminate in this year after after extreme advances and prices start to decline. Bear markets usually starts in September or November at the end of the ninth year and a sharp decline takes place. See 1899, 1909, 1919, 1929...

No.10 the tenth year, is a bear year. A rally often runs until March and April; then a severe decline runs to November and December, when a new cycle begins and another rally starts. See 1910, 1920, 1930...

This is just one of the cycle theories, there are also the Presidential cycle (4 year cycle), secular bull and secular bear, yearly cycle, monthly cycle and many more. From the study of past cycles, we see a very clear picture that history seems to repeat itself and by learning more technical analysis theories we can make better investment decision to help ourselves to grow our wealth.

Finally, Im going to end this article with a statistical table to show how accurate is this theory:

Happy investing,
Pauline Yong

Diposting oleh Unknown 05.17 0 komentar

Forex Manual Trading Systems Forex Cash Factory an Unbiased Review

A few days ago, a newsletter subscriber asked me if I could review a manual trading system called "forex cash factory". On todays post I will do an analysis about this system taking into account the evidence provided on the products website. I will also give my opinion about its usefulness and how much I think it could help manual traders become long term profitable. Finally, after doing all my analysis I will tell you if I believe this product is worth buying or testing or if it is just another product which is filled with promises but fails to deliver any realistic results.

The website starts with nothing but bold claims about the system being able to "pump" tens of thousands of dollars every week out of the market. After this we see that the forex cash factory website is nothing more than a few thousands words of a guy telling us to buy something just because it can make us rich. The webpage is definitely geared towards people who are new to the forex market and are definitely looking for a way to get money quickly.

The author of the forex cash factory fails to give many important descriptions about his system. There is absolutely no mention of the profit or the risk targets of the system, no mention of the money management used when trading, no mention of the characteristics of the strategy, etc. Why would anyone buy a trading system they know nothing about ? The guy fails to explain if his system relies on scalping, swing trading, long term trading, etc. There is simply almost no information abou tthe actual trading system included on the website. The author could have written the webpage without any product because product description is extremely limited.

There is also absolutely no evidence about the profitability of the system or its ability to even produce one USD on the forex market. The thing I find the strangest is that the guy does mention on his website that the system WAS actually tested on a real account for three years before selling it. Why in the world doesnt this guy show this evidence of profitability if it does exist in reality ? Come on ! Who would refrain from posting such evidence if it is obvious that it would increase sales enormously ? No one would ! The fact remains that until the evidence is not posted, it may as well not exist, there is no reason to believe it does.

Then what about all those testimonials ? I can also sit down and makeup whatever testimonial I want, testimonials do not mean anything, specially when a "testimonial" is just a bunch of text there. All the testimonials could have been written by the author, there is no doubt about that. What you should ask for when looking for a trading system, either manual or automated, is not simply a 2000 long sales page telling you how good your life will be after you make the purchase but solid evidence showing that the system has been profitable in the past and has a high like hood of remaining profitable in the future. Why is this evidence never shown for manual trading systems ? Well, mainly because the systems usually only work for one thing, bringing the author sales profits.

In the light of the total lack of even a general description of the system and the absolute lack of any performance record of the system when there is even mentioning that such a record exists (which means that the author is purposefuly hiding it or making that up) I consider the cash factory manual trading system not worth buying and testing. If you want to know more about trading system and how you too can design and trade your own long term profitable automated systems with realistic profit and risk targets please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 19.30 0 komentar

The Doubleplay Forex Expert Advisor

When I began my quest to find an expert advisor that did well in a broad variety of market conditions I was very confused by the overwhelming amount of expert advisors available. After reading and searching for reviews all across the world wide web I found what appeared to be a good and well recommended expert advisor. Hence, I bought the Doubleplay expert advisor.

The Doubleplay expert advisor is what appears to be a very solid and conservative expert advisor. It fits my trading style, having a 50 pip adjustable stop loss and also a risk management module which makes sure that I never risk more than 5% of my account on each trade.

I have been very satisfied with this ea. It has traded as promised and has delivered some profit throughout the three months I have been using it for. I have obtained about 40% profit, which hits a quiet high profit/loss ratio. Support has also been absolutely wonderful, every doubt or support question I have had has been answered promptly by Hal, who is the eas creator.

As much as I like this expert advisor, bear in mind it is NOT a way to get rich quickly. If you ask me I would say that this expert advisor is a PROFITABLE expert advisor, but I would never expect more than 10% a month in ANY case. This was proved by this ea having almost doubled my account along the beginning of October and giving more than half back just a few weeks later.

I have complete faith in Hals commitment to the Doubleplay project, with no doubts in my mind that his main goal is to be successful as we are, not to deceive his customers in anyway. Doubleplay also has a money back guarantee if you have two consecutive months of losses using the ea.

This ea is one of the few I do personally RECOMMEND with no ties whatsoever, neither as an affiliate or as a personal friend of the eas creator. This ea would fit great as a conservative addition to our ea trading package.

This expert advisor can be found here.

Diposting oleh Unknown 09.46 0 komentar

Forex Expert Advisors Forex Espionage Unbiased Review

A few days ago I received an email talking about the forex espionage expert advisor. Of course, the purpose of all these emails I get is to make me click through the affiliate links and buy the expert advisors. What I do most of the time is review the products instead so that people can know my opinion about most new expert advisors (I try to review as many as my time schedule allows me to). If you have read many of my reviews the truth is that I very rarely consider an expert advisor worth buying.

Well, I must confess that the forex espionage expert advisor is really not the exception. I can see the marketing all over it like on most commercial expert advisors out there. The website greets you with a video of a guy who obviousy treats you like you dont know a thing about forex trading or automated trading systems. The video and the website features many claims about profits, backtesting and as always the promise to free you from your 9 to 5 job.

Ok, so what is the validity of their claims ? They have many problems to start with. First, most of their claims are based on backtesting statements which we know are done with the benefit of hindsight so absolutely no validity there. They also show us some very limited "live" testing information which has no live account investor access and is truly excesively limited to pass any judgement about the expert advisor. If you are a commercial expert advisor seller or an expert advisor reviewer that lives from the affiliate links please have this in mind : dont treat your customers like their retarded !

The forex espionage expert advisors seems to be your average commercial expert advisor that aims at trading many times per day with several short term wins and incredible backtesting results but fails to work in the long term (the only thing that grows in the long term is the number of wiped accounts). The creators never mention the problems associated with backtesting and limited live testing results. They just want to convince you to use something even if there is no evidence that the system works in the long run and there is also no evidence that the live testings shown are actually real. Again, we need live accounts with investor access to believe the claims of ANY commercial expert adviosr seller.

In summary, not only do I find the forex espionage expert advisor NOT worth buying, I also consider their website misleading and offensive to the intelligence of any potential customer. Expert advisor sellers not only should show more realiable testing, they should also struggle to explain every possible mistake within the tests they are doing.

If you would like to learn more about how to evaluate and choose expert advisor as well as about other expert advisors I have traded and reviewed please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 01.31 0 komentar

A Proven Profitable Forex Expert Advisor

Ok, this is what all of you have always been looking for and probably the reason why you entered my website. You are looking for a proven, profitable expert advisor that you can trust and trade in your live account with the most minimal risk of large equity draw downs.

With all due respect : You are delusional.

Lets start with the facts. What do you mean by proven ? Someone has made money with it ? Someone has been making money with it for an x amount of time ? Many have made money ? It has made money on different brokers ? As you can see, the answer to this question is very difficult by itself. I will now make something clear to you which you may have already suspected and which may seem a little bit hard to read : There is no such thing as a proven system in the forex market and there is no such thing as a low risk expert advisor.

Yes, thats right. There is no such thing. This happens by definition, because the forex market is dynamic, ever changing and unpredictable in nature. Hence, it is what you would call a high risk market. It is high risk because (you guessed right) the risk of losing capital is very high ! And this cannot be avoided by using an automated trading system. There is no such thing as a low risk opportunity in a high risk market. If you expect to make money consistently, for years, in the forex market, using automated systems, without high risk, please choose another investment vehicle. Perhaps something less risky, like T bonds, would better fit your risk profile.

Does this mean that evaluating expert advisors is meaningless ? No. By testing expert advisors in live and demo accounts we can get an idea of how they work, under what circumstances they work, what consistent profit and expected draw downs we might get. This is because even though the forex market is unpredictable, it can be statistically studied. We cannot tell what will exactly happen, but we can estimate the probabilities and this is one of the things that tells a profitable trader apart from a failing one.

Lets say for example that certain automated trading system gets a 4% profit from 2005 to 2008 in live testing. We can look at overall market conditions and the past 60 years of market history and tell if they are likely to change, to what and what the probability of working would be if said conditions would change. Was the market in an uptrend ? Downtrend ? going sideways ? What was the volatility ? In essence, the longer an ea works, the more robust it it, that is, the more change in market conditions it can withstand. However, if market conditions were to change to something that did not happen for the last x years the ea was tested on, then it can fail.

This is were that disclaimer we have all read comes into play "past perfomance does NOT guarantee future results". Read it about a hundred times.

What is our defense against this ? Have more than one expert advisor, have a portfolio and have them on separate accounts, if all of them have been tested and are robust, when one fails, the most probable thing is that the other will not and vice versa. You need to diversify in automated trading because the systems have limited visibility, they cannot overcome big changes in market conditions due to their rather inflexible nature. Will every tested ea ever programmed have a period in which it will wipe an account ? The answer is, probably yes.

If you would be interested in learning a little bit more about my opinions, criteria and what expert advisors I have tested and consider worth trading please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 15.45 0 komentar

Forex Expert Advisors Forex Ripper an Unbiased Review

During this weeks search for new trading systems I came across the forex ripper expert advisor. On todays post I will write a review about this automated trading system focusing on the evidence provided by the author as well as the claims made on the website. I am going to analyze all the information and then give you my unbiased, honest opinion about this experts long term profitability and if it is or it is not worth buying and testing.

Wow, I have to say that I have read many made up stories in my life but the story given by the author of forex ripper really has a lot of imagination going on. It has the classic "I was ruined" with an "I am a pro" twist coupled with the appearance of this mysterious "ripper" guy from wall street who could "magically" turn a trading system into an ATM. Of course, the story puts up a lot of information which makes us doubt its truthfulness and even more, it makes us doubt the origins and actual worthiness of the trading system.

Why ? Mainly because the author of forex ripper does say that they were able to use the system successfully but no prove is given of live trading performance. This is another guy thinking that the people who buy trading systems are stupid. This person shows some pictures of trades which for all we know could have been hand picked and executed on a demo account with no additional information of profitability. I would ask this person, if the story is actually true, to show us ALL the live statements with investor access of the trading accounts he had when he started running the EA which should be months ago by now. The author of forex ripper definitely talks a lot but he shows no evidence to truly backup the claims made.

What do we have then ? We have a website with a story of a guy claiming a trading system is the best ever made (for a change !) with some partially blurred pictures of trading statements with no third party verified live statements or simulations to hint us about the long term performance or trading tactics of this system. From what I see I would guess that the author of forex ripper is just a programmer who came up with an expert advisor, then made a marketing pitch for it and put it up with a bunch of blurred pictures of hand-picked trades from a demo account to show "proof" of profitability.

This trading system is definitely miles away from proving profitability and even more, thousands of miles away from proving that the system has the slightest likehood of being long term profitable. If the author uploads the live statements (with investor access) of the accounts the EA has been trading in (according to the story) and also gives us 10 year backtests with a period in common with the live testing to check for back/live testing consistency, then and only then, will I redo this review to reflect this additional information. Meanwhile, this website is NOTHING but HYPE and I therefore consider this trading system NOT worth buying or testing.

If you would like to learn more about the automated trading systems I have developed and how knowledge and hard work are the key to long term profitability in automated trading please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 06.30 0 komentar

Forex Expert Advisors Forex Illusion an Unbiased Review

Going on with my review of recently released automated trading systems today I will be analyzing the Forex Illusion trading system. This expert advisor promises you will "beat the dealer" and achieve long term profitability in the forex market even if you dont have any previous forex trading experience or if you have "battled with forex" for a long time. On the following paragraphs I will go through this trading systems website, I will talk about the evidence provided by the author and I will tell you if this evidence is reliable enough to backup the claims of profitability made by the author. After doing this analysis and looking at the systems trading tactics I will then tell you my opinion about whether or not this trading system is worth buying and testing.

The Forex Illusions system website is actually quite odd since it lacks any of the usual "letter type" structure the general expert advisor selling websites have. The only thing you see when you access the website is a video that tells you the general "underdog story" and shows you the evidence of profitability available and the claims made by the author. The video is obviously targeted at forex newbies, as the author tries to sympathize with them, telling a story of how he "bit the brokers" and achieved millions of dollars in forex trading. The story tells us how the guy went from being a mail man to a millionaire.

Truth be told, this trading system just falls short on almost every aspect. The evidence of "live trading" that the author shows is nothing but a visual backtest of a period of just a few months which tells us absolutely nothing about this trading system. It is amazing that anyone tries to sell a trading system on such a small and just worthless piece of evidence. What does a few minutes of visual backtesting tell us ? Nothing ! Where are the full 10 year backtesting statements showing us the long term profit and draw down targets ? Where are the LIVE investor access verified accounts ? where is REAL proof of profitability ?

Again, another person attempts to exploit the new trader by making up a story, doing a visual backtesting of a strategy and pretending to have turned into a forex millionaire. If half of this guys story was actually true, he would have showed a LOT more evidence. This is an obvious lie, if all of this was true you would be looking at the guys personal trading statements or you would already have a live trading account with at least a few months of trading showing you investor-access verified results.

This is just a bold attempt to sell you something that is worthless with absolutely no reliable evidence of long term profitability through a story you might empathize with. I think it is pathetic and I think that anyone who has any respect for the intelligence of their customers would have made the effort to open up live accounts, give investor access information and run 10 year backtests. Because of the incredible lack of evidence I consider this expert advisor absolutely NOT worth buying or testing.

If you would like to learn more about automated trading and how you can develop your own likely long term profitable systems with sound and realistic profit and risk targets please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 20.45 0 komentar

KLCI At Historical High

KLCI recorded another record high of 1629! As we can see from the chart above, there was a reverse head and shoulder formed during the period of April to mid June 2012. On June 19th, there was a breakout from this bullish chart pattern and now heading towards the price target of 1646.

While technical analysis tells you the possibility of near term price action, in a larger picture, we still rely on the fundamentals to give us a glimpse into the future.

The Euro debt crisis is still on, the politicians have not come up with the best solution yet. The concern is the bond yield (or the cost of borrowing) for Greece, Span and other debt ridden countries are much higher than their counterparts like Germany, Sweden and Denmark. For example, the 10 yr bond yield for Germany is below 3% while Spain is closed to 7%. It is believed that those debt ridden countries cannot survive with such high cost of borrowing and that they are suggesting the richer EU countries like Germany and Denmark to share the weaker countries debt burden by jointly issuing government bonds. By doing so, the borrowing cost of Spain and Greece is lowered while that of the Germany is raised.

During the recent Brussel Summit in June the above proposal did not materialized but instead a temporary measure is agreed upon. That is the 120 billion euros growth package was agreed upon during the 2 day summit with funding from the ECB to help solve the problem temporary.

In the US, concern is with the unemployment data that remain stubbornly high at above 8% but it is declining which is a good news for the US. In addition, the corporate sector is generating huge profits as products such as Microsoft, Apple, Johnson & Johnson etc are selling all over the world!

On a contrary, things are not looking good in China. Recently the Chinese data shows that the economy is contracting with weaker PMI and GDP data.

Hence we shall expect the markets to remain choppy until the situations get better in the EU and China.

Happy investing,
Pauline Yong

Diposting oleh Unknown 11.30 0 komentar

How to setup install an expert advisor in MT4

Many people who are new to automated forex trading are puzzled by installation issues regarding the expert advisors for the metatrader platform. This easy to follow graphical guide will show you the simple steps necessary to setup an expert advisor for the metatrader 4 platform.

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1. Download your expert advisor file and indicators (if the ea needs any custom ones). These are either ex4 or mq4 format files, depending on if they are a source or a binary (precompiled file). There is no difference between these two classes as far as installation and usage goes.
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2. Copy your expert advisor files and indicator files to the corresponding directories. As it is shown in the following picture. Keep in mind that this directories are located under your metatrader installation path and that metatrader should not be running at this point.
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3. You should now open up metatrader. Open up a chart with the timefrime and currency pair in which you want to run the advisor. Now simply drag and drop the expert advisor from the navigator window as shown in the next picture.
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4. Now you need to check the live trading dialogue and change any settings you would like to modify on the expert advisor, as it shown. Also remember to click on the expert advisor button on the upper section of the program to allow trading.
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5. Now you should check that the expert is running. A happy face should show up in the top right corner of the chart you chose. If you see an x or a happy face it means you neglected to perform the last step (or didnt perform it correctly).
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Happy trading !

Diposting oleh Unknown 01.33 0 komentar

Measuring System Vulnerability The Market Exposure Index

If you have been reading my blog for a while you may be familar with my use of the term "market exposure", as a matter of fact, most of you may be aware that this is a concept I use most the time to describe trading systems and gauge their possibility to be long term profitable. But, what is exactly market exposure and more precisely, how can it be measure ? Well, those of you who are subscribed to my newsletter may already have seen the video I posted on the FTP about market exposure and how this is vital for the description of a trading system. However, since this concept is pretty important and mentioned throughout my whole website I have decided to dedicate todays post to the analysis of the concept and the formal introduction of what I like to call "market exposure index".

The first thing we need to do if we want to talk about market exposure is to define it. What is market exposure ? There are actually several ways to explain the concept but the simplest one is to think about market exposure as the magnitude in which your system becomes vulnerable to loses as a consequence of the opening of a position. That is, whenever you open a position in the market you are getting "exposed" to losing your money as the market can take a move against you. The vulnerability of any system against taking loses is what I call "market exposure".

Now that we know what market exposure is we are left with a more challenging task. How do we measure market exposure ? How do we measure the vulnerability of a trading system against the market ? The first thing we need to do is think about the factors that affect market exposure, what affects the exposure of a system against the market ? The most important things that determine market exposure are the systems risk to reward ratio and the overall winning percentage of the EA. That is, the probability to win a trade. You must take into account that these two variables have to be deduced from extensive historical or live testing as short tests could bring unreliable results. Also take into account that the probability to win a trade, is never 1, that is, there is ALWAYS the possibility to lose a trade. Stubborn systems, like grid trading systems that assume the market will always "come back" to achieve a profitable result eventually lose as, even though the probability to lose can be low, it is still present and the fact that you are putting your whole account balance at stake makes the system to eventually wipe your account.

So how can we measure market exposure ? This is the reason why I came up with what I call, the market exposure index. This quantity, which is expressed by a simple mathematical formula can tell us if the market exposure of a system is capped. The formula is very simple

market exposure index = 100*(fraction of losing trades)/(average reward to risk ratio)

For example, the gods gift ATR, GBP/USD has a market exposure index near 60. Any market exposure index below 100 implies that the strategy is profitable and adequately capped. Any result above 100 indicates that the system is unprofitable, the higher the market exposure index, the higher the risk of a wipe out. For example, Martingale systems, whose risk to reward ratio increases exponentially with every losing trade have a market exposure which is generally equal to equity over the fraction of profitable trades. Grid trading systems have the same risk to reward ratio, something which lets us know from the start, through the market exposure index, that those are strategies with very important market exposures that WILL cause account wipe outs in the long term.

Hopefully, if you liked the idea, you can start using the market exposure index as a way to gauge the viability of trading strategies and the way in which they protect your equity from the market. Strategies with very low market exposures are the best since ideal strategies would have a very low risk to reward ratio with a very high winning probability. Most of the time, the best systems have a compromise between these two things.

If you would like to learn more about trading systems I have developed and how you to can evaluate and trade automated systems profitably please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 15.45 0 komentar

The Indicators Series The MACD the Markets Speedometer

Todays post will be a continuation of my indicator series of posts which try to explain the mathematical meaning of different indicators and how they can be used successfully to create sound automated trading strategies. The indicator series aims to make emphasis on the importance of understanding the nature of indicators to really know how they can be used successfully in trading. Success when using indicators does not come from just "blue line crosses red line" but from a true understanding of the underlying relationship between the data displayed and the price charts your looking at. This post will focus on the famous MACD indicator created in the 1970s by Gerald Appel.

So what is the MACD indicator ? The MACD, or "moving average convergence-divergence" indicator is nothing more than an expansion onto the idea of moving averages. The indicator has many componente but originally Gerald Appel designed it to have only two : a main line and a signal line. The main line is the difference between to exponential moving averages and the signal line is an exponential moving average of this difference. The histogram, introduced in the 1980s in mainly the difference between the MACD main line and the signal line. The following is a small summary of the tradigional setup (12,26,9).

MACD main line = 26 period EMA - 12 period EMA
MACD signal line = 9 period EMA of the MACD main line
MACD histogram = main line - signal line

But what does this tell us ? I usually look at the MACD as an expansion of the moving average concept. As I told you on the first post on the indicator series - which discussed moving averages - the difference between two moving averages could be interpreted as a sort of "derivative" of averaged price action : A velocity. This is why I usually think of the MACD as the markets speedometer. The MACD main line tells us about the velocity in which price is changing while the histogram tells us the difference between the main line and the signal line which is a measure of the changes in the main line or also a measure of the acceleration of price action (a sort of second derivative of price action). (on a small note, the MACD in mt4 does not display the signal line, only the main line and histogram, they might have considered the introduction of the signal line redundant as crosses between this line and the main line are signaled by the histogram crossing the zero line).
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Traditionally the MACD is traded in different ways with most of them corresponding to different changes in price action. For example, a cross of the main line through the zero line simply means that the difference between the 26 and 12 emas is zero, that is, the moving averages are crossing. If you trade these signals it would be nothing different than trading a traditional EMA cross. You can also trade crosses of the signal and main lines which would mean that there is a change in the "velocity" of price action. That is, price movement in that direction is "slowing down". That would be the same thing as trading the cross of the histogram through the zero line, since the histogram signals the difference between this two lines. Now the best possible signals of the MACD would come from changes in acceleration, which would go before changes in velocity and would be the most early signals of the MACD. However the tops/bottoms of the MACD histogram are impossible to predict since usually several tops/bottoms can form before any meaningful change in velocity (a cross of the histogram through the zero line). An attempt to do this lies in trading the MACD histogram "divergence" signals with price, such trading is incredibly discretionary and not subject to automation.

Truth be told, the MACD, based on moving averages, has some of the same inherent disadvantages of these indicators with the advantage that the "speedometer" feature of the MACD allows for better entries into the market. However developing an automated trading system using a MACD is not that easy. Usually the problem is that the MACD fails under even only mildly volatile markets due to the sharp changes in velocity that the indicator lags behind. The MACD velocity signals (crosses of the histogram through the zero line) would probably be the best and easiest to implement in coding but a lot of effort must be put in using adaptive money management techniques and exits on MACD signals from a MACD with faster settings which may be able to get the system out of losing trades quickly. Definitely exits will be the most important aspect of a MACD based system. A combination of the MACD signals is also not out of the question. Do you have any ideas for an automated trading strategy using the MACD indicator taking into account all the above ? Make sure you share them with us on the comments :o).

If you would like to learn more about my work with automated trading systems and how you too can learn to develop your own systems with long term profitable results please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 07.45 0 komentar

FOREX BUSINESS

FOREX BUSINESS

BUSINESS FOREX Foreign Exchange Business is engaged in buying and selling of currencies, because foreign exchange business including an easy way to money that without outside capital. Because the exchange rate of a country against another country is always changing every second, we may buy or sell anytime in our money in BUSINESS itu.Nah FOREX market of buying and selling that we have a big advantage especially now there are no Foreign Exchange Business Exit Modal.Cukup List 5 Dollar Capital yours.

The movement of currency exchange rates continued to move and change at any time, no matter the day or night, no matter how clear the number of players Foreign Currency Business has never stopped.
The movement of the exchange value of the currency of a country against another countrys currency value moves online Real Time. Buying and selling currencies that aims to make a profit, eg buy rupiah with dollars or buy a dollar with the amount of any time in house prices and the price of money would change too. With the goal of price movements or changes in the value of our currency benefited as much as possible no matter how we want. Thats the simple description of this forex business. To further explore the Business Forex learned one by one article caramainvalas.com

Soon Business Register and Get Learning Forex Currency Trade with caramainvalas.com get a bonus equal to 5 dollars in capital.

Different Business with Money Changer Valas

Same but different Forex Trade was thin trading with the currency trading on margin (leverage) and two directions. Money Changer and no leverage and can not be both ways. Meaning: Business Forex more modern and easier while Money Changer traditional and more difficult to take advantage.

What Is Margin Trading and Sales and Purchase Two-Way

 Ntar deh first learning the other

Who Figure & Jawara Forex

Larry William (With capitalize $ 10,000 within 1 year just managed to generate a total profit of $ 1 million (around Rp 10 M) in the forex world race in a few years ago. And that is real money, real money is not a demo). George Soros (one of one of the 100 richest people in the world), obtained a wealth of Forex Trading. With his ability to pursue Forex Business.

Richard Dennis (At age 25 years) have become millionaires. Educate 13 students with the rules of turtles (Turtles rule) and 13 students into a Powerful Trader by applying the Rich Trading Strategy.

If the many who became rich and successful with your Forex business can also be right? Everything has a chance to be rich

How FOREX it BUSINESS?

His name also BUSINESS yes no goods no money .. Which is often traded on Foreign Exchange Business is 4 (Pair) majority of currency pairs namely:

GBP / USD = (Pounds Sterling) to (U.S. Dollar). That is (Pounds Sterling) are as goods, and (U.S. Dollar) are as money (purchasing tool).

Example:

1. GBP / USD = 1.5162 means: 1 pound sterling bought for 1.5162 U.S. dollars

2. EUR / USD = 1.3505 means: 1 Euro bought with a price of 1.3505 U.S. Dollar

3. USD / JPY = 90.35 (U.S. dollars) as of goods, and (Japanese Yen) For Money (purchasing tool).

   it means: 1 U.S. dollar bought 90.35 price

4. USD / CHF = 1.1450 means: 1 U.S. dollar bought 1.1450 Swiss franc price

How the hell CAN PROFIT FROM FOREX BUSINESS?

His name FOREX BUSINESS:

Buy when the goods are cheap (low value) and sold when the price of expensive goods (high value). The term took the position of Buy or Long and when the profit (price rise) in the lid: Close

FOREX BUSINESS also able to benefit by:

Sell ​​when the price of expensive goods (high value) and bought at cheap prices (low value). The term took the position of Sell or Short and when the profit (price drop) at the close: close.

Therefore It is called Forex Business can profit by buying and selling 2-way ... (nah question no. 3 is already answered in part)

Example:

GBP / USD: 1.4500 buy position-taking at the time

GBP / USD: 1.4550 close on profit taking

means to obtain the difference (1.4550 - 1.4500) = 50 Pip

(Pip = smallest unit of currency)

With 50 Pip my lucky number?

If you take 1 lot: the 1 pip = worth 10 Dollars

If you take 2 lots: the 1 pip = worth 20 Dollars

If you take 3 lots: the 1 pip = $ 30 Dollars

Buy my example with a value of 1 Lot: So Lucky me:

50 Pip x 10 Dollars = 5000 Dollars

What the heck LOT OF UNDERSTANDING

Lot / Unit: Unit standard contract in Forex Trading

Conversion of lots and units:

1 Lot = 100,000 units (1 Pip = U.S. $ 10)

2 Lot = 200,000 units (1 Pip = U.S. $ 20)

3 Lot = 300,000 units (1 Pip = U.S. $ 30)

HOW DO I DETERMINE THE POSITION IN ORDER TO BUY OR SELL PROFIT

By Analyzing the Market (Market). There are 2 Technical Analysis:

Fundamental Analysis: Predicting Currency price movements based on economic, social, politics of a country. Etc.. Fundamental analysis is a market mover (Price currency)

Technical Analysis: Predicting Currency price movements based on past data (Historical) with mathematical calculations. Technical analysis is a guide movement (the price of currency).

Fundamental Analysis

Example: You hear the news that the unemployment rate in Britain rose. Since many companies went bankrupt ... Consequently Currency GBP (Pound) weakened.

Before there was news:

GBP / USD: 1.5500 (1 pound = 1.5500 USD)

After the news:

GBP / USD: 1.4500 (1 pound sterling = 1.4500 USD)

When you remove the information in the news soon take a position "Sell" or "Short" and when the price goes down you get ready to take profits ... Close

On the contrary: You heard the news that in America a lot of bad debts owed housing ... many people can not pay ... as a result (U.S. Dollar) weakened

Before there was news:

GBP / USD: 1.4500 (1 pound = 1.4500 USD)

After the news:

GBP / USD: 1.6500 (1 pound = 1.6500 USD)

When news broke that the information released you immediately take a position "buy" or "Long" and when the price moves up you get ready to take profits ... Close

Where Can I Get Fundamental News

You can read the fundamental news each currency, but if you want speak Indonesian and have been reviewed by experts and analysts Forex .. Open it in www.financeroll.com Indonesia which is the best forex portal.

Technical Analysis

Technical analysis using indicators. There are two general types of indicators:

1. Trend Indicators (indicating direction of the trend) Example: Moving Average, Parabolic Sar, etc..

2. Oskilator indicator (shown already oversold / overbought and over-Bought / over sell) If the market is already saturated with a sell-off sell the start time buying buy If the market is already saturated denan buying buy so from now buying sell. Example: relative Strength Index, Williams,% / R, oscillators, etc..

Jump To More Clearly ... Main practice on Forex Trading Forex "Marketiva". First Install Marketiva Trading Platform on your computer and online internet .. New we can start trading ... ..

Moreover, What You Need to Know For Beginners Forex Trader

Margin Trading System = Leverage Margin Once we have an account and transfer funds into our account then we have a margin account.Setiap time to take a position either buy (buy) or sell (sell) takes a certain amount of funds taken from the margin account as collateral (initial margin requirement .) Initial margin account depending on currency pairs, leverage is selected and the number of lots are taken.

Example 1:

Leverage 100: 1 or 1 / 100 x 100 = 1% Lot / Unit: 10,000

Buy position (long) EUR / USD 1.3340. Then the margin required is: 10,000 x 1.3340 x 1% = $ 133.4

Example 2: Leverage 200: 1 or 1 / 200 * 100 = 0.5% Lot / Unit: 10,000

Buy position (long) EUR / USD 1.3340. Then the margin required is: 10,000 x 1.3340 x 0.5% = $ $ 66.7

Example 3:

Leverage 500: 1 or 1 / 500 * 100 = 0.2% Lot / Unit: 10,000

Buy position (long) EUR / USD 1.3340. Then the margin required is: 10,000 x 1.3340 x 0.5% = $ 26.68 USD

Well no. 3 It is the responsibility of all ... if you do not understand as well .. Gak pa .. Pa. .. While trading .. Lama2 also understand ...

Understanding of margin trading for the management of trading risk management.

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Diposting oleh Unknown 19.01 0 komentar

Is Technical Analysis Important

To be frank, when I just started investing in the stock market, I thought fundamental analysis rules and that technical analysis is for short term traders. I was very wrong indeed!

Now if you asked me whether I prefer fundamental analysis or technical analysis? Ill say both! Under different market condition Ill apply them differently. For example, during the stock crash in August till now, Im looking at the charts every day, I also focus on the macro economic news, but less on the corporate earnings because the published corporate earnings are historical figures that may still look nice but its meaningless if youre at the market top (if thats your assumption).

However, during normal bull run from March 2009 to beginning of 2011, I focus more on coporate earnings than the charts because as long as the bull trend was intact, I do not bother so much about the daily fluctuations. While focusing on the corporate earnings, I pay special attention to EPS growth on a quarter to quarter basis. Most blue chip stocks have strong growth during this period, and so are their share prices.

As mentioned in my book, I Love Stocks, my favourite indicator is 20 day and 50 day moving averages to see the overall view of various markets in the world. Another technical indicator that I often use is the MACD, it is clear and absolutely suitable for our Bursa blue chip stocks.

Technical analysis is based on 2 important assumptions: (1) history repeats itself (2) the stock market is the sum of all behaviours of the market crowd. If history repeats itself, this suggest that by looking at charts, we may be able to forcast the future price movement!

Although there are over 200 technical indicators, but its not necessarily to know them all. As the saying goes: when using the indicators, you should apply "KISS" rule, meaning Keep It Simple, Stupid or Keep It Short and Simple, which ever it is, having too many indicators will cloud your mind.

Having said that, that doesnt mean knowing one or two is enough to help you make investment decision which involved your hard earned money! The following is the list that most investors would look at:
1. moving averages
2. MACD
3. Stochastic
4. RSI
5. Bollinger Band
6. Volume average
7. Fibonacci retracement
8. Money Flow Index
9. On Balance Volume
10. Candlestick
11. Trendlines
12. Price patterns (Head & Shoulders, double top, double bottom)

What a list!

If possible, you may try to understand some of the famous technical analysis theories such as the DOW Theory and Elliot Wave Theory. I hope Im not scaring some of you.

Knowing these indicators and theories is one thing, applying them well is another difficult task that requires certain amount of trading experience.

For me, I usually use fundamental analysis to identify the right stock and apply technical analysis to time the entry and exit for the stock. This way, Im applying both and Im quite happy with the results.

Happy investing,
Pauline Yong

Diposting oleh Unknown 10.01 0 komentar

Forex Expert Advisors Black Swan an Unbiased Review

Today I am going to fulfill another review request and talk to you a little bit about a forex automated trading system called black swan. Todays post will focus on the review of this expert advisor mainly by evaluating the evidence provided on the website and the claims made by the authors. By analysing the experts statements and the information provided I will also tell you my opinion about the long term profitability of this trading system and whether or not I it worth buying or not.

By first looking at the website, you will see that the black swan expert advisor seems to offer a novel approach to automated trading by offering its customers a "web bot" technology which is supposed to search on the internet data from many sources to make accurate trading decisions. The people at forex black swan claim that with this technology you will be able to achieve very large profits which will give you "financial freedom" and the ability have the life style you "always wanted".

Is there any merit in the experts techniques ? Is there anything true about this "web bot" technology ? There are several things I do not understand. If the EA uses a web bot system which dynamically searches the internet then how did they manage to do the backtest from Jan to Nov 2009, how did the webot technology "backtest" on the metatrader 4 strategy tester ? this just does not add up. If the expert really used such an innovative technology it is very likely that it could only be evaluated by live testing. But well, regardless of the fact that this technology does or does not exist, what does the backtest tell us ?

The backtest shown on the black swan website has many inherent problems. To start, the period is very small. Why didnt they do backtests from 2000 to 2009 ? Why is the backtest period limited to 2009 ? This are all questions which cannot be easily answered since doing a longer backtest is just easy to do. There is also the problem that the EA takes a small TP, below 20 pips, which means that interpolation errors in the backtest are likely to be a VERY significant portion of profitability, add to that the fact that the EA uses an almost 10:1 risk to reward ratio (you need to win one time for every ten you lose) and a progressive money management system and you arrive to a system which uses very unsound trading techniques with very questionable results.

My opinion from this backtest is that results are definitely going to be very different in live testing. Probably the loses will be far greater than in the backtest and the progressive money management will grow large holes into the account, to the point of a wipeout. Systems with progressive money management (incrementing lot sizes on loses) will ALWAYS wipe accounts, it is not a matter of if, it is simply a matter of when.

Another important matter is the absence of live testing on the black swan website. Why do this people fail to show live trading results if their system is so accurate ? Why didnt they take the time to put up a few live micro accounts to show us the performance of their system under real market conditions under several brokers ? The number of unanswered questions is simply great and there is no good reason why we should put our money where the creators themselves would not.

The complete lack of live testing evidence as well as the lack of any proof of back/live testing consistency, the absence of a 10 year long backtest and the use of progressive money management are the reason why I consider the black swan trading system NOT worth buying or testing. If you however would like to learn more about system that achieve long term profitability and how you can start your profitable venture in forex trading with realistic profit and risk targets please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 02.00 0 komentar

Forex Expert Advisors Forex Secret Agent an Unbiased Review

Today another expert advisor sees the light and with it another one of my reviews comes out. Within this post I will be talking to you about the recently released Forex Secret Agent trading system. I will talk about the evidence provided by the author and whether or not this evidence backs up the authors claims, I will also talk about the reliability of the evidence and overall, I will give you my opinion about whether or not this trading system will be able to achieve long term profitability. In the end, I will also give you my opinion of whether or not this expert advisor is worth buying and testing. Is the Forex Secret Agent the James Bond of Forex systems ? Can it prove it can deliver massive profits ? Keep reading and find out !

I have to say that the tactic used to sell the Forex Secret Agent seems to be revolutionary in the sense that they are not advertizing the system as an fully automated system but as an "informative" tool which tells people when to enter and when to exit trades. I am very confused by this concept since it seems to me that trading a fully automated system would be much more convenient than having to manually confirm or enter trades when the system signals them.

Of course, the objective would be for the trader to actually confirm that the trade is sound and worth taking but wouldnt this mean that the trader is able to trade for him/herself and doesnt need the system ? If a person is able to determine when it is or it is not worth getting into the market then why would such a person need a signaling system ? If a person doesnt know and wants to follow signals then what criteria does this person have to confirm or deny trades ? In the end I think that the approach doesnt make a lot of sense and I believe that a fully automated system has more relevance when addressing a crowd that doesnt know how to trade but wants to trade from signals. Making the EA request confirmation on every trade or merely provide the information to enter trades seems like an inconvenience for most people.

It is worth noting however that a section of some backtesting results is shown later on the website pointing out that the system is able to trade in a fully automated fashion (at least it would seem from this). Then we have the usual hand-picked results taken from the backtests portrayed as actually live executed results, a very misleading and dishonest tactics which talks about the ethics of the Forex Secret Agents seller. We can also see that the backtesting statements - which are advertized to turn 5 into 200K in a year- have a VERY unfavorable 10:1 risk to reward ratio and a very small average TP meaning that backtests of this system are probably worthless and absolutely OVER estimate profitability. There is also a complete absence of 10 year backtests, something which also makes us doubt the long term profitability of the system although a system with such trading tactic doesnt probably offer reliable backtests anyway.

Then we have also the COMPLETE absence of any investor-access verified live trading results, showing us that the author of this system is not willing to risk his own money trading the Forex Secret Agent. If the author had actually traded the system - as he says he has - then it would be very simple to add that account to myfxbook and show us investor-access verified results. Why arent these results shown ? Because simply the author doesnt believe in his system and probably has never traded it, pointing out that it is much easier to make money in forex selling a system than from trading it.

Overall, the Forex Secret Agent is another over-hyped system with a complete absence of any reliable evidence. The backtesting evidence shown is not validated by live trading results and - more importantly - no verified live testing results are shown. The Forex Secret Agent is just a piece of software with no evidence of profitability and an author unwilling to test the system on his own live accounts. Remember that the burden of proof is on the author, NOT on your live accounts so if anyone should blindly risk their money it definitely shouldnt be you. For all the above reasons, I consider this trading system absolutely NOT worth buying or testing. The author should show at least a 10 year backtest coupled with a 6 month investor-verified live test and a backtest of this same period if he wants me to redo this review.

If you would like to learn more about the world of automated trading and how you can trade with a high like hood of achieving long term success using expert advisors please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 17.30 0 komentar

Forex Expert Advisors Forex Robovore an Unbiased Review

Yesterday an Asirikuy member sent me an email requesting my opinion about a new automated trading system called Forex Robovore. This trading system is interesting since it seems to follow a different line of thought when compared to most of the other automated trading systems available on the internet. On todays review I will focus on the claims made by the author on the Forex Robovores website as well as the validity and support the evidence on the website gives to said claims. In the end I will be able to tell you if what the creator says about the system is supported by the evidence given or if it is simply not the case. With this evidence in mind I will also be able to give you my opinion about the long term profitability of this trading system and whether or not it is worth buying and testing.

First of all, it is clear that the Forex Robovore trading system has a different philosphy when compared with the other systems available online. The Forex Robovore system aims to have a very favorable risk to reward ratio of 1:2 to 1:4, giving us the impression that it was designed to take advantage of trend following moves. The trading systems sale page even includes a report which tells you why expert advisor scalpers are bound to fail in the long run in forex trading. I must say that I appreciate the fact that the creator of Forex Robovore is taking the time to explain that his system uses a different logic, it is also worth noting that the expert uses sound risk management in the sense that only a small percentage of capital is risked per trade.

However these are just words. The important thing is to know if the creator of the Forex Robovore trading system is able to show evidence to substantiate his claims. This is when we start to see the many holes in the evidence provided and how this trading system does not stand in a better place than most of the "other expert advisors" it so strongly talks about. First of all, we find that there are NO ten year backtesting results, showing us that the creator fails to carry out this readily available and easy to perform simulations. On the other hand, the creator says that backtesting can be done by downloading data from the metaquotes server. Therefore it is obvious that the author knows that these backtests can be carried out but yet FAILS to show these backtests on his website. Why ? The most common reason for this is the LACK of long term profitability of the trading system, the lack of profitable 10 year simulations.

Moreover, unverified live testing results of about 4 months are shown as evidence of profitability. I would have to say that four months are a rather small period of time to show as the only available evidence. It is also worth noting that the live results are UNVERIFIED and can be forged. It is VITAL to have live testing results which are confirmed by INVESTOR ACCESS to the trading account. The author says on the FAQ that you can tell a real live test by the configuration of the html file but this is WRONG, this CAN BE FORGED and investor access is the ONLY way to verify that a live trading record is REAL. Why isnt investor access given ? Are accounts not live but demo accounts ? Have the results been manipulated ? I see no other reason why an EA creator would refuse to post results on myfxbook which can independently and reliably verify investor access and trading privileges.

Overall it is sad to say that although the intentions of the Forex Robovore system creator seem to be to create a system with sound money management and trading strategies the trading system is not able to walk the walk. It seems that the website merely uses this "difference" with other trading systems as a marketing pitch without any evidence of the system truly being long term profitable. Because of the complete lack of 10 year backtests and the absence of verification of the live trading results I have to say that the Forex Robovore trading system is NOT able to backup its claims and it is therefore NOT worth buying or testing. If the creator of this trading system provides 10 year backtests with live/back testing consistency tests with the current period of live testing, as well as live account verification through investor access, I will be more than happy to redo this review.

If you would like to know more about what I have learned about automated trading systems and how you too can design and develop trading systems to trade profitably in the forex market please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 07.46 0 komentar