Daily Investment Tips

Many Forex investors have unrealistic expectations about the potential for profit when they invest in the Forex market. The truth is although you can make a lot of money trading and investing in Forex, the market has its disadvantages. Even traders with years of experience can incur large losses in this market.

Factors Beyond Your Control

One big disadvantages is losses and gains in Forex markets are affected by such factors as politics, economic factors in certain countries. Local and regional factors within a country as well as current events can all have a large impact on the market. For example, any political instability in a country can affect a nation’s economy and decrease the value of their curency. The events in one country may also affect other countries in the region as well as their currencies. Political instability come from the blues and are difficult to predict.

Forex Market Is Too Big

One of attraction of forex market investing and trading is the sheer size and trading done round the clock. But this is also a disadvantage. Forex markets never shut, when you go to sleep the market remains open in another part of the world. When you wake up the next day you may find the prices have moved beyond your expectation.

Thin Movements

There is a maximum limit as to how high a currency can move, what this means is in order to make money an investor will need to take a bigger risk. One cannot hope to make extraordinary gains without taking extraordinary risks. A trading strategy that involves taking a high degree of risk means suffering inconsistent trading performance and often suffering large losses.

Unlimited losses

it’s vital to remember that when you trade on margin, relatively small exchange-rate movements can result in big profits or losses. Not only that, but your losses are unlimited – if the rate moves far enough against you, you can lose far more than your initial deposit. The usual solution is to agree a stop loss with your broker, the best being the ‘guaranteed stop’. There will be a charge for this, but it ensures that your losses are always capped.

written by Constantine Njeru \\ tags: Exchange Rate Movements, Forex Investing Disadvantage, Forex Market, Forex Markets, Forex Trading Disadvantages, Initial Deposit, Losses, Market Factors, Maximum Limit, Money Trading, Political Instability, Regional Factors, Stop Loss, Trading Strategy

Patricia Kluge might have fallen hard but the lady seems to be showing her iron side on her road to recovery. While a lot has been written that made people feel sorry for her, New York times has an inspiring story of her come back.

“If you can get a job, you can build another fortune,” Patricia Kluge

The story of Patricia Kluge rise from bankruptcy is a lesson to any one who may unfortunately fall into bankruptcy and is looking for away back.

Patricia Kluge Tips of Surviving Financial Bankruptcy

1. Let go of your past – Don’t dwell on the your past status

2. Always look on the brighter side of life

“No one should feel sorry for us,” Ms. Kluge added later. “I have a great family, a wonderful marriage and loving children and friends. We are not looking at this bankruptcy as if our life has ended. We see this as an opportunity to recreate ourselves.”

3. Keep you family in touch. When the going gets tough you can count on your spouse and kids.

4. Get yourself another job.

5. Cut your losses early. when things start going wrong and they are beyond your control raise the white flag.

6. Learn from your mestakes.

7. Keep dreaming and keep moving forward.

written by Constantine Njeru \\ tags: Bankruptcy, Brighter Side, Fortune, Inspiring Story, Iron Side, Job, Losses, Loving Children, Marriage, New York Times, Patricia Kluge, White Flag, Wonderful Marriage

Last week price drop in oil seemed to have hit, large hedge funds, hard. Clive capital a London based commodity hedge funds has come out and confessed they incurred losses of $4oom.

According to a report seen by Ft of UK, the management said it was at loss to explain what had caused oil prices to tumble so fast.

The scale of this loss demonstrates that even the savviest investors are not immune loss. Investors should take note of that footnote at the end and bottom of investment promotion brochures, Past Performance is not an indicator of future performance!

written by Constantine Njeru \\ tags: Brochures, Capital Hedge, Commodity, Footnote, Hedge Fund, Hedge Funds, Investment Promotion, London, Losses, Oil Loss, Oil Price, Oil Prices, Savviest Investors

Pandora Media, the internet radio station has just announced plans of an IPO. Pandora has filed to raise up to $100 million in an IPO.

Pandora IPO Price

Pandora did not reveal the IPO price range or the number of shares it plans to sell in the IPO. We only know for now is they plan to raise $100 million.

Pandora IPO date

Barring any regulatory hiccups the IPO coud happen in the second half of 2011.

Pandora Financial Statements 2010/2011

• The company generates most of its revenue from advertising, while also offering a subscription service to listeners.
• Pandora, has over 80 million registered users.
• The company posted a net loss of $16.8 million in 2010
• Revenues of $90 million through the first three quarters of 2011. With a loss of $328,000.
• Pandora said it expects to incur annual operating losses at least through fiscal 2012.

written by Constantine Njeru \\ tags: 100 Million, Financial Statements, Hiccups, Internet Radio Station, Ipo Price Range, Listeners, Losses, Pandora, Second Half, Subscription Service, Three Quarters

Having a stop loss order with your broker is considered the most important risk management tool for successful forex currency trading.

A trader can minimize his or her losses by predefining where to exit a position, should the trade not work out as intended. The trader can leave an order in the market with his or her broker, and the order will be automatically executed if the parameters are met.

written by Constantine Njeru \\ tags: Currency Trader, Forex Currency Trading, Forex Trader, Forex Trading, Losses, Parameters, Risk Management Tool, Risk Management Tools, Stop Loss Order, Trading Tools

John Meriwether is a good example of why many investors never learn from their mistakes. Investors delude themselves thinking “This time its different”

John Meriwether was the co-founder of Long Term Capital Management, together with two future Nobel Prize winners, Myron Scholes and Robert C. Merton. With this two brainys on board it seemed this hedge fund was a sure bet.

The fund got off to a flying start, it raised $1.01 billion from high net worth individuals. It delivered annualized returns of over 40% (after fees) in its first years. Nothing could go wrong.

But when the Russian crisis hit in 1998, it lost $4.6 billion in less than four months. With mounting losses and a bailout from the FED the fund was closed in early 2000.

You would have thought John Meriwether had learnt from his mistakes. But immediately after LTCM closed shop Meriwether launched JWM Partners. A fund that would continue many of LTCM’s strategies. He managed to convince investors to invest in him by promising them this time he was going to use less leverage.

Whoever said lightening doesnt strike twice was wrong, just like the Russian Financial crisis of 1998 killed LTCM, the 2007 Credit crisis struck JWM partners. JWM Partners LLC was hit with 44% loss from September 2007 to February 2009 in its one of its fund. As such, JWM Hedge Fund was shut down in July 2009.

Never buy into the idea “This time it is different.”

written by Constantine Njeru \\ tags: Bailout, Bet, Co Founder, Credit Crisis, First Years, Four Months, Hedge Fund, High Net Worth Individuals, Investors, John Meriwether, Jwm Partners Llc, Leverage, Long Term Capital, Long Term Capital Management, Losses, Myron Scholes, Nobel Prize Winners, Robert C Merton, Russian Crisis, Russian Financial Crisis

If you own a residential mortgage and you are behind with your monthly payments you can consider a loan modification. A loan modification cuts payment it can either be the monthly interest or the principal.

Banks are reluctant to reduce the principal, because that would require them to recognize losses when reporting quarterly financial results. Their modifications policy is to reduce the interest rate or giving the borrower more time to pay.

One company that specializes in reducing the principal is Selene Residential Mortgage Fund. Selene Mortgage fund buys loans, mostly from banks, at steep discounts to the balance due. Once the company owns the loan it renegotiates the terms with borrower.

In a Wallstreet journal case study, a borrower who worked with Selene Mortgage Fund was able to drastically reduce the principal plus interest.

The balance due was cut to $243,182 from $421,731, and the interest rate was lowered. Those steps reduced the monthly payment to $1,573 from $3,464, allowing the family to stay in their home despite a drop in Mr. Reynolds’ income as a real-estate agent.

written by Constantine Njeru \\ tags: Case Study, Interest Rate, Losses, Mortgage Fund, Mortgage Loan Modification, Mortgage Loans, Mortgage Tips, Mr Reynolds, Principal Banks, Principal Mortgage, Principal Residential, Quarterly Financial Results, Real Estate Agent, Residential Mortgage, Steep Discounts, Wallstreet Journal

George Soros is known as “the Man Who Broke the Bank of England” after he made a reported $1 billion during the 1992 UK currency crisis. He bet against the British pound and won big.

I came across a quote by George Soros, that seems to give an easy answer as to how the famous speculator makes money in a turbulent world.

The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.

George Soros

It is clear what George Soros does, He evaluates multiple scenarios and takes position in each scenario. As the market unfolds he lets profits run on the correct scenario and cuts losses on wrong scenarios. At a single time he might be long on a position but still take a short position on the same.

To play this scenario game you need to use risk management tools such as options, futures and short sales.  For this kind of trading to be successful an investor needs to have sufficient capital to buy those tools.

written by Constantine Njeru \\ tags: 1 Billion, Bank Of England, British Pound, Currency Crisis, Economic Predictions, Financial Markets, George Soros, Investor, Losses, Money, Options Futures, Profits, Quote, Risk Management Tools, Scenario Game, Scenarios, Short Position, Speculator, Turbulent World, Uk Currency

If your strategy for making money from greece financial turmoil was shorting Greece bank shares, you are to late.

The latest news from Greece is, Greek regulators have announced a ban on short-selling on Greece stock market, following steep falls in bank shares.

The reason why the banks are targeted is because they are the biggest buyers on greece debt. If Greece defaults, the banks will be hit with huge losses.

Since Greece has banned any short selling on Greece stockmarket, investors should look at international banks that might be carrying Greece debt.

written by Constantine Njeru \\ tags: Financial Turmoil, Greece, International Banks, Investors, Latest News From Greece, Losses, Making Money, Reason, Regulators, Selling Shares, Selling Stock, Steep Falls, Stock Market, Stockmarket