Monday, July 28, 2014

How to Make Money Day Trading the Forex Markets

Are you one of those people who have a regular job and interested to build a stable second income? Perhaps you have already tried trading the forex markets but your current situation didn’t allow you to become a full time trader? Or maybe, you are considering leaving your full time job so you can dedicate more time trading? No matter what your situation may be, it is possible to make money day trading the forex markets, even if it means you don’t have the time to trade by yourself. And no, we are not talking about a managed account or something else. But rather, you can make money day trading the forex markets and yet be fully in control of your trading. Sounds too good to be true? Well, read this article to learn how you can achieve this.

Let an EA make money for you, day trading forex
What many day traders with another job might not know, or might find it hard to believe is to automate their trading experience. Just the way, most things in life are now-a-days automated, trading can also be automated so that you have more time for yourself, or maybe attend to your regular full time job without having to worry how the markets are. This automated trading is possible by using a Forex Expert Advisor.

A Forex Expert Advisor, or an EA for short, is an automated piece of software that trades the forex markets without any human intervention. The key to success for a Forex EA is in finding a winning trading strategy. Or in other words, a strategy that is consistent and manages to make more winning trades than losing trades.

ForexFalcon EA – Making money day trading on your behalf 
The ForexFalcon EA is a highly sophisticated piece of algorithm that automates trading for the MT4 trading platform. Day traders can invest as little as $500 and watch the ForexFalcon EA grow the equity by a stable 7% return on investment every month, or up to 125% annualized returns. Having been back tested rigorously, the ForexFalcon EA works on up to 18 currency pairs. A strong risk management criterion ensures that your equity is well protected from taking any big losses.

Simple to use and easy to install, once you purchase the ForexFalcon EA it takes only a few minutes to set up and configure the EA, while it does the job of day trading for you, giving you more time to do whatever it is you want to do. Attend to your regular job or do something else. For the more skeptical people, the ForexFalcon EA also comes with a money back guarantee. So if the EA doesn’t make you a profit within the first month of using it, you can simply request a refund of your $397, no questions asked!

To conclude, people always look for smart ways in their life. Day trading is no different either. Be smart and try the ForexFalcon EA to help you make money day trading the forex markets.

Friday, July 11, 2014

5 Technical Analysis Tools And How They Are Used In Forex

If you want to start trading in the currency market one lesson you can learn from professionals is how to do technical trading. The main goal of technical analysis is to predict profitable trends and cycles in the markets in time to take advantage of them. Technical analyses uses the same ideas whether it is in Forex or in Equities or any other financial market. If you are beginning your career as a trader learning technical trading is often the start. And although there are a wide range of techniques and chart methods the most popular ones are well known:

Trend lines

Trend lines are very common in financial charts they usually represent lines of support or resistance where the price action has historically reversed. Resistance and support lines help the technical trader to plan their price entry levels and stop losses.

Support and resistance lines example chart


Moving averages

The next level up in the toolbox are what is called moving averages. What these show is an averaged representation of the price history over a certain interval. The most common intervals are the 10, 20, 50, 100 and 200 period averages. The 20 period for example takes an average of the past 20 data points as its value so you can use this in a minute chart or an hour chart alike. Forex traders are interested in where these lines cross to suggest if the market is getting weaker or stronger.

Elliott waves

These were first suggested by Ralph Nelson Elliott and accountant who noticed that financial data series usually form a type of wave pattern. He showed that these more often appear in sets of five prime waves on the upward trend and three on the downtrend.

Fibonacci

Another method much used by Forex traders is the Fibonacci retracement. This method uses a mathematical formula to estimate pivot or reversal levels in a chart. These are from the idea that a reversal has a predictable pattern such as 50% retracement of the previous high.

MACD

Finally MACD is vital in the trader's toolbox, it is made up of two moving averages of different periods. Useful in range bound markets it tells traders when short term trends are likely to reverse. In the end most traders will rely on a few tried and tested tools and grow accustomed to them. The choice will depend to a great extent on the trading style adopted. For example a trader using a channel breakout system will use a different set of tools to a range trader. A momentum trader will use a different set of tools to a carry trader who holds positions for months at a time.

Monday, July 7, 2014

UNTD - United Online On Track For A Turnaround or Slow Burning Death?


  • United Online Was Known For Using Spammy Techniques To Generate Revenue
  • Appears the new(er) CEO wants to clean up some of these practices
  • Will his strategy work out in the long run?

United Online (UNTD) is a company I have been following for a long time. Most average consumers will know UNTD by the Net Zero brand - which had a well known marketing campaign during the dawn of the consumer internet age where they offered "free" internet. Believe it or not, people still use dial-up internet, especially in the more rural parts of the country. Those days are numbered, but the company has bolted on other internet properties to form a company with 2 separate divisions.

Content & Media
Internet

For the sake of this article, I'm not going to discuss the internet business in much detail. The company has made a push into high-speed internet, and have partnered with 4G spectrum providers to grow that area of the business. UNTD will continue to use the dial-up/4G internet free-cash flow to fund some of the operations. They are in a fiercely competitive market where UNTD is simply an affiliate of the spectrum provider. Virgin Mobile is a competitor of UNTD, but is essentially employing the same business model. UNTD does not own any of the spectrum, they are simply using the Net Zero brand to market 4G internet service.

Classmates.com
I wrote back in January: "Classmates is to social media as BlackBerry is to smart phones. That actually might be a compliment." Honestly, not much has changed, and while we see huge valuations being placed on tech companies - UNTD is an example of one that is being ignored, in part, because the web properties they own are considered.

Another troubling fact for Classmates is that it's business model leads to customer service issues & complaints. Classmates has a revenue model that is closer to an online dating website than a social media site. Members are allowed to browse the site for free, but in order to send messages, see who's viewing your profile ... ect - you need to pay as low as $30/year. It's a difficult proposition, considering you're likely to find the same friend on Facebook or LinkedIN, where you can try to reach them for free. Not surprisingly, some customers do end up paying, but it seems at an ever decreasing rate.

Based on the previous conference call with investors, my opinion of Classmates has not changed. On a recent conference call with investors - the only positive thing the CEO could say about classmates was the mobile traffic 'growth.' What is likely happening is desktop traffic is trending down at an equally negative rate to off-set any mobile traffic growth. The website will experience sequential declines in paid memberships as time goes on. An entire generation is growing up with free social media accounts and are unlikely to be willing to pay for it later in life. At some point the company will have to make a strategic decision with Classmates, as they've recently done with MyPoints, which might give investors hope UNTD can one day resuscitate this brand. Until then, it's business as usual at Classmates and less & less people are willing to pay each quarter for the right to use it.

MyPoints
Here is where the investment story gets interesting for UNTD. Not that MyPoints can all of a sudden become a revenue generating juggernaut in the customer loyalty space - but the CEO is actually taking a risk by changing the business model at MyPoints.

On the last investor conference call, UNTD CEO describes his strategy for MyPoints going forward.

(Bold emphasis added by me)
...the revenue we’re going to be taking out is primarily in two areas. The first area is very low margin gift cards. Now, that’s something where we get gift cards and we resell it to our user and everybody is happy but it’s low margin and it takes effort, it takes time, and it takes [mind] share so I don’t want to do that too much moving forward. The second area we’re taking out a lot of revenue is in our email advertising products. We have so many engaged users who we email very often. We email them every time we get good deals or promotions that we sell to advertisers.
Now, we can send out more emails, and even more, and even more, and sell them to advertisers and revenue will go up but at what point does it cross? At what point do we say, “This is not completely good for the user.” And, at what point does it, excuse my language, piss a user off that they don’t want to remain a member anymore because we are starting to SPAM them. Well, I want to respect our users more. The decisions we’ve taken on is we want to get back to what a good user experience is, respect our users and that’s another big chunk of revenue we are turning down.
(Q1 2014 Conference Call)
While the company took a $15m write down based on the CEO's decision above, this is a great move by the company. #1 it will create better company/employee moral. Employees don't like spamming other people and generally ripping them off, so a company more aligned with it's customers will attract and retain employees who are of high character. #2 the company is finally recognizing that respecting your user is a more sustainable business model and no one likes getting bombarded by spammy e-mail messages.

Bigger Announcement Coming?

During the last investor call, the CEO seemed to insinuate that he will discuss a broader overall strategy for MyPoints on the Q2 conference call. I believe this will be the first of many changes the CEO will eventually make to the Content  Media segment at UNTD. In the short run, I believe the company will loose revenue and traffic - but if he can put an effective plan in place, the revenue MyPoints generates should be more sustainable over time.

My theory is after the CEO went around to visit employees of the company, he learned that the company was making most of it's revenue spamming inboxes and re-billing subscriptions in a somewhat un-transparent fashion. The fact he specifically identified Gift Cards as being a low margin/high labor product they could stop selling leads me to believe he has a grip on the finer details of the company. Instead of continuing to compete in a low margin business, he's focusing on more profitable ventures. While his decision to eliminate certain areas of the MyPoints business hurts revenue in the short term, he clearly has a plan on where he wants to position the website in the future. I can imagine CEO Francis Lobo went to the board of directors after meeting with employees with a large list of changes to both Classmates and MyPoints. The Board more than likely said something like - let's restructure MyPoints first, then tackle Classmates once you prove yourself.

The fact CEO Francis Lobo is going out on a limb should also be a promising sign to investors in the long run. This is a first time CEO who could have easily sat back and milked the Classmates & MyPoints brands in spammy ways while drawing a paycheck. Instead, he's taking a risk by re-positioning MyPoints - and my guess he will be given the keys to do the same thing to the Classmates brand once (if) he proves himself.

Investor Outlook

Okay, so I've been long this company, then short - now I'm just watching. Given the CEO seems to have a plan & is being allowed to implement major changes to these aging websites, I probably won't jump on the bandwagon & buy shares just yet. Here's why: I believe UNTD will feel more financial pain before they turn things around. At the corporate level re-positions, pivoting, re-branding a website is more like steering a ship than driving a Tesla, however UNTD does have the advantage of an existing user database. It's likely the year over year growth will continue to decline in the coming quarters, which might lead to further deflation of the share price.

I will be watching Lobo's turnaround effort with MyPoints, as I believe he will be allowed to overhaul Classmates if he can prove himself. The stock is trading at around 11x forward earnings, which would be on the low end for a growing tech company. UNTD is far from a growing firm, in fact the websites are considering ancient in website years. However, this is one of those situations where a 1st time CEO could establish themselves. Lobo has already demonstrated he's willing to sacrifice profits for the good of the website's user. To some investors this may not seem like a good idea, but in the highly competitive website traffic world - what's good for the end user is good for the investor. Now that UNTD is focusing on the user experience again, they might be able to generate more profits from Classmates & MyPoints.

For now I'll be on the sidelines & watching. This company gets less coverage after spinning off FTD and canceling the dividend, so I expect much of what they will do will fly under the radar. If the turnaround efforts appear to be working, that might be the time to jump in and invest. Right now, I think UNTD will need to prove it can crawl before it runs.


Friday, July 4, 2014

Basic Investor Terminology For Beginning Investors

Today I had a friend of mine ask me to explain some investor jargon that is a language of it's own for those new to investing. The most important thing to remember is that you don't need to memorize or even fully understand all these concepts to become a successful investor - you simply need to be aware of them.

What Is Bid/Ask?
When you are buying stocks for the first time you will usually see 2 columns of prices - Bid and Ask.
Bid = Think of this as the 'offer price' to buy a given stock. For example, let's assume a seller has a baseball card on ebay listed for $40.00 or best offer - and you offer him $30.00 dollars. That $30 offer is essentially like making a "Bid" or offer to buy a stock.
Ask = Using the same example above, the ask would be $40.00 because that is what the seller is "asking" for his shares, or in the examples case - a baseball card.

So in summary.
The Bid Price is what buyers have offered to pay for shares of stock.
The Ask Price is how much sellers are asking for the shares they want to sell.

What Is FOREX? = "Foreign Exchange Market"
Also known as FX, FX Market, the "currency market"
Basically you are trading currencies from around the world ie: US Dollar, Euro, Yen ... ect.
Personally I don't trade currencies, not that it's particularly difficult, just not a market I follow very much. There tends to be a large amount of webspam related to FOREX, that's the only reason why I include it on a beginners guide. If you want to learn more about FOREX trading - make sure the source is a reputable one.

What Is A Mutual Fund? = A group of stocks - often in a common industry - that are bundled together to create a fund.
For example: a "Internet Company Mutual Fund" might have a portfolio like this:

AAPL 100,000 Shares
GOOG 79,000 Shares
YHOO 35,000 Shares
YELP 16,000 Shares
....ect

Mutual funds are intended to be a longer-term investment and not meant to be bough/sold within a short time period. In fact, many mutual funds have a ~2% (or more) penalty if you sell within 30 days of purchase. Mutual funds often have a minimum initial investment - for example $100, $1,000 or even $10,000 or more. Subsequent investments are often allowed in lower dollar amounts ranging from $1 - $100 or more. When you buy shares in a mutual fund, there is no bid/ask price - you simply buy the shares at market value. Additionally, when you sell - you sell at the market price. The trades go through after the close of trading for mutual funds. For total beginners, mutual funds are a great starting point for leaning investment basics because buying them is relatively simple.

Mutual Fund Fees:
- Trade Commissions - Typically you can find a broker (or invest directly with the mutual fund company itself) where there is no fee for buying or selling shares.
- Front Load Fees - You will see some mutual funds charge an upfront fee every time you buy shares. For example, a front load fee of 5% means the company charges you 5% for every dollar you invest.
- Back-End Load or Contingent Deferred Sales Load (CDSL) is slightly more complicated than a front load fee. It's better described here.
- The mutual funds the majority of investors should look for are no-load mutual funds. They don't have a front-end or back-end load, however there are management fees associated with the fund usually described as an 'expense ratio."

What Is An ETF? = Exchange Traded Fund
I think of ETF's as a trade-able mutual fund. Essentially a basket of stocks (or similar investments) traded on one of the major stock exchanges - like NASDAQ. The advantages of ETF's over mutual funds is they can be traded, and/or used as a short term investment. Unlike mutual funds, ETF's are traded on the stock market with a bid/ask price.

ETF Fees:
- Trade Commissions - You will typically pay a trade commission fee each time you buy and sell. For example most brokers charge $8.95 - $9.99 per trade. You will find some brokers like Schwab, E-Trade, -Ameritrade...ect who offer some ETF's as a commission free trade.
- Expense Ratio - These are fees that are siphoned off from the fund on a yearly basis. The norm is around 1% but they can get much higher or lower.

What is a Bond?
Think of bonds like debt. On one side you have the borrower, and the other side you have a lender who earns interest as the borrower makes re-payments on the loan. Bonds are very similar. Countries, Cities (municipalities), companies/corporations will issue bonds with a coupon (interest) rate. Buyer purchase the bonds, and earn interest on those bonds until they are paid off. If you forget all that - the most important thing to remember about bonds is as interest rates go up - the price of the bond goes down ... and vise-versa.  For example, today a bond has a price of $50 with an interest rate of 5%. Tomorrow, interest rates go up to 5.25% - the price of the bond would go down to something like $45.

What Are Options?
I strongly recommend only trading options after you have become an experienced investor and trader. Option trading requires you to be correct about the direction a stock is going AND you have to guess the correct time period that move will happen. The average investor will likely not need to worry about options, however a high net worth investor might be wise to hedge portions of your portfolio with options.

In a nutshell, options are contracts to buy or sell stock at a given time.