Online Investing Daily

Some folks think of option trading (and stock trading in general) as gambling. The analogy is appropriate in certain cases, especially if a person is unprepared, uneducated, or flat-out reckless.

But it’s a gross generalization to say that trading is always like gambling. Because running a successful option trading practice is much like running a business.

Business owners are most interested in three things: reducing risk, limiting losses, and maximizing profits. Believe it or not, the same is true in option trading.

Reducing Risk

Obviously, a business owner is not going to try to sell a product that nobody wants. That’s stupid and risky. He is only going to offer products and services the market wants.

Similarly, if a stock is not “trade-able,” an option trader will avoid it. That’s because it’s extremely risky to trade a stock that has no clear trend or pattern.

Maximizing Profit

Some promotions work better than others. If a business owner finds one that really cranks, he’ll run it again and again to milk as much possible profit as he can out of it.

A smart trader will do the same thing. If a trade moves in his favor, he’ll ride it for all it’s worth, tightening his stops along the way to lock in profits should the price turn around.

Cutting Losses

Every once in a while, a business owner will be saddled with product that won’t sell. Instead of keeping it, he’ll cut the price to unload it, even if it means taking a loss. That’s because it’s better to free up the cash for reinvestment elsewhere.

An option trader will do the same thing if he enters a trade that moves against him. He’ll liquidate his position quickly, take the loss, and use the cash to reinvest on another trade.

Clearly, recklessness is dangerous in both business and trading. But with preparation and the right attitude, option trading can be run just like a business.

Contracts for Difference (CFDs) are contracts between a trader and a CFD provider, who will at the close of the contract, exchange the difference between the opening price and the closing price of the underlying index, share, commodity, per the number of specified CFD contracts.

A CFD differs from the traditional trading methods as it is not a purchase of the nominated investment, but trading on its speculated price movement. The main idea of CFDs is the ability to be able to trade higher volumes than traditional trading while using less initial capital.

The buyer of the contracts is required to pay commission to enter the contract, plus fixed interest on the remaining value of the borrowed amount, until they decide to end the contract, at which time they are paid the price difference. The buyer may opt on either side - high (buy) or the low (sell), which means that if the contract was a low trade the buyer could still turn a profit it that was the initial investment.

Advantages of CFDs versus traditional share buying

The key distinction between traditional share buying and CFD buying is that buying a CFD is done on leverage (typically between 5% to 35% for actively traded stocks), both shares and CFDs participate in all corporate actions, both buyers receive dividends but only the buyer of the share is able to vote and receive the franking credits. To select a great broker if you are trading in Asia, Australia, or UK vist www.cfdfxreport.com and look at choosing a broker or simply email support@cfdfxreport.com as we have researched them all.

With CFDs one is not entitled to these rights, which enables CFD sellers to sell with ease. This makes CFDs an excellent trading product. The leverage and ability to short sell gives power and flexibility.

Unlike futures, CFDs do not have an expiry date, so one can hold on to them for as long as they desire. CFDs open up a whole new trading world, with the ability to trade shares, indices, foreign exchange, and commodities.

CFDs are the flexible new way to trade. One can trade Singapore Stock Exchange (SGX) listed shares but you have access to worldwide markets, such as the United States (DOW, NASDAQ, S&P), United Kingdom (FTSE), Japan (NEIKKI), Hong Kong (Hang Seng) and many other countries.

1) Leverage

If you do not have the money needed to trade shares directly on the Singapore Stock Exchange (SGX) trading CFDs can offer you the exposure required to make a profit from small percentage moves on the underlying share price. The leverage level offered by the CFD provider magnifies the underlying movement of the stock. Most providers set differing leverage levels and you can find the best level that suits you trading style. Certain CFD providers offer, at a cost, a Guaranteed Stop Loss (GSL) that can effectively increase leverage levels further by capping the margin requirement held against you.

2) Controlled Risk

If you have ever traded, you know how important it is to use stop losses for capital preservation, especially when using a leveraged product.

CFDs allow you to cut your losses quickly and leave your profits to run. This ability to quickly exit at the prevailing market price allows for greater risk control.

CFDs reflect the price of the underlying equity. Therefore, you will always know what the market price is of your shares and know what you can sell out for, provided you choose a CFD Provider who uses “at market” prices. Some CFD providers (market makers) may only give spreads, which have the potential to force you in at higher prices and out and lower prices.

Placing automated Stop Loss orders can exit you out of suggestions that go against you while you are busy in your day-to-day activities. Example:

XYZ Ltd is currently trading at $9.95 bid and a $10.00 ask price. You want to buy 1000 shares of XYZ Ltd share CFDs at the offer price of $10.00, with your view that the stock will rise in price.

We are working on the leverage margin of 1:10. Therefore every dollar of capital you invest the CFD provider will provide you with $10 of leverage.

CFD Trading Traditional Shares

Buy Price $10.00 Buy Price $10.00

Initial Margin (10%) $1,000 Initial Outlay $10,000

Brokerage $17 Brokerage $30

GST 5% $0 GST $1.50

Total Outlay $1,017 Total Outlay $10,031.50

Traditional brokers require that you have 100% of capital required for the trade upfront.

The difference in funds required between the CFD provider and the traditional way of trading is $9,014.50.

Closing the trade

CFD Trading Traditional Shares

Sell Price $10.25 Sell Price $10.25

Gross Profit $250 Gross Profit $250

Brokerage $34 Brokerage $60

GST 5% $0 GST $3

Finance Charge $1.45 Finance Charge $0

Net profit/loss $218.55 Net profit/loss $187

In this example the trade was positive for the trader.

If the stock had of fallen by $0.25, you would have realized a gross loss of $250 with both the CFD provider and the traditional broker.

The net loss would have been $285.45 with the CFD provider and $313 with the traditional broker.

Are you wondering whether you should invest in American Eagle Gold Proof Sets versus the American Eagle Gold Bullion coin sets? You’re not alone. Many gold bullion investors often wonder which version of the two they should purchase. Gold proof? Or gold bullion? The answer depends upon your reason for wanting to purchase the coin in the first place.

Are You An Investor Or A Collector?

Typically, gold is purchased as a hedge against inflation, a declining dollar or as an insurance policy against financial catastrophe. Let’s use the American Eagle gold bullion coin as an example. Both the American Gold Eagle proof and bullion coin are the same size, and contain the same quantity and guaranteed quality of gold. Let’s look at the differences between the two types of coin sets:

American Eagle Gold Proof Coin Sets

1. Are special collector’s edition coins

2. Are produced in limited quantities

3. Struck at a higher quality standard

4. Comes pre-packaged in a protective blue velvet, satin lined case

5. Are shipped with a certificate of authenticity

6. Are available for sale directly from the U.S. Mint

If love to collect beautiful coins that have the potential to increase in value not only for its gold content but for its collectibility, go with the proof version!

American Eagle Gold Eagle Bullion Coin Sets

1. Value is determined solely by the current market price of gold at the time the coin is purchased or sold.

2. Are not purchased for their age or rarity

3. Are not available for sale from the U.S. Mint

4. Must be purchased from an authorized dealer

If your main goal is to purchase the American Gold Eagle coin in order to capitalize on the rising price of gold, with the hope of selling and making a profit down the road, go with the bullion version!

eBay can be a great place to find some of the rare, earlier dated gold proof sets. However, before buying any American Eagle Gold Proof Set online, please be sure the seller is reputable and has a high, positive feedback number!

I believe learning is an indefinite process which stops only when one dies. No matter how educated a person is, there is always room to acquire new knowledge. We need to constantly improve and upgrade ourselves and personal development is an essential and vital long chapter which follows us throughout our life. How great would it be if there is a program which provides personal development education while allowing us to earn money marketing personal development products or courses?

Personal growth and development is a wide area that encompasses topic in relationship, health, finance, love, family, religion and many more. Some of the top personal development classic such as Think and Grow Rich by Napoleon Hill, How to win and influence friends by Dale Carnegie and many personal development trainers and speakers, to name a few like Anthony Robbin, Robert Kiyosaki Brian Tracy, Les Brown and Zig Zigler have helped many attain success in their life, career, relationship and finance.

I have always been hoping there will be an online personal development education available for everyone around the world. It has to be a collection of training courses, seminars and talks from top personal development trainers and speakers which can be easily accessed by anyone in any corner of the world. Of course, it will be perfect to have a share in this 64 billion industry pie in promoting personal development education. After a long search, I found an unprecedented Earn and Learn Opportunity which provides me with life long personal development education and at the same time, allows me to earn money marketing personal development products and courses online.

Remember, success does not discriminate one from another. Anyone can attain success as long as they desire for it and work towards it diligently and consistently. Some may achieve success much faster than the other but do not fret for the slower one, you just have to put in more effort to see your results. To achieve success faster, you have to seek continual learning.