Friday, August 31, 2007

Basics of Forex Trading

Foreign Exchange Trading or simply FX or even forex describes the trading of different currencies of the world. The forex market is the largest in the world with trades amounting to more than USD 1.5trillion every day. Typically, most forex trading is speculative, with only a small part of the market activity representing governments' and companies' basic currency conversion needs.

The main centers for trading are Sydney, Tokyo, London, Frankfurt and New York. By virtues of it being a world market, it is a 24 hour market where online forex trading is conducted across the globe. This is a major advantage as it provides investors with a unique opportunity to react instantly to breaking news that is affecting the world markets. The forex market is known to have superior liquidity and thus there are buyers and sellers present perennially to trade in this market. The liquidity factor ensures price stability and narrow spreads and comes mainly from banks that provide liquidity to investors, companies, institutions and other currency market players.

Unlike the stock market foreign exchange trading is not conducted through a central exchange but something similar to the OTC (over the counter market). It uses sophisticated forex trading software recognized globally. The most commonly traded currencies are the EURUSD, USDJPY, USDCHF and GBPUSD. Trading in the forex market means the simultaneous buying/selling of a currency. The combination of two currencies being traded is called cross. Forex trading is done without commissions and thus proves to be a hugely attractive opportunity for investors dealing on a daily basis. Moreover, the forex market is dynamic, and there exists trading opportunities at all times no matter whether a currency is strengthening or weakening in relations to another currency.

The spot market is the largest forex market as it has the largest volume of foreign exchange currency trading. The market is called the spot market because trades are settled immediately. In practice, however, it takes two banking days. There are virtually no restrictions in the forex trading and the forex market thereby allowing you to enjoy trading opportunities during any market condition. If you are a commercial investor, you may need to swap your trade forward to a later date. This is called forward trading and can be undertaken on a daily basis or for a longer period of time. Although the forward trade is for a future date, the position can be closed at any time and the closing part of the position is then swapped forward to the same future value date.

Trading on margin means that you can buy and sell assets that represent more value than the capital in your account. Forex trading is usually conducted with relatively small margin deposits. Leveraging allows you to hold a position worth up to 100 times more than your margin. This is useful since it permits investors to exploit currency exchange rate fluctuations. However, without appropriate risk management high leverage can lead to both large losses and gains.

Spreads and Pips - The spread is the difference between the price that you can sell currency at and the price you can buy currency at. A pip is the smallest unit by which a cross price quote changes. This is shown when you compare the bid and the ask price, for example EURUSD is quoted at a bid price of 0.9876 and an ask price of 0.9879. The difference is USD 0.0003, which is equal to 3 pips.

Up until recently, the forex market, given its large minimum transaction sizes and-stringent financial requirements, was dominated by big professional players like banks, hedge funds, major currency dealers and the occasional high net-worth individuals. However, now several global companies are now offering small companies, traders and investors small transaction trades with the same price movements and rates.

William Brister - An answer to your financial questions.

Pensions and Long Term Care - Why You Should Turn Again to Property

Most people have this plan in life they work for a large (secure?) organisation, for 40 years or more, and then they feel that the organisation will repay their loyalty by providing them with quite a sizable top-up to their State pensions.

How wrong can they be?

Look at the chaos caused over the last few years on both sides of the Atlantic where companies have either illegally or by bankruptcy robbed hundreds of thousands of hard-working, loyal employees, their right to a comfortable retirement Murdock and Equitable Life in the UK; Enron, IBM and now Delphi in the States are just the tip of the iceberg. (Will GM be next?)

Then there is another highly relevant issue that of long term care. In the UK particularly, human rights for older people remains a very uncertain area, and unless you have money or very vociferous friends and relatives, you could become victim of bureaucratic activities. As reported in the Telegraph Money section in February this year, a couple who had lived together since the beginning of the Second World War ( 65 years of togetherness) found that when the husband had to go into a care home, his wife was refused permission to move in with him. Enforced divorce by the Welfare state? Luckily the couples family rallied to their rescue, and Gloucester County Council relented and the couple are now reunited.

What is the common theme in this reassurance that control of our twilight years will not be taken out of our hands by some faceless bureaucrat?

Financial insecurity of course.

In an attempt to overcome this uncertainty, many people are turning back to one of the bedrocks of financial security property.

But to many average people, the thought of investing in property is seen as a privilege that only the very rich and therefore those totally unaffected by the pension crisis can afford to indulge in.

However, many of these folk are already into property investment, and dont yet realise it. One thing most of us are brought up to believe is that we should, as soon as we are able, get a foot on the property ladder and buy our own house. But then it all goes a bit pear-shaped.

Most of us live in this house we have bought, usually with a really low cost, long term mortgage, and we then have this urgent desire to pay off the mortgage as quickly as we can, so when we retire, we can live rent-free in our own property. That is what we are taught to do in school, by our parents, by society in general.

Very commendable but what about our standard of living on retirement? Or our choice of care homes when the inevitable happens? We may have a nice house to live in, but if all of a sudden, we are only getting a fraction of our usual income, due to retirement or long term illness, what happens to the nice car, the good holidays, the freedom to go and see all the family when we want to?

Over the lifetime of the mortgage the average property - wherever it is situated, has been increasing in value by around 8% every year. With the average price of a house in the UK now at 150,000, that represents a growth of around 12,000 every year. After 10 years, that will amount to some 120,000 (about $205,000 to our US cousins), so you could have at your disposal a lot of this money by refinancing your house.

With the average deposit needed to buy another house as an investment in the UK being around 15%, and the average UK home costing 150,000, another house would require you to raise around 22,500 deposit, so in theory, you could go out and buy and 5 more houses using the equity in your existing house, and each house growing in equity by 8% (12,000 each per year), you would see your net worth grow by around 60,000 every year!

Thats all good and dandy, but now you have 5 extra mortgages of around 127,000 each, each one costing around 550 a month to service. This is what most people find is still the most daunting, and even terrifying prospect, of investing in property.

However, there are organisations around who specialise in locating property both in the UK and in places such as Spain where properties can be brought for very low amounts of money down, and for the uninitiated, full rental guarantees for up to 10 years can be provided in some cases. OK, there the trade off is that there would be little or no rental income, but the mortgage would be paid with no worries, and the capital growth after 5, 10, or more years would provide a very tidy capital nest egg indeed.

But and there is always a But where there is money to be made, sharks tend to circle, and before anybody rushes out and starts to buy low money down property, they should seek sound financial advice from an independent financial advisor.

Copyright 2006 Geoff Morris

Geoff Morris has built up a multi-million dollar property portfolio in less than 18 months. He has written a number of articles aimed to help others follow the same path to financial freedom. Imagine the peace of mind that you would achieve if you follow the advice to be found in his Free reports and consumer guides to be found at If you want to take part in his latest Florida campaign this can be accessed at

Regressive Property Taxes Make Owning a Home Increasingly Unaffordable

State and local politicians at city hall write their bloated budgets based on the extra revenue assessments while property owners who realize they are about to be fleeced prepare their appeals. Engaging in a property tax appeal is one way to lower your tax burden, but more need to be done.

Retired taxpayers have lost their connection with the means to pay. Taxes based on a propertys estimated value is unfair and punitive. Too many taxpayers are becoming land poor in that their property value no longer is proportional to their income. Older person on a fixed incomes often have to sell their house to pay the taxes on it. Or, in other cases, sometimes feel trapped in old homes because their taxes would go up dramatically if they moved.

Property tax is a tax on capital. It should occur only on when you sell the home just like an individual stock in the stock market. One only pays taxes on the realized gain or loss for a stock when it is sold.

An annual property tax is the most regressive, destructive tax there is. It takes from rich and poor alike, irrespective of age, family status, health or income. Property values fluctuate and municipal taxes and budgets are never lowered, it seems. Rising property values have driven up taxes for all property owners. If property values decrease, does that mean taxes will go down?

Perhaps the ebb and flow gets resolved in the Wizard Of Oz but not in most US municipalities. Most governments are addicted to a tax and spend mentality and act like the characters in the Oz movie. The lion big show where the state develops its own pet private enterprise for the good of the community. The tin man no heart that ignores the plight of the average taxpayer, the elderly and retired perhaps throwing a few crumbs of tax relief their way but a deaf ear in they way of budget cuts and overall lower taxes. And lastly the straw man with no brains who over-hires and over-compensates their employees with benefits fit for kings and queens when they should be equal to Costco and Home Depot perks and employee policies.

Many homeowners who look on property as an investment, dont perceive the value of their property to be the price at which they purchased the property. They see it as the price for which they think (or hope) they could sell it for. Little do they remember the lessons from history. In the 1800s the stock market crashed and it took nearly 50-years for markets to recover. The 1929 crash took 25-years for markets and real estate values to recover.

Even the best intentioned investments can become wrong and long agonizing stretches can occur without an underlying asset regaining its former value. After the basics in Maslow's Hierarchy of Needs are met and your shelter transforms from the basics and takes on the shape of an investment, were beyond necessity and into speculation.

That brings up some interesting ethical questions. Should a basic shelter (like a trailer) not be taxed similar to milk, eggs and potatoes or is it an investment? Should speculations such as stocks and investment homes be not treated the same? If they are the same, should they not be treated tax-wise the same and taxed only on appreciation? Regressive property taxes make owning a home increasingly unaffordable.

Property Taxes, Property Tax Appeals, Home Appraisals Determine house values for purchase, sale or how to win your own property tax appeal without the cost of an appraiser or attorney.

You can triple the chances for winning your property tax appeal and also cut your prep time in half. I've been doing this for years. After countless appraisals and tax appeals I decided to make something affordable and useful for anyone deciding to appeal their taxes.

4 Benefits of Long Term Trading vs Short Term Trading

Both short term trading and long term trading can be effective trading strategies, however, long term trading has several significant advantages. These include the effect of compounding, the opportunity to earn from dividends, reduction of the impact of price fluctuations, the ability to make corrections in a more timely manner, less time spent monitoring stocks.

1. Compounding

Time can be investors best friend because it gives compounding time to work its magic. Compounding is the mathematical process where interest on your money in turn earns interest and is added to your principal.

2. Dividends

Holding a stock to take advantage of payouts from dividends is another way to increase the value of an investment. Some companies offer the ability to reinvest dividends with additional share purchases thereby increasing the overall value of your investment. Additionally, dividends are more a reflection of a company's overall business strategy and success than volatile price fluctuations based on market emotions.

3. Reduction Of The Impact Of Price Fluctuations

In the long term investment the persons is less affected by short term volatility. The market tends to address all factors that keep changing in the short term. So a person involved in long term investment or trading will not be affected as much by short term instability due to factors such as liquidity, fancy of a particular sector or stock which may make the price of a stock over or undervalued. In the long term, good stocks which may have been affected due to some other factors (in the short term) will give better than average returns.

Long-term investors, particularly those who invest in a diversified portfolio, can ride out down markets without dramatically affecting his or her ability to reach their goals.

4. Making Corrections

It is highly likely that you could achieve a constant return over a long period. The reality is that there will be times when your investments earn less and other times when you make a lot of money in short term. There may also be times when you lose money in short term but as you are in quality stocks and have long perspective of investment you will earn good returns over a period of time.

There are always times when some stocks do not perform and it is the wise choice to pull out of an investment. With a long term perspective based on quality stocks, it is easier to make decisions to change in a more timely manner without the urgency that accompanies short term and day trading strategies chasing volatile changes.

Investors that begin early and stay in the market have a much better chance of riding out the bad times and capitalizing on the periods when the market is rising by taking a longer term view using long term trading strategies.

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A Little About Lot Sizes In Forex Trading

understanding lot sizes in forex trading is very important to help you avoid the pitfalls of trading on a leveraged account. Forex trading involves the use of dramatically leveraged accounts and before you put one dime into a live forex account you need to understand how leverage works and what is happening in all the different sized lots. Also what is the optimal size lot to use when learning forex trading.

Let me talk to you a little about forex lot sizes. OK I am reaching with a play on words there but a lot of people who read my articles should know by now that I think forex trading should be fun and profitable.

normal Lot: Many forex brokers will require $10,000 to open an account and on it you can trade a normal lot size. There is usually a 1 lot minimum trade.The normal lot is worth $100,000 in currency and when you trade a lot it is 1:100 leverage. What this means is that you are getting a loan from the broker to control $100,000 for your $1,000. Now lets look at this leverage thing a bit more because so many people make a big deal about how wonderful forex trading is due to the leverage you can get. I completely agree that leverage is one of the many benefits of forex trading but it seems to me not many people properly understand the concept.

as an example you have a standard account with 1:100 leverage then for every 1 Pip you gain there is $10 in profit for you ( basically not factoring spreads commissions etc. ). Now leverage is a 2 way street and for every 1 pip the forex market moves against you then you lose $10 and this is what makes leverage fascinating to many. The fact is that you must understand both sides before getting into forex trading. Most markets swing up to 100+ pips a day easily and this means at 1:100 leverage you can in theory gain 100 pips in 1 day thus taking a $10,000 account to $11,000. Now for the bad news you can also lose 100 Pips on most markets and take $10,000 to $9,000 in a day just trading 1 lot. So when you hear people talking about 1:400 leverage they better be very accurate with their forex trading.

Mini Lots: Ok now lets look at a Mini lot and how leverage works with it. Most brokers require at least 1 mini lot to be traded. The mini lot is worth $10,000 this means you are trading with 1:40 Leverage. Let's do some math and I promise it want hurt much. $250 x 40 = $10,000 and since $10,000 is 1/10 of a standard forex lot this is why for every 1 Pip in your favor you earn $1 profit. Conversely for every 1 pip that moves against you forex trading you lose $1.

Micro lots: Now some brokers allow micro lots where you can do forex trading at 1:4 leverage again lets hit the math book a second. $250 x 4 = $1,000 which is 1 / 10 of a ($10,000) mini lot

and this means for every 1 pip in your favor forex trading you will make 10 cents profit and of course conversely for every 1 pip against you then you will lose 10 cents. I know to the novice this does not sound like much but if you had only $100 and traded an account with 1 micro lot then every 10 pips in your favor will mean 1% gain on your account. The micro is in my opinion a great size to trade when learning in a small account if your Broker allows this. Practicing forex trading with micro lots will give you room for forex market swings and time to develop your skills as a forex trader.

That is just a little about forex lots and I hope it clears some things up and explains some of the risk and rewards of forex trading.

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Online FOREX Trading - Profit Opportunities Live Update

Yesterday we looked at 3 trading opportunities. Today, we are going to look at one shaping up in the euro currency, a possible profit opportunity and update the others. Lets take a look first at the euro. We are using the chart service and indicators RSI, Bollinger bands and stochastic in making our observations. This report is written at 10AM Central European time.

The euro is in a firm up trend against the dollar and prices have recently retreated from contract highs. Prices are now at the middle of the Bollinger band and are looking to hold around this level. RSI has fallen back from overbought levels and stochastics are down, but oversold. Support lies at 1.34 and 1.32. Watch for stochastics to bottom and cross with bullish divergence to indicate a shift in momentum, accompanied by rising RSI. This looks like a correction in a bull market. Wait for the correction to run its course, by watching for the above indicators to give you a signal and shift the momentum back to the bulls.

Other trades we looked at yesterday were:

US V Canadian Dollar
Same comments apply as before:
We expect a bounce. RSI very oversold and the dollar is trying to hammer a bottom out above the key 1.10 level. Stochastics remain flat. If they cross with bullish divergence, expect a move up. A close below 1.10 means all bets are off.

US V Japanese Yen
We expect the dollar to hold above the breakout point. Stops should be below the breakout if long if not, to go long look for stochastic to turn up with bullish divergence. The yen is the weak currency of the majors against the dollar and we would expect the dollar to hold its up trend.

Today, should give a clearer indication of near term direction. Short term momentum is down in the dollar. Watch the breakout point and stochastic momentum.

British Pound V US Dollar
The trend in the pound is up but short term momentum is down. We expect the pound to move up after the recent correction, but need to see a shift in near term momentum.

Prices have broken the mid Bollinger band and are drifting lower. RSI is no longer over bought. Stochastic momentum is over sold and down. To enter a long trade watch for a cross in momentum on the stochastic with bullish divergence and also a rising RSI. With all trades dont predict wait for confirmation of shifts in near term momentum before attempting positions.

Good luck and good trading.


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FOREX Trading: Risky Business

You can see the claims on some FOREX web sites, implying that FOREX is a risk-free pastime. No investment is risk-free.

In FOREX you are trading substantial sums of money, and there is always a possibility that a trade will go against you. There are several trading tools that can minimize your risk, yes, but eliminate it, no. With caution, and above all education, the FOREX trader can learn how to trade profitably and minimize loss.

The Scams

FOREX scams were fairly common a few years ago. The industry has cleaned up considerably since then. Still, you should exercise caution before signing up with a FOREX broker by checking their background.

Reputable FOREX brokers will be associated with large financial institutions like banks or insurance companies, and they will be registered with the proper government agencies. In the United States, brokers should be registered with the Commodities Futures Trading Commission or a member of the National Futures Association. You can also check with your local Consumer Protection Bureau and the Better Business Bureau.

The Risks

Assuming you are dealing with a reputable broker, there are still risks to FOREX trading. Transactions are subject to unexpected rate changes, volatile markets and political events.

Exchange Rate Risk: refers to the fluctuations in currency prices over a trading period. Prices can fall rapidly, resulting in substantial losses unless stop loss orders are used (see below).

Interest Rate Risk: can result from discrepancies between the interest rates in the 2 countries represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction.

Credit Risk: is the possibility that 1 party in a FOREX transaction may not honor their debt when the deal is closed. This may happen when a bank or financial institution declares insolvency. Credit risk can be minimized by dealing on regulated exchanges, which require members to be monitored for credit worthiness.

Country Risk: is associated with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with "exotic" currencies than with major countries that allow the free trading of their currency.

Limiting Your Risk

FOREX trading can be risky, but there are ways to limit risk and financial exposure. Every trader should have a trading strategy; i.e., knowing when to enter and exit the market, and what kind of movements to expect. Developing strategies requires education, which is the key to limiting risk. At all times follow the basic rule: Never use money that you cannot afford to lose.

Every FOREX trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted. There is a vast amount of information on FOREX trading available both on the Internet and in print. If you want to be successful at FOREX, then educate yourself.

Stop-Loss Orders

Even the most knowledgeable traders, however, can't predict with absolute certainty how the market will behave. For this reason, every FOREX transaction should take advantage of available tools designed to minimize loss.

Stop-loss orders are the most common way to minimizing risk. A stop-loss order contains instructions to exit your position if the price reaches a certain point. If you take a long position (expecting the price to rise) you would place a stop loss order below the current market price. If you take a short position (expecting the price to fall) you would place a stop loss order above the current market price.

Stop loss orders can be used in conjunction with limit orders to automate FOREX trading. Limit orders specify that an open position should be closed at a specified profit target.

Ron King is a full-time researcher, writer, and web developer. Visit FOREX4U to learn more about this fascinating trading vehicle.

The Major Players in the Foreign Currency Exchange Market - FOREX

Since the US dollar is the centerpiece of the market, it is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote listed above were to increase to 124.01, that would mean that the dollar is stronger because it will now buy more yen than before.

Some exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, which means that one British pound equals 1.4366 U.S. dollars. In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.

So if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening. Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.

Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To investigate a new business idea, visit his website,

A Financial Analysis of The Stanley Works

The Appliance & Tools industry is a relatively small group of companies which commands a lot of demand from other organizations. Large-cap leaders such as Black & Decker and Whirlpool produce common products not only for large corporations, but for the retail consumer as well. While both these companies are relatively well-known, there are some other smaller, mid-cap corporations, such as Pentair and Jarden which also do quite well relative to fundamental performance. One mid-cap equity in particular, The Stanley Works (SWK), not only engenders solid growth for shareholders, but controls an excellent business model which creates increasing margin growth and an undervalued stock.

Before looking at the relative oversold nature of The Stanley Works it is vital to understand what the company produces. According to Reuters, "is a worldwide producer of tools for professional, industrial and consumer use and security products." Separating the business into three segments, "Consumer Products, Industrial Tools and Security Solutions," Stanley diversifies its company to hedge against risk-adverse demand fluctuations in any one industry. Consumer Products include production for "planes, hammers, and demolition tools", as well as "wrenches, sockets, and metal tool boxes" sold to retailers and third-parties. Similarly distributed, the Industrial Tools segment, sells "plumbing, heating, air conditioning and roofing tools" such as "pipe wrenches, pliers, press fitting tools and tubing cutters" both to third-parties and directly to the consumer. The last segment, Security Solutions, provides, "automatic doors, door locking systems, commercial hardware and integrates security access control systems"a comparable but different approach to business when compared to the other two regions of production.

While there are some notable differences between each of the three areas, some investors may argue that the general business model is fairly consistent throughout each segment, and because there are current problems related to the housing and manufacturing sector, it may not be a suitable time to invest in companies like The Stanley Works. However, there are two important reasons to not get discouraged by this observation. First, if technical analysis is correct, steel prices (a big commodity for Stanley) should come down in the next few months. Since January of 2005, when metallics on the CRU Steel Price Index were at 150, prices have escalated to a current reading of near 220. However, during this entire duration, the trend almost perfectly resembled an Elliot Wave to the upside. Now as the wave is near the peak, the correction should begin with an ABC pattern back to a familiar Fibonacci support level. If this does happen, lower steel prices would mean lower commodity prices for Stanley to paycontributing to higher operating and gross margins. In addition, to answer the question about a weak housing and manufacturing sector, Stanley, share price wise, has performed quite nicely. Even though much of this company's business is found with the slumping areas of the economy, in 2007 Stanley's share price has appreciated nearly 26%a number almost doubled of the S&P 500. In addition, Stanley has not had a negative calendar-year performance since 2002, and has only declined twice year-to-year in the past ten years. If Stanley can perform this well under such adverse conditions, there is absolutely some great potential for further share price growth.

Now while these models are great to examine and make speculations about, it is also important to understand how Stanley has performed and will perform relative to financial figures. Looking at the top-line over the past twelve months for this company and investors will see a $4.01 billion dollar number. Compared to the other top 15 market-cap leaders of this industry, Stanley places third in year-to-year growth. What is surprising, however, is how such a high sales figure still gives way for strong margin growth. According to Reuters, during the past twelve months, Stanley saw gross margins at 37.01% and operating margins at 9.93%. Comparing these numbers to five year respective averages of 35.56% and 9.29%, and an investor will realize that margin growth, despite high revenue, continues to grow. What makes these numbers even more intriguing is that the industry not only has smaller trailing respective figures at 28.86% and 7.69%, but each of these numbers are below the five year margin average as well. Even more specific to market-cap competitors, Black & Decker, albeit it has higher revenue than Stanley, has seen gross margins at 34.77% from its five year average of 35.69%. Another industry competitor, Jarden, is a similar story with a respective drop in gross margins from 26.74% to 24.72% and a drop in operating margins from 8.08% to 7.54%both coming at a revenue collection 5% lower than Stanley's trailing figure. Therefore, not only does Stanley have growing margins when the industry has decreasing gaps, Stanley is doing so with the third highest revenue production in the industry.

Furthermore, grow is also illustrated over the past year relative to sales and EPS numbers as well. Sales has grown at 18.92% from last year compared to the industry's respective growth of 14.51%, and EPS trailing growth at 33.71% is also quite high when looking at the industry's EPS difference of only 9.91%, according to Reuters. None of the market-cap industry competitors of Black & Decker, Jarden or Pentair can compete with these figures, despite lower revenue numbers, and only Jarden has a higher EPS difference than a year ago when compared to Stanley. What also separates Stanley from the other three companies is capital spending. Although a bit smaller than the industry average, Stanley still has a capital spending rate of 1.95%. This number is positive which not is the case for Pentair or Black & Decker. This is also illustrated with cash flow that is above free cash flow. Spending on CAPX now will allow for larger EBITDA figures latermore cash for buybacks or other incentives to lure investors. Overall, Stanley has put itself in a great position growth-wise and should continue to excel in both the short and long term with these figures.

What really separates Stanley, however, is its fundamentals when used against its share price. The forward P/E ratio of 15.95 for 2007, while not significant, is still lower than the industry trailing average of 19.00. In addition, this number is also quite similar to competitor Jarden and is below Pentair's 19.65 multiple. More specific to sales, Stanley has a reasonable price to sales figure of 1.24 which is in very close range of all three aforementioned industrial competitors. Forward enterprise value to revenue at 1.52 is respectable and continued cash growth from less CAPX spending in the future should contribute to lower multiple valuations and other discounted comparisons as well. Combining growth to value with the PEG ratio at 1.40 for Stanley, the number is below both Black & Decker at 1.91 and Pentair at 1.71. This number illustrates that Stanley is not only growing well, but is undervalued relative to this growth.

Respective to other intangibles, Stanley Works has performed quite well in these areas. CEO John F. Lundgren and his 17,600 employees headquarter in New Britain, Connecticut has managed to take advantage of investments and equity. All of ROA (7.58%), ROI (10.90%), and ROE (22.11%) are above not only the company's five year average, but above industry figures as well. The company is solvent with a most recent quarter current ratio of 1.34 and long term and total debt is also under control when compared to equity. Inventory, asset, and receivable turnover are all quite high compared to other competitors as well. Overall, Stanley Works is very susceptible to strong growth both in the short and long term with the current fundamental analysis.

Therefore, business strategy and fundamental analysis illustrate that Stanley Works is a profitable company which can be a great investment for any portfolio. Relative to technical analysis, while the RSI at 60 and a parabolic SAR below current share price may not look to enticing for the short-term investor, as a long-term investment, Stanley Works has the strong historical fundamental background and brand recognition to continue to help investors report strong capital gains for portfolios.

Dennis Biray presents advice on all kinds of topics ranging from finance and investing to fitness to sports. For more information email him at, or to view other articles written by him visit

Five Fundamental Steps To Successful Stock Option Trading

Stock option trading presents the opportunity to potentially make a fortune trading options than almost any other form of online trading in todays market. The level of reduced risk combined with above average leverage allows a skilled option trader the chance to make sizable gains but an aspiring option trader must have a solid understanding about what creates a reliable option trading method to insure long term success at option trading. There are five fundamental steps that any option trader must implement when creating a superior stock option system.

To begin with you must realize the affects of time on the premium of the option you are choosing to trade. There are two parts you must factor when considering time into the stock option trading process. The first part that has to be considered is the time left on an option till expiration. Since stock options have a defined time period of anywhere from 30 days up to three years in some cases then you must be sure to select the proper stock option with enough time on it in order to profit. You must be sure that you purchase the correct option containing enough time on it to insure that time decay doesnt erode your investment away before your position has enough time to be profitable.

This brings us to the second part of the option selection process of trading options successfully is factoring time into your trading system. Trading a particular stock option and knowing the key factors of your option trading system or setup by knowing the average time period of a trade once it has been signaled and entered. For example, if your average holding time for an option trade is five days then you dont want to buy an option with four months of time premium left on it because you would be paying more for the extra time with the options purchase price. Nor would you buy an option with less than 30 days till expiration as time decay would eat away the value of option so rapidly that even if the stock options underlying stock moved favorably in your direction the time decay would be so great you would be too late to capture a gain in the option itself.

The third step to successful stock option trading is comprehending the relationship of volatility between the market, the underlying instrument that the option is based on, and the effect is has on the cost of the option itself. When the stock market as a whole as an index goes thru periods of low volatility or experiences low trading volume then the stocks that make up the market tend to follow general market and also begin to follow suit with periods of low volatility which cause cause the value of stock options to become cheap. However if the general markets volatility begins to spike it causes individual stock option premiums to increase in value as long as the market moves in the traders favor.

The fourth key in successful stock option trading is having a trading method that takes factor these key steps into giving clear entry signals, clear exit signals, a defined system of trade management, and a profit factor greater than your average loss over a series of trades. Understanding all steps of various trade setups is meaningless if you dont have a trading system that guides you through each step of the trade management process. A solid trading stock option system guides you by the hand and details each step while guiding you towards being a consistent winning trader in the markets and being profitable in the end.

The fifth and final step to trading stock options successfully is trading psychology. Traders and there mental makeup are usually complex so it is very important that stock option traders have a sound stock option trading system or method that factors this into their overall approach to trading the markets as well as the discipline to follow their trading methods. You can give two traders the same exact profitable trading system but its very likely that they will experience very different results. The reason for this is usually is because the one that has the ability to remain as detached from his losing trades as well as his winning trades while maintaining the discipline to follow the systems rules no matter the individual trading result will come thru as the most profitable trader in the end which shows us that it comes down to a superior mental process towards trading the markets.

Using these five steps as a foundation to create your own stock option trading system can help you avoid the mistakes of many other stock and option traders. By understanding time decay, factoring an options time into your trading method, how volatility impacts a stock options intrinsic value, what details a winning stock option trading system, and your own trading psychology you now have a the key steps to build your trading career on.

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Dxinone E-currency Trading

E-currency trading is growing into a worldwide business. If you are looking for a growing business that will never let down E-currency is a great one. Dxinone is a very confusing system for a person that has never seen or used it before. If you have no idea how to sign up or start to fund your account you will miss out on a very good way of making money-using e-currency.

The web page they use offers no guide to helping you start using the Dxinone system. There are however VERY helpful guides that you can buy for a small price that teach you everything you need to know about Dxinone, and how to get start in e-currency.

Once you join Dxinone and make an account you can then fund your account with money using NetPay, E-gold, E-bullion, and a few others. Once you have funds in your account you can then start to make money in the e-currency system. You will buy digots with the funds in your account. These digots act like a share of stock would. A window will open in Dxinone, and you will see a list of places you can buy digots from. These digots will be how you are going to profit from the e-currency system.

Once you have used all the money in your dxinone account you now will see how the system works. Each night you can log into dxinone, and check up on your digots to see how much you made in profit. Everyone has a different way for buying his or her digots. Again buying and selling digots is just like buying and selling stock. You will see under your TDV Total digot value how much profit you have. You can also tell how much money you used, and how much you can take out of dxinone. Each night you will gain any where from .35% to .5% in returns as profits. The nice thing about dxinone is that your money is compounded daily unlike other investments that might only compound weekly or even monthly. Each night you are making money with e-currency.

As you can see it can be very hard for someone to learn how to use or even start with Dxinone. This is a system that everyone should get to know, as it is a very profitable way of making money online with e-currency exchange.

Visit Mazu e-currency online for more information about dxinone and e-currency trading.

I used the mazu guide to help me get started in Dxinone. It also helped me take my $400 investment into Dxinone and turn it into $5,100 in 4 months. Visht Mazu E-currency Online to see how the mazu guide can help you.