Thursday, December 26, 2013

Drawdown Dangers – What It Means To Traders

Drawdown is a word that is feared and hated by every trader, but it is an inevitable part of playing the markets. It is simply how much your account loses from its peak.

Suppose you start with $10,000 in your account, and after a succession of losses the account goes down to $7000. That means you have lost $3000, or 30% of the original starting $10,000, and therefore your drawdown is 30%.

Drawdown is relative to where your account peaks, so say you had a good run and built the account up to $12,000, then lost $3000 again, bringing it down to $9000. Your drawdown this time would be $3000 from $12,000, or 25%.

Maximum drawdown corresponds to the lowest your account ever hits. Sometimes you will see trading strategies detailing how much maximum drawdown is expected to be when using them – usually the more risky strategies will anticipate a greater drawdown while expecting a higher profit on average.

Drawdown is particularly dangerous because, the way statistics work, you must achieve a much larger percentage gain to recover to your starting position than the percentage you lost in the first place. In the example above, when your account fell from $12,000 to $9000 you had a drawdown of 25%. However to get back up to $12,000 you would have to make 33% on the money you have left.

If you lose 50% of your starting capital, then you need to make 100% on what is left simply to reinstate your original position. Thus it is easy for losses to run away from you, and if you are not careful you may find it very difficult to get back after a losing streak.

If you have a big loss, it can be tempting to change your tactics, and go big on the next trade that seems to be a sure thing, attempting to make your account back up quickly. This type of response to losses has caused the premature end of many would-be traders’ careers, and you need to avoid it and develop patience to reinstate your account.

This is why experts will tell you that you should risk losing only what seems like a very small amount of your account on any trade, say 2% or 3%. It may seem that this limits severely how much you can win, and therefore slows your progress in building your account up, but the alternative leaves you open to a succession of losses from which recovery will be impossible.

It is also important to point out that, depending what type of trading you do, risking 2% of your account does not mean that you can only stake 2%. Possibly you might stake 10% of your account, with a stoploss that limits your losses to 2%.

The other point to bear in mind is that if your account has suffered, you need to adjust the amount you risk. 2% of your account is a different amount if you have $12,000 than if you have $9000, and one of the secrets of successful trading is to focus on keeping your capital, and not on the amount you may win.

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Friday, December 20, 2013

Successful Trading Guideline: Additional Rules To Follow

Note: This is just a continuation of the previous post.

To keep your trading business going, it is important that you take it seriously to protect your capital. It is true that losses are part of the business but losing even the capital is not a good thing. Avoid unnecessary risks that can get you to ground zero as saving money as capital for your business doesn't come by easily. That said it is important to continue learning about the stock market because nothing is constant in it. Keep watch of current news on economics and politics and see how they affect the trading industry. This will help you make calculated moves with sure profits.

Knowing when to stop trading is another rule to follow as it can keep you from going bankrupt. The stability of the market is not the only aspect to consider here. Personal reservations like your health, lifestyle and psychological condition can affect the way you decide on making trades. Thus, it will be helpful just to stay put when your heart and mind are not on it. Lastly, refrain from using techniques which assure huge and quick profits. Rather, base your strategy on facts you find out from carefully studying the market. In connection to this, be ready to recognize the amount of money you might lose in this so as to avoid getting too emotional when faced with risks.

Wednesday, December 18, 2013

Successful Trading Guideline: Effective Rules To Follow

While loss is part and parcel of the risks that comes with trading, it can be reduced to a minimum and make investments manageable. No matter how big your trading account is it can be managed well if you have a reliable set of rules to follow. These rules are usually included in a trading plan. A trading plan tells you when to enter, exit and manage your investments.You can create your own plan by getting ideas from other traders. To see how it is going to work, you can do some backtesting before spending real money.
Besides following your plan up to the T, it is also important to treat trading as a business and not just a hobby. Thus, you must put your mind and heart into it. Spending less effort and time on it can take all your investment down in the drain. Think of yourself as a business owner. Ask yourself every time what a business owner must do to keep his company thriving and so that your efforts wouldn't go off the track. As you need to be focused on your trading, utilize technology to your advantage. Use it to chart platforms and come up with varied strategies. Download mobile software which can help you monitor everything anytime and anywhere with the use of your smartphone or mobile gadget.

Monday, December 16, 2013

Online Trading 101: Trading Advice For Beginners

Online trading is open to everyone who wants to give it a try. It can be very profitable or unprofitable depending on the efforts you decide to muster to make it work. As a beginner, begin with a comprehensive research. Research about all the options available out there. Perhaps, you are interested in the stock market. Do your best to look for companies that are most likely to grow and worthy to invest in.
Consider getting a broker. It is quite risky for beginners like you to do everything on your own.This will serve you best especially when you don't have a tried and tested trading strategy yet. Nonetheless, this shouldn't stop you from learning as much as you can. Read trading books and join online forums to discuss with other traders practices that work. Get a trading software that matches well the kind of trading you're in. Using the software, try trading a small amount on your own to learn the ropes of the trade. Keep an eye on the risks. Note also the strategies that are working on your end. Record them so that you can use them as a guide to your next trading adventures.

Monday, September 23, 2013

When Hiring An Accountant Is A Better Option

Almost all income earners would want to save on their taxes particularly those who are self-employed. This is obviously because their income is solely dependent on how much work they get and do. Whatever they can save on taxes can be a good source of emergency fund. And because of the 'save' slash 'saving' concern, they tend to do all the computations on their. Just to know (when it is almost deadline) that they cannot come up with the right figures and they are doomed to shoulder expensive violations.

If you find yourself caught in similar dilemma, this could now be the perfect time for you to check on what a reliable accounting service offers. For all you know, this can make you save more than you expect.

By hiring an accountant, you can have the peace of mind that your computations are all completed in accordance to the ever-changing tax laws. Thus,  you cannot be charged of any violation. Next, an accountant can give you tax advice on you can pull your legal dues to a minimum. This professional knows the legal deductibles which can be pulled from your records. More so, he or she can clear some misconceptions in your mind. You will be given clear proof or computation whether your business is really earning or not at all.

Now that you are convinced to work with an accountant, start your search for one  by entertaining personal recommendations from people you trust. If this is not working for you, search for the best in your locality. Have at least three prospects. Apart from scrutinizing their individual credentials, study their personalities and get information on how they work for clients. You cannot get the most out of your hired professional if you do not have chemistry. Lastly, choose the one who can work with the budget you can afford.

Saturday, September 21, 2013

Smart Food Shopping Tips To Save Money

Wasted food definitely means wasted money. Getting smart on your buying choices can get you save a lot of money and save food which can be a blessing to other famished souls. To get started on this, you must unlearn one thing that greatly influences everybody's food conception. You must unlearn shopping for without a planned menu or at least a list of foods to buy. Moving forward, here are additional practices you can observe.

- No shopping when you're hungry.

- Always check on the best before or expiry date.

- Refrain from overbuying. Once you buy more than you need, they will just end up rotting in the refrigerator.

- Replace meat with fruits and vegetables in your to-buy list (whenever possible).

- Buy local. Imported food items usually cost more.

- Choose vegetables that will be ripe just in time you need them too.

- Stick with your list. Do not buy anything that is not in it.

- Avoid buying foods in individual serving. Always buy in bulk.

- Take a second look at store brands. If there is no big difference in the taste and quality, store brands  would do.

Wednesday, September 18, 2013

Ignored Yet Effective Ways To Lower Electricity Bills

Cutting on energy costs is not impossible even though now is the age when appliances reign supreme as they make busy lives of busy people very convenient. You do not need to decrease the number of your appliances at home just to save energy. (That will help a lot though) You simply have to be disciplined regarding their use. If you want to substantially lower your electricity bill, consider the following insights.

1) Unplug - When any appliance is not in use, unplug it. You would not believe this but this is true: Plugged appliances consumes about 20 percent of energy even though they are not in use.

 2) Throw away incandescent bulbs - Yes, these yellow lights may give a romantic and warm feel inside the house but they can cause your electricity bill to shoot up. Replace them with energy efficient white ones. 

3) Avoid washing machine overload and dryer use - Overloaded washing machines work harder and they need more energy for this. Just load them according to their suggested capacity. If it is not rainy out there, do away with the use of dryer. Hang your wet clothes under the sun. 4) Clean and organize your fridge - If you stand for a long time in front of your open fridge looking for something, it is time to clean up and put your fridge shelves in order. This will save both time and energy for you.

Wednesday, August 7, 2013

How To Repurpose Grey Water Inside The House

Water is one limited resource and I believe that we have to conserve it. Here are some of the ways that I repurpose grey water that I use inside the house.

Use a basin to wash dishes in the kitchen.

A lot of families are used to get their dishwasher into action to help them save time cleaning the dishes, but I find manual dish washing easier and more practical when it comes to saving water. I use a basin to contain these dishes and that enables me to share the use of water especially when I am rinsing these dishes, of course with the exception of washing the pitcher and drinking glasses.

Make use of old clean trash containers or buckets to hold water from shower.

I take a shower everyday, and whenever I do, I use old plastic trash bins to collect the water I use to wash my hair and use this to flush the toilet. You can do it too, and that will definitely save a number of flushes that of course equates to a higher water bill in the long run.

Clean garage floor with water from washing machine.

That maybe the ultimate way to repurpose water but I do it not only to save money on water bills but also to maximize the use of detergent here at home. Since the water has the detergent in when I wash my clothes, I use this to scrub my garage floor. Same goes when I am using fabric conditioner, that certainly leaves the floor smelling clean and fresh.

Wednesday, July 10, 2013

How To Shed Pounds The Frugal Way

Are you looking for ways to lose weight but want to do it the frugal way? Check out some of my tips below:

Eat real food.

Canned goods aint no good, well, most of them. So go out and buy fresh produce and cook your own food, that way, you can monitor what goes in and this makes you feel healthier while losing pounds little by little.

Make a food budget.

Using a pen and paper, write down your menu for the week, list all healthier options to eat. Then allot a budget to cover your grocery trips once a week. If you follow the menu to a T, then that's a good sign that you are on the right way to shed pounds while enjoying a balanced utrition from your own planned menu.

Clean your own stuff.

Tidy your room, mop the floor, clean your car, organize your garage. Now you get the idea. If you are used to call a group of cleaners to do it for you, then you may have to go a different route this time. This will help you to have a cleaner home and be a healthier homeowner at the same time.

Look for cheaper ways to exercise.

Do you have a Wii or Xbox at home? Make use of it and purchase exercise and dance video VCDs instead of paying for expensive gym memberships. As for me, I just bought a Kinect and that's what I use to exercise right now, avoiding spending on gas and gym memberships. You can also call your local community office and find out if they have activities lined up for those who want to lose weight and live a healthy lifestyle like group zumba parties, aerobics classes and local fun runs.

These are just some of my tips on how to live healthier and feel lighter without spending too much of your hard earned dollar. What about you?

Wednesday, June 19, 2013

How To Save More Money In Your Piggy Banks

Years ago, piggy banks are popular ways to store loose coins. Now, you can still use this to save money, not just loose coins and deposit the entire amount when it is already full.

Here are some simple strategies on how to add savings to your piggy bank.

image credit: google images

Drop all loose coins as soon as you reach home. When I go grocery shop, I take a lot of coins with me since cashiers use these change down to the last cent, which makes my wallet burst with coins. So keep a minimum coins in your wallet and save the rest on your piggy bank.

image credit: writeonnewjersey

Sell your unwanted items. Hold a garage sale, sell your stuff in craigslist or Ebay. You may find it challenging at first, especially if you haven't done this before, but this is another way to make money. This will also help you get rid of clutter at home.

Reward yourself by saving a specific amount. No need to achieve big victories, just simple ones will do. For example, save $5 after doing a spring cleaning in your room, or save $10 when you lose four pounds in a month. You can make your own 'victory list' with corresponding amounts so you can fill your piggy banks in no time. Isn't that a fun way to save more money in your piggy banks?

Wednesday, June 5, 2013

Earning Through A Self-Sustainable Life Style

When sustainable lifestyle is being talked about, many people are thinking of acres of land to be owned in the middle of a country where technology, even electricity, does not exist. Here is just a quick correction. A sustainable lifestyle can happen anywhere and anytime so long as you decide to have one.
By aiming at this kind of living, you are opening doors of opportunities by which you can save money or earn some more money. For the saving part, here are the things you can do:
  1.  reduce your living expenses (by simply living with the bare essentials) 
  2. trim down your need for commercially prepared products
  3. reduce your living space which you need not fill with much possessions 

Since you will be encouraged to live simply, you can get in touch with your creative side all the more. With that creativity, you can earn additional income. Take a look at these.

  1. grow  your own food; you can always sell the extra supply
  2. raise poultry; sell the eggs and some stock
  3. learn craft-making and form a business out of of it
  4. if you have your own farm, convert it into a tourist spot that can generate profits

Monday, June 3, 2013

Ways To Raise Frugal Kiddos

I recall what one of my friends often say, "What kids want, kids get!". Many parents try to endure this reality in a rather painful way. They succumb to the apparent truth that today's children are very different from how the children of the previous years were. But hey! There are many things which can be done to get this straightened out. Only a few parents though are willing to give them a try because they involve discipline among the parents as well. Yes. In their desire to avoid arguments, parents just give in to their children's wants and forego the opportunity of teaching them frugality.

Limit your children's access to TV and internet - All the attractive products - particularly toys which kids today can think of are marketed through these mediums. Seeing advertisements involving kids of their age who hold the latest gadgets in their hands cause every kid to be envious, whine and prod their parents to buy what they want.

Remove electronic gadgets as much as possible - Although electronics do not carry advertisements, they make kids want the latest models as they see the newer versions other kids may have. Also, electronics  limit kids from doing more worthwhile activities like playing outdoors and with other children of their age.

Teach values and stay connected with families who adhere to similar values - Tell your children stories on saving and highlight the wonderful benefits you can get from doing so.  Most of the time, kids have to be reminded every now and then that they do not need to have the latest gadgets in order to feel happy. Surely, you have friends who teach similar concepts. Connect your kids with their kids so that your little ones would not feel alone regarding this matter.