One of the most important parts of making money on the stock market is to determine your position.  The long position is basically the purchasing position – you are about to take on a long-term commitment for ownership of some stock, security, or other traded commodity.  The short position, by contrast, is the selling position – you are shortly going to dispose of the same sort of ownership and any responsibility toward it.

The best time to take up the long position is when stock prices are low.  This will get you into the market at a reasonable price and increase your chances for profitability as new offerings go up in price and older investment options recover or rebound.  In fact, as others take the long position and purchase at the same time you do, this will actually drive the value of securities up through the standard rule of supply and demand, causing the beginning of what could be a bull market.

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No, we are not referring to anything in the garage, the bedroom, or a country band. A whipsaw is a market trend that defies the odds. It can be thought of as the “fender bender”. Despite how careful you are as you learn to drive a car and become coordinated, sometimes you cannot do anything to avoid being rear-ended.

Whipsaw is a term for what happens when everything points toward a specific direction in market trend, causing you to buy (if it looks as though prices are going to rise) or sell (if it seems they are about to fall), then the opposite effect occurs.

For example, if you purchase a security at five dollars per share because the stock seems to have fallen as far as it can go and appears to be starting an upward trend, then unexpectedly, the stock plummets to one dollar per share, this is considered a whipsaw effect. If this happens to you, as it surely will if you play the market long enough, the best thing to do is wait it out. The stock will do one of two things – it will either dissolve entirely, and the company will go bankrupt (this is what you do not want to happen), or it will rebound, and you can opt to wait for a chance to turn a profit or you can get out as soon as the purchase rate is reached.

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Technorati Tags: Investing, Investment, Stock market, stoploss, Trade Forex

When foreign trade began, it was not an international trade market.  It was born out of the Bretton Woods agreement in 1944, which set forth that foreign currencies would be fixed against the dollar, which was valued at $35 per ounce of gold.  This precedent was first put into practice in 1967, when a bank in Chicago refused to fund a loan to a professor in sterling pound.  Of course, his intention was to sell the currency, which he felt was priced too high against the dollar, then buy it back later when the value had declined, turning a quick profit.

After 1971, when the dollar was no longer convertible to gold and the domestic market was stronger, the Bretton Woods agreement was abandoned, and the currency conversion process became more variable.  This allowed for a stronger backing in the foreign markets, and the United States and Europe began a strong trade relationship.  In the 1980s, the market hours and usage was extended through the use of computers and technology to include the Asian time zones as well.  At this time, foreign exchange equalled about $70 billion a day.  Today, about twenty years later, the trade level has skyrocketed, with trade equalling close to $1.5 trillion daily.

Originally, trading across international lines was more difficult, with several different currencies involved across Europe .  Though the major players in the European market were deeply involved in and veterans of international trade by the time other markets joined in, there were more currencies to keep track of – the franc, the pound, the lira, and many more – than was reasonable.  With the birth of the European Union in 1992, the wheels were set in motion to create a single currency that would be used across most of Europe , and the Euro was finally established and put into circulation in 1999.

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Technorati Tags: history of forex, Trade Forex

Forex is the nickname for the Foreign Exchange Market.  In the United States , there are several branches of the stock market, each with their own name.  For instance, some stocks trade on the Dow Jones, others on Nasdaq.  Of course, all stock market transactions in the United States take place on the New York Stock Exchange (NYSE).  In other countries the same is true.  There may be one or more distinct markets.

However, international trade takes place on the market termed the Foreign Exchange Market, or Forex.  Several countries across the world in almost every time zone participate in trade on Forex, with multiple currencies being utilized and stocks and commodities from all participating countries being offered for trade.  Because there are so many nations and time zones involved, Forex does not function as a “business day” entity like most domestic stock markets.  It remains open for trade 24 hours a day, 5 days a week.

Of course, these additional hours increase the risk factor intensely for those of us who are human and obviously cannot monitor our investments 24 hours a day.  This means that the value of your holdings could potentially plummet overnight, while you sleep, because other countries are still trading while you are in a dream world.  Again, it is like a car – there are many moving pieces under the hood, and just because you cannot see them does not mean they are not functioning.

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