Category Archives: Finance news

Preparing Yourself For Day Trading Is A Good Way To Overcome Trader’s Fear

Posted by on October 4, 2011 No comments

Your biggest enemy as an incipient Day Trader day trading tips is Fear. You will probably never entirely get over it, but you can reduce it by becoming aware of several factors that contribute to what I call “Trader’s Fear”. You need to consider these “Trader’s Fear” factors before you launch into Day Trading :

Fear Factor Number One: Being Uncomfortable With The Market.

If you want to make as much money possible as a Day Trader day trading for dummies, you need to squarely face a few issues, including the actual comfort you personally have with trading in the Stock Market. If you are terrified of making a mistake, that fear will paralyze you and cause you to make the same mistakes over and over, for example pulling out when you should stay, trading prematurely (or long after the Indicators signaled you should have entered a trade) — just to name a few. If you are scared the entire time you are in a trade, you won’t be able to move past the problems that will dog you, and you won’t be able to “pull yourself together” when you absolutely need to.

Fear Factor Number Two: Going Cheap on A Broker.

Choose an experienced broker. It’s tempting to go with a broker that charges a low commission, but many times these individuals have little or no experience and they won’t be effective in recommending stock or helping you foresee unexpected problems. In my own case, as an example, I went with a broker who was “new to the game”, having just entered Stock Market brokering from a career in High Tech. He recommended some high risk Biotech companies that lost most of the money I invested. You need to go with an experienced broker, not a cheap one.

Fear Factor Number Three: Not Enough Practice Trading.

Spend time in the practice account before turning to real transactions. Don’t rush into “live trading” until you have spent a great deal of time practicing with the broker’s “funny money”. Practice accounts have an upside and a downside. On the one hand they help you see the impact of changes in the market on your profits and losses. You can make a few risky decisions in the knowledge that you are not really risking your own, real money. The downside is that you make risky decisions that you won’t make with your own money, and practice trading won’t really reflect what you do when you trade in a “live” account. The “Trader’s Fear” factor isn’t with the demo account the way it will be when you convert over to a “live” account — and that can mean all the difference in the world. Still, you can determine your most comfortable investing style with a practice account, which will be helpful.

Fear Factor Number Four: Not Knowing Enough About The Companies You Are Investing In.

Once again, had I known that Biotech stock was as risky as it was, I wouldn’t have touched it. Do your homework. Find out exactly who owns the company, how it is doing financially, what economic factors may influence it, and what Market Gurus are saying about it. Find good sources day trading basics of information and read as much as you can before you “place your bet”. Check out financial reports you can purchase online. This information will always lag behind events, however, so find sources that are as “real time” as possible.

Fear Factor Number Five: Launching Too Soon.

Take your time getting started. As long as you feel like you are leaping off a cliff, the anxiety will be much higher. Take your time with research, with dummy trading, with getting to know the Market in general. Read what advisers and market gurus have to say about how to trade with confidence. If you are careful about how you get started, things are going to go much smoother and you will have fewer problems. Never just dash into the process and hope for the best; prepare yourself as best you can, but also keep in mind that at some point in time you have to actually start. You can’t let fear keep you from doing THAT, either.

Fear Factor Number Six: Failure To Learn To Live With Risk

Day Trading is living with risk. Get used to it. Learn to love it and thrive on it. At the same time, learn how to reduce it. Learn how much money you can risk in a trade, and prepare yourself to lose it all. This means you don’t mortgage your house, or bet your retirement. Never risk more than you can lose, and be prepared to lose it.

Reducing fear as a Day Trader requires that you have a basic foundation in the Market: the manner in which it operates, how it is going to influence your trades, and how to make a profit. Avoiding the market until you decide to start Day Trading might make you anxious and nervous while you figure out what your best approach will be, but taking the time to reduce these “Trader’s Fear” factors is vital.

Above all, don’t rush it. Take your time to make sound investment decisions and ensure that you are on your way toward ultimate success. Some people can do this in a short period of time, but don’t let that stampede you. There is no set time for you to become comfortable with the market — and become a successful Day Trader.

Housing Prices Suffering Reasons

Posted by on June 1, 2011 No comments

The stats
The price of housing in Australia’s capital cities has declined by 2.1 percent in the first quarter of 2011 with Brisbane, Perth and Darwin bearing the brunt of the areas hit hardest. Housing prices have declined by 0.6 per cent over the past year.

The homes in these capital cities have posted the largest quarterly fall in the last 12 years. The capital city of Brisbane showed a property value decline of 4.6 per cent and Perth valued a 3.4 per cent decline for the March quarter.

Tim Lawless, the RP Data research director expressed concern that the housing market is advertising homes for more than 30 per cent what they were being offered for last year. Since the property market has been flooded with more available listings, potential home buyers are finding that they are able to attempt to negotiate better deals than in previous years. Grants for first time home buyers are also making it a little easier to achieve home ownership.

The overage of stock results in prospective buyers being able to request lower prices and sellers are being forced to lower their asking prices by as much as 6.5 per cent.

The floods
The 4.6 per cent drop in housing prices in the Brisbane area is seemly due to the flood damage that has ravaged that area specifically. The median home price in that area was $455,000. Mr. Lawless said that Brisbane’s soft market conditions were due to the severe amount of flooding in the South East Queensland area.

The victims of the floods are left with little comfort, as some of them have no insurance to cover their losses and those that do have insurance face the possibility of waiting for lengthy periods of times for repairs. They may not recoup their loss on property value for many years to come. Prospective buyers will not find the flood damaged areas appealing enough to purchase homes until the damage from the floods has been repaired.

The decline
The decline in home values is likely a result in the higher interest rates posted in 2010, which translates into good news for those looking to buy their first home. Typically, first time home buyers in Australia struggle due to the high cost of homes but this lag in the market helps those individuals.

Some analysts believe that the market has been over-inflated for some time and that it needs correction while others feel that continued growth is due to a strong market.

Brisbane has seen the largest decline with an average sale price of a home being $448,669. This compares to $452,546 in Adelaide, according to Australian Property Monitors. Asking prices have dropped anywhere from 10-30 per cent. Even the companies offering cheapest home loans did not get any proper response.

The only capital city that has not witnessed any decline in property values is Canberra in that same time frame. This suggests that the floods did have a direct impact on housing values. It is quite possible that the effects of the floods concerning home values will be felt for the rest of the year, especially in the Brisbane area.

The rental
March of 2011 proved to be a good month for the landlord. Rental units in capital cities have been posting a gross return of 4.9 per cent for apartments and a 4.2 percent increase for houses. This also translates to an increase in property values for the landlords. Landlords have been able to keep rental prices at a premium due to the demand, and not just from flood victims. The results of the floods saw an increase in the need for rental properties but those amounts have seemed to level out, like there are some good examples showing as cheapest mortgage for Australian people.

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Protection For Credit Card Holders

Posted by on May 29, 2011 No comments

The Federal Reserve has come up with some new rules to protect consumers from a list of abusive lending practices.  The changes aren’t in effect yet, and may not actually go into effect.  It’s worth looking at the proposals, though, to understand what’s been going on just lately.  If you haven’t been paying attention, you most likely have no idea what the charge card companies can legally do to you.
The things that would be prohibited would be:

Increasing the rate on a pre-existing balance

At the moment, there are pretty much no rules about this.  Your credit card agreement probably says how they calculate the rate–but it also says that they can change the agreement at any time, including the part on how to calculate the rate.  Many card agreements also provide for you to “decline” to accept changes–but if you use the card after they send out the notice of changes, that’s the same as accepting the new agreement.  And some cards don’t even offer that protection–they can raise the rate for any reason, or for no reason at all, and there’s nothing you can do about it except pay the new rate until you manage to get the debt paid off.

Applying payments to maximize the interest charges

Your credit card account agreement says how they’ll apply any payment that you send in.  It matters, because parts of your balance are at different rates.  If you read the details, things are often set up to pay off low-rate parts of the debt first, leaving you paying on high rate debt for as long as possible.  Under the new rules:

Banks would be required to give consumers the full benefit of discounted promotional rates on charge cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.

Imposing interest charges using the “two-cycle” method

The “two-cycle” method is a set of rules for calculating the interest owed in such a way that you don’t get any “grace period” if you don’t pay your card off in full every month.  If you carry a balance all the time, it doesn’t matter.  But if you usually pay your card off, but occasionally take an extra month to get back to zero, the two-cycle method can very nearly double the interest you pay.

The rules would also require that banks give card holders a “reasonable” amount of time to make payments.  It used to be that card holders got almost 30 days–basically, you had until the day they printed out your next bill.  Credit card account companies, though, have been shortening the grace period, especially for their riskier customers.  For some cards, it’s gotten to the point where you really have to stay on top of your bills every day, in order not to be constantly late on your payment.

Of course, the only sensible thing to do with charge card accounts is to pay them off every month.  Credit card accounts are a great payment mechanism, but a terrible way to borrow money.  Everybody knows that.  And these new rules wouldn’t really offer much to the people who do use their charge cards to borrow cash.  

What these new rules would do is protect consumers who fail to run an error-free bill-paying and agreement-reading system.  As things stand right now, someone who pays every bill in-full, but who is only 99% successful at paying on-time, could easily end up owing hundreds of dollars in fees, penalties, and interest.  These rules would ease up some of the worst of the “gotcha” effect.  (And it certainly seems that some banks have been changing their rules specifically to set their customers up to make occasional small errors–and turn those errors into big fees for the bank.)

The rules are open for public comment.  No doubt the big banks will be commenting.  They’ll have statistics that show that customers who make a late payment are much more likely to default than customers who are never late.  Maybe a few consumers will comment about the basic unfairness of agreements that the charge card companies can change at any time.

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Understanding Fees Associated With Credit Cards

Posted by on May 29, 2011 No comments

Annual fees, grace periods, balance transfer options…it’s a wonderful world of charge card jargon out there, and depending on your needs and planned uses for charge card accounts, it pays to look at your options.

Following are the various ways in which credit card account companies can get some money out of you:

Interest Rates

All charge card accounts levy an annual percentage rate, the main difference being the percentage charged. Obviously you want to choose the card with the lowest rate. If you already have a card with a higher interest rate but that you like for other reasons, then try calling and asking for an interest rate reduction. According to a 2002 Public Interest Research Group study, 56% of people who called their charge card issuer and asked for a reduction were successful.

Early Interest Posting Dates

If you are in the market for a new card, find out if interest is charged from the date the charge is posted, or the date of purchase. Most will now charge from the date of purchase (which is usually a few days earlier than the posting date), but if you can find one of the other kind, it may be worthwhile.
This is only really an issue if you plan to carry a balance on your charge card account at any time, which if it can be avoided, would be preferable.

How Interest is Calculated

Some cards will charge interest on the balance owing at the month or billing cycle’s end. Makes sense, right?

Well, there is a growing trend now to charge interest instead on the average daily balance. So if you charge $1,500 in September, and pay $1,000 of it off on the due date, the following month you will actually be charged interest on the $1,500 average daily balance instead of the actual $500 left owing.

Grace Periods – or Lack Thereof

Usually, a grace period will allow for a responsible credit card account user to pay off all their purchases within 24-30 days without paying any interest.

But as some readers pointed out in the comments on another article, even those dutiful credit card users who pay off their balance in full each month can sometimes get duped by circumstance (like the bank processing a transfer late) and miss the payment due date by a sliver.

For those consumers above and for those who regularly carry balances, even grace periods won’t save you: if you have an outstanding balance, you are charged interest on new charges from the date of purchase. (All the more reason not to carry a balance)!

Nuisance Fees

In a world of increasing fees for every little thing from booking airline tickets to doing your banking, charge cards are no exception to this bandwagon. The latest in nuisance fees can include:

Late payment fees (as high as $40)
Over-the-limit fees (as high as $25)
Inactive account fees
Not carrying a balance fees (or carrying a balance under a certain amount)
Monthly fees that are a percentage of your credit limit
Annual flat fees
Balance transfer fees
Credit limit increase fees
Set-up fees
Return item fees
Fees for paying by telephone

…and on it goes.

Cash Advance Interest Charges

Many cards charge higher annual percentage rates on money advances in addition to transaction fees.

What They Have to Tell You About

When you are searching for a new charge card account, the following items are required by law to be disclosed:

Annual Interest Rate (also called APR or annual percentage rate)
The teaser or introductory rate, along with the details of when and how the regular rate kicks in
How the variable rate is determined (if applicable)
Penalties for late payments
Annual, periodic, or membership fees
How the balance is computed for interest purposes (ie: average daily balance or balance owing methods)
Minimum charge
Grace period (the period of time you have to pay off the balance without incurring interest)

My Card Sucks! I Want To Cancel

If after reading this you think you have one of those cards with too many fees, you can cancel it. However, there is a chance that it may reduce your credit score. Check out FICO to find out what FICO scores consider, as well as how best to understand your credit score.

To that end, you should be aware of soft and hard closes, and how they affect you.

Soft Closes

With a soft close, the charge card company will acknowledge that you want to close out the card, but they will automatically reactivate it if charges go through. Their rationale is that they are saving you embarrassment of the card being rejected if you happen to be out shopping and inadvertently whip their card out!

Hence, a soft close will also often affect your credit score and ability to qualify for large loans later on if the lender does a credit check and sees that you have all sorts of credit available to you, but doesn’t see that the credit is soft closed.

It also makes you vulnerable to fraud, since if a professional steals your identity, they can order another card from a soft-closed account and start charging.

Hard Closes

Ensuring your account is hard closed entails a little more follow-up work, but can pay off in the end. You must first request a hard close when you are cancelling the card, and follow up with a confirming letter. In your letter, tell the credit company to report “closed by consumer” to the credit bureaus as well, and keep copies of everything.

Some issuers will refuse to do this: their policy might instead be to process a soft close first and a prescribed time period, at which point it reverts to a hard close. Find out how long that period of time is, and ensure that the account is hard closed with a letter at the end of that time.

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Homeowners Defaulting On Mortgage Payments

Posted by on May 29, 2011 No comments

Those with home mortgages are defaulting on their repayments much faster given the current global financial crisis. Tight household budgets and elevated cost of living expenses are causing great stress to customers. Eeven people who have done their leveled best, used home loan calculators but no avail at this point.

Westpac records record gains

Australia’s second largest bank, Westpac, disclosed never before reached profit levels and also unveiled that non-payment of outstanding mortgage rates have reached levels similar to those Australia had in 2008. A six month cash profit statement for Westpac showed an increase of 3.17 billon, a 7% increase from just one year ago. The bank also posted a net profit of $3.96 billon, which was a 38% boost from one year ago which the bank directly relates to the acquirement of St. George.

Westpac Chief, Gail Kelly, despite the low base, expects profits to continue rising even though homeowners continue to have difficulties paying higher cost of living expenses.

The source of some loss for Westpac

According to Westpac’s home loan books, homeowners made up 1.5 percent of the bank’s loans that were 30 days delinquent on payments at the end of March. Ms. Kelly indicated that the rise in mortgage delinquencies was “entirely within our expectations.”

She stated that even though homeowners were probably going to need assistance in the near future with repayment options, that Westpac did not constitute this to mean a loss for the bank.

The rate of those homeowners who are 90 days or more delinquent rose to 0.6 percent which shows a significant increase that is almost double the rate from the previous year.

Queensland has been hit the hardest with mortgage delinquencies but every state is feeling the crunch of the defaults. This is indicating a new wave of mortgage stress for homeowners.

The rising level of mortgage defaults seems next to impossible to believe despite Australia’s low rate of unemployment. Jonathon Mott, a USB analyst, speculates that the deficit might have been caused by the first-time home buyers who were given grants to assist in purchasing a home.

Australia and New Zealand Banking Group shows similar results

The ANZ, Australia’s third largest bank, also reported a 38% rise in profits for the first half but also claims that lender growth will continue to slow as the interest rates soar.

Australia’s quickly developing relations with the Asian countries, including China, is forcing the central bank’s hand. The expansion into the Asian countries kept in line with results that were posted. The bad debt charges were a little more than what was expected.

The central bank has had no choice but to increase interest rates to unprecedented levels in the developed world. Consumer confidence is strained resulting in lack of spending passed on to retailers. This, in turn, is hurtful to Australian exporters who convert currency back into weaker Australian dollars.

ANZ’s Chief Executive, Mike Smith, states that if the central bank continues to increase interest rates that it threatens to “stall the economy.”

If consumers cannot invest in businesses due to the higher cost of living expenses, businesses cannot produce profits and they will just refuse as they have the home loan interest calculator as well.

Australia’s Reserve Bank did not change the cash rate, currently valued at 4.75%, but it anticipated that this rate will have to be altered soon.

Mr. Smith went on to say that “I think lending growth is going to be much slower” which will make it much more difficult for Australia’s big banks to grow their profit margins. It is not expected that lending growth will recover to pre-crisis levels any time soon.

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Why Do Americans Have So Much Debt?

Posted by on May 29, 2011 No comments

The average American household has about $8,000 in charge card account debt and many consumers are applying for a second mortgage and consolidating loans only to apply for more charge cards more and more. Young people are finishing college with lots of loan debt and carry this debt for years.

Why do we continue to overspend and put ourselves in debt? When a psychologist examines a patient and wants to find out why they have a certain problem, they usually look at their past and childhood. Financial trouble can definitely be traced back to their childhood.

Parents today focus on making sure their kids do well in school, don’t do bad things, go to college, and have a good career. Schools emphasize writing skills, math skills, and the arts.

I am not saying that any of these things are bad, by no means! I hope they keep working on and developing these skills. The problem is what they are not including in this list of important things to teach your kids. Most parents do not emphasize finance skills.

If a child becomes an adult never learning anything about money, they will use money based on their own experiences. Once they find out that they can exchange money for the things that they love, they will continue to do so. Add in charge card accounts, and they now realize that they can get more stuff without even having to pay for what they want with money they had to work for.

Usually, these consumers become spending addicts and every time they get paid they’ll spend it on things they don’t need and won’t have anything left for what they do need. They will force them into debt.

We can try to prevent this by teaching them about money when they are young. Parents today need to teach their kids the value of cash and how to budget, save, and spend money correctly in order to keep them out of debt.

If you are a parent, you should point them in the right direction and try to provide good guidance into money management. You can help do this at Teen Money Central which you can find more information about in the link in the bio section below. How do you teach them?

Don’t buy them everything they want. Give them an allowance, not attached to chores, so that they can learn to budget their cash and buy their own things. Encourage them to save. Have them open up a high interest bank account and deposit regularly to it so that they can see that it’s possible to earn money with minimal effort.

Encourage them to apply for a job when they are old enough and have them spend their own money on things such as clothes, music, going out, etc. Teach them about investing and why it’s important to save for their future. Have them open up a custodial account to an online brokerage firm so that they can get hands on experience.

Don’t buy them a car. Have them save for their own car. Or, you can match whatever they save and put it towards their car. Teach them how to budget their money. Don’t give them a charge card account. Follow these ideas and watch your kids learn to handle their money.

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