Why You Need a Trading Plan
By Stu McPhee

In this interview the importance of a trading plan is discussed.

Tom: ‘Well when many traders and get into trading they concentrate on the strategy how they’re going to decide when they’re going to buy and sell, what kind of profit they are going to make and they focus on that. The higher percentages we know from the statistics don’t make it in the trading business and you feel that’s because of their lack of a plan. So explain what you go through when you get someone on the right track.

Stuart: ‘Yes absolutely I think you’ve hit the nail on the head there. I think people are attracted to trading clearly for the money and how much money they can make. Therefore they focus on the first decision they make in the whole trading process and that is when to enter a trade. That is the first thing we need to do and therefore they focus on that. And I think they ignore other things at their peril.

Clearly a complete trading plan is three things and there is nothing new here. There are the three ‘m’s': the mindset, the money management and the method. So many people focus on the method and they really do ignore the money management or the mindset or the psychology. I think a lot of people recognize that the psychology is an important part of what we do but they probably don’t accept it as being such a vital part and they worry about it later. They focus so much on the method, the entry, the trading system.

So my key message is look to be successful in trading, it doesn’t matter who you are, you must have a trading plan, and a trading plan that suits you. Every consistently profitable trader out there has a trading plan. It works for them, its right for them and they use it every day and they implement it every day and they are very very successful doing that.

And you ask anyone who is failing do you have a trading plan many well say, well not really. Some will say well I think I do but not really sure. The bottom line is anyone who is successful does have one, those who don’t, generally the odds are they won’t succeed. That’s harsh but that’s the realities of trading.’

Tom: ‘So you find the successful traders actually write this down before they make the entry into the market, or exit. They establish, they have it clearly defined on paper so it’s not just in their head where they can change it?’

Stuart: ‘Absolutely. Documented is the best. It gives us something tangible. Here’s a piece of paper, you can physically touch it, here are my guidelines, here are my rules this is all I need to follow. And if I follow this I will be successful. My odds have significantly increased.

If I gave this to someone else and paid them to strictly follow that plan, chances are they would make money. So writing it down, documenting it, it gives it something tangible it gives it something real. But funny you should say I think the majority of us starting out really don’t have a trading plan. ‘

by Cashmere Lashkari

As parents we love our children. We give them the best of everything that we can. Even at the risk of spoiling them silly. There is a desire to give the child the best that you can afford. Be it clothes, toys or education. Yet not many parents plan wisely for the financial future of their child.

You are alive and well today, and able to earn money regularly to meet the needs of your children. God forbid if something was to happen to you, what would be the state of your children? Not only will they be devastated that their parent is no more, but they would suffer severe financial hardships as well.

There is no guarantee of life. All of us feel immune to diseases for at least a couple of decades more in our thirties. What we don’t cater for is the unexpected. A healthy 30 year old can be dead in a car accident on the way to work. Don’t think it will happen to you? Why take a chance?

Secure your Child’s Future today!

Here’s a list of things that you can do. Do them all or pick a combination of what works best for you.

Get Life Insurance

While most of us have some sort of group policy at work, it is not enough for the child. It will help in the immediate transition though. So get a separate life insurance policy for your self. This should be payable as a monthly income to the family to help on a regular basis. There are options of paying the premium on a quarterly, annual or monthly basis.

Get Education Policies

Your child is going to need money at various stages in his or her education. At high school, graduation, and post graduation levels. Have separate policies that mature in the specific time frame that you will need the cash. These should be lump sum payments available for admissions and donations. The premiums can be paid monthly, quarterly or annually.

Get Gold

Buying gold was considered the wisest investment in the olden days. Even today it is a sound investment. While investing in physical gold may not be the greatest idea, considering how easily it can be robbed, get into gold funds. These are traded like regular mutual funds on the stock market. A great investment opportunity. Invest as much as you like when you have extra funds around.

Get Mutual Funds

The equity market always gives great returns in the long run. There are crashes when the market suffers, but if you invest in a SIP or Systematic Investment Policy, you will be immune to the daily ups and downs of the stock market. To safe guard your investments even more, invest in mutual funds that have performed well over the last five years and tend to invest in blue chip companies. Invest a fixed amount every month.

Get a PPF

A Public Provident Fund in the name of the child is a great idea to save money. You need to invest a bare minimum on a yearly basis, and when you have extra money you can park it there. The temptation to spend must be avoided at all costs. Even if it is something luxurious for the child. Earmark it as education money. Invest a fixed amount every year.

These are a few basic steps that you can take to ensure that your child always has a financially secure future.

To have your blog posts written by an experienced blogger contact me at cashlash@yahoo.com
Visit my personal blog at http://www.cashmerelashkari.com

In debt consolidation analysis, a debt counselor will work with you to find out a way to give you financial relief by helping you do away with debts. Debt counselors can also contact you over the phone. Details of all your debt accounts are taken into account, your income; expenses and other monthly financial obligations are reviewed.

It should also be remembered that debt consolidation is also a bankruptcy alternative. As such it should be opted for if it is found to be a suitable debt solution for you. Opting for debt consolidation will allow you to enjoy reduced rate of interest and lower monthly payments. It also gives you a new repayment plan so that you can pay off debts in a comfortable manner.

In debt consolidation analysis, a debt counselor deals with different case studies and suggests debt solutions accordingly. If you are regular with your payments, the creditor may also waive off late as well as over limit fees.

Investor mistakes happen and the big ones can kill you financially. If you lose half of your money, you need to double what you have left to get back to break even. Here we discuss the major investor mistakes, not the obvious.

Call the following rules investing basics, or simply investor mistakes to avoid. The sorry thing about these investor mistakes is that some financial planners I have known not only embrace them, but they use them as sales tools, so beware.

Never play “catch up”. For example, your financial planner reviews your progress and finds that you are not on track to reach your retirement goals. Even though you are a relatively conservative investor he recommends investing heavily in aggressive stock funds to earn a higher return. The stock market tanks, and your dreams of early retirement go down the drain. This course of action goes against sound investing basics. Unfortunately, in 2008 and early 2009 too many investors made this major investor mistake.

Averaging down on a stock is an investor mistake, and an old sales tool used by some stock brokers to work a client for commissions. Your broker calls and suggests buying stock in XYZ Financial at $10 per share. XYZ sold for over $40 less than a year ago. You buy 1000 shares and the broker makes a commission. Two months later he calls back when XYZ is selling for $5. The broker exclaims that if XYZ was a good buy at $10 it’s a great buy at $5. You buy 2000 more shares, and he makes a commission.

When XYZ hits $2 your man pimps you again, because at $2 XYZ is the opportunity of a lifetime. You buy 5000 more shares, he makes yet another commission and soon after XYZ goes broke. You lose every penny you had invested. You made a major investor mistake and violated one of the rules of investing basics. If XYZ was a good buy at $10 and $5, why did it then go to $2, and end up broke?

Do not believe that higher interest rates are good for investors. Savers may benefit, but investor mistakes in times of rising interest rates can be costly. Bonds and bond funds will fall in value, and often times stocks and stock funds as well.

Do not believe that you have nothing to worry about if your investment portfolio is diversified. You are diversified if you own several stock funds, but in a bad stock market they will likely all be losers. For much of 2008-2009 there was virtually no good place for average investors to invest and make good returns. Investors lost lots of money, diversified or not, even if they understood investing basics.

Paying ongoing fees for service, or for timing services, is often an investor mistake. For example, you roll your $200,000 retirement plan into an IRA through a financial professional. He puts you into various mutual funds from various fund families. In addition to sales charges of almost 5% and yearly fund expense of over 1%, you are also charged a yearly service fee of 1 1/2%. That amounts to $3000 the first year and grows with the value of your account. Be careful what you sign, these extra fees are not necessary.

In regard to paying for timing services, this is almost always an investor mistake. Very few market timing services have a good long-term record for timing the stock market.

The last of our investor mistakes to avoid: don’t complicate your life by getting disorganized. You may have had numerous employers and retirement plans. Now you have your money scattered about and have lost control. Consolidate by rolling these retirement funds into an IRA with one or two major mutual fund families. You will be able to access your accounts and get service no matter where you live.

Investor Guide to Trusting a Financial Planner

Your persistent savings will add up with time.  One hundred dollars saved each year will cause your total savings to rise from $100 to $1,000 in ten years.  However, your net worth (or financial wealth) should grow, over time, by much more than the sum of your savings.  This is because of the power of compound interest.  This means that you should expect to receive on your savings some rate of interest (or return or appreciation) each year.  If you leave the interest in your account, your interest will “compound” because you will then receive in subsequent years interest on your savings, plus interest on the interest that you received in previous years.

Again, if you save $100 for ten years and receive an interest rate of 10 percent, your total savings with interest will grow from $100 the beginning of the first year to $210 the second year ($100 of savings the first year plus $10 of interest on the first year’s savings plus $100 of new savings), to $331 the beginning of the third year, on to $1,594 the beginning of the tenth year.  In short, with compound interest you will have close to 60 percent more in net worth at the beginning of the tenth year than you would have had from the savings alone.

You can imagine with “interest on interest”—or compounded interest—your net worth will build progressively more rapidly with each passing year.  With sufficient savings, enough patience, and a reasonable rate of interest on your savings (or return on your investments),  you can imagine that your net worth (and resulting income level) in the future will be the envy of those who have chosen to spend all their income year after year on many things they could do without, or do with less of.

To dramatically illustrate just how powerful compound interest can be in building wealth, suppose that you are a newly minted twenty-two-year- old college graduate, with a starting salary of, say, $30,000 a year, and you salt away a mere $2,000 the first year, and only the first year, on your job (which means that you will then save only 6.6 percent of your annual pre- tax income that one year).

Assume that you are able to secure an annual rate of return on the investment (above the inflation rate) of 15 percent until retirement.  Amazingly, your onetime investment will be worth, in the purchasing power of today’s dollars, $814,774 at age sixty-five and over $1.64 million at age seventy.

Why Torture Yourself Listing All Your Bills? You need this information in black and white to get a realistic picture of where you are.  This info will also help you later when it’s time to negotiate with creditors or collection agencies.  Again, write down everything that you owe, even including credit cards that might have only $100 on them.  Don’t make the mistake of leaving those “small” bills out because “Oh, I’m going to pay that one off this month anyway.”  Just write down everything you actually owe as of today.

Many people have a rough idea about how much they owe their creditors.  But there’s no substitute for having true, accurate numbers – not guesstimates.  To fill in the proper figures on your written sheet, or your computer spreadsheet, you’ll have to go find your most recent statements and invoices from your creditors.  Take as much time as you need today to collect all this data.  It’s a crucial step in you getting your finances together.

It’s also a good idea to call the companies you owe and ask for the latest information about your debt, especially if you’re looking at statements that are more than a month old.  Even if the statements are current, you should call your creditors because some of the information on those statements may have changed.  For instance, you may have charged additional items since the closing date on your credit card statement, so now your debt is actually greater than your current statement indicates.  Also, you may have had a teaser rate or a lower interest rate in the past, and maybe that interest rate has now jumped.  Whatever the case, you need to have the most accurate information that is currently available.

A Wake-Up Call: How Much Do You Owe?  The next step is for you to add up all your debts.  For some of you, seeing your total debt in black and white may be a scary thing: a wake up call to how deeply you are in financial bondage.  For others, seeing your total debt may offer relief: perhaps you don’t owe as much as you feared.  Whatever the situation, don’t panic.  Remember, you’re on the path to financial freedom now and if your goal is to get to “Zero Debt” status, keep plugging along – it will happen, and sooner than you think!