Day Trading Forex-might Be A Bad Idea!

The Forex market has understandably become one of the most attractive and popular financial markets in the world. Operating around the clock via a decentralized network of central banks, investment institutions, hedge funds, and similar institutions, the Forex market allows traders to speculate on the movement of currency exchange rates. Players of the Forex tend to like these features most:

· Round the clock action-the Forex market constantly adjusts and is open 24 hours per day between Sunday and Friday afternoon.

· Less problems with gap down (when price starts out lower than its previous ending price due to factors that occurred when the markets were closed)

· Huge leverage (can get 1:100 margins)

· High volume

· Live trading (most traders are connected to the Forex market via an Internet platform that provides them with real time exchange rates)

· Commission-free trades (but most brokers tend to get the difference between bid and ask price which tends to equal 3 to 5 tenths of a penny on most transactions)

While all of these are very attractive characteristics for any investor, the truth is that there are a lot of people who find themselves on the wrong side of a trend and suddenly in trouble because they try using day trading as an investment strategy. Day trading essentially boils down to making a series of short, small trades in hopes of making a quick profit. A rich idea with often a poor outcome.

People can and do make very good money trading on the Forex market but the most common trait of successful investors is the use of a proven investment strategy, patience, and using pre-determined stops after making certain to do your homework. The ability to understand the emergence and direction of trends through analysis is a common trait in successful Forex traders.

Because day trading often involves multiple transactions made in rapid succession in order to make a profit, it is very hard to properly analyze the day’s events and your charts. Day traders are more prone to fear-basic panic selling and other decisions that lose money and lower profitability.

Day trading is also not a good idea with the Forex market because transactions are almost always conducted at the very limit of the margins (typically 1/100, or $1,000 is all most investors have in a given Forex transaction of $100,000, or one lot of currency). Because of this, even small fluctuations in the wrong direction can and often do spell disaster for day traders.

Indeed, there are day traders out there claiming to make a good living trading Forex and they no doubt exist-but they are rare. The volatile nature of the market, the lack of information, and the extensive use of margins in Forex all combine and make day trading possibly a bad investment strategy-period.

Day Trading Forex-might Be A Bad Idea! / Kent Douglas

Article by Kent Douglas, author of “The Simple Forex Solution: The Easiest Currency Trading System Anywhere.” To learn how you too can succeed in Forex and Currency Trading, please visit http://www.SimpleForexSolution.com

Medicaid Asset Protection

As tax preparation time begins, many seniors are asking to include Medicaid asset protection as part of their tax planning strategies. For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors under the new Medicare nursing home provisions. Under the new provisions, before a senior qualifies for Medicare assistance into a nursing home, they must spend-down their assets. These new restriction have a 5 year look-back, used to be 3 years. And used to be that each spouse had a one-half interest in the marital property, it now appears that all the marital assets are to be spent-down. I have not seen specific regulations but it appears that the healthy spouse will be left without any assets if one of them gets sick.

Suggestions by seniors have been to transfer their assets to their children. Although this option is available, I’m not sure that it’s a good option. What if the child decides to use the asset for themselves, what if they get divorced and the judge awards assets originally intended for the parents to the divorcing wife’s decree, what if the child get’s sued?

There are also tax implications. If the assets are transferred to the child for less than fair market value, then it’s a taxable gift. Even worse, if this type of transfer to the child is completed before the 5 years-look back, -is it a “fraudulent conveyance?”

Medicaid asset protection has to be done very carefully. Planning in this area is evolving. There are a lot of eldercare law firms popping up all over the place. I have been approached by such a firm to send them clients. They claim that they can structure a new deal whereby the nursing home won’t be able to attach assets even after they enter the nursing home.

I know this much, any method used to deflect assets from the original owner has to be done at it’s fair market value. For example you just can’t transfer your house from you to your child. There are tax consequences. Did you just sell your house? Or did you just gift your house? Who will determine the fair market value? Did you get a genuine appraisal? If therefore, it’s at less than fair market value (willing buyer and willing seller, neither under compulsion to buy or sell, each acting in their best interest) did you just create a more challenging problem?

Any method whereby there’s an element of strings attached, it’s revocable and therefore you have done nothing to disassociate yourself from your asset. One can challenge your intent, to divert assets for the purpose of defrauding a potential creditor and failure to have filed a gift tax return has statutory penalties, and interest, worse- if Medicare intended, criminal?

I am aware of only one method of disassociating yourself from your asset (personal residence, your CD’s, your investments, vacation spot) is to give it away. Period. You can gift it to your children, pay the tax and that’s it. The problem is that you no longer have any control and you are at the mercy of your child’s good intentions and a blessed spouse. Risky? You bet!

An irrevocable trust with an independent trustee (not related to you by blood or marriage) will fit the bill.
An irrevocable trust, is an irrevocable contract between you and the independent trustee to manage the assets for the benefit of all beneficiaries. You and your spouse can become beneficiaries along with your children and grand children.

Timing is extremely important. If the transfer (repositioning) of your valuable assets is done before the 5 years, chances are good that it will stand-up in court. What if it’s before the 5 years are up? Is your Medicaid asset protection plan still good? In my book it’s better to have done something than nothing.

Medicaid Asset Protection / Rocco Beatrice

Rocco Beatrice, CPA, MST, MBA, award-winning trust & estate-planning expert. 71 Commercial Street #150 Boston, MA 02109 tel: 888-938-5872. Click here-FREE newsletter & learn to reduce taxes, protect assets & secure privacy. Asset Protection Irrevocable Trust

Spot Trading in Forex

This trading is one of the two options and the one which offers traders the flexibility. There are two styles within the spot trading too. They are the traditional option and then the SPOT option which stands for Single Payment Option Trading.

The traditional option let the buyer purchase a contract to buy the required number of lots at a time and price of mutual choice. This is slightly different from the stock market where the opted lots are always bought and sold on standard settlement cycles. This is follows the over-the-counter nature of trading of forex. When option expires and the set price is not attained, the buyer only pays the options seller the premium which equals the difference between the expiration and options price. If the price hits the set price, buyer gais the lots and can sell them off for profit in the cash market. The premiums payable to the options seller is a little higher here than that of the SPOT trading contract.

Single Payment Option Trading- SPOT
SPOT trading is pretty simple and straightforward. The seller offers a price scenario; say for example EURO/USD will cut through a particular price within a specified period and seeks price offers. If the price break comes through, the seller immediately gets cash deposited into his account.

SPOT trading is especially attractive to traders because of the advantages inherent within it.
1. You stand to get the cash if your call is right otherwise you loose only your premium.
2. SPOT offers a number of different choices and not just one fixed to opt for unlike in traditional options trading.

But Why Traders Prefer SPOT?
Out of the appealing reasons some of them are listed out here.
1. Your downslide is protected to the limit of your premium which is the paid up value of the lots.
2. Payment needed to make is lighter than the cash market.
3. The biggest advantage is the freedom to set the prie and expiration date.
4. Traders can hedge the SPOTs against cash positions and minimize risk
5. When you anticipate fundamental changes to a currency you need not put at stake your entire capital to enter into open positions.

There are certain downsides for SPOT trading in forex too without which I suspect everyone would be trading SPOT market rather than cash market.
1. Premium is a function of strike price and date so the risk /reward ratio is variable
2. You can’t change mind midway and trade the SPOT options unlike traditional options or cash market, so predicting exact price and date could be risky.

When entering into positions keep in mind the time function as longer periods load higher premiums.

Spot Trading in Forex / Jason Uvios

Jason Uvios writes about “Spot Trading in Forex” to visit: foreign language translation, foreign exchange markets and forex trading.