Free Forex Training

A Guide to Strategic Forex TradingEntering the world of foreign currency trading can be daunting for beginners. Often tutorials are pitched at a level that is difficult for first time traders and those coming from trading stocks.

The team over at Orbex Forex Trading have just put out a series of ebooks and video tutorials that start right from the beginning with a Forex Market overview, what jargon is involved and the strategies you can employ to get an edge in the market.

They then walk you through the basics of Fundamental and Technical analysis including using candlestick charts and indicators and how they apply to currency trading.

I particularly liked their explanation on correctly drawing flag patterns using charting programs like metatrader 4, and how they can be used to make entry and exit positions

All of their Forex trading library is currently free, and you only have to create a website account to access the material (not obligated to open a trading account).

They also offer free MT4 demo accounts so you can follow along with material on the exact same trading platform that you would use in live Forex trading.

You can see all the materials on their blog page here: https://www.orbex.com/blog/

 

 

Investing in Precious Metals

Gold has long been an investors’ safety net. With all currencies pegged against its value, gold is virtually impervious to market fluctuations and historically has only gained in value over time. But investors seldom consider that it’s part of a larger market—that of precious metals—that is also worth looking into if you’re looking to expand your resources.

There are two ways to invest in precious metals: through financial instruments like mutual funds and certificates, or physical metals such as gold bars and coins. The differences lie in several aspects including liquidity, trading methods, and risks and rewards.

Physical metals generally have a higher perceived value than financial instruments, especially in tough times. This is because when economies tank, investors lose confidence in paper money, and their values fluctuate and often end up lower than before the crisis. When this happens, people fall back to gold and other precious metals, which aren’t subject to the same ups and downs. This security makes them more valuable in the bigger picture.

One of the issues with physical precious metals is storage. Most banks offer storage facilities specifically for such investments, but this leaves the owner vulnerable to bank failures: what happens to the precious metals they have in storage? Will the bank’s creditors, insurers, or account holders have a claim over it? Policies vary by state government and institution, so it’s important to do your research beforehand.

If this is a concern, mutual funds and other instruments may be a better choice. Here, instead of buying precious metals directly, you invest in companies that mine for them or explore potential resources. This is a market that has consistently been profitable, so there is some security compared to other industries. Of course, there is still some risk in tying your money to another company’s success. Other factors that come into play include movements in the labour market and within the organization (e.g. change of management), and even political and economic issues if you invest in international explorations.

Needless to say, it’s important to get informed before putting any money into the precious metals market. Joining a community of dealers such as Lloyds Commodities can help you find reliable market information, and even get you in touch with more experienced dealers who can help you learn the ropes. The market isn’t without its risks, but with good planning and guidance, you can protect yourself and maximize your returns.

What’s In A Cash Flow Statement?

The money trail is famously useful for crime investigators, but it’s also a handy tool for stock market investors. When valuing stocks, investors want to know not just how the company is doing (as indicated by the balance sheet), but also how the money has been spent and generated in recent months. This is where the cash flow statement comes in.

As its name suggests, the cash flow statement details a company’s cash-related activities within a given period. In other words, it shows how the cash moves within the company, particularly compared to net income (which is a non-cash figure). It takes into account investments, loans, dividend payments, buying and selling stocks, and overhead costs. As an investor, you will want to know how much cash came in, where it went, and how much of it stays in the company at the end of a set period.

Both incoming and outgoing cash is considered in the cash flow statement. Outgoing cash is reflected as a negative number, and cash flowing in is a negative number. These numbers are taken from another financial document called the balance sheet. The data is divided into three sections: operating, investing, and finance activities.

Cash obtained from operating activities includes net income, with adjustments for factors such as depreciation, amortization, and changes in working capital. In non-US companies, the information may be presented as the revenue with expenses such as salaries, purchases, and accounts receivable taken into account. Both formats will turn up the same number, which is the net operating cash.

The investing activities section shows the company’s spendings and earnings from investments. These include the sale or purchase of securities, capital expenditures, and mergers or acquisitions. Financing activities are the ways in which the company raises more cash, for example, by taking out loans or selling public stocks. It also includes cash paid out to investors (dividends) and cash used to settle debts.

The sum of the net cash from the three sections is known as the net change in cash. Simply put, it’s the amount by which the company’s cash has increased or decreased in the reporting period. It matters to potential investors because it tells them how well the money is being handled, and therefore how the company is likely to perform in the near future. It’s not the only indicator of financial health, but it’s vital for making short-term investment decisions.

Buffett Offers Tips for Investors

For someone who’s long been one of the world’s richest men, Warren Buffett continues to be an inspiration to both the wealthy and the struggling. He has always credited his practical approach to things—from business to investing to government—with his long-standing success as an investor. Here are five lessons from Buffett that can help put your decisions on the right track.

Go against market fears: The financial crisis has created a “climate of fear” among investors, and this has kept many people timid in their decisions. According to Buffett, there’s value to be found everywhere—it’s just that people tend to listen to commentators and market players who overplay the negatives. Learn to see situations as they are instead of letting collective fears guide you.

Stick to what you know: One way to help you follow the rule above is to invest in markets you really understand, or are interested enough in to try to understand. A “perfect opportunity” may be hard to pass up, but if you know nothing about the industry, Buffett recommends steering clear. The risks of making wrong decisions down the road often outweigh the benefits today.

Keep a buffer: The market’s uncertainty is one reason people rush after trendy investments or shy away from good ones. Get over your own financial insecurities by building a cushion, something that will remind you that losing isn’t always so bad. Buffett recommends putting enough money aside to tide you over for six months in case the worst happens. Having this sort of security will keep your mind clear when it’s time to make key decisions that can make or break an investment.

Think long-term: Buffett always tells people to focus on what really counts in investing. According to him, it’s all about how much you pay for a stock today and how much it earns in ten or twenty years. The best value is always gained in the long term. Although there is something to be said about short-term gains, a good investor will always reinvest them—and it all still translates into the long term.

In a way, this brings together all the bits of advice we’ve counted: see the market clearly and stick to what you know, so you have a good idea of what happens in the next two decades. And with your six-month buffer, you won’t be afraid of the dips that are almost sure to happen within that period.

Reading a Balance Sheet

When valuing public stocks, investors typically look at four financial statements: the balance sheet, the statement of cash flows, the income statement, and footnotes. Of these, the balance sheet contains the most useful information; the other statements derive their numbers from the balance sheet. It basically lists the company’s assets (for example, cash and properties) against its liabilities (debts and losses). It also lists the shareholders’ equity, or the difference between the total assets and total liabilities.

One important difference between the balance sheet and other financial documents is that it offers snapshot information; that is, it tells you how a company is doing at one point in time, not from one point to another. That’s why it is often the first to be shown in annual reports: it helps the investor put the rest of the information into perspective.

In a balance sheet, the total of the assets is always equal to the total liabilities plus the equity. The assets tell you how much the company owns, and the liabilities (usually business credit) and equity (shareholder funds) tell you how the company came to own what it does.

The assets are usually listed first, followed by the liabilities and the equity. Current assets—those that are most liquid, or can be converted to cash within a year—are listed first. Cash itself is the most liquid asset. Further down the list are less liquid assets such as accounts receivable, which is money expected from customers, and the inventory, which are assets that must be sold (and sometimes converted into goods) before their value can be accessed. There are also long-lived assets, which usually include real estate and equipment, long-term investments, and goodwill—intangible assets with subjective value such as brand name and customer relations.

Liabilities appear in order of due date, with the most urgent ones first. Usually, these are the ones due within a year, including accounts payable and parts of larger long-term debt that are due in the given period. This can include bank loans and bonds issued.

Finally, you can see the shareholder equity, which covers four areas: retained earnings (those not used to pay dividends or buy back shares), stock at par value (the published stock price), additional capital (payments for shares exceeding the par value), and treasury stock (a negative number representing the stocks bought back by the company).

Balance sheet formats vary between industries, but most of the basic contents are the same. One thing to remember is that most of the detail is contained in the footnotes, so it’s always a good idea to read through them. It may take time, but the more experience you get, the more automatic it becomes, and you’ll be valuing stocks at a glance in no time!