Saturday, 30 January 2016

The effect of Price inelasticity on demand to Businesses and Investors

Investment and price inelasticity 
Price inelasticity is very beneficial for businesses and offers firms greater flexibility with price whilst the percentage change in demand it elicits remains more or less the same. For price inelastic goods or services, a percentage change in quantity demanded is minimal with respect to a percentage change in price. A 10% increase in price for instance would lead to a 5% increase in demand. This has great implication for businesses and affects demand and total revenue in two ways: If prices for inelastic goods are lowered, the quantity demanded wouldn’t offset the decrease in price. This would result to less revenue. The firm would then run at a loss and should not really reduce the price of its good. On the other hand, if prices for inelastic goods are increased; although it would lead to a small decrease in quantity demanded, the total revenue will increase.

This means that firms that deal in inelastic goods or services can increase prices, sell a little less but make higher revenue. Therefore, businesses who deal in goods that are price inelastic are better equipped for profit maximization and also more protected against downturns. Price inelasticity, therefore, shows that customers and in extension demands are more tolerant to price changes. Thus, firms that deal in inelastic goods or services can transfer extra cost of production to their customers without adversely affecting the demand. So, price inelasticity gives a better edge at setting up or establishing pricing strategies.

Price inelasticity usually occurs with products that have less close substitutes which means fewer options for customers. Such goods tend to be necessity that people can’t do without. To be able to enhance pricing flexibility and profit maximization, firms can strive to create or deal in more customized or distinctive goods or services. Sophisticated brands or more comfy items also possess greater inelasticity. Thus, many companies that sell distinct, luxury goods make great profit. Firms that deal in more ordinary products, typically, need to reduce price and sell at competitive rates to gain more edge over competing brands.

Wednesday, 20 January 2016

Financial Market Opinion: Forecasts about US Interest Rate Rise

The projection for 2016 that the US dollar will remain a market mover in the forex market is among the most debated topics in the forex market currently.

Even though non-US central banks are not likely to cut interest rates above expectations in 2016, a few analysts are expecting the US Federal Reserve to be more upbeat and bubbly.

When wages are increased, Fed may likely raise the interest rate, which may additionally boost the dollar's strength.

Some economists anticipate three interest rate hikes in the United States in 2016. There are projections that there is likely to be one hike per quarter starting from the second quarter of the year.

The difference of opinion over the number of interest rate hikes is what I think will characterize the trend of the US dollar in 2016. The dollar’s upward trajectory movement against other currency majors is, nonetheless, anticipated to be limited by or capped with the recovery of commodity prices.

A few European banks’ commodity analysts expect the global price of oil to get more stabilized over the first quarter and gain a gradual lift beginning from the second quarter of 2016.

Traditionally, rising oil prices occur when the value of the US dollar depreciates. Thus, analysts are of the opinion that although a boost in the dollar's exchange rate is still possible in 2016, the degree of such a rise will be much less compared to the rise witnessed in 2015.

Financial analysts expect the strength of the dollar to be higher than currencies of other G10 countries like the CHF, GBP, andNZD and currencies where central banks are still skewed towards reducing (EUR, CHF).

Dollar Index Could strengthen

Results of a few fundamental research show that the US dollar index ought to subsist in its upward trajectory movement for most part of 2016. The dollar rate is expected to rise a bit more than the rate in 2015, but the rise will only subsist for a short period of time.

The present dollar index levels are at 93.25/92.50. Analysts suggest that persuasive comparison could be drawn between current price actions and the price actions of the 1990s when the dollar index showed similar trend

The index got reduced afterwards persistently and slightly towards the anticipated index pattern. Then, the bullish USD cycle subsisted for nearly a decade. Because of this, analysts are of the opinion that the upward trend of the dollar’s strength will continue in 2016 with a historic benchmark of 106.60/109.00. This benchmark is same as the projected upward and downward index levels of the preceding down trend.

Forex indicators also show that the dollar will move up a bit for sometimes before finally attaining maximum growth. This implies that there is still possibility for bullish movement of the dollar in 2016.

The index appears to hang about in the 103.30/104.10 direction as projected by analysts. Despite this, there are still chances that price trend will get balanced up in so far as the limit stated earlier is attained.

Monday, 18 January 2016

Forex and investment: Sure Succeed tips

You probably have heard that many clever and wise investors make tons of dollars every day trading forex. Yes, many who know this secret explore the opportunity to make huge sums of money on a day to day basis. You too can turn into one of those forex gurus trading forex, either part time or full time. Instead of sitting down waiting for a white collar job that is hard to come this day, you can invest your time and effort into forex.

If you know your way, forex investments could turn you into a millionaire working from home. The concept of forex trading emerged due to harsh economic situations which forced a lot of people to start looking for ways to diversify earnings. There are definitely many businesses you can invest in but investing rightly is the number one key to success.

One investment prospect that has become very popular and highly profitable as people search for ways of becoming financial stable and save enough for retirement is trading in foreign currency. The Forex Market gives individuals the opportunity to make gain through the differences in the exchange rate of one currency over another.

A clever way to be a successful forex investor is to get forex education and training. The reward of getting trained before finally delving into the real world of forex market is enormous. There are many free resources out there to assist you become a professional trader in no distance time. Good and reliable forex brokers offer forex trading training through their platform to help individual traders discover the rudiments of trading in the foreign exchange market.

The training you obtain will arm you with resources to help you to wisely and prudently invest and make money in the forex market. Training is, therefore, the key to succeeding and trading like a pro. It doesn’t have to be paid training. The internet is full of a lot of useful resources that you can access free.

However, if you want to be more confident before investing your real money, there is no harm in registering for a formal training. It will only boost your knowledge and confidence when you place orders. You will then trade not like a novice but as an expert who is already aware of what he or she is doing.

Training is the secret to achieving something in any type of financial market and this is even more applicable in the forex trading market. Many expert and established forex traders you hear of today succeeded due to the forex training they obtained. Without forex trading lessons, you are more likely going to your invested money and your hope of becoming more financially stable before retirement will be foiled.

Online forex trading is speedily and rapidly growing. The increasing use of the internet is fetching right minds extra revenue. It is also turning into a major system of teaching trade dynamics globally to various individuals who are interested. Another excellent approach of becoming a great trader is through the use of automated trading software.

You need to learn the functionality of the profit-making computer programs before applying them to your trade.

Studying the different potentials of this profit automated systems is crucial to making winning trades. Therefore, trying your best bet is to try out different strategies to weigh which one is more suitable. As a trader, you need to know how the software functions and as well know its prospective returns.

Automated forex trading programs are robotic systems that carry out trade transactions for the forex trader. These systems take care of your need to do extensive and complex computations. They as well take care of actual buying and selling for the trader. The main significant thing about these programmes is that they only need little involvement from the trader. However for them to function appropriately you would need to do some tweaking and customization.

Automated trading program is beneficial in a lot of ways if the forex trader applies it correctly. The first benefit of using the system is that it will minimize or totally eliminate human emotions. Humans, sometimes, could dread and show signs of disbelief when confronted with certain situation that would require them to make decisive decisions irrespective of the fact that man is the most intelligent of all creatures. During forex trading, such feelings may make the trader to make costly mistakes.

Any expert and workable automated program must be able to accomplish different trading activities on constant basis. It is essential that a trader keeps records of various money-making opportunities whenever accessible. The use of an automated forex program allows for smooth trading procedures. You are, thus, free from unnecessary difficulties and face ups.

The availability of these automated programs on the internet means that anybody from any part of the world can trade with it. When you make use of these systems, you don’t need to pay for commission nor do you need an agent in order to trade. A significant advantage of the trading software is that you are able to keep all proceeds to yourself. The only cost for running your business may be the bidding and clearance costs.

Anybody that has the basic computing knowledge can make use of these foreign exchange automated programs to carryout complex forex trading deals on the internet. The programs come with user-friendly instructions which functions flawlessly if tracked with precision. With the program, there is also no stress of administration apart from ensuring that you do recurrent routine checks to prevent any possible break-down. However, to ensure that you are not victim of forex scam you need to search for advice on trustworthy and reliable forex trading software from trustworthy and expert traders or brokers.

Making money trading forex all boils down to the training you have, the software or platform you trade with and your chosen forex strategies. You definitely will be successful if you know how to manage the risk involved. Feel free to add any tip or tips you think we missed out!

Friday, 8 January 2016

Candle Stick Charting technique in Binary Options

Charting is very important in any form of trading in the financial market. It ensures that trade is carried out analytically. Charting technique is also used in Binary options’ trading. Anyone who wants to trade forex and make a good sum of money must make use of charting techniques. Thus, a decent knowledge of charting techniques is very essential if you must succeed as a forex trader. Trading binary options can serve as your sole means of income and employment and yield enough for your sustenance if you know how to make use of charting techniques.

For you to be able to chart in binary option, you must have thorough knowledge of charting technique. This article talks about candle stick charting technique and how you can use your knowledge of candle charting techniques to trade profitably

What are Candle stick charts?

Candlestick chart are made up of collection of candle sticks. Every one of the candlesticks stands for a price action for a particular time period as shown in the example below. Our example illustrates the daily price action for EUR/USD currency pairs for 10 days trading time period. 

Candlestick chart colors

Each candle stick of the candlestick chart is colored. The color depends on whether there is a rise or fall in price action between its opening or closing time. The widespread color used for a rise in price also known as the bullish (up) candles is the green color while the most frequently used color for a fall in price also known as a bearish (down) candles are the black and red colors.

The coloring system makes it easier to see in an instance if there is rise or fall in price action on any particular day. It also lets us know the degree of rise or fall of the price action for each particular day. Apart from providing this information, the candlestick chart also offers the trader a few more aid to successful trading.

The candle stick tells the trader the open price; the high and low price and the close price also known as the (OHLC) for each specific time period. This varies a bit. It depends on if the candle is bullish (up) or Bearish (Down).

Fig1: Candle stick chart

Why Candle Stick chart is very effective

The candlestick chart provides more information than the basic chart. It is made up of nodes which indicate either the opening time or the closing time of a unit. It can as well tell the trader if the time period is positive or negative. Red color on the candle chart shows negative while green color on the other hand indicates positive time period. Candle stick charting is an excellent and highly effective binary options trading technique.

To be successful in binary option trading with candle stick chart, you need to understand that the Binary options trading with candle stick method is completely different to trading with other trading options like the Forex or commodity market or stock market trading.

Candlestick Charting gives you a good start

Binary option trading is very good but unless you make good predictions, you won’t be able to make money with binary option. This is exactly what the candle stick chart will do for you. The candlestick charting is a good help to traders both those who are new in binary trading and experienced traders. It can help experienced traders to make a fresh start. It thus helps you to make use of the modern charting technique for trading. Candle stick charting as well possess a number of the best tools of technical analysis. With candlestick charting you can also make use of a few mathematical tools like the moving averages or stochastic.

Candlestick Charting is a stepping stone for successful trading

Take your time to learn and understand chart candlestick patterns. It is the most helpful analysis. It offers a trader some secrets to successful trading like a multiple indicator system, a price indicator system for supply and demand, a successful trading skill in addition to a system that evens out a risk. 

A good number of the trading signals obtained by these systems have been established to be roughly 80% to 100% precise and correct. It is not all trading platform that has the software used in candlestick analysis. Thus, you can decide to choose charting software that can be used to track the unit you are trading on.

Why software is essential in binary Option trading

Trading binary option does not require buying and selling. A good number of traders of Binary option are of the opinion that binary option trading is much more different from trading from other platforms. The one most significant part of binary option trading is the trader’s ability to predict price movement of a specific equity. The use of software in trading comes in handy here. It assists the trader to make predictions of price actions.

Investment in Forex Or Stocks which is better?

Trading Forex 

Modern-day financial market and investment world provides investors and traders with lots of variable trading and investment options to choose from. Individuals are, thus able to choose either to trade or invest in well proven blue chips, businesses, futures or forex. Choosing which among these divergent markets to trade and invest on is a bit complex. We have thus provided in this article essential things that you must consider to guide your decision.

Risk acceptance

The first thing you must consider is your risk acceptance factor and your proposed trading style. If you’d be interested in buy-and-hold investment opportunities, the stock market would be a preferable option for you. On the other hand if you’d be interested in short term trading like swing trading, day trading and scalping; forex market which is more volatile would be the best option for you. You will find below differences between investments in forex, blue chip stocks, indexes and industrials.

Why You Should Consider Forex:

You can get into the market swiftly and with much ease

You can trade forex even without prior financial background or any form of special training. Again, you can start trading with demo account and only invest real money when confident. A forex account can be opened with just a few dollars!

With Forex trading, you have the flexibility of trading on your own terms 

The Forex market is accessible 24 hours a day, 5 days a week, and can be accessed from the PC or mobile device anywhere and anytime. 

Forex market opens up windows of opportunity

More than 4 trillion dollars are traded on the Forex market daily. Even a minute bit of the pie can go a long way. Forex trading, nevertheless, involves significant risk.

You always have a chance to come out on top

In the Forex market, you can trade various currency pairs which means you have many alternatives to choose from. You can decide to trade on a different currency pair if the currency pair you are trading on is falling. 

Comparing investment in Forex and investment in Blue Chips

The forex market is the broadest financial market globally. It roughly accounts for 4 trillion dollars standard daily traded value. A lot of traders and investors are attracted to the forex market because it has high liquidity value; it can be traded round the clock and because of the fact that it offers high leverage value.

Blue chips are stocks from confirmed, long-established and financially sound companies. Blue chips stocks are usually able to operate gainfully during tough economic conditions. They are well known for payment of dividends. Blue chips are by and large taken to be less unstable than lots of other investment options and are frequently used to supply stable potential expansion and intensification of the portfolios of investors. 

Volatile and unstable nature of the markets

Market instability is the estimation of short-term price fluctuations. While a few traders, mostly short-term and day traders depend on market on instability to make gain from sudden price sways in the market, other traders are more at ease with less unstable investments with less risk. Thus a lot of short-term traders prefer forex market to blue chips stock while long term investors prefer investment in stocks.

Leverage offered by the market

Another factor to be taken into consideration when checking which one is best for you is leverage accrued to you. The stock market in US OFFERS investors leverage of 2:1 while the forex market offers investors much higher leverage of roughly 50:1. Some parts of the world offers forex investors even higher leverage than that.

However, although this high leverage offered by forex undoubtedly catalyses the creation of equity with a very meager investment, leverage on the other hand can constitute a problem that may easily damage a trading account. Leverage can thus build and destroy. It serves as a double edged sword.

Trading Hours

Another thing to consider before choosing a trading instrument is the trading hours of such instruments. Stock trading sessions occur only during the exchange hours, which are usually from 9:30am to 4pm Eastern Standard Time, 5 days a week (Monday - Friday) excluding market holidays. 

Forex investment 

The forex market in contrast, functions round the clock. It is usually open from 5pm EST Sunday to 5pm EST Friday. It first opens in Sydney and from there moves round the world to Tokyo, London and New York. The forex market is a bit more flexible. The traders can either trade the U.S., Asian and European markets, with enough liquidity. The opening of the market 24 hours a day makes it suitable for traders who would have been unable to trade due to their day to day schedule. 

Forex/ Indexes

Stock market indexes are related stocks which have been amalgamated to be used as a yardstick for a specific portfolio or the wide market. Key indexes in the US financial market are: the Dow Jones (DJIA), the Nasdaq, the (S&P 500) and the Russell 2000. The indexes make available to traders and investors essential method of judging the movement of the general market.

Deciding whether to trade stocks, Forex or futures often depends on your risk tolerance, your account size and convenience. If you are not available to trade during the regular market hours, you’d rather not trade stocks. On the other hand, if your intention is to buy and hold stock for a long term, generating stable growth and receiving dividends, stocks would be a preferred choice. Whatever choice you make depends on which is most suited for your peculiar situation.