Archive for December, 2008


Money in the Bible

Filed Under: Personal Finance by Bill — Comments Off
December 25, 2008

Merry Christmas everyone.  As today is the day we Christians celebrate the birth of our Lord, Jesus Christ I’d hope you’d take the time to read some of the verses from the Bible relating to money.  If you’re not a Christian feel free to read just for some ancient world wisdom that you may find amazingly fitting for today.

Amazingly there are hundred’s of references to money in the bible ranging from charitable giving, tithing, saving, and investing. 

My favorite investing verse is:

Proverbs 28:20
A faithful man will abound with blessings, but he who makes haste to be rich will not go unpunished.

The key here is to have a plan, I personally try to check my plan with God through prayer, but for those of you with different beliefs there is still wisdom in making a plan and having faith in your plan.  There are thousands of get rich schemes just google “make money” (ok, not now your reading here) and you’ll see lots of them.  If they worked wouldn’t everyone be rich?

Another great verse is:

Ecclesiastes 11:2
Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.

Hopefully you recognize that as diversification.  What I also like is it doesn’t tout the new diversification numbers of 20 or more splits which really just means you mimic the market (or can invest in a mutual fund.)

For personal finance I think this verse sums it up best:

Proverbs 22:7
The rich rules over the poor, and the borrower becomes the lender’s slave.

No where does the bible, or God, want you to be the poor slave.  In many verses wealth is encouraged, but always with a love of God first.
Finally, I want to sum up with a few verses on giving in light of the season.

 

Deuteronomy 16:17
Every man shall give as he is able, according to the blessing of the LORD your God which He has given you.

This was a hard truth for me to swallow.  When I wasn’t doing financially well I didn’t feel I had any obligation to give.  It would only be an insignificant amount and  I would give more when I had more.  The truth for me was I did have blessings and I needed to give what I had – if I didn’t have money I could volunteer, or teach, or raise money to give.  I had some capability to help and I felt more true to myself when I did.

I want to wrap up with:

Proverbs 13:16
A wise man thinks ahead; a fool doesn’t, and even brags about it!

Once you get through the Christmas festivities take some time to plan out your New Year.  You do have the ability to take control of your financial future.
No matter what season it is for you I wish you and your family the best.
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Scalping Forex

Filed Under: Forex by Bill — 2 Comments
December 24, 2008

Scalping Forex or Trading Forex?

There are two different trading styles and really shouldn’t be mixed as they require different mentalities. 

A trader looks at the direction of the market and makes his bid based on the direction using key indicators and then monitors his trade on the forex pairs based on changing market conditions. 

The scalper is using market volatility to jump in and out of the market or scalp the market to make consistent, repeated small gains.  While both traders and forex scalpers may use similar indicators and mentalities the time frames are different.  The forex scalper must have is entry, exit, stop loss all planned at the front as the whole exchange may only take seconds.

In order to make a successful living at scalping the Forex your trading platform becomes one of the most critical components.  If there is too much intervention between the broker, market maker and yourself you may find yourself not getting the short term fluctuation you expected.  Unfortunately, these quality real time systems with quality 1- minute history for back testing can be very expensive.

So say you go through all the effort of making 10 or 20 trades a day for a pip or two per trade.  Is it all worth it?  Only with the Forex trading margin it is.  However, it can be difficult with no experience to make good trading decisions, money management decisions, and emotional checks in a very short time frame consistently.  I highly suggest one starts with the Forex basics, learns to swing trade or momentum trade consistently on a longer time frame.  This will give you real life experience in what 9 consecutive losses can do to your bankroll or a unexpected interest rate change.  During this time of long term trading you can be back testing your scalping strategy.

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Patterns in Charts – Head and Shoulders

Filed Under: Technical Analysis by Bill — 1 Comment
December 23, 2008

The head and shoulders pattern in a chart is another trade pattern that helps indicate a reversal in a stock’s price.

What you want to see in your head and shoulder pattern is a higher volume on the left shoulder rise and the head rise with lower volume on the right shoulder.  The neckline is the low of the left shoulder connected to the low of the right shoulder.  You also want to verify the low of the right shoulder is lower then the high of the left shoulder.  If this isn’t true it’s often just a pull back before continuing in the same stock price direction. 

Once the price has fallen below the neckline with increasing volume on the down side of the right shoulder the chart pattern is confirmed.  Use your choice of independent verification to verify your price reversal.

There is an inverted head and shoulders chart pattern indicating a change from downward pricing to upward momentum though I find this pattern less reliable in this direction.

Head and Shoulder patterns can also be found in oscillators like your MACD.

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Best Tax Savings Tip For A Down Market

Filed Under: Personal Finance by Bill — 6 Comments
December 22, 2008

I probably should start off by saying I am not a tax accountant so please verify all claims for yourself on your own unique experience.  There, now that I’ve made my wife happy I want to talk about the best tax savings often missed by the new or small investor.

Have you ever wondered why there was massive year end selling when all the new to investing books tell you you haven’t lost any money until you sell?  Well this is generally true there is some times when selling for a loss is worth it.  If you sell enough of your stock to gather up $3000 in losses you can deduct this from your ordinary income. (Read IRS Publication 544 for specific details.)

Who wants to lose $3000 in order to save $810 (at 27% tax bracket) you might ask?  Well technically you’re already down that $3000 – so here is how the transaction should take place:

  1. Sell Shares – try to choose your shares so that you make the minimal amount of trades possible.  You don’t want to save $810, but spend $150 in trading fees to get it.
  2. Write off stock loss on your Schedule D against your ordinary income.  (Talk to your accountant)
  3. Wait 30 days at least from day of stock sale.  If you repurchase any of the same shares that you counted for a loss within 30 days then your loss doesn’t count.  You don’t want to eat the extra trading commissions and possible raise the ugly audit flag.
  4. Repurchase same shares if you like (you may even get a better deal if the market stays dead) or move into new positions.
  5. Invest the gained $810!
  6. Tip me if you like for your new found wealth :)

Anyone have any other savings on taxes that can best mine for a down market?  Throw them in the comments below.

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