7 Tips to Positive Thinking

I'm sure you have a bright idea hidden somewhere in the back of your mind that you just can't wait to test out. Of course you're not the only one with the bright idea. So what motivates you to churn those creative, or even inspiring juices to its utmost flavor?

It's always best to set up a personal goal where you can accomplish the most in record time, maybe like mowing the lawn in an hour before the big game on TV. A correct and positive attitude in whatever you do will make things easier, and even enjoyable.

Here are some tips to make it through the week even if you're just sitting in your favorite couch. An idea takes time to form in your head and is always at work while you are busy sitting.

Having a bit of positive thinking can help you realize things that are never thought possible. Thinking big is indeed the American Way and that what made our country prosperous.

1. Take passionate action towards living your life by design. Talk is cheap. Action = deposits in the bank of a passionately authentic future. Without it, passion is void.

This is a perfect example where dreams are made of where you start by tinkering with your mind, then with your hands. And if the idea weakens, you can always go back to it later until you finish it.

2. Commit to yourself as well as those you love to create powerfully a life you can love. Instead of reacting, commit to creating from your heart and soul, out of love rather than fear. The American Dream will always be there, but a dream will still be a dream without motion. Be amazed as the transformation begins.

3. Recognize and embrace the thought that each moment is perfect regardless of its outcome. Every time you hit on something that may appear too extreme, why not give it a shot and see if it will work. You will be surprised to see of there are other ways to get the task done in time. If you are not pleased with the outcome, decide to use that moment to learn from and make the appropriate shift.

4. Dwell completely in a place of gratitude. Learn to utilize what you have in your hands and make use of it in the most constructive way. Slipping into neediness will become less of a habit when you repeatedly shift towards gratitude, away from poverty consciousness.

5. Use a Passion Formula of Recognize/Reevaluate/Restore in place of the Shoulda/Woulda/Coulda whirlwind. The former is based in increased knowledge and abundance while the latter focuses on scarcity and lack. As you face people or tasks that may seem harder than scaling the summit of the Himalayas, allow yourself to realize that the task is just as important as giving out orders to your subordinates. You would rather be richly passionate!

6. Keep humor at the forefront of thought, laughing at and with yourself when possible. You may find yourself quite entertaining when you loosen up! I am yet to see a comedian ever go hungry even though his jokes are as 'old as great-grandma'. Life has so much to offer to allow you to mope around in self pity. Humor is very attractive, very passionate: life-giving.

7. Believe that you are the architect of your destiny. No one can take your passionate future from you except for you! Create your life authentically. As long as there's still breath in your body, there is no end to how much you can accomplish in a lifetime. The concept of thinking big is all about enjoying your work, which would lead to celebrate a discovery that is born within your hands. Watch everything flow into place with perfect, passionate precision.

It's interesting how people get wallowed up by something trivial as learning to use a computer, when nowadays that top computer companies are manufacturing software that even the kids can do it.

I don't mean to be condescending, but that's the idea of not having any positive thinking in your life-you'll just end up as a dim bulb in a dark corner. So instead of subjecting yourself to what you will be doomed for, make your path by taking the first step with a positive attitude.

Today I celebrate all that I am and all that I will become

Today I celebrate all that I am and all that I will become.

Options Trading - Collar Strategy

How Does Collar Strategy work?

Assuming the current underlying stock price is $28.50.

We buy 100 shares @ $28.50.

For the sake of simplicity and to make our calculations easy let's establish the collar using the January 27.5 put and the January 30 call, with both options trading at $1.00. The cost of the collar will be $0 because we paid $1.00 for the put but you collected $1.00 from the sale of the call.

How does the collar work in our usual three scenarios: the up, down and sideway market scenario?

Up scenario:
We find that when the stock rises, the investor gains penny for penny until the stock reaches the call strike at $30. Once the stock reaches that level, the position no longer gains because the stock is at the point where it will be called away.

Capital gains of the position are maximized when the stock reaches the call's strike price.

Let's take a closer look at what happens as the stock price goes up. With the stock at $29.00, both the Jan 30 calls and the Jan 27.5 puts are out of the money and thus worthless.

Since there was no debit or credit incurred in the options, the option profit (loss) is $0. Only the stock position remains. The stock purchased at $28.50 is now trading at $29.00 for a $0.50 profit.

Let's say the stock price increase to $30.00. The puts and calls are again worthless so our profit (loss) is solely determined by the stock. The stock, which was purchased for $28.50 is now worth $30.00 and represents a gain of $1.50. This $1.50 gain is the maximum gain the position allows.

Once the stock goes over $30.00, the Jan 30 call, which we are short, would become in-the-money and therefore the stock position would be called away at that price. When the stock price rises to $31.00, the puts would be out-of-the-money thus worthless but the calls would be worth $1.00.

We received no money for the establishment of the collar, so, we would have a $1.00 loss in the options. Meanwhile, the stock that we purchased at$ 28.50 is now worth $31.00 at expiration, which is a $2.50 gain.

Combine the $2.50 gain in the stock less the $1.00 options loss; we have a $1.50 profit again. We may do this calculation with higher and higher stock prices but the outcome will always be the same. This example shows how us that upside potential is limited.

Obviously, if the option portion of the collar incurred a debit or credit, that inflow or outflow of money must be added to or subtracted from the stock gain to get the overall return of the position.

Normally, there will be a debit or credit incurred in the collar. It is usually difficult to find a put and a call that we want to use in the collar trading at an equal value. Let's use our last example with some minor price changes.

If the put had been trading at $1.25 instead of $1.00, then there would be a $0.25 capital outflow that would have to be subtracted from the $1.50 gain to reduce it to only a $1.25 gain.

On the other hand, if the call was trading at $1.25 then we would have collected an extra $0.25 which added to the $1.50 gain would produce a $1.75 gain. The cost of the collar always impacts the bottom line profit or loss of the position.

Sideway scenario:
The stock price would be unchanged thus neutral in terms of return. Therefore, the potential profit or loss would come strictly from the debit or credit of the two options.

If the stock does not move, as in our example, both the put and call would finish out-of-the-money and be worthless.

Our profit or loss would simply be calculated from whether we paid for the collar or collected from the collar and how much that amount was.

Down scenario:
Using the same prices as the previous example (the stock purchase price of $28.00, the Jan 27.5 put $1.00 and the Jan 30 call $1.00) we will now take a look at the downside. Let's set the stock price at $28.00 on expiration. At this price both the Jan 27.5 put and the Jan 30 call are out-of-the money and worthless. Since there is no credit or debit incurred in the option position ($1.00 inflow from the calls, $1.00 outflow from puts) the total return of the position is simply the gain or loss from the stock.

With the stock purchase price of $28.50 and a stock price of $28.00 on expiration, there will be a $0.50 loss in the position. Setting the stock price at $27.50, we see that the Jan 27.50 puts and the Jan 30 calls are again worthless and with no debit or credit incurred, the positions profit or loss will come down to the gain or loss on the stock.

With the purchase price of the stock being $28.50 and the stock price at expiration $27.50, there will be a $1.00 loss. In this case, we have reached the maximum loss. No matter how low the stock goes, we can only incur a maximum loss of $1.00.

Now, let's set the stock price at $26.00 and see if this holds true. With the stock at $26.00 on expiration, the Jan 30 calls are out-of-the-money and worthless. The Jan 27.5 puts, however, are in-the-money and now worth $1.50.

The stock you purchased for $28.50 is now worth $26.00 on expiration which is a $2.50 loss. Combining the $2.50 stock loss with the $1.50 gain in the puts and we have a $1.00 loss in the overall position.

This demonstrates that $1.00 is the maximum loss of the position. Keep in mind that if the stock position creates a debit or a credit, it must be added to, or subtracted from the stock loss.

Most of the time, there will be a small debit or credit incurred in the option position. It is relatively infrequent that the put and call used in the collar are trading at the exact same price.

Feed Shark

5 Steps to fix your financial woes

We all know that money is not everything and that happiness and contentment cannot be bought with cash. However, as a society becomes more materialistic, most people struggle to fill their lives with 'things' and brands.

However, when bills pile up and despair takes over, you realize that you are now trapped in your personal financial hell. The good news is, IT'S NOT TOO LATE!

Here is the 5 steps to fix your financial woes to escape from rat race:

1. Knowledge and awareness
Find out everything you can about your own cash inflow and outflow. If more money is going out than coming in, you need to do something about it immediately.

2. Have A Plan
Sometimes all it takes is to evaluate your spending habits. Say "no" to flashy things and sleazy salesmen. Count every cost you incur for a month and you will eventually discover where you should cut your expenses.

3. Self-discipline
Once you have a plan. STICK TO IT. Tell yourself that when your financial situation improves, your quality of life will follow suit. Once you're out of the quagmire of debt, everything looks better.

4. Education
Learn not just about money but about yourself. Are you spending because you're depressed or fearful? Getting in touch with yourself will solve many of your financial problems.

5. Action
Once you learn, act on it. Remain vigilant until your goal is achieved - that is financial security or being debt free.

Keeping track of your financial situation is about control.
Remember, that the benefits will be well worth the work.

I feel fulfilled and happy everyday

I feel fulfilled and happy everyday!

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Tips#3 Escape Rat Race

Tips#3 is looking for leverage to escape from rat race.

Are you wondering whether you are currently caught in the rat race? Then, ask yourself this question: on who’s efforts do you currently get paid?

If your answer is you only get paid on your own efforts, then, you need to look for greater leverage. If not, you are NOT serious about leaving the rat race.

Don't expect anything to change, if we don't change anything especially the way we think...

Tips#3 to escape the rat race is looking for opportunities to gain maximum leverage on our personal efforts and time.

What is leverage?

Leverage simply means the ability to generate more and more income with less and less works. If the strategy is to get paid for our time, we are not leveraging.

"I would rather have 1% of the efforts of 100 people than 100% of my own efforts" ~ John Paul Getty.

As highlighted by John Paul Getty that it is better to earn a small amount on the efforts of a large group of people than earning 100% of your own efforts.

What will happen to our income, if we stop going to work for a month?

Just take an example of a friend of mine who is a senior sales manager in a big corperation. She told me that she was getting paid on the efforts of her 50 sales team members i.e. she is leveraging on her people to make money.

However, after a short conversation, she soon realized that if she took the rest of the year off she would soon be unemployed and as such she had little leverage from her current job.

A major step to getting out of the rat race is to look for an opportunity to gain massive leverage through the multiplying effect of lots of peoples efforts combining with our own ones!

Today, more and more leveraged tools are being created such as computers, internet, wireless and many more to help us generate more with less. If we want to keep up with the rich and escape from the rat race, we need to understand the power of leverage and use the leveraged tools that the rich are using. The average use fewer leveraged tools than the rich.

People who do not learn to use leveraged tools like computers and internet will fall behind financially or work harder and harder just to keep up.

Find out more about ways to leverage and escape the rat race here.

Feed Shark

I rise above all limitations.

I rise above all limitations.

I am divinely guided and inspired.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Tips#2 Escape Rat Race

The greatest trap of the rat race is the trading of hours for dollars. As long as our only wealth creation strategy involves trading of our time for money, the more trapped we will be in the rat race.

Thus, the second tips to escape the rat race is to STOP trading our time for money!

I am not suggesting that we should all quit your job today… but we should begin immediately to create an additional or multiple income (esp passive income) streams that gives us greater leverage than our job does.

As long as our income is dependent on the hours we spend earning it we will never have time or financial freedom. So, no matter how much money we earn in our career or business … we will never have our dream lifestyle because we will not be able to fully appreciate the financial success that we have.

As an employee, we are in a terrible position … we are stuck deep in the rat race because we are trading our hour for money!

Decide today that we will no longer trade our time for money directly in future. Make the decision that we will look for a business that allows us to take advantage of our third tips. It is vital to getting out of the rat race!

Stay tune for the next tips to escape the rat race prison...

http://www.inspiringjourneytofinancialfreedom.com/RatRace.html

Feed Shark

I read books that enrich my soul and give me food for thought

I read books that enrich my soul and give me food for thought.
There is always more to learn.

All the goodness comes to me from everywhere, everyone and everyting

All the goodness comes to me from everywhere, everyone and everyting.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Exciting update about Singapore housing market

S'pore residential market is world's hottest this year By Nicholas Fang.

SINGAPORE'S booming housing market is the world's hottest this year, with local home prices recording the fastest increase.

Residential property prices in the Republic surged 24.3 per cent, after adjustments for inflation, ahead of other bullish markets such as Shanghai in China and Bulgaria, said property investment research house Global Property Guide.

In a report published online, the firm said Singapore's strong performance, like those of Japan and South Korea, was due to robust economic growth.

The survey was compiled using the latest official data from 42 countries, though other statistics were used for a few markets, such as Japan and the Philippines, where such figures were not available.

The latest Urban Redevelopment Authority (URA) numbers used in the survey show that Singapore home prices registered a 27.6 per cent annual jump at the end of September, significantly higher than the 7.6 per cent posted a year ago.

This nominal, non-inflation adjusted figure was below the 30.6 per cent recorded by Bulgaria in September and the 27.9 per cent recorded by Shanghai in October.

But in real terms, after adjustments for low inflation of only 2.66 per cent, the Republic leapfrogged these two markets to reach the top spot, said the report.

Singapore's strong showing underscored a more general recovery in Asia, where several markets gained momentum in the first three quarters of the year.

Global Property said this reflected, to some extent, continued recovery from the 1997 Asian financial crisis.

In contrast, the United States housing market crashed due to the sub-prime mortgage crisis, while high interest rates were behind the slowdown in European house prices.

'In Europe, most countries registered unimpressive year-on-year house price changes in 2007, aside from Norway and Estonia,' the report said.

Looking to the year ahead, Global Property said property prices in much of Asia are still undervalued compared with pre-Asian crisis levels, despite strong increases this year.

It expects potential improvement in rentals in Singapore.

'We believe gross rental yields are now too low, at 2 to 3 per cent.

'Nevertheless, Singapore is attracting and admitting more foreign-born workers - which is positive for prices,' it said.

Elsewhere in the region, Global Property also recommended Cambodia, Thailand, Japan, Australia and New Zealand to property investors.

It, however, cautioned against investing in Europe, apart from a handful of Eastern European states, because of high valuations after a long period of price appreciation.

In the Middle East, it found Egypt attractive for its high rental yields and low taxes, but warned of a possible oversupply in Dubai as more properties come on stream over the next two years.

Feed Shark

Tips#1 Escape Rat Race

What is rat race?

Accordingly to Wikipedia, rat race is a term used for an endless, self-defeating or pointless pursuit. It is just like a rat trying to escape whilst running around a maze or in a wheel. It is a term often used to describe work or excessive work in particular. If one works, one is in the rat race. This terminology contains implications that many people see work as a seemingly endless pursuit with little reward or purpose.

How to escape rat race?

The first strategy we need to escape the rat race is to have a powerful dream that drives us forward. Those who have successfully escaped from the day-to-day mundane life of being caught in a rut have done so because they
have had a dream for something better!

If we don’t have bold, daring and imaginative dreams then we are just not being realistic in life!

The reason so many people stuck in the rat race is that they have simply given up on their dreams in life. Before we can successfully make a great escape we need to have a dream.

So what are our dreams?

What are our goals in life?

How can we acquire an expanded view of possibility for us and our family?

Answer these questions and we are well and truly on our ways to raise ourselves above our present circumstances. Get excited about our dreams and we will develop an internal drive to take action to achieve our dreams. Expand our dreams even further and we will become unstoppable when obstacles get in our ways.

We can find numerous ways to create a residual walk away income for life that
would give us both time freedom and financial freedom … but chances are without a powerful dream we would never do anything about it!

So, all success in life starts with a dream!

One of the way to start a dream is goal setting.

The first thing I would do is write a list of 100 things that we would like to Have, Do and Be in our life. This would be an excellent place for us to start right now!

Imagine for a moment that both time and money was no object in our life …

What would we have in our life?

What would our dream home likely to be?

What car would we drive?

What other toys and material possession would we acquire?

What about the things we would do in life?

Remember that time and money in life are no obstacle … so what would we do?

Just go wild for a moment and write down as many ideas as we can.

And finally … who would we become?

As a person, what characteristics would we like to acquire?

What personality traits and roles would we take on?

Write down all of our dreams in life … see if we can make a list of 100 things we would like to Have, Do and Be in life!

Once we have made a list of things we would like to do, just imagine and have as many images as we can that represent our dreams.

Surround ourselves with these images and begin to imagine our life being complete with all of our dreams turned into reality … from there, it is simply a matter of the right vehicle to manifest our dreams.

All success in life starts with a dream … it is the starting point of escaping the rat race to achieve financial freedom!

Watch up for more tips in the coming weeks...

http://www.inspiringjourneytofinancialfreedom.com/RatRace.html

Feed Shark

I am doing the best I can with the understanding, knowledge and awareness I have

I am doing the best I can with the understanding, knowledge and awareness I have.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Stock down and options volatility down...what's next?

Just want to share another interesting observation by Dr Brett Steenbarger.
You can visit Brett's blog at: http://traderfeed.blogspot.com/2007/12/stocks-down-option-volatility-vix-down.html

Interestingly, over the past five trading sessions, the S&P 500 Index ($SPX) has been down about 1.9%, but the VIX has also been down 8.8%. I went back to the start of 2004 (N = 995 trading days) and found that the average VIX change when the five-day $SPX has been down more than 1% has been +16.46%. We've only had six occasions during that time in which $SPX has been down more than 1% over a five-day period and VIX has also been down. The S&P 500 Index was lower five days later on four of those six occasions, for an average loss of -.77%.

Indeed, when $SPX has been down more than 1% over a five-day period and VIX has been up less than 4% during that same time (N = 29), the S&P 500 Index has been higher only 7 times and lower 22 times over the next five trading days (average loss = -.84%). When stocks have been lower but options participants are displaying relative complacency, short-term returns have been subnormal.

I am happy for those who do well and have plenty as there are enough abundance for everyone

I am happy for those who do well and have plenty as there are enough abundance for everyone.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration.html

Interesting article about trading coach

Just to want to share an interesting article about trading coach by Brett Steenbarger, Ph.D. from TraderFeed.com. I agree that when there is no positive result and relationship with the trading coach. We should just treat it like a bad trade. Accept the loss. Cut loss and Move on!
Enjoy...

Three Predictors of Coaching Success

When a trader or trading firm hires a coach, there is a significant investment of time, effort, and (often) money. Coaches are generally sought when trading results are substandard, which means that time is at a premium. Hiring the wrong coach or seeking the wrong goals with the right coach is thus more than a missed opportunity. It can dig traders further into a hole and reduce the odds of eventual success.

So how do we know if coaching will be helpful to a trader?

The psychology research on change processes in counseling and therapy, as well as my own experience across a variety of trading settings, suggest three predictors of coaching success:

1) Relationship Between Coach and Trader - It's the quality of the relationship that often gets people through the inevitable "two steps forward, one step back" frustrations of change. In a good helping relationship, the coach sees the trader's potential, demonstrates a concrete understanding and empathy for the trader's situation, and is seen by the trader as both caring and competent. Very often, I find, the good helping relationship is one that transcends the pure business relationship. Every trader I work with gets my email address and home phone number; I do not charge for those contacts and, indeed, strongly encourage those. It's one way of demonstrating that my level of commitment will match that of the trader. Too, when traders make significant progress, I get excited; it's a real rush for me. I think traders can sense that. They know when a coach is emotionally invested in their success. If the coaching relationship lacks that commitment and spark, the odds of it being successful are meaningfully reduced.

2) Readiness For Change - Research in psychology finds that change is most likely to occur when people are prepared to take actions necessary to make changes. Many times, traders are aware of problems but don't know what to do--or aren't emotionally prepared to take action--to change those problems. A good example is a trader who might need to alter his trading style to adapt to changing market conditions. He might be reluctant to tackle the uncertainty of remaking his trading, which will necessarily extend the length of time it takes to make changes. The traders who are most ready to make changes are often those who are in some discomfort and who have tried all the easy fixes. They are prepared to do what it takes to turn things around. If you're seeking a coach and aren't ready to work on yourself every day and week, you might be best off saving time and money and waiting until the readiness is higher.

3) Involvement In Change - When I reviewed the research literature on change in counseling and therapy some years back, the brief conclusion that I came to is that "talk is cheap". Coaching needs to be more than talk: it needs to produce new skills and new experiences. Good coaching is hands on and goal-focused; it targets specific areas for change and introduces concrete strategies for accomplishing those changes. Too often, coaching talks about trading rather than works directly on trading. Some of my best work has occurred while I was watching a trader trade and could make very specific suggestions about improvements. That made the change work very immediate and involving. The more emotionally and behaviorally involved a trader is in the change process, the more successful that process is likely to be.

One interesting study found that, if positive changes and a solid relationship had not materialized by the third meeting, the counseling was unlikely to be successful--ever. Within a short time, you should have a good feel for the quality of the working relationship, the specific goals you'd be working on, and the concrete ways you'll be tackling those. Within those first few meetings, you should already be feeling that you're on a promising path. If you don't experience all the above with a new trading coach, treat the coaching like a trade and quickly exit the losers.

I am as successful as I make up my mind to be

I am as successful as I make up my mind to be.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Financial Freedom for friends who are still running on the rat race treadmills

First of all don’t get me wrong that rat race is something very bad that you must escape from it. It is your choice whether you are happy to stay on the treadmill or not. The only challenge that I see in rat race is that even if you win the race, you are still a rat. No matter what you do in the rat race, success is uncertain. However, if you do nothing about it, worry about your retirement is on the way.

Accordingly to surveys performed in US, it showed that if we take any group of 100 people at the beginning of their working career and follow them for 40 years until they reach retirement age, according to the Social Security Administration:

• Only 1 will be wealthy
• 4 will be financially secure
• 5 will continue working because they have to for a living
• 36 will be dead
• 54 will be dead broke and dependent on the Social Security checks, relatives, friends and even charity for a minimum standard of living.

These, of course, are US statistics. In the rest of the world, especially the developing countries, the scenario might be far worse.

In short, there is only 5% of the population have enough to retire by age. There will be a high possibility of 95% that we will be either dead or dead broke by 65 years old. Isn’t that scary?

How do the rich manage to escape from rat race?

The rich who is financially successful do not trade their time for money. Conversely, the rich leverage on other people money and time to make money. Instead of working hard for money, the rich ensure money working hard for them through investment.

Property investors leverage on other people money by borrowing from banks to purchase properties or assets. They rent out the properties and have the tenants pay off the loans. Other than getting the tenants to pay off their assets, the property investors make even more money when their assets appreciate in value. Property investors leverage on other people money to make money.
Business owners like Bill Gates leverage on other people time by hiring employees to work for them. Investors, who invest in stock market, leverage on business owners and employees time to make money for them through capital gain from stocks.

Can an average ordinary person escape from the treadmill?

Absolutely Yes!

No doubt it is difficult to leave our comfort zone and risking the secure regular paychecks to pay off our bills. We need to take the first step and action to start somewhere. We need to change our mentality and reprogram our minds to mirror the millionaire minds.

At the same time, we have to start financial planning and saving to cumulate capital. Acquire the skills to generate passive income. Learn how to invest in assets like properties, stock market, etc or own and run businesses.

As our assets growing which in return generating more money, more money will increase our capability to increase the number or size of assets. The same “money working hard” cycle repeats by itself until such time that we no longer need to trade our time for money where we can live, work, play and give freely.

All the goodness comes to me from everywhere, everyone and everyting

All the goodness comes to me from everywhere, everyone and everyting!


http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

5 Steps to Early Retirement Planning

Retire by 30s or 40s?? Sound too good to be true?

After all, it is not a good idea to work until you age or die. Retire early is achievable if we start working on it earlier. It’s never too early to start planning for early retirement. In fact, the earlier we start right out of college or university the earlier we can retire.

Other than allowing us to enjoy everything that we want after leaving the work force, early retirement planning is also one of the critical steps to achieve financial freedom.

Of course, early retirement planning also implies a lot of works and things to be considered. When we see the word “planning”, it already tells us that a lot of steps and long winded processes to follow through.

However, I am going to show you a simple 5 steps to early retirement planning. It is definitely worth investing time and working on it when statistic showing us that 95% of the people retire dead broke! I don't want to worry for my retirement or struggling when retired after working so hard before retirement.
Then, it is better start taking action and working on it now…

Step 1: Set our goal

First of all, we need to know what kinds of retirement lifestyle we want i.e. what is our goal. The number one reason most people don’t get what they want is because they don’t know what they want!

Write down our needs on a piece of paper and rank each of them as either absolutely necessary, most important, nice to have or least priority.
Knowing how we want to live now and in the future will help us set our financial goal.

Below are some ideas on things that we might want to consider and plan for early retirement:
1. At what age we want to retire at?
2. How do we want to spend our time after retirement? Fishing every day?
3. Where to stay after retirement? Big bungalow? Sea facing apartment?
4. Travel around the world
5. How much we need to maintain our desired lifestyle?
6. Children education if you already have kids
7. Any mortgage payments during retirement?
8. Life and healthcare/medical insurance coverage
9. Contribution to society? Other than financially, volunteer your time and talents to help others?

Step 2: Decide our financial target for tomorrow

Based on the desired retirement lifestyle and project the required expenditure on a piece of paper.

Need some guidance here? you can use this Worksheet - budget for tomorrow.

Step 3: Conduct a financial inventory count

Assess our current financial situation by doing an inventory count of what we have today. A financial inventory is simply a list of what we have and where we have it.

List down the following on another piece of paper.

1. All our Assets
2. All our Liabilities
3. Calculate our net worth (Assets less Liabilities)
4. All our Income
5. All our expenses
6. Calculate our net income or Savings (Income less Expenses)

If you need an easier way to do it, you can use the free online worksheets/tools to have an overview of our current financial situation.

Worksheet for Networth
Worksheet for Net Income

Step 4: How much do I need for early retirement

Try this free Retirement Planner to have an idea how much do we need for our early retirement.

Below are some tools/calculators to explore further:
Are You On Track With Your Early Retirement Plan?
List of Retirement Planning Calculator
How Much Will You Need For Retirement?
How Much Do I Need To Save For Retirement?

Step 5: Start taking action with a financial plan and evaluate the progress

Work out a detailed financial plan and start taking action to achieve our financial goal.

If you still find it a bit challenging to work out a financial plan, with the information that you workout from the earlier steps, you can seek advice from a professional financial planner to help mapping out your financial plan.
Next, we need to act and monitor the actual financial performance against our plan on monthly or even weekly basis, if needed.

Evaluate the performance for further improvement or changes due to change of economic situation, interest rate, job, marital status, addition of new family members, etc.

At the same time, keep record of all the short term goals that we have set and attained. Give ourselves a pad at our shoulders and say, “Great job! Keep it up!”

With early retirement planning, Financial Freedom is now a possible dream…

Find out more Tips on Early Retirement Planning here...

My life is exciting because I am discovering new things...all the time

My life is exciting because I am discovering new things and new ways of doing things all the time.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration.html

I deserve the best and I accept it now.

I deserve the best and I accept it now.
All my needs and desires are met before I even ask.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration.html

I love life! I look forward to every moment of it.

I love life! I look forward to every moment of it.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-Dreams.html

I am humble to learn from everyone!

I am humble to learn from everyone,
no matter who they are and what they do.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration.html

What Lies Beneath...

I read this article: '90% of Our Trades Make Money' and Other Expensive Half-Truths by Philip Guziec from Morningstar.com and learn about the thought beneath all the big headlines of the marketing materials that I received and read especially from internet, emails, newspaper, etc. Thinking about the key message of this article again, it is true to certain extent. Hence, I would like to share this article with all my trading buddies and friends. Be careful and think again whether it is the truth or lie beneath the headlines in future...

On my desk is a stack of marketing pitches I've received over the past year hawking option classes, strategies, and systems. These advertisements range from the relatively benign to the borderline criminal, but the key thing to keep in mind is that the objective of the guys making these pitches is to sell courses, newsletters, or systems. That means that the sale needs to be simple and emotionally appealing, but not necessarily that the system will make you money.

I'll walk through a few of these pitches in an attempt to prevent you and your money from parting prematurely.

"90% of our trades make money…"
This is my personal favorite, and it preys on the typical neophyte option user's ignorance of statistics. Anyone can come up with a strategy in seconds where 90% of the trades make money, but the unspoken second half of this sentence is, "…and on the other 10% of trades, you lose your shirt."

There is probably a bunch of fancy option lingo and complexity wrapped around the strategy to disguise the simplicity of this fact, but the bottom line is that any strategy where 90% of the trades make money includes big losses on the other 10% of the trades, and those bring your total return down dramatically. I'll be writing quite a bit about option statistics, but the simple version of the "90% of our trades make money" strategy is to write far-out-of-the-money naked calls. Easily 90% of them will make money if they're far enough out-of-the-money, but a loss on any one of the remaining 10% could bankrupt you.

"We bought xxx calls and made 182%," or "We bought yyy puts and made 367%," etc., etc.
Assuming that these "investments" were even made up front, and not generated by picking the winners after the fact, these are just emotionally gripping numbers that were chosen by selecting from among the winners. What isn't being said is that in the same set of investments, "Our xyz calls expired worthless, losing us 100% of our investment," and "Our pdq puts expired worthless, losing us 100% of our investment." To really evaluate an investment strategy, you need to examine a portfolio return over time.

While we're on the topic of emotionally gripping, let's address this one:

"Joe Schmo was living on the street in a box, but he made $100,000 last year with our secret option strategy." This is just like a casino ad showing the smiling face of a big jackpot winner: "Ed Superlucky won $7,200,000 at the Loseyourshirt casino." In this case, you're hearing from the winner, not the 9,000 other casino "customers" who lost an average of $1,000 apiece. To illustrate further, imagine giving 1,000 vagrants each a credit card with a $1,000 cash advance, and having them all make a 100-to-1 bet at a casino. Ten of them will make $99,000 from nothing, and the rest will wind up defaulting on $1,000 in debt. Joe Schmo, who was living on the street in a box, is the options equivalent of one of those 10 winners.

"Our list of recommended trades last year averaged an 82% return."
These near-lies work in a couple of ways. First, there is the fine-print version, where you'll find something like: "This trading performance assumes that each trade was exited at the high trading price during the period." Think that through for a second. If I buy something, figure I sold it at the same price I paid for it if it goes down in price (the high trading price during the period), and figure I sold it at the highest price it reached if it goes up, of course my calculations will show a huge return!

The second version of the near-lie is slightly more insidious, and it depends on the fact that many options are still relatively illiquid (rarely traded, so a big purchase will move the price of the options). If an options service buys relatively illiquid options, and then pitches the trade to thousands of people, the demand generated will push the price in the service's favor, at which point it will typically sell. The service's portfolio may well make money, but the individual options investors probably won't because they overpaid for the options. When this is done with penny stocks via pitches in e-mails or faxes, it is a little more obvious, and it is rightfully called "pump and dump."

"We've found back-tested strategies that have returned 376% annually, and you can, too, using our back-testing tools."
Back-testing is also called data mining, and it's another way to scam with statistics. In any large set of data, one can statistically find patterns that worked historically, but with no reliable reason the same strategy will work in the future. For example, the Super Bowl Indicator says that most years after the NFC wins are good years for stocks, and most years after the AFC wins are bad years for stocks. The technical term is spurious correlation, and blindly using back-tested strategies should provide a solid, and expensive, education on how schemes that could have worked in the past don't necessarily work in the future.

"Our charting strategy generates signals that blah blah blah… Fibonacci retracement blah blah blah… Candlestick charts blah blah blah…"
Find me one "technical analyst," as they call themselves, among the 500 richest people in the world, and I'll quit my job and read every book ever written on technical analysis.

"XYZ Corp. just got FDA approval for the cure to cancer. We recommend buying the calls on XYZ at…"
Some services seem to add credibility to their analysis by coupling the official release of positive facts with recommendations. This is another strategy for selling services that prey on human psychology. People tend to infer causality when there is none stated. In this case, the sentence adds no value from an investing perspective for two reasons. First, any obvious public news should already have caused the price of the stock and the options to move. Second, even if the news wasn't public, there is no explicit link between the statement and the recommendation. What this service is likely doing is simply linking a news feed to a random generator that suggests the option purchase, knowing full well that human nature will cause many unsuspecting and trusting investors to fall for this strategy, and pay money for the worthless service.

"If you wrote options following our strategy over the past five years, you would have made an average of 22% return on your account."
This is the momentum element of options investing, and the one claim that comes close to an undistorted truth. The securities markets have been in a prolonged period of falling volatility. Another way of putting this is that stock prices have been wiggling around less and less each year since 2001. Because of this, writing options has been a winning game over buying options (technically speaking, realized volatility has been less than implied volatility). Will this continue? Not likely. Volatility has been at historic lows, and the world rarely remains a stable place forever. The one sure thing we know is that volatility won't go to zero. Continuing to blindly follow the strategy of mindlessly writing options is a bit akin to buying tech stocks in 2000. The trend will probably eventually blow up in your face, but you don't know exactly when.

Hopefully these examples will help you better evaluate the marketing materials that show up in your mailboxes, and let you save that money for real investing.

Feed Shark

What do you know about financial freedom?

After attended the 3 days Millionaire Mind Intensive by T Harv Eker, the biggest seminar with 5,000++ audience that I have ever been, I realize that more and more people are beginning to uncover the world is wealthy.

The power of today’s system especially with internet allows people to find ways to achieve financial freedom without the critical essence of hard work. With smart work, there is a different sense and approach to life.

However, sad to say that the current education system is still left behind with the classical teaching. Most of the things that we learn in schools, colleges or universities are refining us to work hard and harder for money. With the number of new degrees and graduates coming out, most of them still have the 20th century mindset that resulting them stuck in the typical rat race treadmill. Typically, their objective is to study hard, get a good and hottest degree in order to get a well pay job. Work hard to climb the corporate ladders in order to earn more money!

We are not learning what could have been general information for financial success. The traditional view forces most people to follow a structure and system where the rich control the world and the poor pay the bills. Being financially literate means knowing the different pitfalls and mistakes of the traditional mindset.

Personally, the 3 days millionaire mind intensive seminar is a paradigm shift. It changes the way people think. We have to have the right inner thinking in order ot be rich or financially free. For instances, think and model the rich will empower us with the value and the right attitude towards money. With that, we can find reasons why the average or poor are not successful and find ways to avoid these reasons.

As a philosophy, we can approach different aspects of our lives and see things differently. The change in perspective will allow us to be more effective and influential individuals because of our personal success.

Financial success is not governed by our talents, skills or luck. A positive mindset is the mind of people willing to change and act. Having the right mindset will allow us to find opportunities in risks and courage in hesitations.

US Market dancing up and down

The US stock market opened sharply higher right after open (its second-largest open in the past four years) after the Fed announced its joint effort with the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank to establish a temporary Term Auction Facility in an attempt to improve liquidity. This is the effort that Fed tried to counter the disappointment from the market after a 25 basis point cut yesterday.

The Fed plans to use term funds auctions that will allow it to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations. The Fed also plans to utilize foreign exchange swap lines. The plan is more ambitious than added easing in the fed funds or discount rates. The operations are open to thousands of banks rather than the 20 or so primary dealers involved with the daily Fed operations. In addition, there should be no stigma against these operations as, like it or not, discount borrowing from the Fed still carries the presumption of troubled borrowing, leaving hesitancy from the market. However, the opening range highs have proven to be the highest prints of the day as the market has subsequently slid lower throughout the session.

Financials, which led yesterday's post-FOMC decline, are underperforming the broader market this session because of several reasons...

Bank of America (BAC) said this morning at a conference that it expects quarterly results to be disappointing. The company expects write-downs will be larger than reported, and described final write-downs of collateralized debt obligations are "unknowable."

Wachovia (WB) said at the same conference that it now expects fourth quarter 2007 provision expense to be $1 bln higher than charge-offs.

There is also a report that Morgan Stanley is picking Citigroup (C) as a stock to sell short as it believes Citi's earnings are deteriorating. The firm expects new management to deliver a dividend cut, and also expects further hybrid issuance, diluting current shareholders.

Finally, JP Morgan (JPM), Bank of America and Wachovia were downgraded at Merrill Lynch based on credit risks...

The more I love myself, the younger I look

The more I love myself, the younger I look.


http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

I focus and therefore I create

I focus and therefore I create!



http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

My inspiration from Mr John Foppe

Everyday, I kick start my day positively by watching at least one motivational web seminar of the world class speakers like Robert Kiyosaki, Anthony Robbins, T Harv Eker, Jay Abraham, etc. Even though viewing some of the web seminars twice or repeatedly, it is still helpful to reinforce the understanding of key messages.

Just want to share one of my favorite inspiration from Mr John P. Foppe, author of famous books, What’s Your Excuse? and Armed With Hope. John Foope was born without arms, yet, he is able to cook, eat, drive, draw, type and is married to a wonderful lady. What is the secret behind John’s success story?

His agonizing handicap has given him a unique point of view. He faced obstacles-both physical and emotional-his entire life. While some see his condition as a debilitating handicap, John disagrees. "Our only handicaps are those mental and emotional ones that prevent us from participating fully in life." Every pathway to success is a step-by-step process requiring a focus on resources instead of handicaps, assets instead of liabilities.

While the sight of how he tackles life with his toes really amazes me, after hearing his message from the web seminar, I am not looking at him but myself. John takes away all my excuses and gives me a new perspective in my life especially my journey to financial freedom.

If John who born without arms can overcome his condition and use his feet to replace his “invisible” hands doing what ordinary people can only do with their hands, there is no reason or good excuse why I can’t achieve what I want in life. John's faith, persistence, enthusiasm and optimism inspire me to change my destiny.

Hope you too enjoy and are inspired by this shorter version of video of John Foppe. John shows us that how can he use his toes to open a can of drink and drink it in front of the audiences.

I always make the correct decision

I always make the correct decision.
I recognize my own intuitive ability.


http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

I deserve the best and I accept it now

I deserve the best and I accept it now.

All my needs and desires are met before I even ask.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html
Feed Shark

Whatever I am guided to do will be a success

Whatever I am guided to do will be a success.


http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Day Traders need to know this...

For traders who getting in and out of the same position on the same day, you definitely need to know this....

Day trading requirement established by Nasdaq and most of the brokerage firms:

• Pattern Day-Traders are characterized by transacting 4 or more stock or options day-trades within a five-day period in a margin account.
• Pattern Day-Traders must maintain at least $25,000.00 in account value in order to continue day-trading practices.
• In the event that a Pattern Day-Trader does not maintain $25,000.00 in account value they will be required to provide cash-on-hand for same-day stock transactions.
• Additionally, an account may be flagged for day-trading if it regularly recycles funds within the same day, for example, an investor sells a security (stock or option) for a premium of $400 and proceeds to purchase another security (stock or option) for $400 when no other capital is available and prior to funds being cleared.

If an account becomes designated as a pattern day-trading account and does not maintain the minimum required equity i.e. minimum $25,000.00, a call will be issued which must be met within 5 business days, otherwise the account will be restricted to Cash only for a period of 90 days or until the account equity is brought above the minimum equity requirement or minimum $25,000.00."

The Nasdaq Day-Trading Risk Disclosure Statement also sets out some considerations for the potential day trader (one who uses an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both the purchase and sale of the same security or securities).

One should consider these as serious warnings because day trading can be extremely risky and is not appropriate for trader who has limited resources and/or limited trading experience. The trader should be prepared to lose everything used for day trading. They also indicate that "certain evidence" indicates that an investment of less than $50,000 will significantly impair the day traders ability to make a profit.

In addition, day trading on margin could result in losses beyond the initial investment. At the same time, with multiple commissions incurred will definitely make it more challenging to attain profits.

On a neutral ground, there are traders who make a fortune from day trading and that make it very tempting for a lot of people. At the same time, there are a lot of people lost so much through day trading. So, we should do our homework before considering this strategy.

Other than obtaining an understanding of the significant risks, the prospective day trader needs to understand his own trading emotions very well and be able to attain great discipline before putting any money at risk.

Happy trading!

When Trading Performance Falls Off a Cliff

US Market sentiment has changed in the past few months and I find this article by Dr Brett Steenbarger very relevant to traders. Just want to share with all my trading buddies and friends.

“I’ve been a successful trader, but lately I’ve been losing money. Nothing I try seems to work. What should I do?”

I’ve heard variations of this problem quite a few times in recent months. Good traders are struggling, despite volatile markets that—on the surface—should offer opportunity. It’s a frustrating and demoralizing situation.

So what should a trader do?

The important thing here is that the trader has been successful over a period of years, not just months. The problem is not simply one of inexperience. This is what makes the problem so perplexing: the trader knows he or she has skills, but it’s as if all that experience has flown out the window.

Let’s take an analogous situation: Suppose you’ve had good health for years, but now feel persistently sick and run down. You’re just not your old self. What should you do?

Clearly, you would seek professional help for a thorough and objective evaluation and for an accurate diagnosis of the problem. What you would not do is let the situation continue to deteriorate. You would also not simply assume that the problem must be “in your head” and immediately seek psychological assistance.

Similarly, the experienced and successful trader whose performance has fallen off a cliff should not let the situation fester and should not assume that the problem is psychological. If health has deteriorated, there’s most likely a health problem that needs to be identified and treated. If the health of one’s portfolio has deteriorated, there’s most likely a trading problem that requires similar assessment and intervention.

Having worked with traders across a variety of markets and strategies—from market making and prop desks at banks to global macro portfolio managers and Chicago prop traders—I’ve found three common sources of performance decline:

1) Diminishing Opportunity in the Trader’s Market – Perhaps you’ve been making markets or trading spreads and the bid-offer has narrowed significantly. Perhaps your market has entered an extended period of reduced volatility. The market has changed significantly and your old strategies no longer work.

2) Altered Market Behavior – Perhaps you’re a short-term trader who looks for advantages in short-term price/volume patterns or in shifts within the order book (depth of market); perhaps you depend on execution (buying bids and selling offers, entering long on pullbacks, short on bounces) for much of your profitability. The presence of new large traders in your market, including automated trading systems/black boxes, has shifted how markets trade in the short-run, disrupting the patterns you’ve counted upon for your profitability.

3) Shifting Market Regimes – Markets that used to behave independently now are more correlated. Countertrend patterns that once ruled markets now are giving way to greater trending moves. Enhanced intraday volatility is making it difficult to participate in longer-term market moves. We’ve seen a variety of changes in market trading patterns and it has been difficult for traders and investors to adapt to these.

Notice that these are variations on a single theme: markets have changed in some ways and what once worked is no longer working. It’s no wonder that struggling traders feel as though they’ve “lost it”. In a sense, they have.

Does this mean that trading problems don’t have a psychological component? Not at all. When markets change and traders are caught in the transitions, the usual outcome is frustration, then self-doubt. These emotional reactions can interact with the trading problems to create vicious downward spirals, both in mood and P/L. What begins as a trading problem can escalate into emotional one. Frustrated, reactive trading can undermine serious efforts at adaptation.

My advice for traders in a prolonged tailspin is severalfold:

1) Cut Risk – It’s that “above all else, do no harm” principle. If you don’t have a feel for the market, trade small while you regain your feel. Preserve as much of your capital as possible to lay the foundation for your recovery;

2) Focus on Your Strengths – It’s not unusual for frustrated traders to try to make all kinds of changes in their trading in a frantic effort to gain some traction. These efforts can compound difficulties by getting traders further and further from their strengths. During rebuilding periods, you want to focus on the markets and strategies that you know most about, that represent your strengths.

3) Reach Out – It’s especially helpful to reach out to traders who trade markets and strategies similar to yours. Are they also struggling? If so, this suggests that market changes, indeed, may be at the root of the problem. If the traders you contact are succeeding, try to find out what they’re doing differently from you. It may well be that a simple tweaking of execution, holding times, and risk management could turn your performance around.

4) Stay Constructive – You may well be in a rebuilding period. This happens to the best athletes and sports franchises. It doesn’t mean you’ve lost all talent and skill. Identifying the kinds of trades that are working for you is a start toward rebuilding: you want to find the common denominators behind your successful trades so that you can emphasize these going forward.

5) Work on Your Self-Talk – Hard as it is, it’s important to stay positive during a rebuilding period. The last thing you want to do is create additional interference by beating up on yourself and dampening your motivation. This is one of the areas where coaching can be helpful. Setting attainable goals and creating plans for learning new patterns and trading strategies can fuel optimism, determination, and focus.

6) Control the Budget – It very much helps to have a cash cushion to weather these rainy day periods. Living within one’s means also helps greatly. I’ve generally found that traders can adapt to shifting markets if they have enough time to make the transition. It’s when the pressures of bringing in money month to month add to the performance pressures of a drawdown period that turnarounds become difficult to sustain.

Perhaps the best advice, however, is preventive.

Identify slumps early and control losses before they get out of hand. Perform regular inventories of your winning and losing trades, so that you’re always on top of what’s working for you and minimizing what’s hurting performance. During your best times, remember that markets always change and keep powder dry to weather the inevitable lean times. Ironically, the best way to master declines in trading performance is to embrace them early and turn them into prods for learning and development.

Feed Shark

My mind is a tool that I can choose to use in any way I wish

My mind is a tool that I can choose to use in any way I wish.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

I have all that I need to make things happen!

I have all that I need to make things happen!

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Today is the future I created yesterday!

Today is the future i created yesterday.

I look forward with enthusiasm to all the great adventures of the day.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

My capacity to earn and grow money expands day-by-day

My capacity to earn and grow money expands day-by-day!

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Every Experience I Have Benefits Me

Every experience I have benefits me.
I am in the process of positive change.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Are you a warrior in options trading?

Before we start on our options trading journey, we need to understand the various styles of equity or options traders. This is because one of the most confusing aspects of the trading profession is there is no single definition of "traders". Traders come in many different styles, sizes, behaviors, characters and varieties.

Professional options traders will generally undertake one of several styles and stick only to that style. This is an important point since traders are always at the risk of being distracted by various market commentaries, analysts’ opinion and conflicting trading styles.

Find out which types of trading warriors you are.

1. Fundamental Warriors

Fundamental trading is a method by which traders focus on company-specific events to determine which stock to buy and when to buy it. Trading on fundamentals is more closely associated with the buy-and-hold strategy of investing than short-term day trading. There are, however, specific instances in which trading on fundamentals can generate some nice profits in a short period.

This type of traders trade companies based on fundamental analysis, which examines things like corporate events such as actual or anticipated earnings reports, stock splits, reorganizations or acquisitions. One of the richest man in this planet earth, Warren Buffett, is famous of investing in companies which are underpriced based on some form of fundamental analysis.

Most of the equity investors are aware of the most common financial data used in fundamental analysis: earnings per share, revenue and cash flow. These quantitative factors can include any figures found on a company's earnings report, cash-flow statement or balance sheet; these factors can also include the results of financial ratios such as return on equity and debt to equity. Fundamental traders may use such quantitative data to identify trading opportunities if, for example, a company issues earnings results that catch the market by surprise.

2. Swing Warriors

Swing traders are really fundamental traders who hold their positions longer than a single day. Most fundamental traders are actually swing traders since changes in corporate fundamentals generally require several days or even weeks to produce a price movement sufficient enough for the trader to claim a reasonable profit.

Swing trading is actually a mix of day trading and trend trading. A day trader will hold a stock anywhere from a few seconds to a few hours but never more than a day; a trend trader examines the long-term fundamental trends of a stock or index and may hold the stock for a few weeks or months. Swing traders hold a particular stock for a period of time, generally a few days or two or three weeks, which is between those extremes, and they will trade the stock on the basis of its intra-week or intra-month oscillations between optimism and pessimism.

3. Technical Warriors

Technical traders are obsessed with charts and graphs, watching lines (esp support and resistant lines) on stock or index graphs for signs of convergence or divergence that might indicate buy or sell signals.

In general, a technician is somebody who looks back in history, using the recognizable patterns of past trading data to try to predict what might happen to stocks in the future. This is the same general method practiced by economists and meteorologists: looking to the past for insight into the future.

4. Momentum Warriors

Momentum traders look to find stocks that are moving significantly in one direction on high volume and try to jump on board to ride the momentum train to a desired profit. Momentum traders may hold their positions for a few minutes, a couple of hours or even the entire length of the trading day, depending on how quickly the stock moves and when it changes direction.
By watching the momentum line, the momentum trader has already engaged in technical analysis, examining stock charts for signs of the breakout. However, the technical indicators used in momentum trading are very limited and only the tip of the iceberg compared to technical guys.

5. Scalping Warriors

The scalper is an individual who makes dozens or hundreds of trades per day, trying to "scalp" a small profit from each trade by exploiting the bid-ask spread. Scalper generates trading profits from stocks that are not moving, make tiny profits from each trade by buying a stock on the bid and then turning around and selling at the ask.

Personally, I am a fundamental warrior because I do play earning during peak season. At the same time, I am a momentum day trader riding on the wave when I see signals to enter and exit.

How about you?

It is very common that options traders are constantly soul searching and questioning their own chosen approach. Novice traders might try and test each of these techniques to find their style. Some experimentation is advisable, particularly at the beginning of the options trading career, but deviating from a disciplined, focused approach can be disastrous later when we are establishing our style.

At the same time, there are a lot of options trading related books entirely devoted to each style, although many titles such as "Day Trade Online" or "How to Get Started in Electronic Day Trading" are unclear about what type of trading they are deploying.

Ultimately, it is critical that we settle on a single niche, matching our investing knowledge and experience with a style to which we feel that we can devote further research, education and practice.

Happy trading!

Feed Shark

It is always easy for me to adapt and change!

It is always easy for me to adapt and change. I am flexible and flowing.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html

Everything I need is supplied to me abundantly

Everything I need is supplied to me abundantly.

http://www.inspiringjourneytofinancialfreedom.com/Inspiration-PositiveAffirmations.html
Feed Shark

Why Option Trading Is My World?

Options trading becomes the in-thing and most trendy investment strategy nowadays. In fact, option is a much popular financial instrument especial in Asia lately. There was even an Options Trading Championship or competition being organized at Singapore, Malaysia and Indonesia concurrently in Oct 2007 organized by Freely Business School headed by Dr Clemen Chiang.

So, why options trading is so popular and in fact being viewed as a tool to attain financial freedom?

Generally, there are 4 main reasons we should consider options trading:

1. Limited risk and exposure
2. Hedging
3. Leverage
4. Generate additional income on existing portfolio

1. Limited Risk and Exposure

In options trading, buyers benefit from being able to control the movement in a stock for just a fraction of the cost of purchasing that stock. At the same time, we can never lose more than this modest dollar amount. Therefore, we can keep the bulk of the investment dollars in the safety of cash where it is immune to the wild and often scary swings in the market.

2. Hedging

One of the most conservative options trading strategies is to help protecting our investment portfolio against sudden downward pressure on stock prices. It is just like an insurance policy. Investors often buy puts as a hedge to protect their portfolio value.

For a comparatively and fairly minimal investment, through option trading, we can secure the right to sell our stocks at a particular price (a "put") regardless of how is the market doing.

By buying a protective put, an investor increases their break-even point of the stock by the cost of the put and if the stock price rises instead of falls, this strategy may limit the upside potential by the cost of the put.

The way this works is fairly straightforward. Let's imagine you decided to buy 1,000 shares of ABC Corporation for $88. To protect your $88,000 investment, you might consider buying puts.

Since each put controls 100 shares, you would need 10 contracts to protect 1,000 shares.

By choosing a strike price of $85 and an expiration date several months away, you would lock in the right to sell your shares with a maximum loss of $3,000 ($88 purchase price - $85 strike price x 1,000 shares) plus the cost of the puts.
Of course, the best scenario would be for the stock to increase in value so the puts would expire worthless. In either case, knowing that you'll be able to sell your shares at $85 -even if the stock drops to $50- might just help you sleep easier.

3. Leverage

For investors with a high level of risk tolerance, options trading enable us to use relatively moderate sums of money to leverage sizable positions.
For a fraction of what it would cost to purchase large blocks of stocks in high-flying volatile companies, investors can buy calls giving them the right, but not the obligation, to buy shares at a specific price (strike).

If a stock trades at $50, it would take $25,000 to buy 500 shares.
Through options trading, the same investor might buy ten 50 call contracts at $8. Now, for just $8,000 (10 contracts x $8 x 100 shares per contract), the investor owns the rights to buy 1,000 shares of stock at $50, any time before the call options expire.

If the stock price is $70 at expiration, the options will be worth $20 each ($70 - $50) or $20,000 (10 contracts x $20 x 100). The investor will have a profit of $12,000 on a $8,000 investment through options trading.

In contrast, the investor who paid $50 for 500 shares spent $25,000 to make $10,000 ($70 - $50 x 500 shares). That's the power of leverage.

However, the risks are equally high. If the stock doesn't move, the investor who paid $8,000 for the $50 calls will lose the entire investment. Likewise, the investors who bought the stock will have lost nothing because they still own the stock.

4. Generate Additional Income On Existing Portfolio

Another relatively conservative options trading strategy is covered-call writing to generate income on stock positions already held. Many investors use this strategy to help generate additional income from stocks in their portfolio or to lower the breakeven on stock positions being purchased.

This is can be done by selling out-of-the-money calls (i.e. options with a strike price that is above the current stock price). When we sell calls, we take on the obligations (if the buyers of the calls exercise their rights) to deliver the shares at a certain price (strike price) by a certain future date (expiration date). When selling options, we pocket the premium received from selling the options. Normally, the owners of the stock decide to sell calls when they think the stocks will stagnate over the short term. In this case, by selling calls generate income even if the stocks fail to stage a rally.

Here's how the strategy works:Let's imagine that you currently have 1,000 shares and the stock is trading at $67. If you sold 10 calls or less against the stock in your account, they would be considered "covered" because you wouldn't have to buy shares at the open market in the event of an assignment. For this reason, the position is far less risky than uncovered (naked) calls that, by definition, are written without stock as collateral.

If the $70 calls are trading at $3, you could sell 5 contracts and earn $1,500 ($3 x 5 contracts x 100 shares). Now, all you have to do is hope the stock remains below $70. If it does, you keep the $1,500 and all of your stock.
If the stock jumps to $72, you have two choices.

First, to keep the stock, you could buy the calls back. While this may result in a loss, from taxation perspective, this option could be preferable than incurring capital gains.

Your other option would be to wait for the assignment and sell 500 shares to the option holder at $70 per share. In this case, you still keep the $1,500 premium you collected from selling the calls. In addition, you capture the profit associated with the stock's move from $67 to $70 i.e. $3 x 500 shares = $1,500.

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I look forward with joyous anticipation to the day

I look forward with joyous anticipation to the day.

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I am an open channel for creative ideas.

I receive creative money making ideas everyday.
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What is Options Trading??!!

Options trading become very popular lately because option is one of the most flexible and versatile instruments that can greatly enhance the performance or reduce the risk of an investment portfolio. By deploying the right strategies, options trading enable us to make money whether the market is bullish or bearish or even when the market going sideway.

So, what is an Option?

Option is a contract that has the right but not obligation to buy or sell a stock at a specific price on or before a specific date.

How does an option work?

An option is very similar to when we want to buy a land to build our home sweet home. For example, when we found an ideal piece of land and need time to obtain permit, land approval, securing financing and seek confirmation from Feng Shui master, etc.

At the same time, we would like to secure the land while putting everything in place. We can go to the land owner and “strike” a deal to buy the land for $5 million. We create a contract that gives us the right to buy the land but it does NOT constitute an obligation that we must purchase the land.

The contract has an expiration of 3 months to put everything in place. Hence, we are controlling the land for 3 months and we must decide whether to buy the land or not before the expiration date.

As a return, the land owner is expecting to collect a premium of $200,000 for being obligated to sell the land to us at $5 million. This premium is based on how much the land might increase in value during the 3 months period.
The land owner will be more than happy to receive and keep the $200,000 premium paid for the contract no matter what happens. At the same time, the agreed upon sales or strike price is likely to be much higher than he or she could obtain if he or she sold the land without obtaining all the necessary approvals.

The contract in this example is very similar to a Call option in stock market. The strike price is $5 million while the option premium is $200,000 for a 3 months expiration contract.

During the 3 months period, if we discover a gold mine underneath the land. The value of the land shoots up to $50 million. However, the land owner is still obliged to sell the land for $5 million. We bought the land for $5.2 million and can now sell it immediately for $50 million to make a $44.8 million profit.
However, if for some reasons such as the application to build a house is unsuccessful or the Feng Shui master confirms that the land is not suitable to build a house. We decide not to exercise the option to buy the land. In this case, we will lose $200,000 premium paid for the option.

Using the similar example and apply it to the share market or options trading, investors who anticipate a bullish market can buy Calls option on the stock to ride on the upward moving wave. When the stock prices go up, the premium of Calls will go up. That’s how an option trader can make money from option but at a fraction of the cost of owning the actual stock.

On the other hand, investors who anticipate a bearish market can buy Puts on stock to profit from falling prices. As the stock prices go down, the premium of Puts will rise to profit the investors. Puts are also used to protect portfolios like insurance to hedge against a fall in stock prices.


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