Monthly Archives: August 2016

Guide to Trade Futures During Higher Volatility

Guide to Trade Futures During Higher Volatility

The increased volatility in the markets means retail futures traders should take smaller positions and remain disciplined in their strategies.

September 16 has seen a large amount of liquidity in the markets since it is triple witching day when equity options, equity futures and index options and futures contracts all expire.

Futures traders must not deviate from their original strategies even as volatility picks up, said Peter Borish, chief strategist with Quad Group, a New York-based financial firm.

“One is in the trading business to make money and are not in the business to be right,” he said. “The most important thing is to maintain your discipline.”

Making smaller trades is important, because the market does not “go straight up or straight down, particularly when volatility expands,” Borish said.

When traders have an opportunity to take a profit, they need to take advantage of the opportunity. Otherwise, “what happens to many people is you end up turning a profit or small loss into a large one,” he said.

One major mistake retail traders commit is attempting to pick the top and wanting to be right, Borish said.

“It happens to many people and under no circumstance should you use volatility as an excuse to lose your discipline,” he said. “Too many people get greedy and they stay in a position too long and don’t take profits or continue to stay short. If they sell a position and it starts to go back up, they still stay in the short.”

Traders need to stick to their original trading plans and understand their own goals and risk tolerance, said J.B. Mackenzie, director of futures and forex of TD Ameritrade, an Omaha, Neb.-based online broker. When there is increased volatility, defining your risk upfront will help.

“This is a 24-hour market and news outside the U.S. could affect your positions, especially assets such as crude oil (CL) ” he said. “Use a stop/loss on your trades because it helps control your risk.”

Since today is witching day, volatility will increase more than usual and some investors will be looking to get out of positions, Mackenzie said.

Trading in smaller positions can minimize losses and lower your risk. Instead of buying three lots in a single order, an investor could purchase one or two lots and watch how the market reacts.

“You’re hitting a single, don’t try to swing for the fence and hit a home run,” he said. “Figure out your average price point and define your downside risk,” he said. “If your goal is $44 and it is trading at $43, place an order right above or below it, but don’t jump in all at once and build out your trade.”

A pullback in the market might occur next week before the Federal Reserve meets, which will lower the amount of volatility, Mackenzie said.

The Chicago Mercantile Exchange’s FedWatch tool shows there is a 12% probability that the Fed will raise interest rates, a decline from 15% on Sept. 14. The odds are based on their 30-Day Fed fund futures prices.

Smooth or Reduce Volatility Over Calendar Time

Futures traders can lower their volatility by investing bit by bit over time which is akin to dollar cost averaging in a 401(k) or IRA, said K.C. Ma, a CFA and director of the Roland George investments program at Stetson University in Deland, Fla. This strategy is more effective in this market because of “maturity effect.”

“Futures volatility tends to increase when approaching maturity, so a natural way to reduce the portfolio volatility is to spread your investment over time,” he said.

Traders can also spread their investments across the same contract of different maturity months at the same time which also lowers volatility and risk.

“A futures contract with longer maturity, by design, has lower volatility than a nearby contract,” he said. “The result is the same in reducing overall volatility, without losing the investment theses of the directional calls of the underlying assets.”

Markets Are Range Bound

When markets begin to move widely, but remain in a range, traders can use daily and longer term charts to determine price action, said Anne-Marie Baiynd, a Detroit-based trader and author.

“When markets become indeterminate or non-trending as they are now, the trading strategies and length of hold time must be adjusted,” she said.

The futures market remains range bound “with sufficient buying pressure showing support levels to recover quickly, but also enough sellers present to prevent an upside breakaway of formation,” Baiynd said.

The market remains in a state with traders waiting “eagerly” for either a breakout or a breakdown to hold, she said.

Baiynd reminds her traders to “identify regions of support and resistance visible on weekly charts and assess the prevailing momentum,” she said. “If momentum is not sloping, the charts will bounce off the floors of support and reject the ceilings of resistance.”

Inexperienced traders often fail to realize that technical trading mechanics need to adjust to the underlying conditions of the charts. Failing to understand can lead the investor to utilize the wrong strategies in the wrong environments.

“As I review my charts each day, this is often one of my primary considerations – have buyers and sellers established a true hierarchy of control,” Baiynd said. “That would mean that if buyers were in control, I would see and upward trend and if sellers were in control, I would see a downward trend.”

Traders should watch the flow of motion, the size of orders at these levels and estimate whether charts are “buying to cover or close their positions (at support), or selling to cover or close their positions (at resistance),” she said.

Tips Marriage Can Fix Your Terrible Credit

Tips Marriage Can Fix Your Terrible Credit

Joint credit isn’t something married couples have to dive into automatically. It should be considered as seriously as your marriage itself.

It doesn’t matter if you’re a platinum card holder with a credit score in the 800s or an infrequent bill payer who can’t buy a car without a co-signer. Your previous credit history doesn’t make one bit of difference to your partner’s credit… until you apply for credit jointly.

“Money and love don’t always mix,” says Anthony D. Criscuolo, certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Fla. “When getting married, often one of the most difficult issues is the merging of a couple’s finances. This is especially true if one or both spouses have a lot of debt or past debt that was handled poorly.”

Since your credit reports are attached to your Social Security number, your partner doesn’t get them or your credit history. Even if you or your partner change your names, the Social Security numbers stay the same… only with an alias attached to your original name.

“Only debts and accounts that you open jointly will be tracked on both of your credit histories, and still they are tracked as part of your separate credit histories” Criscuolo says. “Joint accounts are just reported to the credit agencies under all of the Social Security Numbers that are on the account. There is no such thing as a ‘joint’ credit score.”

Engaged couples or newlyweds may be considering combining banking and credit accounts just to simplify matters, but that approach is only simple on its surface. Julie Pukas, head of U.S. cards and merchant solutions at TD Bank, notes that one member of a couple can authorize the other to use their credit card. The upside is that a cardholder with bad credit can have a spouse with good credit help them polish up their credit score and look better in the eyes of credit bureaus. However, there is a catch.

“If you have too little invested in Europe and the United Kingdom, it’s a great opportunity to invest more while prices are down,” he says.

He advises investing about 15% of your equity portfolio in Europe, with exposure to both the U.K. and the rest of Western Europe. That’s actually fairly low compared Europe’s share of the global economy, but it addresses concerns about the region’s long-term economic struggles and political gridlock.

Joe Correnti, senior vice president of brokerage product at Scottrade, notes that investors should also consider rebalancing their mix of assets around this time. If your portfolio consists of 60% equities and 40% bonds or other fixed income, plummeting stocks may have left you a little heavy on the bonds side.To keep that 60-40 balance, you can either immediately rebalance or see if your portfolio springs back quickly. However, that decision should be based on your timetable and risk tolerance.

“If you are investing for the long-haul, shedding international holdings probably doesn’t make much sense,” said Joe Correnti, senior vice president of brokerage product at Scottrade. “While the vote in the U.K. has led to some volatility in the market, in fact this appears to be the most significant two-day disruption the market has seen, we continue to believe the markets will bounce back, and recent events will likely be viewed as an opportunity.”

Just realize that, with a gross domestic product of about $2.9 trillion, the U.K. is still the fifth-largest economy in the world. While it’s unknown what those effects might be, they aren’t going to be “nothing.”

Jacobs at Palisades Hudson recommends investing in large-cap European stocks through low-cost index funds such as the Vanguard European Stock Index Fund. You can sell losing stocks if you feel that’s the right move, as you can deduct $3,000 worth of losses per year if you don’t have any offsetting gains, but prepare to say goodbye to them for a while. A “wash sale” buyback within 30 days will knock out that deduction, so buy another similar European ETF or mutual fund if you’re having buyer’s remorse.

Also, and this is the tough part, look on the bright side and don’t get jittery. There’s a strong chance that even if the U.K. goes through with leaving the European Union, it may work out well for all parties involved. The EU will work harder to keep its house in order and its membership intact, while the UK’s decision can’t hurt the U.S. all that badly. Exports to the U.K. were less than 4% of all U.S. exports last year, and the U.K. accounts for just 3% of S&P 500 companies’s revenue.

“There won’t be mass defections of talent or wealth from Britain. New trade agreements will be negotiated, and cooler heads will prevail,” Jacobs says. “It’s not in the remaining EU countries’ interest to punish the U.K.”

That said, the Brexit didn’t happen in a vacuum. DeVere’s Green cites China’s economic growth, the U.S. election, the failure of negative interest rates in Japan and the eurozone to stimulate sustainable recovery, and the Fed’s nervousness over the U.S. economy as other concerns for the remainder of 2016. While market shocks from Brexit won’t throw the U.S. or the world into recession, they shouldn’t be viewed as anomalies, either.

“Investors have always faced some volatility but shifting fundamentals will continue to drive up volatility further in the markets for the foreseeable future,” Green says. “Not only do investors need to accept this, they need to embrace it. Volatility is good for markets and investors alike, because it generates important investment opportunities.”

Tips to Invest When the World Is on Fire

Tips to Invest When the World Is on Fire

We understand that all you want to do during this year of elections, Brexit, terror attacks and other global upheaval is panic.

We won’t say don’t, but at least try not to.

 At few points in recent history has “world on fire” been as popular a search topic as it is now. The U.S. presidential is approaching, and this year we’ve dealt with a faltering Chinese economy, the United Nations stepping away from the European Union, Turkey in disarray, terrorist attacks throughout the globe, a virus-and-scandal-plagued Summer Olympics in Brazil and… oh yes, your finances. How, exactly, is an investor supposed to cope with a world that increasingly resembles a 24-hour news network’s “breaking news” ticker?

With resignation. Nigel Green, founder and chief executive of the U.K.-based deVere Group, notes that his home nation’s turmoil is only the beginning. He predicts that not only are we not going to be on stable ground for a while, but that investors may need to get used to that reality.

 “With the new finance minister, Philip Hammond, flagging a possible six-year renegotiation period, with ground breaking decisions being made by the U.K. and the EU, and with those decisions having a far-reaching global impact, investors need to accept that significant uncertainty, which leads to market volatility, is here to stay,” he says. “It is the new normal.”

His U.S. counterparts don’t really disagree. As soon as the Brexit vote cleared, Paul Jacobs, chief investment officer of Palisades Hudson Financial Group in Atlanta, noted that investors could take advantage of the situation by diversifying their portfolio.

Financial Planner Salary Tips

Financial Planner Salary Tips

unduhanThe career of a financial planner is considered to be a very lucrative one and attracts many youngsters these days. The salary range largely depends on educational qualification and other finance related talents.

Job Description
The trend of seeking advice for personal budgeting, managing expenses, and getting suggestions regarding big ticket investments has been on the rise for years. Hence, due to the increasing demand for sound investing and financial planning advice, the job market for professionals such as these is booming. They advise clients on their investments in real estate, bonds, stocks, etc., and have a thorough knowledge on the various instruments of investment. They also play a crucial role in activities such as corporate takeovers, mergers, and acquisitions, and can have individual as well as corporate clients.

Career
To develop a career in this domain, you need to choose subjects such as mathematics, statistics, or economics in high school. Obtaining a bachelor’s and master’s degree in the field of finance, accounting, or management can help you launch a successful career as a financial planner. Further, you need to obtain related certifications by clearing exams of concerned authorities. Good communication skills, consistent efforts, hardworking nature, and a keen interest in the subject are the qualities which you need to acquire as you go along with your career.

Salary Range
The salary largely depends on the educational qualification, years of experience, location of job, and the skill set possessed by the candidate. Most positions related to this field are created in the top business hubs of New York, Texas, and California. Therefore, the salary is higher in such places. In the initial stages of their career, they can earn anything between $40,000 to $50,000 per year. In case of candidates graduating from top business schools, this figure can be much more. The salary can be in the broad range of $40,000 to $70,000 per year, after two to five years of experience. Those with eight to fifteen years of experience can earn anything between $70,000 to $130,000 per year. Financial analysts working at top positions in well-known corporations can earn in excess of $140,000 per year. Other than the salary, benefits such as bonuses, perks, and incentives are also received by the employees.

Professionals who are independent consultants may have to go through some difficulties in finding clients in the initial stages of their career. However, once they have an established clientele in the industry, they can earn much more than their counterparts who work for private organizations. They can also conduct lectures, seminars, and workshops on finance management and earn more.

The aforementioned content will help you plan a career in the field of finance. Financial planners are considered to be talented individuals with great aptitude. So, if you are planning to make a career in this field, be ready to work smart and be challenged every step of the way.