Model Agency 411

Those of you who have been trading for a while will be familiar with Pivot Points. During this lesson I want to go over how to find a Pivot Point and also a slightly different method of using them. First let’s look at how you calculate a Pivot Point.

Using a bar chart you will observe that each bar has an Open, High, Low and Close. This information represents all price activity during that particular period. In the case of the following example we shall use a daily bar for XYZ. To calculate the pivot point all you need to do is add the High, Low and Close. Once this has been done you next divide the total by three to get the Pivot Point.

OK, so far so good, but what do you do with this information. Well, one technique I like to use intraday is to use the pivot point as a trend indicator. If we already know that the Pivot Point for XYZ was 64.10, we will use this the next day as an intraday trend indicator. If the price is above 64.10, then we would only be long and if it were below 64.10, we would only be short.

As price can fluctuate around any given point we also add a further proviso. If we have support close to 64.10 we will first wait for the price to pass through 64.10 and support before entering short. If we have resistance close to 64.10 we will first wait for the price to move through the Pivot Point and resistance before entering long. This method becomes even more powerful when the Pivot Point is close to the opening price. If for example the opening price is 74.10, the Pivot
Point is 64.10 and we eventually go short at 63.55 we can stay short the whole day as long as it does not go above the Pivot Point. Once in a position we normally have a very tight stop to begin with and then will follow the market with a trailing stop to lock in profits.

Another way we like to add Pivot Points to our analysis is for more long-term projections. We will use the Pivot Point of a Yearly, Monthly and Weekly chart. In this case it would be the High, Low and Close of the previous Year, Month and Week. We like to think of the weekly Pivot Point as the short-term trend, the monthly as the medium term trend and the Yearly as the long-term trend. If we are below the yearly, monthly and weekly Pivot Point we know we are in a strong down trend and we
can scale into multiple positions over time. The same holds true for long positions.

The point is there are many ways to determine trend. Experiment with Pivot Points and see if it suits your trading style. At the very least it is always handy to know where they are and it may help you decide which side of the market you should be trading from.

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Steve Martin once delivered an opening monologue for Saturday Night Live in which he answered the age-old question “How can I be a millionaire?” His answer was fairly simple and straightforward, “First… get a million dollars.” If at this point you can’t help but feel that Mr. Martin performed an extraordinary feet of oversimplification that night, then I urge you to read on, and hopefully, by the time you finish this essay, you’ll be convinced that becoming a millionaire isn’t nearly as difficult as everyone makes it out to be. Through a simple three-step process which I will lay out clearly, the keys to the millionaire’s club will be shown to be available to anyone willing to merely reach out and grab them.

Before you begin any financial strategy, you must realize that there is a vast difference between what you earn, what you own, and what you’re worth. The amount of money that you earn from going to work everyday is known as your income, and has relatively little to do with your financial status. The sum of the value of all of your possessions is known as your wealth, and is a closer guideline. Net worth is the real gauge of how close you are to becoming a millionaire, as it is the value of all of your assets, subtracted by your total debt. Now that you see that having a large income is not the end all guarantee of financial security, let’s move quickly to what you can due to get that million dollars that Mr. Martin so accurately described as the first step to being a millionaire.

The first phase in your journey involves understanding that time is of the essence. For those who start investing at an early age, the power of compound interest turns time into their greatest ally in wealth-building. Once you have been investing for long enough, your investments will begin to consistently, and eventually rather impressively, outperform your paycheck. This is true no matter what level of income you have already achieved. If you have an annual salary of $50,000, and invest only 10 percent of that each year, earning a 10% annual rate of return on your investment, in 25 years you will have amassed over half a million dollars. At this point you will be earning over $50,000 each year in interest. Continue saving at that rate for another 10 years and you will find yourself earning $150,000 annually in interest. 10 percent of your income may seem like a lot, but if you can find an investment which directly debits the money from your paycheck each week, you will be surprised to find yourself able to live without it.

Another way to ease the pain of that 10% decrease in take home pay is to use part or all of it as an excuse to lower your tax burden, which I will discuss later. Now that you’re salting away 10 percent of your income each week, and can’t possibly imagine affording anymore, let’s talk about how you can make one of your largest living expenses work for you rather than against you. I am of course talking about the money that you spend providing shelter for yourself and your family.

Owning a home is the single largest investment that most people will make in their lifetime, and that is why moving from renter to home owner is your next step on the road to becoming a millionaire. The growth in the value of real estate in this country makes owning a home not only a wise investment, but also a hedge against inflation While many Americans pour their money into renting a house, effectively flushing it down a toilet they don’t even own, you should be using yours to cover the mortgage payment of the most profitable purchase you’ll ever make according to some financial experts. While it’s true that owning a home does come with certain expenses which a landlord normally covers for those who rent, the tax advantages which you receive for paying the interest on your loan help to offset your out of pocket expenses. The less money you give to Uncle Sam, the more you have available to turn into improvements which increase the value of your home, as well as to put into your other investments, such as a 401k plan at work, or an IRA.

The final step in your quest to become a millionaire is to make sure that as much of the money you earn as possible is there for you to invest. That means giving as little as possible to your greedy Uncle Sam. There are two simple ways to beat the tax man, thereby increasing the amount of money available to help build your net worth. Pretax investment vehicles, such as a 401k, traditional IRA and 529 college savings plans, allow you to lower the amount that your employer deducts from your weekly paycheck to cover your state and federal tax liability. The only drawback to these types of investments is that once you pull the money from the account, taxes are due in full. You do however get the benefit of watching your money grow tax free for years, which allows the concept of compound interest which I discussed earlier to work harder for you than it would if your money was in a traditional savings account.

A traditional savings account is one of the worst investment vehicles available. Along with the comparatively low rates of interest which savings accounts earn, any money that you do earn is subject to annual taxation. To avoid paying taxes on the money you withdraw once you become an independently wealthy millionaire, you should set up a Roth IRA. A Roth IRA is funded with after tax dollars, which may leave you wondering how that helps you avoid paying taxes. The fact is though, that in a Roth IRA, all the money you earn is yours to keep. Uncle Sam can’t take a penny of the money that you accrue in interest, meaning in the long run, the tax advantages are far better than any other form of investment.

I’ve just shown you in three easy steps how you can take advantage of the unseen forces of the financial world to grow your net worth at an alarming rate, now all that is left is for you to follow my advice and wait patiently for compound interest to work its magic. By avoiding taxes to the greatest extent possible, turning you home into an investment, and most importantly of all, not waiting to start saving, you too can be a millionaire. What you do once you get that million dollars is up to you.

Michael Moore is a successful author who provides information on home loans and debt consolidation.

Are certain currencies better to trade than others? The answer is yes and there are several points to consider when choosing the best currencies to trade.

Perhaps the most important consideration is the volume and liquidity of the currency traded.

The reason this is so important is so that you will be able to exit positions quickly to lock in profits and just as importantly, cut losing trades quickly and keep losses to a minimum.

The most actively traded currencies against the dollar are:

The Euro
British Pound
Swiss Franc

Japanese Yen

All traders should consider these four currencies.

If you are a long term trend follower, a day trader, make your own trades or use a currency trading system all of these offer great liquidity, good trends (for long term position holders) and short term price spikes for day traders.

While many traders simply focus on the big three currencies there are many other currencies that offer good diversification from the majors.

When trading a basket of currencies, they offer the opportunity for traders to reduce risk and increase capital gains by spreading the risk, two good currencies for this are:

The Australian and Canadian Dollar

Short term or day traders should not consider these currencies, as they are not as liquid as the big three, but they to offer profits that traders can lock into, from some great long-term trends.

Personality Traits

While anything can happen in the future, we have tried to give a brief personality of each currency and the advantages of trading it, based upon past performance:

British Pound

Thinner volume than the Euro or Japanese yen, means that short term trading should be done selectively, but this market is more suited to long term trend following. Thin volumes and low open interest can lead to exaggerated intraday moves and price spikes.

Euro

Any trader trading currencies should trade the euro. Good volume, high open interest and great long term trends, in addition good volatility is present for day traders and its recent status as a safe haven currency, means it is suitable for all traders.

Japanese Yen

The Yen offers fantastic long-term trends and offers some excellent volatility for day traders. Its slightly more erratic short-term price spikes than the euro, make it a currency that can produce more “false” signals than the euro, but generally, it is a great currency to trade. Like the euro volume and open interest is high.

Swiss Franc

In recent years the Swiss economy has become more integrated with Europe’s and the currency has a higher correlation to the euro, but it still represents a currency with great long term trends making it suitable for long term position traders. Like the British pound, volumes are not as high as the euro or yen and day trading conditions are not so good.

Australian Dollar

Quite thin volumes and large price spikes occur in Australian dollar, but it does offer good long-term trends and a diversification away from the major currencies.

Canadian Dollar

The Canadian Dollar is very similar to the Australian dollar. It offers good long-term trends and a diversification away from the major currencies; again, it is suitable for long-term trend followers and not day traders.

There is no best currency to trade, as the best currency is subjective and depends on method used to trade and investors risk tolerance etc.

We have really based our view of best currencies to trade on volume, liquidity and trending nature and we would say the following:

The Best Currency to Trade:

All traders should consider the Yen and Euro. If we had to pick just one, we would be in favor of the euro.

You should always consider the Swiss Franc and British Pound - if you are trading a basket of currencies, but you should also consider the Australian and Canadian dollar.

While traders often neglect the Australian and Canadian dollar, they offer an important advantage in terms of diversification.

Diversification enable currency traders to spread risk and this can increase overall capital gains and help reduce risk and volatility.

So, with regard to best currencies start with euro and yen and add other currencies in for diversification and reduction of risk.

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