Wednesday, March 3, 2010

How to make over $1000 with One Article In Under 24hour


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Monday, March 1, 2010

WAYS OF MAKING MONEY ONLINE THS YEAR

Hello, do you know this is a serious question many people like you want to know and also
You may have read or watched testimonials about people who have achieved their millions and live a happy life with their online business. You may have also seen their photos with their sports car or extravagant houses; you may envy them for what they have accomplished. A number have revealed their secrets on how they have done that, others kept their secrets to themselves. There is always a question, though everyone claims to know the answer, how to make money online?


The ambiguity of the question kept everyone very excited because at some point, they are dragged by the answers of the experts. The answer is not peculiar, you can make money online through building your own blog or website, market through these steps and then make money. That is how it is simply explained. But the process is not that simple and those who have achieved it can attest to that. The question has a simple answer but the process can divide others into the successful one, the struggling and the frustrated. That is just how online businesses work


The confines of our home make us very comfortable to work, that is why we always want a job or a business that will relocate us at home. Online businesses are mostly found at home, the mothers who are at the same time taking care of their children, the dads who want to earn extra cash for the family or even the students. But what really encloses the money making online? How is it working? Why people are turning to it?


The getting rich in online business has always been a promise, but only a few have made it. The race for riches always has it pros and cons. The making money online shadows the person who is actually driving the business. If the person identifies his purpose on money making then he will receive either a good or a bad karma. You might have notice, when you are browsing the internet, there are a lot of offers, cash gifting and the like popping our screens. It is one way to pawn us with their own trick, thus, it might lead us to something negative where they will persuade us to pay them with their good offer. Others will give us free items and services. That is how everyone works to allure us. It might either be good or bad, but that their way of money making.


The true successful internet marketer is always an authentic person. He possesses integrity because he has a name and a business that he takes care of. He has already establishes a good relationship with his customers, that is why in return the consumers become loyal to him. He puts a heart on his business by not only considering it as a money making business but likewise considers it as his own life. So the secrets has been revealed, the question on how to make money online has been answered with an attitude. The money making might be made in procedures, but giving a heart on it is another.
Here are series of Online Businesses YOU can Do:
Blogging
Affliate marketing
Online Investment (HYIPs)

Friday, February 26, 2010

THE SECRETS OF INVESTING ( A GUIDE TO INVESTMENT)

Investing begins with a strategic plan based on; age, personal risk tolerance, cash flow needs and how
actively you intend to manage your portfolio. Before a plan can be devised an investor must make
some personal decisions. The following information will help in this decision making process.
1. READ THE OPERATING MANUAL
An understanding of the terminology and knowledge of
the security types in the ISI is important when using
the Newsletter. The importance of this cannot be overstated.
Common stocks are all about the same, t h ey all represent a
percentage of ownership in a company. This is not true with
income securities .
Each bond or preferred is unique, having its own characteristics
or features. Bonds and/or preferreds issued by the
same company can be vastly different from each other.
These differences must be understood even before the
health of a firm is evaluated . For a successful bond or preferred investment , the issuer must only be able to pay interest
or dividends. It does not have to prosper.
2. DETERMINE YOUR RISK TOLERANCE
In the context of ISI, risk refers primarily to loss of principal
or income because the company was unable to meet
its obligations. This is also known as credit risk and does
not refer to other risks associated with income securities
such as changes in interest rates or market risk . ISI identifies
each are commended security by its risk level . The best
measure for determining your risk level is “how well your
portfolio lets you sleep at night.”
For ISI purposes the Low Risk category
usually consists of investment grade securities, Medium
Risk has a mixture of investment grade and high no investment
Grade securities and High Risk are usually
Below investment grade and non-rated securities.
N O T E: For common stock (equity) investors it may be instructive to compare the risks of equities
Vs. income securities. The most salient difference is volatility that is the price movement of
The security. Equities tend to jump up and down at the slightest change in a company’s fortunes,
While income securities mostly ignore these reports and don’t react unless the change potentially
Threatens the company’s survival. Typical equity risk would be equivalent to our high-risk portfolio,
Since these income securities are already concerned about a company’s survival prospects.
3. DETERMINE YOUR INVESTMENT NEEDS
Every investor should have a re a s on to invest in a give n
Security. Needless to say we all want our portfolios to
Grow but how this is accomplished depends on the type of
Securities we buy.
I N C O M E: Investors seeking a steady cash income and principle
Protection usually buy and hold low risk bond s, preferred or hybrids. These are usually high-level investment
Grade securities with ratings at or above Baa1/BBB.
GROWTH AND INCOME: Investors looking for cash income
Along with growth frequently turn to convertibles or
Dividend paying com m on stock s . For those willing to
Take more risk, bonds, preferreds or hybrids trading below
Par value may be an option.
G R O W T H: Investors seeking growth where cash income is
not a factor usually go to com m on stocks or convertibles
with low conversion premium.

4. PACKAGING YOUR INVESTMENT FUNDS
An investor should carefully plan their investment go a l s
Before buying securities. Packaging or creating mini
Portfolios with funds available are an important step in planning.
Two key elements in this planning process are:

T I M I N G: Package funds based on when they will
Be needed.
A. Long term - needs such as retirement are met with on e
Investment package.
B. Shorter term - needs such as; saving for children’s college
education, future purchase of a new home, automobile,
RV or that long dreamed about boat are usually
Addressed with a medium term package of securities.
C. Immediate needs - such as petty cash or unexpected
expenses should be met from a package made up of ca sh ,
money markets or other types of liquid securities.
R I S K: Package funds by risk. Age is a key element
in this process.
A. Low Risk - packages aim for principal protection first,
Income second and usually consists of investment grade
Securities. Lon g - term portfolios are com m only saturated
with low risk securities.
B. Medium Risk - packages have a balance between
principal protection and income. They have a mixture
of investment grade and high non-investment grade
Securities.
C. High Risk - packages are created with income and
or growth as their primary goal. They usually consist of
Below investment grade securities. Principal protection
is low priority.
5. DIVERSI FY
In d u s t ries go through business cycles , company’s get into,
and out of financial trouble, interest rates go up and down
and, believe it or not, Investors cash needs can change
overnight . To protect against these and other risk and
uncertainties it is imperative an investor not only “pack a g e”
their funds but also diversify their investment risk by
investing in different types of securities and various companies
in different industries. Example: An investor who has a
$100,000 portfolio invested in one security is at 100% risk
to the fortunes of that company. A $10,000 position in 10
diversified securities lowers the risk to 10%. Thus if on e
security went sour the investor would still have 90% of their
capital remaining.
A. Industries - Instead of investing in 10 different Utility
companies spread the risk over 5 or more industries.
B. Companies – Here again spread your risk by keeping in
mind your percent of exposure to any one company.
While you’re at it try to get companies in different geographical
locations. Disasters affect all businesses in a
region.
C. Security Type – Keep in mind that Fixed Income securities
are more price sensitive to interest rate changes than
Convertibles and Common Stocks.
The communist reflects!

Monday, February 22, 2010

The Best time to invest in stocks


The issue is not really the best time to invest in stocks; but rather the best time to invest in stocks more aggressively. To succeed in stock investing, there are two basic signals you should watch. They can tell you when to invest more heavily in stocks and stock funds... because they are selling cheap.

Average investors should invest in stocks or stock funds on an ongoing basis, allocating a percentage of their total investment assets to this class of investments depending on their risk tolerance. Sometimes when the stock market makes you the most uncomfortable, it's the best time to invest in stocks and increase your position there. Many investors do the opposite. They sell near the bottom, take a sizable loss, and lay low until the market is well on its way to recovering past losses. That's a stock investing recipe for losing money.

If you were an investor in 2002 or in early 2009, you know what discomfort and the feeling of financial panic are. It's not easy to force yourself to buy when everyone else is running for the nearest exit. Here are two things to watch for, to give you more confidence in making the decision to buy more stocks when they are cheap.

First, you've got to follow a stock market major index,
Second, pay attention to the P-E RATIO for the major indexes. This ratio of stock Prices to corporate Earnings

The best time to invest in stocks and start some serious buying is when both of the above conditions spell STOCKS ARE CHEAP. When the major stock market indexes have taken a beating and the P-E ratio gets below 10 it's time to buy - not sell stocks and/or stock funds. Keep a level head and buy in increments with a plan.

Trust me, you'll feel some discomfort. But stock market history will be on your side.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to

Wednesday, February 17, 2010

The Smart Guide for Entrepreneurs


Before Embarking on a Campaign to Raise Venture Capital Funding, You Should Look at Yourself Objectively and Honestly to Determine if You Even Qualify. Most People Don't Stop to Do This.Since the vast majority of venture capital hunters don't qualify, you will, in most cases, end up wasting 6 to 12 months of your life writing a business plan which will never be read and doing "dog & pony" shows for audiences who are at best only mildly curious or at worst engaged in "brainsucking" you for ideas. Who Qualifies for Venture Capital Today?
Venture capitalists, like winning horse track gamblers,bet on the jockey not on the horse.
Industry "stars" qualify for venture capital. This means someone who has already taken a start-up from zero to 50 million in sales or better. So if you're counted amongst the stars in your industry, you stand a good chance of attracting venture capital provided your current deal has the following elements:

* at least 2 other senior executives with experience in building wildly successful companies,

* a proprietary technology in a sector currently considered hot by the venture capital industry,

* a top-notch technical team,

* a target market at least one billion dollars in size,

* a minimum of one year of rising sales to blue chip customers.

It you don't meet the above criteria venture capital funding won't happen. If your name is not synonymous in the minds of financiers with huge, almost obscene, profits, your plan will be accepted politely but never actually read beyond the "team" section. If you haven't made big money for investors and don't have any close relatives running venture capital firms, you should read on.The Three Dirty Little Secrets About Raising Outside CapitalLet me share with you three secrets about raising capital which almost no one else will.

* First, chasing outside capital is by far the most unpleasant and drawn-out ordeal experienced by entrepreneurs. It always seems to take forever. (For this reason, veteran entrepreneurs try to avoid raising outside capital at all costs.)

* Second, based on the fact that your typical early stage venture capital firm invests in only one company out of every 500 business plans it reviews, your odds of succeeding are only 1:500. (If you are pursuing angel investors your odds improve to maybe 1:200, although no one knows the numbers for certain.)

* Third, in about 50% of instances where an early stage company actually succeeds in raising venture capital, the founder is fired within the first year and kisses most of his or her stock good-bye. Even the Wall Street Journal pointed this out in a article by Barnaby Federer from 09/30/02:
"If you ask a VC what value they add, and you get them after a few drinks, they'll say, 'We replace the CEO' ", he said. And that, he indicated, does not vary with the economic climate.So your odds of being a successful venture capital-backed founder/CEO are actually only 1:1000.
* Realist: "With those long odds I need to have a Plan B for launching my company."

* Dreamer: "Yes, those are very long odds but they apply to the other 499 guys, not to me."The Smart Startup Guide covers two dozen other reasons why no sane entrepreneur accepts venture capital other than as a last resort doomsday response. The Funding ProblemHere's what typically happens when a company needs to chase outside capital in order to commence or expand operations. After about 6 months one of three things occurs:


1. The lucky 1 in 500 finds investors.


2. Most die on the vine. In many cases, the wannabe entrepreneur simply abandons the project and moves on to something else. (As the joke goes, "That's why God created 'jobs' ".)


3. A savvy and tenacious tiny minority of entrepreneurs finally gets mad at having wasted so much time. Then it begins to figure out a creative way around the funding problem by focusing on creating cashflow with the resources and opportunities at hand, instead of continuing the futile quest for outside capital.Necessity truly is the Mother of Invention.America's Fastest Growing Industry?This problem of capital scarcity for early stage companies is so prevalent that you may have begun to notice that there are literally thousands of people in the business of "helping" entrepreneurs raise money. At least that's what they lead you to believe. They have taken their cue from the Gold Rush when the truly crafty business-people made money not from prospecting but by selling shovels to the prospectors. Likewise, today's money-raising services have found a low risk means to separate the cash-starved entrepreneur from any money he or she may have left. They do so in many ways:


* Matching Services: We'll match your project with one of our many accredited angel investors. Call now! Operators are standing by! Just $199 to register.

* Business Plan Services: We'll write a business plan for you which will attract funding. Only $999.

* Finders: I can help you raise money for a fee…and, by the way, I require a retainer up-front.

* Money-Raising Bootcamps: Attend our weekend bootcamp for $1,195, and you'll discover that it's not what you know but who you know that counts when it comes to raising money.My two personal favorites are:

* Online Business Plan Repositories: Post your b-plan on our site for 6 months. Only $59.

* Venture Capital Directories: VC's are waiting to fund you! For just $49 you can buy our CD directory with 12,952,734 venture capital firms listed on it. (How these can sell in the age of Internet search engines is beyond me. PT Barnum was correct about a sucker being "born every minute".)
In a nutshell, most of these middle-man services don't work in 99% of instances. This is also why they won't tell you the Three Dirty Little Secrets of Raising Capital.Lesson: put very little faith in these services and never pay up-front fees.The Rodney Dangerfields of EntrepreneurshipPretend for a moment that you are a venture capitalist or angel investor. Two founders visit you about separate deals. You ask them each what progress they have made in the 3 or 6 months that they have been working on their respective projects.

* One entrepreneur answers that he has been able to finish his business plan as well as find a means to generate cashflow which is being used to move the main project further along. Now he needs more money to fully capitalize on this developing opportunity.

* The other entrepreneur can only point to the "great" business plan he's polished to perfection over the past 6 months and the "great" opportunity lying before him. Which entrepreneur would you be more impressed by if you were the investor? Back in the 1990s, I took a 4 year sabbatical from entrepreneurship to run a small business investment fund, so let me share my opinion. The former has shown that he is a doer; the latter has provided nothing in the way of evidence that he can create cashflow--any cashflow.If you are not a recognized star when knocking on investor's doors, you'll quickly start to feel as if you "can't get no respect".Lesson: cashflow wins far more respect from investors than the "great" business plan. If you are not an industry star you can begin to build your credibility up by finding a means of creating cashflow in your industry.

* Realist: "I need to prove myself first as an entrepreneur, then people will give me money." * Dreamer: "People need to give me money first, then I'll prove myself as an entrepreneur."Dreamers as usual have it backwards.Real Entrepreneurship is About Cashflow CreationIt's all about positive cashflow. If you can make it happen, you get respect and investors to fund you so that you can make even more.At some point in the mid-1990s real entrepreneurship became subverted into merely writing a business plan, developing a Powerpoint presentation, scripting an "elevator pitch", and then pestering skeptical strangers for money. With the entrepreneurial bar thus lowered almost to the ground, seemingly everyone declared themselves an "entrepreneur" and tried to hop aboard the dotcom express. However, real entrepreneurship is not about these things at all. It's about making cashflow happen now. Never forget that.Repeat three times daily until the delusion goes away: With cashflow I'm a somebody; without it I'm a nobody. With cashflow I'm a somebody; without it I'm a nobody. With cashflow I'm a somebody; without it I'm a nobody.Fact: Successful entrepreneurs invest the same level of time and energy into creating cashflow during the first year that wannabes invest in polishing their business plans and offering them to complete strangers.Let's Summarize the First HalfLesson 1: Money goes to entrepreneurs with proven track records as money makers for their backers.Lesson 2: The other 499 capital chasers typically end up just wasting 6 to 12 months of time and effort on a capital raising campaign doomed from the very start.What's the range of reaction to this harsh reality?Proven Industry Star: "Who cares?! Vinod just left a v-mail saying Kleiner is pumping $10 million into our "A" Round. I'm outta here!"Dreamer: "I know the odds are against us. But wait till you see our business plan. It's gonna be grrrreat!"Future Industry Star: "We need to by-pass this chump's game altogether for now and get some traction first. "Part 2: The Good News
I believe in...mastering the best that other people have figured out, [rather than] sitting down and trying to dream it up yourself.
Charlie Munger,
Warren Buffet's partner in Berkshire HathawayThe SolutionThere is no one guaranteed solution to the funding problem which all entrepreneurs face. What is the solution, however, is having several dozen successful strategies for creating cash, or its equivalent, in order to be able to get your company out of the starting blocks. This is precisely what The Guide offers you. Dozens and dozens of financing strategies and tactics used by fast growth startups to launch.If we look at the companies which qualify for those annual lists of the fastest growing companies, we see that over 95% were unfunded at start-up beyond a nominal injection of the entrepreneur's own money (in most cases, less than $10k). Most didn't even have a business plan. Why did this minority of unfunded entrepreneurs succeed while most start-ups seeking capital die on the vine or morph into something completely different—that is, something more do-able after 6 months?To answer this question, let me use an analogy. Think of entrepreneurs as being a bit like chefs. Some chefs are very rigid in their style requiring that a specific list of ingredients be delivered to them before they can begin cooking. This rigidity is fine so long as you are not too hungry and can wait for the required ingredients to arrive. However, if you are hungry now and lack the cash to buy more groceries, you will need to be flexible and work with what you have. Other chefs, the more flexible and entrepreneurial ones, will not wait for someone else to deliver a bag of groceries to them, but will instead immediately begin to search the pantry, refrigerator, and vegetable garden for what's available. They then use the items at hand to create a feast. * Realist: "I need to come up with at least 3 different ways to get this show off the ground." * Dreamer: "It's preposterous to even suggest that this venture can be launched in any other way than the one outlined in my business plan. My plan shows the only way it can be down."It's been said that true entrepreneurs are the artists of the business world. They create new businesses and products seemingly out of nothing. It's awe inspiring to watch a true entrepreneur formulate an idea and then begin making it happen within hours rather than sitting around for months writing business plans and pestering strangers for money.In a nutshell, the successful cash-strapped entrepreneur designs a transitional business model for the launch, which can be described as “Heads I win; tails I lose very little.” Once their concept has some degree of traction, they can then choose to talk to venture capitalists from a bargaining position of strength.Once you have cashflow life becomes much simpler. Cashflow not only enables you to pay your bills but it places your company into the “stream of opportunities” that established businesses enjoy. Cashflow also earns you respect and gives you the ability to say, "No thanks!", to those notoriously outrageous offers made by venture capitalists and private investors.Why Does It Work?The Guide's Smart Start-up Model distills the lessons of America's most successful start-up companies for you to use in your venture. You can use the model as a screen to evaluate your current strategy for viability. If it doesn't pass the test, you can use the model to deconstruct it and formulate a stronger new strategy. The Guide contains dozens of strategies and tactics used by successful entrepreneurs to both launch without outside capital and retain control of their companies. It shares "war stories" which illustrate how entrepreneurs think and react to circumstances which would force most others to give up and look for a job.The Guide is the next best thing to sitting down in person with a group of Inc 500 Fastest Growing Companies founders and having them share their secrets with you. Some people need to learn the hard way, while others don't have the time to do it this way and prefer to learn from the mistakes of others. I belong to the latter group. Why should I make the same rookie mistakes as others, when I could instead learn from those who did it the right way before me?How did you get to be so smart about startups ?It all comes down to three things: experience, experience, and more experience. I have personally launched six companies over the past 20 years. In addition, I have acted as an advisor or consultant to hundreds of other entrepreneurs over that time. Finally, although not an academic, I enjoy researching what makes startups successful and then teaching the lessons to others through the Guide or in live classes.I started researching a "better way" to launch and grow a company over its first year after doing my very first venture capital deal in 1987. It was akin to being mugged in a dark alley. There truly had to be a better way. So I began paying attention to what other entrepreneurs were doing. Quickly I noticed something peculiar about entrepreneurs in start-up mode. They can be broken down into two distinct groups * The vast majority consists of dreamers who take the naive approach to business in that they spend a few months at first writing a business plan. Once it's polished and ready for circulation, they begin to look for investors, and look, and look, and look, ad infinitum. * The tiny minority announces its intentions to go after a given market opportunity, and is seemingly magically, in business a month later without raising a dime of outside money. Sometimes they choose to take VC funding later--on their own terms--and just as often they choose to avoid it completely.This second group has always fascinated me. Just what was their magic start-up formula? Some of its members end up on the annual lists of America's fastest growing companies. Many turn into far more viable companies than their VC funded competitors according to Jim Collins of Built to Last fame.The Value Proposition to YouReading The Smart Startup Guide is akin to spending a week with the founders of successful fast growth companies. Imagine being able to pick their brains and learn how they formulated their strategies for fast start-up and growth.Just think how much this knowledge would be worth to you. On average, it will help you to save 6 or more months of your life from being wasted going down dead ends in a futile pursuit of outside capital.Would this knowledge be worth $500 to you? At the very least, if you are truly serious and not just a dreamer as most people are. It could even be worth $5000 to you. Or much more.Some people need to make their own mistakes and learn the hard way. Others can't afford to waste time and money and prefer to learn as much as possible from others who succeeded before them. The Guide is for this latter group.Executive Decision TimeThink of the Smart Startup Guide as an entrepreneurial insurance policy which will ensure that you don't waste the next 6 to 12 months of your life. So ask yourself:How much are the next six months of my life worth? Can I afford to waste them on what may turn out to be a dead end startup strategy?In a NutshellTo recap, the benefits of this manual for your business are:

* It will teach you to think like a savvy veteran entrepreneur who focusses on cashflow creation rather than on begging for money from strangers.

* It can drastically reduce the amount of capital needed to launch.

* It can help a company begin to generate cashflow before any funding occurs.

* In some cases, it can eliminate altogether the need for outside capital.Discovering and using any of the lessons contained in the Guide will set you as much as a year ahead of other start-ups. Cashflow = Respect from InvestorsAnd if you are still committed to raising outside capital because you positively absolutely need a huge sum of capital to build that new state-of-the-art atomic-powered widget factory, you will still benefit from the Guide because:

* Cashflow--any cashflow--earns respect from investors, lenders, customers, suppliers, and even your Aunt Mabel. Cashflow attracts equity capital from investors.

* Cashflow will place you in a stronger bargaining position with potential investors since it will allow you to walk away from a bad deal. Pre-deal cashflow equals power. Power for you.

* Cashflow will give your company a higher valuation which in turn will allow you to hold onto more of your equity if a deal is done. If you are truly committed to building your business then do everything you can today to achieve this goal. If you're a realist you will try the Guide. Dreamers will continue to believe that other entrepreneurs don't have anything to teach them and that it's all about writing that "great" business plan which will miraculously convince people to throw money at an unknown.Don't kid yourself.So ask yourself, in 3 months from now do I want to:

* still be polishing my business plan and chasing investors with nothing to show for my efforts, or

* do I want to have an operating company with positive cashflow?The decision is yours. (If you decide not to invest in the Guide at this time, please bookmark this page for later reference.)

Friday, February 12, 2010

Know Your P’s and L’s

Here is where we’re going to do a little math. You've probably heard of the terms "pips" and "lots" thrown around, and here we're going to explain what they are and show you how they are calculated.
Take your time with this information, as it is required knowledge for all Forex traders. Don’t even think about trading until you are comfortable with pip values and calculating profit and loss.

What the heck is a Pip?
The most common increment of currencies is the Pip. If the EUR/USD moves from 1.2250 to 1.2251, that is ONE PIP. A pip is the last decimal place of a quotation. The Pip is how you measure your profit or loss.
As each currency has its own value, it is necessary to calculate the value of a pip for that particular currency. In currencies where the US Dollar is quoted first, the calculation would be as follows.
Let’s take USD/JPY rate at 119.80 (notice this currency pair only goes to two decimal places, most of the other currencies have four decimal places)
In the case of USD/JPY, 1 pip would be .01
Therefore,
USD/JPY:
119.80.01 divided by exchange rate = pip value.01 / 119.80 = 0.0000834
This looks like a very long number but later we will discuss lot size.
USD/CHF:
1.5250 .0001 divided by exchange rate = pip value .0001 / 1.5250 = 0.0000655
USD/CAD:
1.4890 .0001 divided by exchange rate = pip value .0001 / 1.4890 = 0.00006715
In the case where the US Dollar is not quoted first and we want to get the US Dollar value, we have to add one more step.
EUR/USD:
1.2200
.0001 divided by exchange rate = pip value so .0001 / 1.2200 = EUR 0.00008196
but we need to get back to US dollars so we add another calculation which is
EUR x Exchange rateSo 0.00008196 x 1.2200 = 0.00009999
When rounded up it would be 0.0001

GBP/USD:
1.7975 .0001 divided by exchange rate = pip valueSo
.0001 / 1.7975 = GBP 0.0000556
But we need to get back to US dollars so we add another calculation which is
GBP x Exchange rate
So 0.0000556 x 1.7975 = 0.0000998
When rounded up it would be 0.0001

You’re probably rolling your eyes back and thinking do I really need to work all this out and the answer is NO. Nearly all forex brokers will work all this out for you automatically. It’s always good for you to know how they work it out.
In the next section, we will discuss how these seemingly insignificant amounts can add up.
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What the heck is a Lot?
Spot Forex is traded in lots. The standard size for a lot is 100,000 units. There is also a mini lot size and that is 10,000 units. As you already know, currencies are measured in pips, which is the smallest increment of that currency. To take advantage of these tiny increments, you need to trade large amounts of a particular currency in order to see any significant profit or loss.
Let’s assume we will be using a 100,000 unit (standard) lot size. We will now recalculate some examples to see how it affects the pip value.
USD/JPY at an exchange rate of 119.80(.01 / 119.80) x 100,000 = $8.34 per pip
USD/CHF at an exchange rate of 1.4555(.0001 / 1.4555) x 100,000 = $6.87 per pip
In cases where the US Dollar is not quoted first, the formula is slightly different.
EUR/USD at an exchange rate of 1.1930(.0001 / 1.1930) X 100,000 = 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip
GBP/USD at an exchange rate or 1.8040(.0001 / 1.8040) x 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.
Your broker may have a different convention for calculating pip value relative to lot size but whichever way they do it, they'll be able to tell you what the pip value is for the currency you are trading is at the particular time. As the market moves, so will the pip value depending on what currency you are currently trading.
How the heck do I calculate profit and loss?
So now that you know how to calculate pip value, let’s look at how you calculate your profit or loss.
Let’s buy US dollars and Sell Swiss Francs.
The rate you are quoted is 1.4525 / 1.4530. Because you are buying US you will be working on the 1.4530, the rate at which traders are prepared to sell.
So you buy 1 standard lot (100,000 units) at 1.4530.
A few hours later, the price moves to 1.4550 and you decide to close your trade.
The new quote for USD/CHF is 1.4550 / 14555. Since you're closing your trade and you initially bought to enter the trade, you now sell in order to close the trade so you must take the 1.4550 price. The price traders are prepared to buy at.
The difference between 1.4530 and 1.4550 is .0020 or 20 pips.
Using our formula from before, we now have (.0001/1.4550) x 100,000 = $6.87 per pip x 20 pips = $137.40
Remember, when you enter or exit a trade, you are subject to the spread in the bid/offer quote.
When you buy a currency you will use the offer price and when you sell you will use the bid price.
So when you buy a currency, you pay the spread as you enter the trade but not as you exit. And when you sell a currency you don't pay the spread when you enter but only when you exit.
What the heck is Leverage?
You are probably wondering how a small investor like yourself can trade such large amounts of money. Think of your broker as a bank who basically fronts you $100,000 to buy currencies and all he asks from you is that you give him $1,000 as a good faith deposit, which he will hold you for but not necessarily keep. Sounds too good to be true? Well this is how forex trading using
leverage works.
The amount of leverage you use will depend on your broker and what you feel comfortable with.
Typically the broker will require a trade deposit, also known as account
margin or initial margin. Once you have deposited your money you will then be able to trade. The broker will also specify how much they require per position (lot) traded.
For example, if the leverage is 100:1 (or 1% of position required), and you wanted to trade a position worth $100,000, you broker would set aside $1,000, or the "margin". So if you have $5,000 they may allow you to trade up to $500,000 of Forex.
The minimum security (margin) for each lot will vary from broker to broker. In the example above, the broker required a one percent margin. This means that for every $100,000 traded, the broker wants $1,000 as a deposit on the position.
What the heck is a Margin Call?
In the event that money in your account falls below margin requirements (usable margin), your broker will close some or all open positions. This prevents your account from falling into a negative balance, even in a highly volatile, fast moving market.
Example #1Let’s say you open a regular Forex account with $2,000 (not a smart idea). You open 1 standard lot (100,000 units) of the EUR/USD, with a margin requirement of $1000. Usable Margin is the money available to open new positions or sustain trading losses. Since you started with $2,000, your usable margin is $2,000. But when you opened 1 lot, which requires a margin requirement of $1,000, your usable margin is now $1,000.
If your losses exceed your usable margin of $1,000 you will get a
margin call.
Example #2 Let’s say you open a regular Forex account with $10,000. You open 1 standard lot of the EUR/USD, with a margin requirement is $1000. Remember, usable margin is the money you have available to open new positions or sustain trading losses. So prior to opening 1 lot, you have a usable margin of $10,000. After you open the trade, you now have $9,000 usable margin and $1,000 of used margin.
If your losses exceed your usable margin of $9,000, you will get a margin call.
Make sure you know the difference between usable margin and used margin.
If the equity (the value of your account) falls below your usable margin due to trading losses, you will either have to deposit more money or your broker will close your position to limit your risk and his risk. As a result, you can never lose more than you deposit.
If you are going to trade on a margin account, it’s vital that you know what your broker’s policies are on margin accounts.
You should also know that most brokers require a higher margin during the weekends. This may take the form of 1% margin during the week and if you intend to hold the position over the weekend it may rise to 2% or higher.
The topic of margin is a touchy subject and some argue that too much margin is dangerous. It all depends on the individual. The important thing to remember is that you thoroughly understand your broker’s policies regarding margin and that you understand and are comfortable with the risks involved.
Some brokers describe their leveraging in terms of a leverage ratio and other in terms of a margin percentage. The simple relationship between the two terms is:
Leverage = 100 / Margin Percent
Margin Percent = 100 / Leverage
Leverage is conventionally displayed as a ratio, such 100:1 or 200:1.

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