Rayroy

Archive for the ‘Money Management’ Category

Introduction

It’s a sobering statistic that 100% of Forex traders who blow up their account don’t understand how to apply good Forex trading money management. The sad thing is, many of them proceed to build up another trading stake, come back into the market, and do it all over again. They never learn the basics of money management in Forex that would actually save them from ever blowing up their account again, and give them the Forex trading income they are looking for.

As it stands, just by reading this article you’re already far and ahead of the average beginner Forex trader, because you’re on track in learning the Forex trading money management basics. By the end of this article, you’ll know how to control your risk like a Forex Market Wizard and achieve the Forex trading income you deserve.

Forex Trading Money Management Basics

The fundamental principle of money management in Forex is simple: protect your capital. Most professional Forex traders limit their risk per trade to between 2-4% of their capital, because it’s the best per trade risk for optimum long term capital growth. Risking 2-4% of your capital virtually guarantees that you will never blow up your account, while ensuring that you get the highest possible capital growth. It’s the sweet spot for risk in trading that’s been proven time and time again by the research done by the top minds of trading and risk management.

Perhaps you already know about the 2-4% risk per trade rule in Forex trading money management, and you’re already applying that into your day to day trading. Fantastic! That said, as a smart Forex trader, you need to recognize that there will come a time when your profitable Forex trading system will no longer work. Every Forex Market Wizard knows that no matter how good their system is, there is still that probability of sudden failure, which is why they have one more step to control their risk. If you want to emulate the trading performance of the Forex Market Wizards, then you need to learn the secret of the “failsafe point”.

How To Control Your Risk Like A Market Wizard

“Failsafe points” mark significant drawdown milestones in your trading account equity. For example, many Forex Market Wizards set their “failsafe point” as 20% of their trading account balance. That means that when they lose 20% of their trading account, they drastically reduce their risk per trade and even stop trading entirely until they have identified the issue in their system. While the 2-4% rule is good enough to keep you out of trouble most of the time, if you’re really serious about protecting your capital to ensure long term profitability, then you can really take it to the next level with “failsafe points”.

Every Forex Market Wizard will tell you that 90% of trading success is down to Forex trading money management and risk control. You can achieve that by limiting your risk per trade to 2-4%, and enforcing “failsafe points” in your trading. That way, you’ll never blow up your account and keep your capital safe so that it can keep working for you to bring in the Forex trading income you desire.

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Life is hard at the best of times but it is doubly difficult to meet ends meet at the present time. What with the credit crunch, the downturn in the global economies and job cuts in almost all the industries. We all want to live the life of our dreams by having a better house to live in, drive the car of our dreams and pay our bills without having concerns about our bank balance at the end of the month. Most of these things are possible with changing our lifestyle and better money management.

Nowadays every bit of information that we need is at our fingertips because of the internet and this is also true for money management. There are hundreds of sites offering you advice and information on how to become debt free with money saving tips. There are money management sites which cater to your financial planning with lots of advice and information on how to manage your money more efficiently.

It is no surprise that money issues seem to hit the younger generation the hardest. This is probably because the instant culture that affects young people and very poor money management habits. Young adults want to have things that they often fail to realize are out of their budgetary reach. One thing that we can attribute this to is the ease of getting instant credit. Another reason for this is that most young people want to live their life at the level of their parents but they fail to realize that it has taken their parents twenty or thirty years to get where they are.

Money management techniques and money saving tips have become quite popular in the recent months. More and more people begin to realize that to move towards a debt free future, you need to start saving money in all the areas that you possibly can. One place people are turning to achieve this is the internet, where you can find many organizations that provide sound financial advice and practical info on how to start achieving all your financial goals, understand everything from financial planning to getting out of debt, to managing your money wisely, to saving for your future.

If you are some one who finds themselves in a financial predicament then there are many organizations out there waiting to help you. Consumer credit counseling services offer confidential budget, credit, and housing advice in addition to debt management, financial education, and bankruptcy counseling. Money saving tips and money management advice are available online from a number of sources. All you have to do is to reach out and help is at hand that can help you on your way to a better financial future. You will have to make sacrifices on the way but when you look back, you will realize that it was worth all that effort that you put in.

Proof that the problem of unclaimed money is a national problem is evident from the fact that the Maine Unclaimed Property Division owes 122 million dollars to more than 500,000 people spread all over the nation. The money is waiting to be claimed by its rightful owners.

To be more specific, a staggering 578,000 people are owed unclaimed money by the State of Maine. There are some unclaimed funds checks that range from $50 to $100. However, some claims exceed even ten thousand dollars. Now, that is a lot of money.

Do not ignore unclaimed money in Maine. The single largest claim is worth $222,000 plus stock. What if this was owed to you?

Unclaimed money can come into existence from the most ordinary transactions. It may result due to the fact that an individual had deposited money in a savings or checking account and then had forgotten about the same. It could result from inheritances that the inheritor is not aware of. Bonds, stocks, dividends- all can result in unclaimed money. If you have abandoned your money and if it has remained so for three years or more, your money must have become unclaimed money.

That $10.4 million of Maine’s unclaimed funds was repaid last year is touted as a major achievement. However, the truth is that $25 million got added as new unclaimed money last year. The net gain was of -$15 million in the last year.

The residents of this nation must find out whether they are owed Maine unclaimed funds or not.

A simple search, based on your name, is sufficient to determine whether lost fund is owed to you or not. The same can be done for your family and your friends as well. Some of the unclaimed funds databases covers the state databases as well as the federal databases. Do find out whether your friends or family members are owed money or not. Simply searching for your money will not do.

To claim funds, documentary evidence is required. You will have to submit the proof of identification. You may have to submit proof of ownership of funds as well. The states unclaimed assets division sees inflow of unclaimed cash throughout the year. Hence, you must check at least three to four times in a year for Maine unclaimed funds.

Do not restrict your search to unclaimed funds from Maine alone. You may be owed money from another state or from the federal base. Considering the fact that $35 billion is owed to millions in the nation today, you could still be owed unclaimed cash.

You or your immediate family members may be owed unclaimed money. Use the money wisely and enjoy the unexpected income.

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First things first, wisely consider your accustomed habits of living and take serious inventory of your life.

Find out what you’re spending your money on because herein may lie spending that can be wisely reduced or eliminated. When you find these “leaks” in your wallet, then take 10% of your income and place it in your savings account for investing, this money you never spend you use it to buy business and assets that put money into your pocket. Then, take 10% of your income and put it aside for education. Always remember that the rich educate themselves, while the poor entertain themselves. This doesn’t necessarily mean formal education such as college or graduate school, but rather books, audio tapes, and seminars that teach you how to become financially prosperous.

After this, place 10% into a separate account to save for what you want. This account will be for you to save for something you desire such as a vacation, shopping spree, a down payment on a car, etc. We all have desires, that’s what makes us normal. So set aside money for you to save for what you want. Then set aside 10% for money just to spend. This is what I call “fun money.” This is money that you blow on yourself. You buy whatever you want to buy.

Last but certainly not least, the rest of your money goes toward your living expenses. You may be saying, “I can’t live on 60% of my income.” That is one of the reasons you are struggling financially. Your expenditures are exceeding your income. Your paying everybody but yourself. You worked hard for your money, therefore you are entitled to invest in yourself. I would recommend you downgrading your life such as buying a cheaper house, a cheaper car, do whatever you can to minimize your expenses.

Credit is key, therefore if your credit is bad, it is essential to get it fixed. Take 20% of your income and use it to pay off all your debts. Do this every month. You will get a self esteem and confidence booster when you are finally debt free.

We all receive coins after purchases. Instead of spending your coins, place them in a milk jug. You’d be surprised at how coins add up.

Here are some recommended books that teach you the laws of money and budgeting.

-The Richest Man in Babylon
-Rich Dad Poor Dad
-The Ebony Treasure Map
-The Richest Man in Babylon for Today
-From The Trash Man to The Cash Man

I wish you the best on your way to becoming financially prosperous.

Everyone that has ever worried about the state of their finances has worried about proper money management. Moreover, those individuals that like to keep a watchful eye on their finances also focus on good money management skills. Thus, good money management is a clear issue for anyone that wants to get and keep a firm handle on their personal finances. Thanks to technology, money management is an issue that can be easily handled with a personal home computer and a little bit of free time.

There are a number of money management software applications that computer users can purchase to make their budgeting and tracking a far simpler task than ever before. In fact, with software applications, computer users can manage their personal finances, their checking accounts, their bills, and can even manage their personal taxes with their home computer. Moreover, for those small business owners looking to maintain control over their business finances, software applications are readily available to help them stay on top of the money game.

With certain software applications, individuals can create and devise personal budget plans. They can decide what bills need to be paid and when and track all incoming and outgoing funds. A close analysis of all spending will be easily readable in a series of detailed charts. Thus, people can determine where their highest amount of spending is going and then adjust their budget to better suit their needs. Moreover, such software applications can help those individuals that are experiencing difficulty with their finances as they set up a plan to get their finances back under control.

Money managers can create their own calendars and set up automatic bill payment options with various software applications that are available on the market today. They can easily keep track of savings and with a number of predictive calendars, they can forecast their future financial position if they remain on course with their designed budget. What’s more, those who successfully manage to save money can later put their money into other investments and monitor those too.

Personal finances are certainly not the only thing that can be monitored with the use of software and a personal computer. Small business finances can also be tracked and a you can easily create invoices and record all spending transactions associated with a home-based business. Thus, clearly, the latest software applications can make keeping track of any and all financial matters a far simpler process than one might first imagine.

Finally, one of the greatest benefits from software applications that help track money issues are those derived at tax payment time. During tax preparation, the computer user can truly enjoy the benefit of the fine organizational offerings of software applications. Many of the programs will have all the information in one location and reports can be created that make tax reporting a far easier task. In the end, the cost of such applications is utterly nominal when one considers all of the benefits derived from their use.

Did you know that by giving your kids an allowance on a fixed basis you are actually nudging them to cultivate good money management habits? Well, you are. For those of you, who are probably wondering what an allowance has got to do with building a good habit from a financial perspective, look no further. This information could transform your child’s life and his/her money blueprint in the future.

The only way kids learn to manage their money is through trial and error – not unlike us as an adult actually. What better way than to start them off on something small and manageable. Today, kids have more money to spend (compared to us when we were their age, that’s for sure) and as such, they are developing their own financial styles or habits knowing or unknowingly. Kids who develop good or bad financial habits will foreseeably take those skills into adulthood. If the latter is their money blueprint, then there could potentially be painful and expensive money lessons on his/her horizon. The education system is definitely not helping raise awareness and/or instill structured money management skills for our next generation. Heck, we ourselves were never taught the same during our time. And for those of your luckier ones, your parents were a great role model for you financially. If you were one of them, be thankful. It’s time to pay it forward and teach your kids the same or better.

To be fair, you should only start imparting the basics of money management when your child is able to understand the basic concept of money. Interest is key here as would be case for all other things in their life – music, swimming, ballet etc. For me, the two compelling reasons why an allowance is a must for my kids is to force them to think of how much something costs and to weigh their spending choices as they only have a fixed amount of money. Let them make mistakes with their spending choices – no one gets it right the first time especially when you are only 4 or 5 (maybe even younger). It’s better to learn from those mistakes when the ‘tuition fee’ is only $5 or $10.

As a parent, you must sit them down and tell them exactly (clarity, clarity, clarity) what the allowance is for. Not the specific things that they can or cannot buy, but the 3 main areas the allowance is meant to provide for; namely saving, spending & sharing. Make a list of things the allowance covers so that he/she knows that they cannot come back to you whining and begging for more money as they NEED to spend on something they forgot to allocate for that week.

When I was about 8 or 9 years old, my father insisted each of his children keep a log book to pen down all the details of our spending. He would then go through it on a weekly basis, asking us questions and imparting some advice before he gave us the next allowance. If we wanted a raise in our allowance, we would have to tell him / write in our log book the items in which we wanted to purchase/spend on but could not due to the limitation in the dollar amount we received. In retrospect, I realise that this interaction created an opportunity to discuss and realign my money management education as a child.

The savings from each weekly allowance payout will then be banked into a kids saving account monthly. He would take us all to the bank and we made the deposit jointly. After which, he would explain to us the details in our passbook – how much we had accumulated and the interest given by the bank. Experts today recommend that 10% of your kid’s allowance should be allocated towards savings to build this good habit. Make sure that the allowance is given on a fixed interval, ideally weekly, as you are leading by example. Also, stick to your word as kids wise up pretty quickly when they spot that you do not act according to the financial discipline you preach.

One final question to answer – can I tie in the allowance amount to household chores completed? I will recommend no as it is the responsibility of each family member to contribute towards the household chores. These responsibilities should be separate and apart from the allowance given as the latter is aimed at teaching them the value of money. Be focused and remember that the allowance money lesson is aimed at building a longer term foundation to carry them in the right directions as an adult.