Investors and Financial Execs Agree: Dividends Are On the Rise

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In a recent study released by Boston-based investment manager, Eaton Vance, senior finance executives at dividend-paying American corporations agreed that stocks that pay dividends are growing in appearl.

Investors and Financial Execs Agree: Dividends Are On the Rise

In a recent study released by Boston-based investment manager, Eaton Vance, senior finance executives at dividend-paying American corporations agreed that stocks that pay dividends are growing in appeal. The nationwide survey of executives from all major corporate sectors also projected long-term dividend growth.

The survey, conducted by Penn, Schoen & Berland Associates, Inc., revealed that 47 percent of finance executives anticipate dividend growth to continue to outpace earnings growth in 2006. These projections dovetail with research by Standard & Poor’s, which found that dividends rose faster than corporate earnings over the past year. Duncan Richardson, executive vice president and chief equity investment officer of Eaton Vance remarked, “With strong balance sheets and cash flows, American companies have the means and motivation to continue to increase dividends.”

How long is this trend likely to continue? Of executives who believe dividends will continue to outpace earnings, a majority (60 percent) expect the trend to last for one to two years. An additional 25 percent anticipate the trend will last up to five years. However, the duration of this trend may depend on whether Congress extends the current reduced tax rate on dividends. According to Mr. Richardson, “Businesses may not continue increasing their dividends if the tax cut extensions fail to go through and dividends once again are taxed at a higher rate.”

Regardless of the possible extension to current tax act provisions, “the important takeaway is companies are increasingly returning more to investors in the form of dividends,” said Mr. Richardson. As many dividend-paying companies use excess cash to increase dividends, six out of seven finance executives polled said they consider a company’s track record of increasing annual dividends as a way of displaying shareholder friendly behavior. Furthermore, four out of five believe a firm’s dividend growth rate can give investors confidence in the company’s projected long-term growth potential.

Investors who were polled last year in Eaton Vance’s sixth annual investor survey agreed with these sentiments. A majority of investors polled held a very positive view of companies that pay dividends (78 percent), seeing them as predictable cash generators and viewing dividends as a sign of financial strength.

“There has been a significant shift in investor preference from an emphasis on growth investing towards a more value-oriented conservative investment style,” said Mr. Richardson. “In the 1990s, investors preferred companies that offered buybacks-which increase reported earnings per share-over dividends.” As the results of the Eaton Vance study reveal, a majority of polled individual investors (57 percent) now say they prefer regular quarterly dividends over stock buybacks (23 percent) or special dividends (8 percent).

According to Mr. Richardson, “Dividends have returned to popularity, and value investing has emerged from the doghouse.”

Eaton Vance Corp. is a Boston-based investment management firm whose stock trades on the New York Stock Exchange under the symbol EV. Eaton Vance and its affiliates managed over $113.3 billion in assets as of January 31, 2006, for more than 100 investment companies, as well as individual and institutional accounts, including those of corporations, hospitals, retirement plans, universities, foundations and trusts.

Penn, Schoen & Berland Associates, Inc. is a Washington, D.C.-based full-service strategic polling and market research firm.

Before investing in any Eaton Vance Fund, prospective investors should consider carefully the Fund’s investment objectives, risks, and charges and expenses. The Fund’s current prospectus contains this and other information about the Fund and is available through your financial advisor. Read the prospectus carefully before you invest or send money.

Stock Breakouts And Resistance

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Breakouts through resistance are the most desirable of all trade opportunities. (This discussion will be the buy opportunity discussion of breakouts. (An equal sell opportunity exists on breakdowns through support). A breakout is a penetration of resistance based on a pricing established over time with price reversals taken place at approximately the same price point in previous time periods.

Sounds easy. Well it sure sounded easy when that guy in the $1000 seminar told me…

trading,stock,investing,options,stocks,trade,daytrade,invest,daytrader,option,daytrading,profits

Breakouts through resistance are the most desirable of all trade opportunities. (This discussion will be the buy opportunity discussion of breakouts. (An equal sell opportunity exists on breakdowns through support). A breakout is a penetration of resistance based on a pricing established over time with price reversals taken place at approximately the same price point in previous time periods.

Sounds easy. Well it sure sounded easy when that guy in the $1000 seminar told me about it. I also read how easy it was in the $90 book on trading that said would make me a wealthy independent trader.

Breakouts are wonderful if they continue. If they fail you can expect the pricing not to trend but to return to a range bound probably touching the lower pricing before it rises again. That price movement is probably beyond your stop loss and you will not be pleased.

This occurs more often than you want to believe. Since so many other people see the breakout they are as nervous about it as you are and you have a larger number of quick exits with the slightest wiggle. This is referred to as “buyers remorse?or a “bull trap? What this really represents is a serious hit against your P&L.

Remember, breakouts are a product of an established range bound market. The continuation of the sideways market is the rule with a move away from support or resistance back into the trading range. That means a failed breakout is the rule. The breakout is the exception. Some traders believe the reverse is true. That can cost you a bundle of cash in trading losses.

In addition, MACD Plays: When you are considering any stock you need to know if that stock is exhibiting a tendency to trend. If you wish to be more successful in your trades, then you should be able to identify those stocks with this tendency. Logic dictates that you will make more profits in trending stocks rather than in those issues that fluctuate up and down.

Lucent Needs Some Loving

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Article discusses the problem with Lucent Technologies. This former Wall Street darling has been discarded by the herd and is now looking for some love on the Street

tocks,investing,trading,options,technical analysis,george leong,money,finance,small cap stocks

Lucent Technologies Inc. (NYSE/LU) is a stock that needs some major loving. This former Wall Street darling has been discarded by the herd and is now looking for some love on the Street. Trading at nearly $80 in late 1999, the stock like many others in the communications sector has been under severe pressure in recent years, facing lackluster revenue growth and anemic profits.

Lucent has also gone through its share of lawsuits. Despite some recovery in the communications sector, the area remains a difficult place to operate. The competition is fierce, pricing pressures are growing, and margins are low.

That is the reality for the communications sector, an area that remains in limbo given the current climate. So what is Lucent suppose to do? Shareholders have lost patience in the ability of chairman and CEO Patricia F. Russo in turning around the company and making it a star again.

Down 96% from its late 1999 high, the reality is investors who bought at that level or even lower will probably never recover their losses. Lucent will never be more than a capital loss for those that purchased at the higher and inflated prices.

The company is making money and its forward price-earnings multiple is reasonable, but given the slow expected growth the stock’s upside may be limited.

Given the mixed outlook for the communications sector, Lucent is trying to get a major hug from rival and also troubled France-based Alcatel SA (NYSE/ALA).

Lucent after being rejected already by Alcatel in 2001 is hoping this second attempt is met with hugs and kisses, something they love to do in France.

Alcatel is reviewing the potential merger with Lucent, but it is in the driver’s seat as its position is much better than that of Lucent. In other words, Lucent needs Alcatel more.

But for Alcatel, a merger with Lucent could give the company more exposure and an established network in the United States.

The deal if consummated could be the first of many more to come as struggling telecom companies look for ways to cut cost and compete more effectively.

Note: you are welcome to post this article on your site if it is financial related. You must cut and paste the bio and make sure the web site link is live. Also please e-mail me to let me know.

Cash Is King

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Cash Is King is the basic principle of using cash instead of debit/credit cards whenever possible

Budgets,cash,personal budgets,personal finances

If you understand and follow the basic principle of “Cash is King?you can change your life forever. Your life will be less stressful financially and you will be taking your first major step toward “financial peace of mind?

“Cash is King?is an easy principle to understand; however it may be difficult to follow. This principle is the key to less stress within your financial life. Many things tell us how to manage our finances and it seems that none of them address the “root cause?of our financial problems.

The biggest problem is that we live in a world of plastic and for all practical purposes we do not respect or understand the value of cash.

If you follow this simple but different principle of “Cash is King?you will start on the road to “financial peace of mind? Here are two basic suggestions on how to follow the principle of “Cash is King?

When you are paid make sure you allocate enough money to pay your rent/mortgage, utilities and any other fixed expenses you may have. Any amount of cash that is left should be withdrawn from your checking account to be used for food, clothing, gifts, entertainment, gas, etc. The best way for you to control this cash would be for you to divide and allocate certain amounts of cash for each variable expense and store this cash in labeled envelopes, like the envelopes found in the BUDGETkeeper SYSTEM.
Now remember that this cash is the only way you can spend. Once you have used all your cash there will be no spending until your next paycheck. This is tough! No credit/debit cards? You must be kidding! How will I ever get through to my next payday without using my credit/debit cards? They say smoking is hard to give up, I think sticking to the principle of “Cash is King?may even be harder!

Stick with “Cash is King?and manage your money. You will start by finding the cheapest places to buy gas, run your errands more logically and take your morning coffee from home instead of buying that latte every day. You will have to find many new ways to manage your cash and the first few weeks will be the toughest. You may even run out of cash before your next payday, however, you will stick to the principle “Cash is King?and eventually find “financial peace of mind?

After several weeks it will get easier to manage your cash and you will be surprised to find extra cash available before your next paycheck. What will you do with that extra cash? Many say put the extra cash into a savings account or pay a little extra towards one of your debts. I say put it in a coffee can and let it accumulate then take yourself out and have one great party!

If you can follow this principle, you will be on your way to establishing a personal/family budget. Let the BUDGETkeeper SYSTEM show you the way to “financial peace of mind?

Successful Investors Have Learned to Talk Their Walk!

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If you learn to develop you financial vocabulary a world of investing success will open up to you!

Stock Market, Stock Investing, Stock Investor

Today, English is the most widely spoken and written language on the planet. English was first spoken in Britain by Germanic tribes in the Fifth Century AD. At that time it was known as the Old English (Anglo-Saxon) period. During the Middle English period (1150-1500 AD), many Old English word endings were replaced by prepositions like by, with, and from. We are currently in the Modern English period which started in the Sixteenth Century.

The number of words in English has grown from 50,000 to 60,000 words in Old English to about a million today; the largest of all languages by far. An average educated person knows about 20,000 words and uses only about 2,000 words in a week. Despite its widespread use, there are only about 350 million people who use it as their mother tongue.

It is the official language of the Olympics. More than half of the world’s technical and scientific periodicals as well three quarters of the world’s mail, and its telexes and cables are in English. About 80% of the information stored in the world’s computers (like this text) are also in English. English is transmitted to more than 100 million people everyday by 5 of the largest broadcasting companies (CBS, NBC, ABC, BBC, CBC). It seems like English will remain the most widely used language for some time.

The field of finance was pioneered by the United States of America as an extension of mercantilism. This was at a time when study of anything but economics was considered unworthy as compared to hard sciences like math, chemistry and physic and kissing up in the king’s court was highly regarded. The first business schools were established in the United States for this reason and still maintain their dominance. Finance has many words such as “put?and “call?for which there are no translations in other languages.

It is critical that you develop your financial vocabulary. My understanding of the financial vocabulary is vast compared to the average person because of my Ph.D. that I hold in the field as well as my investing experience as a futures and options trader and long term stock investor.

Many years of study at the doctoral level combined with direct practice in investments has allowed me to develop a vast financial vocabulary. This allows me to capture the essence of investment readings and conversations that the average person does not understand. Many investors fail not for lack of intelligence (I am of average intelligence) but lack of comprehension of what makes the stock market tick. This is due, in great part, to a lack of vocabulary that the common man on the street has not developed. Take the time to develop your financial vocabulary and you will excel over time as an investor!

What Makes A Successful Stock Trader?

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I’ll be telling you about 15 characteristics of a very successful trader.

Trading in stock isn’t everyone’s cup of tea. Some people can do it and some can’t. Even among the some who can, not everybody can be successful at it. While there are no hard and fast rules on what makes or doesn’t make a successful stock trader, those Wall street Wizards that you hear about who made the most in the least amount of time, all appear to have certain characteristics in common.

1. Su…

Investment tips, stock trading

I’ll be telling you about 15 characteristics of a very successful trader.

Trading in stock isn’t everyone’s cup of tea. Some people can do it and some can’t. Even among the some who can, not everybody can be successful at it. While there are no hard and fast rules on what makes or doesn’t make a successful stock trader, those Wall street Wizards that you hear about who made the most in the least amount of time, all appear to have certain characteristics in common.

1. Successful stock traders are able to go against their natural instincts.

2. Successful traders have a simple system. No matter which technique you use as long as you stick to it. A Successful trader knows their technique and makes trades based ONLY on their system. “The secret to being a winner is consistency of purpose”. You want to improve a separate strategy for getting into a position and for exiting one.

3. Successful traders are risk Adverse. Successful traders don’t like losing money and prohibit themselves before losing too much, even if it means admitting they made a mistake.

4. Successful traders are willing to make mistakes. Successful traders have the right and ability, not to do the right thing, but to do the wrong thing. It’s the ability to make your own mistakes.

5. Successful traders don’t care about being embarrassed by taking a loss. Successful traders expect to take losses and know when to cut them.

6. Successful traders know, or learn how to explore stocks. Many traders only use precise analysis, but you may want to learn to use fundamental analysis as well.

7. Successful traders lead balanced lives. We all know the pleasure of the pursuit and the stock market can be addicting, a successful trader is one who knows when to move away and can.

8. A successful trader is Patient. A successful trader let’s winning positions run, but is able to back out when proven wrong. Patience can mean resilience, courage, and conviction for when markets go against you.

9. A successful trader has a biting Desire to succeed. Triumph takes steady work not a chaotic effort, a biting desire to succeed can make all the difference in educating yourself about what you want to know and sticking to your strategy when the going gets rough.

10. A successful trader is disciplined. Very disciplined. A successful trader will do what he needs to do, even if he isn’t in the mood. Discipline also means Sticking to your strategy, not abruptly buying or selling on a whim, or because of a” hot tip”

11. A successful trader knows the difference between defensive and offensive behaviour, and when to use each. – protect your money first, profit later.

12. Successful traders don’t eavesdrop on rumours or get emotionally involved. To be a successful trader you have to be very hard on yourself. Your have to be able to resist the urge to prove you are right and be ready to make mistakes. . You also want to be able to not let emotions affect your decisions. Setting up stop loss points for every decision you make is something that you are going to have to do. That will mean more than occasionally admitting that you are wrong. You and your portfolio will survive and you will be able to get back into the position again when trends signify that the time is right. You will have to learn to disregard any emotional ties you have to your stock and make quick stock trends your master. You will miss the lowest entry points and the top selling points, but you will be able to sleep at night. You will need to learn to get out of a stock position before your profits turn into losses.

13. A successful trader knows themselves. Successful traders must be attentive of their strengths and weaknesses. Your strengths and weakness will become very important. Play on your strengths when you can.

14. A successful trader knows their investments. Your investments are almost as important as you are. Know the past history of the stock and their strengths and weaknesses as well.

15. A successful trader sticks to the rules. The system is there for a reason. Nothing can ruin a successful stock buyer as quickly, or as certainly as flouting the rules.

Get to know these 15 characteristics and you are on your way to becoming a successful trader.

Which Uranium Companies Are Leveraged for Increased Nuclear Energy Demand?

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Summary: Sprott Asset Management uranium expert Kevin Bambrough talked with us about the “second leg?of the current uranium bull market. Bambrough names his favorite uranium companies, where he believes there is still room for growth. Bambrough believes industry insiders have underestimated the growth in demand for nuclear energy. He believes his favorite uranium stocks are still cheap and could be trading much higher in the future.

uranium, Wyoming, New Mexico, Texas, nuclear energy, mining, ISL mining, Sprott, Slovakia

Summary: Sprott Asset Management uranium expert Kevin Bambrough talked with us about the “second leg?of the current uranium bull market. Bambrough names his favorite uranium companies, where he believes there is still room for growth.

StockInterview: How does the major nuclear energy build up you envision impact uranium mining?

Kevin Bambrough:
I think, with the passage of time, all types of mining will again be done again in the United States. They’re going to need the supply. There is no alternative. If you look at Energy Metals Corporation (TSX: EMC), part of their plan is to start with some ISL operations, some of which will come at a facility that’s already fully permitted. Then eventually, they’re going to try to move into places like New Mexico, where I think with the passage of time, common sense will prevail and people will become more pro-mining for uranium.

StockInterview: We now have about ten times the number of uranium companies, some purporting to be a “uranium company,?than when we first started covering this sector. How is this sector going to play out?

Kevin Bambrough:
It’s been very difficult to try and follow what everyone is doing in this space. Right now, the uranium story is looking so good. It’s still relatively early that anyone seems to be able to raise some money, tell a story and perform well. It’s unbelievable how the sector has performed this year. With the passage of time, the guys with the real resources, who can also develop them and produce, are going to do well. The other guys are going to have to keep coming back to the market, raising capital, raising capital and diluting their shareholders in order to try to drill and find something. Of course, there is going to be the odd one here and there that actually strikes something big. It’ll give people hope but, that’s not the way we want to invest.

StockInterview: Have the uranium stocks gotten out of control? Are we looking like another train crash like the internet stocks of a few years ago?

Kevin Bambrough:
The majority of stocks in the uranium space, we will not own. We only own a really select few, probably just over a dozen. We have some explorers, we have some producers and we have some, what we believe to be emerging producers and we’re sticking with that mix.

StockInterview: So which companies do you like?

Kevin Bambrough:
Obviously, there is a lot of mud slinging that goes on in all sectors of the mining business. You talk to different people, and they say, “Oh this is going to be higher cost, that is going to be higher cost, and our properties are better than their properties.?From where I sit, Energy Metals (TSX: EMC) was one of the companies to get in there early, and pick up a lot of known resources and databases. I think they’ve done a great job of doing exactly what they said they were going to do. We started funding them in the early days. Those are the (types of ) companies I want to stick with.

StockInterview: What do you like about Energy Metals?

Kevin Bambrough:
I’m happy to say that we’re a very large shareholder of Energy Metals, and I continue to love the story. The most recent presentation they gave shows what the company will look like after they fully complete the Standard Uranium and Quincy Energy mergers. The combined entity in their presentation shows to have about 236 million pounds of uranium resources, I believe, and a market cap of around C$360 million with $60 million in cash. We’re still a shareholder of Paladin (TSX: PDN). I think we’re up about 40 or 50 times on the first shares we bought. If you compare the two, you’ve got a market cap of close to C$2 billion on Paladin with around 180 million pounds. If you look, you’ll notice the real big move in market cap occurred, when Paladin started to get close to production and they signed contracts. Now Energy Metals has about one-fifth of the market cap and a fully permitted ISL facility down in Texas. They’re at the point where they’re going to sign the contracts and move forward into production. I think people are going to wake up and start giving them more credit. I think that positive permitting developments will continue to occur in places like New Mexico. Obviously, the friendly environment in Wyoming for bringing on production will make Energy Metals perform very well going forward. It’s going to be fantastic for shareholders if it can duplicate the move that Paladin has over the last year or so.

StockInterview: You said earlier “common sense would prevail?in New Mexico. How does that impact Energy Metals?

Kevin Bambrough:
New Mexico is more in the back burner for now, but I think the stock (Energy Metals) will continue to perform well as the regulatory environment continues to improve in the area. I should touch on Strathmore Minerals (TSX: STM). We’ve been please to see they’ve been bringing out their (National Instrument) 43-101’s on a couple of their (New Mexico) properties and show an increase in reserves. I believe they’re doing some work right now on their Dieter Lake project up in Quebec that could be interesting. They’ve got some good resources and reserves. I think at some point, someone is going to want to cut some deals with them, or they’re going to just keep chugging along and bringing things forward.

StockInterview: You were excited about Tournigan (TSX: TVC) the last time we talked. How is that one turning out?

Kevin Bambrough:
Tournigan is really developing into a great story. Originally, when we first got into this, it looked reasonably valued and interesting on its gold prospects. When they picked up deposits in Slovakia, we got in deeper. I think the story just keeps getting better as we look more into what they actually may have in these properties. They’ve also brought on a new hire, who was the head of the Slovakia uranium program years ago. He’s joined the team and he’s basically said that the Jahodna district) is probably not just a 3km strike length but probably more of a 7km potential. The current resource estimates are only based on 500 meters of the zone. They’re going to start stepping out and drilling it. We’re hoping it could get much bigger. It’s open at depth as well. There is also reasonable chance this could become a large uranium district. They’ve found out there were a lot of other targets in the area, in the past. They are going to try to work these targets as well. Slovakia is a major past producing country. A lot of its power currently comes from nuclear. They have two other properties in Slovakia with resources. They’re going to drill and are hopefully going to show better grades and larger resources, with time. Of course, you’re always hopeful, no guarantees, but our experience is that in the uranium business: As you go and drill old properties, redo old drill holes with larger cores, you get better recoveries and can show higher grades. That seems to have been the case for both Tournigan and Western Prospector (TSX: WNP). I should also mention that on the Jahodna property, it’s interesting that, not only did the uranium grade jump but also the molybdenum grade jumped up substantially to where this is now some very valuable rock.

StockInterview: Any final recommendations?

Kevin Bambrough:
SXR Uranium One (TSX: SXR), I think it’s a great story. There’s no doubt that the uranium is there, but some people debate about how difficult the mining is going to be and what the cost will ultimately be. But they’ve got a good gold credit in there to help bring down the overall cost. Again, we believe the uranium price is going to be much higher than most people believe for a lot longer. We love investing in companies with huge resources and plenty of leverage to both uranium and gold.

StockInterview: Do you still see some of your uranium holdings, certain ones as cheap, still in play, and to be looked at?

Kevin Bambrough:
Most definitely, and we’ll be helping to finance some all the way to production.

Profiting from the Anomalies – Stock Markets are not always right

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There are many different factors that affect stock market levels on a minute-to-minute basis. This includes inflation data, gross domestic product (GDP), interest rates, unemployment, supply, demand, political changes, and broader economic forces, among others.

stocks market

There are many different factors that affect stock market levels on a minute-to-minute basis. This includes inflation data, gross domestic product (GDP), interest rates, unemployment, supply, demand, political changes, and broader economic forces, among others.

Complicating this are some general market trends, which have been determined historically to exist. Like their share-price-based brothers, these stock market anomalies may provide buying opportunities for investors. These anomalies include:

Price-based regularities:

1. Lower-priced stocks tend to outperform higher-priced stocks, and companies tend to appreciate in value after the announcement of stock split.

2. Smaller companies tend to outperform larger companies, which is a key reason for investing in small cap stocks.

3, Companies tend to reserve their price direction in the short and long-term.

4. Companies that have a depressed stock price tend to suffer from tax-loss selling in December and bounce back in January.

Calendar-based regularities:

These regularities allow you to better time your investments in the short-term. Although investors should remember that over the long term the benefits of a regular investment plan (investing each month) far outweigh the benefits of trying to time your investment by a day or two, the following patterns have been shown to occur.

1. Time-of-the-day effect. The beginning and the end of the stock market day exhibit different return and volatility characteristics.

2. Day-of-the-week effect. The stock markets tend to start the week weak and finish the week strong.

3. Week-of-the-month effect. The stock market tends to earn the majority of its returns in the first two weeks of the month.

4. Month-of-the-year effect. The first month of the year tends to show increased returns over the rest of the year. This is referred to as the January effect.

Investors should remember that not every anomaly comes about every time, but making sure you’re aware of anomalies will allow you to profit over the long-term and deal with market volatility in the short-term. In short, profit from these anomalies, but don’t aim to make use of these anomalies at the expense of your long-term investment objectives.

How Is Your Budget For The Holidays?

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Most people have tried it ?spending more on the holidays than intended. I comes as a surprise again an again. What is it with money and budgets that do not work? People split up because of money. It is an invisible force from our subconscious mind that tricks us to buy stuff we can not afford at a given moment.

The best way to stop spending too much money over the holidays, is to set a budget for how much you can spend, especially for gifts, and then stick with it, no mat…

Budget Holiday

Most people have tried it ?spending more on the holidays than intended. I comes as a surprise again an again. What is it with money and budgets that do not work? People split up because of money. It is an invisible force from our subconscious mind that tricks us to buy stuff we can not afford at a given moment.

The best way to stop spending too much money over the holidays, is to set a budget for how much you can spend, especially for gifts, and then stick with it, no matter what. Even if you subconscious mind tells you it is okay.

Do it outside the holidays too, people should keep a rein on their spending there as well. If you do it at all times it should be no problem in the holidays as well.

Sixty-one percent of Americans either does not have an annual household budget or feel it is difficulty to stick with it. Out of those who have tried to keep a household budget, fifty percent gave up trying to follow it. Your subconscious mind is doing its thing even if you do not like it.

The best way to maintain financial discipline might be to stop using credit cards. If you know you do not have enough money to buy something and pay for it this month, then maybe you should not buy it at all. Without a credit card in your pocket, you can not be tricked by your own mind to buy anything.

Maybe you have doubts whether you should spend anything on the holidays or not. Is it not just an industry game that is way too expensive for regular people? I think not, don’t be afraid. You can get tons of great stuff that is not too expensive and that will bring joy and smiles in the house.

Have fun and thank you for your time.

Trading the Wrong Market

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Traders who play favorites in this area are setting themselves up for catastrophe. It’s easy to get comfortable in one market, but it’s easy to get comfortable in one pair of socks, too. The bottom line is the same: you need to diversify. Thankfully, it’s not hard to do ?there’s just one thing you need to look for.

The Complete Guide to Daytrading, day trading coach

If you know the pitfalls of trad┬Čing, you can easily avoid them. Small mistakes are inevitable, such as entering the wrong stock symbol or incorrectly setting a buy level. But these are forgivable, and, with luck, even profitable. What you have to avoid, however, are the mistakes due to bad judgment rather than simple errors. These are the “deadly?mistakes which ruin entire trading careers instead of just one or two trades. To avoid these pitfalls, you have to watch yourself closely and stay diligent.

Think of trading mistakes like driving a car on icy roads: if you know that driving on ice is dangerous, you can avoid traveling in a sleet storm. But if you don’t know about the dangers of ice, you might drive as if there were no threat, only realizing your mistake once you’re already off the road.

Too many traders are fixed on only one market. They may trade only the forex USD/EUR, or the E-mini Russell, or the E-mini DOW, or just cer┬Čtain stocks, etc. While they may feel a certain sense of expertise or mastery over this one market, no one, no matter how experienced they are, can predict what will happen all the time. These people are setting themselves up for catastrophe, because there will inevitably come a time when they’ll make a mistake. And, with no diversity in their trades, they will lose everything they’ve worked so hard to gain.

The key to choosing a market isn’t to look for one you seem to understand better than the others. That will always be something of an illusion. But there is one market you can always depend on: the one that is moving. You know you should buy when the market goes up and sell when the market goes down. A moving market will always be profitable, even if you’ve never traded a single share there before.

Pay close attention to trendlines, both in the markets where you’re already trading and the markets you’re considering. If one of your markets is consistently choppy or just moving sideways, get out of it and move on to another. If you think of successful trading as sticking not with a market but with a trend, no matter which market it’s in, then you’re thinking successfully.

The key, of course, is that you have to keep an eye on markets where you aren’t currently trading. Keeping up with your options is just as important as watching what you’re familiar with. This is where research and experience come into play. Getting to know a number of markets (and how to find out about them) takes time. But don’t let that discourage you. Also, don’t feel like you have to understand every option at the very beginning. Pick a few different markets to actually trade in, but also choose a few just to watch. That way, you’ll see how your own trades work, and you can also compare that activity to markets you may not know much about (yet).

The only way to learn about which markets are right and wrong for you is to watch them. Watching a variety of markets will give you the knowledge you’ll need to use when it’s time to change gears and find that elusive moving trend.