Business and Investment sidenote

There is an alarming number of new, and uneducated, commodity traders losing just about everything they own. Why? There are a number of reasons why a new futures trader stands back, scratches his/her head and wonders why their trading account went from thousands of dollars to almost nothing over night.

What happened?

There are actually a number of things that came into play.

1. First and foremost. They believed all the hype that they would become rich over night.

2. They did not buy a good course on how to trade the commodity markets.

3. They picked up some books on trading at the library, or worse, they signed up with a trading forum on the Internet and believed everything the so called experts said about getting rich over night in the futures markets.

4. They did not have a trading plan before they placed a trade. A disaster in the making.

5. They believed everything their broker told them. A NOTE: All brokers are not bad.

So what are new traders supposed to do. How do they keep from losing all their money in their first month as a commodity trader?

There are two very basic ways to learn the craft of trading.

1. Paper trade. Learn what to do before risking a penny.

2. Trade Mini-Futures contracts. Keep any loses to a minimum.

There are multitudes of commodity trading books on how to make money trading futures contracts. However, a person will be hard pressed to find how-to books devoted exclusively to trading Mini-Futures.

The reason I believe is that Mini-Futures lack the glitter and claims to instant wealth found in the more traditional commodity trading manuals.

It’s unfortunate, but an alarming number of new traders will read one or more of the how-to books on commodity trading and jump right in and place a trade order not fully comprehending the real risks involved in trading.

Futures prices can and do make extreme price swings. New traders, because they lack experience, are unprepared to handle the large losses when trading standard futures contracts when prices move suddenly against their position.

Mini-futures are not immune from the same extreme price move. However, the dollar loss is considerably less. Mini futures contracts will let a new trader survive a sudden market shift and have money left in their trading account for the next trading opportunity.

What about limiting your losses with Stop Loss orders?

A Stop Lose is supposed to keep you from having large losses. Right? Not necessarily. There is what is called Daily Limit Moves, known as Limit Move, in futures trading.

A Limit Move means that a commodity price can only change up or down a certain amount during a trading session. When that happens trading stops until whatever caused the drastic price shift changes.

When a commodity makes a limit move against you it can shoot through your stop loss as if it did not exist. If you are unfortunate enough to get stuck in a Limit Move against you that last two, three, or more days you will be wishing you never heard of trading commodities.

This is not an everyday occurrence that you have to lose sleep over, but you need to be aware of it.

Trading futures can be a very profitable way to earn a living if you treat it as a business. Trading in the commodity markets is an extremely high-risk business and as with any business you must first learn the business so you won’t lose everything you own.

Think of it as if you suddenly wanted to be a high wire performer in a circus. You would be in serious trouble if you put on the flashy tights, went up 50 feet and inched your way out on the wire before you learned the craft of tightrope walking a foot off the ground. Fifty feet is a long way to fall without a net to catch you.

Trading in the futures markets, and even the FOREX markets is considered very risky. You must learn how to do it without putting your entire financial world at risk.

When I say risk I mean how much money you stand to lose if a trade goes against you. Your risks are anywhere from 20% to 50% less with mini futures over the more standardized commodity contract.

As an example a 20-cent move against you in corn is $1000 while the same move in the mini corn is only $200. Another great feature of the mini futures markets is the investment required to trade a mini commodity is also 20% to 50% less. A mini wheat contract currently requires about $400 to trade while the full size contract requires more than $1400.

A final note: The FOREX markets also have mini-contracts. But, the same risks apply.

Most people claim that futures trading is a risk due to the volatile nature of the markets. Nevertheless, futures trading is suitable for those who have sufficient risk capital and a personality that is not afraid of risks. Nowadays there are many successful traders who make constant profit from the futures and options markets, but they are experts who know even the smallest and the most insignificant detail about their business.

Futures trading represents the business of buying and selling contracts on commodities and companies trade futures in order to lock in their cost of needed product. Regardless of how efficient they are, all traders need a tool which helps them track futures and options, eliminate calculation errors, keep track of their orders, handle multiple trades, prepare statistical analysis and so on. This is where futures trading software plays an important role. If you don’t have a program which records your trading and if you are using a simple spreadsheet to record your training data, you certainly need to resort to futures trading software. This software will ease many of your daily tasks and help you be successful in today’s financial market place.

Furthermore, futures trading software satisfies all the needs of individual traders, regardless of the size of the trading account and regardless how frequently you trade. Instead of spending precious time on recording your trades and calculate profits, you can focus on analyzing the markets and on creating trading strategies. It is a proven fact that efficient futures trading software saves you precious time and helps you become successful in your field of activity.

You can revolutionize your trading strategy if you decide to resort to futures trading software, which will enable you to create highly accurate trading systems. All trading software works with stocks, futures, currencies and other financial instruments and its only purpose is to ease your tasks. Moreover, trading software is easy to use and it enables you to develop your own trading strategies. With futures trading software you no longer have to worry about losing precious information or spending too much time finding the trading data you need.

Nowadays, traders working from all over the world have the possibility to do online futures trading. All they need is a computer, an internet connection and a profitable trading system. However, online futures trading represents a competitive business and an excellent trading system is vital if you want to succeed in this field of activity. Fortunately, online trading companies offer traders the information and the resources they need in order to formulate a trading plan; of course, their assistance is not free but it is worth every penny.

It is a good thing that the internet has made current price information available and that software programs have trading programs which predict price direction. Thus, traders have a higher chance of success and they can enjoy the benefits of online futures trading and efficient trading software. Nevertheless, even with the best trading programs at your disposal, online futures trading can never guarantee your success since futures trading is a risk-based business.

Trading software will show you how to use simple and advanced strategies and how to find, verify and trade advanced and intermediate strategies. The trading software also helps traders foresee the future trend of prices, thus enabling you to make gains out of the fluctuations of share value. If you want to cut down your losses and to have at your disposal more time for coming up with a trading plan, it is time you bought trading software.

Trading has always been a money making business that everyone wants to enter into. A person should be cautious enough before joining the trading business and know all the goods and bads of this business. Everyone investing money in this business might not reach the ladder of success, as trading strategies have to be followed to have a positive result in this business. Professionals in the field of trading adhere to the trading strategies to have a organized working in this kind of a business. Trading strategies deals with predefining of rules/steps that do not deviate and these strategies must be implemented in order to have an organized and successful trading business.

With the upcoming of Information Technology there are several online businesses that have come into the market. Online trading business is one such business that has seen a great success in few years. Experts in the field of online trading make use of online trading strategies to make a move in an organized way. Every step in the business of trading should be taken with utmost caution. Different online trading companies have their own strategies according to the need. An online trading website can give you an idea about the kind of online trading strategies set by professionals in the field of trading.

Knowing the current market situation is very important before entering into the business of online trading. A person should be smart enough to know when to join and exit the online trading, as this will help to reduce percentage of loss. Building online trading strategies helps to design a planned action to achieve goals. Referring to the strategies help a professional to come out of a problem easily, as these strategies help a person to show the next step that is required.

For those who want to move into the business of online trading must search extensively to know about the tactics to become a successful professional in this business. Web is flooded with large number of online trading sites that give every bit of information related to online trading. Come across such websites and know about online trading strategies as well to build a perfect road for yourself to follow the path of online trading business.

Business correspondence plays an essential role in commercial transaction since it serves as an important way of contact in various business activities. A business letter gracefully and politely written will probably polish the company’s image filled with integrity and hospitality, which will convince the counterpart to cooperate with you and concludes series of business transactions. On the contrary, a rude letter will bring about side effects and damage the company’s image.

Apart from compliance with the principle of completeness, clarity and concreteness, a perfect business letter entails appropriate tone and expressions and observes the politeness principle. Then what are the politeness principle and the characteristics of business trading correspondence?

1 To keep equal between the two parties.

In business trading correspondence, two parties’ negotiations should be based on equality and mutual interest. To be too modest for politeness will backfire and lead to the doubt on your ability from the partner. E.g. you could rest assured that we would make every effort to effect the shipment as soon as possible so as to meet your demand. It is obvious. It would be better to change into we assure that we shall do our best to expedite the shipment.

2 To choose easygoing words.

It’s said that, the more intimate, the less politeness in talking; while the less intimate, the more politeness. That’s why the politeness level among intimate social crowd is low and they speak more directly. Therefore, to properly lower the politeness level of language means intently improving the intimacy and amiability in speech to achieve the business objective.

It is studied that nowadays more and more customer’s especially western companies intend to be fond of oral expression in fax or e-mail to create a relaxing and easy-going atmosphere to make smooth communications. For example, “nothing your enquiry about shipping mark, I will get back to you as soon as the information is available.” The informal expression “get back to you” can be used to replace the formal “replay to your enquiry” such expression sounds more relaxing and close, but not impolite.

In a word, a polite business letter can expedite the conclusion of a business transaction. Just try to comply with politeness principle when you have to write a business correspondence.

Day trading can be considered to be one of the best online businesses one can find themselves in. It takes a lot of effort though to succeed at online forex trading. Online trading might be simple but at the same time it is not easy to do either. That is because there are a ton of trading systems being offered out there to the day trader to use and succeed at online currency trading. Choosing a good system and sticking to it through tough times is where we see the difference between professional traders and amateurs and also discover some common traits found amongst these successful currency or forex traders.

Professional traders choose their trading systems with great care and make sure that their systems fits their personalities properly. They will then trade their trading systems as per their trading rules. This is what makes them different compared to amateurs. They all seem to share some common traits such as courage, discipline, patience, decisiveness, vision and willingness to learn and improve amongst themselves. Let us go through some of them below.

Courage is an important trait possessed by successful currency or forex traders traders. They are willing to show that courage by taking on small amounts of risk in online forex trading. It surely takes lots and lots of courage to pull the trigger on a trade setup and watch it turn into a winner or a loser. Not many people are used to losing money several times in a row.

Discipline and patience are the two other traits commonly seen in them. A disciplined trader might sit on the sidelines patiently for several hours if necessary if he does not see his setup. He will not take trades out just because he feels the need to as he has disciplined himself from doing that. He will sit on his hands and wait patiently for the market to come to where he wants to enter the market which has been laid out well in advance in his trading plan.

Decisiveness is another trait seen in them and comes in play at the time of entering or exiting trades. The pros wait patiently for the markets to come to them. At this exact point is where their decisiveness comes into play. They do not stop to think at their point of entry when presented by the market. Their entry has been precisely defined by their trading plan and when they see it in real time they seize the opportunity without any thoughts or hesitation.

The other very common traits we see in successful traders are those of vision and the willingness to learn from their mistakes and find ways to always improve. They see themselves succeeding in online currency and forex trading through the many ups and downs faced by all traders. Their vision can be seen in the form of their solid business trading plan they wrote for themselves. They always envision themselves as winners and do not stop to think about losing at any time. They are not afraid to make mistakes that they know they can and will learn from. Their mistakes are a learning tool for them and they always learn from their mistakes and try to avoid making them again in the future. They are always looking for new ways that will help improve their performance through the mistakes that they make.

These are some of the common traits seen amongst all the successful traders out there. There are many more traits and they can differ drastically depending on the personality of each trader and are built differently by each trader as they go through the process of learning how to trade and become successful at it.

Investors and Equity

Practically every economy is built upon the backs of small businesses and entrepreneurs. Every day someone comes up with an idea that will make a great business. Every day, these same people wonder how they will come up with the cash to get the business off the ground. The classic answer is to look for investors, and this is where things can go bad.

If you’re seeking investors for your business, you are going to need to form a business entity. Corporations and limited liability companies are the most popular, and give you the ability to trade ownership interest in exchange for cash contributions. With a corporation, investors will buy shares in the corporation. With limited liability companies, the investors will buy membership interests. Regardless, this traditional exchange gives rise to a problem common among small business owners, to wit, giving away too much equity.

From Joy to Misery

A common mistake made by new business owners is to give away too much equity when getting initial cash contributions. This occurs because you let insecurities impact you evaluation of the business. Instead of giving away two percent of equity in exchange for $50,000, you give away ten percent. Let’s look at an example.

I start a business selling digital gadgets. I prepare my business plan and realize I need $250,000 to get everything up and running. I have $50,000, but need to find the rest somewhere. I form a corporation with 1,000 shares and start approaching potential investors. I offer 100 shares for $25,000. I find five investors that give me $125,000 in exchange for 500 total shares. In summary, I now have $175,000, but have given away half the equity in the business. While I am not happy about this, I am still so enthused about the business idea that I shrug it off.

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Business trading is a common practice in industry. There are many reasons why businesses, whether they are large or small, are traded. The most common reason is that an owner would like to retire, so s/he would like to transfer ownership of the business. The second most common reason is that an owner would like to sell a successful business in order to obtain a cash sum. Certainly, it is also possible that an owner can not bear the deficit due to the poor management, so s/he decides to sell the company.

For buyers and sellers, most transactions involving business trading are rarely limited to just the buying and selling. However, the competition between businesses has become increasingly severe in modern society. In this kind of environment, buyers and sellers should be able to improve business dominance and strength through cooperation. It is suggested that buyers and sellers enhance the correlation by means of the repeated purchase of equity. This approach translates into the seller providing the buyer with help and guidance, long after selling the business. For example, the buyer would only purchase 80% of the equity from the seller and the seller would retain control over the remaining 20%. Such a shareholding arrangement would enhance the correlation between the buyer and the seller. In the early stages following the purchase of the business, the buyer will likely encounter difficulties in management; at this time, the buyer can seek the sellers help. Since the buyer and seller form part of the same entity and share common interests, the seller will try their best to help, making this is a win-win situation for both parties. Furthermore, it is also necessary for the buyer and the seller to have a specific legal contract. The more specific the contract, the less scope there is for disputes. For instance, if the buyer hopes to employ the repeated equity purchase approach then this should be clearly stated on the contract. Furthermore, details of the batches to be purchased, the ratio of each batch, the date of purchase, the method of profit sharing, and the last date of equity purchase, should be clear in order to avoid damage to each party’s rights and interests.

It is necessary for buyers to establish a good trading relationship, and the seller should also take the necessary responsibility after selling the business. The seller should make every effort to assist the new business owner in returning the business to the correct course. This collaborative approach will help the business to be both more competitive and more efficient.