Financial Investment

Financial Investment Definition

People, with more than enough bank balance, often look for luculent profitable opportunities to invest and make the most out of their money. Feasible options of financial investments which come with a risk-free guarantee, are hard to find in the market these days. Corporate internationals and individual entrepreneurs are always in search for such adaptable financial investments of varied proportions which will multiply their funds and amplify their company’s growth eventually. Considered as the perfect way of utilizing unused bank balance, financial investments can simply be defined as the money which is spend in any renowned and listed financial investment organization. Such monetary investments are availed by both public and private organizations irrespective of their corporate value in the market.

Features of Financial Investments

Such investments find its utility in different approaches. Different entities have distinctive set of purpose for their each and every financial endeavor. For instance, private multinational organizations confer with financial investment consultants for better opportunities to augment their source of income. Retired people save funds for their old age and uncertainties. Few experienced and well established corporations put money in various emerging organizations to multiply their investment and gain largely. Even government organizations, who wish to expand their base, invest in various projects and achieve social and political advantage. Irrespective of the purpose of financial investment, the money should be spent in a presumed and developed company whose reputations precede all. Though, 10 out of 8 companies promise to offer outstanding financial return on every investment, only a few keep up to their word. The creditability of any financial organization depends on its background and past performance.  So it is always recommended to look before you leap and conduct a proper market survey before investing in any financial organization.

Financial Investment Advisor

According to the definition of financial investment, a financial investment advisor is an adroit and skilled consultant aimed at offering effective and poignant financial investment advice to individual investors or corporation houses. By offering expert financial advice after properly allocating all the assets, an advisor assists a prospective investor to maintain a straight line between investment income and capital gains

Such advisors prefer to utilize mutual funds, stocks, real estate investment trusts, bonds, options, insurance products, futures etc to appease their clients. The funds of the investors are channeled via such modes. Most of the financial advisors are offered money for their services and are entitled to commission only. Out of others, fee based advisory plan is gaining huge recognition in the current period.

(a) Fee-only advisors

Fee-only financial advisors are the principal choice of major financial investment companies. Such advisors are given compensation only by their respective clients. Such financial advisors attain their compensation by an amalgamation of hourly fees, asset management money and financial planning charge. An advisor may get affiliates, rebates, commissions, awards, bonuses, finder’s fees along with different types of compensations due to the proper implementation of the recommendations given to the client. Advisors should never ever receive such compensations and should not accept them in any case. By doing so, an advisor maintains the code of conduct as formulated by financial investment companies and removes the chances of any kind of conflict with their client. By following the code of conduct a financial advisor signifies that he/she is not indebted to any insurance or any other financial company.

A fee only advisor may minimize disagreements of interests such as:

Proposing a client to purchase products and invest in situations when holding cash along with other liquid assets would have been a better advice at that time

Proposing a client to purchase products and issue commissions via unwanted buying and selling of certain securities.

A commission to change real estate, collectibles and other such non-cash assets into hard cash which will enable a financial investment advisor to charge incentives.

A commission to make proposals which offers better sales commissions to any advisor when there a cheaper option is available in the market.

(b) Commission-based Advisors

A number of financial investment advisors receive payment for there services in the form of commission. Such advisors provide effective and productive financial investment advice to their respective clients in exchange of a certain percentage of commission, which is charged on the profit earned after recommendation.

Financial Investment Planning

Financial investment planning is done by investment advisors for better outcomes. Financial advisors assist their customers make profitable and high-earning long term and short term investments. The primary duty of financial advisors is to guide their clients towards the right investment scheme and upgrade them about the risk involved in particular investments. A good financial advisor recommends volatile investment schemes to its clients. It may involve bigger risks but the rewards are worthy. Direct investments in stocks or collective investment products namely unit investment trusts, mutual funds, unit trusts etc are few examples of such money making schemes.

For instance, if any particular client has short term goals for such investors and advisors should recommend financial investment schemes which are less volatile in nature of shorter time period. Cash deposits, certificates of deposit along with short term bonds are few examples which help to explain what the exact meaning of volatile investments is. One of the major drawbacks of such investments is that the return is relatively low since the risk involved is less. Due to the zero possibility of losing the principal amount, people find it safe to invest in such schemes to protect their capital.

Financial Investment Organization

The creditability of any financial investment company depends on its past reputation and its performance till date while making financial transactions. The main and sole objective of such organizations is to do business by buying securities of other well established renowned companies only for investing. An investment company operates by putting money in the shares and bonds of other companies on behalf of other shareholders with there consent. These shareholders then share the profit or loss earned via the investment approach.

An investment company can be of any form, depending on the intention of its directors. However, there are primarily three basic forms of financial investment organizations, namely:

(a) Open-End Management Investment companies

These are also called as mutual funds. Mutual funds are popular through out the world for their surety of return on investment. It is a type of collective investment scheme which is dealt with professionally. It draws out the funds from different investors and purchases securities. Such collective investment schemes are open-ended, regulated and are available to the general people who are not regular investors.

(b) Closed-End Management Investment Companies

Also called close-end funds, these are listed on well-known stock exchange boards and can be brought and sold. The market determines the cost of each share which is dissimilar from NAV-Net Asset Value per share. The price that is fixed is called as premium or discount to the Net Asset Value.

(c) UITs

Unit Investment Trusts is another type of exchange traded mutual fund. The essence of such funds is that they offer portfolio of securities which have a fixed period. The authenticity of UTI is guaranteed by Securities and Exchange Commission under the Investment Company Act of 1940. Unit investment trusts are put together by any specific sponsor and then sold to investors via brokers.

Financial investment is an important term. People can become wealthy if they understand the pros and cons of this term. If used wisely, appropriate financial investment can be one of the best money making schemes you have ever imagined.

How to Invest in Gold

Gold is protection, insurance against inflation, currency debasement, and global uncertainty. Here are four ways you can invest.

1. Gold Bullion

Buy physical gold at various prices: coins, bars and jewelry. Some of the most popular gold coins are American Buffalo, American Eagle and St. Gauden's. You can store gold in bank safety deposit boxes or in your home. You can also buy and sell gold at your local jewelers. Other companies like Kitco.com allow you to store gold with them as well as trade the metal.

When you buy gold coins or bullion, avoid big premiums. You want to buy gold as close to the spot price as possible, or a 10% premium at most. The higher the premium, the higher the gold price will have to rise in order for you to profit.

Coins typically come from the national mint, where they are made and sold at a 4% mark up -- the retailer's margin is 1% to 3%.

To calculate the premium of a gold product, subtract the spot price from the price you are being quoted, divide that number by the spot price and multiply by 100.

Had you purchased a one ounce gold bar at Kitco.com for $1,225.90 -- using a spot price of $1,200 -- the bar has a 2.1% mark-up. This means that the gold price only has to rise 2.1% from spot price levels for you to break even on your investment.

Premiums, though, can mount as high as 75% or more based on the gold item.

To avoid getting ripped off you must establish why you want to buy gold bullion. If you want to own gold as a long term investment, then buy gold as close to the spot price as possible.

If you want to own gold to use as money, if you are a "survivalist" you want to buy a tank of gas with gold as Jon Nadler, senior analyst at Kitco.com says, then you need smaller gold coins like one tenth an ounce and will have to pay the premium.

Nadler's take is that an individual investor shouldn't spend more than a 10% mark up when buying gold, but acknowledges that "everyone has their own threshold."

Where investors also tend to go astray is by buying semi-numismatic or numismatic coins, otherwise known as rare coins, which come with huge premiums that seldom recoup their value.

A good rule of thumb is to leave rare coin buying to rare coin dealers. Nadler advises that consumers interested in rare coins go professional auctioneers like Bowers & Merena orChristie's who have experts on staff and can objectively grade the coins the same way an antique dealer would appraise goods.

If a broker tries to sell you a story with the coin like it's from the "old world and there are only a few thousand in existence" experts advise to go elsewhere.

"Don't confuse investing in gold with the things being sold as gold investments," cautions Nadler. "You want something that tracks the price of gold as close to dollar to dollar as possible."

2. Gold ETFs

Gold exchange-traded funds are a popular way to have gold exposure in your portfolio without the hassle of storing the physical metal. First, you can invest in one of three physically backed ETFs, which track gold's spot price.

The most heavily traded ETF is SPDR Gold Shares (GLD), which saw record inflows as fears ballooned over Europe sovereign debt fears and a struggling U.S. economy. Big guns like George Soros and John Paulson own the stock.

iShares Comex Gold Trust (IAU) is the cheapest ETF with a 0.25% fee.

The newest gold ETF is ETFS Gold Trust (SGOL), which launched in September 2009. This gold ETF actually stores its gold bullion in Switzerland and gives investors access to different types of gold.

For each share of these ETFs you buy, you generally own the equivalent 1/10 an ounce of gold. If investor demand outpaces available shares then the issuer must buy more physical gold to convert it into stock. Conversely, when investors sell, if there are no buyers, then gold is redeemed and the company must then sell the gold equivalent.

Gold is a tool for investors and for traders looking for gold exposure or as a way to hedge other gold positions. The result can be rough violent price action.

Expense ratios can range from 0.25% to 0.50% and your value erodes the longer you hold the shares. The fund must sell gold, for example, periodically to pay for expenses which decreases the amount of gold allocated to each share.

There are also two types of gold stored in the ETFs, allocated and unallocated. Allocated gold is the bullion held by the custodian, big banks. Custodians provide a bar list of all the individual allocated bars daily and are typically audited twice a year, paid for by the sponsor, by an independent party like Inspectorate International.

Unallocated gold relates to authorized participants like JPMorgan or Goldman Sachs who trade gold futures. Futures contracts are often bought if the trustee needs to create new shares fast and doesn't have the time to buy and deliver the bullion. Typically allocated gold far outweighs the unallocated gold and the amounts are tallied each day by the custodian. The ETF also has a set amount of time when it must deliver the physical gold into the vault.

Because you own shares and not the physical metal, precious metal ETFs may be sold short, so two people can own the same "gold" -- the original owner and the investor who is borrowing the shares. Although baskets of shares are allocated to specific gold bars, which can be found in the ETF's prospectus, an investor must share ownership.

Profits made on investments in physically backed ETFs are also taxed like collectibles, at around 28% -- an investor gets taxed as if he owned bullion, when in reality he just owns paper.

There is the possibility of redeeming shares for physical gold, but that arrangement is conducted with brokers and is typically more difficult. Investors have to redeem in huge lots, like 500,000 shares, not really viable for the retail investor.

ETFs are also very controversial. Many complain that investors can't know if their gold really exists. Also, if a bank storing the gold fails, the ETF, aka investor, becomes a creditor.

There are other types of ETFs.

If you want the opportunity of redeeming your shares for gold, another option is Sprott Physical Gold Trust ETV (PHYS), which is a closed-end mutual fund that gives investors the option of trading in their shares for 400-ounce gold bars.

The fund can trade at a huge premium or discount to its net asset value at any time and has higher fees, making it more expensive to invest in. An investor can obtain physical gold on the 15th of every month, although the holder has to make transportation and storage arrangements.

There are also two other ETFs to consider. Market Vectors Gold Miners (GDX), a basket of large-cap mining stocks. and Market Vectors Junior (GDXJ), a group of development-stage miners. They both have market caps of $150 million or more and have traded at least 250,000 shares per month for six months.

3. Gold ETNs

If you want more risk, try exchange-traded notes, debt instruments that track an index. You give a bank money for an allotted amount of time and, upon maturity, the bank pays you a return based on the performance of what the ETN is based on, in this case the gold futures market. Some of the more popular ones are UBS Bloomberg CMCI Gold ETN (UBG), DB Gold Double Short ETN (DZZ_), DB Gold Short ETN (DGZ) and DB Gold Double Long ETN (DGP).

ETNs are like playing the futures market without buying contracts on the Comex. ETNs are flexible, and an investor can trade them long or short, but there is no principal protection. You can lose all your money.

4. Gold Miner Stocks

A riskier way to invest in gold is through gold-mining stocks. Mining stocks can have as much as a 3-to-1 leverage to gold's spot price to the upside and downside.

Gold miners are risky because they trade with the broader equity market. Some tips to consider when picking gold stocks are to find companies with strong production and reserve growth. Make sure they have good management and inventory supported by either buying smaller-cap companies or by maintaining consistent production.

Global gold production has been declining since 2001, only recently experiencing more juice, and big miners keep their gold reserves flush by buying or partnering with small-cap companies, which are in the exploration or development stage.

Many investors make the mistake of buying small gold miners that are in the exploration phase with no cash flow. Picking among these stocks is like buying a lottery ticket, very few companies actually strike gold and become profitable. Even fewer become takeover targets.

With gold prices high, gold companies can make more for every ounce of gold they produce, but their net profits depend on their cash costs; how much it costs them to produce an ounce of gold. Those factors vary from company to company and are subject to currency issues, energy costs and geopolitical factors.

Adam Graf, director of emerging miners for Dahlman Rose & Co., models 50 companies on a forward basis using forward curves. "On a theoretical basis, if gold moved up $100 an ounce, what does the change in the current value do based on what the forward looking cash flow should do."

Another factor to consider when picking gold stocks is how quickly the company will benefit from higher prices. Randgold Resources (GOLD_), a miner in Africa, is almost 100% correlated to gold prices. CEO Mark Bristow says that the company benefits from gold prices in almost two days.

You also have to buy the right amount of gold stocks. J.C. Doody, editor of goldstockanalyst.com, bets on 10 gold stocks because it allows him to take some risk with explorers or junior miners as well as get the safety from a major.

"Frankly there aren't 30-40 stocks in the gold space worth buying," says Doody who would rather be heavily invested in 10 than over invested in 2 and under invested in 40. "If you've got too many the best you're going to be is a mediocre mutual fund and if you have too few you're just taking on too [much] risk."

If you do go the gold stock route, you have to be prepared for the rollercoaster ride.

Leverage swings both ways so if the gold price drops 10%, gold stocks can plummet 20%-30%. Investors often get too spooked too fast and wind up selling out of gold stocks at the wrong time.

"It inhales and exhales 20-30% at least once or twice a year," says Pratik Sharma, managing director at Atyant Capital who urges investors to not get spooked by volatility. "Ultimately what you have to realize 5-6-7%... these things are meaningless when you have a sector that moves 20-30% several times a year on the downside."

There is always time to buy gold, you just have to know your ABCs before you start.

--Written by Alix Steel in New York.

Four Ways to Invest in Gold

Investing part of your portfolio in the yellow metal is one thing, deciding how is quite another. These are four popular options.

(a) Let's Get Physical

Pros: Buying bullion or gold coins is the most direct exposure to the physical asset an investor can get.

Cons: In anything but very small quantities, the need to store and insure physical gold, and the transaction fees associated with buying and selling it, represent hidden costs than can really add up, particularly for high net worth investors trying to put a portion of their portfolio in the metal.

(b) Crystal Ball Bets

Pros: No counterparty risk (The CME Group’s CME Clearing, for instance, matches and settles all metals trades on the exchange and guarantees the creditworthiness of every transaction in its markets), and huge liquidity.

Cons: Cost is once again a factor, and leverage can also be a concern. A $5,000 margin account gets the right to buy or sell futures on up to 100 oz. of gold (miNY and E-mini gold futures are other options that are smaller and require less margin) at 25 times leverage.

(c) Digging For Winners

Pros: Mining stocks are a way to leverage higher gold prices through corporate operations. The cost of extracting an ounce of gold from the Earth varies by country and company, but is generally well below the current trading prices.

Cons: Buying shares of a company rather than the metal itself, futures or ETFs, exposes an investor to operating risk and the possibility that management mistakes, an acquisition gone bad or some type of mining snafu will cause share prices to decline even while gold itself climbs.

(d) Exchange-Traded Treasure

Pros: GLD and its ilk are a less-expensive way to get gold exposure than holding the physical metal and more suitable for inexperienced investors than futures markets. Separately, funds like the Market Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) are a more diversified way to bet on miners than single stocks.

Cons: Skeptics have raised concerns GLD’s secrecy surrounding its hoard of gold in HSBC’s London vault, while the mining ETFs are just as subject to the whims of the broader equity market as they are to the price of gold. 

Gold Trading Company: Types of Gold Investment Opportunities

Investment expert Jonathan Yates of the Small Cap Network wrote in his article entitled, ‘Profit from Mining Stocks as Gold Rises’ that as gold prices continue to rise ($1837.20/oz) gold mining and exploration stocks become compelling investment opportunities. In the Wall Street Journal, BHP Billiton’s chief Executive Marius Kloppers explained that because of production shortfalls at mines gold prices and profits for investors will remain high. Nick Santiago of IntheMoneyStocks.com agrees, stating, “Gold and gold mining stocks are taking off to the upside.”

Procuring shares in gold mining companies is one investment option but if you want to increase your gold, approach a gold trading company and they will be able to help you include more gold in your investment portfolio.

Some Gold Options:

From time to time gold has been touted as a ‘solid’ investment. As the economy goes through the turbulence it is currently experiencing, even as gold is on a meteoric rise, one should gain a thorough understanding of the options before spending any savings.

Bullion: bullion bars and coins is done with the hopes of trading at the right moment when gold prices are high to gain from the situation. But it is much more complex than it looks. Firstly, the gold market is highly dynamic and as there is constant shift one must be able to predict its movement before buying or selling so as to not incur a loss. This takes a lot of study and research to understand and yet there are risks, such as in every investment opportunity. These risks can be mitigated by holding for the long-term and not treating physical gold as a trade.

Numismatics: these are coins that have been minted as currency or proof coins or even artifacts that have historical significance. This may also help you gain profit and these values are guided by rarity, historical significance, circulation, condition etc.

Certificates: Rather than storing physical gold and incurring the cost of storage and the risk of theft, some people invest in gold certificates. These are certificates of ownership that the bank gives for allocated and unallocated gold. The unallocated ones are a type of fractional reserve banking practice.

Mutual Funds: Mining companies that are involved in the mining and exploration of gold offer shares to investors and pay them dividend. The preference in such scenarios is senior stock gold as a senior is a company that is well established for a number of years. The share prices are dependent on gold prices, the company’s performance and fluctuations in the market per se.

Futures: This is a complex and high risk investment that experts indulge in. It allows them to speculate, but the gains and losses involved are high. The terms of the deal are set but the amount is not paid completely and the gold is not delivered, so the speculation can allow for larger investments and bigger risks.

ETFs: Just like ordinary stock, this gold investment option can be traded on a stock exchange. The portfolio is fixed and that makes exchange easy and at low cost. These are highly liquid, passively managed mutual funds that are designed to give similar results as physical gold. But are more expensive in the long run than physical gold so therefore are usually treated as a short-term trade vehicle.

The smallest fluctuations in the gold market can impact investment portfolios that contain gold, immensely. Evaluate the opportunity shrewdly before making any investment. There are risks and hazards as in any other investment option. Decide beforehand based on your understanding and expertise, the amount you are willing to invest, a reliable gold trading company to help you along the way and your establish your goals and objectives. Be wary of opportunities that seem too lucrative to be true, remember all that glitters is not gold.

Protect Your Nest Egg Invest in Gold

Types of Gold Investment

Committing in Goldis undoubtedly secure and successful to a certain level. Although the profit is probably not as high as that of stock stocks, Goldis not subject to the go up and down variation as the stocks. In other words, Goldfinancial commitment is constant, not affected by any negative situation of politic or economic climate of a country. In general, there are a couple of the most common types of purchases which are gold and money. To be exact, the money are by means of 'certified unusual Goldcoins' and the gold is by means of 'modern bullion'. Considering their size, both types of Goldcan be actually kept in a secure put in box, and both products can become forcefully ideal resources.

The accredited unusual money are the best option for a extensive run financial commitment. Because they are positioned and accredited by an approved third party, the value is now getting greater. The less likely the money, the greater the price, and this is why money enthusiasts would do anything to have them. With the legal organizations established to ensure the cleanliness and validity of money, a large network of approved sellers has been managed. This way, enthusiasts must have secure collection of genuine and positioned money. Having the genuine and positioned money is really good for a extensive run financial commitment with all the documentation that goes along with them.

In comparison, when you are in a situation of wanting a Goldfinancial commitment for a quick, then you are recommended to have the contemporary gold type of financial commitment. The contemporary gold Goldfinancial commitment is said to be the best option for quick financial commitment because it is liquefiable around the community immediately and it has low purchase top quality. This is made possible because the Goldhas been hit and confirmed by certain major companies. The resources around the world and the low rates are the reasons why contemporary Goldgold is the beautiful quick financial commitment.

It was probably hard to imagine a while ago that you can do a lot of purchase from home without actually looking at or having the investment in hand. It even was difficult, especially with the famous info 'cash and carry'. Today, although traditional marketplaces do still exist actually, on the internet marketplaces are even more plentiful and far larger, masking the entire world! Any investment can be promoted and bought on the internet, of course with the believe in as the basis of the business. This also relates to precious metal. Whereas Goldhas been mostly known as useful investment which is usually ordered in traditional market, it is now also available on the internet.

6 Types of Gold Coin Investment For Maximum Return

Awareness about how to invest in gold coins could offer you diversification in your investment profile. The knowledge offers an ability to increase your collection.

Since there are multiple ways a gold investor can think of, this could cause confusion. Here we would like to discuss about various options available in Gold coin Investment which will help you to decide and proceed with a decent knowledge for investment.

1. Gold Bullion Bars and Ingots

Whenever people hear about Gold Bullion bars they imagine big gold bars stored in vaults, kept in large safes. The reality is gold bullion bars are available in different sizes. The size or weight which suits an investor he opts the same. Typically gold bars are measured in troy ounce. Some of the common sizes gold bars are are 10, 100 troy ounce onwards.

Gold vendors sell gold bars as per the percentage for the gold price. This means smaller gold bars cost higher premium for an investor. Small gold bars are generally the preferable choice for organizations looking for bigger gold investment. Not the biggies but Small investors are also buying gold.

2. Bullion Gold Coins

There are many strong reasons to own gold that is why government bodies and even private organizations make gold bullions in a round shape just like a coin. These are intentionally mint for investment, So these only appear as coins and carry no monetary value. The value of such gold coins is only because of the yellow metal content in it , not because of government’s acceptance. So they cannot be released for circulation in any Country’s economy. Gold coins weigh from 1/25 troy ounce to bigger sizes as 5 troy ounce.

3. Common U.S. Gold Coins 

One of the more famous ways to invest in gold coins is to find and purchase U.S. Gold coins made in or  before 1933. Since that period gold coins were available in the economy for circulation. However due to some reasons President called back all gold coins to return. Many gold collectors still did not returned their coins to the government and are still available in the market for gold coin collectors.

4. Modern U.S.A. Commemorative Gold Coins

In the year 1982 the U.S. Government resumed their routine coin program. After that in 1984 a gold coin was created as a mark of 13th Olympiad games in Los Angeles. However such coins were not intended for circulation and does carry  high numismatic value. The U.S.A. Mint continued to release such coins as many other sports event carried out afterwords. Those who are interested in commemorative Gold coins can directly purchase it from the United States Mint.

5.Foreign Gold Coins

This could be surprising to some reader that foreign origin gold coins are available in the market and can be selected as investment. Such gold coins are still available in circulation but difficult to find from gold dealers. Still keen coin collectors can find ways to discover such Foreign gold coins. The rarity causes dramatic variations in the prices. These gold coins belong to countries like Mexico, Britain, Austria and many other. gold coin investment is a profitable deal so before purchasing such coins one needs to enquire from an expert on foreign coins.

6. Rare U.S. Gold Coins

An naive investor needs to be aware about the fact that there are many coins that have lower mintage values but higher demand among collectors. As a result these coins carry high numismatic premiums above the real value of metal contained in these coins. In one of our earlier posts we have listed top 10 rare gold and silver coins for investment, the list could be helpful for you to select the rare gold coin you are looking for.

Top Online Stock Trading Sites

Online stock trading sites offer investors access to a variety of tools and research that just a few years ago were only available through full service brokerage accounts.

There are many online stock trading sites to choose from, but narrowing down the field may seem time consuming and overwhelming.

Here are thirteen of the top-rated online stock trading sites that continually show up on just about every list of the best.

Ultimately, your choice is a personal one based on a number of factors and how you rank them in importance.

Not every online stock trading site on this list will work for you because some are stronger in one area, while weaker in another.

All of these sites encourage you to browse through their pages, although some parts will be off limits unless you have an account.

Here are online stock trading sites you should consider:

Charles Schwab

Schwab is the granddaddy of discount brokerage and is carrying this tradition to its online offering - although it is looking more like a traditional brokerage all the time. It offers its own research and clients can work with an investment advisor or Schwab will manage their account for them.

E*Trade

E*Trade gets high marks for its range of offerings including banking and mutual funds. The company has absorbed several other brokerage firms and is now a significant player in the online stock trading market. Like its competitors, active traders get lower rates on their trades.

Fidelity

Fidelity shows up at the top or near the top of almost every ranking of online stock trading brokers. They are not the least expensive, but top most lists in customer satisfaction. Fidelity is known for its research and investors can talk to advisors face-to-face at one of the many Fidelity investment centers.

Firstrade

One of the advantages of a brokerage account is consolidating your investment activity in one account cutting down paperwork. Firstrade topped a survey by Kiplinger as the online stock trading broker offering the most no-load mutual funds without a transaction fee.

Muriel Siebert

Muriel Siebert may not have the marketing muscle of other online stock trading sites but it is a solid brokerage house worth your look. The company receives high marks for customer service and research. The fee structure is straightforward and easy to understand.

OptionsXpress

Despite its name, this online stock trading site offers accounts that trade just about any type of security you want including options, stocks, mutual funds, exchange traded funds, futures and more. This site is easy to use and gets to the point. Not the cheapest, but tops in functionality.

Scottrade

Scottrade’s claim to fame is superior customer satisfaction as noted in J.D Power and Associates survey of online brokers. Commissions are on the low side and transactions are processed quickly.

TD Ameritrade

TD Ameritrade is another brokerage that is the result of mergers (Ameritrade was one of the merged companies and it has been around for a number of years). The company has a large selection of mutual funds and is noted for its responsiveness to customer inquiries.

Thinkorswim

This is a newcomer to the online stock trading scene, but worth checking out if you’re interested in something different. The site is not like any of the others, but Barron’s gives it extremely high marks, so despite its quirkiness, there’s plenty of substance.

TradeKing

TradeKing is the online stock trading site to checkout for low cost trading. This is their thing and SmartMoney.com, Barron’s and Kiplinger all agree. If you are looking for the best prices on trades, this is the place to start.

Vanguard

Vanguard made a name for itself at the low-cost leader in mutual funds. Vanguard is a solid company that excels in providing value to their customers and in consolidating investments in a brokerage account.

WallStreet*E

WallStreet*E combines low commissions with a broad range of web-based services to appeal to investors who want an integrated approach to investing and banking. The company offers a variety of online banking products and other services that will appeal to those who want to see their whole financial picture.

Wells Fargo

The financial services powerhouse Wells Fargo has an online stock trading site that fits it image of comprehensive services. You are offered five different levels of accounts depending on whether you want a strictly independent trading account or a version of their managed accounts. Investors looking for a single place to find all their financial services will find Wells Fargo a good place to start.

Conclusion

Online stock trading sites offer investors a wide range of tools, research and services.

Finding the right one for your style of investing and that meets your needs is a matter of visiting the sites to get a feel for the interface.

Pay attention to the fee structure and how it works with your trading style. If you are an infrequent trader, look for maintenance or inactivity fees.

If you want advice, see how that affects your trading costs.

Many of these sites will let you open a demo account, which will give you an idea how the real thing works.

How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

Price patterns are identifiable sequences of price bars that appear in technical analysis charts. These patterns can be used by technical analysts to examine past price movements and predict future ones for a particular trading instrument. Readers should already be familiar with trendlines, continuation price patterns and reversal price patterns. (If you aren't, check out Introduction To Technical Analysis Price Patterns.) In this article, we will explore how to interpret the patterns once they have been identified, and examine the rare but powerful triple tops and bottoms patterns.

Duration

The duration of the price pattern is an important consideration when interpreting a pattern and forecasting future price movement. Price patterns can appear on any charting period, from a fast 144-tick chart, to 60-minute, daily, weekly or annual charts. The significance of a pattern, however, is often directly related to its size and depth. 

Patterns that emerge over a longer period of time generally are more reliable, with larger moves resulting once price breaks out of the pattern. Therefore, a pattern that develops on a daily chart is expected to result in a larger move than the same pattern observed on an intraday chart, such as a one-minute chart. Likewise, a pattern that forms on a monthly chart is likely to lead to a more substantial price move than the same pattern on a daily chart. 

Price patterns appear when investors or traders become used to buying and selling at certain levels, and therefore, price oscillates between these levels, creating patterns such as flags, pennants and the like. When price finally does break out of the price pattern, it can represent a significant change in sentiment. The longer the duration, the harder buyers will have to push to break above an area of resistance (and the harder sellers will have to push to break below an area of support), resulting in a more formidable move once price does break in either direction. Figure 1 shows a pennant price pattern that formed on the weekly chart of Google (NYSE:GOOG). Once price continued in its established direction, the upward move was substantial. 

Figure 1: GOOG continues a significant uptrend following this well-formed pennant that formed on a weekly chart.

Volatility

Similarly, the degree to which price fluctuates within a price pattern can be useful in analyzing the validity of a price pattern, as well as in predicting the magnitude of the eventual price breakout. Volatility is a measurement of the variation of prices over time. Greater price fluctuations indicate increased volatility, a condition that can be interpreted as a more active battle between the bears, who are trying to push prices down, and the bulls, who are trying to thrust prices up. Patterns exhibiting larger degrees of volatility are likely to result in more significant price moves once price breaks out of the pattern. (To learn how to calculate volatility, see A Simplified Approach To Calculating Volatility.) 

Larger price movements within the pattern may signify that the opposing forces – the bulls and the bears – are engaged in a serious battle, rather than a mild scuffle. The greater the volatility within the price pattern, the more anticipation builds, leading to a more significant, possibly explosive, price move as price breaches the level of support or resistance. 

Volume

Volume is another consideration when interpreting price patterns. Volume signifies the number of units of a particular trading instrument that have changed hands during a specified time period. Typically, a trading instrument's volume is displayed as a histogram, or a series of vertical lines, appearing beneath the price chart. Volume is most useful when measured relative to its recent past. Changes in the amount of buying and selling that is occurring can be compared with recent activity and analyzed: any volume activity that diverges from the norm can suggest an upcoming change in price. 

If price breaks above or below an area of resistance or support, respectively, and is accompanied by a sudden increase in investor and trader interest - represented in terms of volume - the resulting move is more likely to be significant. The increase in volume can confirm the validity of the price breakout. A breakout with no noticeable increase in volume, on the other hand, has a far greater chance of failing since there is no enthusiasm to back the move, particularly if the move is to the upside. 

Guidelines for Interpreting Patterns

Three general steps help technical analysts interpret price patterns:

• Identify: The first step in successfully interpreting price patterns is to identify valid patterns in real time. The patterns are often easy to find on historical data, but can become more challenging to pick out while they are forming. Traders and investors can practice identifying patterns on historical data, paying close attention to the method that is used for drawing trendlines. Trendlines can be constructed using highs and lows, closing prices, or another data point in each price bar.
• Evaluate: Once a pattern is identified, it can be evaluated. Traders and investors can consider the duration of the pattern, accompanying volume and the volatility of the price swings within the price pattern. Evaluating these can give a better picture regarding the validity of the price pattern.
• Forecast: Once the pattern has been identified and evaluated, traders and investors can use the information to form a prediction, or to forecast future price movements. Naturally, price patterns do not always cooperate, and identifying one does not guarantee that any particular price action will occur. Market participants, however, can be on the lookout for activity that is likely to occur, enabling them to respond quickly to changing market conditions. 

Triple Tops and Bottoms

Triple tops and bottoms are extensions of double tops and bottoms. If the double tops and bottoms resemble "M" and "W," the triple tops and bottoms bear a resemblance to the cursive "M" or "W": three pushes up (in a triple top) or three pushes down (for a triple bottom). These price patterns represent multiple failed attempts to break through an area of support or resistance. In a triple top, price makes three tries to break above an established area of resistance, fails and recedes. A triple bottom, in contrast, occurs when price makes three stabs at breaking through a support level, fails and bounces back up. 

A triple top formation is a bearish pattern since the pattern interrupts an uptrend and results in a trend change to the downside. Its formation is as follows:

• Prices move higher and higher and eventually hit a level of resistance, falling back to an area of support.
• Price tries again to test the resistance levels, fails and returns towards the support level.
• Price tries once more, unsuccessfully, to break through resistance, falls back and through the support level.

This price action represents a duel between buyers and sellers; the buyers try to lift prices higher, while the sellers try to push prices lower. Each test of resistance is typically accompanied by decreasing volume, until price falls through the support level with increased participation and corresponding volume. When three attempts to break through an established level of resistance have failed, the buyers generally become exhausted, the sellers take over and price falls, resulting in a trend change. 

Triple bottoms, on the other hand, are bullish in nature because the pattern interrupts a downtrend, and results in a trend change to the upside. The triple bottom price pattern is characterized by three unsuccessful attempts to push price through an area of support. Each successive attempt is typically accompanied by declining volume, until price finally makes its last attempt to push down, fails and returns to go through a resistance level. Like triple tops, this pattern is indicative of a struggle between buyers and sellers. In this case, it is the sellers who become exhausted, giving way to the buyers to reverse the prevailing trend and become victorious with an uptrend. Figure 2 shows a triple bottom that developed on a daily chart of McGraw Hill (NYSE:MHP). 

Figure 2: A triple bottom forms on the daily McGraw Hill chart, leading to a trend reversal.

A triple top or bottom signifies that an established trend is weakening, and that the other side is gaining strength. Both represent a shift in pressure: with a triple top, there is a shift from buyers to sellers; a triple bottom indicates a shift from sellers to buyers. These patterns provide a visual representation of the changing of the guard, so to speak, when power switches hands. 

Bottom Line

Price patterns occur on any charting period, whether on fast tick charts used by scalpers or yearly charts used by investors. Each pattern represents a struggle between buyers and sellers, resulting in the continuation of a prevailing trend or the reversal of the trend, depending on the outcome. Technical analysts can use price patterns to help evaluate past and current market activity, and forecast future price action in order to make trading and investing decisions.

Why Interest Rates Matter For Forex Traders

The biggest influence that drives the foreign-exchange market is interest rate changes made by any of the eight global central banks. These changes are an indirect response to other economic indicators made throughout the month, and they possess the power to move the market immediately and with full force. Because surprise rate changes often make the biggest impact on traders, understanding how to predict and react to these volatile moves can lead to quicker responses and higher profit levels. 

Interest Rate Basics

Interest rates are crucial to day traders on the forex market for a fairly simple reason: the higher the rate of return, the more interest accrued on currency invested and the higher the profit. 

Of course, the risk in this strategy is currency fluctuation, which can dramatically offset any interest-bearing rewards. It is worth stating that while you may always want to buy currencies with higher interest (funding them with those of lower interest), it is not always a wise decision. If trading on the forex market were this easy, it would be highly lucrative for anyone armed with this knowledge. 

That isn't to say that interest rates are too confusing for the average day trader; just that they should be viewed with a wary eye, like any of the regular news releases. 

How Rates Are Calculated

Each bank's board of directors controls the monetary policy of its country and the short-term rate of interest at which banks can borrow from one another. The central banks will hike rates in order to curb inflation, and cut rates to encourage lending and inject money into the economy. 

Typically, you can have a strong inkling of what the bank will decide by examining the most relevant economic indicators, namely: 

• The Consumer Price Index (CPI)
• Consumer spending
• Employment levels
• Subprime market
• Housing market

Predicting Central Bank Rates

Armed with data from these indicators, a trader can practically put together an estimate for the Fed's rate change. Typically, as these indicators improve, the economy is going well and rates will either need to be raised or, if the improvement is small, stay the same. On the same note, significant drops in these indicators can mean a rate cut in order to encourage borrowing. 

Outside of economic indicators, it is possible to predict a rate decision by:

• Watching for major announcements
• Analyzing forecasts

Major Announcements
Major announcements from central bank heads tend to play a vital role in interest rate moves, but are often overlooked in response to economic indicators. That doesn't mean they are to be ignored. Any time a board of directors from any of the eight central banks is scheduled to talk publicly, it will usually give an insight into how the bank views inflation. 

For example, on July 16, 2008, Federal Reserve Chairman Ben Bernanke gave his semiannual monetary policy testimony before the House Committee. At a normal session, Bernanke reads a prepared statement about the U.S. dollar's value, as well as answers questions from committee members. At this session, he did the same. 

Bernanke, in his statement and answers, was adamant that the U.S. dollar was in good shape and that the government was determined to stabilize it even though fears of arecession were influencing all other markets. 

The 10am session was widely followed by traders, and because it was positive, it was anticipated that the Federal Reserve would raise interest rates, which brought a short-term rally by the dollar in preparation for the next rate decision. 

Figure 1: The EUR/USD declines in response to Fed\'s monetary policy testimony
Source: GCM

The EUR/USD declined 44 points over the course of one hour (good for the U.S. dollar), which would result in a $440 profit for traders who acted on the announcement. 

Forecast Analysis
The second useful way to predict interest rate decisions is through analyzing predictions. Because interest rates moves are usually well anticipated, brokerages, banks and professional traders will already have a consensus estimate as to what the rate is. 

Traders should take four or five of these forecasts (which should be very close numerically) and average them in order to gain a more accurate prediction. 

What to Do When a Surprise Rate Occurs

No matter how good your research is or how many numbers you have crunched before a rate decision is made, central banks can throw a curve ball and knock all predictions out of the park with a surprise rate hike or cut. 

When this happens, you should know which direction the market will move. If there is a rate hike, the currency will appreciate, which means that traders will be buying it. If there is a cut, traders will probably be selling it and buying currencies with higher interest rates. Once you have determined this:

• Act quickly! The market tends to move at lightning speeds when a surprise hits, because all traders vie to buy or sell (depending on hike or cut) ahead of the crowd, which can lead to a significant profit if done correctly.
• Be aware of a volatile trend reversal. A trader's perception tends to rule the market at the first release of data, but then logic comes into play and the trend will most likely continue on in the way it was going.

The following example illustrates the above three steps in action.

In July 2008, the Bank of New Zealand had an interest rate of 8.25% - one of the highest of the central banks. The rate had been steady over the previous four months, as the NZD was a hot commodity for traders to purchase due to higher rates of return. 

In July, against all predictions, the board of directors cut the rate at its monthly meeting to 8%. While the quarter-percentage drop seems small, forex traders took it as a sign of the bank's fear of inflation and immediately withdrew funds, or sold the currency and bought others - even if those others had lower interest rates.

Figure 2: The NZD/USD drops in response to a rate cut by the Bank of New Zealand
Source: GCM

The NZD/USD dropped from .7497 to .7414 - a total of 83 points, or pips, over the course of five to 10 minutes. Those who had sold just one lot of the currency pair gained a net profit of $833 in a matter of minutes.

As quickly as the NZD/USD degenerated, it wasn't long before it got back on track with its current trend, which was upward. The reason it didn't continue free falling was that even though there was a rate cut, the NZD still had a higher interest rate (at 8%) than most other currencies. 

As a side note, it is import to read through the actual central bank press release (after determining whether there has been a surprise rate change) to gain understanding of how the bank views future rate decisions. The data in the release will often induce a new trend in the currency after the short-term effects have taken place. 

The Bottom Line 

Following the news and analyzing the actions of central banks should be a high priority to forex traders because as they determine their region's monetary policy, currency exchange rates tend to move. As currency exchange rates move, traders have the ability to maximize profits - not just through interest accrual from carry trades, but also from actual fluctuations in the market. Thorough research analysis can help a trader avoid surprise rate moves and react to them properly when they inevitably happen.