Is Forex trading profitable?

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Onprofitability: a definition

In the business world, an economic activity is profitable if it’s able to generate earnings relative to the associated expenses. In other words, profitability is basically the ability of making monetary gains from a given activity. In the financial world, on the other hand, profitability is often related to the ability of generating a positive risk-adjusted-return at a given point of time, even consistently over time.  Given the first definition, it’s safe to assume that the Foreign Exchange market is profitable since it is clear that is possible to make money in the market, otherwise, it wouldn’t exist according to basic economic laws. Naturally, this is only taking the ability of making positive net gains into account, bringing risk into the picture makes our question a little bit trickier since it is known that the Forex market is particularly risky, which means that the chance of having an actual return differing from the expected outcome return is not negligible. In other words: you can lose money easily on Forex, especially if you’re not skilled enough.

Facing the reality: Forex is not a magic alternative

The internet is full of promises claiming the ability of making impossible returns with minimum effort. Those scams are not exclusive of the Forex market, however, it’s a fact that they are common in the industry. Reality is that Forex is like any market, having the proper skills and the determination of taking the necessary amount of risk to generate profits is essential, and despite all of that, making surreal profits in a reduced time span (way higher than those of skilled Hedge Funds) is not a possibility.

Proper trading strategies and risk aversion

Like any market, having success in Forex is related to the quality of the involved trading strategies and the behavior of the investor. Both are important components in the making of a successful trader in any market, and both require concessions, time and money. Acquiring the ability to make the right decisions, designing proper trading strategies and being able to manage the risk properly takes time and a huge amount of effort, besides that, a proper behavior is required, if you are a Risk Averse investor this might not be the right option for you if your purpose is making economic gains, since is a fact that profits are proportional to the amount of risk the investor is willing to take. It’s also important to get a proper training and to have access to the right information, since (as we just said) the internet is full of scams and empty promises.

Coming back to the initial question: is Forex profitable?

Like many things in life, the answer depends on who you ask. If you ask an investor who has been trading successfully for years after spending a considerable amount of time and money the answer is probably going to be positive, otherwise, he wouldn’t invest his time and efforts in such activity. On the other hand, if you ask an unexperienced risk averse investor you might get a negative answer, since (as we stated above) Forex is not a magic mechanism and being successful requires effort. The best first step is to find the right forex broker for your needs with a recommended website CompareForexBrokers.com.

 

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Money Lies That You Probably Believe

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Truly, these lies may be holding you back from financial success.

I DO NOT NEED TO SAVE A LOT FOR RETIREMENT

In is evident that many senior citizens work beyond their 70’s. To survive their daily expenses, some Singaporean seniors acquire odd jobs. With this environment, you probably think that you can continue working beyond your retirement years. However, humans are subject to their declining health over time.

A senior adviser at a wealth management firm, Mr. Ken Moraif, once elaborated how dangerous it is to work for a lifetime. “With no savings, if our health fails, we not only have lost our income but we now also have a large expense.” The combination of these two factors can trap you into a bad financial situation.

LOW-INTEREST SAVINGS ACCOUNT IS AN INVESTMENT

When you think of savings, what is the first thing that pops into your mind? Is it a savings account or an emergency fund? Well, thinking that your stored cash is an investment is somewhat wrong.

Having excess cash to fulfill your emergency and living expenses is great. But, do not rely too much on your low-interest savings account. The value of your money kept there may decrese over time due to inflation. What shall you do instead? For starters, you may put a decent amount of your money into basic investment vehicles such as a mutual fund. Do your research!

I WILL BE EARNING MORE MONEY IN THE FUTURE

Do you plan for your future operating under a faulty assumption that your gross income will increase? I mean, it is basic Maths right? You get promoted as time passes. For some, believing these things can actually turn into a reality. How about others who stay in a position for a decade or so?

Believing that you will earn more money in the future without actual basis can lead to major purchases that you cannot afford. Can you really buy another HDB flat or a new car?

Image Credits: pixabay.com

We all want to assume that we will compensated as time goes on, but there are no guarantees! Your company may start laying off workers or even dissolve. Moreover, a critical illness may halt your career. To achieve financial freedom, it is better to stay within your means. This way, you can treat any pay increases as bonuses.

FRUGALITY IS ENOUGH TO SAVE YOU IN THE FUTURE

I considered myself as a frugal being once. Then, certain life problems came my way. My mother had an operation, which occurred simultaneously with our home renovation. My savings account became significantly slimmer afterwards. I realized that frugality alone cannot make a positive difference. I need to find a way to expand my opportunities to continue growing my wealth.

Directing all your energy towards ingenious ways to limit your expenses can limit your life. Instead, consider frugality (i.e., a means to eliminate waste) as a long-term financial goal. For instance, you may lessen your trips to Starbucks due to the free coffee provided by your workplace.

I AM NOT WEALTHY ENOUGH TO INVEST

It is common to perceive yourself as a person without the ability to invest. If you have money to satisfy your regular thirst for Starbucks then, you have enough money to invest. If you spend your money on designer watches then, you have enough money to invest. Do not get me started with spending your money on trendy Netflix or hefty shoes!

Image Credits: pixabay.com

The key to financial freedom is not how you perceive the prowess of your money, but how you spend it. You will find that you have sufficient funds to invest when you prioritize your long-term goals over buying unnecessary material goods.

Sources: 1 & 2

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Financial Trading: Why is Known Risk the Best Risk?

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No, this is not some sort of elaborate psychological test or a thought exercise. It a genuine question, do you know why known risk is the best type of risk?

Well, let’s use a hypothetical scenario: you are sitting on a park bench on a cool spring day, what would be more dangerous – a brick falling from an adjacent building that you are completely unaware of or a brick headed in your direction, that you have seen with enough time to avoid.

A risk that is known, is preferable than a risk that is unknown – very simply…because you can avoid risk you know about. This is the genius behind easyMarkets latest product – easyTrade – but it’s not the only feature this innovative and surprisingly smart way to trade offers.

Known Risk, Fewer Problems

Because of the underlying financial product easyTrade is based on – vanilla options – it also allows clients to trade without margin requirements. Margin, if you are unfamiliar is the minimum amount in a trader’s account necessary to trade with leverage – if the account goes below that required amount, trades start closing until it is reached again. This could include profitable trades. Another problem “margin stop out” could create when trading is your position (trades) closing and then shortly after the price recovering.

Another benefit which is similar to the advantage no margin trading offers, stop out is also not needed due to the known maximum risk. Stop out is a risk management tool that allows you to set a level at which your trade will close if you are incurring losses. This carries the same danger as margin stop out though – a change in the price’s direction could potentially close your trade. This isn’t a problem if the rate (price) continues going against your trade, but it can be very damaging if the price recovers. Again, this is due to having known risk and no need for risk management tools you would use if your risk was unknown.

Quickly React

Many traders seek robust ways to trade, that give them immeasurable options and tools. Although these are undeniably robust, they can be a hinderance when you want to react quickly. If you are a trader you know that those slight few seconds are important to make or break a trade. If you aren’t a trader – then let me inform you – markets never sleep, they are in constant flux and a few minutes can make a significant difference to your profit or worse your loss.

Although easyTrade can be used in a sophisticated trading system – as hedging against other trades for example – it is also exceptionally engineered for simplicity. This simplicity can translate into speed when needed. In just four steps – choose what you would like to trade, set the maximum risk you are comfortable with, decide the trade time and then choose if the price will move up or down.

Innovation, Support, Experience

easyMarkets has been in business since 2001. It was one of the very first brokers to offer negative balance protection and free guaranteed stop loss (and still offers it today along with many more tools and conditions), to help customers better manage their risk. A long time has passed since then and easyMarkets has managed to remain relevant through its constant innovation and true dedication to its clients.

Its latest innovation easyTrade which offers no margin requirements, high leverage (in a way that is still regulator compliant) and known risk is yet another great and beneficial tool offered to easyMarkets clients.

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Avoid Making These Costly Mistakes When Buying A Laptop

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For many Singaporeans, laptops have become an integral part of their lives. Saying that I cannot live without powerful device is an understatement. Without my laptop, I would be out of job. This article would not exist either! Laptops bring so much ease to our lives.

Whether you use yours for business or entertainment, laptops are easy to get. Unfortunately, this type of device can be costly! I would categorize it as a major investment. With that said, it is best to plan your purchase to avoid buyer’s remorse.

#1: GETTING THE CHEAPEST MODEL

One might think that the surefire way to save money is to buy the cheapest model available in the market. This may be easy for your wallet, but said model may not have all the necessary features. Given that the materials used in the cheapest models are found in the lower end of the spectrum, many of them lack the longevity that you crave for.

It is best to opt for a laptop that will serve all your needs. Make a list of your ideal specifications, must-have features, and other preferences. Compare this list to your viable options.

#2: SPENDING TOO MUCH

Do you really need the top-of-the-line MacBook Pro costing about S$3,488? Can the least expensive Pro (i.e., the 13-inch costs about S$1,898) satisfy your needs? Realistically speaking, some powerful desktop computers have lower prices.

Image Credits: pixabay.com

If you believe that quality depends on the price tag then, your belief may not be applicable to laptop shopping. Higher prices do not always equate to better product performances. Spending too much on a laptop can lead to buyer’s remorse. Not to mention, parts and repairs are usually more expensive for laptops than other counterparts.

#3: THINKING SIZE DOES NOT MATTER

Let us face it! Size matters when it comes to acquiring a laptop. A laptop’s size determines the design of the trackpad and the keyboard. You will most likely be cramped when opting for a device measuring less than 13 inches. Furthermore, a laptop with a bigger display allows more space to work in your desktop. Also, a “larger laptop” often gives a better viewing space and or a more expansive experience in general.

For frequent travellers, you may benefit more with small laptops such as the ultrabooks. Ultrabooks are not for everyone! Just because a product is in the front page of a tech review, does not mean that it is the best for you. A Chromebook may be cheap and portable, but it has a low storage space that will not suit the needs of a graphic designer.

#4: DISREGARDING THE ART OF “SHOPPING AROUND”

When buying a laptop or accomplishing a major purchase, it is important to do prior research. Investing your hard-earned money on the manufacturer price many not be always be a good idea. Most companies want to sell their products at top prices. Thus, you must consider shopping around.

Look for bargain deals provided by online retailers such as Amazon. Alternatively, you may hit up the nearest IT/Tech shops such as Courts and Challenger. For instance, Challenger’s www.hachi.tech offers 15% discount on the Surface laptop (T&C’s apply).

Image Credits: pixabay.com

Not to mention, the Great Singapore Sale is still on going. Imagine the beaming online and offline promotions ahead!

#5: IGNORING THE IMPACT OF THE FUTURE

At a heartbeat, you were swayed by a salesperson who highlighted the wonders of a touchscreen monitor. This new laptop may be good for now, but how about a couple of years down the road? Is a “normal” laptop more durable than its touchscreen counterpart? Think about it!

As assets, laptops move like cars. Its value plummets as time goes by! Remember that.

Sources: 1 & 2

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Easy Investing into Property backed Secured Crowdfunding

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For the newbies, debt crowdfunding is a concept where borrowers (usually SMEs) approach a crowdfunding platform for loans funded by a pool of investors. Investors earn interest, paid by borrowers, as returns on their investment. Investments are open to individuals as well as corporates with a minimum amount going down as low as $50 for smaller loan amounts.

Funding Societies, licensed and leading crowdfunding platform in Southeast Asia, backed by SoftBank Ventures Korea and Sequoia Capital, has recently introduced Property backed Secured Loans to its pool of more than 50,000 investors, providing them with more diversification opportunities. This is the third product Funding Societies has introduced since Business Term Loans and Invoice Financing.

What are Property backed Secured Loans?

Property backed Secured Loans are loans taken by companies who have pledged a local property as a form of collateral against the loan. These are local properties owned by the companies and/or Directors of the companies, and can be Residential, Commercial or Industrial. The loan amount is capped at 70% of the property value determined by independent valuers.

As an investor, you can start investing from $1,000 in this secured crowdfunding product

Why should you be excited about this product?

It is secured by property as a collateral: Funding Societies (FS) takes the first charge on the property, i.e. In the event that the property needs to be liquidated to repay the loan, FS will have the first right to access the cash after it is auctioned. Given the 70% Loan to Property Value (LTV), there is enough buffer against fluctuations in market prices that result in properties being devalued.

It’s a short-term investment: The loans are typically up to 12 months’ tenor

Fair returns for a lower-risk product: You can get up to 8% p.a. returns in your investment

Additional Diversification:Existing crowdfunding investors now have a secured loan product to further diversify their portfolios. New investors who have not invested in crowdfunding can take this opportunity to start investing.

What happens if a borrower misses out on repayments

In the case of repayment by borrowers, FS will liaise with borrowers on behalf of investors for collections. If the loan reaches defaults (defined as 90 days past payment due date), Funding Societies will pursue legally to auction the collateralized property. Proceeds from the auction will be used to repay the investors and any excess will be returned to the owners of the property.

In the rare scenario where proceeds from the auction are insufficient to repay the loan, Personal Guarantors (usually Directors of the company) and the borrowing company will be liable for the outstanding due.

TL;DR (Too Long; Didn’t Read)

Given that there is collateral security in the form of a property, Property backed Secured Loans become more secured and typically lower risk compared to other crowdfunding investment products.

For those with a lower risk appetite but still want to potentially earn a return of up to 8%, the Property backed Secured Loans is a product for you to diversify your portfolio in.

Limited Time Promotion: Receive $20 Cashback!

From now till 15 June 2018, sign up as an investor and invest at least $1,000 to be eligible for the $20 cashback. That’s an upfront 2% cashback on your investment!

Here’s how to claim the cashback:

Step 1: Sign up for your new investor account on www.fundingsocieties.com.

Step 2: **IMPORTANT!** Enter MDMAY in the Promo Code section.

Step 3: Complete your registration and activate your account.

Step 4: Invest at least $1,000 before 15 June 2018. Investment can be in one loan or across multiple loans.

Eligible investors will be notified via email of their within one month from the end of the promotion.

This article was first published on Funding Societies’ blog.

Disclaimers:

This article is contributed by Funding Societies.

It should not be construed that Moneydigest is endorsing this article or any of the products and services provided by Funding Societies.

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Funding Societies to buy or subscribe for any securities and/or investment products. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

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