Three Reasons the Rich Get Richer

Financial Planning shouldn't be hard. Unfortunately, the reason that people are not more successful with their money is that they are bombarded by financial services marketing. You are constantly being pushed to buy products from financial salespeople instead of simply copying strategies that the wealthy use to grow and protect their money.

In other words, successful financial planning must be "process-driven" instead of "product-driven".

So, what do the wealthiest 1% of the population do that the rest do not?

1. They Keep Score. If you want to manage your wealth, you need to be able to measure it. The rich are masters at getting what they want, and their number one objective is building a substantial net worth and multiple sources of income so they can shift their focus to higher-level pursuits, such as personal fulfillment, freedom and philanthropy. Wealthy people have a healthy obsession with getting what they want, which includes money. They know what their values are and know how to set goals that are achievable. Materialism is only part of their motivation; the strongest for most is the freedom to do what they want, when they want. Winners love to win, and the elation they experience after victory never gets old.

2. They Know the Rules of the Game. The wealthiest 1% of the population calculate the highest and best use of specific assets and then make a decision to buy or sell based on that calculation. Any financial decision you make must be considered thoroughly because of the impact that it has on your whole financial picture and how it may affect other assets you own. It is critical to understand asymmetric risk - minimizing your downside risk, while having a much greater upside potential. When trying to decide what financial products make sense to use in your financial plan, you just need to copy the characteristics that the wealthiest 1% of the population use in their plans and apply them to your own situation! Here are the characteristics:

• Systematic flow of money into the plan
• Superior returns on your money
• Availability of money when you need it
• Minimize taxes on accumulation of money
• Minimize taxes on distribution of money
• Easy distribution of your money
• Protection from loss due to death or disability
• Minimize potential losses of your money
• Flexibility to change your plan

3. They focus on money-making activities. Rich people focus most their attention on money-making activities they enjoy. More importantly, they understand how to use of leverage for success and wealth accumulation. Since people who successfully employ leverage accomplish exponentially more in the same amount of time than people who do not take advantage of this powerful tool, they tend to have more free time and not only greater financial resources, but more balanced and fulfilling lives. Leverage allows us to build more wealth than we could ever achieve alone by tapping on various other resources, and extend our potential "reach" beyond our personal resources (cash, time, experience etc.) via the "force multiplier" effect.

At the end of the day, one does not need to be among the richest people in America to live quite comfortably. However, to be more successful with your money, all you need to do is copy what the wealthiest people do with their money and you can be certain to have financial peace of mind.

Article Source: Here

One Daytrading System, Five Versions, Possible (Dramatic) Improvements

In today's article I would like to introduce an interesting thing on which I have spent quite some time. It's about a few simple comparisons which I believe will interest common day traders. I will indicate new possibilities on how to grasp day trading.

So, what is this about? As I have already mentioned several times in the last few months, Market Internals can be used to improve overall performance of your automated trading systems. But can it also be used by discretionary day traders?

Generally speaking, the impact of the application of Market Internals (MI) on day trading can be absolutely essential and it can really bring an "unfair" advantage against those who have never heard about MI before. One trading system can be developed into numerous versions by only integrating different possibilities of MI - and without even modifying the original system itself; without even touching it! As needed, we can, with the help of MI, improve practically anything in our system - from average profit per trade, to success rate percentage or drawdown and quality of equity.

Let's take a look at a simple trading system which I have traded discretionarily for years - the TNG method (Touch-And-Go). It is about a simple bounce from EMA 34. The system which I have used to test possibilities of MI for day traders is based on the TNG method and I have tested it in a completely automated way. This automated version of the system based on TNG allowed me to test possibilities of MI for day traders much faster, more accurately and in a simpler way. I was quite surprised how one system can bring an immense number of versions without the need to interfere with the system itself in any way!

So, as promised, let's have a look on a few demonstrations.

First of all, the basic version of the system provides a very decent equity (the TNG idea is still very powerful and universal), to my taste, with only one pattern it generates far too many trades which is taking its toll on an average profit per trade (in basic system 51 USD). A reasonable decrease of number of trades, decrease of drawdown to half (original variant of the system has a maximum DD 3500 USD), increase of average trade and possibly a slightly better equity - those would certainly be pleasant "bonuses". The good news is that all this is possible with the application of MI. What I wanted to demonstrate is the variability which the application of MI in a single system can bring - without touching the original system itself, without changing anything.

For example, one of my own MI techniques based on MI moving average managed to reduce radically the amount of trades, dramatically reduce drawdown, and adequately increase the amount of trades. And also considerably change the character of equity.

My next technique with the application of my personal MI Bollinger Band application, for change reduced the system by approximately 20% of the worse trades and contributed to an overall considerable improvement. The equity stayed the same, but it is slightly smoother, the parameters of the system improved, 20% of trades disappeared (among them some of the worst ones) - and all that without touching the original system whatsoever.

I have gained a similar reduction and similar improvement with another technique as well; a very simple one based on strong MI values.

What could be very interesting is the possible combination of both previous techniques - I believe that in such case all results would further improve.

The last demonstration comes from a different MI area, identification of optimal MI volatility and allowing the system to trade only such trades.

What could be very interesting here is to isolate the most optimal MI volatility and subsequently to apply one of the previous techniques (MI moving average or MI Bollinger) on it. All these are certainly impulses for further improvement. It is fascinating how one technique can dramatically and fundamentally influence a day trading system without the need to interfere with it.

And what is truly significant: A lot of the most important changes occurred on the level of statistics. I am not going to itemize all of them as there would really be many of them. Basically the most fundamental ones are:

- It was revealed that any parameter can be improved with one of the MI techniques; it was possible to decrease drawdown by half(!),

- What was particularly impressive - MI can be great in helping to manage the number of contracts: i.e. for example to add a contract in an especially strong situation, confirmed by Market Internals,

- MI can, in certain applications, truly help to exit the trade when the sentiment on the market dramatically changes, i.e. even before the basic stop-loss and in this way dramatically improves results,

- It is possible to dramatically increase a not very impressive avg. trade of the original system through a few MI techniques (the weakest link of the original variant of the system completely vanished).

Personally, I am continuously impressed by the possibilities of MI, especially when used in an innovative and creative way. I am surprised how few day traders are aware of this technique or how few actually use it.

MI are truly a unique technique which can have exceptional impact on your trading if used in a right innovative and creative way. Then MI are literally becoming an "unfair" advantage.

Happy Trading!

Article Source: Here

How to Use Basis in Hedging

Cash Price - Futures Price = Basis (at a specific point in time)

A producer's decision as to when and how to market their crops or livestock can have as big an impact on their net bottom line profit as any production decision they may make throughout the year. Farmers today have more marketing alternatives than in the past and face a complex and fast paced marketing system. They need to compare the traditional marketing methods of making cash sales at harvest (or before harvest, on guaranteed insured bushels), or when livestock are ready for market, to forward contracting or hedging with futures or options. To do this they need to thoroughly understand the relationship between different quotes in prices, to be able to compare them equally in terms of time, place and the quality.

As stated above the relationship between the cash and futures price is known as the "basis". In marketing, basis generally refers to the difference between a price in a particular cash market and a specific futures contract price. Basis "localizes" the futures price with respect to location, time, and quality. Understanding basis makes it possible to compare the "futures market price quotes" with cash and "forward contract" price quotes.

Calculating Basis

The formula for calculating basis is: Cash Price - Futures Price = Basis at a specific point in time. A negative basis implies the futures price is greater than the cash price, and a positive basis implies that the futures price is less than the cash price.

In this formula, the "cash price" is for a specific location, time, and quality of product. The location may be a specific elevator, ethanol plant, packer, etc., or it may represent an average price for the general area. The time may represent a specific day or possibly a weekly average. Quality may be what grade or corn you have or the weight of your cattle. The "futures price" in the formula is for a contract for the same time the cash price represents. The quality of the product in the futures contract price is standardized.

Basis is most often calculated as the difference between the cash price and the closest to expiration (nearby), futures contract. For example, in June the corn basis would be calculated using the current cash price minus the July futures contract price. Basis with grains may also be calculated using the cash price and a more distant futures contract in order to see if the market is offering returns to storage ("Carry").

Livestock is different in that you would only consider the nearby basis (not deferred), for hedging and cash sale purpose because, unlike grains, livestock are perishable and cannot be stored for any length of time, like grains can.

In our next installment we will discuss ways to "predict basis", and ways you can start to track and record basis data in your area properly.

Article Source: Source

Best Ways to Earn Residual Income

Now you've thought about it before - How can you make money work for you and not spend the rest of your life working for money?

It almost sounds too good to be true doesn't it?

I mean, how can a regular person like you create residual income and live the rest of your days doing what you love?

Now obviously it can be done. We all know someone or know someone who knows someone who's doing it.

Luckily for you I'm going to share how you can do it to!

Residual income, also called passive income, involves a steady source of income that does not come from an employer or contractor. This can include rental income or any other business dealing in which you do not actively participate in the business but still earn money from your initial work (like book royalties or certain types of stocks). It's important to realize that even residual income takes a lot of time and effort, and isn't as simple as waiting for the checks to roll in. Learning how to earn residual income can help you supplement your regular income and generate profits for the foreseeable future, as long as you put in the necessary work.

1 - BUILD AN AFFILIATE BLOG

Set up a blog, promote the blog, and use it to promote affiliate offers. This is by far the best known way to generate a source of passive income online.

Start with an affiliate site like ClickBank or Commission Junction. Find a few offers in a category that you know a bit about. Ideally offers with some degree of recurring income. Make sure they have good numbers, and do your keyword research to make sure there's demand. After figuring out what keywords to optimize your blog for, start a new blog and write articles. SEO optimize the blog, and promote it around the web. Once the traffic numbers start going up, deploy some ads for affiliate offers. People click on the ads, and you get paid.

Now repeat the process until you have ten or twenty blogs, or maybe hundreds if you want to lots of cash online.

2 - SELL COMMERCIAL PRODUCTS ONLINE

Customers are buying products online at an extensive rate nowadays. This means that there are a large number of customers looking for exactly what YOU can supply them with.

Lots of people have proven that this is a great platform to sell products online. Put up a page and promote it. People pay you money. The product gets delivered to them, while you kick back as the money rolls in.

If Shopify is not your thing then you can always try your luck with eBay.

3 - MLM / NETWORK MARKETING

This is a great way to gain residual income. You can literally have your own franchise for less than $500. In some cases less. I was personally lucky enough to find a great Health & Wellness company that only has a $50 start up fee! The company ships the product directly to the customer, bills them and pays me. How amazing is that! How this works is you make money from selling a product and building a team of people to do the same. A number of highly reputable entrepreneurs such as Donald Trump, Robert Kiyosaki, Bill Gates and Richard Branson are big fans of Multi-Level Marketing and all say that if they had to start a business at this day and age they would choose Network Marketing. Some even have. Network Marketing is also great because it's more like a course in personal development. The person you end up becoming in the process is far more important than the income you can earn.

Make sure that it's a product and company that you can stand behind. That way it's not like selling at all it's simply sharing something that you believe will benefit others.

4 - RENTAL PROPERTY

Learn about the work involved. Being a landlord isn't as simple as just collecting rent checks every month. There's a lot of time, work, and money involved in maintaining the property and meeting the tenants' needs.

• It's best if you're a handy person with hands-on experience making repairs, doing yard work, and working on basic plumbing repairs/maintenance.
• If you can't perform work yourself, you'll have to pay someone else to do it. This can get very expensive, especially if it's an older property or a neglected building in disrepair.
• Remember that being a landlord can involve 24-hour problems. Just because you're ready to call it a night, it doesn't mean there aren't problems that need to be addressed at the property.
• Sometimes problems arise that need an urgent solution. If you can't be on call around the clock, you'll need to hire a building maintenance person who can be (which, again, will cost you more money).
• Recognize that dealing with tenants can be difficult at times. There's always a chance that some type of conflict will arise at some point, so make sure you can calmly defuse those situations if you're thinking about becoming a landlord.

Article Source: http://EzineArticles.com/9469739