Developing A Successful Trading Plan
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Wayne McDonell, chief currency coach at FX Bootcamp, reviews some of the techniques he uses to trade and analyze the FX markets.
Day trading is the term often used for buying and selling stocks within the same day. Day traders seek to make a profit by leveraging large amounts of capital in order to take advantage of small price movements in highly liquid stocks or indexes.
The wealth effect is a psychological phenomenon that causes people to spend more as the value of their assets rises. The premise is that when consumers' homes or investment portfolios increase in value, they feel more financially secure, so they increase their spending.
The discount rate is the interest rate you need to earn on a given amount of money today to end up with a given amount of money in the future. Let's say you need $1,000 one year from now to go on vacation. We can use the discount rate to determine how much money you would need to have today to have $1,000 in one year.
Most investment choices involve a tradeoff between risk and reward. The "Efficient Frontier" is a modern portfolio theory tool that shows investors the best possible return they can expect from their portfolio, given the level of volatility they're willing to accept.
Tariffs, or customs duties, are taxes imposed on foreign goods and services. In addition to providing a country with additional revenue, tariffs offer protection to domestic producers. Imported items become more expensive, allowing businesses at home to become more competitive with their pricing.
Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality
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