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Interest Cost vs Interest Rate
 
Think the Interest Rate always Matter??? The Lower the Better Right? Well not always True. Let’s look at these charts to show you how to get the best deal.

Let’s look at this simple chart below:

A B All Your Debt $100 $100 Monthly Payment $6.00 $7.00 Total of all Payments $149.00 $212.00

Believe it or not, interest rate doesn’t always matter. Let me give you an example. Imagine two scenarios, A&B. (Illustrated Above) In both scenarios; your total debt is $100. Scenario A your monthly payment is $6.00 and scenario B your payment is $7.00 per month. Which scenario would you choose? A is the obvious answer. Now everything is still the same. In scenario A, you will pay a total of $149.00 over the life of the loan and scenario B you will pay $212.00 over the life of the loan. Which scenario would you choose? Scenario A is still the obvious answer, because your monthly payment is lower and you are paying less over the life of the loan. Now everything is still the same. In scenario A your interest rate is 8% and scenario B your interest rate is 6%. Which scenario would you choose? If you answered A, then you now understand the difference between interest rate and interest cost. (Illustrated Below)

A B All Your Debt $100 $100 Monthly Payment $6.00 $7.00 Total of all Payments $149.00 $212.00 Interest Rate 8% 6%

Interest rate is only a number on a piece of paper. Interest cost is what the rate is going to cost you in dollars and cents. I know what you are thinking, “That’s not possible; if the rate is lower then the payment has to be lower.” Not true, when looking at a mortgage payment, you also have to calculate in PMI or Private Mortgage Insurance. Anytime you are dealing with a Conforming Loan and the Loan to Value (the loan amount divided by the appraised value) is 80% or above, you will be required to pay PMI. The amount differs from loan to loan, but PMI can add a substantial amount to your payment. In addition, when PMI is required, it does not protect you, it only protects the bank. Therefore, in many of these situations going with another loan program (i.e. sub prime) that has a higher rate, but does not require PMI, can actually give you a lower payment. For example, if you have a home that is worth $112,000.00 and you have a mortgage of $100,000.00.

If you were in a conforming loan you would be required opay PMI because your Loan to Value is 89.3% (100,000/112,000 = .893). Say that conforming loan is at 6.5%; your principle and interest payment would be $632.06/month. Your PMI conservatively could run around $60.00/ month bringing your payment up to $692.06/month. Now, if your loan is with a sub prime lender that does not require PMI and your rate is 7%, your payment would only be $665.30/month. “Amazingly” that 7% rate costs you $26.76 less per month than the 6.5% rate. You can also take into consideration the tax savings you will receive. You see, while interest that you pay on your mortgage is tax deductible, Private Mortgage Insurance is not. I could also illustrate interest cost versus interest rate with consolidating high interest credit cards into a 7% loan vs. not consolidating and just refinancing the mortgage into a 6% loan. Depending on how much additional debt there is to consolidate, you could save hundreds of dollars in monthly expenses while reducing the time it takes to pay off all your debts.There are many other examples I could use to illustrate this, but the best thing to do is discuss your personal options and savings with a mortgage professional.

As you can see, refinancing is not as simple as “What’s my rate?” The real question you need to ask when refinancing is, “What is my rate doing for me?” I encourage you to determine what your short term and long term financial goals are and discuss them with your mortgage professional. These professionals aren’t just there to get you “The Best Rate.” They are there to counsel you on how you can use the equity in your home to achieve your financial goals for today and tomorrow. ————————————————– ABOUT THE AUTHOR: Ryan Davis is currently a Loan Officer with Global Mortgage Group, a Broker licensed in 12 States and one of the largest Brokerages in the South East. Ryan is also a Beta Team Tester of Get Loans Cheap, an internet business geared solely to educate and aid the consumer in assessing and obtaining the right loan for their specific needs. View http://www.getloanscheap.com for more articles on mortgages and refinancing, or other home loan needs. Also you can view Ryan’s home page at Home Loan Information

Interest Cost vs Interest Rate by TAMARA SCHMITT

The Future of Forex Trading

The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest market in the world, in terms of cash value traded, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. The trade happening in the forex markets across the globe currently exceeds $1.9 trillion/day (on average). After the advent of Internet into comman mans home had made it easier for retail traders to trade in the foreign exchange market.

The 2004 BIS survey shows a surge in traditional foreign exchange trading. This seems to have been driven by momentum trading and carry trades in a global search for yield on the part of institutional investors and leveraged players as well as by hedging activity.

A major catalyst to the acceleration of Forex trading was the rapid development of the Eurodollar market; where US dollars are deposited in banks outside the US. Similarly, Euromarkets are those where assets are deposited outside the currency of origin. The

Eurodollar market first came into being in the 1950s when Russia’s oil revenue– all in dollars — was deposited outside the US in fear of being frozen by US regulators. That gave rise to a vast offshore pool of dollars outside the control of US authorities. The US government imposed laws to restrict dollar lending to foreigners. Euromarkets were particularly attractive because they had far less regulations and offered higher yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euromarkets a beneficial center for holding excess liquidity, providing short-term loans and financing imports and exports.

The recent technology advancement has broken down the barriers that used to stand between retail clients of FX market and the inter-bank market. The online forex trading revolution was originated in the late 90′s, which opened its doors to retail clients by connecting the market makers to the end users. With the high-speed Internet access and powerful central processing unit, the online trading platform at home user’s personal computer now serves as a gateway to the liquid FX market. Retail clients can now trade

together with the biggest banks in the world, with similar pricing and execution. What used to be a game dominated and controlled by major inter-banks is becoming a common field where individuals can take the same opportunities as big banks do.

Online forex trading market has changed in the last few years by allowing any type of investor to place money using brokerage firm’s margin accounts. It is currently the largest trading market in the world and can only do your money good. The trade happening in the ForEx markets across the globe currently exceeds $1.9 trillion/day (on average). Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems, such as EBS, Reuters Dealing 3000 Matching (D2), the Chicago Mercantile Exchange, Bloomberg and TradeBook(R). The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

The inter-bank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank’s own account. But retail trader is also a major player in this market.

The Forex market differs from other financial markets in that it has no central location or exchange. It is instead a global electronic network of banks and traders that trade one currency for another in every major financial center in the world. The result is a 24/hour a

day market! The Forex market is the newest market in the world. The Forex market has an average daily volume of $1.9 trillion per day, making it 150 times larger than the New York Stock Exchange!

Internet, Wi-Fi is going to revolutionize the market. You can buy sell currencies on the go. Using all tiny carry along gadgets like mobile, PDA, eNotebooks etc. This has its own good and bad effects. The SPURT in you can empty your pockets in minutes. When

you are on a high after a bash and you hit the wrong button you lose your hard earned money.

Internet-based trading of currencies currently only accounts for about 5% of total. Forecasts say that there is a strong growth in this area. Major online foreign exchange markets and top electronic FX trading systems, including the following are poised to grow at a rapid pace.

Atriax

FX Alliance

FX Connect

Currenex

Matchbook FX

EBS

Reuters 2000

Major advances in technology, especially in online trading platforms, are not only helping to ease foreign exchange trading, but also allowing access to the market in ways never available before. Although online equity trading has grown significantly in the last three years, Internet-based foreign exchange trading has been far slow to develop. Major foreign exchange players are becoming aware that not only can they improve trading services for clients with Internet-based systems, they can also save significant time and money in transactional efficiency gains.

With steady growth of the FX markets and the increasing adoption of E-FX among the market participants, algorithmic trading is emerging as the next level of trading technology for market participants to contend with. Although there is much confusion about the technique, most market participants seem to agree that it will be used increasingly frequently. According to financial consultancy Celent estimates, by 2008 up to 25% of all trades by volume will be executed using algorithm, up from about 22% in 2006. It estimates that 60 percent of inter-dealer trading today is done on electronic platforms. The dealer-client market is less electronic, at 43 percent. They predict that electronic trading will grow to 90 percent in the inter-dealer market, and 70 percent in the dealer-to-client market, by 2007.

More Money, More Platforms this is what is going to happen. Yes its true. The electronic trading platforms in the inter-dealer cash forex market operate in an environment different from that of the dealer-to-client platforms. The inter-dealer market is well served by two strong platforms with complementary currency pair strengths, while the dealer-to-client market is more fractured, with five specialized platforms and one very recent entrant. In Future we can expect more of them as the global economic scenario is changing at rapid pace.

It is predicted that all these platforms will become more liquid in the future as adoption of electronic trading continues to increase. Each dealer-to-client platform (with the exception of FXAll) is targeting a specific type of customer within the buy-side, so there is not as much head-to-head competition as in other markets, such as equities. FXConnect is uniquely positioned to serve asset managers, Hotspot has specialized in serving hedge funds and CTAs, and 360T has dominated among Central European corporate treasurers.

For these reasons, it is believed that there is room for all the existing platforms and new platforms in this market. The changes taking place in the foreign exchange market and advances in Internet-based marketplace technologies have converged to create a new breed of foreign exchange trading. This new phase will forever change the foreign exchange market and will eventually lead to a truly transparent, liquid market. However, this transformation will not take place overnight. It is expected that it will be at least four years before even half of FX trading moves to the Internet.

The changes that are going to take place in this market are definitely going to show their impact on the society. This might not be true with developing societies but it could be true with the developed societies – cash rich and always looking at thrills. Your gains or loses change in seconds thus testing your nerves and discipline. A small blink or spurt can change your future from good to bad. This free for all access to the market can cause dangerous implications to the future society. What we need to do to avoid the downfall.

Discipline. That’s easy to say and much easier to practice in other markets. Forex makes it tougher because it’s always open, and big moves are always happening. It’s one of the reasons why an automated system is so valuable in ForEx. Even if you forego automation, you need to develop a script for trading that you can always follow. Consistency is the key, and your ability to stay consistent will surely be challenged.

Learn all you can, build a system, and practice trading before you risk a dollar. The early losses that come from a rush to trading can damage confidence, and that can be difficult to repair. The markets are going nowhere – if you take the time to learn and then consistently apply your knowledge to this huge market your rewards will surely follow.

Keep these facts in mind…

~95 % of all the traders in ForEx are loosing money.

~If you don’t have spare money which you can aford to loose – just stay out of it.

~If you think that this is the place which can make you rich and can solve all your problems – just forget it.

~But if you insist of learning this thing So go on and learn it.

~There are many schools for that Take your time and learn it as good as you can – and after that if you feel that you can trade do so

~Trade on a Demo platform like http://www.pip-forex.com/default.asp?trc=ema-00109-001 and keep thinking that it is real money after that if you think that you are good at that – so – go and open an account not more than 1000$ deposit.

~Another rule don’t ever never take leverage more than 50 times on your money.

~Don’t ever never trade on more than 10 % of your account.

As said the market is huge is there is place for everyone. A disciplined approach to trading will give you benefits. The Foreign Exchange Market is an over-the-counter (OTC) market, which means that there is no central exchange and clearing house where orders are matched.

Technology breakthrough not only changed the accessibility of the FX market, they also changed the way of how trading decisions were made. Research showed that, as opposed to unable to find profitable trading methodologies, the primary reason for failure as a speculator is a lack of discipline devoted to successful trading and risk management. The development of iron discipline is among the most challenging endeavors to which a reader can aspire. With the help of modern trading or charting software, traders can now develop trading systems that are comprehensive, with detailed trading plans including rules of entry, exit, and risk management model. Furthermore, traders can do back testing and forward testing of a particular strategy on a demo account before commitment of capital.

So retail trader has every change to gain from this market provided he follows the traits that are mentioned in this article.

The purpose of this article.

The main purpose of this article is to guide you through some important aspects of Forex trading. To guide you to the best methods and practices in the trade. It is a high risk trade and highest levels of discipline are a must in order to start trading. Hope this article will

help you in understanding the in and out of the trade.

Remember that only 5% will actually make it – but the reason for that isn’t ability, its staying power and the ability to change your perceptions and paradigms as new information comes available.

The losers are those who wanted to ‘get rich quick’ but approached the market and within 6 months put on a pair of blinkers so they couldn’t see the obvious – a kind of “this is the way i see it and that’s that” scenario – refusing to assimilate new information that changes that perception.

The Future of Forex Trading / Pat_Mar

Expert in Content management, content syndication, content categorization, and end user personalization for various dot com businesses (primarily media portals). Also has a good say in Business analysis, preparation of technology blue prints, requirement analysis, and study of eCommerce packages.

Pre Sales: Preparation and presentation of business proposals for diverse business verticals like retail, manufacturing, telecom, financial services and media segments.

Find a Current Account That Suits you Best

When it comes to choosing a new current account, the choices that face you could be endless. In developed financial markets, like the UK, there can be a wide variety of decisions that you’ll have to face before choosing a current account – especially if you’re under 18 and your personal money flow has only just begun to take off. However, whether you’re a teenager hoping to open your first current account, or you’re simply hoping to switch your current account provider, there’s one thing that’s sure to keep you on your toes: current account fees.

A recent survey carried out by the price comparison site, uSwitch, has found that about four in five people would consider changing their current account provider if charges were introduced on their current account. According to uSwitch, that’s 83 per cent of UK financial consumers who would switch their current account – despite the average person remaining loyal to their current account provider for over 20 years.

In fact, the prospect of an end to free banking has stirred up British consumers to such a degree that the current account market is soon to come under investigation by MPs. The flurry of activity surrounding the future of free banking comes after First Direct’s decision at the end of last year to impose a charge on its current account customers who deposit less than £1500 a month.

However, despite calls from some high profile banking officials to make fees on current accounts mandatory, free current accounts are still the norm in the UK and most banks and financial institutions will do all they can to help you find the current account that will suit you best. Current accounts today offer much more than just a place to keep and manage your money. In fact, current accounts now offer a range of benefits, including travel insurance, mobile phone insurance and breakdown cover.

What’s more, many current accounts can be tailor-made to suit your circumstances. For example, if you’ve just left school or college, you’ll be able to find a current account to suit your own personal needs; the same also applies if you’re a student or recent graduate. Many banks also offer Euro currency accounts, so you’ll be able to hold your money in euros and avoid exchange rate fluctuations. And if you’re a parent, you’ll also be able to open a children’s current account for kids until they’re old enough to manage their own finances.

With such a wide choice available in the current account market, it would be impossible for you not to find what you’re looking for. However, if you’re still stuck, don’t hesitate to utilise the services of online consumer comparison sites, which will compare bank offers and help you find the account that’s best suited to you.

Find a Current Account That Suits you Best / andrew.regan.2006@googlemail.com

Andrew Regan is an online, freelance journalist.

Forex – There Is No Sure Fire System

Anyone claiming to have a sure fire trading strategy for the Forex is either lying or truly a genius because none exists-period. The Foreign Exchange market, or Forex, is the single largest market in the world. Actually, the Forex has no centralized market location but instead exists as an informal trading network where banks, governments, and retail investors can all come together and exchange currencies. Retail investors trade on the Forex via a software platform typically supplied by their broker. Nearly 2 trillion dollars are exchanged every day (the Forex is open 24 hours per day in between Sunday and Friday) giving investors ample opportunities to profit from the volatility and liquidity of the Forex.

But in truth, while the Forex offers a very simple and attainable path to sustainable investment income-it is extremely volatile for the retail investor. The standard transaction size on the Forex is $100,000 and would be very prohibitive to the majority of investors were it not for leveraging. The typical margin on a Forex trade is 1%, or $1,000. Highly leveraged positions definitely give investors more access to potentially profitable opportunities-but they also are very susceptible to losses. That is why Forex investors need a solid investment strategy to find the best currency pairs and entry/exit points.

Unfortunately, there just is no sure fire system but that is no reason to come to the market unprepared. Dow Theory states that long-term, identifiable trends exist with respect to price movements. These trends can be identified using technical analysis. There are a number of Forex investment strategies that involve the use of technical indicators to identify and capitalize upon these pricing trends. Once you find the best strategy for your particular investing style, here are a few tips to help improve your odds of success on the Forex currency market:

1. Never move your stops-these are in place to prevent losing more than you are comfortable with and investors typically move them when emotions are guiding their decisions.

2. Trust your charts-charts are everything to a technical trader and you must trust your investment strategy and interpretation of the charts in order to succeed. Don’t allow short-term price fluctuations distract you from the bigger trend-because that is where the profits lie!

3. Back testing is critical! You back test an investment strategy by creating a hypothetical investment portfolio performance history of a currency pair you are interested in. Then, apply your current asset criteria to the hypothetical portfolio and see how accurately your strategy predicts movement. You want to find a strategy with a 70% success rate or higher in order to be profitable on the Forex.

4. Never over trade! Short-term investors lose their money to the long-term investors. You can make more profit with 5-6 great trades than by using some scalping strategy which is very vulnerable to loss due to the highly leveraged positions common to the Forex.

While there is no sure fire system for trading on the Forex, these simple steps will greatly improve your odds of success and help you develop a reliable strategy that will consistently produce profits-even when it does miss occasionally!

Forex – There Is No Sure Fire System / Kent Douglas

Article by Kent Douglas, author of “The Simple Forex Solution: The Easiest Currency Trading System Anywhere.” To learn how you too can succeed in Forex and Currency Trading, please visit http://www.SimpleForexSolution.com

Using COT Report for Forecasting Forex Movements

What do we mean by COT report, after all? And why is it so prominent an indicator used in the forex trade market? COT stands for Commitments of Traders and the report is drawn down by the Commodity Futures Trading Commission which is a detailed information report in the futures market on positions and volumes of contracts. The COT report assumed a position of high importance for its elaborate enumeration of the contracts which basically helped the shot term speculators, which generally is the case, in the forex market fairly accurately.

The COT report is not meant for exclusive use of foreign exchange market nor is that dedicated to it. The report lists out the prevailing condition in the futures market, about the contracts, whether the net contracts were long or short. The considerations are for commercial, non commercial and open interest while giving detailed figures of number of traders in each category, the spread and percentage of open interest etc. The report also includes the same positional data for different foreign exchange currencies.

How to Use This Cot Report?
The fundamental thing to understand while reading the COT report is that the commercial positions are not as much relevant as non commercial positions are for the simple reason that they are predominantly traded in the spot currency market. So, it is wise for a trader to concentrate more on the non commercial market positional data more for reliability in capturing the trade positions.

Forex traders must be concentrating on 3 major areas in the COT report to base their trading decisions.
1. Positional Flips in the market are assumed to be accurately trending.
2. Identification of market reversals through the help of extreme positions has been historically accurate.
3. Strength of a market trend is better judged by the changes in the open interests.

What Do We Infer By This Discussion
Before we go on to summarize the article we need to look at the down side of the COT report too. It does not throw much light on the volumes which is the back bone of the spot trading market. But traders have more or less turned towards the futures market which compensates for this lack of volume data.

Analyzing the three key areas in the COT report, which is released on each Friday, is essential although it contains data till the previous Tuesday only.

If you are a fresher, it would be prudent of you to have slower and smaller exposure till such times when you are comfortable with market predictions even for intraday calls. Another point is not to go for shorts unless you are truly confident of your decision. How long it takes to become a seasoned forex trader? It depends on the background and exposure of the individual and as such there is no standard

Using COT Report for Forecasting Forex Movements / Jason Uvios

Jason Uvios writes about “Using COT Report for Forecasting Forex Movements” to visit: foreign movie, foreign exchange trading and foreign films.