In January 2006, retirement planning became even more complicated with new Roth type accounts being available for 401k and 403b plans. If your employer chooses to offer this option, you may now be given the choice of making tax deductible or non tax deductible contributions.

Employers may amend their plan documents to allow for the new options provided for under recent tax legislation. However, they are not required to make this option available at this time. If implemented, this option would enable employees to make some, all, or none of their contributions either tax deductible or non tax deductible.

The Roth IRA allows for tax free distributions whereas the traditional IRA has a taxable distribution. Of course, there is a tax deduction for the traditional IRA, but not for the Roth. Unlike the Roth IRA, there are no income limits of any kind on the new Roth 401k/403b. Therefore, for those whose incomes exceed the Roth IRA limits, it presents a great opportunity to contribute to a Roth type product.

The tax free distribution on both the Roth IRA and the new Roth type 401k/403b is available at age 59 1/2. One major difference is that the Required Minimum Distribution (RMD)rules do apply on the new option and distributions must occur no later than at age 70 1/2.

The IRS has not issued final regulations on the new law. It is anticipated that new regs will be issued on designated Roth contributions by the end of the year. Due to this factor, most employers will not be making changes to their “defined contribution” plans this year. Until that time, any of the above information is subject to be refined. You may wish to consult your financial or tax advisor to make plans accordingly.

James Robert Coleman, E.A., A.T.A.
Enrolled Agent & Accredited Tax Advisor
Member: National Association of Enrolled Agents http://www.naea.org
Member: National Society of Accountants http://www.nsacct.org
Former IRS Revenue Officer, GS-11
http://www.exirsman.com

The World Wide Web is filled with hundreds of online futures trading brokers who offer services to hedgers and speculators wishing to play the futures markets. To access these brokerages and have round-the-clock information at your fingertips, it is necessary to make sure that your computer has the right configuration in order to run the trading platforms that you will have to use in order to trade in futures.

The services vary depending upon the investor’s depth of knowledge and support he requires, as well. Most have a quiz that you can take in order for them to judge your level of knowledge and recommend the type of account or trading platform you should opt for. When choosing a trading platform, you will be asked about your trading experience, frequency of trades, estimated monthly volume of contracts, type of trade - either electronic futures or pit-traded futures — and the amount of risk capital as well. The platforms that usually run on Java Applets will provide information such as single and multiple account trading functionalities, accessibility to multiple markets, and updated analysis on the markets. They will also have information from a number of stock exchanges incorporated into the platform.

If you wish to deal with pit-traded futures rather than electronic, another trading platform will be made available to you which will allow you direct access to your representative on the floor of the stock exchange.

All these services come along with the option of having a broker give you advice on the buying and selling of futures as well. You can choose the broker by filling out questionnaires available on the site. This will allow you to choose the broker you feel would fit your profile and understand your demands perfectly.

Thus, with the right amount of capital and knowledge of the futures market, plus the right brokerage, you will be able to turn in profits with just the click of a button!

Online Futures Trading provides detailed information on Online Futures Trading, Discount Online Futures Trading, Futures Trading Online Analysis, Online Futures Trading Brokers and more. Online Futures Trading is affiliated with Free Online Stock Trading.

One of the big reasons that forex trading is an entirely different animal than stock trading or futures trading is leverage. Forex trading leverage can be enormous, as high as 400:1, and in most cases you get to choose the amount of leverage or gearing you want to trade with.

Super high leverage is a selling point for many online forex brokers. How many times have you seen the tout ‘control $100,000 of euro for $250′? Those numbers are correct, and, yes, the profit potential of super high leverage is compelling.

This article neither encourages nor discourages forex trading at super high leverage. That’s a personal decision, but a decision that can only be made sensibly with a professional understanding of all the implications of leverage and what they mean to your chances of prospering at forex trading. It’s probably fair to say that unless you have a professional understanding of leverage that your chance of even surviving at forex trading is slim to none.

One of the fundamental terms of forex trading is PIP. You will see that XYZ Broker charges 3 PIP per deal, or that the XY currency pair has an average daily range of 100 PIP. We all know that the value of a PIP is a variable that differs with each currency pair, but did you know that the value of a PIP also varies with the current price of the base currency, and with the gearing on your account?

For example, with EUR/USD at 1.2723 and leverage at 100:1 the amount of a PIP is $7.86. At 200:1 leverage the PIP value doubles to $15.72. For forex traders with different gearing a 100 PIP move means entirely different things to their account equity.

Here’s a new way to look at leverage with the “K Factor”. The three most common leverage ratios available from online forex brokers are 50:1, 100:1 and 200:1. The K Factor for the 100:1 leverage ratio is 1. The K Factor for the leverage ratio of 50:1 is .50, and the K Factor for the leverage ratio of 200:1 is 2.

How can you use the K Factor?

There are three ways to use the K Factor. The first is using the K Factor to calculate the value of a PIP for the currency pair you are trading.

Since 100,000 individual currency units (usually dollars or euros) is the normal size of a single lot you can calculate the value of a PIP with this formula:

(100,000/current price with no decimal) * K Factor = PIP

Here’s an example: The EUR/USD current price is 1.2723 and your leverage is 100:1. With these facts the formula is:

(100000/12723) * 1 = 7.86.

The value of a PIP is $7.86. If your forex broker executes your trade at a spread of 4 PIPs you are paying $31.44 for executing the trade whatever euphemism the broker happens to be using for ‘commission’. If your leverage or gearing is 200:1 that execution will cost you $62.88.

The second way you can use PIP and the K Factor is to quickly determine the potential profit in a trade, or to know to a certainty the actual dollar risk in a stop-loss setting.

For example, if you go long the EUR/USD at 1.2723 and anticipate a move to 1.2850 what profit can you anticipate at 100:1 gearing?

12850 - 12723 = 127 PIP * 7.86 = $998.22 - execution cost.

If you objectively set your stop loss at 1.2715 what amount are you risking in this trade?

12723 - 12715 = 8 PIP * 7.86 = $62.88 + execution cost.

The third way to use the K Factor is to avoid what the forex brokers call the “safety net”, and what I call “kill but do not dismember.”

Margin is not a down payment. It’s cash-on-hand, your cash, that the broker uses to protect its own capital account from your mistakes. That’s all well and good because the global forex market will continue to work only if all participating brokers have adequate capital to meet their customers’ settlement obligations.

If losses from current open positions cause the equity in your account to fall below that required to maintain the total number of open positions, the broker’s trading platform will immediately close all your open positions, even when the unrealized loss on any individual position is quite small. Your loss is the aggregate number of PIP per position * K Factor + execution costs. In almost every case that’s just about everything in your account. This is the broker’s safety net because you will not lose more cash than you had in your account (as can and does happen with commodities futures accounts.)

The formula is:

(Starting Balance - Open Position Losses) / (($1,000/K Factor)* No. Open Positions) -1 < 10% = Kill But Do Not Dismember.

Most if not all broker platforms keep a running balance of your available margin to help you avoid this fatal situation. If you intend to trade multiple positions and fade into suspected price turning points you should consider setting up this formula in a spreadsheet so that you get an early warning long before the situation goes critical.

Mini accounts are based on 10,000 individual currency units with different margin requirements so make the necessary adjustment in the above formulas before doing the calculations.

(c) 2006 by Peter Amaral. Peter is the creator of the http://www.tradingfives.com website and author of several easy-reading ebooks on the exotic trading techniques of the legendary master traders like JM Hurst and WD Gann. Much of the information about stock, futures and forex trading on Tradingfives is unique and not available anywhere else.

Utilities

Want to know where NOT to invest in 2006? Among the less-than-attractive sectors are utilities. I know, I know - you can never get hurt with a utility stock, right? Wrong. These stocks got whacked in 2001/2002 like everything else did. They also got whacked in 93 and 94, when the rest of the market was doing ok. While it’s good to have a sector that can move independently of the market, that doesn’t make things any better right now for this group. Since the end of January, the S&P Utilities Index (UTIS) is down 3.1 percent. That’s not catastrophic, but adding in the fact that this index is also right where it ended June of last year, what you get is anything but bullish. For the sake of comparison, the S&P 500 is up 2.1 percent since the end of January. Since June, the S&P 500 is up by 9.8 percent. See why I’m not thrilled with utilities? And I don’t think it’s going to get better any time soon.

That said, not all the utility stocks are in dire straits. Public Service Enterprise (PEG) and Exelon (EXC) seem to be surviving. So does Duke Energy (DUKE) and Kinder Morgan (KMI). It’s just that the majority of these stocks are headed lower…..enough to make you think twice about buying them indiscriminately. And if you do happen to have one of the ones that hasn’t been voted off the island yet, be sure to keep it on a tight leash.

S&P Utilities Index (UTIS) - Monthly
http://bluegrassportfolio.com/images/031706utis.gif

Consumer Discretionary

The consumer discretionary stocks are my other least favorite group right now. It’s a bit surprising really, as the economy has been pretty strong, employment has been improving, and consumer spending is as good as it’s ever been (not that it ever really slows down). Yet, the S&P Consumer Discretionary Index (CODI) is just not getting any traction. In fact, this sector has been in trouble for more than a year. Since the end of 2004, this index has pulled back by 6.0 percent, and is still itching to go lower. How bad is that in the bigger picture? The S&P 500 gained 7.9 percent during that time.

But like the utilities stocks, it might pay to be selective among these stocks. We have seen - and are seeing - many of the industries within this sector thrive, even though the sector itself is not. The casinos and gaming stocks like Wynn Resorts (WYNN) and Isle of Capris (ISLE) have done pretty well, as have the department stores. Shares of Federated (FD) and Saks (SKS) have both put up decent (albeit volatile) numbers. So clearly, this sector isn’t a lost cause in terms of individual names. But in terms of the broad view, there are a handful of problems. Some of the main culprits are the auto manufacturers and film companies. Time Warner (TWX) and Regal Entertainment (RGC) have been nothing but trouble. The same goes for Ford (F) and General Motors (GM). However, I have to confess that I have the auto-makers back on my watchlist. This just might be they year they get their transmission stuck out of reverse, so to speak.

S&P Consumer Discretionary Index (CODI) - Monthly
http://bluegrassportfolio.com/images/031706codi.gif

Consumer Staples

The list of sectors worth a closer look still includes telecom, financials, and healthcare. None have been great lately, but not much of anything has. One of the other sectors I’m starting to warm up to is the consumer staples group. The S&P Consumer Staples Index (CSTP) is about even for the year, and up by about 9.6 percent over the last twelve months. That trails the market’s twelve-month performance slightly (+10.8%), but I’d gladly give up a little bit of return for the stability that the consumer goods stocks are providing. Plus, I think the underlying improvement in the fundamentals here could accelerate the entire sector. The average P/E here is 21.41 (Hemscott), and dividends are decent. But when industry leaders Procter & Gamble (PG) and Campbell Soup (CPB) are discovered by investors again, I think they could lead the way for the whole group……and end up as market leaders.

S&P Consumer Staples Index (CSTP) - Monthly
http://bluegrassportfolio.com/images/031706cstp.gif

James Brumley is a freelance writer and investment manager. His company - Bluegrass Portfolio Management - offers retail and institutional investors a performance-oriented recommendation service. You’ll also find his commentary in several financial-based websites and periodicals.

You can visit Mr. Brumley’s home site by clicking: http://bluegrassportfolio.com/index.html

Most people shudder at the thought of Forex Trading because they think that it is very high risk trading because of the great amount of leverage involved. However the money making potential in Forex Trading is huge when compared to other financial instruments worldwide.

This article will highlight three great reasons why you should consider Forex Trading or at least a managed Forex Trading Account when considering between the multitude of investment instruments available on the market today.

Firstly, the forex market is the most liquid financial market in the world today. This means practically that even in a falling or rising market, there will always be a ready buyer or seller on the market. Most of us have been caught in situations where we want to sell a stock but there are no ready buyers in a falling market.

The great amount of liquidity in the forex market today, means that not only can you sell your currency fast but you can also acquire it fast as well and in rapid succession. That’s one reason why George Soros managed to funnel large amounts of money through the several South East Asian currencies during the currency crisis and made huge amounts of money in the process.

Secondly, the forex market is a true global market meaning that it operates 24/7 during the weekdays. This means that if you really wanted to, you could trade through the night and the day. Thankfully there is forex trading software now that helps you monitor trades and hunt for good trading opportunities and when you just enter your trading strategy, and the robot takes over and closes your position for you. The trading platforms now are so robust that you can set your downside indicators to close your position when it falls below a pre-set number so that you do not lost money even while you are sleeping.

Thirdly, the Forex Market is controlled by macro economic factors. Currencies are representations of how strong the economies are and how global trade affects them. The US Dollar rises and falls against the Euro in response to how strong the US economy is. Central bank intervention also plays a large role in this matter and such details are readily known to anyone today with internet access. You would want to contrast this to stock markets where the fund managers are usually the first to know about a scandal or bad quarter as opposed to the main retail investors. Another aspect of marco economics is that currency trends take a long time to play out. This means practically that we will not be caught off guard so fast when there is a turn in the market which takes a few years to play out.

In conclusion, we have highlighted three reasons why you should consider Forex Trading as a possible way to make money online. Take some time this weekend and go to the library and read all you can on the subject and then practice as much as you can with the free simulated accounts that most forex trading brokers provide and only spend money when you have accumulated enough profitable paper trading. Remember with great risk comes great reward in the Forex Trading Market. Carpe Diem!

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

Joel Teo is the successful Webmaster of
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