Month: February 2013

By Bill Bonner

Planet Earth dodged a bullet last week. A meteorite exploded over Siberia… knocking out roofs and windows… and injuring hundreds.

“Doomsday!” said an old woman who saw the explosion.

Another meteor or asteroid passed within 17,000 miles of Indonesia. Scientists said they had been keeping an eye on it.

We interrupt this brush with the End-of-the-World for a quick market update. Yesterday, the Dow plunged 108 points. And gold plummeted $26/oz. As I type, the yellow metal is selling for $1,569/oz. Is this the end of the line for the secular gold bull market that began in 1998?

We don’t know… but we’re hoping to see the price of gold fall to $1,000 — or lower. Then we’ll buy as much as we can afford!

Meanwhile, scientists are keeping an eye on the planet’s weather. It’s getting much warmer… or much colder… depending on whom you talk to.

The “much warmer” crowd has the microphone in its hand. Led by Al Gore and others. It is convinced that greenhouse gases are turning Earth into a raging inferno.

Carbon dioxide is the main culprit. There’s always carbon dioxide in the air. It is what you get when carbon-based elements — living things — decompose. You also get heat energy. You can test this yourself. Just put your hand into a pile of decomposing leaves… or hay… or manure. You’ll find it warm. Which is why burning formerly living things is so popular. That’s how we warm our hands… power our drones… and run our automobiles.

The Argument for Global Warming

Here we give you a simple explanation of the argument for global warming, as we understand it.

The sun hits the Earth. Some of the light is reflected back to space, especially the light that falls on shiny white surfaces — such as the South Pole. Much of the light is absorbed… as heat… by the oceans, dirt and so forth. And much of it is absorbed by plants and turned from solar energy into carbon-based life. That’s how we live. Some things live on the sun’s light — along with water and nutrients from the air or soil. Other things eat them. And still other things eat the things that eat the plants.

Trees grow. You can cut them down and burn them for firewood, releasing heat… and carbon dioxide. But if you burn a tree, you add little to the world’s carbon dioxide,
because the tree would have died and released its carbon dioxide into the air anyway… though over a longer period of time.

Over the eons much of the sun’s energy was captured in plants that didn’t fully decompose. Instead, they then sank into swamps… and were compressed into coal,
oil and gas. Burning this “fossil fuel” is different from burning a tree. Because it releases millions of years’ worth of the sun’s energy… and also billions of tons of carbon dioxide that was “locked up” in the ground.

A Bullet Heading for Earth?

In all the years that Earth has been in existence there have been many collisions with meteors and asteroids. There have been dramatic changes in the Earth’s climate too.
But never before has an animal figured out how to use this stored-up solar energy. And never before has an animal significantly altered the amount of carbon dioxide in the atmosphere… and potentially altered the Earth’s climate.

Is this true? Does it make any difference? Is climate change another huge bullet headed for planet Earth?

We don’t know. Many smart people believe it. No one knows for sure.

A friend sent a serious book on the issue: High Tide on Main Street, by John Englander. It is not so much concerned with trying to change or protect the world’s climate as it is with what is likely to happen and how it will affect our lives. Englander writes:

The last truly abrupt
changes in the Earth’s climate occurred more than 50 million years ago.
During that period, carbon dioxide increased about 100 ppm over a
million years. The global temperature spiked by about 9 degrees F […]
over 10,000 years. While that may sound slow, in geologic time it is
considered quick and drastic.

At our current rate of
carbon emissions, we will increase carbon dioxide levels by that same
100ppm in just 30 to 40 years. In other words, we are increasing carbon
dioxide levels roughly 20,000 times faster than at any time in the last
540 million years. Temperatures, which can lag behind the rise of carbon
dioxide, are now rising about 55 times faster than they did even during
the most recent cycle of glacial melting.

Rising Seas

Are human beings to blame? Perhaps. Perhaps not. But if Englander is right, this is a bullet we may not be able to sidestep.

And it could surprise us all by how fast it comes at us. Methane, says Englander, is the wild card. It’s the most effective of the greenhouse gases — meaning, it traps
more heat than any other.

There is beaucoup methane locked up in now melting permafrost — billions of tons of it. This methane… and the unprecedented levels of carbon dioxide… could cause a runaway heat effect — something that has never happened before either. This, in turn, could cause the Earth’s water level to rise — fast.

A few years ago, the local Baltimore papers carried an article about an island in the nearby Chesapeake Bay. Holland Island had been the home of several families.
They farmed. They fished. They built large, handsome houses and enjoyed life — for generations — in “the land of pleasant living.”

But then the islands sank. Or rather the water rose. Sharps Island — 900 acres, with several farms, houses and a hotel — disappeared in 1962. Holland Island was underwater
by 2010. Its last resident waited until the water was at his door. Then he waded to a boat and said goodbye.

Englander believes that present trends will raise water levels some 212 feet. When? He doesn’t know. This has never happened before, he says.

Say goodbye to much of India… China… Bangladesh… the Phillipines… the Netherlands… Florida… and Nigeria. And if you are buying waterfront property, you may want to look at property about 200 feet above sea level. Anything lower than that may soon be underwater.

Regards,

Bill

http://www.billbonnersdiary.com/

By www.CentralBankNews.info     Jamaica’s central bank cut its policy rate by 50 basis points to 5.75 percent, effective Feb. 25, saying the move was in light of the “generally weak economic conditions” and the government’s recent approval of debt reduction measures.
    “These factors will have a dampening effect on inflationary impulses,” the Bank of Jamaica said in a statement from Feb. 22.
    The cut in the policy rate – the rate payable on the Bank of Jamaica’s 30-day Certificates of Deposit –  is in line with the reduction in the rate on government securities on the National Debt Exchange.
    “These actions have occurred against the background of a staff level agreement between the Government and the International Monetary Fund on a medium- term economic programme,” the central bank said.
    Earlier this month the IMF and Jamaica reached a staff-level agreement on a $175 million economic reform program aimed at cutting Jamaica’s “unsustainable debt burden, which has undermined confidence and elevated risks to economic stability,” the IMF said on Feb. 15.
    The IMF’s executive board will take a final decision on the agreement by the end of March, subject to the Jamaican government carrying out some of the agreed measures, including a debt exchange that involves private investors, fiscal tightening and structural reform.

    “Over the last three decades, the Jamaican economy has experienced very low economic growth, declining productivity, and reduced international competitiveness,” the IMF said, adding the high cost of servicing debt has limited the government’s ability to provide services that are needed to achieve sustained rates of growth.
    Jamaica’s Gross Domestic Product rose by 0.2 percent in the third quarter from the second quarter for annual contraction of 0.2 percent, the same rate as in the second quarter.
    In its latest quarterly monetary policy report, the Bank of Jamaica estimated that the economy contracted by up to 1.0 percent in the fourth quarter due to the impact of Hurricane Sandy, the postponement of some projects and weak global and domestic demand.
    For the first quarter of 2013, the central bank forecasts an expansion of the economy by 0.0-1.0 percent following four consecutive quarters of decline. For the 2012/13 fiscal year, which ends March 30, the central bank forecasts Jamaica’s GDP at minus 0.5 to plus 0.5 percent.
    Jamaica’s inflation rate rose to 8.4 percent in January from 8.02 percent in December and the bank forecast inflation in the first quarter of 2013 of 2-3 percent. For the 2012/13 fiscal year, inflation is forecast in a range of 7.5-9.5 percent, a level the bank described as in its “desired range.”
    Last month Fitch Ratings lowered Jamaica’s credit outlook to negative, saying the sustained erosion of its international liquidity position had reduced the government’s capacity to manage external and fiscal pressures.
    Jamaica’s net international reserves fell by $131.7 million to $125.6 million with gross reserves at $980.8 million at the end of December, representing 13.2 weeks of imports, according to the central bank.
   
    www.CentralBankNews.info

By The Sizemore Letter

In the world of finance, “Investing in Oz” is usually taken to mean investing in Australia.  But with the recent interest in the 1939 classic movie The Wizard of Oz, the phrase has taken on a whole new meaning.

In 2013, Oz is back in a big way.  Walt Disney Pictures, a division of the Walt Disney Company (NYSE:$DIS), is set to release Oz the Great and Powerful early next month.  The movie—which had a $200 million budget—is a prequel to the original Wizard of Oz and tells the story of how the Wizard, played by James Franco, originally got to Oz.  The Wicked Witches of the East and West are, respectively, played by Rachel Weisz and Mila Kunis.

But the Disney production is not the only game in town.  Summertime Entertainment, which is privately held, is producing a $60 million animated telling of the Oz story with the working title Dorothy of Oz.

Dorothy Gale, voiced by Lea Michele

While the live-action Disney movie is getting more attention at the moment due to its imminent release, Dorothy of Oz may end up being the larger money maker.

The producers put together a cast that includes Glee star Lea Michele as Dorothy, Dan Aykroyd as the Scarecrow, Kelsey Grammer as the Tin Man and Jim Belushi as the Lion.

Smash’s Megan Hilty plays the China Princess, a new character not seen in the original Wizard of Oz, and Martin Short, Oliver Platt and Patrick Stewart also have prominent roles as new characters.  Much of the soundtrack is being recorded by singer-songwriter Bryan Adams.

Paying actors to voice an animated character is cheaper and more time efficient than paying them to stand in front of a camera.  But apart from having a production budget that is one fourth the size of Oz the Great and Powerful—and thus a much lower threshold for profitability—Dorothy of Oz could easily end up out-grossing its live-action rival.  Animated movies perform almost unbelievably well at the box office.

As NPR reported last year, there have been 70 computer-animated movies produced since the launch of Toy Story in 1995, and virtually all of them have grossed more than $100 million at the box office.  Animated films are also uniquely well suited for sequels, which often perform better than the originals.  And Dorothy, by the way, is the first of a three-part trilogy.

To throw out a few examples you might recognize, the Shrek franchise has taken in more than $3.5 billion, the Ice Age franchise $2.8 billion and the Toy Story and Madagascar franchises $1.9 billion each.

To put this in perspective, the entire Star Wars franchise, spanning six major movies over 35 years, has grossed only $4.3 billion.  The James Bond franchise, which has spanned 23 films over 50 years and six actors playing the starring role, has grossed $6.1 billion.

The children’s movie industry also has excellent demographics in front of it.  2007 was the largest birth year in U.S. history, even larger than the years of the post-World-War-II baby boom.  Those children born in 2007 are now 5-6 years old and finally old enough to sit through a movie.  They are also plenty old enough to nag their parents to take them.

But this is just the tip of the iceberg in the business of animation.  Though shrinking due to piracy and streaming services, DVD sales generally make up a large percentage of the total gross for a movie studio, and animated films tend to do particularly well in this area.  Revenues from DVD sales are often higher than revenues from the box office for animated movies.  Kids often re-watch their favorite movies multiple times per day, and a $15 DVD is often the cheapest babysitter a parent will find for their kids.

And this is nothing compared to merchandising.  If past animated films are any indication Dorothy of Oz has the potential to generate toy and merchandise revenues many multiples larger than its box office sales.

For example, five years after the 2006 release of Disney’s Cars, the movie had grossed $462 million at the box office.  But it had generated $8 billion in retail merchandise sales—seventeen times the amount it earned in ticket sales—and this was before interest in the franchise was rekindled by the sequel, Cars 2. New merchandise sales put the total well in excess of $10 billion…and counting.

Given the number of Lightning McQueen and Mater toys rolling around my house and the closet full of Cars-themed shirts and jackets in my three-year-old son’s room, I feel as though I have spent that much singlehandedly.  And most American parents and grandparents feel my pain.  (We didn’t stop with Cars, by the way. After Cars, my son discovered Toy Story.  We now own at least four Buzz Lightyear action figures, among many, many others…)

The Cars franchise was wildly successful, and not every animated movie can be expected to generate those kinds of returns.  As a case in point, consider the 2007 hit Ratatouille.  Though it was popular at the box office, kids weren’t exactly lining up to buy rat dolls after watching it.

Still, The Wizard of Oz is not Ratatouille. Including its original books, it’s been an American cultural icon for over a century, and its characters are highly marketable.  Dorothy stands to profit handsomely from this.  You don’t need to look behind the curtain to see the potential for a boom in all things Oz.

Note: To watch a preview of the movie and to get an early look at the virtual world planned, go to dorothyofoz.com.

SUBSCRIBE to Sizemore Insights via e-mail today.

The post Investing in Oz appeared first on Sizemore Insights.

India is the fastest growing economy in the world with buoyant investment climate. According to recent trends, India is only second to China in the league of favorite investment destinations. As the Indian economy is developing very fast, it has opened new avenues for people to start businesses. The country is extraordinarily rich in various resources with very low-cost labour. Doing business in India is a profitable option as the majority of the industries and sectors are almost untapped and hence the fear of facing stiff competition is less.

Entry Routes for Investment in India

Foreign Investment is easily permitted in almost all sectors. An Indian company may receive Foreign Direct Investment under two routes:

Automatic route: The foreign investor does not require any approval from the Reserve Bank of India or the Government of India for making investments. FDI up to 100 per cent is allowed under the automatic route in all sectors.

Government Route: The prior approval of the Government of India, Ministry of Finance, and Foreign Investment Promotion Board (FIPB) is required for making investment in India.

Sectors that an investor can look for long-term prospective are:

Banking: The Indian banking sector is one such industry, which has enormous upside growth potential. Investing in India can give investors above average return over long-term in the banking sector.

Healthcare: With the rise in disposable incomes and penetration of healthcare insurance, the demand for healthcare is growing day by day. The health and pharma sectors are quite promising in the current market conditions. Investors with a long-term prospect can invest in strong companies in the healthcare sector.

Education: The Indian Education industry is another industry which is poised at the wings of growth. Increasing awareness, rising disposable incomes and availability of loans for higher education creates a huge demand in the sector. So, it is one of the most important investment sectors in India.

Food processing: India is a country that largely depends on its agriculture. Thus, food processing industry in the country is among the largest in the world. The industry enjoys patronage from government, private players and cooperative sectors. Even the government ensures steady investment in this sector by introducing various changes in the “National Food Processing Policy”.

IT Sector: India is known as the IT hub. The BPO (Business Process Outsourcing) and the KPO (Knowledge Process Outsourcing) industries are enjoying a fast paced growth rate. Thus, investing in the giant software industry in India is really a good decision.

Real estate: Real estate has emerged as one of the most appealing investment sectors for domestic as well as foreign investors. The real estate sector will continue to derive its growth in future because of changing consumer lifestyles. For example, nowadays people prefer to live in societies (apartments) with facilities like swimming pool, gym, security rather than just houses.

“Our economic and commercial relations are expanding. But there is still a lot of untapped potential that needs to be exploited, especially in sectors like agro-processing, manufacturing, pharmaceutical, medical equipment, seafood, automobile parts, tourism and hospitality, IT and IT-enabled services,” according to Anand Sharma, Commerce and Industry Minister.

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics. He writes columns and articles for various websites and internet journals in the domain of Investments and Investing in India.

By www.CentralBankNews.info

EURUSD

It was not the best day was for the euro yesterday — being in pair with the dollar the single currency has lost nearly 300 points. Initially, the pair managed to overcome the resistance at 1.3240, to rise above the 33rd figure and test the level of 1.3318. All this could have meant the renewed uptrend for the pair, if it hadn’t undergone tough sales. As a result, the EUR/USD returned to the support around 1.3160 — 1.3125, overcame it and dropped to 1.3038. Having pulled back, bulls tested 1.3089, but this level limited the recovery attempts. Thus, the pair’s pressure remains. Undoubtedly, with the breakdown of the support 1.3160 — 1.3125, where the 100-day moving average runs on the daily chart, the pair’s outlook became very unhelpful. Though, there is the support near the 30th figure on the bears’ way, but the increasing negative attitude towards the single currency is likely to cause this support’s breakdown. In this case, the most likely immediate target for the bears will be the level of 1.2880, where the bulls are likely to activate.

GBPUSD

The British pound received a chance to recover in pair with the dollar due to the drop of the EUR/GBP . Thus, reduction of the GBP/USD was limited by the level of 1.5086, from which the pair managed to increase to 1.5199, and after a slight rebound — up to 1.5219. However, it is premature to talk about the end of the downtrend in the pair, since the pound should at least move up and consolidate above 1.5320, then the bulls will be able to test the 54th figure. Thus, it not necessary to buy until there are signs of the bottom formation at current levels.

USDCHF

The American dollar managed to increase in pair with the Swiss franc due to the drop of the EUR/USD. Nevertheless, its growth was limited by the strengthening of the Swiss currency being in the cross-rates with the single currency. But that did not stop the USD/CHF pair find the support at 0.9231 and increase to 0.9337. Thus, the positive trend in the pair remains. If the American dollar manages to consolidate above the 93rd figure, the bulls will be able to test the 94th figure. Otherwise, the dollar would come under pressure and drop to 0.9230 — 0.9200.

USDJPY

Yesterday was a clearly successful day for the USD/JPY bears. The pair bulls faced the barrier near 94.72, where the pair opened a gap. After that, the rate dropped to the 93.20 support, which was broken soon. As a result, the dollar dropped to a more important support at 92.20 and also broke it. This strengthened the downward momentum and the pair dropped to 90.86. But after that, it was able to recover to 92.74. However, interests to sell the pair remained and its rate dropped to 91.43. The 92.20 level’s breakthrough worsened the prospects for the dollar, but the bears need to consolidate below this level this time, that will confirm its breakdown. Their immediate target may be the 90th figure.

provided by IAFT

By www.CentralBankNews.info     Hungary’s central bank cut its base rate by another 25 basis points to 5.25 percent, the bank’s seventh rate reduction since last August.
    The National Bank of Hungary, which has cut rates by 175 basis points since August 2012, said the new rate would take effect from Feb. 27.
    Last month the central bank said it would only consider further rate cuts if the outlook for inflation was in line with the bank’s inflation target and the improved sentiment in financial markets was sustained.
    The bank’s president, Andras Simor, who will be stepping down at the end of this month, has consistently opposed rate cuts but has been outvoted each month since August by members of the monetary council that were appointed by the ruling political party.
    One of Simor’s deputies will also be leaving next month and another in July, reinforcing expectations that rates will continue to be cut.
    Hungary’s Gross Domestic Product contracted by 0.9 percent in the fourth quarter from the third, the fourth quarterly contraction in a row, for an annual drop of 2.7 percent, up from the third quarter’s annual decline of 1.5 percent.
    The inflation rate fell to 3.7 percent in January, down from December’s 5.0 percent but still above the central bank’s 3.0 percent target.

    www.CentralBankNews.info

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 26 February 2013, 07:00 EST

U.S. DOLLAR prices for buying gold rose briefly above $1600 per ounce Tuesday morning before falling back, while silver failed to hold above $29 an ounce and stock markets fell following the inconclusive Italian election result.

Italian markets were especially affected, with stocks and government bonds seeing sell-offs, while on the currency markets the Euro hovered near seven-week lows against the Dollar following yesterday’s 2% drop.

“Risk sentiment turned negative [this morning] on the inconclusive Italian election and fears of sustained instability for the country and Eurozone as a whole,” says a note from Credit Agricole.

“The outcome of the Italian elections is likely to spark increased demand for gold,” adds a note from Commerzbank, “as it could force the sovereign debt crisis back into the foreground.”

Italy’s general election failed to produce a clear winner, with the bloc led by Pierluigi Bersani’s Democratic Party winning the lower house of parliament but failing to win the Italian Senate.

The biggest share of the lower house vote to go to a single party went to the Five Star Movement, a protest movement led by comedian Beppe Grillo, which polled 25.55%. Grillo and Five Star have campaigned against the austerity measures brought in by outgoing technocrat prime minister Mario Monti, whose party only polled around 10% of the vote for each house of parliament.

Bersani’s bloc will have more seats than Five Star, however, as will the bloc led by former prime minister Silvio Berlusconi’s party. Berlusconi is expected to win the region of Lombardy, according to Italian television, which adds that this should give him control over the upper house.

“The political situation across Europe is effectively a race between austerity and reforms on the one hand and the rise of populist movements on the other,” says Alberto Gallo, head of European macro credit research at Royal Bank of Scotland.

“Austerity is painful, and if reforms are not implemented in time, you run the risk of social unrest and populism. It hasn’t happened so far in Greece, it hasn’t happened in Portugal or Spain, but we are very close in Italy.”

The FTSE MIB, Italy’s main stock market, fell 5% from yesterday’s close in Tuesday’s early trading, while investors also sold Italian government bonds, pushing 10-Year yields to a three month high above 4.9%.

“It’s clear that from a foreign investor point of view they’re very concerned about political instability and forming a government that can push through pro-growth policies in Italy and in Europe,” one Milan-based fund manager told newswire Reuters this morning.

Gold exchange traded funds tracked by news agency Bloomberg meantime saw their holdings fall to a five-month low of 2536.3 tonnes yesterday.

“The latest collapse in gold ETF holdings stands in sharp contrast to our [earlier] assumption that ETF positions were likely driven by longer-term allocation rather than short-term trading,” says a note from the commodities research team at Goldman Sachs.

“Instead, ETF holdings are increasingly exhibiting a strong inverse correlation to real [inflation-adjusted interest] rates, a pattern that we now expect will continue going forward.”

Goldman cut its gold price forecasts, with its 12-month forecast falling from $1800 an ounce to $1550 an ounce.

“The decline in prices since last fall and our updated forecast suggests that the turn in the gold price cycle is likely already underway,” the report says.

Over in Washington, Federal Reserve chairman Ben Bernanke is due to testify to the Senate Committee on Banking, Housing and Urban affairs later today. Bernanke will then appear before the House of Representatives Committee on Financial Services tomorrow to complete his twice-a-year monetary policy update to Congress.

“Given the Fed[‘s]…highly dovish bias, we expect them to continue printing into [the third quarter]” says UBS commodity strategist Julien Garren.

“[That’s] when we in commodity strategy, in contrast to our economists, expect global growth to lose momentum. That sets up a major gold rally in Q3.”

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By John, TradingSpotSilver.com

Every forex trader’s dream is to get to a level when they do not need to think of a second source of income. Maybe one in three forex trader, somewhere dreams of emulating the ‘Soros Model’ of getting rich. While this might surprise some experienced traders, the truth isn’t far from the fact that some brokers in fact tend to advertise forex as a way to making money quickly… some forex ads even show pictures of fake people claiming to have earned more than their regular income from forex.

The truth is far from it and if you have at the very least traded a few times, you would know how difficult it can be to make money, consistently. Consistency is the keyword here and that is what defines your success with forex.

There are traders who manage to make big money one day, only to lose it all the next day. The markets are such. Fickle and unpredictable!
In this article, I’ll point out some simple tips to bear in mind in order to build consistent profits trading forex.

A Forex Trading System

At the core of every successful trader is a trading system. You can call it whatever… methodology, rules, whatever you fancy. But irrespective of how you call it, the ‘system’ forms the core that defines your trading methods.

Traders with a few months of experience in forex usually scour forex forums and other such places in an effort to find a trading system that they can use. Some traders even go to the extremes of purchasing a forex trading system.

When buying a forex trading system, there are basically two opposing schools of thought.

The first logic dictates that if a trading system is indeed successful, then why sell it for $99 when you can make more trading your system.
The second logic states that most of the trading systems available are indeed profitable. But the fault lies with the trader because most often they do not stick to the trading rules.

Whatever your opinion might be of a trading system, you cannot ignore the fact that it is the engine that takes you on your forex journey.

Testing, testing and more testing

Some forex trading systems seem to work amazing right from the moment you install it and start taking trades. This might get you so excited that you might end up increasing your lot size in hopes to ride this good streak, but sooner than later you would end up losing all your money.

Testing a trading system is key to forex and for two reasons.

#1 – You need to be familiar with the trading system and the rules for entry/exit and stops. Familiarity with a trading system can only come through experience, which is forward testing the trading system on a demo account rather than back testing.

#2 – You need to know the strong and weak points of the trading system. For example, you might have a trading system that might look to work well on a EURUSD or other major currency pair but performs miserable on crosses. Similarly a trading system might work best during a particular market session and go nuts during other market sessions.

Whatever the case maybe, if you want to consistently profit with trading forex, knowing the ins and outs of your trading system is of utmost importance.

Most traders tend to test their system on a demo account for a week or a month. Sadly that isn’t enough. A thorough testing needs to be done for at least a good three to six months. While this might delay your prospects of making money, the time frame is just good enough for you to know how the trading system behaves in various market conditions.

But again, even after thoroughly testing a system there is no 100% guarantee that it will work fine.

Discipline and Money Management

When we talk of trading systems, most traders tend to focus on the currency pairs or the time frames and sadly money management comes in last. A good trading system doesn’t mean having the right set of indicators but one that also takes into account the money management and the risk to reward ratio.

Quite often we have traders who lose money simply because they were on a winning streak, which tempts them to increase their lot size, or perhaps be a bit more ‘flexible’ with their stops, or even worse, adding more positions to a losing trade.

Sticking to a specified lot size and strictly following the trading rules will greatly benefit you in the long term.

EA’s v/s Manual Trading

I’m not a big fan of using automated tools to the extent that they place trades on your behalf. In fact I believe that those who use EA’s either do not know how to trade or are just lazy folks who don’t want to learn how to trade, yet dream of buying a $500 worth EA in hopes that it will make them rich.

The element of manual decision (despite the fact that emotions play a big role in the success of failure of a trading system) is an important aspect to building a good and consistent trading system that makes you more profits than losses.

In fact if you look around for a successful forex trader I’m certain that you won’t find that many traders who automate their trading system. Sure, you might have heard of algorithmic trading, but that’s in a different level and should not be mistaken as an EA’s big brother.

Remember that a trading system is like the engine of a car which is the heart of a car. The road ahead might be smooth, bumpy, steep or curvy. Whatever the path ahead looks like, if you do not know when to push the pedal and when not to, you’ll be setting yourself up for an accident, or in our context a wipe out of your live trading account equity.

To conclude the article, here are some key points to take away.

• Always test a system in a demo account for a considerable period of time before taking it live.
• Every trading system has its strong and weak points. The sooner you are familiar with this, the better you will get at managing your risk.
• Disciplining yourself in terms of trading hours/trading times, money management can go a long way.

About the Author

John is a full time forex trader and contributes regularly to tradingspotsilver.com, a blog focused on trading systems, trade analysis and MT4 tutorials.

By OilPrice.com

I have been making the point about crude oil production and capex absolutely CONTROLLING the energy space right now and through 2013 and this week’s entry is perfect to point that out again through the released quarterly reports of EOG Resources (EOG) and Pioneer Natural Resources (PXD).

The action in both of these stocks in the market recently have been an oil investors’ study — 2013 is all about crude production and capex for that production.

Where are you getting your crude? How much is it costing you to develop? How much will it continue to cost you? When those numbers add up and the results tell a tale of efficiency and growth, you’ve got a stock that you can confidently hold.

Look hard at what I mean in EOG, a recommendation of mine that’s just been tearing it up in the last six months:

There was another beat in the 4th quarter, but that’s hardly what interested me in their report. It is their continuing stellar production numbers and continuing guidance for their operations in the Eagle Ford, which is turning into the most compelling play for US crude independence, even outstripping the Bakken – and EOG has a major stake there. Production is guided at increasing 28% in 2013 and the initial production numbers confirm that Eagle Ford continues to hit high percentages of long-producing assets. EOG will tighten spacing and add 400 wells – showing why Eagle Ford is not just another US shale oil ‘play’ – it is a game-changer.

This makes EOG still a raging buy, even after their big move in the last 6 months. With increasing and sticky oil prices hovering internationally close to $120/bbl. EOG will mint money through 2014.

Pioneer Natural provides a great contrast as they are a bit more over their skis than EOG — equally attempting to ‘play the volume game’ to its advantage, however.

But Pioneer’s big play is in the Permian basin, which has required more Capex to find resource growth and continues to marginally disappoint on production growth. In their latest report, Pioneer has increased their capex guidance to $3bln., leading to their secondary stock offering of 8mm shares on tap overnight. While production from one of their big Wolfcamp developments is increasing, it’s not the type of blowout growth that EOG, for example, has guided on in the Eagle Ford.

Still, investors liked the report well enough and believe in the potential of PXD’s Permian assets, bidding the stock up 3.5% today. This is a move I’d rather fade, not because I don’t believe in the production guidance, but because I want to be investing in the strongest cycle, which is right now clearly in the Bakken and Eagle Ford.

But the important takeaway is again production growth. While your homework might lead you elsewhere than these two, that still must be the number one thought in choosing the right oil company to own in 2013.

By. Dan Dicker of Oilprice.com

This report is part of Oilprice.com’s premium publication Oil & Energy Insider . Oil & Energy Insider gives subscribers an information advantage when investing, trading or doing business in the energy sectors. Successful investors, hedge funds and senior executives, have access to high level intelligence and power in ways that you, as an individual investor, are locked out of (the game is and never has been fair.) Let us help you level the playing field by using our network of traders, intelligence assets and high level partnerships to ensure you are making the right investment decisions.

To find out more on how you can get a legal inside advantage in the energy markets please take a moment to visit: http://oilprice.com/premium