All About Financial Matters

Stopping Yourself

I read on a bulletin board a traders comment that on his first outing trading the E-Mini S&P 500 he lost on each of his trades. He noted though, that had he had a wider stop each of his trades would have been profitable and that therefore he would be trading with a wider stop in future.

A wider stop on these particular trades may have worked, but this does not mean that a wider stop per se is the answer. In fact, everyday there is the possibility of any given trade going into profit if given enough room, but that does not a wise strategy make. This trader was a seller in a market that subsequently went down; hence he could see that had he given his position a bit more room he would have made a handsome profit. Unless this trader has the ability to always accurately predict the direction of the market he is going to experience days where he is wrong and the market goes against him, in which case his potential for loss with wider stops is greater.

When deciding an appropriate amount to risk on any trade (i.e. size of stop) a trader has to consider more than the potential profit on a particular trade on a particular day. What this trader was saying to himself was ‘If I had a 3 point stop instead of a 1 point stop, I could have made 15 points; therefore I will always use a 3 point stop!’ Partly what he was saying to himself was ‘I was right!’ But he wasn’t right; in the time frame of his trades and within the risk limit of those trades he was wrong, his timing was off and that is what he needs to work on.

He is also making two assumptions:

1) That having a bigger stop and therefore bigger open losses will not affect his trading composure and performance (how do you feel if you are risking $10?… $100?… $1000?… $10,000?)

2) That he would have held on to his profitable trade until he gets an exit signal (it is easy to assume after the event that we would have got out at the very best moment)

The truth is we are all much weaker than we would like to assume. The biggest challenge to profitable trading is sticking to our own self-imposed loss limits, be they on a per-day or a per-trade basis. What this trader did on this day was stick to his limits, which is highly commendable; he was just having difficulty accepting his results. No one likes losing money and no one like being wrong, but to be successful in trading we have to be accepting of both.

Malcolm Robinson
LIFFE Pit Trader & Electronic Trader
instinctivetrader.com/ InstinctiveTrader.com

Increase Your Home Value With A Home Loan

Home is one of the precious assets which any individual never likes to apart with. What make it so significant? The answer is its LOYALTY to serve you for so long which makes its maintenance extremely important that in turn demands big moolah. You can consider availing a home improvement loan which helps you to complete all the necessary renovations and enhance value of your residential property many fold in the property market.

Falling under secured loans, home improvement loan is offered against your home or any other valuable property. Another advantage talks of the lower interest rates on home loan that comes on hand with such improvement loans. Lower rate makes it easier for the borrower to repay the home loan on a monthly basis. Depending on the criterion, most banks allow the borrowers to repay home improvement loan as per their repaying convenience. Combined with lower interest rate and larger tenure, you can opt for paying lower amount towards the EMI (equated monthly installments) per month.

Talking about the loan amount, it largely depends on current value of your home and equity in it as such kind of a home loan is secured against your home or any other valuable property. Also, the maximum and minimum loan amount may vary among different home loan banks and financing institutions. The loan amount can be used for any improvement in home like fixing home, adding a room, renovating kitchen or buying furniture.

Even, people with bad credit can also buy a home loan for making improvements in home. Since it is a secured loan, lenders have a low risk and do not go in much reporting to approve the loan for borrowers defaulted on payments. However, the home loan interest rates for an individual with bad credit report would be higher as lenders require covering risks.

You can also apply for online home loans. Banks are financing institutions generally prefer online lenders for a low rate and cost free approval of the loan. Repaying the loan in time is extremely important to save yourself from loosing your home to the lender.

Aditya Jaiswal, advisor of home loans for NRIs, is an associated editor with the site: guide2homeloan.com guide2homeloan.com