Online Forex Trading Techniques:

In FOREX trading there are two common types of analysis that most traders utilize, they are fundamental and technical analysis. Fundamental analysis attempts to predict currency movement based off of political and economy indicators. Technical analysis uses historical economic information to predict changes in the FOREX market.

Fundamental Analysis:

Political and economic changes are the basis of fundamental analysis. These can frequently affect currency prices. Traders that take advantage of fundamental analysis will gather their information from a variety of news sources. They are looking for information about unemployment forecasts, political ideologies, economic policies, inflation and growth rates.

Fundamental analysis will provide you with an overview of currency movements and a broad picture of the economic conditions. Most traders then will combine their fundamental analysis with technical analysis to plot actual entrance and exit points as well as confirming the information provided by their fundamental analysis.

Interest Rates – can cause a currency to either strengthen or weaken depending on the direction of movement. In some cases high interest rates will attract foreign money, however high interest rates will frequently cause stock market investors to sell of their portfolios. They do this believing that the higher cost of borrowing money will adversely affect many companies. If enough investors sell of their holdings in can cause a downturn in the market and negatively affect the economy.

Which of these two affects will take place depends on many complex factors, but there is usually an agreement among economic observers as to how the current change in interest rates will affect the general economy and the price of the currency.

International Trade – If there is a trade deficit (more items imported than exported) it is usually considered a negative indicator. When there is a trade deficit it means that more money is leaving the country to buy foreign goods than is entering the country and this can have a devaluing effect on the currency. Usually though trade imbalances are already factored into the market consideration. If a country normally operates with a trade deficit then there should not be an affect on the currency price. The currency price will normally only be effected by trade differences when the deficit is greater than the market expected.

Technical Analysis:

The other common form of analysis is technical analysis. Technical Analysis is based on the following assumptions:

1. Price movements are a result of combined market forces. Political events, economic conditions, seasonal fluctuations, supply and demand are all things that can effect currency prices. Technical analysts do not concern themselves with why the market moves, they are only interested in the movements themselves.

3. Historical trends can be used to predict current price movements. Data on the FOREX market has been collected for the last 100 years, over that time certain patterns have become emergent. Human psychology and the way people react to certain circumstances are the basis of these patterns.

Most traders consider technical analysis to be of critical importance even though they may also use fundamental analysis to support and confirm the strategy suggested by technical analysis.

Unlike fundamental analysis technical analysis can be applied to many different currencies and markets at the same time. Since fundamental analysis requires detailed knowledge of the economic and political conditions of a certain country it is nearly impossible for any single trader to perform proper fundamental analysis on more than a few countries.

For the beginning trader the complexities of technical analysis may seem overwhelming and they may even wonder if it is actually necessary. If you wish to be successful at FOREX trading you must have a strategy. Any strategy can work but technical analysis has been proven as a reliable and effective method of predicting market changes. Many forces can affect currency prices though so technical analysis is no guarantee, most successful traders utilize a combination of technical and fundamental analysis.

Source: www.LiteForex.org

1. India Infoline News Service / Mumbai Oct 06, 2007 17:00
2. source: www.indiainfoline.com

Why term life insurance is a good idea

It is called the intelligent person’s insurance cover. However, term plans are yet to make an impression in the minds of insurance seekers in India. Most of them would prefer expensive endowment polices because they would get “something at the end of it.” Never mind, they may be underinsured thanks to the costlier premium. Still, the cheapest and most effective insurance cover fails to enthuse most of them.

“Most people just don’t get it. For them insurance is all about tax breaks and tax-free returns on maturity,” says an insurance advisor with Life Insurance Corporation of India. He says it is difficult to convince customers, as most of them do not like the idea of not getting any money at the end of the term or on maturity. Another reason why term plans remain out of public perception is due to the lower commission rate that insurance agents earn on them.

Are you wondering what is this hullabaloo all about? Well, it is about why people do not separate insurance from investment. For example, if you speak to anybody who has gone for the new fad called unit-linked insurance plans recently, you would have noticed that most of them are worried about the performance of their insurance plans. This is because they have taken more exposure to stocks and the markets were not doing well.

For the latecomers, insurance policies as we know are called endowment plans in insurance parlance. These are plans where you get the insurance amount plus bonus on maturity or death. The premium we pay for this cover has two elements. One part is for the risk or insurance cover and the other is the savings element. Insurance companies invest this saving element and declares the return as bonus every year.

However, term policies are an exception to this rule. They do not have any saving element in it. Therefore, the premium is low. Moreover, you will not get any money on maturity from term plans. There are some plans that may give you the premium back, but they are comparatively expensive.

For example, a regular endowment cover of Rs 1 lakh for 10-year term would call for an annual premium of Rs 10,000. However, you can get Rs 10 lakh cover for 10-year term for an annual premium of a little over Rs 2,000. The catch is the endowment plan would fetch you Rs 1 lakh plus bonus on maturity, whereas you will not get anything from your term plan. However, if you die during the term of the policy, your dependants will get the insurance amount.

Want to take a closer look? If you do not have adequate insurance cover because you cannot afford it, term plans are the answer to your prayers. These plans help you to buy adequate insurance cover, as they are cheap. Remaining underinsured is a crime because on the event of your death your dependants will not have enough to take care of themselves.

You have the freedom to add riders or add-ons to your basic term plan by paying an additional premium. Most common riders are accident death and disability benefit, critical illness cover, waiver of premium in the event of permanent disability, etc. however, you don’t have to add them to your basic cover because they are offered.

Insurance experts believe that some of the riders are not a very smart choice. For example, it is better for you to go for a general medical insurance cover than critical illness cover, where only a few listed diseases are covered. On the other, the waiver of premium benefit is a wise choice because it takes care of your future premiums if you become permanently disabled.

As you can see, term plans are easy to understand. All you have to do is to fix an insurance cover you want to buy and compare premiums of variety of insurers. Remember, premium is the deciding factor with term plans. Get premium rates from a variety of insurers. Note, the premium varies with age. One example given in the pamphlet may mislead you because one company need not be the cheapest for all ages.

Let us take the example of a Rs 10 lakh cover for 10 years. For a 30 year-old, LIC is the cheapest. (See: Cost factor) However, LIC premium is a tad expensive at Rs 2,910 than Kotak Mahindra Old Mutual’s Rs 2,900 in the case of a 35-year-old looking for the same cover.

Now, why is it said that term plans are intelligent choice? That is because by separating insurance from investing you would be earning a bit more on your investments. For example, suppose our 30-year-old protagonist buys a term plan and invests the rest of the money in a diversified equity mutual fund. In ten years, his money will grow faster because insurance companies normally adopt a conservative investment strategy.

Also, mutual funds offer easier redemption facilities. You have the choice of redeeming your investment anytime if you are not happy with the performance of the fund. However, the same is not possible in an insurance policy. Even if you have emergencies, you can only take a loan in an insurance policy. And hopping from one insurer to the other is not a smart idea, as your premium may go up with increasing age.

The menu

How much they cost?

*A 10-year policy of Rs 10 lakh for a 30-year-old person

Source: www.dancewithshadows.com

Overview

With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the country’s GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country.

Insurance is a federal subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

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