VDM Trading

My experiences in the world of trading, investing and business …

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The big difference between real and demo trading

Most brokers online offer demo trading options to try out their trading platform to get your 'feet wet' for real trading and show you how easy it is to navigate their software. Although the difference between the two on your screen might be just a simple drop down menu that ...

Testing out different automatic Forex trading systems

I know I know, I was really bashing automated Forex trading systems in the post I wrote on January 13th of this year. Truth to be told I had never tried out an automated system. I mainly was bashing the 'companies' that try to sell you the software needed for ...

Announcing the VDM Trading store, Grand Opening!

In association with Amazon, I've decided to setup my own store filled with handpicked books about investing. For people that are (self) educating themselves, reading up on things or just want to know more about the world of investing in any market. I have several catagories like forex trading, stocks ...

Best days and times to trade Forex

I did some research on the internet when the best days and times were to trade foreign exchange. Absolutely none of the articles I found were of any use at all! None of them covered the topic fully and most of them just gave you the times the Forex market ...

Trading FOREX, check several sources for your final analysis

Trading foreign exchange carries a tremendous amount of research (home work) with it. Most likely you will find yourself spending a lot of time reading newspapers, articles online and a few charts here and there along with technical indicators. These are some of the sources that I check before jumping to a ...

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Smooth Slider

Is Blockbuster stock out of the picture? Don’t count it out just yet.

July 21st, 2010

After the downgrade of Blockbuster (formerly BBI: NASDAQ), now BLOKA-PK (pink sheet), (BLOKA) kicked off the exchange since it couldn’t maintain a stock price above $1, but the stock still trades OTC at $0.14 a share at this time of writing.
Given the shape Blockbuster is in right now it may be one of the riskiest stocks at the moment. However, I do believe there is some ‘hope’ for this company given the following analyses of this stock. The heavy competition such as Netflix and Redbox make it seem impossible for this company to survive, but there is something unique about Blockbuster that the competition doesn’t have. On top of that, factor in that Blockbuster, unlike it’s former rival Hollywood Video, is adapting to it’s new market segment. They offer Blu Ray/DVD’s through the mail and are starting to set up Blockbuster Express boxes (like Redbox). And if Blockbuster goes under, where would you catch up on some older movies or TV series (on HBO for example)? You simply can not get those at Redbox, so that’s one down. When it comes to Netflix, it’s all though mail or Netflix capable streaming devices like XBOX 360. Not many people have an XBOX 360 with Netflix on it, since it would require a Gold Membership and the Netflix membership, also you would have to buy a console too. A lot of people still like the idea of browsing though a video store, not to mention the requirement of a credit card. That is the uniqueness I wanted to address.
Factor in the name recognition that Blockbust has built up throughout the years and all the assests Blockbuster still has, it might have a chance to survive for just a little longer.
It depends on management and corporate reshuffle if they want to pull this off. They have a good service and branding. Blockbuster already said it is determent to put their stock back on the NASDAQ in 2011.

As optimistic as I am about Blockbuster at the moment (I’d hate to see these guys go under, I’m an avid renter myself), for the long term I just don’t see Blockbuster being around anymore. Eventually technology will make it so readily available to rent movies, download games for a fraction of what Blockbuster charges. But I don’t think we are that far ahead just yet.
Within a few years bankruptcy may be imminent, but until that time, there’s no reason not to make money off this stock during this period. I see it’s value around $0.50 or $1+ pretty soon so $0.14 sounds like a bargain, a risky bargain, but you have to take risk in order to make lots of money.

My recommendation:

STRONG SELL – SELL – HOLD – BUY – STRONG BUY
RISK FACTOR: VERY HIGH
POSSIBLE GAINS: 100% +

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I switched to Zecco

July 15th, 2010

After extensive researching other brokers like Scottrade, E*Trade and a few others my vote fell with Zecco. I finally switched to this ‘deep discount’ broker for all my trading needs. Yes all, they even offer Forex trading so I didn’t see any need to stick with my old broker that just specialized in Forex trading, in the end it doesn’t make any difference anyway. They’re both the same price and have the same spreads on all major pairs.
What I’m really excited about is stock, ETF and option trading though them. I’m going to shift more towards these trading instruments since Forex trading, my main occupation at the moment, carries too much risk, and since the CFTC changed the leverage policy, the reward isn’t what it used to be. I will still be trading Forex and give trade recommendations on the website, but be prepared to see more information about for example stock alerts, and articles about general investing in stocks, ETF’s and options!
So far, I’ve been very pleased with Zecco. Their research instruments are far beyond what I have seen on any other website and their community is fantastic too. I’ll probably be sticking around for a little while.

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State of the economy, where to put your money now…

July 13th, 2010

It has been awhile since I blogged, I know. I didn’t sit still though, I have been reading a lot of financial books during my absence from the website. One philosophy I have been studying also is Robert Kyosaki’s ‘Rich Dad, Poor Dad’ view of money. Very interesting, although I do have my own opinion regarding his way of making money, but I will elaborate on that later. Like I said before, I have been studying mainly different markets, other then forex. In these past couple of weeks I have mainly focused on stock options and how this fascinating trading vehicle works. There will be a lot more information and trade recommendations regarding ‘options’ in the near future of the website.

Now to the actual topic of the post;

There has been a lot going on in the markets lately. Very volatile situations, and just for a second I even thought the double dip was closer then I thought when I saw the DOW skid below 10k. I hope for the best, but this might still happen. The state of the economy seems to be rebounding, although still for many I may not seem that way.
From what I’ve seen throughout the years of the recession up until now is that the economy is indeed recovering although very slowly. This recession has been so deep, it will take years for it to get to the level where we were, if we will ever get there again. What I mean by that is that the economy on a global scale has changed significantly. Economic blocks have shifted, and we have a new player in the field; China. The US economy has taken a serious beating during the recession, and although most countries suffered from it, the US suffered the most, due to the lack of social services that are present in most other civilized societies. When un-employment money runs out, too bad, you are on your own. Same goes for health care coverage. The lifestyle has changed for many, instead of spending, the focus is now more on saving. Still, many people are losing their homes, defaulting on their credit cards, filing for bankruptcy and are struggling to get by. Some people have given up looking for jobs after so many months of trying. I read these stories in the news everyday. This is now, ‘after the recession’. For many, the recession is still in full force. The disconnect between Wall Street and Main Street still is very much alive.

At the time of this writing, the DOW trades at 10,373.08 +156.81 (1.53%), and the EUR/USD is trading at a 2 month high; in my opinion, nearing another completion of an Elliot Wave. Which wave is difficult to tell, due to such volatility in the markets and the recent talk of a double dip doom scenario, which distorts actual investor confidence. The best way to approach this is to watch the markets closely. What happens next is clear. What goes up must come down. But which stocks should you be bearish about? Is is time to buy the US Dollar back? I say not yet. I am looking for bargains to short, mainly still in the forex markets and put options in the financial sector. For one, the EUR/USD and put options that track funds, like the SPX. I will post a list of shorts in the near future, a slice of my portfolio.

Stay tuned!

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Investing with money you can’t afford to lose…

June 9th, 2010

High unsecured debt will hold your investing goals back and can ruin your financial future.

Many people who are interested in investing but have some sort of unsecured debt, like credit cards, personal loans or medical bills, are eager to jump in the markets. It’s a very attractive world when they hear how much money can be made. They hope with the possibility of a high rate of return they quickly can pay back all their debts and live debt free after that.

Wait, you are worried about your credit card bills and you are thinking about investing?

Possibly one of the biggest mistakes you can make. You should use the ‘extra’ money to make bigger payments on your credit card bills to pay them off quicker. In almost every single book I have read about investing there is a chapter devoted to the number one evil for your wallet: high credit card debt or any other unsecured debt. They write about it like it is Satan himself…and I happen to agree with them. Credit card companies should be outlawed if you ask me.
Credit cards only work when you are able to pay them in full every month and take advantage of the air miles, points or other benefits that come along with it.
Unfortunately that is not always the case, the ‘instantly owning money’ gratification to pay off other bills or get that item you always wanted right now instead of saving up for it, is what lures many people in to applying for a credit card.

However, if you make only your minimum monthly payments, unsecured debt essentially bleeds your finances dry over the course of your lifetime. Of course, this depends on how much debt you have and at what interest rate. Calculate how much you have paid in interest so far by having a credit card and you will be unpleasantly surprised. All that money could have been saved or invested. Sure you got a great deal when you first signed up for a credit card, but once you accumulated enough debt on the card to a point where it is difficult to pay back the full balance every month credit card companies pretty much can do whatever they want with you (Yes, even with the new credit card laws that are in effect). They work their way around, in order to make it still a very profitable business for them. After all, shareholders are knocking on their doors to see the quarterly results every time, and that can’t be less then what it used to be, right?
Some debt is good. Secured debt, that is: a mortgage, a car loan, etc. Those are things we need in life and are in a sense ‘healthy debts’. And some unsecured debts as well, if you can afford to pay off the balances every month.

Just making the minimum monthly payments? Like money down the drain...

Depending on your APR and how much credit card debt you owe, it can take up to 40 years or beyond to pay them all off in full! Think how much money you are throwing away paying interest alone! It should be illegal, in my opinion. But there is a solution!
Debt settlement (another word is debt negotiation or debt arbitration) is an attempt to settle debt with the creditors. There are companies out there that specialize in settling unsecured debt, personal loans and medical bills. Companies like Exodus America. What they do is negotiate the debt with the creditors, which at that point the creditors are more likely to co-operate to settle the debt for less. In the event of bankruptcy no one gets any money. If you have a lot of unsecured debt, and in the short- mid term you don’t see you financial situation change or getting worse because of the debt, you may want to consider debt settlement. A better option than bankruptcy, which can go on your credit report for 7 to 10 years.
Example, if you owe $10,000 in debt, they may be able to negotiate it down to $7,000 or less and make the payment into one lump sum, payable over 3 years. Of course each individual case is different, a reason why debt settlement companies do free consultations.
However creditors are likely not willing to negotiate the debt if you make your minimum monthly payments. But if you have fallen behind and late fees, overdraft fees and other charges have accumulated, debt settlement may be a good option for you since they are more likely to work with you.

One company I recommend you should consider settling your debt is Exodus America like I mentioned before. They have debt relief programs available, free consultation and free credit reports. What have you got to lose? Exodus America does debt consolidation and free credit counseling so you can pay off your debt with 3 years for example instead of 40. Think about it. Debt free? Starting over, saving the money you normally would have paid a credit card company? Then you can invest that money, and you can make lots more of it, instead of paying the credit card companies. If you have a lot of unsecured debt and you are having trouble making the payments, don’t even consider investing. Rather put the extra money you have and pay off the balance of your credit card. Then come back to trading and investing. Exodus America may be able to help! Really.

Check them out on http://www.exodusamerica.org/

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Extreme volatile trading week ahead, sign of a EURO collapse?

June 6th, 2010

When I hear the word volatility I think of making money. Plain and simple. Volatility can be good, but too much volatility can be dangerous. Getting in the danger zone doesn’t mean there isn’t any money to be made, but we have to play our cards right if we want to. We are looking at the Euro currency, it’s fundamental and technical outlook. It seems like this pair is out of control and showing no sign of direction, or does it? Let’s take a look first with a clean chart;

click chart for larger image

This chart was picked right of my trading platform at this time of writing. Numerous analysts have claimed the pair is heading towards 1.17 and for once I think I have to agree with the majority. There are some vital upcoming events this week that will set the tone for direction of this pair and I believe that tone will be downward pressure even further.
Here’s my reason why. Fundamentally I have always believed that the Euro currency is too overvalued against the USD, since it was trading above 1.10 level (my extremes even) the Purchasing Power Parities (PPI, a measurement how currencies are fairly valued against each other), but that’s not the reason why I agree. I agree because of the clear economic diversity in the Euro zone, something that’s somewhat embarrassing if you ask me. Where’s the union in the European Union at this point? Countries blaming each other for poor economic data or turmoil, and the gloomy future of the common currency.
The problem is co-operation. And I would know, in essence I am European myself, being only 7 years in the United States. There are so and all too many different cultures and economic differences within the EU, it’s almost, if not impossible to satisfy every member of it. Remember, the whole idea behind the Euro was to have a stronger economic block against the United States and Asia / Australia. Instead of having all these individual currencies trading within Europe and the world, members of the European Union thought it was a bright idea to create a common currency, the Euro. At first, it all seemed well until they adopted countries withing the Union that were not so economically sound. The result now? Fundamentally strong nations like Germany have to bail out countries like Greece and maybe many more to come. If continuing and no agreement is reached soon, a disaster scenario. Strong economic countries are not going to put up with this. When the Euro collapses, what then? Going back to what it was, German Marks, French Franks, Dutch Guilders? Is this doom scenario for real? It could be. I hope not, that’s for sure. Because when that happens we are likely going into a second recession that can be more fierce then the last one. The US, Canada and Asia, does a lot of trading with Europe. A collapse of the currency would be disastrous for world economic growth.
As of right now, with this in mind, what does direction in this pair look like?

On the chart above with Bollinger Bands enabled you can see the pair has slammed through that level even, indicating a strong downwards trend. I believe the trend is to continue. The Dow Jones Industrial Average and the EUR/USD are somewhat correlated to each other (in recent trends) meaning when the Dow’s down the pair seemed to end lower as well. In tomorrow’s session, I see the Dow close higher, putting it above 10k again, but the bullish pressure won’t be much, a few gains like 0.1% to 0.4%, to make up for the losses of last week, affecting the EUR/USD by targeting 1.17 and below. My trade recommendation is a sell position between 1.1950 to 1.1900 targeting 1.1850. Or if you’re adventurous, 1.1800.