4 Things You Should Know About Every Single Trade

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12 Things You Should Know About Economics

Reviewed by Raphael Zeder | Last updated Nov 17, 2020 (Published Feb 24, 2020)

Economics affects all parts of our daily lives. So, if you want to be an informed citizen you have to know at least some of the most basic economic concepts. This will help you understand how the world works and enable you to take well-informed decisions.

Now, because we know that not everyone has the opportunity or desire to become an econ major, we have created an infographic that illustrates 12 things you should know about economics. It’s kind of like a cheat sheet for Econ 101. Have a look.

1) Microeconomics vs Macroeconomics

Macroeconomics is the study of the economy as a whole. It focuses on aggregate numbers and data for entire countries. Thus, it provides a broad perspective. Microeconomics on the other hand is the study of small economic units. It scrutinizes individuals and their decision making from a close perspective. Even though the two branches cover different areas of economics for the most part, they are highly interrelated.

2) Opportunity Costs

People constantly face trade-offs. They have to make choices due to scarce resources. As a result, they can’t get everything they want, so they have to pick certain things over others. Opportunity costs describe the value of the next best alternatives that are given up during this process in order to get something else.

3) Supply and Demand

The price of a good or service is determined by its supply and demand. In most cases an increase in demand results in an increase in price, given that all other factors remain unchanged. Meanwhile an increase in supply, all else equal, results in a decrease in price. In the long run, the market reaches an equilibrium price where supply equals demand.

4) Comparative Advantage

If an economic actor has the ability to produce a good or service at lower opportunity costs than another actor, they are said to have a comparative advantage. In the presence of comparative advantage, all actors can benefit from cooperation and trade if they specialize in producing and exporting the goods and services they can produce more efficiently than others.

5) Diminishing Marginal Utiltiy

In most cases, the satisfaction people get from consuming a certain good or service decreases as its supply increases. At some point, the marginal utility of consuming an additional unit may even become negative (i.e. completely unfavorable). This concept is often used by companies to set prices.

6) Economic Growth and GDP

Economic growth is necessary to satisfy people’s desire for an ever increasing standard of living, to redistribute wealth, and to advance new technologies. It is measured by the change in GDP, the total value of all final goods and services produced within an economy over a set period of time.

7) Externalities

Externalities are the positive or negative consequences of economic activities experienced by unrelated third parties. They can arise either on the production or on the consumption side. In most cases, externalities result in market failure that can only be avoided by imposing some kind of regulation to internalize them.

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8) Inflation and Deflation

Most economies experience a moderate level of inflation. That means, the overall price level increases, which is equal to a decrease in the purchasing power of money. Deflation on the other hand is less common. It describes a decrease in the overall price level, i.e. an increase in the purchasing power of money.

9) Interest Rates

Whenever a bank loans money to someone, it will expect to receive interest in return. This way it can be compensated for its opportunity costs and the risk of not getting the money back. Interest rates define how much people (or institutions) have to pay to get a loan. Hence, they have a significant impact on all monetary transactions.

10) Fiscal Policy

One way for the government to monitor and influence a country’s economy is by adjusting its spending and tax rates. The concept of fiscal policy states that increased government spending and lower tax rates will stimulate economic activity, whereas a decrease in government spending and higher tax rates will decelerate it. Thus fiscal policy can be used as a means to smooth economic fluctuations (i.e. booms and busts).

11) Monetary Policy

Central banks or currency boards can influence a country’s economy by adjusting the supply of money. They do this by buying or selling government bonds or by modifying the interest rate. An expansionary monetary policy will boost economic activity and growth, whereas a contractionary policy will reduce it.

4 Effective Trading Indicators Every Trader Should Know

When your forex trading adventure begins, you’ll likely be met with a swarm of different methods for trading. However, most trading opportunities can be easily identified with just one of four chart indicators. Once you know how to use the Moving Average, RSI, Stochastic, & MACD indicator, you’ll be well on your way to executing your trading plan like a pro. You’ll also be provided with a free reinforcement tool so that you’ll know how to identify trades using these forex indicators every day.

The Benefits of a Simple Strategy

Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Traders often feel that a complex trading strategy with many moving parts must be better when they should focus on keeping things as simple as possible. This is because a simple strategy allows for quick reactions and less stress.

If you’re just getting started, you should seek the most effective and simple strategies for identifying trades and stick with that approach.

Discover the Best Forex Indicators for a Simple Strategy

One way to simplify your trading is through a trading plan that includes chart indicators and a few rules as to how you should use those indicators. In keeping with the idea that simple is best, there are four easy indicators you should become familiar with using one or two at a time to identify trading entry and exit points:

  • Moving Average
  • RSI (Relative Strength Index)
  • Slow Stochastic
  • MACD

Once you are trading a live account a simple plan with simple rules will be your best ally.

Using Forex Indicators to Read Charts for Different Market Environments

There are many fundamental factors when determining the value of a currency relative to another currency. Many traders opt to look at the charts as a simplified way to identify trading opportunities – using forex indicators to do so.

When looking at the charts, you’ll notice two common market environments. The two environments are either ranging markets with a strong level of support and resistance , or floor and ceiling that price isn’t breaking through or a trending market where price is steadily moving higher or lower.

Using technical analysis allows you as a trader to identify range bound or trending environments and then find higher probability entries or exits based on their readings. Reading the indicators is as simple as putting them on the chart.

Trading with Moving Averages

One of the best forex indicators for any strategy is moving average. Moving averages make it easier for traders to locate trading opportunities in the direction of the overall trend. When the market is trending up, you can use the moving average or multiple moving averages to identify the trend and the right time to buy or sell.

The moving average is a plotted line that simply measures the average price of a currency pair over a specific period of time, like the last 200 days or year of price action to understand the overall direction.

Learn Forex: GBPUSD Daily Chart – Moving Average

You’ll notice a trade idea was generated above only with adding a few moving averages to the chart. Identifying trade opportunities with moving averages allows you see and trade off of momentum by entering when the currency pair moves in the direction of the moving average, and exiting when it begins to move opposite.

Trading with RSI

The Relative Strength Index or RSI is an oscillator that is simple and helpful in its application. Oscillators like the RSI help you determine when a currency is overbought or oversold, so a reversal is likely. For those who like to ‘buy low and sell high’, the RSI may be the right indicator for you.

The RSI can be used equally well in trending or ranging markets to locate better entry and exit prices. When markets have no clear direction and are ranging, you can take either buy or sell signals like you see above. When markets are trending, it becomes more obvious which direction to trade (one benefit of trend trading ) and you only want to enter in the direction of the trend when the indicator is recovering from extremes.

Because the RSI is an oscillator, it is plotted with values between 0 and 100. The value of 100 is considered overbought and a reversal to the downside is likely whereas the value of 0 is considered oversold and a reversal to the upside is commonplace. If an uptrend has been discovered, you would want to identify the RSI reversing from readings below 30 or oversold before entering back in the direction of the trend.

Trading with Stochastics

Slow stochastics are an oscillator like the RSI that can help you locate overbought or oversold environments, likely making a reversal in price. The unique aspect of trading with the stochastic indicator is the two lines, %K and %D line to signal our entry.

Because the oscillator has the same overbought or oversold readings, you simply look for the %K line to cross above the %D line through the 20 level to identify a solid buy signal in the direction of the trend.

Trading with the Moving Average Convergence & Divergence (MACD)

Sometimes known as the king of oscillators, the MACD can be used well in trending or ranging markets due to its use of moving averages provide a visual display of changes in momentum.

After you’ve identified the market environment as either ranging or trading, there are two things you want to look for to derive signals from this indictor. First, you want to recognize the lines in relation to the zero line which identify an upward or downward bias of the currency pair. Second, you want to identify a crossover or cross under of the MACD line (Red) to the Signal line (Blue) for a buy or sell trade, respectively.

Like all indicators, the MACD is best coupled with an identified trend or range-bound market. Once you’ve identified the trend, it is best to take crossovers of the MACD line in the direction of the trend. When you’ve entered the trade, you can set stops below the recent price extreme before the crossover, and set a trade limit at twice the amount you’re risking.

Learn More about Forex Trading with our Free Guides

If you’re looking to boost your forex trading knowledge even further, you might want to read one of our free trading guides . These in-depth resources cover everything you need to know about learning to trade forex such as how to read a forex quote, planning your forex trading strategy and becoming a successful trader .

You can also sign up to our free webinars to get daily news updates and trading tips from the experts.

7 Reasons Why You Shouldn’t Go To College and 4 Things To Do Instead

I got off to a bad start.

It was the fall of 2005. There I was in my college business class. I was so excited. It was day 1. I had a few business endeavors I had been working on outside of the classroom already, and I was super excited to learn about business in the college setting.

My professor introduced herself, she gave us a 10 minute speech about business and entrepreneurship and then she asked us to open our text books where she began going over a few business terms.

Since I was studying business outside of the classroom by building a business, I was puzzled to find that my professor was referencing business terminology that was flat-out incorrect and in some cases totally outdated. I proceeded to raise my hand and correct her. After the first correction she smirked and said, “thanks for clearing that up.” After the second correction, she was noticeably ticked off, and after the third correction, she asked me to leave the classroom.

I was befuddled. I mean afterall, I was paying to be taught about business and I wasn’t going to allow someone to teach me and my peers information that was incorrect.

So this is where my journey and yours begins. We’ve reached a point in human history where higher education no longer works. As a result of technology, higher education in it’s traditional college setting no longer works. It will never be effective or progressive enough to keep up with the growing needs of employers who look to college institutions for their future employees. Anyone who makes the terrible mistake of pursuing a college education in this day and age will live to regret it. Now of course, there are many professions that still require a college education such as the medical profession and law, amongst others. However, an overwhelming majority of college graduates do not pursue degrees in those fields.

I’m going to tell you 7 reasons why you shouldn’t go to college and 4 things you should do instead, because an entire generation of Millennials have already been screwed and there may not be much many of the them can do to undo the damage they’ve done with 6-figure student loan debt and worthless degrees that only lead to dead-end entry level positions, if any at all. If you’re in high school or your child is in high school or soon to be, then you need to listen up, because the reality check I’m about to give you may just save your life or the life of your loved one.

1.) Preparation For The Real World
This argument doesn’t start and stop at college. This is really a problem with our education system as a whole. However, college exacerbates this issue. As an adolescent we’re trained to get straight A’s and when we don’t perform up to par, we’re told by our parents, our teachers and our guidance counselors that “we’re throwing our life away or that we’ll never amount to anything.” So let’s say that you buy into this propaganda. What happens when you get out in the real world and realize that life doesn’t allow for perfect records, and that no matter how hard you try, you will likely lose more often than you win and you will never be perfect. Perfection is what children are molded into believing they should strive for, and the almighty “A” is the metric we use to determine the level of perfection or imperfection children have.

In case you think I’m making a big deal about nothing, look at Millennials. We’re the most highly educated generation in human history, yet many of us can’t accept the most smallest of life disappointments. We’re so used to gold stars and Straight A’s that once we screw up a job interview we come home crying to mommy about how hard the interviewer was on us. Fast forward to college graduation, kids get out of school, enter the real world and then expect that they’ve somehow earned the right to a job, but not just any old job, a high paying job with a great title, perks, benefits and bonuses. Sorry, but that’s not the real world.

2.) Job Opportunities
Do you think or expect that graduating from college should help ensure you are able to obtain suitable employment? It should in theory. Afterall, that’s why you’re spending 10’s of thousands of dollars to receive a college degree right? According to an annual study conducted by the consulting firm Accenture, 84% of graduates from the Class of 2020 expect to find a job in their chosen field. The reality is that only 67% of graduates from the previous two classes have received jobs in their chosen fields, and this number doesn’t take into account the position or pay these recent grads are receiving which is typically reported with dissatisfaction.

So why can’t college grads find jobs? It’s because they have zero skills. Here’s the fundamental reason why college is now obsolete and a total scam. The original intent of higher education was to create a workforce that exercised their brains to think bigger and brighter so that they could expand their minds to new things and new experiences. In the 1970’s this all changed. The college system went on a massive PR blitz to propagandize an entire generation into believing that college would provide high-level job opportunities, and it did. Universities first started by infiltrating high schools and paying off school districts to post their posters of two people side-by-side. One of which was a pudgy blue-collar worker next to a slim and trim guy in a business suit. You’d often see taglines, such as, “Which guy do you want to be?” This created a social and economic boom. People started enrolling in college in droves and the system was working and people were actually getting the high-level corporate gigs they were promised. However, they pushed the PR campaign too far and now the next generation has raced to obtain their college degrees at a rate much higher than previous generations. Since there was a proven track record of success, parents instilled the value of college in their children thinking they would achieve the same success story they did, but unfortunately Wall Street was watching. Wall Street, the Federal Government and the college system ganged up and skyrocketed the cost of tuition to record highs. This was easy to do because not only did they have posters blanketing high schools showing kids what a loser they would be if they didn’t go to college. They also had mom and dad at home telling them the same thing. So what was the result? This brings me to my next point.

3.) Student Loans
As a result of the scheme Wall Street, the Federal Government and the college system concocted, America now holds $1 Trillion in student loan debt. This is more than home mortgages, car loans and credit cards and here’s the worse part; 75% of this debt was accumulated between 2003 – 2020. The Federal Government loves this by the way, because student loans are the only debt that can’t be expunged in bankruptcy proceedings, which means you have no choice but to pay it. Wanna hear more devastating facts? The cost of college has gone up 1000% in the past 40 consecutive years. In fact, the growth rate has far surpassed the rate of inflation. The system that continues to feed us this bullcrap discourages us from doing the math.

According to College Board, the average cost of college tuition and fees per year ranges from $8,893 – $30,094. This doesn’t take into account room and board which according to Collegedata.com ranges from $9,500 – $10,830/year. Sum it up and a 4-year college education could cost you $80,000 – $160,000. Since the propaganda posters and the unpaid salesman (parents, teachers and guidance counselors) won’t do the math, I’ll do the math for you. Now that you know the total cost of your college education, let’s see how much your student loan payments will be. According to the figures I previously provided, your student loans would range from $920/month – $1,840/month for 10 years. Are you prepared to start your adulthood off with this kind of debt? You better think twice, because this debt is the reason why millions of kids are moving back home after college. Their monthly student loan payments exceed the cost of housing and utilities if they were to live on their own.

4.) Job Readiness
I’ve seen it over and over again. I’ve had so many colleagues, friends and family members who graduated from college, got their first corporate gig and simply weren’t prepared. College doesn’t teach you any skills. None. Nothing. Zero. Nada. Now of course, there are some fields of study that do teach you marketable skills such as accounting, medicine, law, or computer science, but a vast majority of college graduates nowadays are pursuing degrees in business administration, marketing, or psychology. These degrees are absolutely worthless. You don’t have to take my word for it. I’m just telling you what numerous hiring managers and staffing firms have told me. They’re finding it difficult to find talented and qualified applicants that are recent college graduates, because they simply have no skills. All they have is knowledge that can’t be applied to anything practical in the real world.

The same study I referenced earlier from Accenture also found that 80% of graduates from the Class of 2020 expect to be trained on-the-job by their first employer. However, more than 50% of graduates from the Classes of 2020 and 2020 report not receiving any training from their first employer which has led to a tremendous turnover rate because more and more companies are finding that recent college grads are simply unprepared and they’re not willing to spend their time and resources training new employees. They expect you to be ready to go on day 1.

From personal experience I can say that every professional job I’ve ever had has required me to know substantially more than what was printed in the job description. Lucky for me I’m well-versed in many fields so I have always performed well. I have had a very successful career in marketing working with Fortune 500 companies both on the client and agency side, and every business I’ve ever worked with expected me to know far more than just marketing. I’ve had to know web design, basic coding, various forms of marketing both online and offline, photography, graphic design, video editing and I could go on and on. This is why a college education is a joke. You simply can’t learn this many skills in a college setting for a reasonable amount of money and in a reasonable amount of time. If you wanted to learn what I’ve learned in a traditional college setting it would take you decades and hundreds of thousands of dollars. Keep reading and I’ll tell you how I achieved my skills for a few hundred bucks.

5.) Your Degree Will Be Obsolete Before You Graduate
The world moves too fast for our education system to keep up. As soon as the ink dries in a text book, the information is likely to become obsolete or incorrect before it’s even handed to the student. This was certainly the case with me, as I mentioned at the beginning of this article. Technology completely changed the game. When you look at the skills required for the most in-demand and high paying jobs they require a learning process that college can’t keep up with, because the new skills required change too frequently.

We’re living in the age of media. Everyone and everything is a media platform. People are making online celebrities out of their dogs, cats, babies and themselves. This is why graphic designers, writers, online marketers, photographers, film makers and programmers are crushing it right now and will continue to crush it for decades to come, because creativity, technology and entertainment is what drives the economy today. This is why psychology and business degrees are total pieces of junk. Business degrees lost their value in the early 90’s and psychology degrees never had value. If you obtain a business or marketing degree you will never be anything more than a project manager, and over-time more and more technologies will become available that will automate much of what you do making you completely dispensable. You’ll be tossed out with the garbage!

6.) Conversion to Corporate Clone
There’s one of two conclusions that people come to when deciding what career they want to pursue and the degree that goes along with it. One conclusion is based on the passion they have for the career field. The other more common reason is based on how in-demand the career field is. This is the scam everyone is sold in high school. “Be a doctor or a nurse or a teacher, because people will always get sick and need to be healed and people will always procreate, therefore requiring a need for teachers.” So let’s examine what’s happened to these people in the last 10 years. Doctors are being paid less thanks to Government regulation of our healthcare system, nursing has one of the highest turnover rates and teachers are being laid-off left and right all across the country due to government budget shortages.

When you go to college and spend tens of thousands of dollars to get a job that is in-demand, you become one of a million other clones that have your same specs. Millennials are the most educated generation in human history, which is why they are also one of the most underemployed generations in human history. The people who sent us down the path of higher education clearly don’t understand basic economics and the law of supply and demand. One of the biggest reasons why college grads can’t find meaningful work is because there’s too high a supply of the same people with the same credentials and not enough jobs (demand) to fill them all with meaningful work. So we now have the biggest employer’s market in human history, where employers have their pick of the litter, and because of this employees will get paid less and less and benefits will continue to erode.

7.) It’s a Waste of Time
Life is short. As of this writing, I’m 28 years old. My 20’s flew by faster than I could have ever imagined. I can’t imagine how far behind I would be if I didn’t make the biggest decision of my life 9 years ago, which was to drop out of college. Spending 4+ years pursuing a college education in this day and age when the world is changing at the speed of light is not only silly, it’s absolute insanity! Since I dropped out of college and started my career half a decade before my peers, I’m 5 years ahead of the game, plus I have zero debt. No student loans for me.

After my freshmen year of college in 2005 I began a journey to look deep inside myself and explore the trajectory of the world. I hedged a bet that the education system was going to fail us by improperly preparing students for the real world and their careers. I also explored the rising cost of college tuition rates and realized that the value portrayed was fraudulent, so I dropped out of college and got my education by educating myself. This is a good segway into 4 things to do instead of going to college.

1.) Educate Yourself
I’ve learned professional and semi-professional level skills in web design/development, marketing, business, photography, design, film making, video editing and so much more using free or inexpensive online education platforms such as YouTube and Lynda.com. In case you’re wondering what I’ve put on my resume’ for education, I put high school and this has never denied me job opportunities because my portfolio speaks for itself. In this day and age, employers care about value. They want to know what value you will bring to them. They’re not concerned with your fancy MBA or private school education. Yes. Most employers do appreciate this, but when a college graduate is put next to me, I slay the competition every single time because not only do I have the skills to back me up, my skills are vast and diverse, allowing me to provide value in several sectors of the business. A college education pigeon-holes you into one narrow lane.

2.) Build a Business
I know. I know. Everyone’s not an entrepreneur and everyone’s not capable of building a business. However, if you have the slightest aptitude or interest in building a business, you need to pursue this before you ever waste one dollar on a semester in college. Nowadays, thanks to The Internet, building a business is easier and cheaper than ever before. The barriers to entry are insanely low, and the knowledge required is relatively easy to obtain. With a few books, commitment, and a few months you can become an Internet Entrepreneur. It will not be free though. It will either cost you time or money. You can build a business online and build web traffic organically, which is technically free, but it may take a few years before your hard work produces livable wages. You can also accelerate your growth with advertising. Now you might be thinking, “where am I going to get money to start a business and advertise?” Get a job. Wait tables, bartend, work retail or anything, just don’t move out of your parents’ house. Stay home, keep your bills low and invest your money from your job into building your business. The risk is absolute zero. Since you’d be building the business with cash instead of loans, the worst case scenario is you lose your cash. The value will come in the experience of building a business, and by the way, employers love this! If you build a business and it fails, and you decide to enter the workforce and look for a real job, business experience will get your foot in the door much faster than a worthless MBA. I can say this from personal experience.

3.) Build a Brand
Are you really extraverted? Do you have a hobby or passion like make-up, fashion, gadgets, movies, music etc? If so, building a personal brand is for you. There are literally thousands of people making millions of dollars as bloggers or vloggers on YouTube. As I mentioned earlier, we’re in the age of media. If you’ve got what it takes to entertain someone or give them something of value, then you need to be building a brand.

4.) Go to a Vocational/Trade School
College isn’t for everyone. Neither is entrepreneurship. So many people complain about the lack of jobs that are available. This is true. However, they’re really referring to white collar jobs. Do you know that there are an estimated 3 million labor jobs available; 90% of them don’t require a college degree and most of them pay more than white collar jobs. They simply require a skill. A skill that can be learned at a vocational or trade school. Be careful though. Trade schools are on the rise and many of them cost just as much if not more than a traditional university education, and many of them are known for embellishing their data as it pertains to job opportunities and salary expectations.

I just gave you the cold-hard facts about a college education and I supported it with irrefutable data. You now have a choice. You can continue down a path that’s riddled with tremendous uncertainty cloaked in the disguise of opportunity, or you can wake up to the real world that surrounds you and take the path less traveled.

If a college education wasn’t necessary for Bill Gates, Mark Zuckerberg, Steve Jobs or Richard Branson, then why is it necessary for you? We hold these great leaders in such high esteem, yet we enter the institutions that weren’t necessary for these great minds.

The world we now live in today can be summed up in one word: Value. This is a tremendous divergence from the world of yesterday, because the world today requires value. It has no patience for people who are all-show and no-go. Those who contribute value to the world, their employer, their customers and the people around them will win. All others will be clones, eventually replaced to lead a life of a mediocre existence where the decisions made by people no smarter than them will dictate the entire outcome of their life.

Michael Price is an entrepreneur and author of What Next? The Millennial’s Guide To Surviving and Thriving in the Real World. An advocate of ideas for radical change, he has received critical acclaim for his lessons in education, career, entrepreneurship, and personal finance.

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