Posts Tagged ‘Dictionary’

Why Diversification is So Important in Forex Trading

Saturday, November 15th, 2008

Diversification as defined by the American Heritage dictionary is: “To distribute (investments) among different companies or securities in order to limit losses in the event of a fall in a particular market or industry”.

The primary goal of diversification is to “capitalize on returns” through investments in different areas so prevent a total wipe of your positions should the market turn against you. Nearly all investment specialists have the same opinion that, diversification is absolutely necessary to avoid risks for long-term investments.

Just imagine that you have an account in Forex, and you only trade the EUR/USD, can you diversify your position?

The answer is YES. A very resounding yes at that as well! Even if you trade just one currency pair you still should diversify your holdings. In a while we will go through just how to do that. Let us first explore the advantages and disadvantages of diversification in Forex.

One of the advantages of having a diverse holding would create more stability in your account. Just image if one trade turns against you (which is highly likely) you have at least some other trades that would win. Thus your final profit and loss statements for a day will show a profit. If you had just one trade most likely you would be facing with a loss for the day.

A disadvantage of diversification is that there is the possibility that you get carried away and over diversify your positions. Focus is needed to maintain profitability in your account, an over diversification will dilute that focus which makes it difficult to grow your account.

To illustrate the above 2 examples let’s work through some figures:

For instance you fund your account with $10,000 and each position size you take is normally 5% of your total account. How should you diversify your account?

There are three ways of diversifying and I recommend that you do at least two. First method is that you break your 5% into 1% each and trade with 1% per trade instead of a huge 5% in a single trade.

Second is that you trade different time frames, for instance you normally trade 5 minutes, now have two position one 5 the other 15 minutes.

Third, you can trade non related currency pairs. For example The EUR/JYP and the GBP/USD

Based on your money management rules, use at least 2 of the above 3 points to help you diversify your positions.

Next we have to address the issue of over diversification. It can be a potential problem if you lose focus and over diversify. As the old saying goes, “too many cooks spoil the broth” over diversification is like that. I would suggest that you should have no more then 3 positions opened at any point in time.

For example, you decided to use 5% of your account to trade and instead of having in all in one trade, you slit it up into 2 different trades with 2 pairs.

You use 2.5% to trade the EUR/JPY and the next 2.5% to trade GBP/USD. This spreads out you risk a fair amount. You can still focus on these two trades and if thing go well you will earn on both. If one fails there is a chance that the other will win.

There is that possibility that both trades turn against you. That’s why at the onset you only use no more than 5% of your account to trade!

Diversification is a part of good money management; it will protect your account and help you make more money in the long term.

Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading and down load your FREE e-book “Money Management” for a limited time only!

Returning Accountability to Public Servants

Friday, July 6th, 2007

Issue: Should parents be instructed by their children on how the parents run the household? The parents by virtue of their position as creator of the children tell the children how they are to behave, not the other way around. Who created the federal government? The Constitution states that “We the People” created the government for specific and defined purposes with specific and defined powers. One of the responsibilities of “We the People” is to ensure the government is held accountable. In this article I will discuss some of the issues we face and provide some guidance on how we can accomplish this.

I would like to start this article on accountability with the words of Patrick Henry: “This is no time for ceremony. The question before the House is one of awful moment to this country. For my own part, I consider it as nothing less than a question of freedom or slavery… It is only in this way that we can hope to arrive at truth, and fulfill the great responsibility which we hold to God and our country… Mr. President, it is natural to man to indulge in the illusions of hope… Is life so dear, or peace so sweet, as to be purchased at the price of chains and slavery? Forbid it, Almighty God! I know not what course others may take; but as for me, give me liberty or give me death!”

Patrick Henry’s famous “give me liberty or give me death” speech, when America sat on the brink of war with England, shows the resolve of the American settlers. Hearts were split between the land they grew up with, where their family’s lineage ran long and the binds of generations weighed heavy upon them. But they suffered under a government that would not answer their grievances and instead added increased taxation and more encroaching laws.

Today we have government intrusion into every aspect of our lives. We no longer own property free and clear, if you think you do just try not paying property “tax” and see how long they let you keep “your” property. Every right we may have had at the outset of this great union has been slowly infringed upon, taxed, limited, licensed, fee’s assessed, coded, legislated, and in some cases outright denied. The taxation rate within the colonies that flamed the feelings of oppression and revolt was between three and four percent. Today we give at least 25% of our total earnings and feel good when Uncle Sam gives us back a $500.00 refund check, without paying any interest.

Yet in this day and age of instant communication, You-Tube, cable television, cell phones, internet, etc.; very few Americans know anything about the serious threats that loom over them and their posterity. And those that do may not know what to do about it.

James Madison stated: “I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations.”

According to Black’s Law Dictionary (6th Edition) the term “Unalienable Right” is a “right which can NEVER be abridged because they are so fundamental.” (Abridged means: “To reduce or diminish.”) The seventh edition of Black’s however states that Unalienable Right means “a right that cannot be transferred or surrendered.”

Notice the difference, in the former edition where they denote a right cannot be made to be reduced or diminished. In the later they state that it cannot merely be transferred or surrendered. This would leave ground for one to surmise the ability to diminish or limit a right so long as they do not take it away completely.

Because governments are endowed with powers that can have good as well as evil effects upon their citizenry it is of utmost importance to the well being of that society to hold the government to a high standard and especially those who manage it.

Recently a group of concerned citizens, under the banner of the “We The People Foundation,” petitioned the government for a redress of grievances as provided for under the First Amendment. The government’s response was silence! Many more attempts were made with similar results; so they took the government to court. During this whole process the government acknowledged that, indeed, the people have the “right” to petition the government but that the government has no constitutional responsibility to answer. This of course is absolutely absurd!

For those who remember their history, one of the primary reasons, and in may people’s opinion the most important reason, we went to war with Britain was the King’s refusal to respond to the colonists petitions. In the Declaration of Independence the forefathers listed item after item of the oppressions heaped upon them and stated: “In every stage of these oppressions we have petitioned for redress in the most humble terms; our repeated petitions have been answered only by repeated injury.”

An IRS official when answering the question why they would not answer the petition of the We The People Foundation they responded that they were answering them by “enforcement.” This reminds me of the axiom “that those who forget the lessons of history are doomed to repeat them.”

The We The People Foundation’s case was appealed all the way to the Supreme Court. The Supreme Court decided that it would not hear the case. In my opinion the spineless Black robes chose to play politics with our rights and freedoms instead of standing up for the people and honoring their oath to support and defend the Constitution.

The Constitution defines itself as the supreme law of the land. The Supreme Court has affirmed that any laws that stray outside the enumerated boundaries of the Constitution are repugnant and void as law. This does not mean that the De Facto power does not exist to enforce unconstitutional law, it surely does, it only means that they are wrong doing it and they do it anyway, this is termed as despotic rule.

For instance, the Second Amendment states that “…the right of the people to keep and bare arms shall not be infringed.” Today we have over 20,000 laws, various licenses, fees, applications, and taxes on that “right.” This to me is a prime example of infringement by anyone’s definition.

So what do we do when those sworn to support and defend the Constitution, don’t?

Resolution: It is the responsibility of the citizens of this nation to hold the government accountable. Every government throughout history that has been left to its own devices eventually turned on its own people (some would argue this is already happening here). So what can WE do to hold our public servants accountable to their oaths and ensure this does not happen here?

First – get informed; you cannot hold your government accountable if you don’t know what they are supposed to be doing in the first place. The good news is the vast majority of information you need is readily available and free. Start with the founding documents, read the Declaration of Independence, the Constitution, and the Bill of Rights. Just knowing these documents will put you ahead of the majority of Americans.

Second – if an the persons are elected officials then on the next election cycle fire him! Every other year we have the opportunity to change a percentage of those in office. Review the voting record of any person coming up for re-election. If they fail to uphold the constitutional standard fire their butts and replace them with someone who will.

Third – Run for office yourself; sometimes when you want a job done right you have to do it yourself, or support someone you know who will. Get involved!

Fourth – Know what your servants are up to. Read the bills being presented and contact your representative to let them know you either support or oppose those bills. There are a number of watchdog organizations that will send you email alerts whenever a suspect bill is introduced. Groups like Restore the Republic, Downsize DC, NRA, Gun Owners of America, and many more.

Fifth – When public servants disregard the Constitution call for their impeachment. It is within the right of every citizen to contact their representative and demand adherence to Article II Section 1 and Article VI of the Constitution where they swear an oath to support and defend the Constitution. Breach of this oath is grounds for impeachment.

Sixth – Support new bills that hold your representatives accountable to the Constitution. Two bills worth supporting are the Enumerated Powers Act and the Read the Bills Act. Both of these bills originated at the grass roots level and are gaining support in Washington.

The Read the Bills act requires any member voting yes on the bill to have actually read the bill he is voting on. This makes perfect sense. How can anyone in good faith vote to enact law when they have not read the law.

The Enumerated Powers Act requires anyone submitting a bill for consideration must cite the Constitutional Authority under which this bill gains its authority to authorize the legislation to pass such a bill. Without a clear tie to a constitutional power no bill would be allowed to the floor let alone a vote unless it can be tied directly to the Constitution.

Seventh – Don’t be selfish, once you know something tell someone else. Write your family and friends and pass along the important information you find. Don’t assume they already know this stuff, it was new to you when you found it, share it.

Eighth – Contact your representative and have them sponsor or support a bill that requires every elected representative in both houses to be versed in the founding documents and to know what a “republican form of government” looks like. They cannot “support and defend” a thing they know nothing about.

Ninth – The last and final resort was stated at the beginning of this article by Patrick Henry in preparation of supporting this nation – “Give me Liberty or give me Death.” The founding document, the Declaration of Independence, states “Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it… It is their duty to throw off such Government, and to provide new Guards for their future security…”

So you see my fellow Americans it is up to us to keep our public servants accountable for what THEY do and how WE respond makes all the difference.

Michael LeMieux is a retired U.S. Army intelligence and imagery analyst, and has served combat tours in Kuwait and Afghanistan with the 19th Special Forces. He is a Purple Heart recipient for injuries received in Afghanistan. Mr. LeMieux is the author of Unalienable Rights and the denial of the U.S. Constitution, published by Publish America. You can contact Mr. LeMieux via his website at http://www.constitutiondenied.com