Regular forex traders will know the advantages of Forex trades quite well.  This is rapidly becoming one of the most popular, safe alternatives to other sorts of trading.  Many people who trade with Forex initially get their start using practise accounts.  This is a good way to refine your technique before making a large investment.

Many people wonder about whether using practise accounts does any good when they are ready to get into serious trading.  If you have the money to invest, you might feel as though you’re ready to get started straight away.  However, a bit of practise might do more good in the long run.

People who use practise accounts that simulate trading large sums of currency often feel more comfortable making trades in a risk-free way.  If you make a few mistakes, you don’t need to worry about losing your whole savings.  Once the time comes to make real trades, you will feel much more comfortable with the entire process.

This is also a good way to put your technical analysis skills to good use.  Since most traders prefer to use charts during the trading process, practise accounts are a good way to evaluate your own analysis skills. 

There are also a few precautions that should be taken with using practise accounts.  One is avoiding the possibility of becoming too overly confident.  This often results in catastrophic and even embarrassing losses during real trades.  Keeping the distinction between simulated trading and real trading in mind will always prove helpful.

Forex is the term for the foreign exchange market or the currency market, systems by which one currency is traded in exchange for another.  On one level, forex currency trading is used by those who merely wish to swap a foreign currency for their own.  An example would be corporations which pay out wages and other expenses in different jurisdictions.  On another level, forex is used by currency traders, who trade in currencies, in a similar way to which stocks are traded.  Currency traders seek to take advantage of even the tiniest fluctuation in the values of currencies to turn a profit. 

Forex trading does not rely that much on the notion of ‘inside information’ because changes in exchange rates are typically the result of transparent monetary flows as well as global macroeconomic forecasts.  So forex news is readily available.

In the trading of one currency against another, the currencies are noted as XXX/YYY.  In this case, YYY is the international three-letter code under ISO 4217.  This currency is then expressed as the price of one unit of the currency represented by the letters XXX.  The UK pound is expressed using the symbol GBP and the US dollar is expressed using the symbol USD.  So, the value of the pound in dollar is GBP/USD; for example, 1 pound = 1.60 dollar.    
The forex market operates on an interbank basis, with no single universal exchange for trading in two particular currencies.  As such, the market is always open and all world currencies can be traded 24 hours a day.  If the European session has finished, the US and Asian sessions will be on-going.

Whether it is machinery for the workshop or equipment for the office, the cost of equipping a business can put an intolerable strain on cash flow.  However, there is a way of solving this problem and it does not involve an overdraft or having to take out a bank loan.  Instead the enterprise can secure those business essentials through leasing and asset finance.

With leasing and asset finance there will be costs and they will eventually be higher than if the equipment was purchased outright.  But the expenditure will be spread over a period of time and the business will be spared the strain of having to find the money up front.  What is more, because costs are spread, the business may well be able to afford much better equipment.

There are also other advantages for business people availing themselves of leasing and asset finance.  It offers less risk compared with a secured loan when homes can be lost if payments are not kept up.  Also, the interest rates for the monthly payments usually do not vary.  This will allow businesses to factor them into their budgets.  Unlike with an overdraft, where the bank can demand repayment at any given time, the deal will be allowed to run for the agreed period, provided the payments have continued to be paid.

There are some disadvantages with this form of finance.  The business may have to provide a deposit.  And capital allowances are unable to be claimed on leased assets for leasing periods of less than five years (seven in some instances).

Expanding an established small business when economic times are tough can be difficult, but it can also be highly advantageous if done correctly. The trick to doing it successfully is securing adequate capital. If banks are reluctant to lend, investment finance can be a practical solution.

Filling a niche

When the economy is struggling, the rate of business failures goes up. This creates new niches for healthy businesses to expand into. At the same time, market demand continues to evolve and developing technologies create new business possibilities, but only a few businesses are able to keep up. Those that do so successfully, without overstretching themselves, have the potential to become the success stories of the future. For this reason, times of low overall economic growth are actually the ideal time to expand, provided that sufficient capital is available.

Securing an investor

Successful business people understand the advantage of expansion at such times and often take the opportunity to make lucrative investments. This means that there is always a reservoir of investment capital available for those with pitches impressive enough to attract it. A key component of this is a solid business model, even if it is not making big profits in its present form, and a team that is genuinely committed to making it a success. Attracting an investor is not just about having a good idea. It is also about demonstrating the passion required to see it through development and maximise its potential once an investment has been made.

Trading equity

Despite the rhetoric of financial independence that pervades small business culture, cooperative strategies can be just as important as competitive ones. There is nothing inherently bad about parting with some shares as long as the deal is a good one. Access to investment capital in the immediate term can mean a stronger, bigger business in the long term, so remaining shares might eventually be worth more than the total value of the original business.

Trading forex can be a profitable business, but it does involve a high element of risk.  Anyone embarking on forex trading may also need to invest in forex software, or feel that they need to undertake forex training, which will incur costs before the first trade is made.  For those who want to enjoy the potential benefits of online trading in the forex market, but who do not want to expose themselves to any unnecessary risk, invest in software, or learn forex, there is an alternative.  It is managed forex.

Managed forex allows people to make an investment with the aim of securing a return by trading forex, but through a third party.  In this case, the third party is a forex brokerage which manages the forex account on the client’s behalf.

The client actually owns the managed forex account, but it is the brokerage which deals with its trading.  With some accounts the client, especially if he has knowledge of currency trading, may advise the account manager of the particular forex signals to look for.  Otherwise, the client will rely on the use of the forex broker’s own proprietary system.

A managed forex account is opened by the individual who is finding a forex broker, and opening an account. He is then responsible for putting funds into the managed account.  Trading will be carried out by a professional trader, but he will not be able have access to, deposit or withdraw funds, without authorisation from the client.

By the very nature of managed forex accounts, clients have access to them and can view balances and profits as well as trades that are currently open or have been closed, but they are unable to make their own trades.  This is one of the issues that anyone interested in currency trading should consider before opening a managed account.

Investment finance is a way of bringing more capital into a business.  With this form of finance, alternatively known as equity finance, a portion of the business is sold off to investors in the form of shares.  The only businesses that can avail themselves of this form of financing are those with limited liability.  This means that the likes of sole traders or partnerships are not able to use this form of raising business capital.

Owners of businesses who raise extra capital through equity finance should understand that they will be losing total control of the company to a third party, in this case the shareholders.  The advantage, however, is should the share price rise then the value of the owner’s share of the company will also increase.

Any owner deciding to sell shares in his company to raise finance must also realise that he will no longer be the sole person making key decisions for the business.  Those who have bought shares – the shareholders – are also entitled to their input.  That can be advantageous, particularly if they bring in new skills and experience.

Investment finance also has other advantages.  Unlike business loans, if they can be secured, or bank overdrafts, there are no interest payments to drain the company’s financial resources.   Any business risks are shared with the shareholders.  But anyone considering investment finance should understand that it can be a very time consuming and expensive solution.  These factors should be considered before deciding to raise business capital through equity finance.

Investment finance for business can be raised in several ways.  One is known as a buyout when those involved with the company buy a controlling share.  Private equity firms often purchase shares in companies with the potential for high growth, while venture capitalists will seek a shareholding in companies with potential. 

Companies use invoice factoring as a method of reducing cash flow problems by accessing money against sums owed on sales invoices. Factoring enables cash to be accessed very quickly, often within 24-hours and is a viable alternative to a company having to increase its overdraft or take out a bank loan.

Invoice factoring is offered by financial brokers, such as Touch Financial and is a reasonably simple concept. The client company invoices its customer for the service or goods provided and a copy is sent to the invoice finance broker. The broker then presents the client company with a sum of money, usually between 80% and 90%, of the total value of the invoice.

Once the finance broker has succeeded in securing payment of the invoice the balance is paid over to the client company, minus the agreed brokerage charges.

One of the advantages of factoring is that it is the broker who becomes responsible for collecting payment of the invoice rather than the company that issued it. This enables the client company to concentrate on its core business activities rather than having to take the time and effort to recover the debt. It also saves on the cost of phone calls, statements and other correspondence, not to mention salaries to credit control staff, as all this is handled by the broker.

Another advantage of invoice factoring is that it is suitable for a wide range of businesses, small, medium and large; from start-ups to well established companies. Often, companies with a minimum turnover of £250,000 (excluding VAT) are considered suitable to take advantage of invoice factoring.

27
Jul

Gaining finance to start your own business can be a challenging task especially in today’s economic crisis, but a well written small business plan can be the difference between getting funding and not. A business plan defines your business, what it wants to achieve and how you plan to achieve it.

In this article we take you through the steps of creating a great business plan.
What is your business and what does it plan to do?

This is perhaps the most important area of a business plan and could be the difference between attract investment or not. Your business plan should clearly state:
•    What your business intends to do
•    What products/services will the business provide
•    How will customers have access to your products/services i.e. commercial shop, online, over the phone
•    How will you price your products/services

Knowing your customer base

Another essential part to a business plan is knowing about your potential customers and how you are going to market your products/services to them. Here are some questions that you should take into consideration:
•    How old are they? Under 18, 18-30, 40-50, 50+
•    How much disposable income will they have?
•    Do they already buy a similar product or service to the one that you’ll be offering?
•    Why would they choose your business over a competitor?
•    How will you tell prospective customers about your product or service?

Doing some research and knowing as much as you can about the types of people that would buy your product or service will help you in your marketing plan.

Company name

The name in which you choose for your company not only conveys the company to potential customer, it is also your brand and should be chosen carefully. First thing you should do is make sure that the name you have chosen is not already in use and that the web domain is available (if you plan to have a website). You should also make sure that the branding and name will fit with uniforms and business stationary.

Employing staff

At the beginning of a small business venture staff may not be an issue, but as the company starts to expand hiring employees will help you grow your brand.

Before you take on any staff it is important to familiarise yourself with the employment law and make provisions for any entitlements that they need.

Writing the business plan

When writing your business plan make sure that it is clear and concise, and be realistic about any profits that you plan to make. Use your research to support your calculations and don’t be afraid of changing it once your business begins to grow and expand.

23
Jul
stored in: Forex, Forex Tips and tagged:

If you are keen on Currency trading, It is pretty sure that you will have heard of the thing that the professionals use, automated FX software. You will be able to find plenty of examples of automated FX software, now the FX sector is just as accessible to the small investor as well as the large institutions.

There is certainly also the logic behind the advancement of numerous automated Foreign currency trading platforms, the very best of course are designed by highly skilled and experienced Forex traders, and it has been designed to reduce the margin of error. So, what do you get with your automatic Forex trading computer software? Your software program will truly let you select your individual currency pair, your selling cost, along with your asking cost. Previously Forex Traders did their buying and selling manually, you really had to be on your toes the whole time and with the currency market rises and falls can happen quickly at any time of day or night, much better to have an automated programme to do it for you, leaving you to do other things. Using a system that is set up for you means that it is akin to having your own Forex trader at your computer.

14
Jul

Any enterprise seeking to raise more capital might consider trying to raise a business loan.  These types of loans might also be considered for those seeking cash to start up a new business.

The loans are usually borrowed through the banks or, depending on the type of business, Community Development Finance Institutions.  Loans where investors also lend money to enterprises to assist companies with their borrowing requirements are also available.  Alternatives for securing a business loan are through borrowing from other companies or even family and acquaintances.

As with any other loan, interest will have to be paid on a business loan.  This will mean the company or enterprise being subjected to costs during the period of the loan, and this should be carefully considered when considering their financing options.

Business loans are also available to sole traders and partnerships as well.  As these enterprises do not enjoy limited liability this could mean a home being at risk if the loan is secured and payments are not met.

The amount of interest a business will have to pay on the loan will depend on several factors, including the amount being borrowed and the length of the loan period.  The rate of interest may be fixed, not changing at all during the period of the loan, or be variable where it is likely to fluctuate.  Both have their advantages and disadvantages.   A fixed rate will ensure the business owner knows how much he will be paying throughout.  He will not be forced to pay any more should the interest rate rise, but also will not be able to benefit should rates tumble.

With a variable interest rate the owner must realise that payments are likely to change while it is being paid back.  He will benefit should rates tumble, but could face difficulties should they rise.