There are certain basic trading tenets that all trading plans should address, such as proper money management. But again, what is proper money management for one trader may not be for another.

Below are a few general questions that may help you define or refine your own trading plan, or that may help reaffirm that your trading plan is the right on the mark for you.

1. Are you a trend trader?
   Most successful traders are trend followers, in some form or another. But there are a few successful traders who do “buck the trend” and are not trend-followers. If you are a trend-following trader, then your trading plan should include employing some technical tools that focus on the trend of the market–such as moving averages or oscillators like the Relative Strength Index (RSI) or Slow Stochastics. If you do not consider yourself a trend-following trader, then you probably should not use trading tools whose main focus is price trend.

2. What is your trading “timeframe?”
   If you are mostly a “day trader,” then your trading plan needs to include trading tools that attempt to define shorter-term trends or recognize shorter-term market turns. A day trader is likely to be less interested in a 40-day moving average than he or she is a 15-minute moving average. A longer-term “position trader” is likely to focus on longer-term trend lines or fundamental factors such as economic reports or weather patterns. There are successful day traders and successful position traders, but the point here is that some different trading tools should be employed for each type of trader.
   
   
3. Are you an aggressive or conservative trader?
   There is no right or wrong answer here. There are successful aggressive traders and successful conservative traders–but they very likely have significantly different trading plans or methods. The aggressive trader should realize that he or she will likely experience some bigger trading losses at some point, in an attempt to take bigger profits off the table. The aggressive trader’s trading plan should take into account that trading-account drawdowns are likely to be larger during any losing streak. While the conservative trader’s trading plan will likely not place as much emphasis on big drawdowns, neither should that more conservative trading plan expect to see bigger trading profits accrue in shorter periods of time.

4. What is your benchmark for trading success?
   This question does not have a single right answer, either. However, your trading plan needs to take into account what you deem to be successful trading. Are you satisfied to be a part-time trader who is not “in the market” with trades at all times. Or, are you determined to be a full-time trader who does have a position or positions on most of the time. There is no doubt that there is much more pressure on the person who tries to be a full-time trader. Any trading plan for the full-time trader needs to be that much more concise, including contingency plans for losing streaks and bigger trading-account drawdowns.

Today though, we are going to talk about a trading indicator that actually does live up to it’s promise and is not so difficult to interpret, at least in part. More on that later. The indicator we are talking about is MFI, or Market Facilitation Index. It was developed by Bill Williams and is really a great indicator for peering beneath the surface of market action.

It is computed by dividing the high price of the day minus the low price of the day by the volume for the day or, (H-L)/V. It is most easily read when displayed as a histogram.

The benefit of this indicator is that it gives insight as to how efficient the price is moving by graphically showing how much volume it took to move the price a given distance, the idea being the less volume it took to move the price, the more efficient it moved. That is not to say a little volume accompanied by a large price move indicates a strong move. The amount of volume is relative to recent trading.

Four basic conditions can be noted from view MFI and volume together.

1) Index is up and volume is up (strong market): This indicates the market is basically moving in one direction and more participants are entering the market. This is an excellent time to already have an open position in the direction the market is moving.

2) Index is down and volume is down (fade): The market idling, usually from fading interest. This usually occurs towards the end of a trend or rally. However, the direction of the next trend or rally could be in either direction.

3) Index up and volume down (fake): The market is moving basically in one direction, but the volume is down due to lack of new participants. Since less volume is moving the price, the activity may be generated primarily on the floor, faking the actual public sentiment.

4) Index down and volume up (squat): The volume is increasing which indicates additional market participants, but the price is not moving as strongly in the same direction. This typically occurs prior to a significant price move in the opposite direction, as the new market participants are those attempting to move the price in a new direction.

We could spend quite a bit of time going over each of the above scenarios, but we’ll focus on number 4, as in my opinion, it is one of the easiest to spot and is very consistent when the conditions are extreme. Take a look at the chart below. The Red indicator is MFI and the blue indicator is volume. You can easily see that during the month of January, while price is on a steady decline, the MFI indicator is also steadily declining while volume is increasing. This is a strong indication of that the market is approaching a turning point, which as you can see in the chart that is does.

Will you always see this pattern before a market turning point? No. You are using these indicators to discern the sentiment behind the market action. Often times market sentiment is mixed and doesn’t give a clear picture with just the days totals. A much clearer picture can be obtained by viewing the individual transactions for the day. The more one sided it becomes however, the more discernable the pattern becomes with end of day data. That is why a clear relationship between MFI and volume is not always apparent, but that is not a problem. If you don’t see a clear indication, move on to another trade or use another method of analysis. As with other indicators, you must try not to “read into it” something that is not there. When a clear relationship is discernable though, this is a great asset to have. It is also a great confirmation tool to use in conjunction with other indicators. With some practice, combinations 1 through 3 can be noted as well.

Unexpected Growth
Accenture reported a strong quarter all around. Net income for the company’s fiscal second quarter grew 37% to $406.6 million (64 cents per share) from $296.7 million (47 cents per share). Revenue was strong also, growing 17% to $6.06 billion from $5.17 billion. The company strongly exceeded expectations on both the top and bottom lines. Consensus analyst estimates had forecast profit of 56 cents per share on $5.59 billion of revenue.

Accenture is thriving as its clients struggle for answers in a troubled market. In the press release, CEO William Green said the performance “reflects the momentum we have seen in the marketplace and the essential nature of our services”. Others that serve businesses, like Oracle (Nasdaq:ORCL) and Cisco (Nasdaq:CSCO) have reported strong growth, but are still seeing the effects of reduced demand. Green went on to state that bookings were strong for the company. It has the highest level of consulting bookings in its history, and demand is continuing. (To learn all about the world of consulting, check out Consulting – Everybody’s Doing It, Should You?)

While fears of soft business spending seem like they should logically hurt a company like Accenture, the current economic landscape proves to still be attractive for its business. More clients are relying on outsourcing to run their businesses more efficiently in a challenging environment. This is not just in the U.S. either. The company grew revenues in all of its three regions in which it does business.

Bad News Is Good News
The company can expect to benefit from this environment a little longer. While GDP growth has not turned negative, the Commerce Department reported its final measure of GDP for the fourth quarter of 2007, leaving it unrevised at 0.6%. This was nothing new, but it reaffirmed the fact that growth in the U.S. has come to a near halt. (To learn how to include the big picture in your analysis, check out The Importance Of Inflation And GDP.)

This is a time where we are seeing a slowdown in a business cycle, with more and more layoffs being reported all the time. Unfortunately for the economy, this is bad news and will take some time to work itself out. Fortunately for Accenture, the company can benefit from this continued weakness and establish stronger relationships. The company will still benefit when spending ticks up after this all runs its course. I think the stock is attractive trading at 13.3 times forward earnings estimates, and this stock could have run up much more with the quarter it reported.

The Bottom Line
Accenture came in with very strong results for its fiscal second quarter. The company beat analyst estimates on both the top and bottom lines, showing that demand for its services continue to be strong in a weak economic environment. I think the company has proved its position and could be trading at a higher multiple due to its growth. The shares look particularly attractive after the light run up on such a strong quarter.

Stop losses are a means to protect against excessive losses associated with your trading.  They are not, however, guarantees.  For example, let’s say you had a position in wheat or soybeans in recent volatile trading, and the markets went limit up or down against you.  There is no guarantee that, just because you have a stop loss, you will be filled at that price – especially in a limit up/down market.  Similarly, in a “fast” market (when prices are moving at the speed of light) your stop may be touched, but you may get filled several points away from the stop, causing a greater-than-anticipated loss.

These things happen from time to time and are unavoidable in trading.  As a casual and unscientific observation, I have noticed that my stops are filled more or less as set in the electronic markets I trade, even in fast and limit move environments.

Stop losses are a common-sense means of managing risk and money.  Stop losses set a predefined pain threshold, if you will, for loss.  If we are smart about setting stop losses, we will take a moment to actually calculate how much money we will lose if our stop loss is hit and, knowing that, if we can stand to take the trade should our stop loss be hit.  If not, maybe you should consider another trade with less volatility.

Stop losses are not a conspiracy against you.  Trust me, I have been there.  For example, in a recent Japanese Yen trade, my stop loss was hit, the market went 5 points above it and then went right back to where it was at the beginning of the day.  I missed out on more than $1,200 of profit because I was stopped out.  There are times when I think there is a fat guy in a cheap suit sitting in front of his computer screen just waiting to punish me by taking my stop.  NOT TRUE.

So, how do we determine where to set our stop losses?  First, you must understand that setting stop losses too close to the market’s movement will work against you and gradually and painfully eat away at the value of your account.  Setting stop losses too close to the market is a sure-fire sign that you are a newbie to trading or have absolutely no faith in the trading system you are using.

CEOs are begging for loans from oil-rich Middle East nations – nations that could one day use their financial leverage to demand that businesses comply with Islamic law (shari’a).

“The launch of these indices underlines Standard & Poor’s commitment to providing Islamic investors with the widest possible investment options which were screened for Shariah compliance and equipping them with the tools they need to quantify their performance,” Alka Banerjee, vice-president (index services), S&P, said.Standard & Poor’s Shariah Indices are screened by Ratings Intelligence Partners, a Kuwait-based consulting company specialising in the Islamic investment market. Ratings Intelligence Partners researchers interface directly with a dedicated Shariah Supervisory Board. The Board is comprised of a group of Islamic scholars whose role is to interpret business issues as well as financial practices and recommend actions in relation to Shariah index management.

Many Baby Boomers are waking up to the reality that this ain’t their father’s retirement. With Americans living longer and healthier lives and still retiring at 62 (or many times younger) they’re finding that a gold pen and pension aren’t getting them as far as they expected. Many Baby Boomers have discovered that the money they saved in retirement accounts may not outlast their lives. But according to Arthur Cooper, an Irvine-based CERTIFIED FINANCIAL PLANNER™ professional, a few simple steps can help investors build a nest egg for their golden years.

Irvine, CA (PRWEB) September 20, 2007 — Many Baby Boomers are waking up to the reality that this ain’t their father’s retirement. With Americans living longer and healthier lives and still retiring at 62 (or many times younger) they’re finding that a gold pen and pension aren’t getting them as far as they expected. Many Baby Boomers have discovered that the money they saved in retirement accounts may not outlast their lives. But according to Arthur Cooper, an Irvine-based CERTIFIED FINANCIAL PLANNER™ professional, a few simple steps can help investors build a nest egg for their golden years.

DON’T BE AFRAID TO GET HELP
A financial professional can help map out a strategy for generating income that outlasts your life including inflation estimates and income distribution scenarios.

What is Financial Plan?

It is a structured blueprint to manage your cash flow. This also includes planning for your education, retirement, tax payments, estate and business planning and other specific long-term or short-term goals.

Risk management of the plan is incorporated into the entire strategy and a financial planner is the best person to help you map out a financial plan. Unfortunately, some financial plans do not work out.

Without a specialist’s assistance, you can expect your plan to pack up. But if you’re decided to do it on your own, make a realistic plan. Making the personal finance plan is like preparing your household budget. Stick to the plan and you’re on your way to a secure future or achieve your goal.

Who Needs Financial Planning?

Everybody with a regular and stable income needs financial planning. Salaried workers are the best candidates for such planning, considering that someday they are going to retire and live on their retirement plan. If nothing has been done to prepare one’s retirement plan, the future is bleak and fraught with financial uncertainties.

Government employees and those employed in the private sector should consider the advantages of having a personal finance plan. If employment is their only means of financial stability in the present, the more they should consult a financial planning specialist to help them set out realistic parameters to ensure the success of the blueprint.

People who do not know how to manage their money properly are the ideal candidates for financial planning. The plan would help them know where there is money is going and how much is coming in. This will help them become aware of their finances and encourage them to look for investment opportunities.

Saving and Investing

Before you finalize your financial plan can, determine sources of revenues–paychecks, DSS and pension benefits, investment earnings, unemployment checks, and child support or alimony. Add this all up to determine the total amount you get monthly. If you are unemployed but earn irregular income, arrive at a minimum monthly average.

The next step in your financial planning is to add up your regular expenses–food, rent, utilities, transportation, entertainment, clothing, and medication if you have a medical problem. The next step is to calculate how much you can put towards your investment, retirement, educational or tax plan.

Once everything has been figured out, you’ll have to stick to a balanced plan. It may be difficult to adhere strictly to a budget but the in the end, the benefits will outweigh the sacrifices you endured to achieve your goal whether you’re saving your money or investing it in a worthwhile personal finance project.

Your Plan

Sound financial management is not in anybody’s agenda. When problems crop up, people look towards planning as a way out of their financial problem. In instances when they’ve occurred huge credit card debts, they realize to see the folly of their careless spending.

Talk to any retired worker and listen to what they have to say. The unlucky ones will tell you that they regret ignoring the advice to get a retirement plan or an insurance policy. Had they heeded the advices of well-meaning friends they wouldn’t be in dire financial straits in their old age. They lacked the will to get on with their personal financial planning when they were younger and employed.

The lucky retirees will tell you how they endured living with a budget and saving towards a future. They were fortunate because they found expert advice when they started to take interest in financial planning. The thought of being old and penniless one day bolstered their resolve to follow the plan conscientiously.

Planning Your Finances

Mapping out your financial plan starts with assessing your resources and liabilities. Include your regular expenses to get by from one month to the next. Review the list and look for areas where you can minimize spending and the money saved added up to the monthly contribution towards your financial goal–paying off credit card debts, investments, or savings.

Your financial plan should be manageable and realistic. Do not slash a huge chunk from regular expenses just to shorten your time plan of 6 months to three months. This will backfire and you’ll find yourself dipping your fingers into the funds intended for other purposes, or you’ll be discouraged at some point to continue with your financial plan.

Make your planning simple, doable, and realistic. A fool-proof plan never assumes that you and your family can live on a drastically cut budget. The plan should have a timescale that will allow you save money and still have enough left-over for some minor financial setbacks. The cardinal rule to achieve your financial goals is never to touch the money that’s intended for your future security.

Getting Professional Help

Having qualms about your ability to cope with financial plan? Get professional help. A professional financial planner can devise a financial plan that suited to your needs and lifestyle and introduce avenues for investment, savings, and spending.

He will be constantly monitoring how you are doing concerning the financial plan drawn up. He’ll be able to give advice when you think that the going is getting rough. Expect some difficult times when you’re investing for the future.

It may cost to get professional help but unless you can do it on your own live by the financial goals, go ahead. Whether you get professional help or not, the success of your personal finance aims will hinge on your determination to make it work.