The 7 Top Ways Millionaires Become Wealthy

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There are 7 common factors to those who build net fortunes of one million dollars or more. In America, there has never been more personal wealth than there is today; yet most American’s are not wealthy. Amazingly, a mere 3.5% of our households own almost one-half of the wealth in the United States! Although we may be hard working, educated, moderate to high-income earners, why are so few of us affluent?

In studying the affluent, I found a pattern that the wealthy follow. It is more often the result of planning, hard work, perseverance, and self-discipline that determines who become wealthy. The factors compiled here are summarized from the research done by Thomas Stanley Ph.D. on over 1100 actual millionaires (many are multi-millionaires) in the U.S. today.

1) Live Well Below Your Means

Don’t be fooled. The ‘average’ millionaire doesn’t look like a millionaire! The key word here is frugal, frugal, and frugal. The typical person is America is a consumptionist. It’s in our blood. We work hard, make money, and spend it well. Not the typical millionaire! They play great defense (saving and investing) as well as offense (making money). Just like in football – great offense is exciting…but great defense wins games. An interesting note: Millionaires on average claimed their spouses were as frugal or more than they were. It’s a family affair: Sacrifice high consumption today, for financial freedom tomorrow.

How To Become A Successful Forex Trader

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Retail traders just starting out in the forex market are often unprepared for what lies ahead and, as such, end up undergoing the same life cycle: first they dive in head first - usually losing their first account - and then they either give up, or they take a step back and do a little more research and open a demo account to practice. Those who do this will often eventually open another live account, and experience a little more success - breaking even or turning a profit. To help avoid the losses from hastily diving into forex trading, this article will introduce you to a framework for a medium-term forex trading system to get you started on the right foot, help you save money and ultimately become a profitable retail forex trader.

Why Medium Term?
So, why are we focusing on medium-term forex trading? Why not long-term or short-term strategies? To answer that question, let's take a look at the following comparison table:

Type of Trader Definition Good Points Bad Points

Short-Term (Scalper) A trader who looks to open and close a trade within minutes, often taking advantage of small price movements with a large amount of leverage. Quick realization of profits or losses due to the rapid-fire nature of this type of trading. Large capital and/or risk requirements due to the large amount of leverage needed to profit from such small movements.
Medium-Term A trader typically looking to hold positions for one or more days, often taking advantage of opportunistic technical situations. Lowest capital requirements of the three because leverage is necessary only to boost profits. Fewer opportunities because these types of trades are more difficult to find and execute.

Long-Term A trader looking to hold positions for months or years, often basing decisions on long-term fundamental factors. More reliable long-run profits because this depends on reliable fundamental factors. Large capital requirements to cover volatile movements against any open position.

Now, you will notice that both short-term and long-term traders require a large amount of capital - the first type needs it to generate enough leverage, and the other to cover volatility. Although these two types of traders exist in the marketplace, they are often positions held by high-net-worth individuals or larger funds. For these reasons, retail traders are most likely to succeed using a medium-term strategy.

The Basic Framework
The framework of the strategy covered in this article will focus on one central concept: trading with the odds. To do this, we will look at a variety of techniques in multiple time frames to determine whether a given trade is worth taking. Keep in mind, however, that this is not a mechanical/automatic trading system; rather, it is a system by which you will receive technical input and make a decision based upon it. The key is finding situations where all (or most) of the technical signals point in the same direction. These high-probability trading situations will, in turn, generally be profitable.

TOP QUESTIONS ABOUT CURRENCY TRADING?

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Although forex is the largest financial market in the world, it is relatively unfamiliar terrain for retail traders. Until the popularization of internet trading a few years ago, FX was primarily the domain of large financial institutions, multinational corporations and secretive hedge funds. But times have changed, and individual investors are hungry for information on this fascinating market. Whether you are an FX novice or just need a refresher course on the basics of currency trading, read on to find the answers to the most frequently asked questions about the forex market.

How does the forex market differ from other markets?

Unlike stocks, futures or options, currency trading does not take place on a regulated exchange. It is not controlled by any central governing body, there are no clearing houses to guarantee the trades and there is no arbitration panel to adjudicate disputes. All members trade with each other based on credit agreements. Essentially, business in the largest, most liquid market in the world depends on nothing more than a metaphorical handshake.

At first glance, this ad-hoc arrangement must seem bewildering to investors who are used to structured exchanges such as the NYSE or CME. (To learn more, see Getting To Know Stock Exchanges.) However, this arrangement works exceedingly well in practice; because participants in FX must both compete and cooperate with each other, self regulation provides very effective control over the market. Furthermore, reputable retail FX dealers in the United States become members of the National Futures Association (NFA), and by doing so they agree to binding arbitration in the event of any dispute. Therefore, it is critical that any retail customer who contemplates trading currencies do so only through an NFA member firm.

The FX market is different from other markets in some other key ways that are sure to raise eyebrows. Think that the EUR/USD is going to spiral downward? Feel free to short the pair at will. There is no uptick rule in FX as there is in stocks. There are also no limits on the size of your position (as there are in futures); so, in theory, you could sell $100 billion worth of currency if you had the capital to do it. If your biggest Japanese client, who also happens to golf with the governor of the Bank of Japan tells you on the golf course that BOJ is planning to raise rates at its next meeting, you could go right ahead and buy as much yen as you like. No one will ever prosecute you for insider trading should your bet pay off. There is no such thing as insider trading in FX; in fact, European economic data, such as German employment figures, are often leaked days before they are officially released.

Before we leave you with the impression that FX is the Wild West of finance, we should note that this is the most liquid and fluid market in the world. It trades 24 hours a day, from 5pm EST Sunday to 4pm EST Friday, and it rarely has any gaps in price. Its sheer size and scope (from Asia to Europe to North America) makes the currency market the most accessible market in the world.

Where is the commission in forex trading?

Investors who trade stocks, futures or options typically use a broker, who acts as an agent in the transaction. The broker takes the order to an exchange and attempts to execute it as per the customer's instructions. For providing this service, the broker is paid a commission when the customer buys and sells the tradable instrument. (For further reading, see our Brokers And Online Trading tutorial.)

The FX market does not have commissions. Unlike exchange-based markets, FX is a principals-only market. FX firms are dealers, not brokers. This is a critical distinction that all investors must understand. Unlike brokers, dealers assume market risk by serving as a counterparty to the investor's trade. They do not charge commission; instead, they make their money through the bid-ask spread.

In FX, the investor cannot attempt to buy on the bid or sell at the offer like in exchange-based markets. On the other hand, once the price clears the cost of the spread, there are no additional fees or commissions. Every single penny gain is pure profit to the investor. Nevertheless, the fact that traders must always overcome the bid/ask spread makes scalping much more difficult in FX.

The Spouse of a Trader: What Makes Marriage Work

Credit: Brett N. Steenbarger, Ph.D.

www.brettsteenbarger.com

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Much has been written about trader personality and what it takes to succeed in markets. I can't say I've encountered any serious discussion of the psychology of the trader's spouse. And yet, my work with professional traders suggests that trading can take a meaningful toll on spouses and marriages.

The fundamental challenge, I believe, is that traders are rewarded for sound decision making under conditions of risk and uncertainty. These very conditions ensure that traders do not have regular, predictable earnings streams. When I was teaching full time in Syracuse, I had a fixed salary and a tenured position with the medical school. While Margie and I certainly dealt with other challenges, money was not one of them. We had fine employee benefits, two secure incomes (she was a tenured teacher at the time), and very reasonable living expenses.

The trader at a professional firm (investment bank, hedge fund) will typically have a base salary, but most of potential earnings will come from performance. Because these firms are often located in such high living cost locales as Manhattan and suburban Connecticut, the base salary is not perceived as adequate total compensation. Many proprietary trading firms have no such salary structure at all. At best, they offer a "draw" against future profits that must be repaid eventually. Too, the proprietary firm may very well not offer full benefits to its traders, as they are customers of the firm (the prop shop acts as their broker), not employees.

Explaining Market Success

Credit: Brett N. Steenbarger, Ph.D. 

http://www.brettsteenbarger.com

Numerous books have been written on the topic of trading success.  Nevertheless, it is unclear how expert traders obtain their expertise.  Several explanatory models are implicit in market writings:

1)      The psychological model – What makes great traders, this model asserts, is self-mastery.  Great traders don’t necessarily possess better trading methods or secrets, but apply common wisdom more consistently, with less emotional interference, and therefore with better risk management.  Developing trading expertise is a function of developing oneself in this model.

2)      The scientific model – What makes great traders according to this model is superior research.  Markets exhibit cause-effect relationships, and these relationships shift over time.  The role of research is to uncover these patterns and capitalize upon them.  Such a model is, in a sense, the opposite of the psychological model.  It hypothesizes that, once you discover inefficiencies in the marketplace, these can be incorporated into mechanical systems that eliminate any troublesome human elements from trading.

3)      The hidden pattern model – Success in the marketplace, this model emphasizes, is a function of understanding.  Patterns exist in the marketplace that do not shift over time, but also that are not necessarily observable on the surface.  The role of the great trader is to successfully decipher and apply these universal patterns.  This is not so much a function of research as experience; such approaches to trading as charting, Elliott Wave, and Market Profile are not systematic approaches to trading, but instead rely on the trader’s interpretive skill.

4)      The performance model – Trading is viewed as a performance activity, like athletics, in this model.  Successful trading can be broken down into component skills and aptitudes that can be honed through intensive exposure and practice.  Expertise is less a function of explicit research or pattern-based interpretation as rapid execution of perceptual and motor skills. 

EURJPY Eyeing 132.432 Levels After Passing Through Off 130.763 Support

Looking at EURJPY in the H4 chart, the price passed through the previous resistance line which became the support line now at 130.763. Currently it’s looking to climb up to 132.432. levels, continuing its bullish trend. The mentioned 131.590 is considered as a resistance area. The price can test this level and once breached, this can go higher to 132.432.

The 5, 10, and 20 day Simple Moving Averages for the EURJPY currency pair are currently moving below the price, a clear bullish momentum. As a confirmation of this heightened bullish strength, the 5 day Simple Moving Average has recently advanced over the 10 and 20 day Simple Moving Averages.

RSI(14) in the daily chart is currently at a 56.94 level. RSI has recently bounced off overbought territory and thus the resurgence of bullish traders and investors. The current level, although considered neutral, implies that the price still has room for an upswing. It is expected that the price will continue its established upward trend.