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Is there any merit to the “Elliot market waves theory?”
The Elliot Wave theory essentially uncovers larger trends and investor sentiment by smoothing and “zooming out” from market price action. Elliot Waves zoom out on market price action by using larger-interval moving average and smoothing out price information to reveal larger trends. He was one of the first to attempt such a theory, and his foundations may have contributed to the use of Fourier Analysis and Fibonacci Sequences in market analysis. Continue reading...
What is the Elliott Wave Theory?
Elliot Wave Theory incorporates the natural cycles of nature and waves with market movements in an attempt to explain and predict the historical and future prices of stocks. Penned by Ralph Elliott in the early 20th century, the Elliott Wave Theory attempts to organize the seemingly random behavior of the market into cycles. The theory visualizes a series of waves cycles, each representing a different length of time or magnitude of a trend or cycle. Continue reading...
Top Stock Chart Patterns
Chart patterns are shapes that sometimes appear in the charts of securities prices. Some of them may prove useful to you. Some frequently discussed chart patterns include Head and Shoulders, Double/Triple Bottom/Top, Cups and Saucers, Flags and Pennants, and others. Generally, it can be useful to compare and connect the troughs to each other and the peaks to each other to see if there is a trend confirmation if the breadth is narrowing, or if a reversal might be imminent. Continue reading...
Is there such a thing as a “presidential election cycle” impact on stocks?
Some analysts have popularized the notion that the 4-year presidential election cycle holds secrets to bear and bull markets. Found in publications such as the Stock Traders Almanac, The Presidential Election Cycle is the theory that different phases of the presidential term are correlated to broad market conditions. As will many such theories, it may not hold up under a lot of scrutiny, but there are some correlations to be found. Continue reading...
What are market cycles?
Markets are said to experience cycles of various length and magnitude. Cycles tend to be defined in retrospect and it is not always evident what part of a cycle the market is in. Cycles can be of various length and magnitude, with current cycles existing as minor subtexts of the larger cycles. In Elliott Wave Theory, for instance, cycles of various levels exist simultaneously, with the longer cycles exhibiting “self-similar” patterns to the shorter-term cycles, as in naturally occurring fractals in nature (since Elliott’s theory is that the market is a natural phenomenon, just like the breeding cycles of rabbits). Continue reading...
What are Fibonacci Numbers/Lines?
Fibonacci numbers are part of the Fibonacci sequence, where the two previous numbers are added together to calculate the next number in the sequence. The ratio of two Fibonacci numbers is the Golden Ratio, or 1.61803398875, which has been used since ancient times as the perfect proportion in architecture and other design. The Golden Ratio is also known as Phi (pronounced “fee”). Because Fibonacci numbers are found throughout the natural world, they have been integrated into some traders’ strategies for market analysis. Continue reading...
When Should I Start Saving Money?
The answer is simple and needs only common sense to understand: you should begin saving as soon as you can! However, because of most people’s spending habits and the day-to-day realities of life, it is often difficult to follow that advice. Let’s compare how your savings would accumulate, depending on the age at which you begin to save. Your total savings will be much greater by the time you want to retire – say when you’re 65 – if you invest $5000/year at age 25 for just 10 years, than if you continuously invested $10,000/year at age 35, or $15,000/year at age 45. Continue reading...
What Should My First Savings Vehicle Be?
Start basic, and just open a savings account at a bank or create a brokerage account at a major custodian (Charles Schwab, Fidelity, for example). As a rule of thumb, you should have six months’ worth of living expenses in this account. Another good rule of thumb is to avoid touching this money at all costs, and never invest this money in risky assets like stocks. It’s better to keep the money as liquid as possible, so even buying Certificates of Deposit (CDs) may not be the best idea. The purpose of this money is not to make you rich – this is your safety net. Continue reading...
Where do I Get Started in Saving for Retirement?
Your employer is usually the best place to start, but you can also open your own retirement account (an IRA or Roth IRA, for instance) at your bank or a major custodian (like Charles Schwab or Fidelity). In some cases, there are income limits for contributing to a retirement account, which a financial advisor can discuss with you. A smart idea is to set up an automatic contribution to your retirement account, such as 10% of your monthly income. That way you’re automatically saving, and saving regularly. Continue reading...
How Can You Use Elliott Wave Theory to Trade Breakouts?
The world of stock market trading has various theories and methodologies, and among the most intriguing is the Elliott Wave Theory (EWT). Developed by Ralph Nelson Elliott in the 1930s, EWT is based on the idea that stock markets, despite their seemingly random movements, move in repetitive wave patterns. These patterns are believed to reflect mass psychological swings between optimism and pessimism. Continue reading...
What is a Thrift Savings Plan?
A Thrift Savings Plan (TSP) is a 401(k)-style plan for Federal employees. A Thrift Savings Plan functions the same way a 401(k) does – you can elect to contribute a portion of your salary, known as an employee deferral or employee contribution, and the money will be allowed to grow in the account tax-deferred. The TSP is only available to Federal Employees and United States military personnel. There is a flat contribution of 1% from the employer, and, depending on the type of Federal job, employees may be eligible for a matching contribution from the employer. Continue reading...
What is the Federal Savings and Loan Insurance Corporation (FSLIC)?
Created about the same time as the FDIC, the FSLIC, which insured up to $100,000 in deposits at savings and loan institutions, also known as “thrifts.” In the 1980s, the “savings and loan crisis” caused the FSLIC to become insolvent. In 1989 it was disbanded by the FIRREA Act and replaced by the Resolution Trust Company (RTC) which was merged with the FDIC a few years later. During the 1980s, a huge number of savings and loan companies (“thrifts”) went bankrupt. Continue reading...
How Does a Health Savings Account Work?
A Health Savings Account (HSA) allows the owner to save (and invest) money in an account, which can be used to pay for health expenses on a tax advantaged basis. Generally speaking, your contributions to a HSA are tax deductible, the earnings grow on a tax deferred basis, and you can withdraw the money tax free if used for a qualified health expense. As 2016, you are allowed to contribute $3,350 (for individuals) and $6,750 (for families) to the account, plus an additional $1,000 if you’re over 55. Continue reading...
What Are the Contribution Limits For My Thrift Savings Plan?
Contribution limits for the TSP are the same as regular 401(k)s. Employees and employers using the TSP will have the same contribution limits as 401(k) plans. An employee can defer up to $18,000 a year in 2016, plus a $6,000 catch-up deferral if the employee is over 50 years old. The employer can contribute up to a maximum total balance of $53,000 (or $59,000 if the employee is over 59 ½), including employee deferrals. There is a standard 1% employer flat contribution, and some Federal employees will also receive a match. Continue reading...
Where Should I Put my Healthcare Savings?
There are two options for saving for healthcare needs: brokerage accounts and Health Savings Accounts (HSAs). Brokerage accounts provide more investment flexibility and no restrictions on withdrawals, but may be subject to taxes and penalties. HSAs provide a triple tax benefit, higher contribution limits, and no expiration date, but have restrictions on how funds can be used. The article emphasizes the importance of starting to save for healthcare expenses early and staying informed about healthcare options. Ultimately, the choice between these options depends on an individual's circumstances and goals. Continue reading...
What is the Difference Between a Thrift Savings Plan and Other Retirement Plans?
The main difference is that the TSP is only for Federal employees. A Thrift Savings Plan is essentially a 401(k) for employees of the federal government. It functions in the same ways and is subject to the same limitations. The contribution limits and catch-up limits are the same, as well as the employer contribution limit. The plan actually has lower fees than most 401(k)s, so that’s one difference. The investment options are fairly limited, but not much more than regular 401(k)s. There are basically 5 index funds to choose from and then a series of target-date funds that blend the index funds. Continue reading...
What Websites and Apps Can Help Me With Personal Budgeting?
There is a thriving industry committed to helping people plan and maintain a personal budget through online tools and apps. Perhaps the most-used personal budgeting tool as of this writing is Mint, which allows a user to link their bank accounts into the budgeting software, and then sends the information right into a tax filing after the new year. A list such as this is almost definitely going to be outdated by the time you read it; your favorite search engine or app store may turn up more relevant results than this. Continue reading...
What is an Account Balance?
An account balance is the amount either credited to or owed on a ledger assigned to a particular entity or line-item. The balance of an account is the net debit or credit assigned to it after all transactions have been documented for a current period. Transactions might be deposits, withdrawals, interest credited, fees, or other activity. The account in question could be a personal savings or checking account, or a ledger account at a business or institution, or another form of account, such as the macroeconomic concept of current national account. Accounts are said to be “in the red” when there is a net debit (negative) amount, and “in the black” when there is a net positive balance (net credit). Continue reading...
What is Annual Percentage Yield (APY)?
APY is an annualization of an interest rate which may be assessed on a different schedule, such as on a monthly basis, and is useful for comparing debt and loan agreements that use different schedules. Annual Percentage Yield is a way to compare products and loans with different interest rates and different schedules for calculating the interest. It is a calculation of the effective annual rate, and it takes into account the effects of compounding interest, which a similar calculation for APR (Annual Percentage Rate) does not do. Continue reading...
What is an Account Freeze?
An account freeze stops all pending transactions and does not honor new transaction requests for a financial depository account. A checking or savings account might be frozen at the prerogative of the banking institution or at the request of the account owner or government agency. Similarly an investment account might be frozen for breaking the terms of the account agreement with regards to trading activity or margin requirements, in addition to illegal activity or court order for another reason. Continue reading...