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Pension – Funding the future

Posted by on Sep 1, 2016 in Binary Options, Financial Market, Pension | Comments Off on Pension – Funding the future

   A pension is a fund which increases with money from the salaries. A person doesn’t have to do it by themselves as it is the responsibility of the employer. Once the employee retires they get monthly payments from that fund.

    A retirement plan may be set by an organization, but an employee may opt for different parties as well. The size of the payments depends on the amount of money that goes to the pension fund every month. In some cases, the retiree can take more money out of the fund and in some cases the amount they receive is fixed, and it lasts for life.

   In general, there are three (in some countries, four) types of pensions depending on the reason for the pension and other fine details of the pension plan.

   The primary type of pension is the state pension, and it is known as a social pension. This premium comes into effect once the person retires or becomes physically challenged. The fund is filled from through the monthly payments provided by the employee in the question. A person has to work his whole life (until a certain age specified by the law of the country in the question) to become eligible for the pension. The amount the retired person receives depends on the monthly contributions. Every country has a minimum sum of money that a person can contribute, but the maximum number is not specified.

    A disability pension is in most cases a reworked social or employment pension. If a person suffers a disability which prevents them from working and contributing to their pension plan, they become eligible for disability pension. This allowance start from the moment of the disability and lasts until a person dies or the disability ceases to exist (which is very rare).

    An employment pension is a type of pension set by the employer. The receiver of the pension starts getting the money out of that fund once they retire from the job. Two different contributors to this fund exist, the employer and the employee. The employee doesn’t have to make payments as the money is taken from their paychecks. This type of funding is tax-free, and other sources may contribute to the fund as well (self-funding, different government agencies and so on). Countries around the world provide military pensions which are another form of employment pension plan. The money is taken from the soldiers’ paycheck, and the state provides additional payments which are given to the veteran in the shape of monthly military pensions.

  Many countries have inadequate pension systems. They don’t provide enough money to the people that need it. The amount those people receive is not sufficient for basic survival. Prosperity for the people that worked their whole life is just a dream. This is why many of the older people start looking for alternative ways to earn some cash. After a while, they stumble on a site like Top 10 Binary Demo, and they get hooked up on it. The problem is that they don’t know anything about binary options or trading, and they lose their life savings.

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How market liquidity affects the trade

Posted by on Aug 27, 2016 in Binary Options, Financial Market, Market Liquidity | Comments Off on How market liquidity affects the trade

The liquidity of the market represents the stability of the market during the sale or purchase of the asset. A market that has enough liquidity will not experience a large change in the price of an asset that went through purchase/sale. The asset also has liquidity. If an asset is liquid, then it can go through the sale/purchase without any substantial price decrease.

The most liquid asset on the market is the cash. The money can be exchanged for goods in an instant, and it will never lose value in that kind of the trade. Cash only loses its value on the Forex market, but even in that case, it retains its liquidity.

Investors (traders) exchange assets with low liquidity for assets who liquidity is high and constant. This type of trade is called liquidation. Some dealers also sell those assets for cash. This sounds strange (why would anyone buy an asset that has no liquidity), but the liquidity of an assets isn’t same on all markets. Some traders earn their share by trading assets with low liquidity. They find a market for which the asset has better liquidity and then they sell it there. The difference between the strength of the liquidity determines the profit of that trade.

Liquidity has the enormous impact on the markets that depend on the asset price. The stock market depends on many things, and the liquidity is one of them. When a trader buys a stock he spends his money and the expected return depends on the price of the same asset. If the asset has high liquidity, then there isn’t a high risk of a decrease in the price. Over the time the price of the property may increase, and the trader can sell his asset and earn some money on that trade.

Option markets (Binary options market especially) are dependent on the liquidity of the market as well as the liquidity of the asset. When a trader buys an option, he waits for the price of the property to change. The trader has two choices, call or put which represent two points, one above and one below the original price. Assets with good liquidity have the very substantial price which doesn’t fluctuate. On the other hand, an asset with low liquidity may vary in its price both up and down. The overall liquidity of the market has the big impact on the binary options as well. If you want more info about binary options, then visit Quantum Code, where you can find all relevant data about this form of trading.

The banking system has a different approach to liquidity. Bankers have to keep an adequate level of liquidity at all times to prevent unacceptable losses. Those losses occur when the system fails to meet obligations. The majority of the banks have a firm grasp of the liquidity. They can easily maintain the necessary liquidity level through increase and decrease of deposit rates and other deposit products. But the bank has to spend money to maintain liquidity. If a bank pays the bulk of the liquidity, then it isn’t as stable as it seems.

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Leverage and its impact on financing markets

Posted by on Aug 5, 2016 in Binary Options, Economy, Financial Market | Comments Off on Leverage and its impact on financing markets

In the simplest possible way to explain, the leverage is a tool (technique) in the world of finance that allows a person to multiply their gains. The most common way to use it is to buy a high amount of an asset with borrowed funds. The income from the asset or its price increase should in theory cover the amount of borrowed money.

Leverage is a double-edged sword. Any tool or technique that increases the gains carries a high level of risk. Leverage can destroy a trader or investor when the expected income fails to cover the borrowed money. Many forms of the leverage exist, and each and every one of them carries a risk that equals the possible gain. If the potential benefit is tripled by the leverage, then the losses on that investment are also tripled.

Some good example of the leverage use in different markets is:

– The owners of equity leverage their investments through their business as they borrow a portion of the financing. A company that acquires more has a lesser need for investment. This means that the both losses and profits go to the smaller base, and the proportion of both is multiplied.

– Option and future contracts are securities that work on the notion of short T-bill rates in the borrowing and lending business.

– A company can leverage its operations by fixing their cost inputs. The expected revenues are still variable, and they can go both ways. If the income goes above the average, then the income from operations will add to the overall profit. But if it goes below the average then the services will suffer loss.

– Hedge funds use leverage through the short sale of some positions. Money that is generated through those sales serves as leverage to finance a portion of other portfolios. If those securities fail to make profit, then the loss is twofold, loss from short sales and loss from active portfolios.

– It might not be as obvious as some other things, but individuals use leverage in their financial moves. For example, they leverage their saving by financing a portion of home purchase with a mortgage debt. Another example is the exposure to investments through borrowing from a broker in which cane they leverage their exposure to those investments.

Leverage is all about the management of the risk. A successful investor (trader or any other party that uses leverage in their business) finds a way to lower the possible loss from a business decision that involves leverage. If an investment carries too much risk and the chance of the gain is marginal, then the investor won’t invest. But if the chance of the gain isn’t improbable then the investor can invest and use the leverage to profit from the investment. Possible loss, in that case, is acceptable.

No serious investor will leverage more than they can cover. Those that fail to follow that path of the though end up in bankruptcy. Stock brokers are a good example as they forget about the risk and end up broke over night.

You can find more about this on Wikipedia.

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