forex market hours differ based on different sessions.

Forex Market Hours: Best Times to Trade Currencies

The forex market is the largest financial market in the world. It trades of about $1.5 trillion each day. Meaning, there are so many people buying and selling currencies all over the world.

But why is that?

That’s because the market is open 24 hours a day from 5 pm EST on Sunday until 4 pm EST on Friday. It’s one of the basic things in forex trading. And learning the forex market hours is important if you want to trade in this area.

Find out what makes The Forex Market Unique with our previous article.

the map of the world of each country's respective currencies

Currencies are in high demand. It’s one of the reasons you should know about in forex trading. And the concept of currency trading is that there are always traders across the world who are making and meeting demands for a certain currency.

The availability of the forex market for 24 hours is one of the greatest advantages of currency trading. It provides countless opportunities for traders to trade at any time of the day or night despite a busy schedule.

However, it still doesn’t mean it’s always active the whole day. You could make money either the market is moving up or down. But you’ll have a difficult time trying to make money when the market doesn’t move at all.

Forex Market Hours

The beauty of the forex market is when one major market closes, another one opens. Let’s take a look at the schedules of each major session.

Approx. April – October

  • Sydney session 6:00 pm – 3:00 am EDT
  • Tokyo session 7:00 pm – 4:00 am EDT
  • London session 3:00 am – 12:00 pm EDT
  • New York session 8:00 am – 5:00 pm EDT

Approx. Oct – April (Daylight savings)

  • Sydney session 4:00 pm – 1:00 am EDT
  • Tokyo session 6:00 pm – 3:00 am EDT
  • London session 3:00 am – 12:00 pm EDT
  • New York session 8:00 am – 5:00 pm EDT

Best Forex Market Hours to Trade

The best time to trade is when the market is the most active. Therefore, it has the largest volumes of trades. Actively traded markets will provide a good chance of trading opportunities and profits. While calm and slow market would only waste your time and money.

Overlapping sessions

  • New York and London – between 8:00 am – 12:00 pm EDT
  • Sydney and Tokyo – between 7:00 pm – 2:00 am EDT
  • London and Tokyo – between 3:00 am – 4:00 am EDT

Overlapping sessions have more volume when two markets are open at the same time. With that, these sessions are the most active and busiest times during the trading day.

If you take less active period between 5 pm – 7 pm EST, after New York closes and before Tokyo opens, Sydney will open for trading.

The Sydney session will have more modest activity than the 3 major sessions. Consequently, less activity means less opportunity.

If you want to trade the most popular currency pairs like EUR/USD, GBP/USD, or USD/CHF, you can find more activity between 8 am – 12 am when both London and New York are active.

the globe with a dark blue background and symbols of the US dollar

Conclusion

Trading during the best forex market hours is not the only way generate opportunities. You should look out for the release times of government reports and economic news.

To learn more about this, you can check out our article What Makes the Forex Market Move?

Knowing when to trade in the forex market hours already gives you the advantage. And pairing your knowledge with various trading strategies will double your benefits. If you truly want to be a successful forex trader, always be one step ahead of the game.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

visual concepts of pips in forex trading

Pips in Forex trading: What you need to know

As you start trading in forex, there’s no doubt you’ve heard of pips getting thrown out every now and then. But as a beginner, we can’t blame you for finding it hard to make sense of all these confusing words.

But there’s nothing to worry about. We’ll help you to understand what you need to know about pips. It’s one of the most basic concepts that have hidden complexities that every trader must know.

Before proceeding, it’s important to know the basics of forex trading. Read what is forex trading and what you should know about it.

What is a pip forex?

Pip is an acronym for “percentage in point” or “price interest point.” Traders often use pips to reference gains or losses in forex.

Still confused?

Let’s try to make it simpler.  Pips represent the smallest movement that a currency pair can make. Usually, it is $0.0001 for US-dollar related currency pairs, which is referred to as 1/100th of 1%, or one basis point. Let’s say if a pip was 10 basis points, a one-pip change would cause greater volatility in currency values.

various currency pairs are shown with their respective quotes

Read: Top 3 Most Popular Currency Pairs

A pip measures the smallest price change of any currency can make. Most pips are equal to a 0.0001 price change.

If EUR/USD moves from 1.2278 to 1.2279, that 0.0001 USD rise in value is one pip.

However, there is an exception.  Where a currency has a low unit value, the price is quoted to 2 decimal places. For instance, a pip is 0.01 instead of 0.0001. The best example for this is the USD/JPY pair. If the pair increases from 106.16 to 106.17, the rise of change is one pip.

The value of a pip

In every trade, there comes a risk. It’s important to know the pip value of each position in the currency of your account. This way, you can manage your risk more effectively.

Read more: Proper Risk Control When Forex Trading

Here’s how you can get the pip value.

(Pip in decimal places x Trade Size) / Market price = Pip Value

Imagine you’re trading EUR/USD with a trade size of 100,000 and the exchange rate at 1.13798.

(0.0001 x 100,000) / 1.13798 = 8.78750]

With this result, we can say that each pip is worth 8.79 euro.

Of course, you don’t have to calculate this yourself. Brokers can do this for you, or you can use forex pips calculator that are widely available on the internet.

Pips and Spreads

Every time a currency pair is quoted, there are two prices. The first is the bid price. This refers to how much is being offered for the currency pair. The second is the ask price, which refers to how much sellers are asking. Spread is the difference between the two, and measured in pips.

Buy orders are executed at the higher ask price, and sell orders are executed at the lower bid price. So, if you buy and then sell immediately, you will always lose the amount of spread.

That is why forex traders look for few spreads, since the spread is like a tax, except on a private one.

The money you lose on spreads will then go to the market maker or broker. This is how they make profits. This is also the reason why forex trading doesn’t involve commissions, since the broker’s profit is already built into each trade.

Conclusion

Pips are very useful in forex trading. Sometimes, you don’t have to calculate for the pip value, but it’s still worth knowing how to determine them. With that, you can utilize pips in different trading styles you can apply.

After reading this article, You can check out our article on How to be successful forex trader as your guide for a successful trading career.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Man working on his laptop as Day Trading is shown on screen

3 Effective Day Trading Strategies

Every trading day is always different. There’s not such a thing that two days in the market are exactly alike. However, there are still patterns that occur over and over as they’re hidden beneath the random daily price movements. This is where day trading strategies come in.

Day trading is the buying and selling of a financial security on the same day, or multiple times in a day. It involves in taking advantage of small price moves. Usually, all positions are closed before the market session ends.

Read more: Beginner’s Guide to Day Trading.

Traders who use day trading pick a trade at the beginning of the day. They would act on their bias, then finish the day with either a profit or a loss. In addition, they never hold their traders overnight.

A trader showing a fist as he's looking at his phone and a computer with charts on the background

Day Trading is suited for forex traders. If you have enough time throughout the day to analyze, execute, and monitor a trade, then day trading might be for you.

Read more: What is forex and you should know about it.

Here the three effective day trading strategies in forex.

Trend Trading

One of the most effective day trading strategies is trend trading. It involves looking at a longer time frame chart, and finding an overall trend.

When the overall trend is set up, you move to a smaller time frame chart. Then, look for trading opportunities in the direction of that trend.

Find out more about the Underlying Principles of Trend Trading.

Further, you can use indicators on the shorter time frame chart. This will give you an idea when to time your entries in positions.

Counter Trend Trading

Counter trend trading is also known us pull back trading, reverse trading, and fading. It’s one of the worst day trading strategies, especially for inexperienced traders.

This is similar to trend trading. However, once you find the overall trend, you look for trades in the opposite direction. The goal here is to determine the end of a trend, and jump in early as soon as the trend reverses. It’s among the day trading strategies that is a bit riskier, but can generate huge profits.

A reverse trader has to determine potential pullbacks with a high probability, and to be able to predict their strength. Further, this strategy requires a lot of market knowledge and practice.

On the other hand, you can consider the Daily Pivot strategy as a special case of reverse trading strategy. It specializes in trading the daily low and daily high pullbacks and reverse.

Breakout Trading

Breakout day trading is about looking at the range a pair has made during certain hours of the day. After that, place trades on either side, hoping to catch a breakout in either direction.

This is most effective when a currency pair has been in a tight range. This is an indication that the pair is about to make a big move.

In this day trading strategy, you determine a range where support and resistance have been holding strongly. After this, you can set entry points above and below your breakout levels.

The general rule here is that you want to get the same amount of pips that makes up your determined range.

Read more: The basics of support and resistance indicators.

Conclusion

This kind of trading is considered to be one of the most challenging styles of trading. This is why it’s important to jumpstart your career with day trading strategies.

Moreover, there are more day trading strategies out there you could try. While it’s not a secret that day trading is difficult to master, it still can provide huge rewards. If you have the time, skill, and discipline, you can significantly improve your chances of becoming a successful forex trader.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Disadvantages of Index Funds

4 Disadvantages of Index Funds Investing

Index funds are created to mirror the investment results of a specific market index. It can consist of either stocks or bonds in its portfolio, and these mutual funds differ in the strategies that they use to achieve returns parallel to their chosen index. Index funds oppose with non-index funds, which seek to improve on market returns instead of aligning with them.

There are advantages and disadvantages of using stock indexes and the index funds that trace them. An index fund is an imagined portfolio of securities signifying a specific portion of the wider market. It is typically made using the shares of leading companies in the economy or in a particular area of the economy. Today, this article will be tackling some of the disadvantages of index fund investing to help you widen your knowledge about this type of investing.

Index Funds on Keyboard

  1. Absence of Drawback Protection

The stock market has ascertained to be a great investment in the long run, but over the years, it has had its fair share of ups and downs. Investing in an index fund, such as one that traces the S&P 500, will give you the advantage when the market is performing well, but also makes you totally exposed to the drawbacks. You can decide to limit your exposure to the index through shorting the index, or buying a put, an option contract providing right to the owner to sell a specified amount of an underlying asset at a set price within a specified time, against the index.

  1. No Huge Gains

An index fund doesn’t have the ability to outdo the market the way managed funds do. This means that if you invest in an index fund you are disregarding the possibility of a huge gain. The top-performing non-index funds in a given year work better than an index fund in a year. However, the top-performing non-index funds may differ from year to year, so that under-performing years can stop the over-performing ones, while index fund’s performance remains more stable.

  1. No Control Over Holdings

Indexes are set portfolios. If an investor purchase an index fund, he or she has no control over every holding in the portfolio. You may have certain companies that you want to own, such as a favorite bank or food company that you have found on the net and want to purchase. Likewise, in daily life, you may have events in your life that lead you to believe that one company is notably better than the other, maybe it has the best brands, management or customer service. As a result, you may want to invest particularly in that company and not in its rivals.

  1. Reduced Personal Satisfaction

Investing can be distressing and nerve-wracking, especially during times of disorder. Choosing a certain stock may leave you constantly looking after quoted price, and can keep you awake at night, but these situations will not be prevented by investing in an index. You can still find yourself constantly checking on how the market is performing and being worried sick about the economic landscape. Above all these, you will lose the satisfaction and excitement of creating good investments and being profitable with your journey.

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Consumer Confidence and Its Importance

Consumer Confidence and Its Importance

Economic indicators are sources of data used in a macroeconomic scale to be able to interpret present and future investment potentials or to be able to evaluate and grasp the overall health of a particular economy and an individual’s financial state. One type of an economic indicator is consumer confidence, which is also the same as consumer sentiment. This post will talk about this in details and why is it important.

What is consumer confidence?

Consumer confidence refers to the amount or level of spending consumers takes part in. This is a statistical measurement influenced by opinions of the consumers. It simply means that it is the feeling of an individual relative to his or her own present financial situation along with the general health of the economy and the potential for an economic growth.

When does IT affect the markets?

Consumer confidence affects the market as there are investors who depend on a dynamic consumer spending conditions. When making investment decisions, one of the many indicators needed to look at is this particular concept.

Where did IT originate?

It was during the mid-20th century when consumer sentiment or confidence was established as an economic concept. It has become as an indicator that can greatly influence both economic and public policy and the stock markets in a broad-spectrum.

At that time, when consumer sentiment was regarded to be less positive, the markets react by becoming bearish and vice versa.

A Woman with Shopping Bags

How do you translate consumer confidence?

Just like in the olden times, a high level of consumer confidence can indicate that consumers, generally, feel good about their financial status and their ability to acquire and maintain their jobs. If their confidence is high, then consumers are more likely to spend the amount of money they have and such tend to increase proportional to their thinking. On the other note, if their confidence is low, then consumers are less likely to spend their money.

Why is it important?

As mentioned before, consumer confidence measures the level of confidence consumers have towards the general health of the economy. It also reveals how confident the public is towards the stability of their employment as well as their income. It then dictates a person’s economic decisions such as spending.

This in turn affects the economy. As the confidence increases, the economy expands. When the opposite happens, such as when the economy contracts, it can mean that consumer confidence decreases.

Conclusion

Consumer confidence and / or sentiment data is important since it can be utilized by a number of individuals such as investors, retailers, banks, manufacturers and even various government agencies to be able to assess their actions and to better strategize. Moreover, consumer confidence (or sentiment) is also helpful to help people push forward even such as the concept of a self-fulfilling prophecy. However people must still be careful because if the contrary happens, it can greatly affect a person’s financial position.

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Why Portfolio Diversification Matters

Why Portfolio Diversification Matters?

You probably have heard about the saying “do not put all of your eggs in one basket” because if you do, you would not have anything left when the basket falls. The concept of portfolio diversification has been a long topic in the field of financial investing. By now, you may already know the basic meaning of diversification and it is making a wise distribution of your investments over the different sectors of the market.

In this article, you are going to learn the utmost importance of portfolio diversification and why you should do it immediately.

 Investment Eggs in a Basket

Diversify to Soften Drawbacks

As you diversify your portfolio, you lessen your market risk especially when a particular sector is under-performing.  Asset allocation is a wise way to adapt to a changing market environment.

Since nobody can precisely predict the outcome of the market, portfolio diversification can be of help a lot to the investors and be able to survive even the most harsh market conditions. When the inevitable happens, your other investments can offset the losses.

Diversify to Maximize Returns

Aside from protecting the health of your portfolio, diversification also gives you the opportunity to maximize returns by investing in different areas that would have a different reaction to the current situation of the market. By allocating your investments among several different financial instruments, businesses and even categories, you are somewhat guaranteed against losses.

Diversify to Target Across the Board

This setup can be regarded as superior portfolio diversification. That is, diversifying your portfolio across the board. Normally, when investors diversify, they do it with several companies. But when you do across the board diversification, you target different types of industries.

The more your stocks become unconnected or unrelated with each other, the better and more advantageous it is for your portfolio.

Another across the board technique is diversifying among different asset classes (i.e. bonds and stocks, equity markets, etc.). When adverse events happen, such types of assets would react differently since you have a combination of asset classes. Just like what is expected, unpleasant movements in one class will be counterbalanced by the upbeat results from the others.

Diversify to Own More than Owning Just One

Another obvious reason why you should diversify is because it is better to own more stocks than just having one. Market experts suggest that optimal diversification is achieved when an investor owns at least 15 to 20 stocks expanded across several industries.

However, it is still important to apply proper risk tolerance to determine the right assortment of your own choice of assets.

Conclusion

Generally, market downturns and risks affect nearly every stock.  Diversification may not completely protect your portfolio from risks or even guarantee elimination of chances of a loss, but it can help an investor manage the risks and reduce the impact of market volatility.

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Trading Essentials Knowing Your Trading Environment

Knowing Your Trading Environment

Generally, there are three types of market condition – the downtrend, uptrend, or ranging. Knowing the type of trading environment you are into is advantageous on your part, especially if you know the various tools and trading strategies you need to employ.

In this article, you are going to learn more about trading environments.

 Why is it necessary to know trading environments?

There are a number of reasons why knowing the trading environments matters. Here are a few of the known reasons:

  • It is vital to know the type of trading environment an investor is in since the technical analysis tools, systems and strategies that he or she would employ will greatly depend on the market environment. The different types of market require different techniques and the method you have used in one instance would not necessarily hold effective to another market.
  • If you are also trying to redeem yourself from a bad performance, it is advisable that you detach yourself first from trading and observe the market from afar. This one can help you focus on determining the kind of market environment and find out the right momentum for you to trade accordingly.

Trading Floor

What are the indications that a trader considers the trading environment before making a move?

Trading is like going to war. The foolish trader always rushes without having a concrete trading plan. On the contrary, a wise trader would get adequate information about the present surroundings and the conditions and then creates strategies on how to do the attacks in order to win the battle.

If you are able to do this, you may expect of the following results:

  • Be able to maximize the power of your system and take advantage of its profitability.
  • Be able to choose a trend-based strategy to be victorious in your trading goals.
  • Be able to trade without being fearful. It does not mean that you are overconfident, but it is more like being able to execute a trade since you are certain of your move and the kind of market you would like to conquer.
  • Be able to determine a number of opportunities since you know which techniques are appropriate to use and be able to figure out the precise indicators as needed by the situation.

See also: How to conquer your investment fear

Conclusion

Experts are saying that the most common mistake a trader would commit is that they are not aware of the type of environment they are trading in. For a trader to be successful in his or her trading endeavor, he or she must be able to identify this area to be able to take full advantage of the opportunities the market holds. A trader can spot these chances if he or she is able to determine the type of environment existing in that particular period.

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Ways to Avoid Lifestyle Inflation

Ways to Avoid Lifestyle Inflation

Most people would dream of having a well-paid job and finances to be able to live a better life. Improving your earning potential allows you to stretch your budget on important things. However, more often than not, what happens is that when a person’s income increases, so do their lifestyle. This concept is commonly known as lifestyle inflation. It means that when a person’s salary expands, their spending habits become greater, too.

In this article, you are going to learn on how to avoid lifestyle inflation and ensure that you are living within your means and that you are using the added money for significant things. Making plans on how to use the money to ensure financial security is an advantage.

See also: Why do you need a investment plan ?

Lifestyle Change Sign

  1. The best way to avoid something is to be conscious about it

As you transition from a phase where you have “enough” money to a period where you earn some “extra,” it gives you the feeling like you deserve to enjoy life for a moment. However, what happens is that such extends until a period where you find yourself struggling with your finances as you were not able to save up for what is essential.

The added amount on your paycheck must not be regarded as “fun” money but rather a means for you to be able to prepare for your future.

  1. The best way to avoid something is to scrutinize it thoroughly

When you receive a raise, you have to understand that you really cannot enjoy the whole amount added to your salary. This is because taxes take a toll on your money. You have to take the time to look into your budget and realize that the extra money does not necessarily mean that you can spend it on expensive items and dine outs.

  1. The best way to avoid something is to control it

If you want to protect the extra money you get from a salary raise, you have to transfer it to another savings account as soon as possible. If you only have a single bank account, it is advisable that you set up another one so you can be able to transfer your extra money into that account. This helps you avoid spending it on unnecessary things.

Another strategy is to set up your account automatically, wherein the excess money can be transferred after every pay period to your savings account without becoming hesitant of what you should do with your money every time.

  1. The best way to avoid something is to have a clear goal in mind

Failing to create clear personal objectives lures you to spending the extra money on items that do not bring you a step closer to your goal. Sit down and think thoroughly about the goals that you wanted to achieve either in a short span of time or for something that is long-term.

You are less inclined to using up the extra money if you stay focused on your goals and how much self-control you need to have in order to definitely achieve them.

Conclusion

It is really tempting to know that you have the extra money in hand after a raise. But with the above-mentioned tips, you now have the choice how are you going to use your money in order to meet both of your short-term and long-term goals. Follow these simple ways to avoid lifestyle inflation.

Read also: Importance of Financial Investing

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

What Should You Do During A Stock Market Correction

What to Do During a Stock Market Correction?

The market can undergo tough days as it can go through good days. Such instance is not surprising, since a stock market correction is just around the corner. It would be alarming if the market would not have a period of correction and crash.

If a stock market correction happens, what are the advisable actions that an investor must do?

  1. Do Nothing

A wise investor is someone with a financial plan and an investment strategy at the same time. If a stock market correction happens, it does not necessarily mean that you need to do something immediately. Making a certain move in reaction to the correction is not really an advisable move. The least you can do is to wait until the market volatility settles somehow. The sound advice for investors is to – “relax.” Hold, as it will work itself out.

  1. Do Calm Down

Do not panic. Panic will just cost you a lot of money. Crashes happen once in a blue moon. To be able to think appropriately, you first have to calm yourself before making any move.

Market corrections are a normal part of a stock market cycle. No investor can control or counteract such events. What you can do is to set up your portfolio so that it can withstand unforeseen and untoward events such as a market correction.

  1. Do Ignore the Media

 News deliver good information and it is highly essential that you know what is happening with market trends. However, during periods of market correction, news can highlight fear which may in turn cause the investor to panic. The media is not the proper venue for you to be during such times. It is advisable that you go back to your financial plan and investment strategy to aid you during such phase.

  1. Do Review Your Portfolio

As the saying goes, there is always a positive to every negative. This means that during a market correction, you can take advantage of such incident to assess the performance of your portfolio. If you find yourself fearing the effect of the correction to your portfolio, then maybe it is high time that you review your asset allocation. If you think that you cannot do it alone, you can always ask for the help of a professional financial advisor to review your portfolio and employ the necessary strategy.

Conclusion

Admit it, stock market corrections are frightening. In this era of fast information dissemination and a wide range of media when it comes to updates, investors are advised to remain calm before reacting. Investors might find themselves at a loss during such periods; however, it is a part of reality that markets tend to correct at some time. As a wise and smart investor, you have to factor such unfortunate event to your plans.

Read also: Ways to Survive a Stock Market Crash

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

What Stage of Wealth Are You

Find out What Stage of Wealth Are You

In assessing others’ level of wealth, as well as your own level, it is important to have a sound measurement on your financial situation. Merely assessing someone by just their lifestyle and the kind of car they drive are just one of the many myths people believe to be true in order to say that someone is doing well in life. Certainly, there must be a sensible way in determining the financial position of a person.

Read also: Taking Charge of your money in your 60s

What Stage of Wealth Are You

Find out in this post the definite stage of wealth you are into at the moment. There will be different stages that will be discussed, and here they are:

Stage 1 – Financial Solvency

You are in wealth stage 1 if you can pay your bills on time and be able to save even a small chunk from your income. Generally, the standard when it comes to saving is a minimum of 10%. Yes, saving can help you be financially independent; however, you will need three decades at a minimum for you to be able to enjoy your money.

Stage 2 – Financial Stability

Stage 2 requires you to have an emergency fund that you can use anytime an unwanted financial situation happens, i.e. hospitalization. If the emergency fund is lacking, there is a higher chance that you will be inclined to spending a portion or even the whole of your savings.

You cannot say that you are in the financial stability stage if you have not surpassed the solvency stage. You must be financially solvent first before becoming financially stable.

Stage 3 – Debt Freedom

As the name says it, a person is considered to be on this stage if he or she had finished paying all of his or her debts. A lot of people usually reach this stage a few years before retirement, between 40-60 years old. This stage is hard to achieve, as there are mortgage and vehicle offers wherein the pay period range from 25 years and above.

A person is said to achieve this stage if the first two stages have been attained.

Stage 4 – Financial Security

You are said to reach this stage when you already have a positive cash flow which you can use to build wealth further. The person, then, is able to make his or her money work for him or her, allowing you to have a bigger amount of money than your annual gross.

When a person is at this stage, he or she can take deal with more investment risks (such as getting into the investing field and portfolio diversification) without worrying about the consequences in order to grow more his or her wealth.

Stage 5 – Financial Freedom

Financial freedom entails that as you let your money work for you, you are not only getting more financial sources aside from your gross income, but you are also given the opportunity to spend on extravagant things that you were not able to give yourself or your loved ones.

There are people that may think they are already in this stage since they can afford the extravagant things in life, but remember you must have confidently and truly surpassed the first four stages before considering yourself belonging in this stage. The word “afford” then might not really apply to you – you might just be spending on extravagant things without really becoming financially able to buy them.

Conclusion

The measurement of wealth mentioned in this post can be considered to be the concrete gauge for assessing in what particular stage of wealth you are into. Remember that, wealth cannot just be inferred from the accumulation of material goods.

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!