There are lots of signal services, newsletters, and trading rooms offering predictions for the coming days, weeks and months ahead on what the market is going to do. It's a very tempting proposition to give subscribers a peace of mind on what the market is about to happen. Some believe it is possible to see what the market will do and subscribers do follow these services. Unfortunately, predictions don't exist even if these advisors are seers. No one can make the correct predictions even 50% of the time consistently, market is either goes up or goes down.
When traders anticipate what the market will do, is it the same as prediction? Prediction is declaring something will happen exactly in the future with only one outcome while anticipation is to give thought in advance to all possible outcomes.
Anticipation requires dealing with problems before they arrive; prediction is expecting something to happen without dealing with. Prediction tends to take a bias or position while anticipate requires careful thought of what might happen: good or bad.
An example of the anticipation is when the trader is watching the prices rising and approaching an old resistance level. He anticipates that the prices may either continue or reverse. He has to make preparations to deal with both scenarios. One is to prepare for the breakout and continue to the upside, he has to determine at which price he will go long and where the stop loss will be place. If the prices reverse, he has to determine where the short entry will be as well as the stop loss.
These scenarios prepare him for the next price movements, anticipating what other traders will do when the prices get to the resistance level. If he predicts what prices will do, say, has been going up and continue to go up. He has no plans for the possible reversal. He is focused only on the uptrend move and no on the possible reversal or the consolidation. These scenarios must be constantly considered and planned as the markets continually evolve. This mentality makes a tremendous difference between a successful trader and a losing trader.
Predicting is a losers game, feeding the need to be right instead of the need to make money. The ego many times is the culprit to show off to other traders how good he is at predicting the market direction. In trading, ego and profitability cannot co-exist. If its not ego, most traders will look for one direction and then use evidence to support that bias ignoring the evidence that may support the opposite direction.
This bias is predicting the future. It tends to carry the mindset until after the trade is made. It may be a profitable trade, but eventually the trader is so convinced of this bias that when trade fails, he'll have no alternative in preparing for the loss.
One of the desired traits of a successful trader is his ability to prepare of all possible outcomes, imagining the scenarios the market may do, up or down, before the trade is made. He knows he cannot predict but he can calculate the probabilities of the market going one way or another.
In anticipating the outcome, he has a plan for one outcome or another. What happens if the market goes against his position, where will he exit? What happens if the market goes in favor of his position, where should he exit to take profit?
Anticipating is preparation for both outcomes, good or bad. Calculating how much to lose just as important as how much to expect to win. This means the trader will identify in the chart where he'll see the entry point and two exit points (stop loss and profit target). By having this method, he can identify his risk-to-reward ratio as well as the probability of the success of the trade.
So how do we overcome this dilemma? Probabilities can be made found through rigorous testing historical data based on strategies that the trader plans to trade with them. Finding statistics to back his notion that the strategy works will give him confidence in approaching the market and give the mindset to anticipate and not predict the outcomes. One way is the see the market as it is showing us either by the price action or by indicator.
Recognize that prices or indicator can change direction at anytime. By using statistics to make an educated guess, the trader can find which direction the market will likely go. But probability cannot guarantee the desired outcome. This means a backup plan must be in place, i.e. a stop loss, in case that desired outcome doesn't happen.
This is the reason why successful traders have stop loss in place. A stop loss is a deciding factor that determines if the outcome has worked or not. The trader must accept that the market will always be right and trying to be right will prevent the trader from being one with the market and go with the flow.
An HSA - a "healthcare savings account" - is medical and retirement planning savings account that can be used on a tax-advantaged basis. HSAs were created in Medicare Modernization legislation passed in December 2003. To be eligible for an HSA, a consumer must be covered by a high deductible health plan (HDHP).
By contrast, an HRA - a "healthcare reimbursement account" is an account maintained by an employer to be used to reimburse employees for qualified medical expenses. HSA accounts must be funded before they're used, but HRAs don't need to be. Using an HRA, an employer can simply pay the medical expenses as they're incurred.
HSA accounts belong to the individual employees and are fully portable; in other words, employees can take the accounts with them if they leave an employer. HRA accounts belong to the employer. Each employee gets an annual allocation of dollars and unused funds roll over from year to year as long as the employee continues in good standing. Typically, an employee forfeits the money in an HRA account if they leave the employer.
An HSA can be funded by either the employer or the employee (or, often: both). An HRA may only be funded by the employer.
All qualified contributions into an HSA are tax-free. If the employer contributes, then such contributions aren't treated as part of the employee's income, and are therefore tax-advantaged. If the employees makes contributions, these can be deducted from the employee's income when tax returns are filed.
Here's the best part: not only are deposits into HSAs tax-free... so are withdrawals. Any distribution from an HSA for qualified medical expenses is tax-free. HSAs are typically managed much like an IRA: that is, there are a variety of investment vehicles that the consumer can put his or her money into, so that it might compound and grow while it's waiting to be used for medical needs. The specific investments available to a consumer vary depending on the company offering the HSA. As we said before, like an IRA a HSA belongs to the individual and is portable.
Consumers can make withdrawals from HSAs for non-medical purposes after the age of 65 but the withdrawals (aka "distributions") are treated as income and taxed accordingly. Distributions for non-medical purposes made before the age of 65 are treated as an early distribution and subject to an early withdrawal penalty of 10% plus regular income tax.
Both Larry Swing & Kurt Stammberger are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Larry Swing has sinced written about articles on various topics from Finances, Investments and Finances. Larry Swing CEO & Head Swing Trader theboss@mrswing.com +1 (281) 968-2718 Yahoo & Skype ID: larry_swing. Larry Swing's top article generates over 110000 views. to your Favourites.
Kurt Stammberger has sinced written about articles on various topics from Finances, Health Insurance and Gastric Bypass. Kurt Stammberger is VP, Marketing at Healthia Inc. Healthia provides you comprehensive information to help you