In our previous illustration we discussed risk management techniques, and a few more key terms that will help one develop risk management and trading strategies. I have always loved Japanese candlesticks. Which strategy does your favorite investor utilize?


Sector Diversification

  • Information Technology
  • Healthcare
  • Materials
  • Energy
  • Industrials
  • Financials


Bearish it is when an investor believes a security or market is headed downward. Bears attempt to profit from a decline in prices. Bears are generally pessimistic about the state of a given market.

Bullish it is when a specific security or an industry will rise. An investors who takes a bull approach will purchase securities under the assumption that they can be sold later at a higher price.

Candlesticks  is a style of financial chart used to describe price movements of a security, derivative, or currency. Each “candlestick” typically shows one day; so for example a one month chart may show the 20 trading days as 20 “candlesticks”.

Pips The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point – for most pairs this is the equivalent of 1/100 of one percent, or one basis point.




In our previous illustration we discussed risk management techniques, strategies and a few key terms that are essential when creating an investment portfolio. It is important to remember that trading is a strategy. Once one is comfortable and has developed a strategy that is effective, one will yield a return.


Forex the foreign exchange is a global decentralized market for trading of currencies. In terms of volume it is the largest market in the world.

Futures is a standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality for a price agreed upon today, with delivery and payment occurring at a specified future date.

Commodities unprocessed goods that can be processed and resold. Commodities are for immediate or future delivery  of  grains, metals and minerals.

ETF a security that tracks an index, commodity or a basket of assets like an index fund but trades like a stock  on an exchange.


In our previous illustration we discussed a few of my favorite stocks on my watch list and the importance of risk management.  I love AAPL, it has simply been my trade of the month.

In our newsletter, we discussed savings one’s resources and insuring one establishes an account that yields interest in order to generate residual income. This was our strategy to earn interest and increase our net worth. We will build upon this strategy to continue to create our financial plan.

Once one has developed risk management techniques, identified a broker to help one manage risk, consider these resources and investment techniques.

An investment strategy that counts the cost, assesses risk and incorporates strategies will yield a return.


Security is a negotiable financial instrument that represents an ownership position in a public traded corporation (stock), a creditor relationship with governmental  body or corporation. For example: investors of securities may buy and sell securities on their own behalf, an organization, financial institution and or behalf of their client.

Share is a unit of ownership interest in a corporation or financial asset.

Shareholder  is an individual or institution that legally owns a  share of stock in a public or private corporation.

Broker is an individual or party that arranges transactions between a buyer and a seller for a commission when the deal is executed.


In our previous illustration we discussed a few key terms to help one begin building one’s financial portfolio.  We will continue to discuss some additional key terms that are essential.  One will begin to realize that one can create a $77 million dollar investment portfolio with the correct strategy, training and risk management techniques.


Let’s consider AAPL, MSFT and GOOGL which are large corporations. They are not large solely because of their products and reputation but because they understand risk management. The economy, revenue, earnings reports, economic reports, product development, and stockholders are some of the criteria that will impact a corporations stock price. However, if a corporation does not implement risk management techniques, they will lose profit.


Risk refers to the degree to which an investor may lose his or her investment.

Return refers to how an investment performs and how much it gains or looses over a period of time.

Source of Risk refers to one’s investments which are subject to varying degrees of market risk.

Volatility refers to the amount of uncertainty or risk about the size of changes in a security’s value.


In our previous illustration we discussed a few key terms that will help one diversify one’s financial portfolio. It does not matter how one diversifies one’s financial portfolio, but risk management is key. We will continue with a few basic key terms in order to help one move forward with one’s financial portfolio.


NASDAQ  Also known as the National Association of Securities Dealers Automated Quotation, is the world’s first electronic quote system that provides price quotes and supports trading for over-the-counter stocks. It has the ability to create or stimulate a market by purchasing some of the stock being offered and representing it to its own investors.

S&P Also known as Standard and Poor’s  is an index of 500 stocks chosen for market size, liquidity and industry grouping. The S&P is designed to be a leading indicator of U.S. equities.

Dow Jones is an indicator of stock market prices; based on the share values of 30 blue-chip stocks listed on the New York Stock Exchange.The Dow Jones Industrial Average is the most widely cited indicator of how the stock market is doing.


There are many ways to diversify one’s financial portfolio in order to generate residual income. Let us consider AAPL stock’s price when the IPHONE 6 was released. I remember comparing their stock price, this time last year and it has increased dramatically. When we initially released our newsletter Financial Planning, their stock price was roughly between $104.00 and $105.00. Today, their stock price has risen to roughly $115.00 within a few months.

We have provided additional terminology to help one continue to create one’s financial portfolio.



Mutual Fund is an investment made up of a pool of funds collected from many investors for the purposes of investing insecurities, bonds, stocks and money markets.


Certificate of Deposit is a time deposit that has a fixed term and is held until maturity. When the certificate of deposit has matured, it can be withdrawn together with the accrued interest.


Bond is an instrument of indebtedness. It is a debt security in which the issuer owes the holder a debt and depending upon the term of bond, one is obligated to either pay interest and or the principle at a later date.


Stock a security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.There are two main types of stock: common and preferred.



When building a financial portfolio it is a great idea to diversify one’s portfolio.


What does it mean to diversify?

Diversify means to place one’s money into more than one place. In an investment portfolio, dividing funds among securities of different industries or of different classes will help one diversify one’s assets.