Tuesday, October 30, 2012

Difference Between Innocent Spouse Relief And Injured Spouse Relief

There are several primary differences between innocent spouse relief and injured spouse relief. An innocent spouse can get relief from the IRS when their spouse makes errors and false reports on a join tax return. On the other hand, an injured spouse is able to receive relief when the IRS holds a joint refund as a way of satisfying debts of their spouse. There are definite benefits to be aware of. While you may not qualify for one, there is a good chance that you could take full advantage of the other.

Injured Spouse Relief

If you believe that you qualify for injured spouse relief you need to follow the steps outlined by the IRS.

1. Make sure that you actually filed a joint return. If you did not, you are unable to use injured spouse relief as a way of bettering your situation.

2. Find out of the IRS has withheld a tax refund in the past, or plans to do so in the future, because your spouse has missed payments on items such as student loans or child support. If you are unsure of where you stand, do not hesitate to contact the IRS for further information on your account.

3. Download Form 8379 from the IRS website. This is the form that you need if you are going to apply for injured spouse relief.

4. On part two of the form, you will need to allocate all income, deductions, and credits between you and your spouse. This is the information that the IRS needs in order to give you the portion of the refund that you deserve.

5. Send the completed form to the IRS. You can send this along with your completed return, or separately if you have already filed.

Innocent Spouse Relief

Those who are requesting innocent spouse relief should follow these steps.

1. Did you file a joint return? This is the number one qualifier. If you didn't, you are unable to request innocent spouse relief.

2. Make sure that your spouse improperly and inaccurately reported items, which in turn led to an understatement.

3. Did you know that your spouse was including erroneous information when you signed the return? If so, you are not going to qualify for innocent spouse relief. Only those who were not aware of these intentional errors are eligible.

4. Download Form 8857 from the IRS website. This form needs to be completed and forwarded to the IRS immediately. Make sure you include honest, accurate information.

Hire a Professional

Even though it may seem cut and dry, there are times when you may be confused about whether you should file for innocent spouse relief or injured spouse relief. Rather than guess and hope you are right, hire a tax professional to answer your questions and guide you through the process.

All in all, there are several key differences between innocent spouse relief and injured spouse relief. Are you in position to take advantage of either one of these relief options?

Sunday, October 28, 2012

Things To Look Out For When Deciding To Invest In Commercial Real Estate

Commercial real estate is any property that has to do with any aspect of business. Whether it involves selling, buying, renting or leasing properties, it is all part of business. Nearly every business in existence is housed in either a residential or non-residential area. Churches, shopping malls, hotels, hospitals, restaurants, and other places of business are all located on commercial real estate property. One example of this is commercial real estate in Chesapeake, Virginia.

To determine whether or not a property is located in the right area for a particular business, many prospective business owners may go to the local business zoning office, and search out this pertinent information. Another way to find out is to consult with a licensed real estate agent .

Commercial properties deal with properties for business in Chesapeake. Whether it is selling a house or leasing an office space. Many people will consult a Realtor during this time, especially if they're not sure about a transaction. This is not uncommon. Even when selling or buying a house that is in question, it is always wise to consult a professional in that area of expertise.

There are huge differences between commercial real estate and residential commercial estate. There are many issues that can arise out of the buying or selling of any property. Some properties may have liens or other issues such as ownership problems, or title verification. There may be unforeseen liabilities or risks that could be buried underneath the surface. These hidden surprises could result in the purchaser or renter spending hundreds or even thousands of dollars in legal fees. There are some properties that are located in residential zones, but a trained real estate agent will be able to decipher the law as to whether or not a certain type of business can be opened, and operated, in that particular zone.

It is important for anyone who is looking to invest in commercial property in Chesapeake to seek out the services of a qualified real estate agent or agency. There are occasionally illegal and fraudulent business ventures that prey on unsuspected and less than knowledgeable entrepreneurs. Many first-time investors make the mistake of thinking they have everything under control, only to run into problems later. A qualified agent can help someone in their purchase or rental and ensure that they receive the best price in today's market. They will go over contracts, check ownership status, and title or deed verification. Seeking the advice and service of a licensed Realtor makes good practical sense.

Wednesday, October 24, 2012

Automobile Brand Loyalty: Important Factors And Why Porsche Is A Reliable Luxury Brand

If you're in the market for a luxury vehicle, a certified pre-owned Porsche is a good choice, as evidenced by the fact that owners of new and used Porsche vehicles demonstrate brand loyalty.

In a recent JD Power & Associates survey, the Porsche 911 was the top ranking model, as determined by the number of reported problems per 100 cars. This kind of dependability is common in new and used Porsche models. Porsche drivers also appreciate the powerful performance and luxurious driving experience that a new or used Porsche delivers.

However, not all brand loyalty is based in such practical reasons. The 2012 New Luxury Vehicle Loyalty study, from Polk and AutoTrader.com, asked brand loyalists why they stay dedicated to a certain automobile brand. According to respondents, the most important factors in brand loyalty are:

-Brand Affinity. (44% of respondents Brand Affinity as the top determining factor in brand loyalty.)

-Quality/Reliability, as cited by 33% of respondents.

-Driving Performance (24%)

-Price/Finance/Value (16%)

-Styling/Design (16%)

An interesting corollary of this study is that brand loyalty motivations shifts according to the brand at hand. For instance, Acura drivers list innovation and technology as one of their top five reasons for brand loyalty. In contrast, Cadillac owners cite Brand Affinity more frequently than any other group of drivers. For BMW drivers, Driving Performance is the top reason for brand loyalty. Mercedes-Benz and Lexus owners reported that dealership loyalty is most important to their brand loyalty.

Car manufacturers track brand loyalty very carefully because it guarantees they will enjoy a steady stream of return buyers.

That same set of research results from Polk and Autotradrer.com found several explanations for why luxury car buyers switch brands.

The Main Reasons Why Car Buyers Switch Luxury Vehicle Brands

1. Price/Finance/Value (24% of surveyed car buyers)

2. Size/Body Style (20%)

3. Brand Affinity (17%)

4. Time to Change (14%)

5. Driving Performance and Styling/Design (both cited at 13%)

These are the reasons why a loyal Cadillac man might switch to a new or used Porsche.

How Age and Gender Impact Brand Loyalty

Age and gender demographic splits demonstrate significant differences in brand loyalty. For instance, considerably more women (17% of women compared to 11% of men) remain dedicated to a luxury brand because they feel loyalty to a certain dealership. In other words, a woman is more likely to continue driving her new or used Porsche because she loves the welcome she gets at her local Porsche dealership. Women appear to value vehicle safety more than men as well - 10% cited safety as a factor in brand loyalty, as compared to 5% of male respondents.

Age also influences brand loyalty. Brand affinity is important among those who are older than 55 years of age. 47% of 55+ respondents rated affinity as important, versus 37% of those younger than 55. Quality and reliability are key for younger drivers, 54% of whom cited these factors as important to their brand loyalty. In contrast, just 31% of drivers over 55 cite quality and reliability when explaining why they stay loyal, according to the Polk/Autotrader.com study.

Clearly, several factors drive automobile brand loyalty. For a reliable, fun car, you can't go wrong with a used or certified pre-owned Porsche. Call your local Porsche Dealership to learn about their available inventory of new and used Porsche vehicles.

Saturday, October 20, 2012

Payday Loans For People On Benefits

Those people who are physically challenged ones and have no other source of income other than the benefit amount they get from the DSS, they too can borrow money instantly when some emergency strikes or an unexpected bill is to be repaid. Payday loans for people on benefit are such products that these people can instantly avail. The loan money is made available to them within 24 hours.

Payday loans work on the basis that a borrower gets a monthly paycheque regularly for past few months at least. In the case of the physically challenged people, though they do not go anywhere to work but they are getting a fixed amount of monthly or bi-weekly benefit amount from the Department of Social Security. This benefit amount becomes the basis of approving of the loan for them.

Through payday loans for people on benefits, the borrowers can avail up to 500-1000, depending on DSS benefit amount and their overall repayment capability. They should be having a minimum of 500 in their savings account. Like other payday loans, these loans are also approved for two weeks and the repayment date is fixed as the date of getting your next benefit amount.

Payday loans for people on benefits do not allow bad credit history of the borrowers come in the way of fast approval of the loan. Even with late payments and payment defaults, a borrower can avail the money quickly.

However, because of short-term and lack of security, the lenders charge interest at little expensive rate. High APR many put the next benefit amount under the stress as well. So, borrow from a lender who is offering payday loans for people on benefits at competitive rates. Even a little lower rate of interest can save of lots of money. Compare the lenders before you settle for the deal.

Thursday, October 18, 2012

Benefits Of Real Estate Business And Investment

In the domain of real estate business there is no need to be apprehensive as yet for the Americans, are still recovering from the fear of debts which had controlled their finances until recently and it is only with the help of such resources as a low interest consolidation or the best debt management programs that the citizens could finally get respite from the trap of debts. But now when the economy has started to look up from the financial void, it is time for the citizens to change their views about some of the businesses which are capable of providing better returns in the long run. Gone are those days when businesses were looked with greater awe. Though there are persistent risks which are involved with this business, it is of more worth to calculate the advantages of being involved in this business.
Let us have an overview of the same in the next few lines:
If you have been comparing an array of business opportunities lately, you will be glad to know that a real estate investment is less risky than other businesses and they are in fact quite stable provided that you have actually been able to encompass the pettiest of aspects that are related to this business, and you have taken this opportunity seriously. However the lesser risks are associated with such factors as stability in the rate of mortgage followed by the appreciating value of the land and various other socio economic issues.
There is no need to have a huge capital at least initially to start off with the business. The property can be secured by negotiating a lower amount, and some money should be kept for holding the property as a security.
A real estate investment will not tale up a hell of all your time but only if you are calculating and clear sighted about the prevailing marketing conditions at that point of time.
As far as investing in real estate is concerned leveraging still remains as the best option wherein you can invest a portion of your money and the rest can be borrowed from a bank or any other financial institution.
If you are able to select the correct geographical location, you are likely to get a high value of appreciation over a period of time.
Along with paying your mortgage debts you will be creating a home line of equity which is to imply that you will be able to approach the original price of the property without any debt.
Unlike other investments where you may lose a lot of your money for paying the tax amounts, the tax exemptions on a real estate investment is much more than any other business.
Therefore a real estate investment is the best bet for the value of a property is almost always on the rise which provides a good impetus for the growth of this business, but you have got to treat it with the necessary vigilance and the required acumen.

Tuesday, October 16, 2012

Global Economic Imbalances is a Huge Threat to Global Financial Stability

The cost of imbalance
Can be discussed from three aspects the cost of global imbalances. The first is the imbalance caused by the cost of the world. First, global economic imbalances is a huge threat to global financial stability, and this threat increases with the degree of imbalance in the accumulation. No safe and effective financial system can be configured so large and growing capital. Since the formation of trade imbalance a lot of money flooding the financial markets, causing interest rates low, the market underestimated the risk there, relax lending conditions, rising leverage, financial institutions, finance highly dependent on short-term funds from the market, risk reduced ability to resist, the stability of the financial order is becoming increasingly fragile. For this reason, some economists and even the imbalance as the root cause of the global financial crisis.

Second, the imbalance caused by inefficient allocation of global resources. In general, high rate of growth of capital in the production of more efficient countries, but the imbalances, the high rate of productivity growth in the developing countries experienced capital outflows, while the slow growth in developed countries have attracted large capital inflows. Again, if the growing imbalance may lead to the U.S. dollar as the major international currencies sudden price collapse in the future, which will form a major impact on world economic stability. The second aspect is the imbalance in the current account deficit countries to the risks or losses. Deficit countries accumulated large amounts of external debt, if the imbalance continues, the foreign debt will continue to expand. Once the global interest rates rise, the net pay of foreign monies owed will increase, which will squeeze domestic consumption, investment and government spending on national economic growth adversely.

In addition, on the current account deficit if foreign resources, claims the country scale with the growth of foreign debt has become "too large", people will question the country's solvency deficit, or debt service will, which will not continue to flow into the international capital deficit States to finance its current account deficit. In other words, the deficit the country faces international capital flows and sustainability of current account deficits. Finally, the current account surplus countries are also facing high imbalance costs. First of all, the most intuitive is a high loss of the benefits of savings. Surplus countries have not translated into a surplus of national welfare, the proportion of GDP, consumption and living standards are maintained at low levels. Second, if the surplus countries want to exchange rate stability, inflation will be faced with hedge (sterilization) the cost of a dilemma. China, for example, the export sector received an endless stream of dollars of income, the central bank bought foreign exchange when the dollar equivalent of RMB yuan constantly running.

If you do not use this part of foreign exchange hedging instruments recycling of excess liquidity growth, the economy will be damaged due to inflation; but if the hedge, one needs to pay interest, so there is a higher financial cost, and second, banks will the accumulation of a large number of hedge bonds, limiting the size of loanable funds, which the efficiency of the domestic financial system have an adverse effect.

Third, the trade surplus would continue to passive accumulation of vast foreign exchange reserves, the size often exceeds the optimal level. To ensure the safety and liquidity, a large number of excess foreign exchange reserves is usually very low rate of return in the form of U.S. government bonds held with respect to the form of more productive in terms of assets, there is a higher opportunity cost. Fourth, continue to accumulate and hold U.S. Treasuries will be slow because of the depreciation of dollar damage, large-scale sale of U.S. assets they may have suffered losses because of falling asset prices, huge surpluses of foreign exchange reserves accumulated loss of surplus countries to adjust to the initiative. In short, whether surplus or deficit of the country the country, will bring the needs of the global imbalances and the misallocation of resources and the real exchange rate distortions and other key prices to pay high price.

Rebalancing is the essence of the adjustment of structural factors

Since the existence of global imbalances and much harm, it must be addressed and resolved.
There are at least two solutions, one realized by the decline in trade volume, the second is re-balanced manner. A simple example can be carding. Assuming the world has A, B between the two countries, A to B export 200 million U.S. dollars of products, B to A $ 1,000,000 export products, this time $ 3,000,000 total global trade, trade imbalances, the amount of $ 1,000,000.

If because of the financial crisis and other exogenous shocks to the A country B national demand decrease of 100 million U.S. dollars, at this time, A country can only export $ 1,000,000 B State the product, just with country B to country A considerable product value of exports , to achieve a balance of trade between the two countries, but it is by the $ 3,000,000 the total trade volume dropped to 200 million for the cost of implementation. Balanced approach to achieve balance again is different. This approach means that, B States because of the rise in savings rate and the adjustment of production structure, with the production and export value of $ 2,000,000 products; the country because of domestic demand expansion of A formed from the B value of $ 2,000,000 imported products needs.

At this point, A country to country B exports $ 2,000,000 products, B States also exports to A $ 2,000,000 state product, total world trade volume increased from the $ 3,000,000 to $ 4,000,000, and to achieve trade balance. Two ways to achieve balance, the most fundamental difference is that the first approach does not solve structural problems, but under the influence of external shocks temporarily reduce the imbalance. Once the economic situation improves, the existing imbalance mechanism will continue to play a role, the fragile balance was broken. The rebalancing method is to be achieved through changes in structural factors, the balance of sound, will not disappear because of external shocks relapse. Understand the essential requirements of rebalancing, it is easy to judge, means of trade protectionism, import restrictions, we can not truly rebalance the global economy. Because trade protectionism does not affect a country's savings, investment, production or consumption habits, even if short term to reduce the deficit, does not have the long term sustainability.

The actions of common but differentiated

As the global economic balance as the goal of structural adjustment, and then balance the inevitable need to pay the costs. Both products and services flows, capital flows or a savings and consumption, are involved in a surplus balance deficit side side and the two groups, therefore, need to re-balance the economies of both sides to assume the responsibilities and actions to adjust to less.
However, whether surplus or deficit side side, re-balancing measures in the specific choice, should be emphasized in accordance with their actual situation.

United States, the world's major trade deficit should be a comprehensive, systematic adjustments. First of all, it should be committed to improving the homes, businesses and public sector savings rate, the private and public sector balance sheet is more sustainable.

The household sector should reduce the unnecessary expenses, focus on wealth accumulation. To government departments, in the medium term fiscal consolidation should be to raise government savings in order to reduce external imbalances. Meanwhile, in the financial sector reform should strengthen supervision and avoid excessive speculation in financial markets. Well is to relax export restrictions on high-tech products to increase exports. Others, like Greece, Ireland, Portugal, Spain, countries like Britain severe budget deficit, to emphasize fiscal austerity and reconstruction. The trade surplus side, the main task is to increase consumption, expanding domestic demand and reduce dependence on external markets. For Asia, the formation of sufficient size should be committed to the ultimate consumer market within the region. Specifically, China should stimulate domestic consumption as a priority policy options, this should improve financing for small businesses and residents of the channels, while improving and enhancing the government's public services and social security in order to reduce precautionary savings.

Japan and South Korea, the situation is different, they should adjust the industrial structure and increased reliance on service industries to increase productivity growth. India's current account remained balanced, the deficit slightly in recent years, the Indian market within the Asian region the formation of the final consumer market is very important. In recent years, India's sustained and rapid economic growth, but domestic, whether public or private sector, are very backward infrastructure, human capital requirements of the education and health facilities are inadequate.

Although some high-tech related services sector development is good, but need through the "re-industrialization" to reduce poverty and increase employment. Therefore, India's policies will tend to increase spending and domestic demand, which will shape the consumer market in Asia to make the ultimate contribution. The Philippines, Thailand, Malaysia and other ASEAN countries, the main task is to improve the domestic environment for private sector investment in order to promote private sector investment needs.

Saturday, October 13, 2012

Jobs for Felons in Visual Communications - Get A High Tech Job

Are you an ex-offender looking for job opportunities for felons? When it comes to searching for jobs for felons, you need to understand two things: yourself and the job market. If you don't want to get stuck working at low-paying jobs for felons you need to acquire skills that are in high demand. One of the hottest jobs for felons is in the field of study right now is visual communications.

What is visual communications?

As the name itself suggests, visual communications is transmitting or communicating messages through visual media like signs, drawings, graphic designs, illustrations, animations and other such media.

Graduates of graphic communication programs are skilled in the design and production of both digital and print media that are used in corporate and public communications. Their work typically involves creating and designing print and multimedia communications. Many work as graphic designers and web designers.

This career is suitable for people who are creative and visually artistic. Since you will be working with clients to either draw attention to a message or to sell products, you need to be the type of person who is easy to talk to and can translate abstract ideas into concrete visuals. This type of job also requires a person who is outgoing. People who are too shy to talk in public will find it hard to present and sell their work to clients.

In visual communications, computers and software are the main tools you will be using everyday. This means that you should be the type of person who is willing to keep on learning. You will have to master different types of media or software as the current tools become outdated and newer technologies become popular.

Visual communications is a good career path for ex-felons because this is one field where people will care more about what you can do for them now than what you have done in the past.

Most graphic designers and web designers work freelance, which means that you can be your own boss. That's why there are numerous job opportunities for felons in visual communications. Your felony will be irrelevant because almost none of your clients will do background checks since you won't be employed by them you will be self-employed.

How does that work?

The majority of both small and big businesses do not need the services of a visual artist or designer daily so they will not have a designer on their payroll. Instead, they will just hire a freelance designer whenever they need a new design for a logo, advertisement, product packaging, website, online store, etc.

You, as a freelance graphic communications expert, will hire yourself out to many different clients and you will be paid according to the tasks or projects that you finish.

The main advantage to freelance job opportunities for felons is that you can enjoy a lot of freedom and flexibility in your work week. You will be your own boss and manage your projects independently.

If this prospect does not appeal to you, there is also the option of working a regular job at companies or organizations that do need designers daily. The companies that hire visual and graphic communications graduates are advertising firms, magazines, newspapers, book publishers, online news media companies, film studios, computer game design companies, etc.

Jobs for Felons: How to Get a Job in Visual Communications

Although it is certainly possible to teach yourself the basics of visual communications, employers and clients prefer people who have a certification, diploma or degree in visual communications.

When choosing a school and a visual and graphic communications program, examine the course description to see what it will focus on. Then choose the one that best fits your interests and goals. For example, if you are interested in multimedia 3D animation, choose a visual communications program that has basic and advanced animation subjects.

Schools generally offer short-term certificate programs, two-year associate degrees and four-year bachelor's degree programs. If you graduate from a shorter program then you can get a job faster but you will probably have to start with the lower-paying jobs. A bachelor's degree may help you start with the higher-paying jobs after graduation, especially if you want to work for the big companies.

In closing, visual communication jobs for felons are the best choice for people who are artistic, creative and outgoing. You will need a diploma or degree in visual communications to get the best jobs for felons. The main advantage to visual communication jobs for felons is that there are many job opportunities for felons available that pay well.

Friday, October 12, 2012

Boulder: Your Best Choice in Commercial Real Estate

In 2011, Bloomberg Businessweek dubbed Boulder, Colorado as "America's Best Town for Startups." This city is perfect and ideal for setting up, expanding and even relocation your business.

Boulder is not as busy as the major cities like Denver. It is accessible and yet not at the very heart of where most people are. It is just 30 minutes from central Denver and just 45 minutes away from Denver International Airport, which is essential in business and trade.

The city is a hub for various industries. It is a haven for organic and natural products. A number of outdoor merchandise is manufactured here as well. Some federal laboratories are also situated in the city.

Boulder is home to some of the leading universities. The city also boasts of its breathtaking natural landscape and of course, the innovative spirit of its people. The city also takes pride in their quality of life, which is influential in bring new people in as well as keeping highly talented individuals in the city.

The city's profile is the best that you can possible have; hence, they can truly boast about the quality of life people enjoy here. The residents are well educated and education system here is nothing but superb. The city's climate is ideal since it enjoys dry and moderate climate and takes pleasure in more than 300 days of sunshine annually. Boulder sits at the foot of the Rockies, which gave way to lots of trails and open spaces ideal for outdoor activities. The city has everything covered for you from dining, art, culture and shopping. Also, the cost of living here is at par with other cities in the country.

Boulder's Commercial Real Estate
With Boulder's excellent profile, there's no doubt that the city's commercial real estate is one of the most promising and fast-growing across the country today and it is best proven with the growing number of commercial real estate agencies in Boulder.

Many investors, businessmen and corporations consider the city for them to start, expand or relocate their business. This is a business-friendly city as it advocates a positive business atmosphere. Also, one of the city's flagship programs is retaining businesses and supports their expansion.

There's still a lot of room available for business to settle here. Commercial real estate agencies have long lists of commercial properties for sale or for lease. You will surely find a perfect one for you.

Scout for the best commercial real estate agency in Boulder and make an appointment with them. Outline your prerequisites and requirements and they will surely be able to give you great options for you to choose from. The real estate industry here is booming, thriving and flourishing. A lot of projects and developments are on going to cater to the rising need of the city and its people.

It is important that you consult and hire competent and experienced realtors to help you find the suitable and appropriate place for you. Don't be afraid to ask questions, conduct ocular inspections and even haggle for the best deal possible. Most commercial real estate agencies in Boulder are open, helpful, dependable and forthright.

So waste no time, you can search online for the leading commercial real estate agency in Boulder, check their initial listings and start your inquiries. Boulder is a guaranteed place for your business to grow and succeed.

Monday, October 8, 2012

Silence speaks more than words

Movie theatres like us to believe that silence is golden; when it comes to watching a show that just cost 20 for the tickets and another 30 in snacks I do not think that many people would argue that at least in that case, silence is golden.

It may sound strange to think of silence as an anger management tool, but when used in the right situations it can be a very effective one.

Often times when we are in an argument with someone we are so concerned with getting our point across that we do not even make an attempt to listen to what the other person is saying. After all, there is no way you are wrong- it must be them, right?

Keep those same arguments in mind and try to remember how the ones that had a healthy resolution ended. In some of those cases it is likely that you either realized that you were wrong, the other person figured out they were wrong, or the two of you came to some sort of compromise.

The key element to success in all three scenarios is one thing- silence. Often times your silence can speak and say more than any words that you could say. People often get angry and feel the need to argue because they do not feel as if they are being listened to. Take the time to do just that (and understand what they are saying) and you can go a long way towards finding a solution.

Silence can not only help diffuse the other person's anger, but it can go a long way to quieting yours. Sometimes all you need to do to calm down is stop doing or saying anything. The act of practicing silence can be a calming one simply because you are no longer arguing.

Well, how are you going to resolve an issue if you don't talk it out? While the talking can be a very important tool in conflict resolution and anger management, you first have to be willing to listen to someone else before you can have a chance of resolving even the smallest of issues. That silence shows your willingness to get those issues resolved telling the other person that you are ready to do what it takes to end the argument.

Wednesday, October 3, 2012

Risk And Money Management In Trading With The Kelly Ratio

You have a limited amount of money for trading whether it is ,000 or ,000,000, once it's gone, you are done with trading. The problem is that you can have a long string of losing trades before you hit a winner with your trading system.

The riskier you're trading strategy, the more thought you need to give to your money management style. Otherwise, you can find yourself out of the market with a margin call in no time. Let's say, you trade 100% of your account. You only need one losing trade to lose 100% of your account. Suppose, you divide your trading account into 10 equal parts. Now, you can have 10 losers before you are out of the market.

You want to reduce risk further in your trading. You divide the capital in the trading account into 100 equal parts. Now, you only risk 1/100 of the capital in the trading account on a single trade. Suppose you lose. You only lose 1/100 of the capital. Suppose, you lose 100 times in a row. You are done. But the chances of making 100 losing trades in a row statistically speaking are very very low. So, you are on a more safe ground. This is the essence of risk management. You only risk what you can afford to lose. Experienced traders divide the capital in their account into 50 equal parts and they risk only 1/50 of the capital on a single trade. In other words, they don't risk more than 2% on each trade. This should give you the idea. Trading is all about long term survival. You lose in the start but eventually you start hitting winners consistently. This grows the capital in your trading account into a large sum by compouding the wins overtime.

So as long as there is some chance of losing your money, you don't want to bet it all on one trade. But as long as there is some chance of making money, you want to give enough exposure to your winning trade to make a decent profit. So how do you figure it out?

So what you need is a good money management system that tells you the position size for each trade that you should bet. Kelly Criterion emerged from the work done on signal noise issues in 1950s in the famous Bell Labs. Very soon, the mathematicians who had developed this formula saw its' application in gambling and trading and in no time this formula took off with the traders.

What you need to do is first select a trading system that you think you will use in your trading. Now make a number of trades with that trading system something like 30-40 trades. Use the data from these 30-40 trades to calculate the ratio of winning trades to the losing trades made by that trading system. Also calculate the average return on a winning trade plus the percentage of winning trades that the trading system makes. Now use this formula to calculate the Kelly Ratio: Kelly %age=W-{(1-W)/R}. This ratio will tell you the percentage of your trading account that you can risk on a single trade using that trading system.

W is the percentage of winning trades that the system makes over time. R is the average gain of the winning trade over the average loss of the losing trade. Many traders divide this percentage by 2 to be on a more safe side.