Trend following systems in forex trading work much like the old rule of physics: A body in motion tends to remain in motion until acted upon by an outside force. When applied to currency, this is also thought to be true. If price is going up, it tends to continue going up, and profits can be made by investing on this trend. The trend can be upward, or it can be downward, and sometimes there’s no obvious trend, but the principle remains the same. If you can see the trend then you can invest with the belief that it will continue.
The forex market lends itself very well to technical analysis. Since a country is such a big and complex entity, it is difficult to put an intrinsic value on it. Yet there are a large number of elements, both fundamental and technical, that can be used to establish trends. They include the GDP, CPI, prime interest rates, export and import figures, and even the unemployment level. All of these can be translated to charts showing the historical data going back decades. When they are charted, trends can be seen rather easily. When an investor becomes skilled in reading these charts and interpreting the trends, he will be able to use this information to guide his currency trading strategy.
Trend following is not always that simple. Indeed, it is quite a complex method of analysis. It can reveal historical turning points or levels where the trend tends to change direction. This can lead to investments known as “bucking the trend” trades. Although highly speculative in nature, they also present some tremendous profit potential. In essence, you are going to be betting that the trend is going to change direction while the majority of investors are betting it is going to continue.
Regardless if you are planning on bucking trends, or merely investing in the hope they continue in the same direction, understanding and identifying them is going to be the key element to successful investing strategy. This is one of the things that makes forex trading so appealing to the statistical minded and computer orientated investor of today. The facts are all out there, and the ability to gather and organize them has never been better. In the past, it was necessary to seek advice, and usually you had to pay dearly for it. While there are still plenty of financial advisors willing to give you their interpretations of trends, you are able today to do that pretty much for yourself.
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We have followed this company for years, as they have morphed their business model from a software security company, called Roaming Messenger, to now an on-line catalog/website enhancer, through visual merchandising.? ?At one time, this company possess a ?killer app? in the security industry, and have now sort of spun off this idea, to a company called Zingerang Software(incidentally, a startup company founded by Michael Chuises, former Roaming Messenger Vice-President of Engineering.? This deal seems pretty good for Warp 9, although this replaces an earlier deal that was lucrative as well. But it allows WNYN to share in future royalties, while keeping the patents.)? ?Warp 9 now competes in the internet space with its application software, and while a ?baby? in this industry, it has some resilience to the economic slowdown, with its pricing model. ??Warp 9 earns fee income from its solid retail base, a real key being in that it includes fixed monthly charges, and variable fees based on the sales volume of their clients? e-commerce websites. Unlike traditional software companies that sell software on a perpetual license where quarterly and annual revenues are quite difficult to predict, their SaaS model spreads the collection of contract revenue over several quarters or years and makes the revenues more predictable for a longer period of time. ? With its most recent quarter in the books, the company made over 2.2 million in revenues in fiscal ?07 , comparing quite favorably to ?06, where the company made 1.3 million, a significant ramp-up.? The most recent quarter saw a jump in revenues of 40%, from 433,000 to 604,000.? Cash on hand went from over $100,000 to over $500,000 this past quarter.? The company seemed to have turned a corner, as the company finished with a cash flow positive quarter, and a price to earnings of 4.? Yes?.4.? An aggressive PE for a technology company could easily be in the 30?s and 40?s, or negative in fact.?? Cash flow positive, low PE, revenue ramp-up, increasing cash, unheard of in our opinion for a company this size. ??Just what gives here?? Digging deeper, the company consummated a convertible debt offering with Cornell Capital Partner, LP. in 2005, resulting in dilution of its shares.? In the quarter ending September 07 for example, the company issued over 17 million shares in exchange for Cornell?s convertibles.? This is bound to way on the share price of the company as this goes on, and this we feel is the main reason for the price suppression.? The CEO has to figure a solution here, as this would really help the share price maintain some stability.? Still, it is way over done, in our opinion, resulting in a great opportunity for investors. ?