Back testing is a useful technique adopted by financial institutions to reconcile predicted losses from Value at Risk (VaR) with actual losses, typically at 1 day, 1 or 2 weeks, 1 month or a year. VaR is best known for quantifying the risk of loss on a portfolio. For a given probability, VaR is defined as the loss that a portfolio may make by the end of a given time horizon under normal market conditions.

The framework was developed by the Basel Committee and is the central format for judging the performance of a VaR model. Back testing helps a company test the accuracy of a VaR model. Employing this technique can enable a comparison of the losses that were forecast with the actual losses at the end of the defined time horizon.

How to Enhance Back Testing

To minimise any problems or limitations that might arise from back testing, it is recommended to follow the steps below:

1. Refer to the Basel Committee’s three-zone approach. The green zone means that the possibility of incorrectly accepting a model that is inaccurate is low. The yellow zone displays an alert that the model should be checked (most likely by the risk manager) before any action is taken. Finally, the red zone represents the probability of incorrectly rejecting a model that is accurate so the performance of a model can then be [removed/ replaced/ amended].
2. Keep up to date with new approaches to back testing, as they are constantly being developed, and any updates may be useful.
3. Carry out back testing by using daily profit and losses as it will give a broader insight into cases where risk measures have not been accurately catching trading volatility.
4. Data sets should be updated at least once every 3 months

With these in mind, an operative back testing framework can be put into effect in order to measure risk and performance.

This post was written by UnaVista from the London Stock Exchange Group. UnaVista is a hosted matching and reconciliation platform built by London Stock Exchange, aiming to provide a range of regulatory solutions. The platform is the UK’s leading approved reporting mechanism (ARM) for MiFID transaction reporting, and can provide solutions across a number of other regulations including the potential to connect to ACER for REMIT reporting. For more information on how regulations such as CRD IV will affect you please visit the UnaVista website.

The huge cash gains made by many gold or silver scrap metal dealers has made some of them quite crafty and thus employing any technique to swindle unsuspecting clients off their money when they go selling their gold or silver metal scraps. In simple terms, these dealers are always desperate to make quick money to the expense of their customers. Fortunately, by following the below tips, you can be able to avoid buying fake precious metals that are valueless.

• Scientifically, gold metal is not magnetic. If a metal being claimed to be gold is attracted to the magnet, then that is definitely not a genuine gold. Remember also that it may not be attracted to the magnet and yet it may turn out fake. So, some other tests need to be done before finally deciding that the gold is authentic.

• It may appear awkward but you can tell whether a gold piece you are about to buy is real by biting or pressing it gently with your teeth using moderate pressure. Real gold will indicate your teeth markings and the deeper the markings, the more its purity. However, do not rely on this test since it can cause damages to your teeth. Lead also appears to be much softer than gold and if any gold item is plated with it, this can deceive that the item you are about to buy is real gold. Other more professional tests have to be carried out to verify the gold item authenticity before finally buying or selling it.

• The purity of your gold can be tested using unglazed ceramic plates. If you do not have this gold testing plate, you can as well as buy it. You can use this method to test even the purity of gold scraps you are planning on selling. Drag the piece of gold on the surface of the plate and if you notice a black streak, then walk away from that deal as that gold item is obvious fake

• Weight can also be used to tell the pureness of the gold you are about to buy. Your jeweler can weigh your gold for you and normally there is no charge for it. The density of the gold being sold can define if it is real. Gold tends to have a higher density than other metals and thus it is believed that the higher its density, the more authentic it is.

Trading Capital

First of all, use money that you can afford to lose when stock market trading. This is a very important point. You can invest money that you can’t afford to lose. If it’s for retirement or college tuition, investing in stocks is not a problem, so long as it makes sense.

Use money that you can survive without. So if you need the money to pay your bills, don’t use it. It’s that simple. If you use money you need to live your life, you will have an unhealthy attachment to it that will affect your stock market trading and will usurp your strategies.

In addition, if you use money you can’t afford to lose on day trading, you are basically gambling. This is especially true if you are new to trading. That is because it is highly likely that you will bust your first or second trading accounts in the process of learning.

Trading is not like investing where you find stocks to buy and hold and your capital is pretty much protected on the most part. With trading, you could lose the whole thing in a single day.

Use Leverage – But Cautiously

Unless you have $100,000 to trade in the stock market, you really won’t make enough money to live off of. Even with $100K, you’ll be lucky if you make enough to pay your rent. And that’s if you’re good.

That means you will need to use leverage. Leverage is when you borrow money from your broker so you can buy more shares in a stock than you can with cash.

Again this is very risky because if a trade goes against you, you’ll need to have a large enough deposit so you don’t get margin called out of the trade by your broker.

Stock Futures

An alternative way to trade stocks with leverage is by trading stock futures. Most of the big stocks have futures contracts that are traded associated with it as the underlying security.

You can also trade what are called e-mini’s. These are futures contracts with the entire S&P 500 index as the underlying security.

E-mini’s are useful because if you were to trade a standard S&P 500 ETF, like the SPDR, you wouldn’t make much money. The S&P 500 usually changed 1-2% a day. Those are very low returns unless you are trading $100K positions. E-mini’s are a good way to get more of a return on less movement in the market.

There are many other strategies that you can use to trade the stock market. These are just a few suggestions. Just remember to use money you can afford to lose. That is the key to long term success and to not cutting your trading career short before it has a chance to begin.

Understand the Real Price

Real estate is incredibly expensive compared to most investments. The pay-offs are high, of course, but the amount of capital involved in an initial investment is high. While you might have the cash (or credit) on-hand to deal with the initial buy-in, try to remember that there are assorted costs related to the property that might not be obvious. Not only will you have to deal with taxes, but also basic holding costs and maintenance costs can drive up the price of the investment. Failure to realize this can cut down on your margins and leave you holding a bad investment.

Time Your Investments

Real estate investment is tricky, and not just because of the costs involved. If you do choose to invest in this market, you have to learn that timing is key. Part of it is that old adage of buying low and selling high, of course, but knowing when to pull the trigger on a deal is just as important. Learn to adapt to the flow of the market and you will succeed; attempt to buy and sell only on your own terms, though, and your investment will be a flop.

When to Hold, When to Fold

At a certain point, you might think that your real estate investment has paid off as well as can be expected. The unfortunate truth of the market is that it is very difficult to determine when your property has met its maximum value and when it is poised for a fall. If you buy your property to rent, try to make sure that pay attention to market trends – if other inventory is in short supply and you have hit your maximum rental potential, it is time to get out. On the other hand, it might be wise to hang on to those renters if the rental market is moving well. It all comes down to your best judgment.

These three tips are only a few of the basic rules that you must learn to follow if you are dealing in real estate. If you can learn how to turn a single property investment into a revenue stream, you can learn how to do it with multiple properties. While the risks grow larger with each step of the investment process, so will your potential profits. Real estate investing is not for the faint of heart, but those who succeed in the process can look forward to many profitable years in their futures.

Shane writes for Precision Properties, one of the best home builders in Fayetteville NC.

You can save time and money by making your means of commute a bicycle. Yes, ride your bike everywhere you go. Obviously if you have a long commute this may not be an option, but let me explain how this helps save time and money.

Can Riding A Bike Help Save Time?

It’s true that riding a bike may take longer to get you places; however, it will force you to be more efficient and a better planner. You’ll have to plan out your trips to cut out unnecessary stops at the grocery store during the week. You’ll need to plan all your errands on one day and in the best order to save you the extra work. I believe that we spend so much time rushing around trying to accomplish so much, but the luxury of a car allows us to be very inefficient with our time. Riding a bike can also save you time because you will be exercising as you commute allowing you to free up that time you normally would have blocked off for the gym. And lastly, you may have more time because the things that you would normally do with a car aren’t really necessary anyways. When you cut out impulse trips and unnecessary driving you’ll free up more time than you ever thought you could.

Save Money By Cycling

Why riding a bike saves money is a little more obvious so here are a few reasons:

• You save the money you would have used on gas.
• If you quit using a car altogether, you don’t have to pay for car maintenance or fees like insurance and registration.
• There are less frequent trips to the store which means less browsing and less impulse buying.
• You have to carry home your purchases making you decide if your purchase is a need or a want.
• This may help you lose weight which will lower your grocery bill
• You can double this as exercise and you can cut out a gym membership fees or exercise equipment costs.

Everyone’s looking for the easiest way to save money and time; this easy lifestyle change can help you save both and will help relieve stress in the process.

They identified the fraudulent acts and wrote up the list as a reference to help Americans tell the difference between liars and the real thing. Take a look at the top three they found and keep an eye out for them in your own life.

First, identity theft is abounding in the US. Applied to the IRS, people steal your personal identification information and file for a return in your name.

When completed successfully, they file taxes before you do and have a return on the way to their mailbox before you figure out what’s happened. Fraudulent refunds reach into the billions of dollars every year.

The IRS has become very good at stopping many of these cases from going through. They aren’t fool proof though.

The best way to avoid this is to be very protective with your identity. Hold onto personal information like your life depended on it.

Don’t easily hand over things like your social security number, birth date, or other identification number. Only give that information to companies that need to know it and you understand why they need it.

Be more conservative than you are liberal. Doubt the company before you believe in them.

Second is phishing. Phishing is when someone attempts to trick information out of you (and is hence a tool used in identity theft).

Phishing with taxes often shows up in the form of emails and websites. An email shows up in your inbox claiming to be from the IRS or some other similarly important tax agency telling you they need some information.

For your convenience, they ask you to hand over information like your social security number, financial numbers, and other sensitive information. They might even direct you to a website made to look like the IRS’s webpage.

Don’t follow those links. Don’t send that information in an email.

Should you ever receive a contact from the IRS, it would come in the form of a letter in the mail. You would never receive an email from them, nor would they ever ask you to send that information via email to them.

Nor should they need your personal identification information, providing they know who you are better than you do. If for some reason they do require something of you, they will send a letter in the mail.

When you receive these letters, give the IRS a call to verify that the document is real. Don’t fall to a phishing scam by not giving out your information.

Third and finally, dishonest return preparers will sometimes be a source of tax fraud. Choose someone honest, and well documented to prepare your tax returns this year.

These are the three most common forms of fraud the IRS is seeing this year. Watch out for them as the final days of the tax season come to a close.

The Tax Crisis Institute is an office of tax lawyers in LA. These LA tax lawyers specialize in helping clients manage and work with back taxes, wage levies, and other tax problems Americans come into problems with every year.

1. Use Caution getting back inside

After a fire has been put out and the scene deemed fit to get back inside, be careful, the smoke and water or other chemicals used to turn out the fire might be a health risk, not to mention the structure might be compromised. If it is necessary for you to go back in, enlist the help of the firefighters.

2. Take care of yourself, family and belongings

Get in touch with your family members and or relief organizations in case your home was affected. Ensure that your family members have a roof over their head. As for the belongings that were salvaged, ensure that they are stored safely. If it is an office, store your belongings at home or a go down. If family members and pets were present during the ordeal, always try to find a way to comfort them.

3. Get in touch with your insurance agent/company

Contact your insurance company or agent immediately. Let them know of the situation and they can advise accordingly. Some companies will send their agent to the scene. Others would like you to give a list of all the damaged assets and or lives.

It may seem too early to start thinking about compensation. In case you do not have insurance, it will still be to your advantage to have everything listed out for count purposes and get to know what you have lost and what was saved.

4. Financial standing

If you were paying mortgage, it is advisable to get in touch with the company and inform them immediately of the situation. Report your debit or credit cards destroyed to the relevant companies and have them start processing for replacements. While using cash or any other means of purchase, save the documents for latter. This comes in handy when doing your calculations on expenditure and other expenses.

5. How to handle the damage

Depending on the damage sustained, you may choose to repair your home or office and continue living or doing business in it, or putting it in the market. It is advisable to engage experts to undertake the survey and guide you through the best action. There are professional companies that handle such situations. They are able to assess the premises and repair it accordingly. This might mean smoke damage restoration or total overhaul of the premises.

India’s new found tourism industry increases the country’s total revenue. With India’s beautiful location, as compared to other tourist destinations around the world, tourism does wonders for their economic growth. Not to mention their strategic location with regards to one of the world’s largest necessities; oil and food.

Especially in terms of other growing countries, many machines and almost everything today are run on fuel and food, which India has plenty of. The revenue from those exports alone are capable of sustaining the country’s economy as a whole, but at the same time, does not cater much to the average working man. Most oil companies are owned by business tycoons or governments and food is a necessity that does not cost too much to produce.

China’s population and population growth, on the other hand, being very large helps them sustain their economic rise. China uses their proficiency in mass production to attract more investors from other countries. This, however, in essence may cause trouble among China’s people due to the low salary that the average working man would receive; it would be very good, concerning the country’s overall growth in economic stability. Only the government manages everything, and to put things simply, there are just too many people to provide the resources ample enough for every person. China has an insatiableappetitefor luxury goods and has been the first mover into investment diamonds.

With India, they have patterned themselves out of a somewhat democratic outlook, while China is still almost authoritarian in nature. Essentially, the reason why China’s growth has increased so rapidly over the recent years is because of their ability to utilize the resources at hand. Take the issue of roads and infrastructure; with China, since the government is “authoritarian-esque”, this allows for the quick building of structures needed for economic growth.

Without hesitation, China’s government can literally move people out of the way. In the case of India, because of their government, people are allowed to own private property and it would be much harder for the government to pave over the places needed to make the proper roads and infrastructure.

This is merely one example, wherein China and India’s governments differ in relation to their economic growth. On the other side, both China and India are capable, with the resources at hand, to build up their market in a parallel manner. With regards to maintaining economic growth, both countries are equally competent in the field.

Bankruptcy is often viewed as a moral failing. The image of the bankrupt individual is that of a scofflaw who racks up enormous debt, then shirks his financial responsibilities by filing bankruptcy. But that image is far from accurate.

After the near total financial collapse of 2008, a lot of people who thought they were financially stable, suddenly found themselves living beyond their means. The culprits were job losses, pay cuts, and rising rates on loans as banks scrambled to recoup their losses.

But even before 2008, an otherwise responsible individual could find himself in a serious financial bind if he was suddenly faced with an insurmountable expense – like medical bills. In fact, medical expenses were the cause of 62% of bankruptcies filed in 2007.

All it takes is one major mishap for someone to find himself buried deep in debt. And for many, the only way to ever see daylight is to file bankruptcy.

There are two types of bankruptcy available to individuals: Chapter 7 and Chapter 13.

Chapter 7 is a debt forgiveness plan where all eligible debts are eradicated. Eligible debts include installment loans, cash advances, credit cards, mortgages, personal loans, medical bills, and utility bills.

The advantages of Chapter 7 are that it’s relatively cheap to file, and you get a fresh start.
The disadvantage is that you could lose some of your property. If you have a home loan, the bank will take the home as part of the settlement. The same goes for an auto loan, and you will need to surrender all of your credit cards.

Also, Chapter 7 is only an option for people who have absolutely no money. An individual who has no income, or very little income, no property, and no savings, would qualify for Chapter 7. And individual who has higher income, money in savings, or equity in property, would not.

Individuals who do meet the financial qualifications for Chapter 7, can file Chapter 13.

Chapter 13 is a debt adjustment program where the courts negotiate with your creditors to create a monthly payment plan.

The major advantage to Chapter 13 is that, in most cases, you can keep your property. Also, some debts could be written off in the course of the negotiation. The major disadvantage is the cost. Chapter 13 is more expensive than Chapter 7 because your lawyer and the courts have to administer the repayment plan throughout the term of the plan, and they charge fees.

Another disadvantage is that your repayment plan is based on your income and assets at the time that you file. If your financial situation changes for the worst, you could be stuck with a payment plan that you can’t afford.

You are also required to notify the courts when your financial situation changes for the better, so the courts can adjust your plan and take larger payments.

You can file Chapter 7 or Chapter 13 on your own, but that is not advisable. The bankruptcy process is difficult and one missed form could result in the courts dismissing your filing. Your best bet for a successful filing is to use a bankruptcy lawyer. You can find a lawyer through your local legal aid society, or bar association. You can also find one online by searching for the type of bankruptcy and your city or state — for example, “chapter 13 bankruptcy Michigan.”

The bankruptcy systems exists specifically to give consumers relief from insurmountable debt.  If you have struggling to pay your debts, with no end in sight, bankruptcy could be your best option.

Shop at Discount Stores or Buy in Bulk

Bulk stores like Sam’s Club and Costco allow you to get bulk items of name brand products at a discount. Often times the final cost is less than the store brand or sale price at a regular grocery store. Just make sure you really are getting a deal. You probably won’t buy everything at one of these stores. If you’re shopping at a supermarket too, it pays to know prices so you can compare.

Discount stores like ALDI can offer low prices because they don’t give shopping bags, they charge a quarter for shopping carts to make sure you return them so that they don’t have to hire someone to clean them up, and they pile products up in boxes instead of displaying them on shelves. All of these little things add up to steep discounts.

Use Coupons

You are probably aware of the ‘extreme couponers’ out there that get lots of stuff for next to nothing. You don’t have to be extreme to take advantage of the saving power of coupons. Look through your Sunday paper for coupons you know you will use, and check out websites like coupons.com or redplum.com for printable coupons. Pair coupons with store deals to get the lowest price.

Track Sales

Most items go on sale every 3 to 5 weeks. Some are more or less frequent, but if you can keep track of when most items go on sale, you can stock up and use coupons at the best possible time. This is a good tactic to save, however, if you’re spending more than an hour on coupons each week, you are probably going too far. Make sure the savings are still worth the time you spend.

Make a List

Never go to the grocery store without bringing a list. Plan your meals for the week so you know what to buy. If you go in without a list, not only will you forget things, you will also buy more of what you don’t need. Plan your trip to avoid making extra trips and to keep from getting tempted to buy junk food or other things you don’t need.

Cut Out Fast Food

Fast food restaurants are not only terrible for your health, they cost a lot, too. If you were to make most of the meals at home that you buy from fast food, it would cost a fraction of the amount. Plus, you can actually make real food that isn’t full of preservatives and depleted of nutrients. Making your own lunch or dinner doesn’t take long. When did taking the time to make a meal become such a problem?

Farmer’s Markets

Shopping locally is good for your community and local economy. Local food at markets is also better for you and often lower priced. Even at the same price, you’re getting a bargain because of the superior quality. Take an hour or 2 out of each week to check out your local farmer’s market.

Sam Asher writes at Best Investments for Beginners about how to invest and how to manage your money. You can also find more tips to help you save money on groceries.