A Shockingly Simple Stocks Momentum Indicator
Mar 9, 2010 Uncategorized
Following a trend is great. But if the trend is moving quickly, you want to know that so that you can get ahead of it. If the rate of change of the trend is going up, rising prices are going to follow quickly.
Momentum was the velocity multiplied by the mass of the object. Now first what is a momentum? You must have read about the momentum in high school physics.Velocity was the rate of change. Now. a simple way to calculate the momentum of any security price is to divide the closing price today by the closing price ten days back and then multiply it by 100! So when we talk of momentum in trading, we are talking of the rate of change of any security prices.
This gives you the momentum indicator. If the prices didn’t go anywhere momentum indicator will be 100. If the prices went up, the momentum indicator will be greater than 100 and the prices went down, the momentum indicator will be less than 100. Now, a trend is expected to continue if the momentum indicator is greater than 100.
Momentum is a leading indicator. It tells you what is likely to happen in the future not what happened in the past. Momentum trading is done with some attention to the fundamentals. When key business fundamentals like the sales or profits are accelerating at the same time the security price is going up, momentum is likely to continue.
However, in momentum investing, you search for stocks that have rising prices that are expected to continue for sometime. So you buy high and sell even higher within a few weeks making a decent profit. You can use that profit to do more investing. As said before, instead of investing in a security or a stock you can do momentum investing. When you are doing ordinary investing, you are waiting for its price to appreciate to give you a capital gain. This price appreciation might take from a few months to even years tying down your capital in that investing.
What a momentum investor is looking for is a security that is going to move big. But this move big is going to happen on a long term horizon instead of a few days. The expectation is to make money on the longer term. The thought is that if the security is starting to go up in price, it will keep going up in prices unless something dramatic happens to change. In the meantime, you can make a lot of money.
There are many way to do momentum investing. One is the price momentum that we have talked above. The other can be Earning Momentum. If you are a long haul investor who keeps an eye on the financial statements of different companies and you find that the quaterly earnings are going up steadily from one quater to another. What this means is that the stock price will also accelerate and follow suit.
Mr. Ahmad Hassam has done Masters from Harvard University. Get this 49 page Quantum Swing Trading Report plus the shocking Profit Button Report that applies no matter what you trade- stocks, forex, futures or options FREE. Download this very simple 1 Minute Forex Trading System FREE that makes money anytime instantly.
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Brunswick Forest Has Much to Offer in a Private Community
Nov 23, 2009 Real Estate
Situated along the North Carolina coastline, Brunswick Forest offers 11 beautiful neighborhoods built among 4,500 acres. This private community in scenic Wilmington, North Carolina, offers it’s residents many luxury amenities.
Southern charm abounds within the communities neighborhoods. Budget conscious home owners will enjoy the low maintenance single family homes and town houses. The planners have done an excellent job with keeping the neighborhoods secluded while keeping the feeling of a close knit community.
Tennis players and golfers will enjoy the tennis complex and the Cape Fear National 27 hole golf course. The Fitness and Wellness Center offers state of the art fitness equipment or venture outside and enjoy the walking and biking paths and trails that meander through the communities wetlands and woodlands. The River Center allows residents access to the Cape Fear River and Intracoastal Waterway through a series of inlets and coves which are great for kayaking and canoing. Enjoy a picnic or walk through the community Garden Center.
The Cape Fear National golf course was created by Tim Cate and incorporates all the local beauty of the local woodlands. Private membership to the golf club will be required in the future. Homeowners have access to all the amenity centers in the community.
The community features over 100 miles of paths and trails that meander through the woodlands and wetlands of Brunswick Forest. The paths and trails are great for active adults who enjoy walking and biking.
The River Club has an observation deck and a boardwalk with bridge leading to a floating dock in the creek. The club is a great launching point for fishing, kayaking, and canoing. Other benefits at the club include a screened pavilion and outdoor fireplace. The club also has an area suited for boat storage. The nature center offers canoes, kayaks, and fishing gear for sale or rent.
The Fitness and Wellness Center has a lot to offer the residents of the community. The centerpiece of the community is it’s indoor and outdoor resort style swimming pools complete with poolside grill and six hard-surface tennis courts. The center also features a steam room, massage rooms, sauna, whirlpool, and mens and womens dressing rooms. The aerobics and exercise rooms help you stay fit.
The Villages at Brunswick Forest is a commercial area inside the community that has shops, restaurants, entertainment, medical and professional services connected to the communities neighborhoods by the bike paths and trails.
Hubert Miles is the founder of Gated Communities USA which features the best Master Planned Communities in the USA and Internationally. Find information on Gated Communities in Coastal North Carolina.
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Stop Loss Orders
Oct 31, 2009 Real Estate
Risk management is an important part of any trading decision. One important way to control your trading risk is by setting stop loss exits. A stop loss exit is a practical tool used in risk management. However, there is an art of developing the right stop loss exit strategy.
Placing your stop loss requires fine tuning on your part. On the one hand, you dont want to get too liberal with your stops that you never lock in a profit. On the other hand, you dont want to set too tight stops that you constantly get bumped out of the market.
The topic of setting stop loss exits generally falls under the heading of trading systems. Your exits must be carefully coordinated with your entries. This is a trading skill that you can only learn with experience.
There are a variety of stops that you can incorporate into your trading system. The following sevens are the most valuable:
1. Initial Stop: Whenever you enter a trade, put a stop loss first. It is the largest loss that you are going to take in the current trade. This stop is identified before you enter the market. This is the first stop set at the very beginning of the trade. The initial stop is also used to calculate your position size.
2. Trailing Stop: Trailing stops develop as the market develops. The trailing stop lets you lock in profit as the market moves in your favor.
3. Resistance Stop: A resistance stop is placed just under the countertrend pullbacks in a trend. This is a form of a trailing stop used in trends.
4. Three Bar Trailing Stop: This stop is used in a trend when the market seems to be losing momentum and you anticipate a reversal in trend.
5. One Bar Trailing Stop: When the prices have reached your profit target zone, use this stop after three to five bars move strongly in your favor. This stop is used when there is a breakaway market and you want to lock in profits.
6. Trendline Stop: You always want to get out when the prices close on the opposite side of the trendline. Use a Trendline Stop placed under the lows in an uptrend or on top of highs in a downtrend.
7. Regression Channel Stop: A regression channel forms a channel between the highs and lows of the trend and usually represents the width of the trend channel. Stops are placed on the outside of the lows of the channel on uptrends and outside the highs of the channel in downtrends. Prices should close outside the channel for the stop to be taken.
If you find yourself being stopped out too frequently or if you seem to be getting out of the trend too early then most probably you are trading with a fearful mindset. Try to overcome your fear and place your stops at reasonable places in the market.
Mr. Ahmad Hassam is a Harvard University Graduate. Learn These Candlestick Patterns. Try These 1500 Pips A Day Forex Signals from heaven! You are welcome to reprint this article - but get your own unique content version here.
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Understand Forex Leverage
Oct 16, 2009 Real Estate
Whats so special about Forex Leverage? Another feature of forex markets that differentiates it from other financial markets is the astronomical level of leverage that is commonplace in the forex world.
Forex brokers can offer up to 400:1 leverage on the average retail trading account. This means that $1 in a traders forex account can control up to $400 in a currency trade. The implications of this are mind boggling. No other financial market offers even close to this level of leverage.
Forex leverage can both be a very positive feature as well as a very negative one. Leverage is type of financial magnification by definition. Forex leverage is a double edged sword. While it is true that high leverage magnifies profits, it also magnifies losses equally.
Used with a great deal of caution, however, high leverage of the magnitude found in forex trading can offer tremendous possibilities to the upside as well as the downside. However often, this high level of leverage summarily wipes out otherwise healthy trading accounts.
If you have been trading stocks than you already know that stock brokers only offer leverage ratio of 2:1 on margin accounts. The futures market is better. FCMs (Futures Commission Merchants) offer leverage of 10:1 to futures traders. But in case of forex trading, common leverage ratios offered by forex brokers range from 50:1 on the low side all the way up to 400:1 on the high side. Even on the low side, as compared to the amount of leverage available in other financial markets, the sheer magnitude of forex leverage far eclipses whatever leverage is available in other markets.
In practical terms, what this means to a forex trader is that a standard lot of $100,000 for example can be traded in EUR/USD currency pair with only $250 in trading account margin. Of course, this is assuming that 400:1 leverage is utilized.
In this particular example, $250 in your forex trading account can control a trade of $100,000 using 400:1 leverage. In other words, for every $1, you as a forex trader are in fact controlling a whopping $400.
Some brokers even advertise that you can open a trading account with $50. With $50 you can trade a mini lot of $10,000 using a 200:1 leverage ratio. The fact that a small amount of money can control a large amount of money in forex trading can certainly serve to magnify potential profits. Can you handle this much leverage while trading? The amount of risk involved in using this high level of leverage is also equally magnified, however on the flip side of the coin.
High leverage trading is aggressive trading that is both characterized by high risk and high reward potential. Therefore, it is advisable to use caution when trading with the substantial leverage common in forex trading.
Dont get hoodwinked by the forex broker advertisements. Too much leverage is dangerous. Even a small movement in the market can be magnified many times by using leverage making large profits for you when the market moves in your favor. Now this is the positive side. You need leverage in forex markets because the size of the currency pair movements is too small. So you need to magnify it with leverage. However, when the market moves even a small amount against your position, your whole trading account can get wiped out. This is the dark side of using too high a leverage.
You need to know the safe level of leverage you can use in your trading. In the beginning, dont use more than 5:1 leverage in your trading. You can increase that level to 10:1 or 20:1 with experience, but this much leverage would be sufficient for you. Once you really start trading like a professional trader than you can use 100:1 ratio to trade a standard lot.
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try 1500 Pips a day Forex Signals. Discover a revolutionary Forex Robot Trading System!
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Currency Profile Of British Pound (Part III)
Oct 15, 2009 Real Estate
UK tends to share a more common set of views with the United States. Economically, the United Kingdom is more free-market oriented than Europe. The United Kingdom cant totally disassociate itself from Europe at the same time, given its history and its geography. The upshot is a currency that is affected by politics at home and on the two continents to which its destiny is so closely related.
The British Pound GBP) is active against the dollar and the euro, offering good opportunities to trade both pairs (GBP/USD and USD/GBP). The GBP/USD is one of the most liquid currency pairs in the world. 6% of the all the global currency trading involves GBP as either the base or counter currency.
GBP is also in the four most traded major currency pairs EUR/USD, GBP/USD, USD/JPY and USD/CHF in the world. One of the reasons for GBP liquidity is the countrys highly developed capital markets.
Many hedge funds are located in London. UK is an important foreign investment destination. Many foreign investors seeking to diversify their investment other than the United States send their funds to the UK. Foreigner investors need to convert their local currency into GBP in order to create these investments.
GBP was full of speculators one to two years back. GBP had one of the highest interest rates in the developed countries. Although Australia and New Zealand had still higher interest rates but their financial markets are not as well developed as UK.
Carry trading was popular with many hedge fund managers. It is a long term fundamental trading strategy. Carry traders would use GBP as the lending currency taking advantage of the high interest rates and would go long against USD, JPY and CHF.
UK Treasury had to intervene heavily in the market by pumping money into a number of failing banks in order to stabilize the financial markets. The present global financial crisis has taken a heavy toll on the British Banks as well. There have been a number of high profile bankruptcies.
Interest rates have been lowered. An exodus of carry traders took place that increased volatility in GBP with the lowering of the interest rates. Interest rate differentials between UK gilts/US Treasuries is a barometer for GBP/USD flows and UK gilts/German Bunds is a barometer for EUR/GBP flow. These interest rate differentials are widely watched by the professional forex traders to judge where the money will flow between US, UK and EU.
Indications on adopting the Euro usually put negative pressure on GBP while further opposition to Euro boosts GBP. The three month eurosterling futures reflect market expectations on UK interest rates three months into the future and can help predict fluctuations of GBP/USD.
GBP has positive correlation with the energy prices. GBP/USD is more liquid than EUR/USD. However, EUR/GBP is the leading gauge for GBP strength. GBP/USD tends to be more sensitive to the developments in the US economy. EUR/GBP is a more pure fundamental pound trade as EU is the UK primary trading and investment partner.
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Understanding Forex Margin Call
Oct 14, 2009 Real Estate
Have you started dreading the forex margin call? The risk that is assumed when trading aggressively the currency markets often results in receiving a margin call. But contrary to the popular opinion that a margin call represents that worst case scenario for the currency trader, this is far from the truth. The worst case could be far worse.
A margin call is in fact a safeguard to protect a trader from losing 100% or even more of the money in the trading account. To owe additional funds to the broker is actually the worse case scenario. This uncomfortable position is largely avoided because of the existence of the margin call.
In stock trading, you will receive an actual call from the broker to add more funds to your margin account when equity is running low. Unlike the world of stock trading, a margin call is not actually a physical call from your broker in forex trading.
In forex trading when the trader no longer has enough equity in the trading account to keep the open positions viable, the trading platform software automatically closes out all the open positions and immediately realizes all losses at the prevailing market rates.
Prices can move extremely fast in forex markets and because of the high leverage used, every price move is magnified. There are good reasons for automated margin calls in forex trading, although this may seem a bit cold hearted.
The trading account can become depleted very quickly with not enough time to call for more funds when the traders equity runs low in forex trading. The forex margin call closes all open positions to help ensure that the trader does not lose the entire account or worse as a safeguard measure.
Lets make it clear with an example. Suppose you have $1500 in your trading account. So exactly when is a margin call triggered? This depends exactly on the number and the size of the lots being traded, the leverage chosen and the equity in the account. Suppose you use a leverage of 100:1 to trade in standard lots of $100,000.
You want to trade one standard lot of EUR/USD. That is EUR 100,000. Suppose the EUR/USD exchange rate is 1.3465. You need to convert it into Euros since your account is in US Dollars. So you need $1346 to trade standard lot EUR 100,000. This is because with a leverage of 100:1, EUR 1000 are needed to control EUR 100,000.
Suppose you are a new forex trader. You dont know much about forex trading. However you have read that it is a great opportunity to make money. Naturally you are very enthusiastic about trading forex as quickly as possible. So you dont know that stop losses are used to minimize downside risk in trading. You start trading without putting stop losses in place. Your trading account has $1500. The margin required to keep the trade open is $1346. Each pip is exactly equal to $10 in this case.
When your equity drops below $1346, you will receive a margin call. You have $1500 equity in your trading account. Your open position will be automatically closed when you receive a margin call. That means once you lose the excess equity in your account above the margin required to trade a standard lot that is $1500-$1346= $154. This is equal to 15.4 pips loss (assuming no spread).
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Treat Currency Trading As A Business
Oct 14, 2009 Real Estate
If you are currently trading for a living or want to take on trading as a future substitute of a current job, then you should remember to take trading as a business. You need to treat it as a business.
You need to give some consideration to the fact that how you are going to deduct your monthly expenses such as your computer equipment, your quote feed, your DSL line, travel to investment conferences and continuing education seminars. How are you going to treat trading as a business? You should think whether you need to form a private limited company or a public limited company.
This can help you save thousands of dollars annually. You should seek advice from a tax specialist so that you can take advantage of all the regular and necessary expenses as business deductions.
After all it would be heart breaking to know that you cannot make expense deductions that could literally save you thousands of dollars after you have consistently started making money in the market.
Lets see what your expenses can be as a forex trader: You need to have a room where you have the required peace for trading. Then you have to have equipment that includes desktop computers, printers, laptop for travel and so one. Lets say these things cost you $5000. Suppose you rent a small one room office that could cost you like $500-1000 per month.
You need a good DSL connection for your trading, $50 per month for the DSL expense. A price quote feed might cost you like $200 per month. You attend an investment conference that might cost you $1000 roundtrip airfare plus $300 per night for the night stay at a hotel.
You could be taking as little as $5000 to $25,000 per year in actual business expenses that could be deducted if you are running trading as a business and if you have business entertaining expenses and went to two investment conferences per year.
Do you have a business plan? What business plan you have in place to protect the money you make in the market. If you are a small time investor and decide that trading for a living is something that interests you, you should think do you have the financial resources, time and emotional makeup to trade full time.
As a long term trader what will you do when the market conditions change according to your system or methods? You need to cover your cost of living expenses, mortgage payments as well as your business expenses.
The forex market offers you a unique opportunity to participate on a pay as you go method because there are no commissions. Forex dealers provide free charts and quotes. But you have to cover the bid-ask spread each time you trade as a trading cost.
Suppose you are a day trader, you trade twice a day with a 3 pips bid-ask spread. Suppose you trade 10 lots ($100,000) each trade. So your daily trading cost will be $600 = (3) (2) (10) (10). If there are 200 trading days in a year, it means $120,000. So you need to cover $120,000 as your trading cost annually not to talk of your actual losses. You need to keep this in mind that trading is not free.
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What Is Position Trading? (Part I)
Oct 13, 2009 Real Estate
Position trading is all about taking a directional market position and holding it as long as the trade makes sense from the trend standpoint. This means that positions are held for longer term. Now there are four style of trading: Scalping, Day Trading, Swing Trading and Position Trading.
Position trading may mean keeping a trade open from one week to a month to as long as a year or possibly more in the fast moving world of forex trading. Most individual and retail traders do not have the patience for position trading.
Only those position traders who have the patience to stick with the trend and let their profits run are generally able to capitalize on these longer term price moves. This is somewhat unfortunate as most retail traders dont have that patience. Position trading can be one of the most profitable styles of trading due to the fact that many currencies tend to trend well on long term basis.
Due to its long term time frame, position trading tends to rely heavily on fundamental analysis along with longer term technical analysis. This is unlike day trading or swing trading that relies almost exclusively on technical analysis due to the short time frames.
Fundamental analysis is geared towards longer term price forecasts rather than swing to swing movements that are primarily the focus of technical analysis. Fundamental analysis concerns itself with the economic forces that drive the major market movements.
The general direction of change in the currency value over the long run is what interests the position traders. The economic forces that determine the long term trend of a currency include interest rates, inflation, GDP, unemployment and help to determine the value of the national currency overtime.
Trading with the trend is what the trend traders do. Position trading and trend trading both follow almost similar approaches. However, position traders often rely on fundamentals along with the technicals; trend traders are almost exclusively technical in nature.
Carry trading was very popular last year with the hedge fund managers. The most popular currency pair for carry traders was NZD/JPY. As carry traders hold interest positive positions to benefit from both regular interest payments and exchange rate profits, carry trading can be considered a form of position trading. How do position traders decide which position to take?
Fundamental analysis exclusively! Position traders establish positions on currency pairs according to their views and experience based on fundamental analysis. Forex position traders weigh strength and weaknesses in currencies by taking various fundamental and technical factors into account.
Lets suppose that a position trader is of the view that the US Dollar is indicating fundamental weakness going forward. He/she has performed fundamental analysis on economic conditions surrounding the major currency pairs that involve the US Dollar on either side of the pair.
The position trader thinks that the Euro is showing significant fundamental strength at the same time that the US Dollar is showing weakness going forward. This opinion may have been based on the recent rate of economic growth, comments by the Federal Reserve Board (FED) Chairman or the President of European Central Bank (ECB), the state of ongoing recession, on the state of inflationary/deflationary pressure in the economy and so on.
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The Air Is Great In Payson Arizona Along With Real Estate
Oct 9, 2009 Real Estate
As a town, there are a lot of events and attractions that make Payson a vibrant, lively and exciting place to live. As a location for real estate, the properties on offer are tempting and come in all shapes and sizes. This report looks at what Payson has to offer when it comes to homes for sale in Payson, AZ ? as well as the culture.
It can sound illogical, but make sure you think about the end of the day in advance. When you have moved all of your stuff from A to B, the last thing you will want to do is look for the bedding you need to sleep. Make sure your sleeping essentials are towards the front of the truck in an individual box to make things easier after a tough day.
It is not expected of you to be a superhero and you will probably not be able to do everything in one day. Make sure that you get all of the essentials that you need like kitchen utensils, dried food and toiletries in an individual box towards the front of the truck. That way, you are relatively prepared for the night of your relocation.
An all-too-common scenario is the damage that is made to valuables during the move. If you have any objects of sentiment, make sure that they are safely with you in the car. The last thing that you want is any regrets.
Payson has a lot to offer when it comes to attractions ? it can be said it is a very leisurely place to live. With an impressive array of three golf courses, a casino and a host of restaurants, it isn?t too hard to see why. Two community parks, a swimming pool and a skate park confirm this further.
Pets can get in the way of the proceedings of a Moving Day. What?s more, they can sometimes appear to get rather distressed. Removing your pet from the situation by leaving it with a friend or relative can be beneficial to both you and your pet.
Annual activities include the Beeline Cruise-In and Car Show. A cruise around the town during the day culminates with music and dancing in the night. What?s more, the festival even accounts for the ladies ? with special activities planned for their interest!
Payson even has the Christmas spirit ? with a special event every December which is known as the Magic on the Mountain. Consisting of a live Nativity play and a Santa?s Workshop, the event is geared at all ages. Various monuments and locations in and around Payson are also lit up during the event.
It can be a stressful time and you may find yourself in over your head with the dilemmas and decisions to be made, let alone the things to remember, too. Do remember that with moving vans usually come hired help. Truck foremen are honed experts in moving days and you should know that you are in very safe hands.
If anything should go wrong on the day, you need to make sure that you contact your mover with your queries. Make sure you log down all of the details that are relevant to your transaction. That way, if you have any further queries, requests or issues ? you have all of the information handy to give the company.
Follow this advice and you will go far wrong when it comes to selling your house. When it comes to tactics and getting a spot-on asking price for your home, a Realtor is perfect. Always remember to hire by word-of-mouth as this stops you getting that useless agent.
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Position Trading (Part II)
Oct 8, 2009 Real Estate
After performing the fundamental analysis, the trader may be confident that the US Dollar is indicating overall weakness and the Euro is indicating overall strength for the coming six months.
Keeping in view the overall strength of Euro and the weakness of US Dollar, the next step for the position trader would be to open a long position in EUR/USD pair. This simultaneously provides the position trader with long Euro position and a short US Dollar position.
The long term directional bias has been formed by the position trader on the basis of fundamental analysis. Going long on Euro and at the same time short on US Dollar, this combined trading position fulfills the fundamental outlook of the position trader on both the currencies.
So position trading depends on using fundamental analysis in identifying a profitable position in the currency market and then using technical analysis in setting up the actual trade. However, pinpointing the best time for the trade entry as well as setting risk managed control strategies is best accomplished by using technical analysis.
Now this concept of strength/weakness fits extremely well with the forex markets as all currencies are traded in pairs unlike the stock market or for that matter other financial markets. The position trading uses fundamental analysis in pairing strength with weakness.
Trading forex requires a directional commitment on two currencies for each trade, position trading with the strength/weakness model is the most logical fundamental method for approaching long term forex trading.
Buying one currency because it looks like it will become stronger while simultaneously selling another currency because it looks like it will become weaker is a better way to trade as compared to other financial markets.
Your first step as a position trader should be analyze the Central Bank policy statements, economic growth factors of these countries, global economic news etc to identify the currency with the strongest positive future prospects and the currency with the strongest negative future prospects at a given point in time. As a position trader, you will have to do fundamental research and analysis on all major currency pairs.
Suppose you identify AUD and JPY as the strongest gainer currencies in the foreseeable future while CAD and CHF as the strongest loser currencies by performing fundamental analysis. Possible currency pairs for position trading could be long AUD/CAD, long AUD/CHF, short CAD/JPY and short CHF/JPY.
After this, you can enter the trades with the help of technical analysis and hold them as long as they move in the correct direction disregarding minor corrective swings and market noise because the price action is never ever linear. It is always up and down with minor trends superimposed on major trends.
Position trading if done properly can be one of the most effective methods of extracting long term profits from the forex markets. Position trading maybe the most difficult method of approaching forex trading for the beginners! It requires a great deal of patience and faith in ones own analysis to weather the inevitable swings against the trading position.
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