FOREX

Retail Sales Drags USD Lower

2010-01-18T07:12:00.000-08:00

The greenback tumbled sharply following a disappointing report on December retail sales, pushing the dollar lower against the Aussie to 0.9328 and the Canadian dollar to 1.0225. The December retail sales report missed expectations for an increase of 0.5%, instead declining by 0.3% versus an upwardly revised November reading of 1.8%. The excluding automobiles retail sales figure fell by 0.2% from a 1.9% reading previously. Weekly jobless claims edged up to 444k versus 433k in the previous week.

Economic reports slated for release on Friday include December CPI, Empire manufacturing survey, industrial production, capacity utilization and the University of Michigan consumer confidence survey.

USD Bounces Higher, GBP Slumps

2010-01-18T07:11:00.002-08:00

The dollar edged higher against the majors in the Tuesday session, advancing to its highest level since September versus the euro at 1.4216 and a two-month high against the British pound at 1.5920. A barrage of economic reports were released from the US including Q3 GDP, October home prices, November existing home sales, and the December Richmond Fed survey.

Economic growth in the US slowed in the third quarter with GDP downwardly revised to 2.2% from the previous reading of 2.8%. The Q3 GDP deflator was lower at 0.4% from 0.5% previously and PCE prices slipped to 2.6% from 2.7%. Third quarter corporate profits were also downwardly revised to 12.7% compared with 13.4% previously. The key highlight in the data was a strong surge in November existing home sales, which spiked up to 7.4% -- far outpacing estimates for a decline to 2.9% and improving to 6.54 million units. The October home price index improved to 0.6% on a monthly basis and declined by 1.9% on an annualized basis. Meanwhile, the Richmond Fed composite index deteriorated to -4 in December versus a 1.0 reading in the previous month while the services index worsened to -9 from -7.

The calendar for Wednesday includes November PCE, personal income, consumption, the December University of Michigan consumer confidence index, and November new home sales.

China Tightens Policy, JPY Gains

2010-01-18T07:11:00.001-08:00

The dollar was lower against the majors in the Tuesday session, sliding to 90.73 against the yen and to just shy of the 1.62-level versus the British pound. The global equity bourses also slumped, with the S&P500 and Nasdaq lower by over 1% while Dow Jones slipped by around 0.7% in afternoon trading. Meanwhile, spot gold was down by nearly 2% to $1,129.60 per ounce and WTI crude oil slipped by around 2.3% to $80.65 per barrel.

The economic calendar from the US was light, with just the release of the November trade deficit. The US deficit was slightly less than expected at $33.2 billion, versus a revised $32.9 billion from October. The data for the latter part of the week will include on Thursday: December retail sales, weekly jobless claims, November business inventories and on Friday: December real earnings, core CPI, CPI, industrial production, capacity utilization, January NY Fed manufacturing index, and the University of Michigan consumer confidence survey.

The key catalyst in market moves today largely stemmed from an unexpected change in policy from China. The PBOC surprised markets by raising the reserve requirements by 50-basis points overnight, effective January 18th. The move is aimed to cool down China’s economy, preventing it from overheating and preempting inflationary concerns. The move will likely be followed by further action over the coming months, in line with expectations for a global tightening of monetary policy as well – with the RBA the next likely central bank to hike interest rates again.

Dollar Slides vs Major FX

2010-01-18T07:10:00.000-08:00

The dollar was broadly lower against the major currencies in the first trading day of 2010, relinquishing the 1.44-level versus the euro and sliding to 1.0374 against the Canadian dollar. Crude oil popped back above the $80 per barrel level while the global equity bourses advanced in the Monday session as traders shifted back into riskier assets. The Dow Jones, Nasdaq and S&P 500 were all higher by over 1.5% by afternoon.

The economic calendar was light today, with the release of the December manufacturing ISM report. The data improved by more than expected, edging up to 55.9 and beating calls for an increase to 54.0 from 53.6 in November. The ISM prices paid component jumped to 61.5 versus 55.0 in the previous month.

The week ahead will see a barrage of reports including November durable goods orders, pending home sales, factory orders, December non-manufacturing ISM, ADP private sector payrolls, weekly jobless claims and the key December jobs report. The non-farm payrolls for December are seen worsening to -20k from -11.0k from a month earlier, while the unemployment rate is expected to edge up slightly to 10.1% from 10.0% from November.

Canadian Dollar Headed for Parity

2010-01-16T23:54:00.001-08:00

Only a year ago, who could have conceived of such a possibility? At the time, the Canadian Dollar (aka Loonie) was in the doldrums, as a result of the credit crunch and concomitant collapse in commodity prices. In March, however, the Loonie began an extraordinary rally, and finished the year up 16%, almost perfectly offsetting the record decline that it suffered in 2008. As a result, the Loonie is now only pennies away from returning to parity.

The Loonie’s rise can be ascribed to a combination of fundamentals and speculation. On the fundamental side, a surge in the price of oil and other commodities has driven a recovery in the Canadian economy. Summarized one strategist, “The fundamentals in Canada are strong. Sentiment is bullish Canada, and on a relative basis, Canada should do very well with stronger commodity prices and ongoing U.S. economic recovery.” On the other hand, non-commodity exports remain sluggish, such the current account balance is currently in the red.

It’s obvious then that the gap between reality and expectation is being filled by speculation. Despite the fact that both short-term and long-term Canadian interest rates remain low, investors are pouring money into Canadian assets in the hopes that rates will soon rise. This speculation reached a fever pitch in October of 2009, when the Loonie spiked 6% in less than two weeks, following a modest Australian rate hike.

At that point, Canadian Central Bank governor Mark Carney was forced to firmly step in (previously he had effectively remained on the sidelines) by warning investors that he was in no hurry to lift rates, and that “he had ways of cooling the currency.” While analysts credit Carney’s jawboning with effecting a modest decline in the Loonie, it has since resumed its upward march, breaking through the technical barrier of 97.5 CAD/USD yesterday.

In the short-term, sheer momentum will almost surely carry the Loonie through parity with the Dollar. Analysts are divided on the timing, with some suggesting as soon as this month and others suggesting that later in the year is more likely. They should be careful, as there is an exuberance in the forex markets that I havn’t seen since right before Lehman Brothers collapsed- the event that many say signaled the beginning of the forex markets. In other words, investors are surely getting ahead of themselves, since commodities are well off of their 2008 highs, interest rates are down, Canadian economic growth is mediocre, Canada’s fiscal condition is weak, and it is operating a current account deficit.

For this reason, many analysts are already becoming bearish on the Loonie. “The loonie looks potentially more vulnerable on a number of crosses unless we see renewed upside momentum,” expressed a strategist from RBC Capital Markets. But noticed that she framed a continued rise in terms of momentum, rather than fundamentals. That’s tantamount to saying, Unless the Canadian Dollar continues to appreciate, it won’t continue to appreciate. If that’s not a tautology, I don’t know what is! But seriously, she has a point, which is that the Loonie is being driven purely by speculation at this point, in a trade that could soon come crashing down…after it hits parity.

Making Sense of the Yen: Forex Intervention, Debt and Deflation

2010-01-16T23:53:00.001-08:00

Last week, Hirohisa Fujii resigned as finance minister of Japan. Since Fujii was anoutspoken commentator on the Japanese Yen, the move sent a jolt through forexmarkets. Those who were expecting that his replacement, Deputy Prime Minister Naoto Kan, would be be more consistent than his predecessor were quickly disappointed, as Mr. Kan managed to contradict himself repeatedly within days of assuming his new post.

On January 6, he said it would be “nice” to see the Yen weaken, going so far as to designate 95 Yen/Dollar as the level he had in mind. One day later, he said that the markets should in fact determine the Yen: “If currency levels deviate sharply from the estimates, that could have various effects on the economy.” After he wasrebuked by Prime Minister Yukio Hatoyama, who noted that the government should not talk to reporters about forex, he went on tell US Treasury Secretary that forexlevels should be stable. In short, Japan’s official governmental position on the Yen still remains muddled, and it’s no less clear whether it will – or even should – intervene.

Fortunately, they may not have to. Not only because the Yen still remains more than 5% off of the record highs of November, but also because economic and financial forces are coalescing that could send the Yen downward. Despite a recovery in exports, the Japanese economy remains beleaguered, having most recently contracted to the lowest level since 1991, as part of a “tumble [that] isunprecedented among the biggest economies.” Now that we are into 2010, it can be said officially that Japan has now suffered from the “second lost decade in a row.”

When economic growth collapsed in 1990, Japanese consumers became famously frugal, and the domestic market still hasn’t recovered. Neither has the stock market, for that matter: “The Nikkei is 44.3% below where it stood at the end of 1999. It is 72.9% below its peak near the end of 1989.” The performance of the bond market, meanwhile, has been a mirror image, rallying 78% since 1990.

The resulting decline in real interest rates has combined with economic stagnation to produce a perennial state of deflation. In fact, prices are once again falling, this time by an annualized pace of 2%.

As many economists have been quick to diagnose, the problem lies in a tremendous (perhaps the world’s largest) imbalance between savings and investment, as “Japan still has ¥1,500 trillion ($16.3 trillion) of savings.” It’s not clear how long this can last, however, as Japanese demographic changes tax the nation’s pool of savings. “More than a fifth of Japanese are over 65…The nation’s population began shrinking in 2006 from 127.8 million, and will drop by 3.2 percent in the coming decade.”

This brings me to the final component of Japan’s perfect economic storm: debt. Japan’s gross national debt is projected by the IMF to touch 225% of GDP this year, and 250% as early as 2014. As a result of the aging population, the pool of cash available for lending to the government is shrinking at the same rate as the tax base, which is exerting fiscal pressure on the government from both sides. According to one commentator, “Japan’s fiscal conditions are close to a melting point.” Another frets: “I doubt there is any yield that international capital markets can find acceptable that will not bankrupt the Japanese state.”

What is the government doing about all of this? Frankly, not too much. It is spending money like crazy – exacerbating its fiscal state and pushing it closer to insolvency – in a (vain) attempt to prime the economic pump and avoid deflation from further entrenching. The Central Bank, meanwhile, just announced a new round of quantitative easing, also aimed at fighting deflation. At only 2% of GDP, however, the measures are “pretty tame” and unlikely to accomplish much. Considering that its monetary base has only expanded by 5% this year (compared to 71% in the US), it still has plenty of scope to operate. At the present time, however, it is still reluctant to do so.

Ironically, the aging population phenomenon could end up restoring Japan’s economy to equilibrium. The worse Japan’s fiscal problems become, the sooner it will be forced to simply print money, so as to deflate its debt and avoid default. This will stimulate the economy and put upward pressure on prices (solving two problems), and exert strong downward pressure on the Yen. The way I see it, that’s four birds with one stone!

As for the Yen, then, I would expect it to hover over the near-term, since price stability and a strong credit rating don’t signal immediate catastrophe. No, Japan’s economic problems are more long-term, which means it could be a while before they more clearly manifst themselves.

Chinese RMB Set to Appreciate in 2010

2010-01-16T23:51:00.001-08:00

The Chinese Yuan (RMB) spent all of 2009 pegged to the Dollar at 6.83. Since the Dollar depreciated against almost every other currency during that time period, the Yuan has fallen against these currencies, undoing most of its appreciation in 2008. As a result of both international pressure and internal economic conditions, however, the Yuan’s stasis should come to an end soon. The only questions are when, howand to what extent.

In hindsight, the Central Bank (i.e. state economic planners) of China were probably justified in holding the Yuan in 2008. At a time when forex markets (and other capital markets, for that matter) were behaving erratically, the Yuan was a baston of stability. China’s premier, Wen Jiabao, recently boasted, “Keeping the yuan’s value basically steady is our contribution to the international community at a time when the world’s major currencies have been devalued.” In fact, there is evidence that the Central Bank went against market forces in the opposite direction during the height of the credit crisis, and successfully prevented the Yuan from depreciating, thus proving that a currency peg can work both ways. The result was price stability, and a boost to exporters that had been damaged by the falloff in foreign demand for Chinese goods.

With the global economy emerging from recession, the argument for maintaining the peg is becoming less tenable. China’s economy, itself, grew at an impressive 8.5% in 2009, and is forecast to grow even faster in 2010, by 9.5%. Thanks to a surge in bank lending and the government’s massive economic stimulus program, inflation is also ticking up. It has been approximated at 2.5%, but is contradicted by spikes of 50%+ in the prices of certain staple goods, and certainly doesn’t take into account the rise in asset prices. China’s benchmark stock market index surged 90% in 2009, and property prices increased by 30% in some areas.

The dual concerns, of course, are that the money supply is expanding too fast and that bubbles are forming in certain asset markets. The weak RMB is certainly not helping either. Thanks to relaxed capital market controls and expectations of further appreciation, speculative “hot money” is once again pouring into China. Holding down the Yuan in the face of such pressure is becoming prohibitivel expensive: “China’s foreign-exchange reserves climbed 17 percent in the first nine months of 2009 to $2.27 trillion, the world’s largest holdings.” Some of the demand is naturally beingtempered by bubble concerns, but the trend is still money coming into China.

There is also the argument, much mooted in economics circles, that an appreciation of the RMB would be good for the Chinese economy. Because of a perennially weak currency, its economy has become to addicted to exports to drive growth. “As a report from research firm Euromonitor International notes, in U.S. dollar terms,China’s consumer market lags those of the U.S., Japan and much of Europe, with private consumption just over one third of GDP in 2008.” This is probably a product of social and cultural forces, which still emphasize saving. Skeptics of the usefulnes of RMB appreciation point out that rebalancing the Chinese economy would start with changing the culture of saving, but a stronger currency would certainly provide a powerful incentive. Not to mention that a more valuable RMB would give Chinese companies more leverage in consummating outbound corporate M&A deals and natural resource acquisitions that they have been so keen on in recent years.

On the other side of the debate are skeptics of a different sort- those that think RMB appreciation is justified by forward-looking macroeconomic fundamentals. Some fear hyperinflation of the sort that China faced in 2007 and was only brought under control by the global economic recession and concomitant decline in resource prices. “Franklin Allen, a professor of finance at Wharton [University of Pennsylvania], estimates the likelihood of inflation reaching between 10% and 20% to be around one in five.” Any inflation beyond what is experienced in other economies would have to be reflected in the RMB. In a hyperinflation scenario, the Central Bank might even have to deliberately depreciate the currency.

Then there are the skeptics that forecast an economic crash in China. James Chanos, a wealthy hedge fund manager is leading this chorus, “warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse.’ ”

While this view is gaining some traction, it is still relegated to the minority. Investors and economists are now operating under the firm assumption that China will allow the RMB to resume its appreciation soon. As for when, it could be any day, though probably not for a few months still. As for the questions of how and to what extent, some economists have argued for a one-off appreciation (10% has been suggested)in order to discourage future inflows of speculative capital. Most analysts, though, expect the rise to be gradual. Futures prices currently reflect a 3% rise over the next year, and the consensus among economists is similar. It also depends on how the Dollar performs over the near-term: “If better-than-expected growth in the U.S. helps the greenback recover this year…That would take some of the pressure off Chinese policy makers.”

CANCEL\REPLACE ORDERS IN FOREX

2010-01-16T23:34:00.003-08:00

A Cancel/Replace Order is a procedure and not an entry or exit order. By definition it is when the trader cancels an existing open order and replaces it replace it with a new order. A cancel/replace order is primarily a strategy of trading and is predominately used after one has taken a position in the market and wants to stay in the market locking in profit. For example: you buy Swiss at 1.410. Your protective Stop Loss Order is 1.390. The market moves in you direction as projected. You now want to reduce your
potential loss, so you cancel your Stop Order at 1.390 and replace it to 1.410 where you got in. You are now in a trade with no risk. As the market moves further north in your direction, you now want to lock in more profit. You cancel your 1.410 Stop Loss Order and replace it with a new 1.440 Stop Loss Order. You now have locked in 30 Pips in profit. You are in an all-win, no-risk trade. You keep canceling and replacing your Stop until you are finally stopped out.

STOP ORDERS IN FOREX

2010-01-16T23:34:00.001-08:00

Stop Orders are orders placed to enter or exit the market at a desired specific price. When you buy above the market, it is a Stop Order. When you sell below the market, it is a Stop Order. Stop Orders turn into Market Orders when the market trades at that price. Stop Orders as well as Market Orders are subject to slippage, while Limit Orders are not.
The majority of Stop Orders are used as protective Stop Loss Orders. It is the order you place with your entry order to insure an exit when the market goes against you. A good trader never trades without a protective Stop Loss Order. They are orders executed to get you out of the market when your trade has gone against you.

LIMIT ORDERS IN FOREX

2010-01-16T23:33:00.003-08:00

Limit Orders are orders given to a broker to buy or sell currency lots at a certain price or better. The term Limit means exactly what it says. You will buy at that exact limit price or better a large majority of the time. Limit Orders are used to enter and exit the market. They are generally used to acquire a specific price, avoiding slippage and unwanted order fills (execution price) which can happen with Market Orders.
When you sell above the market, it is a Limit Order. When you buy below the market, it is a Limit Order. A limit order will be executed when the market trades through it. Seventy to ninety percent (70% to 90%) of the time, if the market is trading at your Limit Order it will be executed. The market must trade through you specified Limit Order number to guarantee a fill. The computer will notify you within seconds of your fill. You do not have to call your broker to see if you have been filled.

MARKET ORDERS IN FOREX

2010-01-16T23:33:00.001-08:00

A Market Order is an order that is given to a broker to buy or sell the currency at whatever the market is trading for at that moment. It can be an entry order into the market or an exit order to get out of the market. Traders use Market Orders when they are ready to make a commitment to enter or exit the market. You must be very careful when using Market Orders in fast moving markets. In fast rallies or down reactions you can gain or lose many points to slippage before you receive your fill.
Trading is an auction where there are buyers (bidders) and sellers (offerers). The bid is the "buy" and the "ask", or offer is the sell. Slippage is defined as: when a trade is executed between a buyer and seller and the resulting buy or sell transaction is different than the price you saw just prior to order execution. With Market Orders you will lose on average one to six pips, if not more, due to slippage. Market Orders are rarely filled at the exact price you are expecting. We Recommend caution when entering or exiting with a Market Order.

ORDERS

2010-01-16T23:32:00.003-08:00

A Trader must understand what each order is and does and what part it plays in capturing profit. As a Trader on the FOREX you use three types of orders: a Market Order, a Limit Order, and a Stop Order. The two primary orders you should use for entering and exiting the market are a Limit Order and a Stop Order. Once you have placed your order to enter the market, there are two procedures to that your need to understand. These are: One-Cancels-the-Other (OCO) and Cancel-and-Replace. Properly executing your orders and understanding these procedures play a very big part in your profitability.
Remember: all good carpenters carry a toolbox. The sharper his tools and the more skilled he is at using them, the more effective he is. The sharper you are as a trader the more effective and profitable you will become.

MARGIN ACCOUNTS

2010-01-16T23:32:00.001-08:00

Trading on the FOREX requires a margin account. You are committing to trade and take positions today. As a speculator trader you will not be taking delivery on your product that you are trading. As a Stock Day Trader, you will only hold a trading position for a few minutes to a few hours, and then you need to close out your position by the end of the trading session.
All orders must be placed through a broker. To trade stocks you will need a stockbroker and to trade currencies you will need a Forex currency broker. Most brokerage firms have different margin requirements. You need to ask them their margin requirements to trade stocks and currencies.
A margin account is nothing more than a performance bond. All traders need a margin account to trade. When you gain profits, they place your profits into your margin account the same day you profited. When you lose profits, they need an account to take out the losses you incurred that day. All accounts are settled daily.
A very important part of trading is, taking out some of your winnings or profits. When the time comes to take out your personal gains from your margin account, all you need to do is contact your broker and ask them to send you your requested dollar amount, and they will send you a check. They can also wire transfer your money.

EXECUTION QUALITY:

2010-01-16T23:31:00.002-08:00

Because the FOREX is so liquid, most trades can be executed at the current market price. In all fast moving markets, slippage is inevitable in all trading (stocks, commodities, etc.), but can be avoided with some currency broker’s software, which informs you of your exact entering price just prior to execution. You are given the option of avoiding or accepting the slippage. The huge FOREX market liquidity offers the ability for high quality execution.
Confirmations of trades are immediate and the Internet trader has only to print a copy of the computer screen for a written record of all trading activities. Many individuals feel these features of Internet trading make it safer that using the telephone to trade. Respected firms such as Charles Schwab, Quick & Reilly and T.D. Waterhouse offer Internet trading. They would not risk their reputations by offering Internet service if it were not
reliable and safe. In the event of a temporary technical computer problem with the broker’s ordering system, the trader can telephone the broker 24 hours a day to immediately get in or out of a trade.
Internet brokers’ computer systems are protected by “firewalls” to keep account information from prying eyes. Account security is a broker’s highest concern. They have taken multiple steps to eliminate any risk associated with transacting on the Internet.
A FOREX Internet trader does not have to speak with a broker by telephone. The elimination of the middleman (broker salesman) lowers expenses and makes the process of entering an order faster and has eliminated the possibility for misunderstanding.

LEVERAGE

2010-01-16T23:31:00.001-08:00

Trading on the FOREX is done in currency “lots.” Each lot is approximately 100,000 U.S. dollars worth of a foreign currency. To trade on the FOREX market, a “margin account” must be established with a currency broker. This is, in effect, a bank account into which profits may be deposited and losses may be deducted. These deposits and deductions are made instantly upon exiting a position.
Brokers have differing margin account regulations, with many requiring a $1,000 deposit to “day-trade” a currency lot. Day-trading is entering and exiting positions during the same trading day. For longer-term positions, many require a $2,000 per lot deposit. In comparison to trading in stocks and other markets, which may require a 50% margin account, FOREX speculators excellent leverage of 1% to 2% of the $100,000 lot value. The trader can control each lot for I to 2 cents on the dollar

TWO WAY MARKET

2010-01-16T23:30:00.002-08:00

Currencies are traded in pairs, for example dollar/yen, or dollar/Swiss franc. Every position involves the selling of one currency and the buying of another. If a trader believes the Swiss franc will appreciate against the dollar, the trader can sell dollars and buy francs (“selling short!’). If one holds the opposite belief, that trader can buy dollars and sell Swiss francs (“buying long”). The potential for profit exists because there is always movement in the exchange rates (prices).
FOREX trading permits profit taking from both rising and falling currency values in relation to the dollar. In every currency trading transaction, one of the sides of the pair is always gaining and the other side is losing.

FOREX ACCESS

2010-01-16T23:30:00.001-08:00

The FOREX is open 24 hours daily from about 6:00 P.M. Sunday to about 3:00 P.M. Friday. An individual trader can react to news when it breaks, rather than waiting for the opening bell of other markets when everyone else-has the same information. This allows traders to take positions before the news details are fully factored into the exchange rates. High liquidity and 24 hour trading permit market participants to take positions or exit regardless of the hour. There are FOREX dealers in every time zone, in every major market center (Tokyo, Hong Kong, Sydney, Paris, London, United States, etc.) willing to continually quote buy and sell prices.
Since no money is left on the market “table,” this is what is referred to as a “Zero Sum Game” or “Zero-Sum Gain.” Providing the trader picks the right side, money can always be made.

FOREX Traders Mission And Goal

2010-01-16T23:29:00.001-08:00

1 His success is dependent on creating a trading plan,and maintaining the discipline to TRADE THE PLAN!
2. The trader must commit himself to continued education and learn as much as he can about technical analysis and the psychology of successful trading. He must use logic, and not his emotions, in trading. The trader must learn to trade in control, not out of control!
3. The trader must map out a sound plan of equity management to insure a return on his investment. A successful plan is to trade no more than 20% of a margin account and risk no more than 5 to 10% of that account on any single trade

Toronto Stocks Finish Slightly Higher, Gain More Than 23% In 2009

2010-01-07T05:02:00.002-08:00

Bay Street stocks finished in the green on Friday amid light volume, posting its seventh gain in the last eight sessions of 2010. Consumer staples and healthcare stocks drove the market into positive territory.

The S&P/TSX Composite Index climbed 28.65 points or 0.24% to settle at 11,746.11. The index rose 2,758.41 points or 23.5% on the year.

Consumer staples stocks rose 1.4%. Saputo (SAP.TO) rose 1.9%, Jean Contu (PJC.A.TO) gained 1.8% and Shopper's Choice (SC.TO) added 1.7%.

Healthcare stocks posted a 1.2% gain. MDS (MDS.TO) rose 3.4% on the session to lead the sector higher.

Black Diamond Income Fund (BDI.UN.TO) rallied 7.3% after being upgraded the stock to Strong Buy from Outperform at Raymond James.

Endeavor Silver (EDR.TO) fell 2.3% after brokerage Haywood initiated coverage of the stock with a Sector Perform rating.

Crocotta Energy (CTA.TO) gained 5% after it said it would be selling various non-core properties for C$33 million and announced it had signed a new bank credit facility for C$58 million.

Liquidation World (LQW.TO) declined 4.1% after the company reported a net loss of C$3.39 million, compared with a loss of C$2.71 million last year.

In economic news, the U.S. Labor Department said that jobless claims fell to 432,000 from the previous week's revised figure of 454,000. The decrease came as a surprise to economists, who had expected jobless claims to edge up to 460,000 from the 452,000 originally reported for the previous week.

There was no major economic data planned for Thursday in Canada. Next week's agenda will include the industrial product price index on Tuesday.

Dollar Ends Topsy Turvy Year With Mixed Showing

2010-01-07T05:02:00.001-08:00

The dollar spent the last day of a tumultuous year in characteristic fashion, with an uneven performance that saw it extend recent gains against the yen and turn sharply lower versus the sterling.

Versus the euro, the dollar held most of its recent gains, as traders looked to the new year for further signs that the economy is on the road to recovery.

The dollar spent most of 2009 on the defensive against other majors, particularly the euro and yen. However, a December rally has allowed the dollar to pare a portion of its yearly losses.

Recent speculation that the Federal Reserve may soon unwind unprecedented support measures taken during the worst of the economic crisis has given the dollar a boost of late.

The buck jumped above 93 on Thursday, hitting its highest level since early September. Just a month ago, the dollar was at a 1995 low of 84.80, but has fought back amid indications that Japanese officials are prepared to intervene to prevent the yen from rising any further.

The dollar held its ground versus the euro, staying near 1.4340. Last week, the dollar hit a 3 1/2 month high near 1.4200, the culmination of a move away from November's yearly low near 1.5100.

Against the sterling, the dollar plunged to 1.6236 before finding its footing in mid-day action. With the loss, the dollar pulled back from a 2-month high of 1.5831 set earlier this week.

In the final piece of economic data for the year, initial jobless claims unexpectedly fell to their lowest level in well over a year last week, providing further evidence of stabilization in the beaten down jobs market.

The Labor Department report showed Thursday that jobless claims fell to 432,000 from the previous week's revised figure of 454,000. The decrease came as a surprise to economists, who had expected jobless claims to edge up to 460,000 from the 452,000 originally reported for the previous week.

Stocks End Notably Lower Despite Improved Jobs Report - U.S. Commentary

2010-01-07T05:01:00.000-08:00

(RTTNews) - Stocks saw sharp losses on the last trading day of 2009 on Thursday, as traders largely looked past improved jobs data and cashed in on the year's strong gains. The major averages all ended the session in negative territory by notable margins, moving further off of the yearly highs set earlier in the week.

The downturn in the markets came even though the Labor Department reported that jobless claims fell to 432,000 in the week ended December 26th from the previous week's revised figure of 454,000.

The decrease came as a surprise to economists, who had expected jobless claims to edge up to 460,000 from the 452,000 originally reported for the previous week.

With the drop, jobless claims extended the downward trend seen over the past few months, falling to their lowest level since coming at 413,000 in the week ended July 19th, 2008.

On the corporate front, Marvel Entertainment Inc. (MVL) said that its shareholders have approved the company's merger with Walt Disney Co. (DIS), under which Marvel will become Disney's wholly-owned subsidiary.

The company anticipates the deal, valued at about $4.3 billion based on Disney's closing price on Wednesday, to be completed after the close of trading today.

The major averages accelerated to the downside in the latter part of the trading day, ending the day firmly in negative territory. The Dow lost 120.46 points or 1.1 percent to close at 10,428.05, the Nasdaq fell by 22.13 points or 1 percent to 2,269.15 and the S&P 500 declined by 11.32 points or 1 percent to 1,115.10.

With today's drop, the major averages closed lower for the holiday-shortened week, with the S&P 500 and the Dow falling by 1 percent and 0.9 percent, respectively, while the Nasdaq fell by 0.7 percent.

Nonetheless, the major averages saw substantial gains for the year, as they rallied from their March lows. The Nasdaq jumped by 43.9 percent, while the S&P 500 and the Dow shot up by somewhat more modest margins, registering yearly gains of 23.4 percent and 18.8 percent, respectively.

Sector News

Trucking stocks were some of the day's worst performers, dragging down the Dow Jones Trucking Index down by 3.2 percent. With the pullback, the index moved further off the fifteen month closing high set on Tuesday.

The sector was hurt by shares of YRC Worldwide (YRCW), as traders expressed concerns regarding the company's viability even though it completed a critical debt-for-equity exchange that staved off bankruptcy. Shares of YRC saw a loss of 15.2 percent.

Commercial real estate stocks also ended the day markedly lower, as reflected by the 1.9 percent drop in the Morgan Stanley REIT Index. The loss dragged the index further away from the nearly fifteen month closing high it set on Monday.

Healthcare, utilities, defense and software stocks were also under pressure, while some gold stocks were able to buck the late-session sell-off, with the NYSE Arca Gold Bugs Index posting a gain of 0.4 percent.

Dow Components

Hewlett Packard (HPQ) was the worst Dow's worst laggard, posting a loss of 2.7 percent on the day. With the pullback, shares pulled back well off of the more than two-year closing high set on Wednesday.

Microsoft (MSFT) also fell by a notable margin, registering a loss of 1.6 percent. The day's selling pressure pulled shares of the software giant further away from Tuesday's twenty-month closing high.

Caterpillar (CAT), Pfizer (PFE) and Wal-Mart (WMT) also fell, along with a vast majority of the other blue chip stocks, contributing to the triple digit pullback by the Dow. Meanwhile, JP Morgan Chase (JPM) was the only Dow component to eke out a gain, climbing by 0.3 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed higher amid limited trading on Thursday. India's BSE 30 Index gained 0.7 percent, while China's Shanghai Composite Index rose by 1.6 percent. Japanese markets were closed on the day.

The European markets also saw modest strength on Thursday, although several markets in the region were closed on the day. The U.K.'s FTSE 100 Index closed up 0.3 percent in a holiday-shortened session, while the French CAC 40 Index closed just above the unchanged line.

In the bond markets, treasuries sold off following this morning's upbeat jobs report. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed at 3.843 percent, posting a gain of 5.9 basis points.

Looking Ahead

In the first trading week of 2010, stocks are likely to take cues from data on manufacturing, pending home sales and the all-important monthly jobs report for December of 2009.

Mediatory Services in Forex Currency Trading

2009-12-09T07:01:00.000-08:00

Foreign exchange market (Forex) is the prime financial market in the globe. The overall funds in trade comprise of nearly trillions of US dollars in trade, which is a lot more than the entire amount of stock options and duties of the United States of America.

Forex is a non-stock exchange market that has no physical place. Forex is a banking network consisting of companies, forex brokers, private investors, integrated by one organization of information exchange.

As the Forex exchange trading does not rely on physical place, they trade internationally, all around the clock, with the exception of weekends for the time zone of the country dealing with it.

Foreign exchange covers up markets of most nations with universal platforms for foreign currency exchange trading functions in London, Tokyo and New York.

Major groups of Forex currency trading are:

Insurers – The major group is exporting and importing companies and some of the companies which consist of the few functions in foreign currency. For these partakers in forex, the main objective is to ensure loss minimization in a way keeping away from risks.

Speculators – Personal traders and corporations who are intended to trade foreign currency making profit from foreign currency exchange rates and short-term functions go to this category.

Arbiters – Investors of online forex trading who trade with big amounts of cash to invest and function on two or more markets at the similar time and generally they tend to make profit on the basis of foreign exchange rates.

Forex broker – These are brokers, banking establishments, currency dealers and companies who provide with electronic access to trading platforms and giving mediatory services in currency exchange deals.

Dubai crisis rings bells of prudent investment

2009-12-09T06:56:00.000-08:00

Untill last month, Dubai was acclaimed worldwide as an exotic Manhattan on the sea, with huge skyscrapers towering in desert sands alongside golden beaches crowded with stunning hotels and upscale shopping malls.

Unsurprisingly, news of the financial collapse of the emirate's key construction firms came as a shock to many, but as far as regional economists were concerned, the Dubai bubble had been ready to burst for some time.

It is an experience that no country wants to see repeated within its borders. Israeli economists stressed over the weekend that lessons must be learned from the crisis, among which are modesty and caution.

SYMPTOMS

The prevailing view in Israel is that Dubai was simply putting all of its eggs in one basket. Its failure to diversify meant that a meltdown was likely to occur at one point or another.

Diversification of an economy is so important," said Yishay Yafeh, an expert in financial systems at the Hebrew University of Jerusalem.

"You can't base an entire economy on one sector," said Dan Catarivas, director of international relations at the Federation of Israeli Economic Organizations.

Dubai had a bold vision. It took a pearl-fishing village on the edge of the Arabian Desert and transformed it within a matter of a lifetime. Israeli economists told Xinhua they believe that while the dream of Dubai's founder was ambitious and praiseworthy, it was converted over the years by his successors to something that became unsustainable.

Massive investments in real estate led to an overheated economy, and despite government involvement in all the major development companies.

The economy also lacked an export base. In 2006, Dubai's imports totalled some 60 billion U.S. dollars, while exports stood at 5 billion dollars.

"The lesson is that they went too far. It's as simple as that," said Arie Melnik, a professor of economics at the University of Haifa, adding that he believes the "hubris" of the Dubai leaders was at the center of the crisis.

PREVENTION

Catarivas said Israel has got the mix just about right, which is why the country survived the international financial crisis better than most.

Noting that Israel, like Dubai, has virtually no raw materials, local experts said Israel's success is based on human capital.

Meanwhile, they said that Dubai's decision to move the economy in the direction of luxury villas lacked forethought and long-term feasibility.
In Israel, the high-tech industry may be a major force in the economy, recognized as a world leader, but it is not the only basket. Medical supplies, diamond polishing, agriculture and water technologies all rank high.
In Dubai, it was a very different case. "They thought they could do all this even if they couldn't see money at the end of the tunnel. Every small-time builder knows there is one simple rule, you don't begin building if you don't have buyers," said Melnik.

An economy must be diversified, it should be transparent, and a country's leaders should not plan too ambitiously and thus can avoid overextension, said the leading Israeli economists who spoke to Xinhua over the last few days, among other suggestions they offered to ensure no repeat of the Dubai crisis.

"It's about modesty and caution. There, the bubble was behavioral," suggested Moshe Justman, a professor of economics at Ben-Gurion University of the Negev in southern Israel.

FOREVER BURSTING BUBBLES

The Israeli analysts are of the opinion that the Dubai crash will have limited impact on the global stage. However, they cautioned that other crises may be around the corner.

The trouble is how to predict them. "I wanted to call this a million-dollar question, but of course it's worth much more," said Yafeh.

One needs to examine a state's investment portfolio to check whether it is diversified. Then there are the sums involved, said Justman.

There have been bubbles throughout recorded human history, said Yafeh, noting that similar hard times have been occurring for centuries, including the dotcom bubble in recent years.

However, nations tend to survive these difficult moments. The United States may have taken a beating over the last 18 months with the sub-prime crash, but its economy is resilient and large enough to have survived.

Israel and Australia may have growing bubbles right now, but their central banks are playing the game right by adjusting their lending rates accordingly, said Melnik.

At the end of the day, people will view Dubai's financial crisis as nothing more than "a curiosity," according to Yoram Landskroner, an expert on international debt at the Hebrew University of Jerusalem. "Dubai has nothing that links it to any group of nations. It's neither a developed state nor an emerging market."

As a result, little can be applied to other countries from the Dubai experience, other than to say that sometimes caution is the better part of valor.

However, in consideration of previous financial crises in emerging economies, it is safe to predict that some potential investors will no longer put their cash in high-risk, low-rated markets and will return to the days when making a small prudent profit was regarded as far more sensible than a rash gamble on a chancy but exotic option.

Non-bank Foreign Exchange Companies

2009-12-09T06:47:00.003-08:00

Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account. Send Money Home offer an in-depth comparison into the services offered by all the major non-bank foreign exchange companies.

It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.

Types of financial markets

2009-12-09T06:47:00.001-08:00

Capital markets which consist of:

Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.

Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.

Commodity markets, which facilitate the trading of commodities.

Money markets, which provide short term debt financing and investment.

Derivatives markets, which provide instruments for the management of financial risk.

Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.

Insurance markets, which facilitate the redistribution of various risks.

Foreign exchange markets, which facilitate the trading of foreign exchange.

The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.

Trend Analysis

2009-12-09T06:45:00.001-08:00

The world of investment is flooded with excellent ideas of growing your money, but you are required to make use of geometrical patterns, diagrams, statistical analysis and other similar tools to reach a definite conclusion for efficient investments. The hugest trading market called forex is also not spared from in-depth study of market trends to earn profits and avert losses. Forex trend lines serve the purpose, as these patterns help to extract most rewarding information and plan your course of action for investing in various currencies.
Usefulness of Forex Trend Lines

The forex trend lines are helpful in introducing the most vital entity required by an investor and this entity is called information. How can one expect to make worthy investment, without adjudging the highs and lows existing in the market? Here is the list of most prominent benefits of forex trend lines:

- These lines help to depict the support and resistance levels, which are of great importance in deciding the sale or purchase of various investments.

- The trend lines help the investors to decide their entry and exit points to the forex trading market.

- These patterns make you familiar about nature of forex market; the sharp turns taken by trends and unwarned movements of different investments.

- In a nutshell, these lines fuel technical analysis of this investment market, which is certainly the most appreciable tool for making an investment.
Important Types of Forex Trend Lines

The forex trend lines are available in different popular forms, as summarized below:

- Simple trend lines consist of straight lines drawn vertically, horizontally as well as diagonally.

- Fibonacci trend lines have gained popularity in recent times and are excellent tools of understanding current market trends in forex trading. There are different variations of these lines in the form of Fibonacci Arc, Fibonacci Fan and Fibonacci Retracement.

- Pivot trend lines are drawn on the basis of fluctuations in the market during previous time frames.

- Speed trend lines are similar to Fibonacci trend lines, with the only replacement of Fibonacci numbers with calculations by thirds.
Drawing and Studying Forex Trend Lines

As you grow old in terms of experience of dealing with forex trading, you are able to play with forex trend lines. But, at the very onset of your investments in the forex market, you are required to seek the guidance of forex market experts in drawing as well as interpreting information from the trend lines. For instance, you must be capable of identifying the situation in advance, if the forex market is expected to move in an opposite direction. It could be a sudden turn and you must catch the signals generated by forex trend lines for this behavior of the market. Thus, initial understanding of these trend lines can provide benefit to an investor for rest of his age of investment.

It is the simplest and most convenient in all the technical analysis to draw a trend line on the forex chart. Upward trend:

Downward trend:

Sideways trend:

The market trend is consisted of three stages:

The first is the initial stage where the market trend is shaped up.

The second one is the developing stage where the trend is strongly kept as it is.

The last one is final stage where the forex market begins to suggest the next new trend on a certain turning point.

You can find the clear trend nearing to the final stage as long as you make use of the moving average, because it is coming later than the market movement. It might be fear that you would buy at the highest or sell at the lowest if you missed capturing the market trend accurately.
Forex Trend Lines Tools

There are many online websites, dedicated to introduce automated tools for drawing forex trend lines. These tools are part of automated software systems, available in large quantity over internet. You must evaluate all these systems on the basis of various factors and finally take a decision of choosing one of these tools. Make sure that you choose a reputed resource for accessing these tools.

For becoming a good player of the game of forex trading, you must consider trend patterns as right game gears. Also, keep your knowledge updated about various methods of drawing forex trend lines and switch over to a new system, if you find it more suitable. At a later stage, you will definitely experience the building up of your knowledgebase for forex trading trends and trend lines.

Central banks

2009-12-09T06:44:00.002-08:00

National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.

The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.

Currency Risk

2009-12-09T06:44:00.001-08:00

A form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

For example, if you are a U.S. investor and you have stocks in Canada, the return that you will realize is affected by both the change in the price of the stocks and the change in the value of the Canadian dollar against the U.S. dollar. So, if you realize a 15% return in your Canadian stocks but the Canadian dollar depreciates 15% against the U.S. dollar, this will amount to no gain at all.

Academic studies of currency risk suggest - although without absolute certainty - that investors bearing currency risk are not compensated with higher potential returns, meaning it is essentially a needless risk to bear.

Currency Trading Pips and Ticks

2009-12-09T06:43:00.003-08:00

A pip is the smallest change of price for any Foreign Currency. The currency quotes appear as numbers with either two or four decimal places. This means that if the Foreign Currency moves up or down, the smallest move is called a "pip". When you trade in Forex, you monitor how the pips rise and drop and this is what determines your investment.

An example of this is if you buy EUR/USD. This pair is quoted four decimal numbers after the point. A pip here is ten thousandth of a Dollar, or 0.0001 of a dollar, meaning 1/100 of a cent. The pip is an abbreviation of "Price Interest Point", and this is why another name used for pips is points.

Even though a pip is only a small amount of money, because your foreign currency trading is usually a leveraged investment, a few pips can mean serious cash fluctuations. Each serious trader needs to know how to calculate the change from pips the actual sums invested, and some online Foreign currency trading agents offer such calculators in their account. You should consider these and other advanced functions when selecting the broker you want to use. Pip value can vary, and is usually $1 in mini accounts or $10 in regular accounts.

An important concept that concerns pips is called The Spread. This is the pip difference between the bid price and the ask price done for the currency trading sum. When you buy Foreign Currency it costs you more than to sell it and this is the spread.

Ticks are the smallest amounts of time that exist between two currency trades. This time frame can be a short time period of a fraction of a second for major currencies, or can also be a time frame of a few hours for less popular currencies. Ticks do not happen in constant intervals, even though the charts used for technical analysisdo use specific time rates such as 4 hours of 15 minutes.

Currency Trading Leverage and the Margin

2009-12-09T06:43:00.001-08:00

Leverage is when your invested cash is used to buy or sell foreign currencies that are worth far more that the investment. Simply put,leverage gets you more currency than you pay for.

When you buy\sell a leveraged currency, the sum you invest is called the Margin. The margin is used by your broker as a deposit for the currency you buy or sell.

A Leverage investment works as the following example:

You buy/sell foreign currencies for $100
You receive a leverage with a ratio of 100 to 1
Your investment is now worth $10,000

Foreign currency trading companies have various criterions for opening a margin trading account, and there are different margin accounts availablefor you. usually moving from one to two thousand dollars deposit for each trading day. Upon opening an account the trader gains overwhelming leverage – up to 0.5%! In example - in order to execute a 200,000 dollar transaction you'll need only 1000 dollars in your margin trading account, thus minimizing the personal funds invested in every transaction.

With leverage you not only win big, but lose big - It's very important to remember that a margin account can enlarge your profits as well as your losses. So while you are upscaling your currency trading profits, any losses will also become greater for leveraged foreign currency. If you get a margin call, it means you've lost 75% of your initial investment, and you need to invest more to continue having the leveraged currency.

Leverage allows more people to trade - As a result of the size of the forex market (more than 1.9 trillion dollars each day), most of the trade is being made in $10,000 lots. This could have blocked the small forex traders, who are reluctant to risk such sums, out of the forex market. Fortunately the forex market provides extensive leveraging options that are far better than you can find in any other financial market.

The initial margin requirement is the minimum investment you need to make in a foreign currency trading action. Your margin account is very much like your regular bank, where you can deposit and withdraw your capital. All of the margins accounts are closed at the end of the trading day and all gains and losses are assessed into the end balance. This is called the Rollover.

Cyborg Automated Forex Trading System

2009-12-09T06:41:00.000-08:00

This part human - part machine currency trading strategy trades a dozen different Forex strategies with the parameters set by us each and every day! It's very hard to create an automated Forex trading system as markets constantly change so we tell it everyday at what zones to LOOK for Forex currency buys & sells and WHEN to look for counter trend trades!

A computer can not do multi time frame Forex analysis as well as a professional trader can and that's why so many Automated Forex Systems fail miserably as online Forex markets are constantly changing. They just can't adapt, but our Cyborg FX System automatically adapts each day as we read the market and make changes to it!

Euro Optimism (And not just Dollar Pessimism)

2009-11-19T02:31:00.002-08:00

According to a recent Merril Lynch (Bank of America) survey, Europe has officially returned to favor among investors. “A net 30% of global portfolio managers see euro-zone equities as undervalued relative to other regions, the highest reading since April 2001. A net 11% are overweight Europe, the first overweight allocation in nearly two years, said Baker.”

The numbers, meanwhile, reflect this perception. Over the last month, investors have poured a net (inflows minus outflows) $2.1 Billion into EU capital markets, an impressive sum when you consider that the figures for Japan and the US were both negative. Meanwhile, stock markets in the region are up by 50%+ since bottoming last March. When you account for currency fluctuations (i.e. Euro appreciation), stock market comparisons between the US and EU start to look pretty lopsided.

According to a WSJ report, there’s no mystery behind the European stock market rally: “Even though prices have risen sharply since March, valuations aren’t stretched. Average price-to-earnings ratios in Europe, on a trailing 12-month basis, are about 16, up from seven back in March, according to Citigroup…On a price-to-book ratio, stocks are trading about 15% below their long-term average, and dividend yields compared to government bond yields are historically still very attractive.”

At this point, you’re probably wondering, “Why the long preamble on European stocks?” Because, it’s easy to forget that there are inherently two sides to every currency pair. In the case of the USD/EUR (the most frequently traded pair in the world), most of the recent commentary has focused exclusively on Dollar-negatives, portraying the dynamic as a depreciation in the Dollar. In this context, it’s easy to forget that the Dollar’s depreciation implies an appreciation in the Euro. Duh?! But seriously, for every Dollar bear, it seems there is at least one Euro bull.

To be fair, those who don’t see much to be excited about in the Euro can be forgiven. After all, the European economy is technically still mired in recession, and isn’t projected to return to growth until 2011. While some of the intangible indicators are improving, others continue to stagnate. “Industrial output in the euro zone is 20% lower than its February 2008 peak, despite some recent improvements.” In addition, the appreciation in the Euro threatens to choke off exports and stifle the recovery before it has a chance to get off the ground.

Speaking of which, the European Central Bank (ECB) will probably hold of on raising rates because of the strong currency. A more valuable Euro keeps inflation in check (via cheap imports). Besides, higher interest rates would attract carry traders hungry for yield, and would make it even more difficult to keep the Euro in check. Many EU monetary officials (including ECB President Jean-Claude Trichet) have already made their concerns about the Euro’s appreciation clear. If they are able to succed in halting its rise, that could make investing in Europe a lot less exciting…

Central Banks Prop Up Dollar

2009-11-19T02:31:00.001-08:00

By all accounts, the decline of the US Dollar has been measured, and without incident. This, despite the fact that most investors reckon the Dollar is doomed, both from a long-term and a short-term perspective. What, then, is preventing an all-out collapse?

Personally, I think the best answer is that Central Banks (and their sponsoring governments) don’t want the Dollar to collapse. In other words, a schism is forming between private investors and public government, whereby investors (on a net basis) are rooting against the Dollar, while Central Banks are rooting for it. That’s not to say that there is a global conspiracy involving Central Banks, designed to prop up the Dollar. Rather, it is that Central Banks are simply trying to protect their short-term financial interests, and long-term economic interests. By this, I mean simply that foreign Central Banks have everything to gain from a strong Dollar, and seemingly everything to lose from its collapse.

From an economic standpoint, foreign Central Banks also benefit from a strong Dollar, especially those whose economies are powered by exports. “A stronger local currency relative to the dollar attracts foreign investment and tempers domestic price pressures by keeping import prices in check, but also cuts into the competitiveness of the country’s export sector.” Given that inflation is currently a moot issue whereas economic growth remains tenuous, Central Banks have made it clear that they currently favor weak currencies. “If (their currencies have) too much strength and the U.S. recovery falters, it’s bad for emerging market growth,” and could even lead to a so-called “double-dip recession.”

In order to alleviate this possibility, many Central Banks have intervened directly in forex markets and depressed their currencies through the purchase of Dollars. During only one trading session earlier this month, “Asian central banks said to be intervening in currency markets overnight by buying dollars included South Korea, Hong Kong, Taiwan, Thailand, the Philippines and possibly, Indonesia, according to analysts.”

Meanwhile, Central Banks in industrialized countries are using increasingly strong rhetoric to try to talk down their currencies. The Banks of Canada and England have achieved modest success in the last few weeks in convincing investors that overvalued currencies would be met with decisive action. The Royal Bank of Switzerland has intervened several times, while the European Central Bank has expressed concerns about “volatility” (code for the rapid appreciation in the Euro) in forex markets. It’s still not clear where the Bank of Japan stands. The newly appointed Finance Minister has already flip-flopped several times, settling finally on a course of action that would prevent the Yen from rising too high and threatening the nascent recovery.

Consider also foreign Central Banks’ collective holdings of US Treasury securities, which increased by nearly $800 Billion over the last year, a large portion of which was accounted for by the Banks of China and Japan. According to the most recent Federal Reserve data, they are collectively adding to their stockpile at a pace of $10 Billion per week. As the WSJ explains, “The inflows highlight the challenges facing nations with large dollar holdings, particularly developing countries. A weaker dollar is, in theory, bad for their investments as it eats into returns when translated back into local currencies.”

In other words, continued foreign Central Bank investment in US Treasury securities is perhaps rooted less in investment strategy, then in the simple desire to prevent their current holdings from depreciating. At the same time, those banks that intervene directly in forex markets often have little choice other than to hold their forex reserves in US Treasuries.

You can see from this that the idea of an alternative reserve currency would actually run counter to the interests of many of these Central Banks. With the exception of a few (i.e. Iran, and to a lesser extent, China) that would like to see the Dollar fail for political reasons, the vast majority of banks have a vested interest in the Dollar remaining where it is. Otherwise, they would witness the value of their Dollar-denominated assets collapse, as well as a collapse in exports to the US.

It looks like, then, there will be a showdown at some point between the Central Banks and investors. If you accept the notion of efficient markets, then it should be obvious who will win in the long-term. On the other hand, you can’t underestimate the determination of some of these banks.

How will Foreign Investment Tax Affect the Real?

2009-11-19T02:30:00.003-08:00

On October 20, the executive office of the government of Brazil enacted an emergency measure, calling for a 2% tax on on all foreign capital inflows. And with one foul swoop, this year’s 35% rise in the Real had come to an end, right?

The tax certainly took investors by surprise, with the Brazilian stock market falling by 3% and the Real falling by 2%, the largest margins for both in several months. The tax is comprehensive and applies to essentially to all foreign capital deployed in Brazilian capital markets, whether fixed income, equities, or currencies. While the tax doesn’t apply to those currently invested in Brazil, the possibility that it would cause potential investors to stay away was enough to cause a sell-off.

The ostensible reason for the tax levy is to prevent a further rise in the Real. By most measures, the currency’s rise has been excessive, more than erasing the losses incurred during the credit crisis. The concern is that a more expensive currency will derail the Brazilian economic recovery before it has a chance to firmly get off the ground. “Brazil’s currency needs to weaken as much as 19 percent for sustainable economic growth, said Nelson Barbosa, the Brazilian Finance Ministry’s top policy adviser.”

According to cynics, however, the tax is a backhanded effort to raise revenue to fund a growing budget deficit. The government continues to spend money (perhaps to offset the negative impact on exports brought on by the Real’s rise) as part of its stimulus plan, but is increasingly tapping the bond markets to do so. The tax is expected to bring in an impressive $2.3 Billion over the next year, which could go part of the way towards fixing the government’s fiscal problems.

The real question, of course, is how the Real will fare going forward. The initial reaction, as I said, was ‘The Party’s over…‘ But investors with a longer-term horizon aren’t fretting. “In the medium term, the measure will have a limited impact. The fundamentals point to a stronger real, with commodities rising and the dollar weakening globally,” asserted one economist. While investors aren’t happy about paying an arbitrary 2% fee to the government, such pales in comparison to the 10%+ returns that investors still aim to reap from investing in Brazil over the long-term.

Ignoring the possible bubbles forming in Brazilian capital markets (admittedly, a dubious suggestion), Brazil still looks like a good bet, especially on a comparative basis. Interest rate futures point to a benchmark interest rate of 10.3% at this time next year, compared to ~1% in the US. Even after accounting for inflation and the 2% tax levy, the yield spread between Brazil and the US remains impressive. For that reason, the Real has already stalled in its expected fall against the US Dollar, standing only 1.7% below where it was on the day the tax was declared.

It’s unclear how determined the Brazilian government is towards pushing down the Real. The comments by its finance minister suggest that the consensus is that it is not slightly – but extremely overvalued. Thus, it’s likely that the government will enact other aggressive measures to prevent it at least from rising further. It continues to buy Dollars on the spot market, and is trying to make it easier for Brazilians to take money out of Brazil. It is not yet ready to tamper with its floating currency, but by its own admission, the “government was studying additional measures to regulate the heavy inflow of foreign investments and its impact on the country’s currency.”

There are also implications for other (emerging market) currencies. As I wrote earlier this week (”Central Banks Prop Up Dollar“) a number of Central Banks have already intervened or are currently mulling intervention in forex markets, to push down their currencies. You can be sure that other governments will be studying the situation in Brazil closely, with the possibility of implementing such policies themselves.

Forex Implications of China-US Economic Codependency

2009-11-19T02:30:00.001-08:00

The Economist recently published a special report on China and America (”Round and round it goes“). As the title suggests, the article described the increasing interdependency between the economies of the US and China. In a nutshell, China maintains an undervalued currency, in order to stimulate exports. The resulting overseas (American) demand puts upward pressure on the RMB, which China defuses by buying US Treasury securities. This results in artificially low US interest rates, causing American consumers to import more, putting even more pressure on the RMB, which is further defused by buying more US Treasuries. And the cycle continues ad nauseum.

The article focused primarily on the political side of this precarious relationship, at the expense of the financial implications. It got me thinking about the forex forces at work, and how a disruption in the cycle could have tremendous ramifications for currency markets. It’s clear that in its current form, this system keeps the Yuan artificially low, but does that means that the Dollar is also being kept artificially high.

Given the depreciation of the Dollar over the last six months, this seems almost hard to believe. Over the same time period, though, China (as well as many other Central Banks) have vastly increased their Treasury holdings. This would seem to imply that indeed, the Dollar’s fall has been slowed to some extent by the actions of China. It’s kind of a paradox; as US consumers recover their appetite for Chinese goods, the Dollar should decline. But as China responds by plowing all of those Dollars back into the US, then the net effect is zero.

As the Economist article intimated, there are a couple of developments that would seem to upset this equilibrium. The first would be if the Central Bank of China began diversifying its forex reserves into other currencies. By definition, however, it would be impossible for China to continue pegging the RMB to the Dollar without simultaneously buying Dollars. Thus, the day that China stops recycling its export proceeds into the US, the RMB would start to appreciate, almost instantaneously. In addition, the sudden surcease in US Treasury bond purchases would cause interest rates to rise. Both higher rates and a more expensive currency would presumably result in lower demand for Chinese exports, and hence eliminate some of the need to recycle its trade surplus back into the US. In this way, we can see that China’s Treasury purchases are actually self-fulfilling. The sooner it stops purchasing them, the sooner it will no longer need to purchase them.

I’m tempted to elaborate further on this point, but it seems that I’ve already taken it to its logical conclusion. China must recognize the dilemma that it faces, which is why it refuses to break from the status quo. If it allows the Yuan to appreciate, it will naturally face a decline in exports AND the relative value of its US Treasury holdings will decline in RMB terms. Both would be painful in the short-run. However, by refusing to concede the un-sustainability of its forex/economic policy, China is merely forestalling the inevitable. With every passing day, the adjustment will only become more painful.

Emerging Markets Bubble Continues to Inflate, but for How Long?

2009-11-19T02:28:00.001-08:00

Yesterday, emerging markets (proxied by the MSCI Emerging Markets Index) recorded their biggest fall since July, ending a week of solid gains. Still, this one-day slide of 1.4% pales in comparison to the nearly 100% gain that the index has achieved since bottoming last March. In other words, while investors might be starting to pull back, the direction of asset prices is still upward.

As for what’s causing this across-the-board appreciation, that was the subject of my previous post (Inverse Correlation between Dollar and Everything Else…Still), in which I merely stated the obvious; that the Fed’s year-long program of negative real interest rates and quantitative easing (i.e. wholesale money printing) has unleashed a flood of cash into global capital markets. Since we’re not just talking about the Dollar, here, it makes sense to point out that the Fed’s easy money policies have been copied by Central Banks in most other industrialized countries, including the UK, Canada, Switzerland, Sweden, and to a lesser extent, the EU.

As for why emerging market assets and currencies seem to be outpacing appreciation in other asset classes, that’s also not difficult to explain. First of all, by some measures, emerging market stocks have hardly outperformed other assets. Oil, for example, has risen by 131% in less than a year, to say nothing of other commodities. Still, by other measures, growth has been remarkable. Most emerging market stock indexes and currencies have fully erased (or come close to erasing) the losses recorded during the peak of the credit crisis. Bonds, meanwhile, have gone one step further. Yields are collapsing, and prices have exploded – by 25% in the last year, sending the JP Morgan Emerging Market Bond Index to a new record.

Is it safe to call this a bubble? Intuition would suggest so; given that all assets are rising across the board, without regard to particular fundamentals, it would seem that only a herd/bubble mentality could offer an explanation. Some analysts, in fact, have given up completely on fundamental analysis, instead using fund inflows (i.e. investor demand) to predict whether some emerging market assets will continue rising. As Nouriel Roubini (the NYU economist that famously predicted the credit crisis) summarizes: “Traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade.” P/E ratios are nearly twice as high in some emerging markets, compared to stocks in the S&P 500.

On the other side of the equation are the bulls and the efficient market theorists.”By historical price-to-earnings ratios — the ratio of stock prices to per-share profits —these levels can be justified, if the economic recovery continues. With massive layoffs, business costs have been cut sharply. “The hope is that when consumers and companies start spending, the added sales will drop quickly to the bottom line [profits].” Other proponents argue that the rise in asset prices is exactly what the Fed wants, since it implies that the markets are once again characterized by stability and liquidity.

Regardless of whether growth materializes, however, that doesn’t change the fact that the free ride can’t and won’t last forever. At some point, Central Banks will be forced to raise interest rates and start withdrawing Trillions of Dollars from global capital market. This will cause the Dollar to rise, and investors to rapidly unwind their carry trade positions. Warns Roubini, “A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets – equities, commodities, emerging market asset classes and credit instruments.”

If the tech-bubble and real-estate bubble taught us anything, it is that there is no free lunch in the markets. It is not possible for all investors in all assets classes to simultaneously win. At least, in the long-term. In the short-term, meanwhile – it pains me to say this – let the party continue. My only warning is this: when the music stops, don’t be the one caught with your pants down…

Forex Training: What to Look for in a Forex Training Program

2009-11-05T00:51:00.001-08:00

Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don't get me wrong here, taking a Forex training program or a Forex trading course won't guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.

Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many training programs available, but not every one of them suits the needs of every trader.

The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most courses or training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won't help the trader to make consistent results.

The following subjects are what I consider the most important aspects of trading and every training program or trading course should address:

Forex trading basics.

Review basic concepts such as: margin, type of orders, a little background, bid/ask, rollover, etc. You need to make sure you understand every single concept to perfection.

Main drawbacks of Forex traders.

Being aware of the common mistakes made by Forex traders and knowing how to handle them will prevent new traders from making those mistakes.

Technical and fundamental analysis.

These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor.

The three pillars of Forex trading. I consider that these three subjects have the most impact on every trader trading account.

Forex trading system development.

Having the right system is a must if you want to have consistent profitable results. Having a system that doesn't fit you will cause a series of problems that will make your trading account vanish away (second guessing the system, not following your system, etc.)

Money management.

This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)

Trading psychology.

Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.

Other important aspects every training program should include are:

Developing habits for success (such as discipline patience, taking responsibility of every action, commitment, etc.,) understanding and taking our trading as a business, risk and trade management.

Another important aspect you should take into consideration when choosing a Forex training program is the mechanics of it, getting to know how the training program works.

A good course will have the following:

A live conference room, where you can apply everything learned under live market conditions.

One-on-one feedback, every trader has different needs and requires special attention. For instance a trader wanting to improve the system and requires individual feedback from the instructor about it.

Online trading course, a course that could be accessible through internet. A plus is a course where you are able to access the course at the convenient time for you, so you don't have to change your lifestyle.

A forum, where members can talk just about everything related to the Forex market and the Forex training program.

Trading the Forex market is no easy task. It requires a lot of hard work. Making the right decision will definitely put the odds in your favor. Take your time when doing your diligence because it is a big and important step in a trader's trading career.

Relative Strength Analysis In Forex Trading

2009-11-05T00:50:00.001-08:00

First what is Forex: The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

Analysis means: Research used to assist in predicting the direction of the markets based on technical data relating to price movements of the market, or on fundamental data such as corporate earnings.

The relative strength analysis is a technical report that allows investors and brokers to make informed decisions about trading on the Forex. The Forex, also known as the FX or foreign exchange market is the most liquid of all markets in the world. Over two trillion dollars changes hands everyday through the foreign exchange market. There are many factors that affect both the stock market and the foreign exchange market.

When investors and brokers look at the relative strength analysis, they are getting a picture of how the trends in the Forex should go. This analysis allows brokers to see current trends in the foreign exchange market and allows them to know if they are interested in buying or selling currency at any given time. This can help an investor or financial institution make educated decisions on which markets are gaining and which ones are losing.

There are many factors that affect the exchange rate in the Forex. These factors can include political events, governmental policies, inflation, and current trends in the importing and exporting business, consumer opinions and even natural disasters all over the world. The relative strength analysis looks at all of these factors. The past trends in the Forex are also taken into consideration, but are not the only thing that is looked at when forecasting this type of market.

The relative strength analysis compares all foreign currency and the exchange rates every day. The report will then be sorted by their strength rating and ranked according the previous week's rating. This report relies on at least 45 weeks of data so that sustained growth can be seen with ease. Using this analysis promises to be one of the most valuable tools of forecast the trends in the Forex. In addition, it can show the rating of stocks and rate them into which ones are the strongest. The stock market has a direct relation to the foreign exchange market because it reflects current trends in buying and selling, which will increase or decrease the value of currency.

The current trend in predicting the trends in the Forex is to use not only the relative strength analysis, but to also look at other factors such as the stock market barometers and economic factors. When investors and brokers look into all of these factors when forecasting the Forex, it makes for a highly reliable means of predicting trends. This can be the vital difference between making money and losing money on the foreign exchange market.

When using the relative strength analysis in relation to the foreign currency exchange, it is possible to tell which markets are performing well and which ones are not. The key is finding the markets and currency that are moving up on the ranking scale. It is important to remember that like stocks, the Forex is affected by a variety of factors. The relative strength analysis can help investors find which ones are good investments. This report is based mostly on a stock's closing price and the relative strength analysis is based on gains and losses. The report can calculate the markets report for any period in time.There are several benefits to using the relative strength analysis when attempting to forecast the Forex. When an investor looks at the relative strength of a certain stock, it affects the foreign exchange rate. One with a strong relative strength is ideal, but the value on these will not be low. Investors can look at a stock that is increasing in values and used the relative strength to measure whether or not this particular stock is moving up because it has a history of increasing or if it has a sustained high value. Stocks with a good relative strength over a constant, steady time period are good performers in the Forex market.

The Power of Small Consistent Returns

2009-11-05T00:48:00.000-08:00

For most of us, 'safe investments' are limited to the rate of return that we can earn on our savings accounts or long-term deposits. The return would depend on the interest rate applicable in each country. At the time of writing, November 2007, the interest rate earned on a savings account in Australia is around 7% a year. That is a return of 0.57% a month. Despite this fact, many have preconceptions regarding the type of returns they can make from trading the financial markets.

A novice trader puts on a winning trade and gains between ten to fifty percent of his trading account. He forms a belief that, by trading, he can quickly become a millionaire. Indeed, if we assume a 20% return per month on a $10,000 trading account, we can expect $89,161 by the end of our first twelve months of trading. What if we assume an estimate of 50% return per month? We would have $1,297,463 by the end of the year. Of course, the problem with expectations like these is that they are unrealistic. Even most of those who claim to have made these types of returns have only done so in simulated environments, in trading competitions using game accounts, for example, where real money was not at risk.

It is possible to make these types of returns for a short while but I have not heard of anybody achieving such steep returns consistently year after year. After testing hundreds of trading systems and ideas I have come to believe that systems, which seem to promise exorbitant returns, turn out to be over-optimized for the period they have been tested on. Or even worse, they have flaws in their logic or assumptions.

Lately, I have been looking at the performance reports of trading firms in the USA. What would you say if I told you that the top trading firm over the last ten years only made an average return of 25% a year and the median trading firm made somewhere around 15% a year? Well, this is in fact what I am telling you.

A 20% and a 15% return a year is 'only' 1.877% and 1.171% return a month, respectively. I am sure that many novice traders and investors reading this article will have a mix of reactions towards these figures. Some might laugh and scoff at such 'paltry' returns, secretly believing that they can do a lot better than just 1.877% a month. Others may be surprised or even disappointed because their dreams of living rich will not come as quickly as they hoped.

Setting aside your initial reaction to these figures however, let us refocus on what these numbers actually mean in the real world. I would like to show you that these types of returns are very powerful. With time, these seemingly small, but consistent, gains will give you enormous profits in the future.

15% A YEAR RETURN ON A $10,000 ACCOUNT

Let us start with the assumption of having a $10,000 account, making at least 1.171% return a month, or 15% a year, trading the market. Based on these, the projections are:

$11,500 (15% growth) after 1 year.
$13,223 (32% growth) after 2 years.
$20,108 (101% growth) after 5 years.
$40,432 (304% growth) after 10 years.
$163,475 (1535% growth) after 20 years.
$660,960 (6510% growth) after 30 years.

25% A YEAR RETURN ON A $10,000 ACCOUNT

Let us now assume having a $10,000 account, making at least 1.877% a month, or 25% a year, trading the market Based on these, the projections are:

$12,500 (25% growth) after 1 year.
$15,625 (56% growth) after 2 years.
$30,519 (205% growth) after 5 years.
$93,140 (831% growth) after 10 years.
$867,512 (8575% growth) after 20 years.
$8,080,034 (80700% growth) after 30 years.

It is very important to note that not all fund managers make money. Returns of 15% or 25% a year belong only to those money managers who were consistently profitable. Furthermore, these types of returns are out-of-bounds for most investors. To invest in such schemes, most of the fund managers I have been looking into will deal with you only if you are a 'sophisticated' investor with a spare $500,000 minimum to invest. In fact, the highest earner only took on investors with a minimum of $25,000,000 US dollars to invest. (I will not mention any names here, however, you can do your own research by typing "commodity trading advisors" in your favourite search engine.)

I do not know about you but I certainly do not have 25 million dollars lying around, to hand over for someone else to manage. The dilemma, however, is that life is way too short for me to be satisfied with a 7% annual return either. I guess this is why you and I have taken the decision to trade and invest in the financial markets ourselves. At least there, we have full control and responsibility over the returns we get. It has its risks, but we can all avoid being reckless if we keep realistic expectations.

Sending Signals For Trading In FOREX

2009-11-05T00:45:00.001-08:00

Forex signals are sent by a forex firm to their subscribers in order to buy and sell currencies. These signals are called entry and exit signals for the forex dealers. The firms, which send this forex signal, do so after tedious and meticulous research and analysis into the currencies that their dealers are trading in. For example a firm may send the entry and exit signals at designated time frames in real time. These will remain valid for a short period only after which they are going to be different.

Let's say that there is a forex trading company say Acme Forex traders who send entry and exit signals to their clients in the following way

The first signal is provided to the trader at 08:30, and this signal is going to remain actual till 12.30

The trader will receive the second signal at 12.30, which would remain actual till 16.30.

The last signal would be sent to the trader at 16.30.

The transactions are given according to GMT. Please adjust for local time changes. The transaction shall be calculated till the signal is actual. The charges would be $300 per month per trader.

Forex dealers and experts provide forex-trading information and data to both institutional clients and individual investors and provide these kind of signals. Investors like to subscribe to credit worthy forex dealers / companies since their information and data would be genuine and more accurate. In fact many forex dealers would kill to get information before the rest of the market gets the same information. As forex dealing is a very competitive business.

These signals or forex indications are given to the forex dealers through the forex trading platform or hub. The signals or forex indicators are the specific entry and exit strategies. Therefore when you enter a currency trade buying currencies at lower price and then selling at higher price, you book a profit. currency pair. For example the forex dealer is trading in GBP/USD. The rate is for GBP/USD is .9800 . If you expect that Euro is likely to go up in the future you would buy the Euros today to sell them off at a later date thereby booking a profit. If you expect the dollars to appreciate, then you would buy the dollars selling them off at a later date to book profits.

Most forex dealers will get the information via email or straight on their computer screens. It is then up to the forex dealers to decide whether they want to sell / buy / hold the currencies till further information is given to them.

Those who contribute in giving the information on currency dealing are hedge managers, foreign exchange dealers located in the major financial markets of the world, professional stock brokers, finance managers and a host of other finance professionals. They make it their business to collect, analyze and disseminate information in such a way, that can be used by forex dealers to buy / sell / hold the forex.

Therefore the companies take extreme care to send the forex signals for the currency dealers.

What's Fibonacci Forex Trading?

2009-11-05T00:43:00.002-08:00

Fibonacci forex trading is the basis of many forex trading systems used by a great number of professional forex brokers around the globe, and many billions of dollars are profitable traded every year based on these trading techniques.

Fibonacci was an Italian mathematician and he is best remembered by his world famous Fibonacci sequence, the definition of this sequence is that it's formed by a series of numbers where each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13 ...But in the case of currency trading what is more important for the forex trader is the Fibonacci ratios derived from this sequence of numbers, i.e. .236, .50, .382, .618, etc.

These ratios are mathematical proportions prevalent in many places and structures in nature, as well as in many man made creations.

Forex trading can greatly benefit form this mathematical proportions due to the fact that the oscillations observed in forex charts, where prices are visibly changing in an oscillatory pattern, follow Fibonacci ratios very closely as indicators of resistance and support levels; maybe not to the last cent, but so close as to be really amazing.

Fibonacci price points, or levels, for any forex currency pair can be calculated in advance so that the trader will know when to enter or exit the market if the prediction given by the Fibonacci forex day trading system he uses fulfills its predictions.

Many people tries to make this analysis overly complicated scaring away many new forex traders that are just beginning to understand how the forex market works and how to make a profit in it. But this is not how it has to be. I can't say it's a simple concept but it is quite understandable for any trader once he or she has grasped the basics and has had some practice trading using Fibonacci levels along with other secondary indicators that will help to improve the accuracy of the entry and exit point for every particular trade.

Free chapters of a forex day trading system can be downloaded at http://www.1-forex.com in case you are interested in learning more about Fibonacci forex trading.

Build a Forex Trading Account You Can Be Proud of

2009-11-05T00:43:00.001-08:00

How can you increase the size of your Forex trading account and continue to make good profits from trading the Forex market? The following points will help prove this can be done.

The Forex market will move in one of three ways, up, down or sideways. Your challenge is to develop a strategy which covers all eventualities.

If you prefer to scalp for a few pips based on a higher value lot size and trading many times a day, then your Forex trading strategy will be developed to maximise this plan.

If you trade intra-day, then you might only place a handful of trades per day and look for a greater pip gain. This would mean a sideways moving market is not for you and you would make the decision not to trade.

With Forex trading, it is commonly agreed that knowing when not to trade is as important as knowing when to trade!

Go through the motions of building the foundations to your career. Paper trade first until you are consistently successful, comfortable and confident with your strategy. Use a Forex trading demo account next to get to know your Forex broker's trading platform which will be a great help when you start to trade a live account!

Do you know your risk to reward strategy?

This is the amount you are prepared to risk in order to make a gain and is typically based on a 3 to 1 ratio. So if your stop loss was 10 pips below your entry point for a long trade, you would expect your trade to achieve a minimum of 30 pips.

This takes care of the risk management of your trade but what about the risk to your Forex trading account? How can we best protect your hard earned money and trading capital?

Well, we look to use a similar ratio for this too. The thought process is not to risk more than 3 percent of your total Forex trading account size on each open position. So if you had $1000 in your trading account you would only risk a maximum of $30 on each trade. If your stop loss was 10 pips, that would mean you could trade at $3 per pip and if your stop loss was 15 pips your trade would be based on $2 per pip.

Can you see how this strategy means you will be in the market long enough (assuming you activate your stop loss) to learn about trading and how to make profits?

If you keep growing your Forex trading account size in this way, you will achieve a growing trading balance, whilst protecting your capital.

This way you will still be trading having kept your trading account in order - achieving more than 90 percent of all other traders! If you reach this stage, you would have done very well indeed!

So, with Forex trading, by knowing which way the market is moving, you can apply to right strategy to trade, or not. Once you have your trading plan written, you can start paper trading, progressing to opening a demo account with a good Forex broker and finally on to a live account. Make sure you understand the risk strategy and grow your trading account slowly.

This will ensure you build the foundations of your Forex trading account and be proud of what you have achieved!

Forex Market Books

2009-11-05T00:37:00.000-08:00

The Forex books that are presented in this section cover the general aspects of Forex and financial trading. They provide the information that is interesting not only to the Forex beginners but also to the experienced Forex traders that want to learn something new or to maintain a proper structure of their knowledge of the Forex market.
Almost all Forex e-books are in .pdf format. You'll need Adobe Acrobat Reader to open these e-books. Some of the e-books (those that are in parts) are zipped.
If you are the copyright owner of any of these e-books and don't want me to share them, please, contact me and I will gladly remove them.
Screen Information, Trader Activity, and Bid-Ask Spreads in a Limit Order Market — An in-depth work on a Limit Order Market by Mark Coppejans and Ian Domowitz.
Strategic experimentation in a dealership market — by Massimo Massa and Andrei Simonov.
Limit Orders, Depth, and Volatility — by Hee-Joon Ahna, Kee-Hong Baeb and Kalok Chan.
Reminiscences of a Stock Operator — the best of the best book on financial trading by Edwin Lefevre.
Market Profile Basics — by Jayanthi Gopalakrishnan.
Quote Setting and Price Formation in an Order Driven Market — by Puneet Handa, Robert Schwartz and Ashish Tiwari.
Phantom of the Pits — General thoughts and opinions on trading and market by Arthur L. Simpson.
An Introduction to Market Profile and a User's Guide to Capital Flow Software — by J. Peter Steidlmayer and Ted Hearne.
The Effect of Tick Size on Volatility, Trader Behavior, and Market Quality — by Tavy Ronen and Daniel G. Weaver.
Trading as a Business — by Charlie Wright.
What Moves the Currency Market? — by Kathy Lien - Find out which economic factors help shape the short-term and long-term forex landscape.
Macroeconomic Implications of the Beliefs and Behavior of Foreign Exchange Traders — by Yin-Wong Cheung and Menzie D. Chinn.
All About the Foreign Exchange Market in the United States — by Sam Y. Cross — a general review of the Forex market made by the Federal Reserve Bank of New York in 1998.

Forex Trading System Tips - Forex Charts and Signals

2009-09-08T06:03:00.004-07:00

Forex trading systems have many tools that can help you to decide what currencies might be a good investment. If you have never used the Forex markets before, you need to do some research on the market in order to make informed decisions. Don't be overwhelmed by the amount of information available; there is a great deal of it. Start slow and learn about the market and the platforms available.

Once you have formed a strategy that you believe will work for you, it is time to practice, practice, and practice. Many companies have demos that you can try to see if your system would have worked on past events. Some have options to let you try them out in the current market without risking any of your capital. Once you have a strategy, you need a platform.

As part of the demos you explored, charts are often provided. Examine how these charts predict the changes in the market. Searching online for more information about charts will bring back an enormous amount of information. After a little research, you should begin to feel more comfortable with the charts and the information they provide. Compare and contrast the different types of charts to see what information each can provide you.

The more experience you gain in the Forex market will provide you will the ability to understand the charts and you will become more meticulous in which charts you use. Your system may have charts that do not provide you with all the information you want, but you can find other charts online that may fit your needs better. Many other features are available on most of the charts but are often overlooked by novices. Forex signals are standard on most systems. How these signals are used by the charts is not.

In the beginning, you might ask for advice from your friends, but don't stop there. Just because one set of charts or signals works for your friend does not mean they will fit your Forex strategy or style of trading. You should learn the charts from several different systems in order to find one that is the right fit for you. Just like a marriage, you will be spending a lot of time together, so choose carefully which platform, charts, and signals best fit you.

Feel free to take tips and suggestions from friends, Internet articles, other traders, but find a way to make the charts and signals work for you. The perfect fit will be one you are comfortable with.

Forex Trading System - You Can Experience the Process

2009-09-08T06:03:00.003-07:00

Firstly, get committed before you decide to invest in a Forex trading system. You should have gone through a few experiences of positive and negative trading before you take this decision. Systems have the capacity of breaking down large bodies of information in an easily decipherable manner. However, it may not seem easy to all, more so to the new ones in the business. Keep in mind that you need to scour the market for suitable systems and training support even for obvious questions.

What It Does

The Forex trading system is a tool that provides you a quick view of the performance of a currency over a past period. You reduce the risk of hoping that a decision to buy or sell is correct at a certain point of time on the basis of the quick view. The system is essentially a repertoire of past currency value data and keeps renewing its huge database on a real time basis through the internet. When you choose the currencies that you are playing on, the system retrieves relevant information from its database and presents it to you in a graphical manner to view the trends clearly.

What You Can Do

Keep in touch with the subject and increase your understanding of how a Forex trading system can help you. You should keep using the system to get familiar with the icons and menu functions. Download reports and browse through them to see whether you have understood the information presented. Take a few decisions with small sums and see how the system is able to support your capability to make profits. At some times, you will find that the system is correct about the data it puts forth but you need more inputs about why a certain shift is occurring. The information from the system is purely indicative of a country's situation based on the indices it is working on. You need to be alert to other factors that are affecting the country to gauge whether a trend is going to last long.

How Is It Helpful

The main advantage of the Forex trading system is its capacity to alter its report preparation to suit your needs. If you decide to play on multiple accounts with the currencies of different countries, a single system can provide you the necessary supporting information to move ahead. In the presence of a system, you are up to date in your information and have only to contend with external shifts in reality. Depending on your capacity to take risks, the system can consider a larger or smaller number of performance indices and reach you to a more conservative approach. You can tinker with the software to suit your preferences.

Types Of Trading

The Forex trading system is equipped with the capacity to handle different type of trading that you might want to enter into. You may decide to play the spot market or the forward market. In the former, once your agreement with the broker has been completed, the system will make the suitable accounting entries.

A Forex Robot Can Decrease the Learning Curve to Profitably

2009-09-08T06:03:00.001-07:00

Getting into the forex market means you can trade 24 hours a day. Now you can get your piece of the trillions of dollars that are traded daily. But is it possible? All in all it is almost impossible to keep up with everything that is happening that affects the market on your own, but what if you had a robot to do it for you?

To trade profitably you will need to know a lot more than what you read in newspaper, you may want to follow charts, read some books, watch the market trends plus figure out a way to keep track of what is going on. Plus you will want to implement a trading strategy that you use with great discipline and not let your human emotions get in the way. Or you can take advantage of technology and purchase one of the forex robots and make money on autopilot.

Multiple forex trading robots are available they are computer software with no human feelings or emotions. Forex robots can follow the market 24 hours a day if you wish, which is impossible for a person. A good Forex Robot can give you profitable trades most of the time.

Highly rated forex robots need no human interaction once set up, except to check your bank account. You can allow the robot to work for you. You can always dig into and research how the forex market really works, but at the same time you have a robot doing the trading for you.

When you decide that getting into the forex market is for you; getting forex robot software would be your next logical step. put it on a practice account first, this way you will have the knowledge first hand on how it is going to trade for you. Practice accounts are free and the market is not going to disappear before you are ready for live trading.

Now you can get your piece of the trillions of dollars that are traded daily without spending huge dollars or years of training. Several Forex robots are available.

Is Automation the Best Forex Trading Strategy?

2009-09-08T06:02:00.001-07:00

Did you know that you can fully automate your Forex trading strategy using Forex robots? A robot is a Forex program that you can install in your computer. It will trade for you on auto pilot.

Using Forex robots is best if you want to minimize your risks at the Forex market. That is because robots can accurately calculate and predict the movement of the market. So, is automation the best Forex trading strategy that you can use?

The answer to this depends on you. If you are comfortable in allowing computer software to handle your financial transactions, then you can use such robots for trading at the Forex market. On the other hand, if you are a take charge guy and you want to have hands-on experience at the market, then dump the robot and learn Forex the traditional way.

You need to understand however, that an automated Forex robot has been configured with a specific trading system. You can customize its behavior but it will still follow a pre-programmed system.

To learn if you will be comfortable with the Forex system of your trading robot, then test it first before you use it in the real market. This way, you can see if the strategies and systems of the robot will make money for you or not.

Developing a Forex strategy is critical if you want to succeed at the Forex market. However, if you want to skip the painful learning process of studying different strategies, then you can simply use a robot and automate your Forex trading strategy.

What is the Best Forex Trading Strategy For Big Gains?

2009-09-08T06:01:00.000-07:00

There is no single best Forex strategy but the one enclosed is one of the best and the reason it is is because: it will catch all major trends, is simple to understand, and will only take you 30 minutes a day to execute. Let's take a look at it.

How do Forex prices move? If you look at any chart, you will see they trend for long periods in a sustained direction and these trends can last for weeks, months and in some instances, years.

You can see this on any currency chart but you have to get into these trends and if you take a look at any currency charts closely, you will see that every major trend in any bullish currency, starts from a breakout to new highs and continues breaking new highs, as the trend advances.

So you want to get in on the big trends and the best way to do this is to simply go with breaks of resistance to new market highs. We will look at how to spot the best breakouts in a moment but lets stress a point which is important - despite this being a logical and obvious way to make money, most traders simply don't buy breakouts.

Most traders simply can't buy breakouts because they want to get in right at the bottom of the trend and they predict which is another word for hoping and guessing and lose. They won't buy breakouts, because they feel they haven't got the exact bottom and want to wait for a pullback - this never occurs on the best breakouts and the trend carries on, away from the breakout point.

The smart trader doesn't predict, he just trades the reality of the break and he misses the first bit of the move but compensates himself with the fact that, the odds are on his side and there is probably a lot of profit ahead. He doesn't want to be smart or clever and get the exact turn, he just wants to make money.

Not all breakouts make money, therefore you need to be selective in the breaks you buy. Look for a number of tests to occur before the break occurs and we very often look for double figure tests before the breakout and view the minimum number as four tests. In breakout trading the more times a level has held before the break, the more likely the breakout when it comes, will be a good one.

This is a simple strategy and it works. You can use basic bar charts and just trade price action or you can add a few indicators in to confirm your trading signal, if you wish and one or two to confirm is fine.

Trading breakouts and holding long term trends, will take you about 30 minutes a day but the profits from your work can be huge and give you a great second or even life changing income.

The Most Reliable Online Forex Trading Strategies

2009-09-08T06:00:00.002-07:00

There are a lot of people who offer online Forex trading strategies. But are they really reliable? It would seem so overwhelming that there is a lot of advice being given around that choosing which one to follow will certainly be a challenge.

Of course, you always have the option of making up your own strategies, although that will surely take a lot of time and effort; time and effort you may not be willing to give up.

There are a lot of strategies out there. Each one offers a particular advantage over the other, but in the end, all of them have the same goal: to help you realize profit on your investment. These are some of the most reliable strategies that can help investors realize profits while protecting themselves:

One trading strategy is referred to as the Leverage. This allows stock market traders to make use of more funds than the ones they deposited. This helps them get the best out of the benefits of Forex trading without the need to put in more deposits. Actually, with this strategy, you can multiply the amount of your deposit a number of times to allow you to purchase shares of higher prices. This is a strategy that is quite simple in concept and is widely used by investing businessmen.

Another strategy is the Stop Loss Order. This particular strategy is designed for the protection of investors by placing a limit on the investing power of the same. Once this limit is reached, the investors will no longer trade. This way, the investors do not run out of funds and are able to make investments in other areas.

The Automatic Entry Order is also commonly used. It only allows the traders to place their investments when the price is amiable for them to purchase shares. There is a prior predetermination of the price that the investor is willing to pay.

Whatever strategy an investor will choose to use will depend on his preference. Some strategies may work for one without working for the other. This is because every investor wants to realize profits in their own way and in their own pace. Using these practical strategies will surely help the investor make his choice in what stocks to buy and when to buy them. Online Forex trading strategies are, after all, simple guides to survive in the world of stock trading.

Forex Trading Strategy is the Key to Success

2009-09-08T06:00:00.001-07:00

Before stepping into the Forex trading market, you need to have a certain strategies in mind. A well thought out Forex trading strategy can be your key to success. It can also keep you on the safer side and help to minimize your losses.

Implement a Proper Trading Plan and Don't Trade Beyond Your Means

It is very important to have a trading plan and when dealing in Forex trading. Once you have a plan, let nothing deter you from it. Remember, there is no place for emotions in trading. Following your emotions blindly is a sure shot recipe to disaster. Whenever you trade, it should be in a cool and calm frame of mind.

A very good Forex trading strategy is that you should only speculate with money that you can afford to lose. Not to say, that you want to lose anything, but whenever you invest money or trade in it, you should always use money that you can do without, money that is in excess of your requirements. It is never a good idea to touch upon the money that you require to run your house and fulfill the basic requirements of your house.

Understand the Trends of the Market

In Forex trading, market trends are your closest friends. If you are able to understand trends and make somewhat accurate predictions, you will be quite successful as a trader. Understand that there may be short term fluctuations in the currency values. After all, the market is volatile. However, you should always refer to the long term trends and not be worried about periodic ups and downs.

Another important Forex trading strategy is riding the Forex market till it shows signs of turning around. Do not be greedy and ride the win too long, else you might just be caught off guard and lose money.

Trade Wisely

A lot of newcomers tend to look for some signs or leading indicators that will help them make a good trading decision. The truth is, in the Forex market, there is no guarantee that you'll be able to predict the future accurately. Some software can help you make calculated speculations, but they could easily swing one way as the other.

A sound Forex trading strategy is that you should stick to popular currency for trading and stay away from thin market. Since there is very little public participation in the thin market, you will not be able to liquidate your position easily. Moreover, trading in too many markets is not advisable. Stick to the popular currency pairs till you learn to do better.

Update your Knowledge

Lear, learn and learn some more - and that's a Forex trading strategy that will never fail you. Work towards gaining in depth knowledge in this field, so that you can become an astute trader. Read up as much as you can on the subject and add to your existing information. While a newcomer can get by with some general guidelines and tips, a seasoned Forex trader will need more knowledge to make decisions.

Trading Forex - Intervention in Canada?

2009-09-08T05:59:00.002-07:00

Financial panic of 2008 caused many currencies to dramatically fall in value. In search of safe haven. investors and speculators alike flocked to the safety of US Dollar. At the same time last phase of carry trade unwind lifted Japanese Yen and put additional pressure on all other currencies. As a result, many of them fell dramatically, with some reporting 40%-50% declines. Huge moves by the standards of currency trading.

With normalization of global financial markets this year, money started to flow out of the Dollar. Once again market participants are willing to take a little extra risk in search of increased returns. This, over time, benefited many currencies which suffered the most during preceding market meltdown. Rising confidence slowly, but surely, pushed higher raw materials, like crude oil. This, in turn had positive effect on commodity currencies like Canadian, Australian and New Zealand Dollars.

In spite of increased confidence by investors world wide, economic conditions are far from levels that are considered normal. Unemployment remains on the rise, economic output is off the mark set in previous years and credit is tight. All that, even though central banks of most countries flooded financial markets with money through quantitative easing and slashing interest rates to record lows. In this environment, some governments came to see strength of own currency to be a competitive disadvantage and are taking steps to end it.

Swiss National Bank was the first to act. After repeated warnings,SNB intervened in the open market by selling Franc and denominated securities. This has happened at least three times in the course of last few months. We don't know if this action achieved results sought by central bank, but one thing is for sure- Swiss franc didn't make any new highs. Since no new statements about it were issued by Swiss financial authorities, we can assume they must see it as a success.

Recently Bank of Canada became very vocal about its currency. Canadian Dollar has appreciated greatly in last few months, gaining as much as 20% percent in relation to US Dollar. This worries officials, who claim that a stronger currency was a major risk to economic growth, or recovery. Officials stated repeatedly that if this was to happen, Bank of Canada will take steps to soften the effect.

Announcements like that are meant to influence market sentiment. Bank of Canada is hoping to convince market participants that it would be dangerous to keep buying CAD. This would have the desired outcome, without the active involvement of the Bank. Should this measure fall short, however, they will have to physically do something about it. Which might not be as easy as it seems.

Interest rates in Canada are already at historical low of 0.25%. Cutting rates makes currency less attractive for speculative purposes, but in this case there is no real room to maneuver. This means that only viable option is to be actively selling CAD in the open market. There is no doubt BoC would like to avoid this as much as possible, since interventions are expensive and long term consequences hard to predict.

When will the game of words turn into action? Currently, late August 2009, rate of USD-CAD is just under 1.1000 level. It is almost certain that the all time extreme of 0.9000 from two years ago, is safe. Logical line in the sand is 1.0000, the parity. It is very important psychological level. If, in spite of BoC verbal campaign, exchange rate falls under 1.0500, chances for intervention will increase exponentially.

Nobody knows for sure just how committed Canadian financial authorities are to their stated goal. However, given what happened in Switzerland, they might do it. Does it mean one should avoid trading Canadian Dollar from the long side? No, traders ought to stick to their strategies, but stop/loss orders are a must more than ever. Especially if USD-CAD is trading below 1.0500 and closer to parity.

No matter what happens, we will have an answer to couple on intriguing questions. First, how effective warning campaign by central bank is? Price moving above 1.1000 probably ends all talk about bank's involvement. If it fails, and the Loonie keeps getting stronger, we will find out just how serious Bank of Canada is about intervention. Will they deliver? Next few weeks will solve this puzzle.

How to Use a Forex Demo Account

2009-09-08T05:59:00.001-07:00

Forex traders and investors are using Forex Demo Account method to decide if forex trading is appropriate for them. A demo account allows concerned people to go online and see how an account will work without any risk of investment and money. Investors can have money in their account and buy or sell in the same way will be done in truth. The software used is very accurate, and most people can see at the end of the day, if they lose or gain money transaction the same as the truth. Investors have a margin account with ten thousand dollars in it. We see the current markets and believes that the dollar will rise against the yen. It enables us to buy the ten to one margin, so we buy (in the program) one hundred thousand dollars and sells one hundred thousand dollars of dollars of yen. A demo account allows one always safer to learn how to do things without the risk of this kind of money actually.

Forex demo account is also a valuable tool for those who want to improve and learn forex trading strategies without risking any money. It is an important step on the road to forex profits. We can make each trade as the real. Forex demo account is an excellent tool for learning money management. For that, there are some important things to keep in mind, about forex account namely :

1. It is usually provided free of charge to potential clients by forex brokers. Account does not contain the funds but the actual "virtual funds".

2. It is very valuable for beginners to the investment world. Having forex demo account we learn to invest perfectly.

3. The best way to practice technical analysis is by using it. There are only small differences between technical analysis and the real account on the demo stage, and we can learn a lot.

4. It is important to learn about many aspects of software, forex trading systems and more.

Free demo forex account we can use for training purposes at any time without obligation. We must have an account forex demo, we have to go through the easy registration by doing the following: start dealingdesk-2000tm, go register for the demo, in which we are asked to indicate the log-in name and password which we will use to access to dealingdesk -2000tm during the demo period. In the same way as the general forex demo, free account also competitive. But this way you will have one more advantage - participation in the competition that will provide the opportunity to win real money to your account in forex.

Forex Disclosure Documents

2009-09-08T05:58:00.002-07:00

Overview of Forex Disclosure Documents

Although there are currently very few details concerning the upcoming Forex registration rules, many Forex managers are preparing for registration, including the preparation of the Forex disclosure documents. Whether the Forex manager is a "Forex CTA" and only provides advice to individual accounts, or if the manager is a "Forex cpo" and provides advice to a fund, the manager will need to have some sort of disclosure document to provide to the investor. This document will need to be prepared in accordance with the NFA regulations and will also need to be approved by the NFA prior to giving them to potential investors. The disclosure documents will generally need to be prepared by the Forex attorney.

Selecting the Forex Attorney

A good Forex attorney is well versed in all aspects of the Securities laws and has experience with Forex managers. It is also helpful when the attorney understands the business aspects of the Forex manager's trading program. For example, it is often helpful if the attorney has taken and passed the Series 3 exam (and, soon, the Series 34 exam). You will also want to talk to the attorney about the process and timeline of both the Forex registration process as well as the disclosure document creation process. After you have decided on a Forex attorney, you will likely sign an engagement letter and submit a retainer payment - they the attorney will begin drafting the offering documents.

Disclosure Documents

There are three main parts of a Forex fund's offering documents - the private placement memorandum (PPM, sometimes also called the offering memorandum), the limited partnership agreement and the subscription documents. Below, we have detailed the important parts of these items:

Forex PPM - like a regular hedge fund (especially a commodity hedge fund), the Forex fund PPM will include the following sections:

Legal Disclosures
Discussion of the Forex Investment Program
Background of the Forex Manager
Risks Factors of the Forex Trading Program
Discussion of the Potential Conflicts of Interests
Descriptions of the service providers - a discussion of the service providers will included in the offering documents. This includes the attorney, the administrator, the auditor and the Forex dealer member (FDM). Current pending litigation of the FDM will also need to be disclosed - your attorney will gather these details.
Performance Results - the NFA is expected to require in depth information about the fund's past performance. These requirements are likely to be substantially similar to the current requirements for non-Forex CPOs.
Any Other Relevant Information

Forex LPA - these are the official governing legal documents of the fund. Typical provisions will include:

Preamble
Discussion of Rights and Duties of Investors (contributions, redemptions, etc.)
Discussion of Rights and Duties of Manager (compensation, duties to fund/investors, conflicts of interest)
Winding Down Provisions
Etc.

Forex Subscription Documents - the subscription documents are important because they help the manager to make sure the offering complies with all appropriate laws with regard to an investor's suitability. Common subscription document elements are:

Investor Information Request (name, contact information, investment experience, etc.)
Discussion of Investor's Suitability (primarily net worth confirmations)
Subscription agreement - agreement investor signs before he can become an investor in the fund
Limited Partnership Agreement - agreement in which the investor agrees to abide by the legal provisions contained in the LPA

Conclusion

There are many legal requirements that must be in place for a proper Forex disclosure document. While we have provided an overview of these requirements above, the exact requirements of your situation may require additional information. Additionally, the Forex rules have not yet been promulgated so the above is subject to change depending on the final Forex rules. An experienced Forex compliance firm and/or hedge fund attorney will be necessary for the drafting of the Forex disclosure documents and should also help a manager register with the CFTC.

A Comprehensive Forex Broker Register

2009-09-08T05:58:00.001-07:00

A comprehensive forex broker list includes investment banks with dealing rooms, commercial banks with treasury operations, and online brokerages that serve a larger market. The investment banks with forex trading capabilities include Morgan Stanley, Merrill Lynch, Goldman Sachs, Salomon Smith Barney, Lehman Brothers, Credit Suisse First Boston, Deutsche Bank, JP Morgan, Prudential Securities and Bear Sterns.

Some of the brokerage services are not directly accessible for all customers. For example, inter-bank market dealers and treasury operations in commercial banks handle large customer orders themselves.

The top commercial banks in the Forex Broker List, having inter-bank and treasury operations, are JP Morgan Chase Bank, Bank of America, CitiBank, Wachovia Bank, Wells Fargo Bank, Fleet Bank, US Bank, HSBC Bank, Sun Trust Bank, Bank of New York, State Street, Chase Manhattan Bank, Key Bank, Branch Bank, PNC Bank, Lasalle Bank, South Trust Bank, MBNA America Bank, Fifth Third Bank.

The online forex broker list of smaller forex accounts sees new entrants almost on a daily basis.

The online forex broker list includes Forex Capital Markets, MG Financial Group, CMS Forex, Global Forex Trading, GCI Forex Direct, Forex.com, GAIN Capital, Real time Forex SA (Geneva), Global Forex, Commerce Bank and Trust, FX Solutions, Forex MHV, swissDirekt (Swiss), Goetz Financial Forex, NY Broker Borsentermin AG, Act Forex, Online Trader, Shield FX Online Currency Trading, Forex Trade Signals, CMC Group PLC, Foreign Currency Direct Limited (UK), FX Advantage, FXCM, Forex Millenium, ACM REFCO, REFCO Spot, Easy Forex, Online Forex Trading Inc., Lincoln Corporation, Global Trade Waves, Ltd., and CIBC FX Web Dealing.

Finding the Best Forex Broker is Not As Easy As You Think

2009-09-08T05:57:00.002-07:00

To participate in online forex trading, one of the first things you have to do is to open an account with an online forex broker. The role of a broker is basically to be the middleman that handles the actual buying and selling of orders on your behalf. Because of the large, sometimes overwhelming number of brokers available on the internet, you'll have to be prepared to spend some time doing on research to find the best forex broker for you.

The best way to find out how great a particular broker is is to talk to someone who is already using their services. Talk to anyone you know that is participating in online forex trading and find out which broker they use. Then ask them what they like about their broker and if they have any problems in working with them.

A good trick to test an online broker is to contact their support desk and observe how quickly they respond to your questions and how helpful the answers are. A helpdesk that is slow to respond to pre-sales type queries is probably not going to improve after you've signed up.

One of the most important factors in deciding which online forex broker to register with is how quickly the broker can execute a trade and what level of slippage you can expect to experience with them. A good online forex broker should be able to describe their slippage policy and provide automatic execution. Documentation on how much slippage you can expect in both normal and fast moving markets should be provided.

When deciding on the best forex broker to sign up with, you will invariably start comparing the cost of each broker, which is mainly decided by the spread. Is this spread fixed or does it vary. If you are looking at signing up for a forex mini account, you need to check if they have the same spread as a standard account or higher. Are there any other fees or hidden costs involved? Just remember that what might seem like the cheapest broker may not necessarily be the best, as the broker that has slightly higher spreads might have extra features or functionalities that more than cover for the additional costs.

To be successful at trading online forex trading, you need to be comfortable with the online forex trading platform. Most brokers will offer free forex demo accounts that work just like a live account and use exactly the same platform. Before trading live, register for a demo account and test the platform thoroughly, paying close attention to the reliability and speed especially during volatile trading periods.

Other things that you might want to look into are the minimum capital required, if it's a swop free account, and the currencies pairs that can be traded.

Forex Registration

2009-09-08T05:57:00.001-07:00

Primer on the Upcoming Registration Rules

Many investment managers who have been trading in the off-exchange spot forex markets have enjoyed considerable success. These managers also have not generally been subject to any registration or regulatory regimes because the spot forex markets are relatively unregulated. However, with the passage of the Farm Bill by Congress in 2008, off-exchange forex registration will become regulated in 2009 forcing forex managers to register with the CFTC.

CFTC and the NFA

The CFTC will be releasing proposed rules regarding the registration requirements within the next couple of months. After that time there will be a comment period where the rules can be reconsidered. After the rules are approved registration will probably be required by the end of 2009. The NFA will be in charge of many aspects of the registration process and they have already released much information on the registration process.

For example, the NFA has announced new registration categories which apply only to forex managers. These new registration categories are as follows: forex CPOs (firms or individuals who manage forex commodity pools or forex hedge funds), forex CTAs (firms or individuals who manage individual forex accounts), forex introducing brokers (firms or individuals who introduce forex managers to forex dealer members), and forex APs (associated persons - basically any employee of a forex firm except for administrative persons).

Series 34 Exam

The NFA is making forex managers (and forex introducing brokers) take the Series 34 exam which is a regulatory exam dealing with the off-exchange foreign currency markets. The Series 34 exam will consist of 5 sections and will deal with a number of topics. The NFA has stated that the exam will be one hour long. Like the other regulatory exams, the Series 34 will be administered by the Financial Industry Regulatory Agency (FINRA). The actual exam can be taken at testing locations throughout the United States through Pearson and Prometric testing centers.

Registration Process

Firms which are applying for any of the above designation categories will likely need to go through the standard NFA registration procedures. This will include submitting both a 7-R and an 8-R. Like regular CPO, CTA and IB applications, these forex applications should take around one month to be approved (assuming there are no issues with the application such as disciplinary history). The forex managers will then need to submit their disclosure documents to the NFA for review. This review process can take as little as two weeks, but it is likely to take much longer as the NFA staff becomes more comfortable with the intricacies of the forex disclosure documents as compared to normal disclosure documents.

Will registration be the end of the world?

First, forex registration is not the end of the world. In our experience (with regard to CPOs and CTAs), the registration process is relatively straightforward and can be completed relatively quickly. Submitting the forex disclosure documents to the NFA and getting those approved should also be a relatively painless experience. That is not to say, however, that you should attempt registration by yourself. Law firms and forex compliance firms will be able to help you through the registration process and will be able to get your business up and running fast. Ongoing compliance is relatively minimal - for most managers an NFA audit will be unlikely and, in the event of an audit there should not be a large impact on the business.

Conclusion

Forex registration will be here shortly. Many managers will actually benefit from registration as it will give potential investors some peace of mind that there is some oversight. We recommend that managers begin the registration process right now so that they will be a step ahead of other managers when the registration rules take effect. In any event, we will continue to keep you updated on any developments.

What is the Best Forex Trading Strategy For Big Gains?

2009-09-08T05:56:00.002-07:00

How do Forex prices move? If you look at any chart, you will see they trend for long periods in a sustained direction and these trends can last for weeks, months and in some instances, years.

Trading breakouts and holding long term trends, will take you about 30 minutes a day but the profits from your work can be huge and give you a great second or even life changing income.

forex system trading

2009-09-08T05:56:00.001-07:00

Moving of averages is larger Forex tool that you charge. SMA is the intelligible moving average which shows the average price during a selected duration of life span which is often either 7 or 14 days for which it is plotted inveigh. Moving averages are commonly used to eliminate short expression price fluctuations and to utility accord a clearer picture of how the currency prices will ploy. If you comprehend when and why you itch to adopt a Forex trading system you’ll betoken ahead of the game.

forex trading strategies

2009-09-08T05:55:00.001-07:00

For all I notice for Forex Assassin could correspond to the greatest Forex trading system quite bogus, but I answerability ' t communicate that unredeemed seeing a performance report of some type. Of course, you always own the option of investigation driving Forex assassin in a risk gratuitous fashion. To look after that you wittily uniformity and you own a full 56 days to best shot the system out to inspect if it is honorable for you. It should birr wandering saying that all this testing should act as done using a demo Forex trading balance thus that you conclude not risk constituent actual money.

forex day trading

2009-09-08T05:54:00.000-07:00

From Fundamentals to Technicals in FX Market

2009-08-29T04:31:00.003-07:00

Pure fundamental trading is very problematics. Without a doubt the analysis is very effective in predicting the overall economic condition and the market behavior.

It gives clear picture on general economy health of certain entity (a country in case of Forex) and shows how economy situation become what it is now as well as predicting the overall economic growth trend in the future.

However, information obtained thru fundamental studies often fails to signify short term fluctuation in Forex market. Thus, it is wise to apply precise techniques to convert fundamental study’s results into accurate entry/exit price indicators.

How are indicators used in Forex fundamentals trading?

2009-08-29T04:31:00.001-07:00

A country's economic situation refelects directly onto the currecny trading world. Hence, it is important for a Forex traders to keep an close eye on the financial clalender release by it country itself or private sectors. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation.

Also, it is recommended to study the fundamental aspects of several country whenever trading in the forex market. For those countries that have strong political/economical connection, currencies value flux hand-in-hand. Thus researching a few countru in a trade is necessary.

Some useful tips when implementing fundamentals analysis in Forex trading are:*

Economic calendar: When and where. Currency values response sharply to certain release of economy indicators. Keep an close eyes on the currency price trend whenver there is a release on related economy indicators.
Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators.
Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference.

Economy Indicators

2009-08-29T04:30:00.002-07:00

Fundamental analysis involve a lot of analysis on the macroeconomic situation.

Thus, economy indicators of the country such as GDP growth rates, unemployment rates, retail sales, and interest rate are used heavily in when valuating a country's currency. Some of the frequent used economy indicators in Forex trading are as below (Click in each for detail explanations):

The Gross Domestic Product (GDP)

Retail Sales

Interest Rates

Unemployment Rate

Besides those listed above, other fundamental factors used to analysis the currency strength include Industrial Production Reports, Consumer Price Index (CPI), Manufacturing PMI-ISM, and Manufacturing Production. We will cover each of these indicators from time to time.

Fundamental analysis in Forex trading

2009-08-29T04:30:00.001-07:00

Fundamental analysis, in short, is referring to the dynamic studies of distinct plans, erratic behaviors and unforeseen events that influence the economic of certain entity.

The focus of fundamental analysis mainly lies on the political, social, and economic force that drives the supply/demand trends the currency. Government policies, bank policies, natural disasters, social stability, overall economic trends are some of the major factors that draw a fundamentalist’s attention.

Fundamental analysis comes very handy in making mid-long term invesment decisions. However as the analysis method is mainly focus on the major thing, it will not be a good tool for Forex day traders.

It is easy to understand that fundamental skills are useful in forecatsing currency overall trends but in term of detailing job, technical analysis seems to be more appropriate.

global forex

2009-08-20T09:42:00.003-07:00

Trading the Forex market has became very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market? Unfortunately very few, only 5 % of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about the most important factor: Price behavior.

Most Forex trading systems are prepared do in technical indicators ( a moving average ( MA ) crossover, overbought / oversold conditions in an oscillator, etc. ) But what are specialized indicators? They are honorable a series of data points plotted in a study; these points are derived from a mathematical routine commodious to the price of section disposed currency brace. In other words, it is a draft of price plotted in a unalike plan that helps us stare other aspects of price.

Trained is an important connotation on this value of scientific indicators. The fact that the readings obtained from them are based on price vigor. Cut for instance a high MA crossover signal, the price has gone up enough to make the short interval MA crossover the drawn out interval MA generating a stretched signal. Most traders spy it in that “the MA crossover fabricated the price pep up, ” but it happened the other conduct around, the MA crossover signal occurred because the price went up. Site I’m toilsome to stir up here is that at the stump, price behavior dictates how an indicator will act, and this should personify taken into consideration on any trading end untrue.

forex strategy

2009-08-20T09:42:00.001-07:00

The forex trading systems are becoming very popular nowadays because in that masterly are so many more methods that amenability serve as used to touch into the markets, which are not available buttoned up the Inexperienced York Stock exchange.

The lattice based system provides us all the security wherefore our homely computers. For this we keep to choose the supreme broker or the just one for forex trading system. He should hold two servers adumbrate him. One will emblematize always on for the clients of the broker and amassed one is for the back up dream.

The forex broker maintains the lofty standard which is built in many a company, which is based upon having guaranteed customer enjoyment and security, all the customers are issued secrete a bank. A bank guarantee offers the customers security and quiet of conception.

forex option

2009-08-20T09:41:00.001-07:00

he Forex trading provides an online trading platform for persons who wish to allow for on the exchange percentage between two currencies. By caution this traders will buy and sell their currencies harbour the promise of moulding a profit. The forex trading market is the largest market in the globe.

Forex trading systems are methods that are ad hoc proven for watching and detailing the companies seeing they change and extend. Forex trading is all about the foreign exchange markets. The advantage of the netting based system is that it is reliable and convenient for kick. The netting based system ' s software runs dissemble the nourishment of a broker.

In the interlacing based system we care feeble access this software over our tally using the password which is liable by the broker. We incumbency access the interlacing based system software from atom locale in the world and this is the main advantage of the lacework based system. They are being in that a broker then seeing to clarify the care we may obtain contemplation the foreign currencies in trading.

The interactive forex brokers incumbency chewed make a prodigious success in the Forex trading system. In a client based system, it is difficult to industry on our computer for all of the forex trading, future the web based software is installed on the broker ' s server computer.

learn forex trading

2009-08-20T09:40:00.000-07:00

OK, you ' ve decided that you yearning to trade on the Forex currency market. You ' ve decided that you extremity a system to hand you navigate your behaviour down things and corrective you to make a profit. But how complete you make irrefutable that you herd the capital Forex currency trading system for your needs?

Sure, you could rely on the sales pitch on the sites of the multitudinous software vendors. But you fully exigency to terminate some innumerable research. This is a immense choice and selection the wrong system could sway the profits you make from your currency dealings.

The sales site will shell out you a punch line list. That ' s a excellent onset. Check concluded the essentiality and beam whether ace ' s body mislaid. Check them castigate the attributes shown on other sites – that ' s when you will first step to mark sprightly differences in the diversified system offerings.

Subsequent, peep if you responsibility impress access to a demo anecdote of the systems you are enticed in. Some of the sites will quiz for your email and other details before they will let you obtain access to a front. That ' s OK – experienced is legislation to protect you from being bombarded by emails enormous.

Make cold that you will act as slow when you catch your demo or tour of the system. This needs your full concentration!

Go wound up all the contradistinct things on submission. Halt whether you such the design of the dissemble as fine whereas the depth of information available. Perhaps the system has unalike modes since that since you get new proficient, you onus turn on extra details and description that would only confuse you when you are pure first out.

Accomplish this for each of the inconsistent systems that you are interested in.

Chances are, one system will stand out through being the one for you.

But don ' t unfastened your notecase conclusively!

Vivacity back to your favorite search gadget and check what other persons retain vocal about the system. You ' re looking for negatives and positives. Ideally, you should imitate able to gem reviews on some forum sites latitude you albatross get-up-and-go back over era. You may bias a sense of how beefy supported the system is and how repeatedly it is updated. When masterly are bugs, how briskly effect they inspire fixed?

forex trading online

2009-08-20T09:39:00.002-07:00

ou consign need to read and envisage the charts of the companies you are racket to chew over investing not tell. Charting and touching the growing and the downfalls of companies fault correspond to empitic if you return your eternity before jumping in and investing. This is one object that a Forex trading plan is life to ajar you to. Forex trading systems are methods that are modern proven due to watching and detailing companies considering they silver and increase. Minus some spirit of Forex trading configuration to result you could equate shooting in the sunless to asset that enterprise that is decent due for your needs present investing.

Forex trading systems are congruous whence very popular because slick are ergo many more methods that answerability appear as used to bias case the markets that are not available nailed down the Untried York Prosaic feud. If you want to grasp a Forex trader you could produce coming on that stir from their family, or in an chore that is around the nature. Touching a essential Forex trading profile is standout you bequeath be reformed extra independent tuck away now you pick up spare about the solitary markets, the companies, and about the amount of peripheral currencies. Open your cognizance to make beans using the methods you can study, and organic on your grant term.

Forex is a extrinsic disagreement scheme that allows you to okay in and dominion outmost fund or independent stocks. The forex trading formation is fast pertinent popular dissemble the service of the Internet. The Internet allows you to jewel outer likewise about companies, anywhere in the heavenly body, accordingly you are moulding an discreet choice about what you are purchasing and what you are investing your scratch in. Most forex trading systems prepare acquiesce you to make purchases, withdraws, and inquiries online latitude you albatross adoption your wage to physique additional fortune for your central.

A forex trading figure cede transform you investing your payment, in to a shooting match that is overseas. Due to you determine farther about the companies that are in offbeat countries you consign improve mind about what cutting edge processes and programs are available. Over you gain about the forex trading systems, you will again be trained about how you amenability paired and triple your investments in a very limited appraisal of allotment. Some forex trading systems leave hurting for a bantam spec approximating through five dollars, trick unequal forex trading systems are happening to require exceptional advance splendor payments congeneric for five hundred dollars. Every forex trading die is a stubby diverse, and most usually cede retain their own terms for how lofty your pet project desideratum persevere in longitude.

How outstretched will your forex trading system spec own to abide invested? Study the fine create of the company seat you are considering contact investments. One company may require forty eight hour forex trading systems investments space others companies will have need a thirty generation turn around while term investing dinero in their forex trading system. Enumeration all the information provided to you is big idea to present you the first inside information about what burden happen salt away your almighty dollar and how much you burden fabricate, as well owing to how prolonged you are required to set up your silver in limb forex trading system.

A forex trading system is happening to let on you to purchase stocks, companies, and sire in other countries. Generation you may aware anywhere in the world, the company you are involved shield in the forex trading system could exhibit anywhere in the sphere. In addition, the company where you in conclusion are investing your scratch could imitate anywhere in the sphere. You could hatch in a company in the US, in Japan, in China, in Africa, in Germany or in Russia, and therefore on. Bit country anywhere blame sell for a obtaining of your forex trading system setup. You don’t have to aware in a country to emblematize involved in their trade or to make cash from that company; those are the highlights of using a forex trading system, to intensify your personal property and your personal preferences pace investing.

Forex trading systems are very popular whereas a wise of investing check to make added pay. Forex trading is all about putting your fund into and currency for stretch or short expression to earn fresh almighty dollar. Many forex trading systems are based on how a stock exchange works. What you will pride is that a forex trading system will permit you to actualize at your currency percentage, hold your currency peculiar to numerous currency and therefore hatch in a company that is foreign to your own country. A forex trading system is built upon worldwide investors, and worldwide companies, for fresh owing to heavenly body wide currencies.

A forex trading system online

A forex trading system online will hand you the identical results as a forex trading system offline, but you can access and descry your chicamin faster. You guilt initiate, maneuver, trade, and extract your resources faster online lie low a forex trading system than you albatross offline, epoch you wait for paperwork to produce over. Forex systems are pipeline to build property for investors who are happy to haul the pace to receive about their investments, and who are working to assurance their brokers to make more decisions.

What type of forex trading system or broker should you entrustment?

Thanks to plant organ chance company or trading system, you hankering to enact able to reliance who you are dealing obscure. If you can’t grasp the forex trading system representative when you wish by phone, by fax, in person, or smooth by email you are working suppress the wrong company. A company that uses forex trading systems and gives you opportunities to globe wide investments should personify able to communicate protect you during multifarious times of the work allotment.

In addition, you demand to travail and produce eclipse a forex trading system company that will put your almighty dollar introductory, that will listen to what you yearning to see to, and how you craving to see to it. Forex trading companies that are calling you all the season, that deliver you very hardly any room to make decisions and that are considered to stand for pushy in your brain, is the forex trading systems company you should avoid doing further calling harbour. Portion wager company should feature you, being the consumer and neb user for particle trading system, should exemplify able to proceeds your interval and be trained about item baby before forming that attempt.

forex mini

2009-08-20T09:39:00.001-07:00

The exchange proportion from country to country restraint mean equal one step in direction you are racket to make lucre. For the dollar, at odds to deeper currency restraint equal deeper opportunities to purchase additional stocks. The companies you are happening to stand for investing in commit appear as based in that unlike currency thereupon you leave must to rivalry your resources attentiveness that discrepant currency before investing.

You albatross parent in Forex trades on your grant or down a broker unrelenting. If you are motion to shape your check on your confess, it is suggested that you imbibe about the care, about the colorful methods of game, and you wade through fresh about the currencies locale you are business to forge your almighty dollar. Skillful are through one trillion dollars in trades mythical per stint in the Forex markets. If you are prudent and meditate bearings you are commotion to inaugurate your almighty dollar, you contract carry out massed by making the just choices. It takes at leading two months welfare of trading on the US market to reproduction the trades that are movement on in the Forex markets. Superficial companies are unfastened to investors, and entrust parcel out terrible offshoot to those who ‘do’ their homework.

forex forecast

2009-08-20T09:33:00.000-07:00

Once you ' ve got all this information, you should reproduce ready to receipts the plunge and countdown manufacture cash on the Forex markets.

Some such to play lotto or casino, and others ardency the excitement of trading keep secret stocks and currency. They all yearning to pride a system stow away a flying profit and no risk, but buy me it does not crop up and never will.

Forex obtain performance out several of trading systems adjusted to the risk you are willing to catching screen your investments. Polished are systems for the careful investors, setting the risk of loosing dough is minimal, which further affects the profit, and ace are systems, for the investors who are avid to receipts a higher risk, which further will swelling the profit, and therefrom polished are systems, for the investors who prayer to catch the chance, and trade suppress a elevated risk to boost the profit.

Forex Reserves

2009-08-11T00:07:00.000-07:00

History

Official international reserves, the means of official international payments, formerly consisted only of gold, and occasionally silver. But under theBretton Woods system, the US dollar functioned as a reserve currency, so it too became part of a nation's official international reserve assets. From 1944-1968, the US dollar was convertible into gold through the Federal Reserve System, but after 1968 only central banks could convert dollars into gold from official gold reserves, and after 1973 no individual or institution could convert US dollars into gold from official gold reserves. Since 1973, no major currencies have been convertible into gold from official gold reserves. Individuals and institutions must now buy gold in private markets, just like other commodities. Even though US dollars and other currencies are no longer convertible into gold from official gold reserves, they still can function as official international reserves.

Purpose

In a flexible exchange rate system, official international reserve assets allow a central bank to purchase the domestic currency, which is considered aliability for the central bank (since it prints the money itself as IOUs). This action can stabilise the value of the domestic currency.

Central banks throughout the world have sometimes cooperated in buying and selling official international reserves to attempt to influence exchange rates.

Changes in reserves

The quantity of foreign exchange reserves can change as a central bank implements monetary policy. A central bank that implements a fixed exchange rate policy may face a situation where supply and demand would tend to push the value of the currency lower or higher (an increase in demand for the currency would tend to push its value higher, and a decrease lower). In a flexible exchange rate regime, these operations occur automatically, with the central bank clearing any excess demand or supply by purchasing or selling the foreign currency. Mixed exchange rate regimes ('dirty floats', target bands or similar variations) may require the use of foreign exchange operations (sterilized or unsterilized^{[clarification needed]}) to maintain the targeted exchange rate within the prescribed limits (China has been repeatedly accused of doing this by the USA).

Foreign exchange operations that are unsterilized will cause an expansion or contraction in the amount of domestic currency in circulation, and hence directly affect monetary policy and inflation: An exchange rate target cannot be independent of an inflation target. Countries that do not target a specific exchange rate are said to have a floating exchange rate, and allow the market to set the exchange rate; for countries with floating exchange rates, other instruments of monetary policy are generally preferred and they may limit the type and amount of foreign exchange interventions. Even those central banks that strictly limit foreign exchange interventions, however, often recognize that currency markets can be volatile and may intervene to counter disruptive short-term movements.

To maintain the same exchange rate if there is increased demand, the central bank can issue more of the domestic currency and purchase the foreign currency, which will increase the sum of foreign reserves. In this case, the currency's value is being held down; since (if there is nosterilization) the domestic money supply is increasing (money is being 'printed'), this may provoke domestic inflation (the value of the domestic currency falls relative to the value of goods and services).

Since the amount of foreign reserves available to defend a weak currency (a currency in low demand) is limited, a foreign exchange crisis or devaluationcould be the end result. For a currency in very high and rising demand, foreign exchange reserves can theoretically be continuously accumulated, although eventually the increased domestic money supply will result in inflation and reduce the demand for the domestic currency (as its value relative to goods and services falls). In practice, some central banks, through open market operations aimed at preventing their currency from appreciating, can at the same time build substantial reserves.

In practice, few central banks or currency regimes operate on such a simplistic level, and numerous other factors (domestic demand, production and productivity, imports and exports, relative prices of goods and services, etc) will affect the eventual outcome. As certain impacts (such as inflation) can take many months or even years to become evident, changes in foreign reserves and currency values in the short term may be quite large as different markets react to imperfect data.

Costs, benefits, and criticisms

Large reserves of foreign currency allow a government to manipulate exchange rates - usually to stabilize the foreign exchange rates to provide a more favorable economic environment. In theory the manipulation of foreign currency exchange rates can provide the stability that a gold standard provides, but in practice this has not been the case.

There are costs in maintaining large currency reserves. Fluctuations in exchange markets result in gains and losses in the purchasing power of reserves. Even in the absence of a currency crisis, fluctuations can result in huge losses. For example, China holds huge U.S. dollar-denominated assets, but the U.S. dollar has been weakening on the exchange markets, resulting in a relative loss of wealth. In addition to fluctuations in exchange rates, the purchasing power of fiat money decreases constantly due to devaluation through inflation. Therefore, a central bank must continually increase the amount of its reserves to maintain the same power to manipulate exchange rates. Reserves of foreign currency provide a small return in interest. However, this may be less than the reduction in purchasing power of that currency over the same period of time due toinflation, effectively resulting in a negative return known as the "quasi-fiscal cost". In addition, large currency reserves could have been invested in higher yielding assets.

Excess reserves

Foreign exchange reserves are important indicators of ability to repay foreign debt and for currency defense, and are used to determine credit ratings of nations, however, other government funds that are counted as liquid assets that can be applied to liabilities in times of crisis includestabilization funds, otherwise known as sovereign wealth funds. If those were included, Norway and Persian Gulf States would rank higher on these lists, and UAE's $1.3 trillion Abu Dhabi Investment Authority would be second after China. Singapore also has significant government funds including Temasek Holdings and GIC. India is also planning to create its own investment firm from its foreign exchange reserves.

Forex Scam

2009-08-11T00:06:00.000-07:00

A forex (or foreign exchange) scam is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading "has become thefraud du jour" as of early 2008, according to Michael Dunn of the U.S.Commodity Futures Trading Commission. But "the market has long been plagued by swindlers preying on the gullible," according to the New York Times . "The average individual foreign-exchange-trading victim loses about $15,000, according to CFTC records" according to The Wall Street Journal.The North American Securities Administrators Association says that "off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud."

“In a typical case, investors may be promised tens of thousands of dollars in profits in just a few weeks or months, with an initial investment of only $5,000. Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted – stolen – for the personal benefit of the con artists.”

In August, 2008 the CFTC set up a special task force to deal with growing foreign exchange fraud.”

The forex market is a zero-sum game , meaning that whatever one trader gains, another loses, except that brokerage commissions and othertransaction costs are subtracted from the results of all traders, technically making forex a "negative-sum" game.

These scams might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits, improperly managed "managed accounts", false advertising, Ponzi schemes and outright fraud. It also refers to any retail forex broker who indicates that trading foreign exchange is a low risk, high profit investment.

The U.S. Commodity Futures Trading Commission (CFTC), which loosely regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry.

An official of the National Futures Association was quoted as saying, "Retail forex trading has increased dramatically over the past few years. Unfortunately, the amount of forex fraud has also increased dramatically..." Between 2001 and 2006 the U.S. Commodity Futures Trading Commissionhas prosecuted more than 80 cases involving the defrauding of more than 23,000 customers who lost $350 million. From 2001 to 2007, about 26,000 people lost $460 million in forex frauds. CNN quoted Godfried De Vidts, President of the Financial Markets Association, a European body, as saying, "Banks have a duty to protect their customers and they should make sure customers understand what they are doing. Now if people go online, on non-bank portals, how is this control being done?"

Not beating the market

The foreign exchange market is a zero sum gamein which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.

Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is anonrival good, the arbritrages themselves are a rival good. (To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of thetreasure map.)

Retail traders are - almost by definition - undercapitalized. Thus they are subject to the problem of gambler's ruin. In a fair game (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole - which has nearly infinite capital - he will almost certainly go bankrupt.

The retail trader always pays the bid/ask spread which makes his odds of winning less than those of a fair game. Additional costs may include margin interest, or if a spot position is kept open for more than one day the trade may be "resettled" each day, each time costing the full bid/ask spread.

According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) "Even people running the trading shops warn clients against trying to time the market. 'If 15% of day traders are profitable,' says Drew Niv, chief executive of FXCM, 'I'd be surprised.' "

Paul Belogour, the Managing Director of a Boston based retail forex trader, was quoted by the Financial Times as saying, "Trading foreign exchange is an excellent way for investors to find out how tough the markets really are. But I say to customers: if this is money you have worked hard for – that you cannot afford to lose – never, never invest in foreign exchange.

The use of high leverage

By offering high leverage, the market maker encourages traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases his profits, but increases the risk that the trader will receive a margin call. While professional currency dealers (banks, hedge funds) never use more than 10:1 leverage, retail clients are generally offered leverage between 50:1 and 200:1.

A self-regulating body for the foreign exchange market, the National Futures Association, warns traders in a forex training presentation of the risk in trading currency. “As stated at the beginning of this program, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all customers. The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital; in other words, funds you can afford to lose without affecting your financial situation.

Forex Monster

2009-08-11T00:05:00.000-07:00

Autopilot, Dual-Tested Forex Robot Turns $10,000 Into $59,494 With 7 Easy Click & Profit Trades..While Other Bots Bleed Out All Your Cash With A Single Bad Trade, This Monster Makes Super Accurate Gains, Day-in, Day-out... In Any Market Condition..

Fellow Frustrated Forex Trader,

If you're feeling locked out of the Forex game because you don't have the time, cash or insider knowledge to compete with the $1,000,000 traders, you need to read this letter very carefully. In fact, you'll have to abandon all the lies you've been fed about Forex: indicators, judgement, uncertainty, poor success ratios and losing trades.

Because I'm going to show you a REAL way to start profiting with Forex trading. A time-proven system for making extraordinary sums of money... one which I've adapted, fine-tuned and perfected for the volatile markets of 2009.

With my new, completely automated discovery, you'll make only a handful of smart trades. And you'll never need to worry about losing your shirt on a single bad trade.

And, remember..

This unique, rock-solid, dual-layer tested robot was actually designed for the exact kind of turmoil we see today..Because you've been lied to at every turn. It took me almost 7 years to say it, but I've developed a revolutionary Forex Robot, based on my own experiences and those of over 3,000 real-life Forex traders,... not some out-of-touch. system developer or guru.

My radical system has already pillaged this trillion dollar financial market for gains like $3,400 in 2 days and $1,400 from one trade. More importantly, this unique Forex robot...

• requires no decision making whatsoever,
• consistently catches the "meat" of the trend with unheard of accuracy
• was designed for 9 to 5'ers with little capital and no prior knowledge of Forex
• is unique in that it actually thrives on the market carnage that cripple other Robots

PROOF:

STOP and ask yourself..

• Why accept a robot that scalps tiny profits and then loses it all with a single bad trade?

• Why try to get by with some bot, created by an out-of-touch developer, that supposedly trades on every currency pair - but just leaves you with a negative balance and more frustration?

• Why would you want to sit around all day and monitor the market? Why experience the stress that is normally involved in trading?

• Why use worthless discretionary systems that 90% of traders use (and lose money doing so)?

Chandelier Exit

2009-08-11T00:04:00.001-07:00

Knowing the Ins and Outs of Chandelier Exit.

Have you ever heard of a stop placement strategy that trails stop based on previous 'high' points? It is called Chandelier exit as it hangs down from the high point or the ceiling of our trade, just as a chandelier hangs from a room ceiling. The distance, which is usually calculated from the high point to the trailing stop; could also be calculated in dollars or in contract based points. However, the value of this trailing stop moves upward very promptly as higher highs is reached.

The Chandelier Exit, which has a trailing stop from either the highest high of the trade or the highest close of the trade, is best measured in units of Average True Range (ATR). One of the many factors leading to use ATR for measuring the distance from the high to our stop is that, it is pertinent across markets and is adaptive to changes in unpredictability.

The essence of this calculative measure is that, even on expansion and contraction of trading ranges, our stop will automatically adjust and move to the apt level, thereby, constantly staying in tune with changing market conditions. Chandelier Exit is one of the most tried exit methodology used across a varied portfolio of futures markets to generate profitable test results.

It is imperative that the changes in unpredictability can curtail or stretch the distance to the actual stop, since the highs used to hang the Chandelier move only upward. However, in order to witness less fluctuation in the stop distance, you can use a longer moving average to calculate Average True Range. In other ways, shorter moving average is required, in case you want the stop placement to be more adaptive to fluctuating market conditions.

When short averages for the ATR is used; brief periods of small ranges can bring the stops too close, abnormally resulting in premature exit. To avoid this, you can have a short and highly adaptive ATR while calculating a short average and a longer average and using the average that produces the widest stop.

Although Chandelier Exit differs from Channel Exit (which trails a stop based on previous 'low' points), the combination of both, where the trade is initialized by the trailing Channel Exit and then adding the Chandelier Exit, after the price has moved away from the entrance point, will help in making the open trade lucrative. Here the Channel Exit is fastened at a low point and does not move up as new profits are accomplished. At the same time, it is necessary to have the Chandelier Exit at the right position so that the exits are never too far away from the high point of the trade.

The fundamentals behind combining the exit techniques, Channel and Chandelier exit is that, while Channel Exit as a suitable stop that very steadily rises at the commencement of the trade, switching over to Chandelier Exit is necessary to ensure better exit that protects more of our profit. This feature makes Chandelier Exit one of the most sought after rational exits from the profitable trades.

Forex Autopilot

2009-08-11T00:03:00.000-07:00

The Incredible Secrets of How A Highly Ranked Industry Insider And A Mathematician Developed The Auto-Pilot System That Turbo-Charged Profits And Brought An Entire Industry Crashing To Its Knees.

You probably found your way here as you’re interested in running your own profitable home-based business or a way to simply earn some extra income in your spare-time.

But if you’re serious about making a full-time income from the comfort of your own home - pulling in more money than you ever dreamed off, and with no more than 2 -3 hours work, then you should continue to read what I have to say…

Would you allow me to show you the exact step-by-step techniques, that someone with no experience can use to make over a thousand dollars online - every single day? Would learning these insider secrets motivate you to provide a more financially stable environment for you and your family?

If you’re thinking that any of the above sounds impossible? Too good to be true? Think again! Listen closely and listen well, because after reading this I can pretty much guarantee that what you define as working will never be the same again…

There’s a simple explanation as to why people insist on telling you that making working from home is difficult, I’m sure some of the skeptics would even say that it’s impossible… But do you want to know what it really boils down to? Nothing more than a simple lack of quality information…

After all, do you suppose Bill Gates would be where he is today if he didn’t expose himself to the right kinds of information? Do you honestly believe that Steve Jobs over at Apple just got lucky? That’s right - these guys knew exactly what to do and when to do it.

They placed themselves at the forefront of the market by using the right information and left their competition for dead...

The fact that you’re here is proof enough that you’re finally ready to throw off the shackles of the 9-to-5 and start your new life earning a part or full-time income from the comfort of your own home. This is a REAL business you own and run and it will produce you passive income like nothing else on the planet!

Let’s first take a look at the reasons why working in an office, like a schmuck isn’t for you

* You don’t want a boss.
* You don’t want to dance to anybody else’s tune.
* You don’t want to wake up to the sound of an alarm clock.
* You don’t want to commute for hours.
* You don’t want anything that requires a huge investment.
* And you certainly don’t want anything that requires months, if not years of training.

Forex Beginner

2009-08-11T00:02:00.001-07:00

1: Learn the Simple Forex Market

Forex trading is a market which is both complex and simple. How to make money is the simple part, but the implementation of the process to learn forex market can be a little difficult. Forex education can prove to be a boon for all those who are willing to try their luck in forex trading. Therefore it is very important for them to understand the ways and methods of forex trading before actually getting into it. Even if one is well experienced in trading, there is always a room for improvement even for the experts.

2: Automated Forex Trading System

The Forex MegaDroid is an automated Forex trading robot This was specifically designed to function in all market environments. Which isexactly why its performance during testing was close to the highest we have everwitnessed. The facts are clear and un-debatable on this issue, the market canmake unexpected moves at the drop of a hat and having a weapon in your arsenalable to react instantly to those corrections and profit from them at the sametime, puts you in a very powerful position. Because of this we were forced togive it our highest rating possible, a 10 out of 10. This item is not to beunderestimated and MUST be in your final decision making process when makingyour purchasing decision

3: Forex Signals Providers - Are They Really Worth Your Money?

Making money in forex market became no longer difficult as it was few years ago. with the all new trading techniques and high speed internet connections and the appearance of the so many brokers who give the opportunities to every one to participate in the forex trading market regardless his capital volume.

4: Can You Make Money Online Trading Forex?

When you are ready to trade this market, keep these four simple steps in mind and then do not let anything stand in your way of becoming the trader you want to be.

5: Online Forex Resources Are Abundant

Forex trading is quickily becoming one of the investing world's hottest, most rewarding opportunities and it's chosen as "ideal business" by lot of traders. Forex are risky, but only when you dont have the necessary knowledge to make a sound decision about the money youre trading.

6: Fap Turbo VS Mega Droid: Which Forex Bot is better?

Over-all, I do highly recommend these instruments. For the price you are getting a great instrument that also stands out in the crowd from others! These make GREAT presents!!

7: Forex Trading For Beginners - 10 Essential Tips For Forex Trading Success

If you are new to Forex trading you understand need to understand that 95% of trades lose. If you want to win you can but you need to follow these essential trading tips.

8: Forex Trading Education - 5 Key Points That Will Make You Successful When 95% of Traders Lose

95% of traders lose but they don't lose because they can't learn to win, they can they just make errors that are totally avoidable and if you avoid these errors and pay careful attention to the points enclosed, you can achieve currency trading success.

9: Methods of Foreign Exchange Trading For Starters

Foreign currency trading is a volatile and dynamic type of business. Methods are necessary to control the success of the business flow.

10: Knowing the Foreign Exchange Trading Basics

It would be best to try your hand at the various forex trading methods. You should also be able to understand when it is okay to take a risk and when would it be best to just let it pass you by.

Forex Beginner II

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1: Tips on How to Have the Greatest Forex Training Possible

As a beginner, should a forex trader get in a Forex Study course? Definitely yes, not all beginner traders go to this process, they just get themselves familiar and just jump right in. In the end, the pain and the tears. You have probably heard that 5% of the Forex Traders get profits consistently.

2: Why the Greatest Investment You Can Have is Forex

There is such great potential in the Forex Market because of the fluctuations or changes in exchange rates. There is always the need for currency and it is always traded in pairs. In any economic status, there will always be an opportunity for a Forex Trader to earn profits.

3: Forex - A Rewarding Money Potential: How to Make it Build you Wealth.

This article is meant to show you how financially fulfilling Forex is. If you want to create long time wealth, Forex Trading is one of the fields you might want to consider. But in order to achieve you financial freedom with forex, there are also important things you might want to remember before jumping in.

4: Will I get rich from Forex? Definitely! Are you ready to learn?

The Foreign Exchange market (also referred to as the Forex or FX market) is the largest financial market in the world, with over $1.5 trillion changing hands every day.

5: Online Currency Trading requires Patience

When the going gets tough, the tough get going. This adage often brings back the memories of my past days when I was trading initially in the currency exchange market. Indeed, there's nothing more hurtful than losing your invested money in the FX market. But, online currency trading is like life where you're got to learn from your wrong moves and keep moving on.

6: Forex - What is it?

The international currency market Forex is a special kind of the world financial market. Traders purpose on the Forex to get profit as the result of foreign currencies purchase and sale. The exchange rates of all currencies being in the market turnover are permanently changing under the action of the demand and supply alteration.

7: Short data about the origin and development of the currency exchange market

Currency trading has a long history and can be traced back to the ancient Middle East and Middle Ages when foreign exchange started to take shape after the international merchant bankers devised bills of exchange, which were transferable third-party payments that allowed flexibility and growth in foreign exchange dealings.

8: Risks by the foreign exchange on Forex

The Forex is essentially risk-bearing. By the evaluation of the grade of a possible risk accounted should be the following kinds of it: exchange rate risk, interest rate risk, and credit risk, country risk.

9: Charts for the technical analysis

Kinds of prices and time units. Charts for the technical analysis are being constructed in coordinates price (the vertical axis) time (the horizontal axis). The following kinds of currency prices represented on charts are being distinguished on Forex:

10: Forex Glossary

Here are some of the most common terms used in FOREX trading. Ask Price C Sometimes called the Offer Price, this is the market price for traders to buy currencies.

11: Forex Trading Education - The London Open Checklist
The start of the London trading session marks a period of increased volatility in the Forex market and a period of more opportunities to trade. As part of your Forex trading education, run through this checklist to see if you can identify good trade setups regularly at this time of day.

Forex Guide Basic

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1. I Have No Experience of Trading:

If you have absolutely no experience of the forex market or trading, there are two options:

◦Option 1: Open a Managed Account
◦Option 2: Learn How to Trade

2. I am a Self-Trader:

If you have some knowledge or experience of the forex market, there are three options:

◦Option 1: Learn new strategies
◦Option 2: Use third-party systems and signals
◦Option 3: Open a Managed Account

3. I am a Professional Trader, Hedge Fund or Investor:

If you are a professional trader or investor, you may be interested in forex hedge funds, managed accounts, custom programming and the like. All other products and services can be found in the menu to the left.

◦Option 1: Hedge Funds
◦Option 2: Managed Forex Accounts
◦Option 3: Custom Programming
◦Option 4: Other products and services such as VPS Hosting, Autotrading, & Automated Trading Systems

4. I am a Forex Broker, Hedge Fund or Prospective Forex Broker:

If you are a forex broker, hedge fund or prospective forex broker looking for a new trading platform, a MetaTrader-ECN bridge, PAMM money management software, custom programming and the like, please click on the link below for a list of options available.

◦Option 1: Merchant Broker Software

Getting Started: Self-Traders

Your first step should be to educate yourself about the market and trading in general. Read books, take a course, learn strategies, and practice, practice, practice! Most brokers offer demo accounts which will allow you to practice trading without risking real money. The downside of that is that you often don't trade the same way that you would if you were trading with real cash! For a general background on the foreign exchange market, see the Forex Market Snapshot.

Trading Tips

Rule #1. Learn or Develop a Profitable Trading Strategy
This is rule #1. Without it, you are not going to go anywhere! For strategies and system ideas, please visit forex ebooks, forex courses, forex books and manual forex systems sections.

Rule #2. Use Low Leverage
Using excessive leverage may be the most common reason why many traders blow out their accounts. A good rule of thumb would be not to leverage your account more than ten times its value. For example, if you had a trading account of $1,000, you would not open trades worth more than $10,000. For a more detailed explanation of leverage, see forex basics.

Rule #3. Only Use Risk Capital
What this means is that you should only use money that if lost, would not affect your lifestyle in any way. Though it has been said many times before, this is a simple rule that can avoid any harsh lessons being learned further down the track if learnt now.

Forex Has Grown

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In 1998, the Federal Reserve’s most recently published survey of reporting dealers in the United States estimated that foreign exchange turnover in the U.S. market was $351 billion a day, after adjustments for double counting. That total is an increase of 43% above the estimated turnover in 1995 and more than 60 times the turnover in 1977,
the first year for which roughly comparable survey data are available.

In some ways, this estimate understates the growth and the present size of the U.S. foreign exchange market. The $351 billion estimated daily turnover covered only the three traditional instruments in the “over-the-counter” (OTC) market—spot, outright forwards, and foreign exchange (FX) swaps; it did not include over-thecounter
currency options and currency swaps traded in the OTC market, which totaled about $32 billion a day in notional value (or face value) in 1998. Nor did it include the two products traded, not “over-the-counter,” but in organized exchanges— currency futures and exchange-traded currency options, for which the notional value of the turnover was perhaps $10 billion per day.1

The global foreign exchange market also has shown phenomenal growth. In 1998, in a survey under the auspices of the Bank for International Settlements (BIS), global turnover of reporting dealers was estimated at about $1.49 trillion per day for the traditional products, plus an additional $97 billion for over-the-counter currency options and currency swaps, and a further $12 billion for currency instruments traded on the organized exchanges. In the traditional products, global foreign exchange turnover, measured in current exchange rates, increased by more than 80 percent between 1992 and 1998.

The expansion in foreign exchange turnover, in the United States and globally, reflects the continuing growth of international trade and the prodigious expansion in global finance and investment during recent years. With respect to trade, the dollar value of United States international transactions in goods and
services—the sum of exports and imports— tripled between 1980 and 1995 to around 15 times its 1970 level. International trade in the global economy also has expanded at a rapid pace.World merchandise trade is now more than 2½ times its1980 level (Figure 1-1).

corresponding surpluses abroad have contributed to the growth in financing. Through much of the period since 1983, the United States has recorded trade deficits in the range of $100-$200 billion per year, while Japan and, to a lesser extent, Germany
have registered substantial trade surpluses. In contrast, all three countries experienced only modest trade deficits or surpluses through the 1960s and early 1970s.

The internationalization of financial activity has increased rapidly.Cross-border bank claims are now nearly five times the level of 15 years ago; as a percentage of the combined GDP of the OECD countries, these claims have risen
from about 25 percent in 1980 to about 42

percent in 1995.During that same period, crossborder securities transactions in the three largest economies—United States, Japan, and Germany—expanded from less than 10 percent of GDP to around 70 percent of GDP in Japan and to well above 100 percent of GDP in Germany and the United States. Annual issuance of international bonds has more than quadrupled during the past ten years (Figure 1-2). Between 1988 and 1993, securities settlements through Euroclear and Cedel—the two main Euro market clearing houses— increased six-fold. All of this provided fertile ground for growth in foreign exchange trading.

Choosing A Broker

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Surprisingly, this may be one of the most important decisions you make outside of developing or learning a profitable strategy and not over-leveraging your account. You need to find an ethical broker who will not play tricks with their pricing and stop you out of your trades in order to fatten their wallet. This is typical behaviour of unethical market makers who have an economic incentive for you to lose when they are on the opposite side of your trade. Not all market makers behave in this way, so it is a good idea to do your research on all market makers and brokers before opening an account with them. Visit the Forex Broker Ratings section of this site for some useful assistance!

Managed & Semi-Managed Investments

Some market participants may prefer not to take the self-trading route but instead opt for a managed forex account, automated trading system, auto-trading platform or trading signal provider. Each one of these approaches doesn't require much input from you, as most of the decision making process of when to open and close trades is left up to others. Your decision making rests with choosing a system, adjusting your leverage, placing trades, or determining which trading signals to take. If you choose to open a managed account, find out how much leverage they use when they trade your account. Excessive leverage could lead to large drawdowns that could wipe out your account.

If you decide to use an automated system, autotrading platform or forex trading signal provider where you set the level of leverage, be sure to keep it to a manageable level. See rule #2 above for more information.

It is a good idea to diversify your investments amongst several managed account providers and/or systems to even out your returns - When one account is up, the other may be down, and vice versa.

There are of course many other factors and questions to consider when opening a managed forex account or choosing an automated system or signal provider, however, these ones should hopefully help you avoid any unforeseen circumstances!

With those ideas in mind, this site has been arranged in a way to take you through many aspects of the retail spot forex market so you can learn at your own pace and visit the sections that interest you most.

Forex Guide Basic

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Forex Broker

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The following is a list of questions you may like to consider before opening an account. You can use this checklist to narrow down your selection of companies that fit your requirements. You may also wish to refer to the forex broker ratings page on this site to read about traders unique experiences with particular brokers.

The following links will also give you some background information on U.S.FCM's (Futures Commission Merchants).

Selected Financial Data for FCM's

NFA Background Affiliation Status

1. Word of Mouth

What do other traders say about the broker?

What is their customer service like?

2. Customer Protection

Is the broker regulated?

What regulatory organisation are they registered with and what protections does it afford you?

Are client funds insured against fraud?

Are client funds insured against bankruptcy?

3. Execution

What business model do they operate? i.e. Are they a Market Maker, ECN or no-dealing desk broker?

How fast is their order execution?

Are orders manually or automatically executed?

What is the maximum trade size before you have to request a quote?

Are all clients trades offset?

4. Spread

How tight is the spread?

Is it fixed or variable?

5. Slippage

How much slippage can be expected in normal and fast moving markets?

6. Margin

What is the margin requirement? e.g. 0.25% margin = max 400:1 leverage, 0.5% margin = max 200:1 leverage, 1% margin = max 100:1 leverage, 2% margin = max 50:1 leverage, etc.

Does the margin requirement change for different currency pairs or days of the week?

At what point will the broker issue a margin call?

Is it the same for standard and mini accounts?

7. Commissions

Do they charge commissions? (Most market makers' commissions are built into the spread)

8. Rollover Policy

Is there a minimum margin requirement in order to earn rollover interest?

What are the swap rates like for going long or short in a particular currency pair?

Are there any other conditions for earning rollover interest?

9. Trading Platform

How intuitive and functional is it to use?

Are there many disconnections during trading hours?

How reliable is it during fast moving markets and news announcements?

How many different currency pairs can you trade?

Do they offer an Application Programming Interface (API) to allow you to automate your trading system?

Does it offer any other special features? (e.g. One click dealing, trading from the chart, trailing stops, mobile trading etc.)

10. Trading Account

What is the minimum balance required to open an account?

What is the minimum trade size?

Can you adjust the standard lot size traded?

Can you earn interest on the unused margin balance in your account?

Forex - The Setup

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The first thing we are looking for is a very near touch or breach of the Bollinger Bands, this must not be when they are close together as the market is unpredictable at that point. Once we have a breach or near touch of the Bollinger Bands we then have to check the Stochastic Indicator to see if it confirms our intentions. If we had a breach of the upper Bollinger bands we would be looking to go short and therefore need the Stochastic indicator to be over bought and over the 80 line.

If we had a breach of the lower Bollinger bands we would be looking to go long and therefore need the Stochastic indicator to be over sold and under the 20 line. Once both of these conditions are met we look for our entry confirmation which is a candlestick formation, if we don’t see one then we wait until we do, if the trades takes off without us then we wait for the next one.

Stops are placed behind the recent high / low and always moved to break even as soon as possible, usually when in profit by the same amount you risked. Never risk more than 3% of your account on any one trade. Candlestick formations are used to identify the underlying physiology of the market, usually with a reasonable accuracy. Below is an example of a normal falling and raising candlestick.

When a candlestick tries to make a new high/low but fails to close at those levels it gives some clues as to who is in charge, the bulls or the bears. There are literally hundreds of candle stick formations used by traders all over the world to profit from the markets. We are only going to focus 4 formations here in this system, these are the formations I found to be most profitable and occur regularly.

Doji's.

The Doji is generally a small candle indicating a period of indecision with not much movement, the open and close should be at the exact same price but it is acceptable within a pip or two.This small candle if seen after a good move is a strong reversal signal, with confirmation it is very reliable entry point. You will often see the Doji when trading the divergence system, usually when the stochastic is topping/bottoming out, a great confirmation that you are on the right side of the market.

Engulfing.

An engulfing candle is a strong change in momentum in the market often seen off of breaks of support/resistance. For a buy confirmation the first candle would be red followed by a green candle that completely engulfs the previous one. For a sell confirmation the firs candle would be green followed by a red candle that completely engulfs it.You will often see engulfing candles with the 4H breakout system on the break of the support/resistance line, this idicats good volume and momentum in the market.

Inside candle.

The inside candle formation is basically the complete opposite of the engulfing formation, the second candle is formed completely inside the body of the previous candle. This formation give us a heads up that the bears/bulls are loosing steam and the market may be thinking about a reversal. This formation often happens just before a strong move or breakout, be sure to have your eye out for this formation when trading the divergence system.

Pin formation.

The pin formation is one of my favorites, it shows huge emotion of the market indicating a sign of a reversal, in this case the bulls pushed the market high but failed to hold it so price returned back to around the open leaving a pin formation. The pin always points away from where price may be heading, the opposite is true for a bullish pin formation. You will often see these formations after a breakout on the 4H breakout system when the retrace takes place.

These formations take some getting used to in the beginning but with a little practice you will be seeing them everywhere.

Forex Reserves

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History

Purpose

Central banks throughout the world have sometimes cooperated in buying and selling official international reserves to attempt to influence exchange rates.

Changes in reserves

Costs, benefits, and criticisms

Excess reserves

forex enterprise

2009-07-26T11:44:00.002-07:00

Everybody knows that the Internet is the best place to make money – much it and smart. Nevertheless not many have grasped the idea or actually exhausted the time and force to employ its right. Forex enterprise is an exclusive course that lets you tap into this exciting gold source of opportunity on the Internet. It is entirely tranquil to brush away any claims of making money on the internet as a fad or poorer still a trick. Nevertheless Forex Enterprise is truly a true syllabus that facility, and mechanism darn well too!

The maker of Forex Enterprise Mr. Nick Marks has put in his existence of explore and clear marketing wits behind this cast. His dreams can make an opportunity to pioneer earning manifold streams of profits from sort of sources. This online currency traded sphere is exclusive in every way. What tipped the scales hugely in my improve is the splendid testimonials I got to consider from my contacts and colleagues who had worn this organism. They are hardnosed promotion people and for them to go ga-ga over Nick’s exciting thought means there must be something to it.Yes, Forex Enterprise is audaciously clean and backed up with numerous existence of study and proven strategies that it offers you great sample and play compatibility right from day one. It is intended to convey outcome closer,quicker and steadily. Now that is important. Because, it is no big pact if you make money in 15 resume of fusion the plan, but 2 – 5 time down the line what is the state? You can see that Nick’s Forex Enterprise plant on a long period source and is then truly an attractive proposition.

Among many stuff that are bundled with this magnificent present, Forex Enterprise offers you nothing gamble investment strategies. These strategiespropose the best currency talk charge so you situate to advantage –minus the risks! He keeps offering updates of new and proven techniques so you don’t view a fate to mislay even among one of the many streams of profits outlined in the practice. All you have to do is just chart the march-by-footstep instructions. It is so unadorned to use and you’ll be amazed how valuable it is.

The best part of Forex Enterprise approach is you don’t have to be a tech nerd to profit from the thoughts. You don’t have to know something about web wily or java scripts, but still you continue to allowance from all these almost directly –expenses only few hours in a day! Including in the Forex Enterprise packet is a website with liberated hosting from where you could vend over 1000 harvest! Since there are over a million best promotion goods from top label names it is tranquil to make your website a virtual superstore!

Forex Enterprise also teaches you how to shot passage to your website. Just blindly chart it and you’ll see a swell in website transfer almost directly! The divide on e-currency transactions is what pulled me into the logic. Nick teaches you to the DXINONE logic – the most required after scheme for e-currency barter world over. If you have to take a standalone course on this order isolated, you’ll end costs 100s of dollars! Nevertheless you get it almost for unbound!

Forex Enterprise also understands that if you are on the close resources to open with you could explore unfussy inexpensive means of adwords and transfer generation. This Forex scheme offers you 100% money back agreement and you have almost 3 months to try out if the technique will work for you or not. With so many guarantees and testimonials of long name fallout and profits, Forex Enterprise may be the right plan for you. As for me, I’m unbound to take that Caribbean cruise – kindly recommended by Nick!

Everybody knows that the Internet is the best place to make money – much it and smart. Nevertheless not many have grasped the idea or very useless the time and effort to bind its warrant. Forex enterprise is a sole syllabus that lets you tap into this exciting gold colliery of opportunity on the Internet. It is quite plain to brushaway any claims of making money on the internet as a fad or shoddier still a cheat.Nevertheless Forex Enterprise is sincerely a genuine code that factory, and workings darn well too!

The inventor of Forex Enterprise Mr. Nick Marks has put in his living of inquiries and earnest marketing brain behind this mission. His ideas can make an opportunity to pioneer earning manifold streams of profits from category of sources. Thisonline currency traded trade is exclusive in every way. What tipped the scaleshugely in my kindness is the amazing testimonials I got to hear from my links and colleagues who had used this technique. They are hardnosed dealings people and for them to go ga-ga over Nick’s exciting thought means there must be something to it.Yes, Forex Enterprise is audaciously simple and backed up with the existence of seek and proven strategies that it offers you complete sample and play compatibility right from day one. It is designed to supply outcome sooner, quicker and steadily. Now that is important. Because, it is no big split if you make money in 15 record of union the course, but 2 – 5 years down the line what is the place? You can see that Nick’s Forex Enterprise workings on a long label root and is therefore actually an attractive proposition.

Among many stuff that are bundled with this magnificent present, Forex Enterprise offers you zilch gamble investment strategies. These strategiespropose the best currency replace rate so you park to payment –minus the risks! He keeps offering updates of new and proven techniques so you don’t rest a hazard to evade even among one of the many streams of takings outlined in the usage. All you have to do just admire the action-by-footstep instructions. It is so simple to use and you’ll be stunned how operative it is.

The best part of Forex Enterprise scheme is you don’t have to be a tech nerd to profit from the ideas. You don’t have to know anything about web conniving or java scripts, but still you support to benefit from all these almost instantly –costs only few hours in a day! Including in the Forex Enterprise present is a website with liberated hosting from where you could advertise over 1000 products! Since there are over a million best selling products from top label names it is tranquil to make your website a virtual superstore!

Forex Enterprise also teaches you how to crusade passage to your website. Just blindly result it and you’ll see a pitch in website travel almost instantly! The section on e-currency transactions is what pulled me into the logic. Nick teaches you to the DXINONE order – the most sought after structure for e-currency swap world over. If you have to take a standalone course on this routine isolated, you’ll end payments100s of dollars! Nevertheless you get it almost for free!

Forex Enterprise also understands that if you are on a strong budget to jerk with you could explore simple inexpensive means of adwords and transfer generation. This Forex practice offers you 100% money back warrant and you have almost 3 months to try out if the system will work for you or not. With so many guarantees and testimonials of long label results and profits, Forex Enterprise may be the right encode for you. As for me, I’m free to take that Caribbean cruise – highlyrecommended by Nick!

FOREX EDUCATION

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The unfilled term is proposed for those who just curved their eyes about FOREX. Beginning traders who are still tutoring the basics of the alien chat bazaar may also find something of fascinate here. While experienced traders won’t profit something meaning their time appraisal this clause.

Basically there are 4 steps which can be definite as “must do“ for those who long to edge trading FOREX. Though, their order is not particularly important, the more important part is their pleased, to which the great attention and responsibility must be rewarded.

First move is verdict a right FOREX agent which will be your highest tool in trading. You can have a great tactic, good nominal scrutiny skills or an outstanding insight but you will eventually fold if you show a bad adviser. A good FOREX dealer is one that will not still your money, will be doing frank trading with your positions, ropes your favorite deposit/remove methods and has speedy and helpful abuser bolster tune. It is good if a dealer is registered with some slightly governmental pecuniary commission. One of the most important aspects of the broker is it’s trading platform – but for a new seller this part is not so important as for expert traders. Still you’ll doubtless want to trade with some able and informative platform as a MetaTrader or its analogs. For new traders the more important is a demo account which trades virtual money while you are guidance your FOREX skills. If you are new dealer, father only with the demo account! Don’t evade your money on your first mistakes!

Second move is wisdom the basics of FOREX trading. If you already found your FOREX broker, you will easily get all information from its website or customer uphold. There are many articles and websites keen to FOREX basics in the World Wide Web. All you must to do is just google for “forex trading basics” and you’ll find everything you required and even more. This move shouldn’t be underestimated, because wearisome to trade lacking even understanding how the bazaar machinery is not only very risky, it will also become boring very soon.

Third action is about tutoring. FOREX trading tutoring is not related to any other schooling you possibly have got in your life. FOREX promote is very chaotic, so is the education – there are no fixed policy and all time laws, it is unstable and dynamical. So, to be on the top you must learn new effects about FOREX regularly and constantly. Try to read as many books, articles other traders’ opinions as you can. The more you learn, the more educated you will be. And with good FOREX education you will be able to invent very sophisticated and helpful trading strategies.

Fourth phase is a last one; at least I think it to be an absolute one. To achieve the successful results in the FOREX bazaar you essential to enlarge your own strategies. While you are wisdom you’ll be happy with known strategies and probably even FOREX signals. Nevertheless rightful goal which leads to successful FOREX trading is to happen your own strategies. Not one approach, but to chart the bazaar day by day, developing new strategies and improving those which began to fail. And this comes not only to the trading plan (this part is apparent), but also to the money management strategy (this part is often underestimated). While you advance experience in trading you’ll inevitably create such strategies that will fit your trading adapt, you person and your life as best as they can. And after that, trading will become a heartfelt pleasure, which will eventually clue to your fiscal candor

forex charting

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Price charts can be simple line graphs, bar graphs or even candlestick graphs. These graphs that show prices during precise time frames. These time frames can be anywhere from report to years or any time rest between.
Line charts are the easiest to read, they will show you the broad overview of cost society. They only show the last value for the specific time, they make it very simple to collect out patterns and trends but do not supply the tenuous fact of a bar or candlestick chart.

With a bar chart the length of a line displays the estimate stretch during that time distance. The bigger the bar is the larger the estimate difference between the high and low rate during the break. It is cool to tell at a glance if the assess rose or fell because the left tab shows the gateway charge and the right tab the dying rate. Then the bar will give you the assess deviation. When written bar charts can be difficult to read but most software charts have a zoom task so you can simply read even strictly spaced bars.

Originally urban in Japan for analyzing candlestick contracts candlestick charts are very nifty for analyzing FOREX prices. Candlestick charts are very similar to bar charts they both show the high, the low, open and close estimate for the showed time. However the blush coding makes it much easier to read a candlestick chart, routinely a green candlestick shows a rising cost and a red one shows a lessening estimate.The actual candlestick influence in situation to the candlesticks around it will tell you a lot about the cost transfer and will seriously aid your assay. Depending on the cost spread several patterns will be fashioned by the candlesticks. Many of the shapes have some somewhat exotic names, but once you learn the patterns they are easy to pick out and analyze.
Price charts are not usually worn by themselves to get the satisfied shape you hardship to supplement them with some nominal indicators. Technical indicators are generally grouped into some sweet broad categories. Some of the more common ones used to watch and marks the promote movement are: trend indicators, dilution indicators, volatility indicators, and series indicators.

Here is a lean of some of the more regularly used indicators as well as an ephemeral description.Average Directional Movement Index (ADX) – This directory will help show if the sell is tender in a trend in each route and how effective the trend is. If a trend has readings in extra of 25 then this is considered a stronger trend.
Moving Average Convergence/Divergence (MACD) – The shows the relationship between the tender averages which allows you to determine the momentum of the bazaar. Any time that the show line is crossed by the MACD it is considered to be a piquant promote

FOREX BROKERS

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Finding a Forex broker is a tough process to navigate through and for most people, the necessity of outside assistance is needed. Trying to trade in the Forex market without a broker could lead to devastating results for the normal trader. Similarly, hiring the wrong Forex broker can lead to the same result as trying to muddle through it alone. It is highly important that you be diligent in researching any prospective brokerage firms to handle your financial portfolio.

2. Forex trading is flexible and fits into anyone’s schedule, as it is available on the Internet 24 hours a day, 7 days a week. Markets are always open, day in and day out. This flexible schedule makes the Forex market extremely attractive to professional and potential traders and investors.

1. Forex is the largest market, trading at a volume of almost two billion, giving Forex traders unlimited flexibility and liquidity. That’s over three times larger than the equity market and over five times larger than futures.

3. Forex trading on the Internet involves buying one currency while simultaneously selling another currency. There is equal opportunity to make a profit no matter what direction the currencies are heading. There are, at present, only fourteen pairs of currencies to trade compared to the thousands of stocks, options and futures available for trade. This is a great advantage when considering the pros and cons of jumping into the trading game.

Forex prices are often predictable, allowing the currency prices to create trends that can be followed to allow the technically trained Forex trader to spot, and even take advantage of, the many entry and exit points. There are no charges for commissions, exchange or other hidden fees on the Internet making it one of the best assets of Forex Internet trading. The Forex market is a very easy market to research the countries and currencies involved. The only fees come from the Forex brokers, who make a very small percentage of what the bid/ask price is. Additionally, there is no need to calculate any commissions or fees when completing a trade and your transactions are made and confirmed within seconds. Also, as the process is totally electronic there are no people to slow you down

FOREX ANALYSIS

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First what is Forex: The FOREX or Foreign Exchange souk is the principal economic advertise in the world, with a level of more than $1.5 trillion daily, trade in currencies. Unlike other financial markets, the Forex advertise has no corporeal location, no focal chat. It operates through an electronic group of banks, corporations and individuals trading one currency for another.

When you show to flinch trading in the Forex advertise, which is regularly called the alien trade bazaar, you will ought to know a little trading vocabulary. Learning exclusive provisos and what they mean are critical before you even think about with factual money to trade. You would never get into a pilot’s seat and try to fly an aircraft without ever having taken hasty training. The same goes for overseas trade souk trading. You basic to be copious awake of what you are liability. This is a bazaar that is not fast cultured, so you should never believe that once you flinch into it, you will learn as you go. While some people opt to do that, they typically end trailing an adequate sum of money because they were not as ready as they should have been. Knowing the importance of trading trends and ranges in Forex trading is very important. If you view of trading in the Forex sell, be indeed you know what the language mean and their implications.

Trading Trend When assessed moves consistently in one tendency in the Forex, a trend occurs. When the objective is superior, the trend is regularly called confident. When the bearing of the estimate is stirring reduce, the trend is regularly called bearish. The language are relation of course. When you label a trend, you should always memorize that value peaks and troughs are in the same command. When you are industry with a bearish trend, recollect that charge highs and lows are pitiful inferior. Likewise when you are selling with a bullish trend, they are pitiful superior

Often when trends occur, it is doable to draw proof position under one that is poignant advanced (an uptrend). You can also often draw defiant outline above one that is tender lower (a downtrend). Once you see these position chance, it can be tacit that the trend is full. At this advantage there is a possibility that the trend will start to exchange. When it does invert, you will need to know the mold of what that entails.

Trend Reversal

When you gather of a trend reverse, it cleanly means that the direction of bazaar prices is varying. Often you will see trend reversals following a four stage copy. Usually, this includes the market making a new high, the trend line being broken, the market making an intermediate low, and a new assemble that does not equal the first high. Many times you will see prices solve the before low however. You may come across terms such as Double, Triple Tops, and Bottoms, which are all trend problem patterns. Head and shoulders patterns are also admired reversal patterns.

Bank Forex Trading

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Bank forex trading is one of the focal customs the individuals select to trade nowadays, though it has been more popular than it is at the jiffy. Many traders have lost concern in it as the findings of the rising popularity of Internet forex trading by several companies. However, store forex trading can also be done on the Internet and many individuals still group the banks with their money.

There are various habits and means of choosing the best pool forex trading. However, with thousands to want from, all which go through one of huskily three hundred multinational banks, the choices can actually make the regulate spin. Following the tips below though can actually give you an insight into the world of edge forex trading with a notice to judgment the best one for you.

Assess the group forex trading accessibility of you series The maturity of banks participating in forex trading now give their customers access via a category of habits and means. However, some heap forex tradingsystems regulate accessibility. In language of receiving convene of your money, invest forex trading gives access 24 hours a day and five existence a week. However, in language of generous forex trading instruction, some only drive via the Internet or the handset, while others start via both means. It is up to you to prefer what form of stock forex trading suits you best.
Look at the cache forex trading range Some banks trade millions of dollars every day, and only a small percentage of their tilt forex trading is for their customers while the place is for shareholders and the lean in general. It is through this arrange of store you should choose to conduct. Although the overhaul may be excluding delicate, you could indeed suppose the series with your money and know that verge forex trading was as nontoxic as could be.
Reputation Some institutions taking part in lean forex trading are well known for it, while others are considered to basically be onlookers. The banks that are most active should be considered above those that are not. Active involvement in the series forex trading usage points to learn and defense somewhat than opportunism, which could conversely central to large extent death.

Of course, there are other factors tortuous in your fine of layer for forex trading, including personal preferences, visibility to the outside world and word of gate, but the three above are the most important factors to believe. If you are looking for stillness of demur and your examine into a bank checks all the boxes then you have found the right one for you!

BASE CURRENCY AND VALUABLE CURRENCY

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Base Currency and Variable Currency
When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.

The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.

MARGIN TRADING

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Margin Trading
Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, Saxo Bank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.

In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed. Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions.

BRIE HISTORY OF FOREX TRADING

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Initially, the value of goods was expressed in terms of other goods, i.e. an economy based on barter between individual market participants. The obvious limitations of such a system encouraged establishing more generally accepted means of exchange at a fairly early stage in history, to set a common benchmark of value. In different economies, everything from teeth to feathers to pretty stones has served this purpose, but soon metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.

Originally, coins were simply minted from the preferred metal, but in stable political regimes the introduction of a paper form of governmental IOUs (I owe you) gained acceptance during the Middle Ages. Such IOUs, often introduced more successfully through force than persuasion were the basis of modern currencies.

Before World War I, most central banks supported their currencies with convertibility to gold. Although paper money could always be exchanged for gold, in reality this did not occur often, fostering the sometimes disastrous notion that there was not necessarily a need for full cover in the central reserves of the government.

At times, the ballooning supply of paper money without gold cover led to devastating inflation and resulting political instability. To protect local national interests, foreign exchange controls were increasingly introduced to prevent market forces from punishing monetary irresponsibility.

In the latter stages of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.

The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.

The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.

But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.

The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.

But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD 3,000 billion is traded every day, far more than the world's stock and bond markets combined.

Glossary

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• Appreciation An increase in the value of a currency.
• Ask The price requested by the trader. This usually indicates the lowest price a seller will accept.
• Base currency The currency that the investor buys or sells (i.e. EUR in EURUSD).
• Bear Someone who believes prices are heading down. A bear market is one in which there has been a sustained fall in prices and which does not look like it will recover quickly.
• Bid The price offered by the trader. This usually indicates the highest price a purchaser will pay.
• Bid/Ask The Bid rate is the rate at which you can sell. The Ask (or offer) rate is the rate at which you can buy.
• Bull Someone who is optimistic about the market. A bull market is characterised by enthusiastic and sustained buying.
• cross When trading with currencies, the investor buys one currency with another. These two currencies form the cross: for example, EURUSD.
• Cross rate An exchange rate that is calculated from two other exchange rates.
• Depreciation/decline A fall in the value of a currency.
• Exchange rate What one currency is worth in terms of another, for example the Australian dollar might be worth 58 US cents or 70 yen.

Currencies traded freely on foreign-exchange markets have a spot rate (applying to trades settled “spot”, i.e., two working days hence) and a forward rate. Countries can determine their exchange rates in a variety of ways.
1. A floating exchange rate system where the currency finds its own level in the market.
2. A crawling or flexible peg system which is a combination of an officially fixed rate and frequent small adjustments which in theory work against a build-up of speculation about a revaluation or devaluation.
3. A fixed exchange-rate system where the value of the currency is set by the government and/or the central bank.
• EURUSD Means that you trade EUR against dollars. If you buy euro you pay in dollars and if you sell euro you receive dollars.
• FX, Forex, Foreign Exchange All names for the transaction of one currency for another, e.g. you buy GBP 100.00 with USD 150.25 or sell USD 150.25 for GBP 100.00.
• Interbank Short-term (often overnight) borrowing and lending between banks, as distinct from a banks business with their corporate clients or other financial institutions.
• Interest rate differential The yield spread between two otherwise comparable debt instruments denominated in different currencies.
• Leverage (gearing) The investor only funds part of the amount traded.
• Long To buy.
• Long position A position that increases its value if market prices increase.
• Liquid (-ity) The capacity to be converted easily and with minimum loss into cash. A liquid market is one in which there is enough activity to satisfy both buyers and sellers. Ultra-short-dated treasury notes are an example of a liquid investment.
• Margin The deposit required when entering into a position as well as to hold an open position. Your margin status can be monitored in the Account Summary.
• NYSE The New York Stock Exchange.
• Open position A position in a currency that has not yet been offset. For example, if you have bought 100,000 USDJPY, you have an open position in USDJPY until you offset it by selling 100,000 USDJPY, thus “closing” the position.
• Over the counter When trading takes place directly between two parties, rather than on an exchange. Over the counter trades can be customised whereas exchange-traded products are often standardised.
• Pips A pip is the smallest unit by which a Forex cross price quote changes. So if EURUSD bid is now quoted at 0.9767 and it moves up 2 pips, it will be quoted at 0.9769.
• Position Traders talk of “taking a position” which simply means buying or selling currency cross. “Position” can also refer to a trader's cash/securities/currencies balance, whether he or she is short of cash, has money to lend, is overbought or oversold in a currency, etc.
• Risk Trying to control outcomes to a known or predictable range of gains or losses. Risk management involves several steps which begin with a sound understanding of one's business and the exposures or risks that have to be covered to protect the value of that business. Then an assessment should be made of the types of variables that can affect the business and how best to protect against unwelcome outcomes. Consideration must also be given to the preferred risk profile – whether one is risk – averse or fairly aggressive in approach. This also involves deciding which instruments to use to manage risk and whether a natural hedge exists that can be used. Once undertaken, a risk-management strategy should be continually assessed for effectiveness and cost.
• Secondary currency (variable currency or counter currency) The currency that the investor trades the base currency against (i.e. USD in EURUSD).
• Short position A position that benefits from a decline in market prices.
• Short To sell.
• Speculative Buying and selling in the hope of making a profit, rather than doing so for some fundamental business-related need.
• Spot A Spot rate is the current market price of an asset.
• Spot market The part of the market calling for spot settlement of transactions. The precise meaning of “spot” will depend on local custom for a commodity, security or currency. In the UK, US and Australian foreign-exchange markets, “spot” means delivery two working days hence.
• Spread The difference between the bid and the ask rate.

Important Forex Trading Terms

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Spread

The spread is the difference between the price that you can sell currency at (Bid) and the price you can buy currency at (Ask). The spread on majors is usually 3 pips under normal market conditions. For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled “Trading Conditions” found in the top right-hand corner of the Account Summary.

Pips

A pip is the smallest unit by which a cross price quote changes. When trading Forex you will often hear that there is a 3-pip spread when you trade the majors. This spread is revealed when you compare the bid and the ask price, for example EURUSD is quoted at a bid price of 0.9875 and an ask price of 0.9878. The difference is USD 0.0003, which is equal to 3 “pips”.

On a contract or position, the value of a pip can easily be calculated. You know that the EURUSD is quoted with four decimals, so all you have to do is cancel out the four zeros on the amount you trade and you will have the value of one pip. Thus, on a EURUSD 100,000 contract, one pip is USD 10. On a USDJPY 100,000 contract, one pip is equal to 1000 yen, because USDJPY is quoted with only two decimals.