Retail forex trading is a segment of the vast foreign exchange market. It has been speculated that it represents 2 percent of the whole forex market which amounts to $50-60 billion in daily trading turnover. Due to the increasing tendency in the past years of the gradual shift from traditional intrabank 'paper' trading to the more advanced and accurate electronic trading, there has been spur in software development in this field. This change provided different types of trading platforms and tools intended for the use by banks, portfolio managers, retail brokers and retail traders.
One of the most important tools required to perform a forex transaction is the trading platform providing retail traders and brokers with accurate currency quotes.
History and new developments
Since 1996, when retail forex trading was introduced, several brokers who lacked the sufficient tools developed their own trading platforms tailored specifically to their needs. These platforms were good enough at the time but required constant investments in R&D and its development cost too much. This was the first wave.
The second wave was in the early 2000s: several software companies entered the retail forex trading market by launching their own versions of trading platforms. Typically these versions were cumbersome for both front-end users (retail traders) and back-end users (retail brokers) due to the misunderstanding of the developers about the forex market and also because of the insufficient programming tools/languages at the time. Simultaneously most of the retail brokers kept using and developing their own systems as they waited for better platforms which were yet to be developed.
There are currently few to no brokers which were part of the first wave trading systems. By now most of the first wave brokers have either vanished, merged or progressed to the second wave trading platforms – the most common example of which is Metaquotes.
It is only in the last couple of years that the advanced trading platforms started to emerge. These platforms put much stronger emphasis on the user interface (GUI) making it more accessible to the retail traders while making trading on it very simple and intuitive. Moreover a very strong emphasis was put on the back-end which allowed the retail brokers better control over their operations, better reporting and accurate system and ways to manage marketing campaigns. Gradually this wave is replacing the previous second wave with a major shift now to the friendlier and more intuitive systems of the third wave which according to Aite Group are necessary in order to maintain growth.
Nowadays, banks have also jumped on the retail forex trading platform bandwagon and have started offering those services to individual traders and money mangers, expanding the forex trading appeal. DBFX and Citibank are some of the banks that are currently offering this service.
Friday, December 11, 2009
Forex Scam
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 the fraud 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 other transaction 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 Commission has 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?"
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 other transaction 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 Commission has 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?"
View on Global Forex Trading is a Scam!
As far as the zero-sum game is concerned, almost every type of trading instrument, money, transaction etc., is a zero-sum game! If you think that should stop you go dig a hole for yourself, go live there for a few days until you starve and die, it'll save someone the effort to dig the hole at least. Though on a serious note, that's the beauty of the markets, there is always someone betting against you, it could be someone booking profits, losses, buying, selling, short-selling, its always the same!!
Now to get on with forex, its not really that tough to calculate, one of the main basic principle is the interest rate of the country, if its high, there will be higher demand, hence lesser supply, hence a rally or vice versa, apart from that other factors like the GDP numbers, Ruling Government, Public Opinion etc., play an important role. Frankly there are a too many unrelated variables that come into play, hence its not worth my time.
I would ask you to do only a couple of things.
1) Learn the meaning of risk - There is no easy way to do this, and the best way is by experience, and that only comes with losses, so if you have $100,000 to trade with break that up into 20 $5000 account and start slowly, with control and rules (self set) blowing your accounts, if an account never blows, good for you! Hopefully you'll have learned quite a bit by the time you're half way through your capital.
Now to get on with forex, its not really that tough to calculate, one of the main basic principle is the interest rate of the country, if its high, there will be higher demand, hence lesser supply, hence a rally or vice versa, apart from that other factors like the GDP numbers, Ruling Government, Public Opinion etc., play an important role. Frankly there are a too many unrelated variables that come into play, hence its not worth my time.
I would ask you to do only a couple of things.
1) Learn the meaning of risk - There is no easy way to do this, and the best way is by experience, and that only comes with losses, so if you have $100,000 to trade with break that up into 20 $5000 account and start slowly, with control and rules (self set) blowing your accounts, if an account never blows, good for you! Hopefully you'll have learned quite a bit by the time you're half way through your capital.
Online FOREX Trading
There are a lot of people who are interested in online FOREX trading because you can make oodles of money with the right strategies. You can learn all these strategies by using Google and search for online FOREX trading tips and online FOREX trading strategies.
You can also buy books from bookshop to learn more about FOREX trading. However FOREX markets are extremely volatile and you must analyse carefully before trading. But like understand that currency trading is not get rich quick scheme. It is like any other investments and can it is similar to stock market. Be warned, if you are interested in participating in currency trading you had better get good tips and strategies first or you will certainly lose your money.
The market operates on a very high margin-trading. That means you can gain control a greater exchange of money by putting down only a part of your money. It is called leveraging and you are commonly permitted approximately 10 times your cash position. That can be a big gain for making profits. However, you will lose a lot if your trades go against you, so you have to be on top of the post. This is not a sport.
If you are venturing into online FOREX trading, learn the trading and the market first. Online FOREX trading is not gambling and it is essential to know what the investment is all about and how it works before you start trading. Look for a platform that has been established for a long time and good background.In the beginning of this article, we went over the basics. Now, we will look at this topic a little more in-depth.Currency trading is the world's largest trade. Over three trillion dollars merit of transactions take place each and every day in the world's currency market. Currency trading is open 24 hours a day, 7 days a week. A laptop with unfailing and preferably fast Internet connection and approved learning and strategies are necessary to start online FOREX trading.
If you could take the main ideas from this article and put them into a list, you would a great overview of what we have learned.
You can also buy books from bookshop to learn more about FOREX trading. However FOREX markets are extremely volatile and you must analyse carefully before trading. But like understand that currency trading is not get rich quick scheme. It is like any other investments and can it is similar to stock market. Be warned, if you are interested in participating in currency trading you had better get good tips and strategies first or you will certainly lose your money.
The market operates on a very high margin-trading. That means you can gain control a greater exchange of money by putting down only a part of your money. It is called leveraging and you are commonly permitted approximately 10 times your cash position. That can be a big gain for making profits. However, you will lose a lot if your trades go against you, so you have to be on top of the post. This is not a sport.
If you are venturing into online FOREX trading, learn the trading and the market first. Online FOREX trading is not gambling and it is essential to know what the investment is all about and how it works before you start trading. Look for a platform that has been established for a long time and good background.In the beginning of this article, we went over the basics. Now, we will look at this topic a little more in-depth.Currency trading is the world's largest trade. Over three trillion dollars merit of transactions take place each and every day in the world's currency market. Currency trading is open 24 hours a day, 7 days a week. A laptop with unfailing and preferably fast Internet connection and approved learning and strategies are necessary to start online FOREX trading.
If you could take the main ideas from this article and put them into a list, you would a great overview of what we have learned.
Tuesday, November 10, 2009
Forex Trading Examples
Example 1
An investor has a margin deposit with Saxo Bank of USD 100,000.
The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.
The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.
Day 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.
Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.
Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.
Day 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.
As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.
This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.
Example 2:
The investor follows the cross rate between the EUR and the Japanese yen. He believes that this market is headed for a fall. As he is not quite confident of this trade, he uses less of the leverage available on his deposit. He chooses to ask the dealer for a quote in EUR 1,000,000. This requires a margin of EUR 1,000,000 x 5% = EUR 10,000 = approx. USD 52,500 (EUR /USD 1.05).
The dealer quotes 112.05-10. The investor sells EUR at 112.05.
Day 1: Sell EUR 1,000,000 vs. JPY 112.05 = Buy JPY 112,050,000.
He protects his position with a stop-loss order to buy back the EUR at 112.60. Two days later, this stop is triggered as the EUR o strengthens short term in spite of the investor's expectations.
Day 3: Buy EUR 1,000,000 vs. JPY 112.60 = Sell JPY 112,600,000.
The EUR side involves a credit and a debit of EUR 1,000,000. Therefore, the EUR account shows no change. The JPY account is credited JPY 112.05m and debited JPY 112.6m for a loss of JPY 0.55m. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the loss calculation.
This results in a loss of JPY 0.55m = approx. USD 5,300 (USD/JPY 105) = 5.3% loss on the original deposit of USD 100,000.
Example 3
The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:
He asks Saxo Bank for a quote in USD 1,000,000 against the Canadian dollar. The dealer quotes 1.5390-95 and the investor sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.
Day 1: Sell USD 1,000,000 vs. CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD 1.5357 = Buy CAD 1,535,700 for Day 61 due to the interest rate differential.
After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.
Day 31: Buy USD 1,000,000 vs. CAD 1.4865 = Sell CAD 1,486,500 for Day 61.
Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61. The USD account receives a credit and debit of USD 1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD 49,200 = approx. USD 33,100 = profit of 33.1% on the original deposit of USD 100,000.
An investor has a margin deposit with Saxo Bank of USD 100,000.
The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.
The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.
Day 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.
Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.
Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.
Day 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.
As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.
This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.
Example 2:
The investor follows the cross rate between the EUR and the Japanese yen. He believes that this market is headed for a fall. As he is not quite confident of this trade, he uses less of the leverage available on his deposit. He chooses to ask the dealer for a quote in EUR 1,000,000. This requires a margin of EUR 1,000,000 x 5% = EUR 10,000 = approx. USD 52,500 (EUR /USD 1.05).
The dealer quotes 112.05-10. The investor sells EUR at 112.05.
Day 1: Sell EUR 1,000,000 vs. JPY 112.05 = Buy JPY 112,050,000.
He protects his position with a stop-loss order to buy back the EUR at 112.60. Two days later, this stop is triggered as the EUR o strengthens short term in spite of the investor's expectations.
Day 3: Buy EUR 1,000,000 vs. JPY 112.60 = Sell JPY 112,600,000.
The EUR side involves a credit and a debit of EUR 1,000,000. Therefore, the EUR account shows no change. The JPY account is credited JPY 112.05m and debited JPY 112.6m for a loss of JPY 0.55m. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the loss calculation.
This results in a loss of JPY 0.55m = approx. USD 5,300 (USD/JPY 105) = 5.3% loss on the original deposit of USD 100,000.
Example 3
The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:
He asks Saxo Bank for a quote in USD 1,000,000 against the Canadian dollar. The dealer quotes 1.5390-95 and the investor sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.
Day 1: Sell USD 1,000,000 vs. CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD 1.5357 = Buy CAD 1,535,700 for Day 61 due to the interest rate differential.
After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.
Day 31: Buy USD 1,000,000 vs. CAD 1.4865 = Sell CAD 1,486,500 for Day 61.
Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61. The USD account receives a credit and debit of USD 1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD 49,200 = approx. USD 33,100 = profit of 33.1% on the original deposit of USD 100,000.
Analysis of Forex: Saxo Bank Market News & Analysis
Risk Warnings:
Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited.
Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.
Please read the full Analysis Disclosure & Disclaimer at
www.saxobank.com/analysis/disclaimer.
Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited.
Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.
Please read the full Analysis Disclosure & Disclaimer at
www.saxobank.com/analysis/disclaimer.
Forex Market Update
Monday, Nov 02, 2009, 13:57 GMT
By John Hardy Consultant/FX Strategist Saxo Bank
Central Banks in the crosshairs this week. Volatility from last week continues into today's action.
JPY crosses gyrate, GBP swoons as pivotal week gets under way. US ISM Manufacturing on tap.
MAJOR HEADLINES – PREVIOUS SESSION
China Oct. PMI Manufacturing out at 55.2 vs. 54.7 expected and 54.3 in Sep.
Australia Oct. Performance of Manufacturing Index out at 51.7 vs. 52.0 in Sep.
UK Oct. Hometrack Housing Survey rose +0.2% MoM and fell -4.6% YoY vs. +0.2%/-5.6% in
Sep.
Australia Q3 House Price Index rose 4.2% QoQ and 6.2% YoY vs. 3.0%/4.3% expected,
respectively
Japan Sep. Labor Cash Earnings fell -1.6% in Sep. vs. -2.1% expected
China Oct. HSBC Manufacturing PMI out at 55.4 vs. 55.0 in Sep.
Sweden Oct. Swedbank PMI Survey out at 56.7 vs. 55.5 expected and 55.9 in Sep.
Switzerland Oct. SVME PMI out at 54.0 vs. 54.8 expected and 54.3 in Sep.
UK Oct. Manufacturing PMI out at 53.7 vs. 50.0 expected and 49.9 in Sep.
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
US Oct. ISM Manufacturing (1500)
US Sep. Pending Home Sales (1500)
US Sep. Construction Spending (1500)
US Fed's Tarullo to Speak (2000)
New Zealand Q3 Private Wages/Average Hourly Earnings (2145)
Australia RBA Cash Target (0330)
Market Comments:
This week has already picked up where last week left off, with yet another direction change in most of the USD crosses in Asian and European trading, though so far, the USD sell-off has been somewhat weaker than Friday's USD rally. Clearly, the market is on tenterhooks after the dramatic expansion in volatility late last week and wondering whether this was a calendar month phenomenon or the real deal as we go into a new month and a week packed with event risks.
JPY volatility
As if volatility wasn't bad enough, JPY crosses swooned due to some bizarre situation in Tokyo with the ZARJPY cross and a misquote that triggered all manner of stop-losses across the board - even in other JPY crosses, so the sell-off and comeback that appears on the charts may be an artificial development from a technical perspective. It was interesting to note, nonetheless, that EURJPY once again found support right at its 200-day moving average, as the overnight action underlines that level as critical for the longer term outlook. JPY crosses are likely to remain the high beta crosses this week with all of the economic data and central bank's decisions weighing on both risk appetite and interest rates as cross-market volatility is clearly heating up here.
Tonight's RBA
AUDUSD slipped to a new low overnight in the Asian session, but that low couldn't hold after strong house price data has the market looking for that extra bit of hawkishness in tonight's (Asian Tuesday) RBA rate announcement. Rate differentials between AUD and the USD (and more other currencies, for that matter) are still well off recent highs, so whatever the RBA has planned, it will need to reinvigorate spread widening for the AUD to regain the upper hand across the board. Risk appetite will also need to make a comeback for the AUD rally to get back on track. As we suggested last week, the AUDUSD rally may be facing structural threats from a technical perspective. Regardless of that latter fact, if the minority of analysts looking for a 50-bp. hike tonight are correct and risk appetite snaps back, we could see a rush back to 0.9300 in a hurry. This is a busy week for data out of Australia as well, with the AiG services survey and Sep. Retail Sales set for release in Australia's Wednesday session.
GBP fadeaway
GBP fell out of bed to start the week after its rather odd bout of overexuberance late last week. The poor growth data from Q3 suggests the market may be looking for the waffling BoE to lean more on the side of QE than it expected before the latest batch of numbers. Still, home price data suggests that the easy money policy continues to prop up asset prices and the latest manufacturing PMI out today was quite strong. Industrial and Manufacturing Production data are also out on Thursday just ahead of the BoE decision. Regardless of the direction in risk appetite this week, we suspect that the USD will outpace GBP unless the BoE comes out with a more hawkish message on planned exit from QE than we or the consensus expect. Tactically speaking, the line of support around 1.6350 is interesting for today's US session, and the two-week low at 1.6250 is the bigger potential downside trigger.
Looking Ahead
The US ISM manufacturing data is not likely to surprise to the downside today after two of the three regional surveys surprised strongly to the upside in October. The market has bigger fish to fry than the ISM anyway this week, and many are writing off any uptick in the manufacturing side of the US economy as part of the inventory restocking cycle, especially in autos after the Cash for Clunkers depleted inventories. Remember once again that we have the RBA up tonight, the Fed up on Wednesday, and the ECB and BoE on Thursday. This is all capped off with the US employment report Friday. Certainly a week for treading carefully!
GBPCHF
GBP found important resistance today it seems, as evidenced in a cross like GBPCHF, where the two-wave correction appears complete after an attempt at the 55-day moving average. The sell-off back through the old high suggests that further weakness toward the rising line of consolidation is the path of least resistance for the moment.
By John Hardy Consultant/FX Strategist Saxo Bank
Central Banks in the crosshairs this week. Volatility from last week continues into today's action.
JPY crosses gyrate, GBP swoons as pivotal week gets under way. US ISM Manufacturing on tap.
MAJOR HEADLINES – PREVIOUS SESSION
China Oct. PMI Manufacturing out at 55.2 vs. 54.7 expected and 54.3 in Sep.
Australia Oct. Performance of Manufacturing Index out at 51.7 vs. 52.0 in Sep.
UK Oct. Hometrack Housing Survey rose +0.2% MoM and fell -4.6% YoY vs. +0.2%/-5.6% in
Sep.
Australia Q3 House Price Index rose 4.2% QoQ and 6.2% YoY vs. 3.0%/4.3% expected,
respectively
Japan Sep. Labor Cash Earnings fell -1.6% in Sep. vs. -2.1% expected
China Oct. HSBC Manufacturing PMI out at 55.4 vs. 55.0 in Sep.
Sweden Oct. Swedbank PMI Survey out at 56.7 vs. 55.5 expected and 55.9 in Sep.
Switzerland Oct. SVME PMI out at 54.0 vs. 54.8 expected and 54.3 in Sep.
UK Oct. Manufacturing PMI out at 53.7 vs. 50.0 expected and 49.9 in Sep.
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
US Oct. ISM Manufacturing (1500)
US Sep. Pending Home Sales (1500)
US Sep. Construction Spending (1500)
US Fed's Tarullo to Speak (2000)
New Zealand Q3 Private Wages/Average Hourly Earnings (2145)
Australia RBA Cash Target (0330)
Market Comments:
This week has already picked up where last week left off, with yet another direction change in most of the USD crosses in Asian and European trading, though so far, the USD sell-off has been somewhat weaker than Friday's USD rally. Clearly, the market is on tenterhooks after the dramatic expansion in volatility late last week and wondering whether this was a calendar month phenomenon or the real deal as we go into a new month and a week packed with event risks.
JPY volatility
As if volatility wasn't bad enough, JPY crosses swooned due to some bizarre situation in Tokyo with the ZARJPY cross and a misquote that triggered all manner of stop-losses across the board - even in other JPY crosses, so the sell-off and comeback that appears on the charts may be an artificial development from a technical perspective. It was interesting to note, nonetheless, that EURJPY once again found support right at its 200-day moving average, as the overnight action underlines that level as critical for the longer term outlook. JPY crosses are likely to remain the high beta crosses this week with all of the economic data and central bank's decisions weighing on both risk appetite and interest rates as cross-market volatility is clearly heating up here.
Tonight's RBA
AUDUSD slipped to a new low overnight in the Asian session, but that low couldn't hold after strong house price data has the market looking for that extra bit of hawkishness in tonight's (Asian Tuesday) RBA rate announcement. Rate differentials between AUD and the USD (and more other currencies, for that matter) are still well off recent highs, so whatever the RBA has planned, it will need to reinvigorate spread widening for the AUD to regain the upper hand across the board. Risk appetite will also need to make a comeback for the AUD rally to get back on track. As we suggested last week, the AUDUSD rally may be facing structural threats from a technical perspective. Regardless of that latter fact, if the minority of analysts looking for a 50-bp. hike tonight are correct and risk appetite snaps back, we could see a rush back to 0.9300 in a hurry. This is a busy week for data out of Australia as well, with the AiG services survey and Sep. Retail Sales set for release in Australia's Wednesday session.
GBP fadeaway
GBP fell out of bed to start the week after its rather odd bout of overexuberance late last week. The poor growth data from Q3 suggests the market may be looking for the waffling BoE to lean more on the side of QE than it expected before the latest batch of numbers. Still, home price data suggests that the easy money policy continues to prop up asset prices and the latest manufacturing PMI out today was quite strong. Industrial and Manufacturing Production data are also out on Thursday just ahead of the BoE decision. Regardless of the direction in risk appetite this week, we suspect that the USD will outpace GBP unless the BoE comes out with a more hawkish message on planned exit from QE than we or the consensus expect. Tactically speaking, the line of support around 1.6350 is interesting for today's US session, and the two-week low at 1.6250 is the bigger potential downside trigger.
Looking Ahead
The US ISM manufacturing data is not likely to surprise to the downside today after two of the three regional surveys surprised strongly to the upside in October. The market has bigger fish to fry than the ISM anyway this week, and many are writing off any uptick in the manufacturing side of the US economy as part of the inventory restocking cycle, especially in autos after the Cash for Clunkers depleted inventories. Remember once again that we have the RBA up tonight, the Fed up on Wednesday, and the ECB and BoE on Thursday. This is all capped off with the US employment report Friday. Certainly a week for treading carefully!
GBPCHF
GBP found important resistance today it seems, as evidenced in a cross like GBPCHF, where the two-wave correction appears complete after an attempt at the 55-day moving average. The sell-off back through the old high suggests that further weakness toward the rising line of consolidation is the path of least resistance for the moment.
Forex Trading News Letter
Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all or more of your investment therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading. This website, SniperForex, G.J. Pavkovich, and anyone associated with it, cannot be held responsible for any losses incurred. Trading foreign currencies is a challenging and potentially profitable opportunity for educated and experienced investors. However, before deciding to participate in the Foriegn equity market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose.
There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair.Moreover, the leveraged nature of foreign equity trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. To manage exposure, employ risk-reducing strategies such as 'stop-loss' or 'limit' orders.There are risks associated with utilizing an Internet-based trading system including, but not limited to, the failure of hardware, software, and Internet connection. This website, SniperForex, G.J. Pavkovich, and anyone associated with it, cannot be held responsible for communication failures or delays when trading via the Internet.
Any opinions, news, research, analyses, prices, or other information contained on this website are provided as general market commentary, and do not constitute investment advice. This website, SniperForex, G.J. Pavkovich, and anyone associated is not liable for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. We have taken every possible measure to ensure the accuracy of the information on the website. The content on this website is subject to change at any time without notice.
There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair.Moreover, the leveraged nature of foreign equity trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. To manage exposure, employ risk-reducing strategies such as 'stop-loss' or 'limit' orders.There are risks associated with utilizing an Internet-based trading system including, but not limited to, the failure of hardware, software, and Internet connection. This website, SniperForex, G.J. Pavkovich, and anyone associated with it, cannot be held responsible for communication failures or delays when trading via the Internet.
Any opinions, news, research, analyses, prices, or other information contained on this website are provided as general market commentary, and do not constitute investment advice. This website, SniperForex, G.J. Pavkovich, and anyone associated is not liable for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. We have taken every possible measure to ensure the accuracy of the information on the website. The content on this website is subject to change at any time without notice.
Friday, October 23, 2009
How An Forex Trade Works
In the forex market you can buy or sell one currency for another. When you buy a currency, you are said to be "long" in that currency and when you sell a currency, you are said to be "short" in that currency. As the value of one currency rises or falls relative to another, traders decide to buy or sell currencies in order to make profits - since the objective is to earn a profit from their position.
Placing a trade in the foreign exchange market is simple and the mechanics of a trade are virtually identical to those found in other markets. Because of the symmetry of currency transactions, you are always simultaneously long in one currency and short in another. An open position is one that is live and ongoing.
As long as the position is open, its value will fluctuate in accordance with the exchange rate in the market. To close out your position, you conduct an equal and opposite trade in the same currency pair.
For example, if you have gone long in one lot of EUR/USD you can close out that position by subsequently going short in one EUR/USD lot (at the prevailing bid price).
Placing a trade in the foreign exchange market is simple and the mechanics of a trade are virtually identical to those found in other markets. Because of the symmetry of currency transactions, you are always simultaneously long in one currency and short in another. An open position is one that is live and ongoing.
As long as the position is open, its value will fluctuate in accordance with the exchange rate in the market. To close out your position, you conduct an equal and opposite trade in the same currency pair.
For example, if you have gone long in one lot of EUR/USD you can close out that position by subsequently going short in one EUR/USD lot (at the prevailing bid price).
Wednesday, October 14, 2009
Good Earnings With FOREX Trading
Earning has come to just a click away with the advent of online forex trading. The internet has already proved its worth in the trading system online, be it any business and when trading in forex market is talked about it has scored again.
It is a lot easier for the online trader to make investments online thus increasing his returns. The forex trading software has made the entire process further effortless. The software makes the trader task pretty uncomplicated by making and closing deals on its own thus leaving the trader tension-free, even where decision making process is concerned.
The online trading system with the help of software helps the trader and the broker to witness market changes right in front of them on the computer screen and that too in no time! Currency trading online can be learnt in no time with the help of the software. The process can be initiated on demo accounts and with virtual money which later on is easily applicable on real account and actual money. Practicing on virtual money spares the trader the risk of spending and loosing actual money.
Forex trading can be started at any point of time with gaining knowledge from the various courses available on the internet. These also are demo accounts available wherein the trader can actually learn trading in simpler ways. The learning process can go on slowly as the trader learns all the nuances of the forex market. The courses and demo accounts and other e-books make it very easy for the trader to know all that he needs to enter the forex market and start investing on real money.
To enhance the learning procedure, there also is currency trading software which gives an overall knowledge of the trading business and helps not only the new trader but also the experienced trader in investing online. The software provides all the required information and tips on investing so the decision making becomes easier for the trader.
To know which the appropriate software and how to use it, the trader can also take help from forex software review which tell him about the software usage, its performance and outcome. Reviews prove of a real help while buying software for trading online, as they might be given be users or experts. No matter how much experience the trader might have in the trade, he would need to update his knowledge every now and then in order to be successful.
For that required earning through forex trade, whether online or otherwise, the forex trading strategies remain the same and a knowledgeable and experienced trader and broker would use them just the right way to generate maximum profits.
It is a lot easier for the online trader to make investments online thus increasing his returns. The forex trading software has made the entire process further effortless. The software makes the trader task pretty uncomplicated by making and closing deals on its own thus leaving the trader tension-free, even where decision making process is concerned.
The online trading system with the help of software helps the trader and the broker to witness market changes right in front of them on the computer screen and that too in no time! Currency trading online can be learnt in no time with the help of the software. The process can be initiated on demo accounts and with virtual money which later on is easily applicable on real account and actual money. Practicing on virtual money spares the trader the risk of spending and loosing actual money.
Forex trading can be started at any point of time with gaining knowledge from the various courses available on the internet. These also are demo accounts available wherein the trader can actually learn trading in simpler ways. The learning process can go on slowly as the trader learns all the nuances of the forex market. The courses and demo accounts and other e-books make it very easy for the trader to know all that he needs to enter the forex market and start investing on real money.
To enhance the learning procedure, there also is currency trading software which gives an overall knowledge of the trading business and helps not only the new trader but also the experienced trader in investing online. The software provides all the required information and tips on investing so the decision making becomes easier for the trader.
To know which the appropriate software and how to use it, the trader can also take help from forex software review which tell him about the software usage, its performance and outcome. Reviews prove of a real help while buying software for trading online, as they might be given be users or experts. No matter how much experience the trader might have in the trade, he would need to update his knowledge every now and then in order to be successful.
For that required earning through forex trade, whether online or otherwise, the forex trading strategies remain the same and a knowledgeable and experienced trader and broker would use them just the right way to generate maximum profits.
Forex Mini Trading
If you are just starting out in foreign currency trading then you will almost certainly want to start by trying your hand with a mini Forex trading account.
Although it varies from one broker to the next, a Forex trading account can usually be opened with $2,500 or more. However, for those who are new to the world of currency trading then a Forex mini trading account can often be opened for as little as just $250.
A standard account will usually be operated in trading lots of 100,000 (meaning that you have to purchase 100,000 dollars, euros, yen etc.) whereas a mini Forex account you will normally allow you to trade in lots of just 10,000.
A mini Forex trading account operates by allowing you to use leverage in trading so that you are effectively trading with more money than you actually have in your account. The leverage available will vary between brokers, but is typically in the region of 200 to 1.
So, what does this mean?
If we assume that the minimum required to trade a lot is $10,000 then, with a leverage of 200 to 1, you would be able to trade with as little as $50 ($50 X 200 = $10,000) and so, with an initial deposit of $250, you would be able to trade up to 5 lots.
This is of course a very simple introduction to online mini account Forex trading and there is a little bit more to it than portrayed here.
Never the less, the principle behind Forex mini trading is simply to allow those who are just starting out in the world of foreign exchange trading to learn the ropes without investing too much money or taking too high a risk.
Just look for Forex mini online or a Forex managed mini account and find a broker who offers a Forex mini demo and the best mini Forex fully automated trading.
Although it varies from one broker to the next, a Forex trading account can usually be opened with $2,500 or more. However, for those who are new to the world of currency trading then a Forex mini trading account can often be opened for as little as just $250.
A standard account will usually be operated in trading lots of 100,000 (meaning that you have to purchase 100,000 dollars, euros, yen etc.) whereas a mini Forex account you will normally allow you to trade in lots of just 10,000.
A mini Forex trading account operates by allowing you to use leverage in trading so that you are effectively trading with more money than you actually have in your account. The leverage available will vary between brokers, but is typically in the region of 200 to 1.
So, what does this mean?
If we assume that the minimum required to trade a lot is $10,000 then, with a leverage of 200 to 1, you would be able to trade with as little as $50 ($50 X 200 = $10,000) and so, with an initial deposit of $250, you would be able to trade up to 5 lots.
This is of course a very simple introduction to online mini account Forex trading and there is a little bit more to it than portrayed here.
Never the less, the principle behind Forex mini trading is simply to allow those who are just starting out in the world of foreign exchange trading to learn the ropes without investing too much money or taking too high a risk.
Just look for Forex mini online or a Forex managed mini account and find a broker who offers a Forex mini demo and the best mini Forex fully automated trading.
The Forex Demo Account
The Value Of Simulated Forex Trading To Currency Trading SuccessAs a novice you will probably begin trading by opening a Forex demo account and your first few trades will be paper trades, or simulated Forex trading, as you learn how the market works and how to use some of the trading tools. It is not long however before you are ready to move on and to put your paper trading days behind you.
But is it such a good idea to leave paper trading behind you?
Many successful Forex traders today are discovering that continuing to trade on paper from time to time can be both helpful and profitable.
Problems often arise for traders when they find themselves with a losing trade. Despite the fact that losing trades are an everyday part of trading life, you are always going to be affected by a trading loss and there is often a strong, albeit often subconscious, urge to recoup the money you have just lost as fast as possible. This frequently means that you go right back into the market but, because you are in a losing frame of mind, your next trade often also results in a loss or a less than spectacular gain.
In this case you trade seriously and in exactly the same way that you would trade normally but run the trade on paper. You study the market indicators, open a trading position, put a stop loss order in place and then track the trade. As the trade progresses you move your stop loss order as the market moves and, finally, you close out your position when your market indicators tell you to do so.
This paper trade might result in a profit or a loss but, as the trade is only being made on paper, it doesn’t matter one way or the other. The importance of this trade is that it allows you to clear your mind and to put your previous losing trade behind you. Even if this paper trade results in a loss the affect is positive because you are happy knowing that you have not actually lost any money.
Having run this paper trade you are now ready to leave the world of simulated Forex trading and return to live trading and can open a new trading position in a winning frame of mind.
But is it such a good idea to leave paper trading behind you?
Many successful Forex traders today are discovering that continuing to trade on paper from time to time can be both helpful and profitable.
Problems often arise for traders when they find themselves with a losing trade. Despite the fact that losing trades are an everyday part of trading life, you are always going to be affected by a trading loss and there is often a strong, albeit often subconscious, urge to recoup the money you have just lost as fast as possible. This frequently means that you go right back into the market but, because you are in a losing frame of mind, your next trade often also results in a loss or a less than spectacular gain.
In this case you trade seriously and in exactly the same way that you would trade normally but run the trade on paper. You study the market indicators, open a trading position, put a stop loss order in place and then track the trade. As the trade progresses you move your stop loss order as the market moves and, finally, you close out your position when your market indicators tell you to do so.
This paper trade might result in a profit or a loss but, as the trade is only being made on paper, it doesn’t matter one way or the other. The importance of this trade is that it allows you to clear your mind and to put your previous losing trade behind you. Even if this paper trade results in a loss the affect is positive because you are happy knowing that you have not actually lost any money.
Having run this paper trade you are now ready to leave the world of simulated Forex trading and return to live trading and can open a new trading position in a winning frame of mind.
Your Mother Could Make Money In Forex Trading
The question would be not whether she could but rather would she enter the Forex trading market. The Forex day trading arena is a veritable snake pit ripe for scam artists to bilk money out of unwary investors. On the other hand, it is a forum for educated traders with the correct education, tools, and trading strategy to make a handsome income.
Becoming a successful Forex trader basically comes down to four things;
1) attaining the correct education,
2) using Forex tools which
3) use your own personal trading strategy, and
4) finding the correct Forex broker to fulfill your requirements.
Let's look at these individually:
Attaining the correct education. Your Mother may not know the difference between a Forex PIP and one of the backup singers for Gladys Knight. So would you send her to one of those infomercial Forex riches classes to find out? We hope not! There are literally hundreds of training courses and materials out there for proper training. Word of mouth recommendations might be the best path to follow here.
Forex tools can also do many things like send trading signals and various buy/sell alerts to your desktop or mobile device based on what your personal trading philosophy dictates. Many of these tools are software based and some are provided via your favorite Forex trading sites. Not all people base decisions based on these signals though and use things like technical and fundamental analysis to determine when to buy or sell.
It also is essential to develop your own personal trading strategy. Your ability to assume certain risks might not exactly be what other traders or your broker recommends. A Forex trading strategy is not something generic and involves your personal game plan.
Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.
One of the most important ways to make the greatest return (and, also carry a greater loss risk) in Forex trading is with the use of a margin account. These accounts may let you trade as much as $100k in currency for as little as $1000. Margin accounts are the lifeblood of Forex trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.
Used correctly and together, the above items can lead to a comfortable part or full time income. If you don't use all the information available to you, though, you may as well let Mom take the weekend visit to Vegas with her money to see Gladys Knight. Make sure that she has developed her own Forex trading strategy and has used "paper trades" many times before actually beginning trading for real. Better that ole Mom is equipped to make some real money rather than throwing it away on the gaming tables.
Becoming a successful Forex trader basically comes down to four things;
1) attaining the correct education,
2) using Forex tools which
3) use your own personal trading strategy, and
4) finding the correct Forex broker to fulfill your requirements.
Let's look at these individually:
Attaining the correct education. Your Mother may not know the difference between a Forex PIP and one of the backup singers for Gladys Knight. So would you send her to one of those infomercial Forex riches classes to find out? We hope not! There are literally hundreds of training courses and materials out there for proper training. Word of mouth recommendations might be the best path to follow here.
Forex tools can also do many things like send trading signals and various buy/sell alerts to your desktop or mobile device based on what your personal trading philosophy dictates. Many of these tools are software based and some are provided via your favorite Forex trading sites. Not all people base decisions based on these signals though and use things like technical and fundamental analysis to determine when to buy or sell.
It also is essential to develop your own personal trading strategy. Your ability to assume certain risks might not exactly be what other traders or your broker recommends. A Forex trading strategy is not something generic and involves your personal game plan.
Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.
One of the most important ways to make the greatest return (and, also carry a greater loss risk) in Forex trading is with the use of a margin account. These accounts may let you trade as much as $100k in currency for as little as $1000. Margin accounts are the lifeblood of Forex trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.
Used correctly and together, the above items can lead to a comfortable part or full time income. If you don't use all the information available to you, though, you may as well let Mom take the weekend visit to Vegas with her money to see Gladys Knight. Make sure that she has developed her own Forex trading strategy and has used "paper trades" many times before actually beginning trading for real. Better that ole Mom is equipped to make some real money rather than throwing it away on the gaming tables.
Forex Toolbox
SigmaForex operators to offer Premium Forex Trading Tools that are useful for advanced beginners and professionals Traders. The main technical and analysts working in developing these resources to meet its customers the highest level of satisfaction.
There are a number of tools in the toolbox and change the operator and one of the most important is the Forex chart. In its simplest form, the chart Forex chart of the performance of a currency pair over the period. Reading Forex chart is at the heart of any activity, and therefore it is important to be able to read and understand what they mean.
A chart is plotted as the change of a single currency pair EUR / USD AUD / CAD, and shows the movement of currencies against each other over time. For example, EUR / USD chart shows how the euro and the dollar has moved against each other during the period for which the table is drawn up.
Schedule at the bottom of the table, which may, for example, be divided into 15 minutes, one hour per day, week or longer period of time. Going up the right of the map is a phase-values, which are typically lasts for just under a little more than the upper and lower price reached during that period. For example, EUR / USD chart 1,2534-1,2564 run up to the May values.
A Forex chart is useful because it gives a very clear and easy to read under the covers of a pair of currencies and you can see at a glance whether a currency is strengthening or weakening of the act, you can. Dialog table is as important as the short period of time can help you see the very low, and trends over a longer period to help you identify trends in the longer term
There are a number of tools in the toolbox and change the operator and one of the most important is the Forex chart. In its simplest form, the chart Forex chart of the performance of a currency pair over the period. Reading Forex chart is at the heart of any activity, and therefore it is important to be able to read and understand what they mean.
A chart is plotted as the change of a single currency pair EUR / USD AUD / CAD, and shows the movement of currencies against each other over time. For example, EUR / USD chart shows how the euro and the dollar has moved against each other during the period for which the table is drawn up.
Schedule at the bottom of the table, which may, for example, be divided into 15 minutes, one hour per day, week or longer period of time. Going up the right of the map is a phase-values, which are typically lasts for just under a little more than the upper and lower price reached during that period. For example, EUR / USD chart 1,2534-1,2564 run up to the May values.
A Forex chart is useful because it gives a very clear and easy to read under the covers of a pair of currencies and you can see at a glance whether a currency is strengthening or weakening of the act, you can. Dialog table is as important as the short period of time can help you see the very low, and trends over a longer period to help you identify trends in the longer term
Forex Analyses
For example, let's say, we shall endeavor to maintain the gains from the movement and the transition from English to Russian ruble FOREX Pounds.Using can we determine who, or rather the end of the handle, the advantages that most want to to return to the investor. FOREX analysis to determine the costs and benefits of this strategy, and as we all know, this is very important to the borders of the investments and the potential benefits, each other, why funds if they do not reap a return on the amount that is greater ? FOREX analysis is made easier for the average investor, if he has access to the agent, or to view statistical information service. Band, which really a collection of the narrow investment opportunities are in almost every time. So, have access to the best available analysis FOREX can make a difference, and that rule should be practical mater, since the decision in the FOREX market, investment in the future of your money either by you or by the erosion of time. FOREX analysis can be a place not only to the amount of your assets, but also to the size and potential growth of your money. A brief analysis of the FOREX is an important key to a successful strategic investment.
Forex Trading Terms
When FX trading, it is a good idea to have some familiarity with basic terms that you will come across. Whether reading about the foreign currency exchange, or just understanding the jargon used by forex brokers, it is a good idea to have a basic knowledge of what common currency trading terms mean. Here are some terms forex brokers and others sometimes use in association with foreign exchange:
Leverage: This is the amount of money you are borrowing from forex brokers to make your FX trade. If you have 200:1 leverage, you pay 0.5% of what you are using to control your position, and the rest of the money comes from the forex broker.
Spread: This is the difference between the bid price and the ask price. You make a profit in currency trading when you overcome the spread.
Support: The level at which a forex trend changes from bearish to bullish.
Resistance: The opposite of support: The FX trend switches from bullish to bearish.
Pip: A term that stands for “percentage in point.” This is the smallest change that can be made to a currency rate.
Scalping: A technique that helps you get between three and five points per trade by using foreign currency pairs with low spreads. Most scalping trades last only a few seconds to a few minutes.
Margin call: Forex brokers often monitor your margin requirements. When the equity of your forex trading account drops below your usable margin, your open positions on the foreign exchange market are closed to keep your losses from mounting.
Cable: This is the nickname for the Great Britain pound and U.S. dollar foreign currency pair on the FX market.
Greenback, buck: Nicknames indicating the U.S. dollar in online currency trading.
Sterling: A nickname used for the Great Britain pound.
Fiber: A nickname used to indicate the euro currency.
Loonie: The currency exchange nickname for the Canadian dollar.
Kiwi: The FX trading nickname for the New Zealand Dollar
Leverage: This is the amount of money you are borrowing from forex brokers to make your FX trade. If you have 200:1 leverage, you pay 0.5% of what you are using to control your position, and the rest of the money comes from the forex broker.
Spread: This is the difference between the bid price and the ask price. You make a profit in currency trading when you overcome the spread.
Support: The level at which a forex trend changes from bearish to bullish.
Resistance: The opposite of support: The FX trend switches from bullish to bearish.
Pip: A term that stands for “percentage in point.” This is the smallest change that can be made to a currency rate.
Scalping: A technique that helps you get between three and five points per trade by using foreign currency pairs with low spreads. Most scalping trades last only a few seconds to a few minutes.
Margin call: Forex brokers often monitor your margin requirements. When the equity of your forex trading account drops below your usable margin, your open positions on the foreign exchange market are closed to keep your losses from mounting.
Cable: This is the nickname for the Great Britain pound and U.S. dollar foreign currency pair on the FX market.
Greenback, buck: Nicknames indicating the U.S. dollar in online currency trading.
Sterling: A nickname used for the Great Britain pound.
Fiber: A nickname used to indicate the euro currency.
Loonie: The currency exchange nickname for the Canadian dollar.
Kiwi: The FX trading nickname for the New Zealand Dollar
Forex Trading Margin
Margin trading allows you to leverage your capital into a larger position. Basically, forex brokers – including dbFX, which operates using a margin forex trading platform – lend their clients money so that they can control a larger position than they have the capital for. In forex trading, positions (called lots) are in chunks of 100,000 units of the base currency. Most people do not have $100,000 at their disposal in order to control such a large position. Using margin to leverage their capital, however, allows them to take $2,500 or $1,000 (or less) and control a large lot size.
Because lot sizes are so large, and because the foreign currency market is so volatile, a great deal of money can be made with each position. This allows the clients to make enough money to cover the margin used to trade forex. The flip side, though, is that if gains are magnified by the leverage use in currency trading, so are the losses.
Some forex brokers offer margin calculation services to help you keep track of how much of your account balance is available for new positions. With dbFX, which is owned by Deutsche Bank, it is possible to automatically see where you stand. This is very useful, since it can reduce the chances that you will over extend yourself. It is important to realize that margin forex trading can be devastating in some cases. Some forex brokers offer a 400:1 margin, but it is possible to select a 100:1 or 50:1 margin that is less risky. Your profit will be smaller, but so will your chance of a large loss.
Because lot sizes are so large, and because the foreign currency market is so volatile, a great deal of money can be made with each position. This allows the clients to make enough money to cover the margin used to trade forex. The flip side, though, is that if gains are magnified by the leverage use in currency trading, so are the losses.
Some forex brokers offer margin calculation services to help you keep track of how much of your account balance is available for new positions. With dbFX, which is owned by Deutsche Bank, it is possible to automatically see where you stand. This is very useful, since it can reduce the chances that you will over extend yourself. It is important to realize that margin forex trading can be devastating in some cases. Some forex brokers offer a 400:1 margin, but it is possible to select a 100:1 or 50:1 margin that is less risky. Your profit will be smaller, but so will your chance of a large loss.
Forex Methods
The Forex Market is indeed to be one of the great places to produce tremendous wealth, even in an recent economy of uncertainty. Better than Stocks and Futures Markets combined, Forex has opened its doors to individuals that want to have wealth sooner than they thought, and even larger than they ever dreamed of, and yes, that is you and me. In a such situation of the economy, companies turn their heads on Forex for additional income.
Did you know that the Forex Market is like fire? Because, if you do not know how to nourish or control fire, it takes over you and does some damage that can scar for for a very long time. But if you know where to direct it, place it, control its intensity and quantity, then fire is not a damaging element anymore, but useful. Evolution and time has taught man to control fire.
Same as in Forex, if you do not know how to make Forex work for you, your loss can be heartbraking and traumatizing. Forex Traders fail in forex, but not because it was just too risky, if you dig down deep, they tend to use a trade method that doesn’t work, for them. Remember that no matter how “effective” a trade method is, it won’t work unless it works for you. There are many forex trader success stories, using the method that works for them.
But what is a good trade method?Here are some guidelines in order to determine if a trade method will benefit you the most:
1. It must be a complete method, with setup conditions, entry rules, initial stop rules, and exit
strategy rules, leaving no decision to chance.
2 . It must include specific risk management, money management, and portfolio management
guidelines.
3. It must be based on technical analysis, but it must not be a 100% mechanical system.
4. It must take less than an hour a day to apply after learning how to trade with it.
In evolution and time, there are forex methods that some may not be aware of, on how Forex is flame that can be put to our good use and maybe it becomes an important resource of convenience, financial convenience. Find a good trading method using the guidelines mentioned, there are good methods out there that you can use to experience financial freedom with Forex, it is possible to have your economy rebound with Forex. Start now.
Did you know that the Forex Market is like fire? Because, if you do not know how to nourish or control fire, it takes over you and does some damage that can scar for for a very long time. But if you know where to direct it, place it, control its intensity and quantity, then fire is not a damaging element anymore, but useful. Evolution and time has taught man to control fire.
Same as in Forex, if you do not know how to make Forex work for you, your loss can be heartbraking and traumatizing. Forex Traders fail in forex, but not because it was just too risky, if you dig down deep, they tend to use a trade method that doesn’t work, for them. Remember that no matter how “effective” a trade method is, it won’t work unless it works for you. There are many forex trader success stories, using the method that works for them.
But what is a good trade method?Here are some guidelines in order to determine if a trade method will benefit you the most:
1. It must be a complete method, with setup conditions, entry rules, initial stop rules, and exit
strategy rules, leaving no decision to chance.
2 . It must include specific risk management, money management, and portfolio management
guidelines.
3. It must be based on technical analysis, but it must not be a 100% mechanical system.
4. It must take less than an hour a day to apply after learning how to trade with it.
In evolution and time, there are forex methods that some may not be aware of, on how Forex is flame that can be put to our good use and maybe it becomes an important resource of convenience, financial convenience. Find a good trading method using the guidelines mentioned, there are good methods out there that you can use to experience financial freedom with Forex, it is possible to have your economy rebound with Forex. Start now.
Forex Update
Crude futures are consolidating beneath $70/bbl and our 2nd tier downtrend line as volume continues to drop off since Tuesday’s sell-off. Meanwhile, the S&P futures are fluctuating around 1000 while the EUR/USD and GBP/USD consolidate. Therefore, investors have had little incentive to send crude into a technical recovery. However, our EUR/USD and GBP/USD trend lines are approaching their respective inflection points.
Forex Update
Investors are brushing aside the higher than expected Unemployment Rate since the number seems to have been priced in by weeks of disappointing Unemployment Claims data. Bulls are fighting to end the summer on a high note as investors get ready for the Labor Day holiday weekend. We recognize a nice pop in both the EUR/USD and GBP/USD while gold trades just under its highly psychological $1000/oz level. Additionally, the 30 Year T-Bond futures are experiencing a sizable pullback.
Forex HOT NEWS
The Swiss CPI edged up 0.1% in August from one month earlier (0.0% expected) and was down 0.8% year-on-year (0.9% expected).In the UK, new car sales were up 6.0% year-on-year. The numbers were up for the second month running.The US unemployment rate, which fell unexpectedly in July, rose from 9.4% to 9.7% in August. In contrast, non-farm payrolls declined by 216,000 in August compared with 276,000 the previous month. Commodity markets have been very volatile over the last week, with the price of oil dropping from $73.36 to $67.05 a barrel and gold surging from $943.80 to $997.20 an ounce.
Forex Forecasts - FX Forecasting A few points to understand when planning your strategy
If you are interested in Forex forecasts, it is important to understand that Forex trends are easy to see in retrospect. Foreign currency markets are predictable, at least in a broad sense – however, they still bow to a certain set of variables.
Once a trend is in place in the Forex market, it tends to stay around indefinitely. It can last for months, even years. These types of Forex forecasts open a window of opportunity for longer-term investingWatch the trends, but remember that Forex is unique.The Forex marketplace is highly liquid, with rapid changes that take place around the clock. You can make a profit Forex trading by adhering to a trading strategy that you have created for yourself. Enter your stops only when the odds are stacked in your favor.
Keep in mind, when making or analyzing Forex forecasts:
Forex is a truly seamless 24-hour market. Trades are conducted while you’re sleeping, eating, and working.
Forex is a true zero-sum game. This means that a gain is often offset by an equal loss.
Forex has no secondary measures, unlike other marketplaces. This means it has no upside/downside volume figures or P/E ratios.Major Forex players end their days mostly flat – this is because they are often handling billions of dollars - during their time zone.Central banks openly declare their intentions and impact trends in the Forex marketplace.The truth is although there are overall trends to forecast in the marketplace, Forex is a highly volatile market. Like the stock market, Forex markets are ruled predominantly by emotions, perceptions and the reactions to these. There are many cultural differences to be aware of when working with a large span of currencies. A spike in your candlestick chart may be the reaction to a new story in another country, and the ripple may settle by the time the business day has closed in that geographical region.
Take the time to gain an understanding of the market, and analyze reactions. Forex forecasts can be the key to meeting longer-term financial targets, but it’s up to you to choose the best strategy for your needs. Make a plan, set a goal, and monitor your progress in the upcoming weeks and months.
Once a trend is in place in the Forex market, it tends to stay around indefinitely. It can last for months, even years. These types of Forex forecasts open a window of opportunity for longer-term investingWatch the trends, but remember that Forex is unique.The Forex marketplace is highly liquid, with rapid changes that take place around the clock. You can make a profit Forex trading by adhering to a trading strategy that you have created for yourself. Enter your stops only when the odds are stacked in your favor.
Keep in mind, when making or analyzing Forex forecasts:
Forex is a truly seamless 24-hour market. Trades are conducted while you’re sleeping, eating, and working.
Forex is a true zero-sum game. This means that a gain is often offset by an equal loss.
Forex has no secondary measures, unlike other marketplaces. This means it has no upside/downside volume figures or P/E ratios.Major Forex players end their days mostly flat – this is because they are often handling billions of dollars - during their time zone.Central banks openly declare their intentions and impact trends in the Forex marketplace.The truth is although there are overall trends to forecast in the marketplace, Forex is a highly volatile market. Like the stock market, Forex markets are ruled predominantly by emotions, perceptions and the reactions to these. There are many cultural differences to be aware of when working with a large span of currencies. A spike in your candlestick chart may be the reaction to a new story in another country, and the ripple may settle by the time the business day has closed in that geographical region.
Take the time to gain an understanding of the market, and analyze reactions. Forex forecasts can be the key to meeting longer-term financial targets, but it’s up to you to choose the best strategy for your needs. Make a plan, set a goal, and monitor your progress in the upcoming weeks and months.
Forex Market
Trading information for beginners
If you’re a new to the forex (foreign exchange) market, you probably have a lot of questions. Making money in a global currency market is an exciting prospect; you’re probably wondering how, and what you need to get started. A lot of information on the internet is geared toward the knowledgeable trader who has at least experienced the stock market. Not everyone has the benefit of Wall Street experience. We are here to help you out if you’re not all that stock savvy and don’t have a financial background.
So, what is foreign currency exchange?
The basic term, foreign currency exchange, is used to explain the exchange of one country’s currency for another’s. If you’ve every traveled out of the country, you probably cashed in your American dollars to find that the trade was nowhere near equal. Forex is the same thing on a much larger scale – it’s similar to the market except it deals in liquid assets at all times. It’s the process of buying and selling cash from nations around the world.How can foreign currencies be traded?Currency exchanges can be handled on three different levels. You will need to use a broker or a brokerage firm that allows trades through one of the following:
• The Commodity Futures Trading Commission (CFTC)
• Securities and Exchange Commission (SEC)
There is also what is called the off-exchange (over-the-counter) market. An example of this would be that you return from your vacation from Canada and trade your cash in for American dollars. This is only on a retail level or corporate level. Off-exchange trading is subject to very limited regulatory oversight.How much money do I need to trade Forex?
It depends on the Forex dealer. Brokers concentrated in the Forex market can set their own minimum accounts and are allowed to set their own fees and rate schedules. You’ll need to ask your dealer how much money it’s going to cost you initially.
Many dealers will require a security deposit (a “margin”) to cover future transaction fees. When you choose a broker, make sure that you look over the fees and schedules carefully before you deposit any money. It is important to understand your broker’s capabilities, as well, before handling any transactions through their firm.
These are just a few basic facts about the Forex market to get you started. Trading foreign currencies can be an exhilarating experience when you’ve begun making money, but it is important to get an education before you start out. This website has a wealth of information for the new Forex trader, including tips and strategies. It is highly encouraged that you read up to explore the possibilities of trading in a worldwide environment.
If you’re a new to the forex (foreign exchange) market, you probably have a lot of questions. Making money in a global currency market is an exciting prospect; you’re probably wondering how, and what you need to get started. A lot of information on the internet is geared toward the knowledgeable trader who has at least experienced the stock market. Not everyone has the benefit of Wall Street experience. We are here to help you out if you’re not all that stock savvy and don’t have a financial background.
So, what is foreign currency exchange?
The basic term, foreign currency exchange, is used to explain the exchange of one country’s currency for another’s. If you’ve every traveled out of the country, you probably cashed in your American dollars to find that the trade was nowhere near equal. Forex is the same thing on a much larger scale – it’s similar to the market except it deals in liquid assets at all times. It’s the process of buying and selling cash from nations around the world.How can foreign currencies be traded?Currency exchanges can be handled on three different levels. You will need to use a broker or a brokerage firm that allows trades through one of the following:
• The Commodity Futures Trading Commission (CFTC)
• Securities and Exchange Commission (SEC)
There is also what is called the off-exchange (over-the-counter) market. An example of this would be that you return from your vacation from Canada and trade your cash in for American dollars. This is only on a retail level or corporate level. Off-exchange trading is subject to very limited regulatory oversight.How much money do I need to trade Forex?
It depends on the Forex dealer. Brokers concentrated in the Forex market can set their own minimum accounts and are allowed to set their own fees and rate schedules. You’ll need to ask your dealer how much money it’s going to cost you initially.
Many dealers will require a security deposit (a “margin”) to cover future transaction fees. When you choose a broker, make sure that you look over the fees and schedules carefully before you deposit any money. It is important to understand your broker’s capabilities, as well, before handling any transactions through their firm.
These are just a few basic facts about the Forex market to get you started. Trading foreign currencies can be an exhilarating experience when you’ve begun making money, but it is important to get an education before you start out. This website has a wealth of information for the new Forex trader, including tips and strategies. It is highly encouraged that you read up to explore the possibilities of trading in a worldwide environment.
Friday, September 18, 2009
Central banks
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.
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.
Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.
Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.
Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.
Market participants
Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.
Market size and liquidity
Presently, the foreign exchange market is one of the largest and most liquid financial markets in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.
Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0% In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.
Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.
Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—; ) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.
FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).
Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0% In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.
Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.
Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—; ) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.
FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).
Foreign exchange market
The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies.
The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.
In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.
The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.
In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.
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