Learn where to get news on Forex trading
By Felicia R. Blue
Since you have decided to trade in foreign currency exchanges, it’s important you stay abreast of Forex news and trends. The Forex market is a money-making field. However, it is a volatile market. Thanks to the Internet, you can find a wealth of information on Forex trading, so much information that it may feel overwhelming. Here are three ways you can obtain information on Forex trading without feeling like you're drowning:
1. Keep abreast of the market with online Forex trading news.
2. Know what other traders are doing by visiting Forex currency trading blogs.
3. Sign up for foreign currency exchange newsletters.
Action Steps
The best contacts and resources to help you get it done
Use online Forex trading news to help you stay on top of the market
You have to be on top of the foreign exchange trading market if you want to be a successful trader. These websites cover a wide range of topics when it comes to news, such as the country's currency value, tax policy, or if a country is experiencing a recession or economic boom. You can also read commentaries that analysts post on the website. If you need immediate access to the news, you can sign up for alerts so that the stories are delivered to you immediately.
I recommend:
MGForex offers currency trading news. You can see if the foreign currency exchange closed up or down. You can also read articles that analysts wrote. DailyFX is another foreign currency trading website you will want to visit. It covers market and economic news.
Use Forex currency trading blogs to learn what other traders are doing
Blogs have become a major force for studying trends or getting news. Computer users rely on blogs to find out what is happening in politics, sports, and even the Forex market. Perhaps one of the reasons why traders rely on Forex trading blogs is that they get to read comments that other traders posted. You can use these comments to come up with trading ideas or improving your existing trading systems.
I recommend:
Forex Blog offers currency exchange information, such as the British pound or Chinese Yuan. The articles cover a wide range of topics, including deflation or inflation. You’ll also want to look at EarnForex, which covers technical analysis. It also discusses on how you can better manage your money.
Subscribe to Forex currency exchange newsletters
You can find a wealth of information in FX trading newsletters. One of the features you will like in a newsletter is that you can read about professional Forex traders and their methodology to trading. It's important to understand the psychology behind foreign currency trading. Other topics that you might find interesting are money management or rules of currency trading.
I recommend:
Forex Advisor offers a free Forex currency exchange newsletter. Some of the topics it covers include the psychology of trading and how to study charts and execute your trading system. Action Forex also offers a newsletter on currency exchanges. In addition, you can learn what the central banks are doing.
Tips & Tactics
Helpful advice for making the most of this Guide
• Subscribe to Forex currency exchange newsletters first. Many offer valuable information on
the Forex market as well as trends and general news. This will help you save money in the
long run
Wednesday, November 4, 2009
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.
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.
Forex Trading Basics
The global foreign exchange market is the biggest market in the world. The 3.2 trillion USD daily turnover dwarfs the combined turnover of all the world's stock and bond markets.
There are many reasons for the popularity of foreign exchange trading, but among the most important are the leverage available, the high liquidity 24 hours a day and the very low dealing costs associated with trading.
Of course many commercial organisations participate purely due to the currency exposures created by their import and export activities, but the main part of the turnover is accounted for by financial institutions. Investing in foreign exchange remains predominantly the domain of the big professional players in the market - funds, banks and brokers. Nevertheless, any investor with the necessary knowledge of the market's functions can benefit from the advantages stated above.
In the following article, we would like to introduce you to some of the basic concepts of foreign exchange trading. If you would like any further information, we suggest that you sign up for a FREE Membership on this website, where you will be able to exchange views with other Forex traders and get answers to any questions you might have.
Margin Trading
Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, Saxo Bank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.
In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed. Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions.
Base Currency and Variable Currency
When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.
Dealing Spread, but No Commissions
When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.
The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.
This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USDEUR presents price swings of 150-200 points.
Spot and forward trading
When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security.
If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.
Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.
Interest Rate Differentials
Different currencies pay different interest rates. This is one of the main driving forces behind foreign exchange trends. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate.
Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when you buy the US dollar. Of course, an even more important factor normally is the relative value of the currencies, which changed 15% from low to high during 2005 – disregarding the interest rate differential.
From a pure interest rate differential viewpoint, you have an advantage of 100% per annum in your favour by being long US dollar and an initial disadvantage of the same size by being short.Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions!
Such a situation clearly benefits the high interest rate currency and as result, the US dollar was in a strong bull market all through 2005. But it is by no means a certainty that the currency with the higher interest rate will be strongest. If the reason for the high interest rate is runaway inflation, this may undermine confidence in the currency even more than the benefits perceived from the high interest rate.
Stop-loss discipline
As you can see from the description above, there are significant opportunities and risks in foreign exchange markets. Aggressive traders might experience profit/loss swings of 20-30% daily. This calls for strict stop-loss policies in positions that are moving against you.
Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This means that there will nearly always be an opportunity to react to moves in the main currency markets and a low risk of getting caught without the opportunity of getting out. Of course, the market can move very fast and a stop-loss order is by no means a guarantee of getting out at the desired level.
But the main risk is really an event over the weekend, where all markets are closed. This happens from time to time as many important political events, such as G7 meetings, are normally scheduled for weekends.
For speculative trading, we always recommend the placement of protective stop-lossorders. With Saxo Bank Internet Trading you can easily place and change such orders while watching market development graphically on your computer screen.
There are many reasons for the popularity of foreign exchange trading, but among the most important are the leverage available, the high liquidity 24 hours a day and the very low dealing costs associated with trading.
Of course many commercial organisations participate purely due to the currency exposures created by their import and export activities, but the main part of the turnover is accounted for by financial institutions. Investing in foreign exchange remains predominantly the domain of the big professional players in the market - funds, banks and brokers. Nevertheless, any investor with the necessary knowledge of the market's functions can benefit from the advantages stated above.
In the following article, we would like to introduce you to some of the basic concepts of foreign exchange trading. If you would like any further information, we suggest that you sign up for a FREE Membership on this website, where you will be able to exchange views with other Forex traders and get answers to any questions you might have.
Margin Trading
Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, Saxo Bank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.
In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed. Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions.
Base Currency and Variable Currency
When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.
Dealing Spread, but No Commissions
When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.
The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.
This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USDEUR presents price swings of 150-200 points.
Spot and forward trading
When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security.
If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.
Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.
Interest Rate Differentials
Different currencies pay different interest rates. This is one of the main driving forces behind foreign exchange trends. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate.
Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when you buy the US dollar. Of course, an even more important factor normally is the relative value of the currencies, which changed 15% from low to high during 2005 – disregarding the interest rate differential.
From a pure interest rate differential viewpoint, you have an advantage of 100% per annum in your favour by being long US dollar and an initial disadvantage of the same size by being short.Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions!
Such a situation clearly benefits the high interest rate currency and as result, the US dollar was in a strong bull market all through 2005. But it is by no means a certainty that the currency with the higher interest rate will be strongest. If the reason for the high interest rate is runaway inflation, this may undermine confidence in the currency even more than the benefits perceived from the high interest rate.
Stop-loss discipline
As you can see from the description above, there are significant opportunities and risks in foreign exchange markets. Aggressive traders might experience profit/loss swings of 20-30% daily. This calls for strict stop-loss policies in positions that are moving against you.
Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This means that there will nearly always be an opportunity to react to moves in the main currency markets and a low risk of getting caught without the opportunity of getting out. Of course, the market can move very fast and a stop-loss order is by no means a guarantee of getting out at the desired level.
But the main risk is really an event over the weekend, where all markets are closed. This happens from time to time as many important political events, such as G7 meetings, are normally scheduled for weekends.
For speculative trading, we always recommend the placement of protective stop-lossorders. With Saxo Bank Internet Trading you can easily place and change such orders while watching market development graphically on your computer screen.
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.
Tuesday, October 20, 2009
Forex Successful Curency Trading
The Foreign Exchange - Forex, FX - market is one of the biggest markets today. Daily turnover has skyrocketed from approximately 5 billion USD in 1977, to a staggering 3 trillion (and more) US dollars today. This is more than 40 times the daily turnover of the NASDAQ.
Forex currency trading is attractive to traders as currency markets are cnstantly fluctuating and there is potential to profit whether a currency is going up or down. Traders trade on margin which leverages their potential gains. What also makes it so popular is that there is no centralized location for trading as there is in futures or stocks, as trading occurs around the clock over the telephone and on computer terminals at thousands of locations worldwide.
Currency trading occurs when one country's currency is traded for another country's currency at the prevailing exchange rate. All currency is traded in LOTS. Each lot has a different amount of currency. Currency trading is carried out on a point (or pip) system. Traders are trying to capture points. Depending on the currency, each point is worth a different amount. For example, if the Brittish Pound is worth about $10 per point that is traded per lot and you trade 1 lot and capture 40 points, you make $400.
Forex currency trading does involve substantial amount of risk. About 10% of people make money and 90% lose money on currency trading! Why? Because many of those who enter the currency trading market are dirven by emotions and know very little about the techniques of currency trading. Having some forex currency trading education, being in the optimal state of mind, and having the right tools can help you to join the ranks of those 10% of people who do make money in forex currency trading.
Currency trading professionals seek price fluctuations and investors seek return on investment. Both take a calculated risk that is minimized by knowledge, optimal mind set, and the right tools. Currency trading turns into gambling when you are uneducated, trade emotionally or with a "hot tip".
Successful Forex Trading set of CDs is designed to help you become a successful Forex trader by programming your subconscious mind to help you choose the best currencies to trade, when to enter, when to exit the trade, develop your intuition and open yourself to financial abundance. Financial wizards will tell you that 80% of financial wizardry is in your mindset and the other 20% is in techniques and mechanics.
Successful Forex Trading CDs help you to get into the optimal mindset for successful Forex trading. Beside having the optimal mindset, you could also tremendously benefit from having the right tools
Forex currency trading is attractive to traders as currency markets are cnstantly fluctuating and there is potential to profit whether a currency is going up or down. Traders trade on margin which leverages their potential gains. What also makes it so popular is that there is no centralized location for trading as there is in futures or stocks, as trading occurs around the clock over the telephone and on computer terminals at thousands of locations worldwide.
Currency trading occurs when one country's currency is traded for another country's currency at the prevailing exchange rate. All currency is traded in LOTS. Each lot has a different amount of currency. Currency trading is carried out on a point (or pip) system. Traders are trying to capture points. Depending on the currency, each point is worth a different amount. For example, if the Brittish Pound is worth about $10 per point that is traded per lot and you trade 1 lot and capture 40 points, you make $400.
Forex currency trading does involve substantial amount of risk. About 10% of people make money and 90% lose money on currency trading! Why? Because many of those who enter the currency trading market are dirven by emotions and know very little about the techniques of currency trading. Having some forex currency trading education, being in the optimal state of mind, and having the right tools can help you to join the ranks of those 10% of people who do make money in forex currency trading.
Currency trading professionals seek price fluctuations and investors seek return on investment. Both take a calculated risk that is minimized by knowledge, optimal mind set, and the right tools. Currency trading turns into gambling when you are uneducated, trade emotionally or with a "hot tip".
Successful Forex Trading set of CDs is designed to help you become a successful Forex trader by programming your subconscious mind to help you choose the best currencies to trade, when to enter, when to exit the trade, develop your intuition and open yourself to financial abundance. Financial wizards will tell you that 80% of financial wizardry is in your mindset and the other 20% is in techniques and mechanics.
Successful Forex Trading CDs help you to get into the optimal mindset for successful Forex trading. Beside having the optimal mindset, you could also tremendously benefit from having the right tools
Forex Anayles
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 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 cal
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 cal
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.
Tuesday, October 13, 2009
How to Trade Forex
Trading foreign exchange is exciting and potentially very profitable, but there are also significant risk factors. It is crucially important that you fully understand the implications of margin trading and the particular pitfalls and opportunities that foreign exchange trading offers. On these pages, we offer you a brief introduction to the Forex markets as well as their participants and some strategies that you can apply. However, if you are ever in doubt about any aspect of a trade, you can always discuss the matter in-depth with one of our dealers. They are available 24 hours a day on the Saxo Bank online trading system, SaxoTrader.
The benchmark of its service is efficient execution, concise analysis and expertise – all achieved whilst maintaining an attractive and competitive cost structure. Today, Saxo Bank offers one of Europe's premier all-round services for trading in derivative products and foreign exchange. We count amongst our employees numerous dealers and analysts, each of whom has many years experience and a wide and varied knowledge of the markets – gained both in our home countries and in international financial centres. When trading foreign exchange, futures and other derivative products, we offer 24-hour service, extensive daily analysis, individual access to our Research & Analysis department for specific queries, and immediate execution of trades through our international network of banks and brokers. All at a price considerably lower than that which most companies and private investors normally have access to.
The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.
Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type.
Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements.
The benchmark of its service is efficient execution, concise analysis and expertise – all achieved whilst maintaining an attractive and competitive cost structure. Today, Saxo Bank offers one of Europe's premier all-round services for trading in derivative products and foreign exchange. We count amongst our employees numerous dealers and analysts, each of whom has many years experience and a wide and varied knowledge of the markets – gained both in our home countries and in international financial centres. When trading foreign exchange, futures and other derivative products, we offer 24-hour service, extensive daily analysis, individual access to our Research & Analysis department for specific queries, and immediate execution of trades through our international network of banks and brokers. All at a price considerably lower than that which most companies and private investors normally have access to.
The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.
Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type.
Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements.
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.
Trading Strategy
A forex trading strategy can provide profit for a skilled speculator. A FX trading strategy is, simply put, a method for using foreign exchange rates of currency from various countries to buy one country’s currency when it is undervalued, and exchange it for another country’s currency with it is of normal or higher value, with the difference being profit.
A common forex trading strategy could involve US dollars and the Euro, the official currency of most European countries. To use a simple example of a forex trading strategy, a speculator would buy Euros when they were undervalued; let’s say two Euros equaled one US dollar. This would be unusual because normally the two currencies are almost equal.
By spending one hundred US dollars to buy two hundred Euros a speculator would be able to buy more goods in Germany, France or other European countries. When the market changed and became more even, the speculator would have twice as many goods as he normally would have, and would be able to exchange those goods for US dollars once again.
The difference would be profit. This is a very simple explanation of a forex trading strategy, but gives the basics to the new speculator.Of course, when coming up with a forex trading strategy the trader should only use money that he or she can afford to loose. This is speculation, as opposed to investment. The chances for profit are real, and could come quick but if the market turns the opposite way than expected the trader could actually loose money.
A forex trading strategy can reap large profits, but if anyone tells you that all trades will result in profit, they haven’t studied the market as well as they should have and they are not correct. Still having a sound forex trading strategy for a competent businessman can be a profitable venture. It requires study of the markets, which takes time and is usually best accomplished by reading financial newsletters and using tools available on the Internet.
Getting the advice of a professional forex trading strategy specialist can also be a sound choice. Professionals have the time, education and skills and can generally help a trader come up with a forex trading strategy that will result in profit more often than one could do without their help.The most sound forex trading strategy options are generally used by large multinational corporations who are often able to make steady profits.
Watching what large corporations do who are involved in forex trading, looking for patterns they may have set, can help a trader to get the benefit of the very expensive expertise used by these large companies. Making watching of the large traders a part of a person’s education is definitely a good place to start a forex trading education. Identifying the state of the market, determining the time frame you are working in, and the currencies that have fluctuation and getting the advice of professionals through self study can be the wisest forex trading strategy option available.
A common forex trading strategy could involve US dollars and the Euro, the official currency of most European countries. To use a simple example of a forex trading strategy, a speculator would buy Euros when they were undervalued; let’s say two Euros equaled one US dollar. This would be unusual because normally the two currencies are almost equal.
By spending one hundred US dollars to buy two hundred Euros a speculator would be able to buy more goods in Germany, France or other European countries. When the market changed and became more even, the speculator would have twice as many goods as he normally would have, and would be able to exchange those goods for US dollars once again.
The difference would be profit. This is a very simple explanation of a forex trading strategy, but gives the basics to the new speculator.Of course, when coming up with a forex trading strategy the trader should only use money that he or she can afford to loose. This is speculation, as opposed to investment. The chances for profit are real, and could come quick but if the market turns the opposite way than expected the trader could actually loose money.
A forex trading strategy can reap large profits, but if anyone tells you that all trades will result in profit, they haven’t studied the market as well as they should have and they are not correct. Still having a sound forex trading strategy for a competent businessman can be a profitable venture. It requires study of the markets, which takes time and is usually best accomplished by reading financial newsletters and using tools available on the Internet.
Getting the advice of a professional forex trading strategy specialist can also be a sound choice. Professionals have the time, education and skills and can generally help a trader come up with a forex trading strategy that will result in profit more often than one could do without their help.The most sound forex trading strategy options are generally used by large multinational corporations who are often able to make steady profits.
Watching what large corporations do who are involved in forex trading, looking for patterns they may have set, can help a trader to get the benefit of the very expensive expertise used by these large companies. Making watching of the large traders a part of a person’s education is definitely a good place to start a forex trading education. Identifying the state of the market, determining the time frame you are working in, and the currencies that have fluctuation and getting the advice of professionals through self study can be the wisest forex trading strategy option available.
Multiply Your Wealth With FOREX
To many people that sounds amazing, and perhaps it is. It can be very profitable for investors and fortunes have been made by many. The incentive to learn forex trading is the oldest incentive by far, the incentive to make profit. If you learn forex trading you are learning how to make your money make more money for you, the goal of all investors.
If you choose to learn forex trading online you are not alone since thousands of people choose this method every year. If you learn forex trading online you have the benefit of choosing an instructor from almost anywhere in the world, or to choose multiple instructors.
When you learn forex trading in this fashion your virtual classmates could be from England, Hong Kong, Singapore, Paris, or any other exotic locale that you may have only read about in the past.
Obviously this diversity of culture and knowledge will be beneficial. During online chats and student discussions questions will be raised that you may not have thought of yourself, and you’ll be able to benefit by hearing the answers.
The ultimate goal of forex trading is to trade currency in a consistent manner that will result in profit. For instance, buying Euros with US dollars and then selling the Euros for more than you gave for them when the market changes.
This is the oldest rule of business, buy low and sell high. If you learn forex trading you’ll be able to do this on a scale you never would have thought possible, limited only by the amount of investment funds you have and by market conditions.
If you choose to learn forex trading online you are not alone since thousands of people choose this method every year. If you learn forex trading online you have the benefit of choosing an instructor from almost anywhere in the world, or to choose multiple instructors.
When you learn forex trading in this fashion your virtual classmates could be from England, Hong Kong, Singapore, Paris, or any other exotic locale that you may have only read about in the past.
Obviously this diversity of culture and knowledge will be beneficial. During online chats and student discussions questions will be raised that you may not have thought of yourself, and you’ll be able to benefit by hearing the answers.
The ultimate goal of forex trading is to trade currency in a consistent manner that will result in profit. For instance, buying Euros with US dollars and then selling the Euros for more than you gave for them when the market changes.
This is the oldest rule of business, buy low and sell high. If you learn forex trading you’ll be able to do this on a scale you never would have thought possible, limited only by the amount of investment funds you have and by market conditions.
Trading Spot Gold and Silver
Much like trading currency pairs, spot metals enables traders to take a long or short position in gold (XAU/USD) or silver (XAG/USD) while simultaneously taking the opposite position in the U.S. dollar or other major currencies.
Spot gold and silver trades globally in an over-the-counter market, and prices float freely based on supply and demand. The spot price is the price quoted for the metal to be paid for (including delivery) two days following the date of the actual transaction (also known as the settlement date).
Spot gold and silver trades a lot like currency pairs in the foreign exchange market. Trading is available 24 hours a day from Sunday at 6:00 pm ET to Friday at 5:00 pm ET. There is no central market however, the main centers for trading spot gold and silver are London, New York, and Zurich. Liquidity is typically highest when European market hours overlap with trading in New York - roughly four hours a day during the morning for U.S. traders. There may be some illiquid periods for trading spot gold and silver around the close of the US market (5pm ET to 6 pm ET). There is a twice-daily fix for gold and a daily fix for silver in London that helps set reference points for intraday prices. Settlement is very similar to forex settlements.
Who trades spot gold and silver, and why?
There are many different reasons that drive investors to trade spot gold and silver:
* Speculation on the price based on the use of fundamental and or technical analysis
* Creating a balanced, diversified asset allocation model for an overall investment portfolio
* Applying risk management as a hedge against market volatility and financial crises caused by
economic, political or social turmoil.
Spot gold and silver trades globally in an over-the-counter market, and prices float freely based on supply and demand. The spot price is the price quoted for the metal to be paid for (including delivery) two days following the date of the actual transaction (also known as the settlement date).
Spot gold and silver trades a lot like currency pairs in the foreign exchange market. Trading is available 24 hours a day from Sunday at 6:00 pm ET to Friday at 5:00 pm ET. There is no central market however, the main centers for trading spot gold and silver are London, New York, and Zurich. Liquidity is typically highest when European market hours overlap with trading in New York - roughly four hours a day during the morning for U.S. traders. There may be some illiquid periods for trading spot gold and silver around the close of the US market (5pm ET to 6 pm ET). There is a twice-daily fix for gold and a daily fix for silver in London that helps set reference points for intraday prices. Settlement is very similar to forex settlements.
Who trades spot gold and silver, and why?
There are many different reasons that drive investors to trade spot gold and silver:
* Speculation on the price based on the use of fundamental and or technical analysis
* Creating a balanced, diversified asset allocation model for an overall investment portfolio
* Applying risk management as a hedge against market volatility and financial crises caused by
economic, political or social turmoil.
Forex Fundamental Analysis
In order to make Forex trading strategy, most Forex traders rely on analysis such as fundamental analysis. Forex Fundamental Analysis is a type of market analysis that uses market trends to determine the future value of a particular currency in the FX market. Fundamental analysis gives us an overview of currency movements based on economic, political, environmental, other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the financial instrument. Forex fundamental analysis strategies require a basic understanding of supply and demand since it provides information how political and economical events influence the currency market. It is about looking at the intrinsic value of an investment. In other words, its application entails looking at the economic conditions that affect the valuation of a nation's currency.
The basis of fundamental analysis is mainly on the political and economic changes as these can frequently affect currency prices. Thus, traders are most likely to gather information from news sources to determine unemployment forecasts, political ideologies, economic policies, inflation, and growth rates. Traders keep an eye on the figures and statements given in speeches by important politicians and economists, as well as announcements related to United States economy and politics. Speeches from prominent people like the Chairman of the Federal Reserve Bank of USA, Secretary of Treasury, President of the Federal Reserve Bank of San Francisco and so on.
It is known that if there is a decrease in supply but the level of demand remains the same, there will be an increase in market prices. On the other hand, if there is an increase in supply, it produces the opposite effect. Thus, fundamental analysts study the supply and demand for the country's currency, products or services, quality management, government policies, past and forecast of performance, future plans and all the economic indicators like Gross Domestic Product (GDP), industrial production, interest rates, international trade, CPI, durable goods orders, PPI, PMI and retail orders. When all data is gathered from these studies, the analysts will construct a model that will check the current and estimated value of a currency against another. Analyst will then decide whether the currency ought to rise or fall after estimating the intrinsic value and comparing it to the current exchange rate.
In summary, Forex fundamental analysis focuses on what ought to happen in a market. Factors involved in price analysis include supply and demand, seasonal cycles, weather, and government policy. Thus, the fundamentalist studies that cause of market movement. Fundamental analyst needs to know a particular market intimately. In practice, traders use fundamental analysis in conjunction with technical analysis to determine a Forex trading strategy, fundamental analysis is considered to be the opposite of technical analysis.
The basis of fundamental analysis is mainly on the political and economic changes as these can frequently affect currency prices. Thus, traders are most likely to gather information from news sources to determine unemployment forecasts, political ideologies, economic policies, inflation, and growth rates. Traders keep an eye on the figures and statements given in speeches by important politicians and economists, as well as announcements related to United States economy and politics. Speeches from prominent people like the Chairman of the Federal Reserve Bank of USA, Secretary of Treasury, President of the Federal Reserve Bank of San Francisco and so on.
It is known that if there is a decrease in supply but the level of demand remains the same, there will be an increase in market prices. On the other hand, if there is an increase in supply, it produces the opposite effect. Thus, fundamental analysts study the supply and demand for the country's currency, products or services, quality management, government policies, past and forecast of performance, future plans and all the economic indicators like Gross Domestic Product (GDP), industrial production, interest rates, international trade, CPI, durable goods orders, PPI, PMI and retail orders. When all data is gathered from these studies, the analysts will construct a model that will check the current and estimated value of a currency against another. Analyst will then decide whether the currency ought to rise or fall after estimating the intrinsic value and comparing it to the current exchange rate.
In summary, Forex fundamental analysis focuses on what ought to happen in a market. Factors involved in price analysis include supply and demand, seasonal cycles, weather, and government policy. Thus, the fundamentalist studies that cause of market movement. Fundamental analyst needs to know a particular market intimately. In practice, traders use fundamental analysis in conjunction with technical analysis to determine a Forex trading strategy, fundamental analysis is considered to be the opposite of technical analysis.
FOREX Trading System
Want a good Forex Trading System? Searching for a good forex trading system? If you're anything like me, you've been probably exposed to a number of Forex trading systems haven't you? Most of those trading systems are 100% mechanical in their nature. You know the drill: "if A and B happen, do C... if not, do D instead". They basically tell you exactly what to do and when to do it, which is all good but... the problem is that you do not know what you are actually basing your trading decisions on! Pulling the trigger without know the "why?" factor always gets me a bit nervous. Here's the good news though: You can now learn Forex as a trader instead as a system-follower!Forex Trading System.
Luckily for all of us who enjoy old-school trading, there's a fantastic learning program now available where everything related to Forex trader is taught: chart-reading, trend analyzing, stop loss placement, profit takings, news announcements, trading psychology... absolutely everything!!! And you know what's best? it's all taught over live videos! cool ey? If you want to actually learn how to trade Forex, trust me on this one: you don't want to miss this out!Let's see a small snippet of the type of learning you will get in forex trading:Forex Trading System Many folks have asked repeatedly the following particular question regarding Money Management: "If I spot a crystal-clear, mint-perfect, extraordinarily high-probability setup... is it OK to increase my usual lot size for that very trade?" I remember one guy who had even developed a rather unique Money Management system under which he'd rank his trade setups from 1 to 5 points: 1 being a low quality setup with a high degree of risk, and 5 being an A-setup with absolutely all the ducks falling in line.
Luckily for all of us who enjoy old-school trading, there's a fantastic learning program now available where everything related to Forex trader is taught: chart-reading, trend analyzing, stop loss placement, profit takings, news announcements, trading psychology... absolutely everything!!! And you know what's best? it's all taught over live videos! cool ey? If you want to actually learn how to trade Forex, trust me on this one: you don't want to miss this out!Let's see a small snippet of the type of learning you will get in forex trading:Forex Trading System Many folks have asked repeatedly the following particular question regarding Money Management: "If I spot a crystal-clear, mint-perfect, extraordinarily high-probability setup... is it OK to increase my usual lot size for that very trade?" I remember one guy who had even developed a rather unique Money Management system under which he'd rank his trade setups from 1 to 5 points: 1 being a low quality setup with a high degree of risk, and 5 being an A-setup with absolutely all the ducks falling in line.
Friday, October 2, 2009
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.
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
The GBP/USD is stabilizing further above our 3rd tier uptrend line, yet can manage to break free of our 2nd tier downtrend line. These two trend lines are colliding soon, and we notice multiple inflection points occurring in the EUR/USD. Hence, the two currency pairs are implying there could be a jolt of volatility soon. However, trading should be light today since many traders are taking a long weekend for the Labor Day holiday.
Forex Update
The GBP/USD is stabilizing further above our 3rd tier uptrend line, yet can manage to break free of our 2nd tier downtrend line. These two trend lines are colliding soon, and we notice multiple inflection points occurring in the EUR/USD. Hence, the two currency pairs are implying there could be a jolt of volatility soon. However, trading should be light today since many traders are taking a long weekend for the Labor Day holiday.
Tuesday, September 15, 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.
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
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.
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 foreign exchange market is unique because of
its trading volumes,
the extreme liquidity of the market,
its geographical dispersion,
its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
the variety of factors that affect exchange rates.
the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
the use of leverage
As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank fo InternationalSettlements, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:
$1.005 trillion in spot transactions
$362 billion in outright forwards
$1.714 trillion in foreign exchange swaps
$129 billion estimated gaps in reporting
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 foreign exchange market is unique because of
its trading volumes,
the extreme liquidity of the market,
its geographical dispersion,
its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
the variety of factors that affect exchange rates.
the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
the use of leverage
As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank fo InternationalSettlements, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:
$1.005 trillion in spot transactions
$362 billion in outright forwards
$1.714 trillion in foreign exchange swaps
$129 billion estimated gaps in reporting
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