FOREIGN EXCHANGE

What are commonly traded currency pairs (Majors) in forex trading?

2009-11-18T07:14:00.000-08:00

Majors are the most liquid and widely traded currency pairs in the world. Trades involving majors make up about 90% of total Forex trading. The Majors are: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD and USD/CAD.

Symbol	Country	Currency
USD	United States	Dollar
EUR	Euro members	Euro
GBP	Great Britain	Pound
JPY	Japan	Yen
CHF	Switzerland	Franc
CAD	Canada	Dollar
AUD	Australia	Dollar

GBP/USD is the only currency pair with its own name. It is known as "Cable" but there are also lots of abbreviations for other currency pairs such as

Symbol	Known As
EUR/USD	Euro
GBP/USD	Cable
GBP/JPY	Geppy
AUD/USD	Aussie
NZD/USD	Kiwi
USD/CAD	Loonie
USD/CHF	Swissy
USD/JPY	Gopher

When is the time to trade forex ?

2009-11-18T07:12:00.000-08:00

Forex can be traded 24 hours a day and 5 days a week. The main trading centers are in London, New York, Tokyo, and Singapore, but banks throughout the world participate. The biggest foreign exchange trading centre is London, followed by New York and Tokyo. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the US session and then back to the Asian session, excluding weekends.

The following approximate market schedule is based on New York local time: Japan forex markets open at 19:00 followed by Singapore and Hong Kong that open at 21:00. European markets open in Frankfurt at 2:00, while London opens at 3:00. New York forex markets open at 8:00. European markets close at 12:00 and Australian markets start again at 18:00.

What is traded in Forex Trading?

2009-11-18T07:11:00.000-08:00

The answer is Currency. Currencies are always traded in pairs, such as EUR/USD, GBP/USD, etc. Why? Because when you trade forex, you are exchanging 1 currency to another currency simultaneously (buying 1 currency and selling the other at the same instance). You will gain from differences of traded currency price rates.

What is Forex Trading?

2009-11-18T07:10:00.001-08:00

The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.

The average daily trade in the global forex markets currently exceeds US$ 2 trillion. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks.

What do you need to start trading forex?

2009-11-18T07:08:00.000-08:00

· A Personal Computer (and PDA, optional and preferable)

· Stable and high speed internet connection

· Limited equity (for example $1000)

· Reliable, reputable and trusted online forex broker

You dont need an office, otherwise you can start your business from home or anywhere else. Even when you are traveling, you still can make money. As simple as that!

Why you should consider forex (Currency) trading as your primary business?

2009-11-18T07:07:00.000-08:00

• In forex trading, you decide when you want to work, how long you want to work, and how much money you want to make (You are the Boss)
• Forex trading requires limited equity and the yield could be unlimited
• You can make money anywhere (as long as you are connected to internet) and anytime (forex market opens 24 hours a day, 5 days a week).
• You can maximize your profit and limit your loss.
• You will have a big probability to become financially freedom by trading forex. All you need to do is read this website for forex tutorial and guide, find your own profitable trading system (or use ours) and repeat making profit by your own trading system.

Learn Forex (Foreign Currency) Trading?

2009-11-18T07:05:00.000-08:00

Why should you learn forex? I myself make a lot of money from forex. Forex is the largest money market in the world. There is always an opportunity for you to make money. No matter how hard the competition is. The part I love most is you can earn unlimited profit in forex.

European Economics Preview: Eurozone CPI Data Due

2009-10-15T13:21:00.000-07:00

Thursday, major statistical reports due for the day include consumer prices data from Eurozone and Italy.

At 2:00 am ET, retail sales data for August is due from Finland. Sales had dropped 0.3% year-on-year in July. In the meantime, EU 25 new car registrations report is also due.

At 3:00 am ET, the Czech Statistical Office is slated to release producer price data for September. Prices are expected to drop 5.2% year-on-year, larger than the 5.1% decline seen in the previous month. Czech import and export prices data for August is also expected at the same time.

In the meantime, the Turkish statistical office is scheduled to issue unemployment data for July. Economists expect the unemployment rate to ease moderately to 12.9% from 13% in the preceding month. Further, Slovakia is set to release harmonized consumer price data for September at 3:00 am ET.

Half an hour later, retail trade figures for August is due from Statistics Netherlands. Sales are expected to drop 4% annually, faster than the 3.6% fall in July.

At 4:00 am ET, the European Central Bank is expected to release its monthly bulletin.
At the same time, the Italian statistical office ISTAT is scheduled to release the final report for September CPI. The preliminary estimate showed that consumer prices rose 0.2% on a yearly basis in September. Meanwhile, the HICP climbed 0.3% in September from the previous year. The statistical office is expected to confirm the preliminary estimate.

Also due at 4:00 am ET, is September’s trade data from Norway. The trade balance logged a surplus of NOK 24.9 billion in August.

At the same time, Austrian consumer price inflation data for September is also due. In August, the inflation rate stood at 0.3% on a monthly basis and 0.4% on a yearly basis.

At 5:00 am ET, the Eurostat is expected to release a revised report for Eurozone HICP. Eurozone consumer prices declined 0.3% on a yearly basis in September. The statistical office is expected to confirm the initial estimate released on September 30.

New York Fed Index Rises To Highest Level In Over Five Years

2009-10-15T13:19:00.000-07:00

Conditions for New York manufacturers improved significantly in October, according to a report released by the Federal Reserve Bank of New York on Thursday, with the index of activity in the sector rising to its highest level in over five years.

The New York Fed said its general business conditions index rose to 34.6 in October from 18.9 in September, with a positive reading indicating growth in the manufacturing sector. Economists had been expecting the index to fall to a reading of 17.5.

With the unexpected increase, the business conditions index rose to its highest level since May of 2004, when the index came in at 35.0.

The unexpected increase by the index was partly due to notable improvements in new orders and shipments. The new orders index rose to 30.8 in October from 19.8 in September, while the shipments index jumped to 35.1 from 5.3 in the previous month.

Employment also showed a significant improvement compared to the previous month, with the number of employees index rising to 10.4 in October from a negative 8.3 in September. This marks the first positive reading for the index since June of 2008.

On the inflation front, the prices paid index edged down to 19.5 in October from 20.2 in September, while the prices received index fell to a negative 5.2 from a negative 3.6 in the previous month.

US Borrow And Spend Policies Continue

2009-10-14T12:50:00.000-07:00

European industrial output rose for a fourth month in August, increasing just below 1% from July. From a year earlier, August output fell 15.4%, a big drop but still the smallest YOY decline in eight months. The euro (EUR) area continues to recover ‘at a gradual pace’ according to ECB President Trichet. The positive news coming from the manufacturing sector is a good sign the European economic recovery will be sustainable.

Another report overnight showed that China’s exports fell by the least amount in nine months during September. As we have written over and over again, China will lead the world out of the global recession, and the latest reports show China beginning to pull away. Reports due out next week will likely show that China’s economic growth accelerated to 8.9% in the third quarter, slightly above the government’s target.

Australia Business Confidence Declines In September

2009-10-14T12:45:00.000-07:00

Business confidence in Australia slipped for the first time in five months, driven by a decline in confidence among retailers and manufacturers, a report released by the National Australia Bank said on Tuesday.

The index measuring business confidence stood at 14 in September, down 4 points from August’s reading of 18. August marked the highest reading recorded in the index in nearly six years. A figure above zero means optimists outnumber pessimists.

The decrease in the index was largely due to the receding confidence among the retail and manufacturing sectors, which fell 6 points and 11 points, respectively, from August, while higher confidence was seen in the construction sector on the back of higher infrastructure spending.

Hong Kong May Modify Land Supply Arrangement

2009-10-14T12:41:00.000-07:00

Hong Kong’s government will closely watch and revise its land supply arrangements, if necessary, on rising concern over development of a property bubble in the economy, Chief Executive Donald Tsang said in his annual policy address on Wednesday.

Tsang told the Legislative Council, “The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home, and the possibility of a property bubble.” He noted that property prices returned to their mid-2008 levels, except for luxury flats.

For luxury flats, prices are still below their peak in 1997. At the same time, home purchasing power is greater than in 1997 and the number of negative equity cases remains very small. A steady property market can avoid property owners from being hit hard during an economic downturn.

According to Land Registry, the number of sale and purchase agreements for all building units received for registration in September jumped 95.9% annually to 14,437 units and sales of residential units surged 102.2%.

Hong Kong GDP rose 3.3% sequentially in the second quarter after falling 4.3% in the first three months of the year. That was the first increase following declines in four consecutive quarters. The strong stimulus measures adopted by the Mainland Authorities helped the Chinese economy regain growth momentum, thereby benefiting the Hong Kong economy.

UK Sept. Annual Inflation Lowest Since 2004

2009-10-14T12:37:00.000-07:00

UK annual inflation slowed more than expected in September to a five-year low. Also, inflation stood below the central bank’s 2% target for the fourth straight month.

Annual inflation slowed to 1.1% in September from 1.6% in August, the Office for National Statistics reported Tuesday. This was the lowest annual rate since September 2004. Economists had expected the annual rate to ease to 1.3%. Month-on-month, consumer prices remained flat, the lowest monthly change since records began in 1996. Core annual inflation that strips out energy, food, alcohol and tobacco stood at 1.7%, down from 1.8% in August.

The largest downward contribution to the change in the CPI annual rate came from housing and household services, the ONS said. There were also large downward contributions from food and non-alcoholic beverages as well as restaurants and hotels. On the other hand, the largest upward contribution came from transport and clothing and footwear.

Further, the agency said the retail price index, which is used for indexation of pension and state benefits, stood at 215.3 in September, up from 214.4 in August. From August, the retail price index was up 0.4%.

Retail prices dropped 1.4% in September from the same period of last year compared to a 1.3% fall in August. Consensus forecast was for a 1.5% fall. Excluding mortgage interest payments, retail prices were up 1.3%, slower than the 1.4% growth seen in the prior month.

Overall results for the third quarter were encouraging. The survey found that confidence strengthened across the board in the third quarter. Domestic orders and sales also strengthened considerably, especially in manufacturing. However, they remain negative, making it difficult to argue that the UK has already emerged from recession. The cashflow indicator remained negative and still remain weak by historical standards.

UK Housing Market Continues To Strengthen In September

2009-10-14T12:35:00.000-07:00

Confidence returned to the UK housing market in September, with the net balance of respondents expecting house price to rise moving up to its highest level since May 2007, a survey showed Tuesday.

Data released by the Royal Institute of Chartered Surveyors showed that a net 22% saw house prices rising rather than falling in the three months ended September, the highest balance in more than two years. This comes after a net balance of 10% in August, and stood higher than economists’ expectations for a balance of 16%.

The biggest gains were seen in London, with a net 79% seeing rise in prices rather than falls, while in the South east, the proportion was 52%. However, a net 18% of respondents saw more price falls rather than rises in Yorkshire and Humberside. In Wales, the net balance was 15%.

On Monday, the Council of Mortgage Lenders said the number of house purchase loans in August totaled 52,700, up 29% from the same period of last year. However, approvals fell 5% from July.
On October 7, Fitch Ratings in a report warned that the recent gains in house prices could provide only a temporary respite and expects the prices to fall from its nearly two year peak. The rating agency forecasts house prices to fall 30% overall from its peak in October 2007, with the prices being currently 13% below that peak, having dipped 19% in the first quarter. The fall would bring it in line with the long-term average, Fitch said.

The latest house price data from Nationwide showed that prices rose for the fifth consecutive month in September. House prices climbed a seasonally adjusted 0.9% month-on-month in September, after a 1.4% rise in the preceding month. Further, the Lloyds Banking Group Plc’s Halifax division said on October 6 that house prices climbed for the third consecutive month in September, by 1.6% on a monthly basis compared to a 0.8% rise in August.

The latest quarterly survey from the British Chamber of Commerce released Tuesday said the decline in economic activity in Britain was coming to an end, although most of the rebound is from historic lows.

Hong Kong CPI Logs Biggest Decline In Five Years

2009-08-23T22:53:00.000-07:00

Hong Kong consumer prices dropped for the second consecutive month in July and marked its biggest fall in five years, the Census and Statistics Department said on Thursday.

The consumer price index or CPI declined 1.5% year-on-year in July, worse than a 0.9% fall in the previous month. The decline was in line with economists’ expectations. This was the first decline in CPI since January 2005 and the biggest since early 2004. The CPI had grown 6.3% in the same month last year.

The CPI, excluding the effects of all government’s one-off relief measures or underlying CPI, dropped 0.3% in July, in contrast to the 0.4% growth in the previous month. This was mainly due to the decline in food prices and smaller increase in private housing rentals.

During the first seven months of the year, the CPI rose 0.5% from the same period of the previous year. For the three months ending July, the index dropped 0.8% year-on-year.

A Hong Kong government spokesman said, the consumer prices decline in July was a part of a global phenomenon. The government expects the underlying consumer price inflation to stay negative in the coming months, as local price pressures continue to subside and import prices remain soft.

Last week, the government forecast headline consumer price inflation for 2009 at 0.5%, revised down from 1% predicted in May. Underlying consumer price inflation is expected at 0.9%, same as in May.

Though the main economic indicators are yet to confirm an economic recovery, Hong Kong’s economy emerged from the worst recession in the second quarter, prompting the government to raise the outlook for this year.

The government expects the recovery process to be “rather bumpy”. It now expects the economy to contract by 3.5%-4.5% in real terms this year, up from 5.5%-6.5% decline forecast in May. Most private sector analysts are currently projecting the economy to contract by 3.5%-5.5%.

Philippines Ends Monetary Easing In August

2009-08-23T22:47:00.000-07:00

Thursday, the Philippine central bank ended its monetary easing that started in December 2008 as the economy showed signs of recovery from the global recession.

The Bangko Sentral ng Pilipinas held its key interest rate unchanged at a record low of 4%, in line with expectations. The interest rate on overnight lending or repurchase facility was kept at 6%.

In July, the central bank cut its key policy interest rate by 25 basis points to the current level.

Since December 2008, the central bank made a cumulative reduction of 200 basis points in its benchmark interest rate. The central bank also initiated liquidity enhancing measures.

Asian central banks have stopped cutting interest rates after seeing signs of economic recovery and demand rebound. In the second quarter, the Japanese economy grew 3.7% and China expanded 7.9%. Economic growth was 20.7% in Singapore.

Weekly Jobless Claims Show Unexpected Increase

2009-08-23T22:45:00.001-07:00

While recent data has shown some signs of stabilization in the labor market, the Labor Department released a report Thursday morning showing that first-time claims for unemployment benefits unexpectedly increased in the week ended August 15th.
The report showed that initial jobless claims rose to 576,000 from the previous week’s revised figure of 561,000. The increase came as a surprise to economists, who had expected jobless claims to edge down to 550,000 from the 558,000 originally reported for the previous week.
With the unexpected increase, jobless claims rose for the second consecutive week, although they remain well off the highs seen in March.
The Labor Department also said that the less volatile four-week moving average rose to 570,000 from the from the previous week’s revised average of 565,750.
Additionally, the report showed that continuing claims edged up to 6.241 million in the week ended August 8th from the preceding week’s revised level of 6.239 million.

UK July Retail Sales Register Biggest Rise Since 2008

2009-08-23T22:42:00.000-07:00

UK retail sales in July registered its biggest annual increase since May 2008 reinforcing the perception that recession is slowly leaving the economy. At the same time, government borrowing was the largest on record for July.

Retail sales rose 3.3% in July from a year earlier, which was the biggest increase since May 2008, the Office for National Statistics reported Thursday. July’s increase was larger than the expected growth of 2.7%.

Predominantly food store sales rose 2% annually in July and non-food store sales grew 3.4%. Clothing and footwear sales increased 10.3%, while sales volume for household goods stores dropped 1.3% in July.

On a monthly basis, retail sales volume grew 0.4% in July, in line with expectations, but slower than June’s revised 1.3% increase.

Further, the ONS report showed that the seasonally adjusted value of retail sales increased 2.6% on a yearly basis in July. Meanwhile, the estimated total value of sales on an unadjusted basis was GBP 21.9 billion in July. The average weekly value of sales was GBP 5.5 billion.

Philly Fed Index Turns Positive For First Time In Almost A Year

2009-08-23T22:39:00.001-07:00

Manufacturing activity in the mid-Atlantic region is showing some signs of stabilizing, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the sector unexpectedly climbing into positive territory in August.

The Philly Fed said its index of current activity rose to 4.2 in August from a negative 7.5 in July, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase to a negative 2.0.

With the bigger than expected increase, the index rose above zero for the first time since September of 2008 and reached its highest level since November of 2007.

However, Peter Boockvar, equity strategist for Miller Tabak, noted, “The data measures the direction of improvement, not the degree. So, don’t extrapolate that we are at November ‘07 output levels.”

A turnaround in new orders contributed to the improvement in the sector, with the new orders index rising to 4.2 in August from a negative 2.2 in July. The shipments index also jumped to 0.6 from a negative 9.5 in the previous month.

The report also showed that the inventories index rose to 0.3 in August from a negative 15.4 in July. This marks the first positive reading for the inventories index since September of 2007.

Leading Economic Indicators Rose For Fourth Consecutive Month In July

2009-08-23T22:37:00.001-07:00

Research group the Conference Board released its report on leading economic indicators in the month of July on Thursday, showing that its leading indicators index increased for the fourth consecutive month.

The report showed that the leading economic index rose 0.6 percent in July following an upwardly revised 0.8 percent increase in June. Economists had expected the index to increase by 0.7 percent, matching the increase originally reported for the previous month.

Positive contributions from six of the ten indicators that make up the leading index contributed to the continued growth.

The interest rate spread, weekly jobless claims, weekly manufacturing hours, supplier deliveries, stock prices and manufacturers’ new orders for non-defense capital goods contributed positively to the index.

Meanwhile, the negative contributors were the index of consumer expectations, real money supply, and building permits. Manufacturers’ new orders for consumer goods and materials held steady in July.

Eurozone Private Sector Activity Stabilizes In August

2009-08-23T22:32:00.000-07:00

(RTTNews) - The Eurozone private sector economy showed signs of broad stabilization as the Purchasing Managers’ Index hit the threshold level for August. A return to growth in manufacturing output and slowing rate of contraction in the service sector led to the stabilization.

The Flash Eurozone Composite Output Index rose to 50 in August from 47 in July, a survey from the Markit Economics showed Friday. Economists had expected the index to edge up to 48 in August. The latest reading marked the end to a fourteen-month stretch below the no-change mark of 50.

A reading above 50 indicates an expansion in the private sector activity, while a level below 50 suggests contraction.

Since its record low witnessed in February, the headline reading improved for each of the last six months. The increase seen in August was the greatest in the series history.

The Flash Purchasing Managers’ Index for the manufacturing sector stood at its 14-month high of 47.9 in August, rising from 46.3 in July. The expected reading was 47.5.

Meanwhile, the services PMI came in at 49.5, up from 45.7 in July. The services activity index posted its highest reading in the current fifteen-month sequence of contraction and stood above the expected 46.5.

European Session: USD Drops vs. Yen as Initial Jobless Claims Unexpectedly Rises

2009-08-23T22:30:00.001-07:00

The US Dollar continued its fall backed by rising equity markets as Chinese equities started its rebound after the 4% decline on Wednesday. AIG said that it plans to repay the money borrowed from the US government which also helped push the equity markets higher. Leading indicators posted a reading of a rise of 0.6% backed by improvements in job sector and positive equity markets while the Philadelphia Fed manufacturing activity showed a positive reading at 4.2 against an expectation of -2.0 and better than the previous reading of -7.5 as new orders received increased. This data shows that the manufacturing sector has gained the most majorly boosted by the auto sector where the cash-for-clunkers program has helped the most.

Risk of US Session

2009-08-23T22:28:00.000-07:00

Although every investment involves some degree of risk, the risk of loss in trading off‐exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make an informed decision prior to investing. The material presented here is not to be construed as trading advice or strategy. ACMNY makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change.

US Session: Bear Market Rally On Positive US & European Economic Data

2009-08-23T22:25:00.001-07:00

Positive economic data out of the Euro zone and United States managed to lift investors’ desire for riskier assets, pushing equity markets higher. The EurUsd rose 73pips, finding support at 1.432, while the UsdJpy fell 32pips to 94.50. The GbpUsd appreciated 50pips, bringing the cable to the upper-range of 1.65. Equity markets rose in the U.S. and Europe, with the Dow higher by 1.45% or 136pts and the FTSE up by 1.43% or 66pts. The yield curve experienced some flattening, with the 10 and 30 year bonds up 12 and 9bps respectively. Commodities were higher across the board with oil up by $.44bbl at $73.39bbl and gold up $13.4oz approaching the mid-range of $954oz.

Non-Bank Foreign Exchange Companies

2009-07-31T18:53:00.000-07:00

Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account.

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

Commercial Companies

2009-07-31T18:50:00.001-07:00

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

2009-07-31T18:47:00.000-07:00

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.

Understanding Forex

2009-05-18T17:19:00.000-07:00

For the absolute newcomer to forex trading, this short collection of videos found on youtube.com will gently introduce you to the world of currency exchange. Several education and forex training programs are readily available over the Web to further your trading skills and knowledge and range from forex courses to rather complex software algorithms to help with trade decisions. I suggest you take the time to read the appropriate reviews and feel free to post reviews on any company, platform or website that you have had experience with.

Learn Forex

2009-05-18T17:18:00.002-07:00

Unless your broker or signal provider is calling the shots for you, a certain amount of bona fide forex training is in order. From formal schooling to online education and learn-at-home courses, sorting through the various forex training alternatives can be more confusing than the subject of forex itself.

Regardless of where you are in your forex career, make sure you stay abreast of current trends and changes as they apply to forex trading techniques, signals, pips, spreads, and more. As a well-educated forex trader, I still seek counsel from my favorite signal providers just to stay one step ahead. For many, one source of forex education is not enough, as different services offer varying degrees of information about the forex market. Make sure your forex education is both well rounded and from reputable trainers.

How abysmal headline growth data sparks a rally

2009-05-18T17:18:00.001-07:00

I was shocked to see it but I think we actually got some truth this morning with the latest GDP data. The headline number showed contraction of 6.1% in Q1 while Q4 was revised even lower to show contraction of 6.3%. Yes, those numbers are ugly and I'm sure quite a few market participants were expecting the S&P 500 and Dow to get hammered on this data, but that was certainly not the case. About the only thing that got hammered was the USD Index and Treasuries.

The headline numbers really didn't matter, especially to those that move markets. It was the underlying fundamentals contained within the GDP report that sent money-flows into risk markets like equities, crude, gold, and non-risk averse currencies such as the euro, pound sterling, and Aussie, and out of the dollar, yen, and US Treasuries. When it comes to using the fundamentals to gauge market direction, sentiment, and where money-flows will go, the thing I do is breakdown the entire GDP report to get a full and well rounded view for how markets should react.

So, what I'm going to do here is go through what I saw in the GDP fundamentals that explain why the markets reacted the way they did; this is the exercise I go through in my mind whenever we get a major piece of fundamental data that will cause strong price action volatility. And GDP is certainly one of those fundamentals that impact money-flows and sentiment

Prices and inflation

2009-05-18T17:16:00.001-07:00

As we've talked about several times the past few weeks in the updates, prices and price inflation are a major catalyst that either drive markets up or drive them down, it's a very simple correlation. Here's what today's GDP data revealed about 2008 Q4 and 2009 Q1 prices/inflation:

GDP price index for domestic purchasing:

-3.9% in Q4 2008
-1.0% in Q1 2009

GDP price index for domestic purchasing ex food and energy:

+1.2% in Q4 2008
+1.4% in Q1 2009

Those numbers are pretty cut and dry. The plunge in consumer price inflation that hammered equities in Q4 of 2008 is subsiding and this is the kind of fundamental data that leads to higher prices of equities and money-flows that go out of the USD, JPY, and Treasuries and back into those higher risk markets. These price and inflation numbers are what I consider to be some of the core underlying fundamentals of what moves markets and money-flows and it's glaringly obvious why equities have recovered in 2009. The correlation between prices, inflation, and equities shows part of the story for why and how equities have been able to recover, these fundamental correlations are working just as they should should be and even though there are signs of disinflation within other fundamental data, this GDP report reveals possible resurgence of price pressures.

The cousins of Forex

2009-05-18T17:14:00.000-07:00

The final two days last week while I was trading the yen crosses I noticed an interesting correlation shift between the yens and their majors, specifically between the EUR/JPY and its cousin, the EUR/USD and the GBP/JPY and its cousin, the GBP/USD. I'll get to that part in a moment, but before we dissect that potential correlation shift we need to put some things in perspective in regards to the Japanese yen.

Overall, the JPY put in a rather strong week, especially against the USD, even in the face of equities that were able to rally after selling-off earlier in the week. Under "normal" market conditions, the exact opposite would have been the case as riskier appetites send their money-flows into equities and out of the yen, and based on that fairly solid and steady market correlation, the yen crosses would have been driven higher as the S&P 500 and Dow made back their losses.

That wasn't exactly the case for one of the two yen crosses... earlier in the week I gave a GJ support level of 141.50 which did manage to hold solid all week, but there was a definite shift in the correlation between the GU, GJ, and equities... both the EUR/USD and GBP/USD managed to put in a rather strong performance on Thursday and Friday, however, the GBP/JPY sold-off to a much larger degree than the EUR/JPY even though they generally follow each other when equities are strong and their cousins remain well supported, which was the case at the end of last week.

On Friday the EUR/JPY made its high for the day and remained well supported to the upside just as the EUR/USD was putting in the same exact performance. The GBP/USD also remained fairly supported yet the GBP/JPY was sold-off with conviction. As the euro was testing the 1.3300 level its cousin was testing the 129.00 level, which were their top of the range highs, correspondingly, while the pound sterling was testing its highs at the 1.4770 level and was able to remain supported above 1.4700, the GJ was plummeting down to the 142.50 level which was 200-points lower than its high. Within the GJ's price action it showed zero signs it should be bought and was screaming "sell me" from the time NY opened and right through the close.

So why would the EU and EJ maintain its positive correlation and maintain its ability to move in tandem with equities while the GU and GJ went in opposite directions? Now before we go any further, let me just say this is my own theory and opinion, so take it for what it's worth...

As technical as the GBP/JPY may be, the markets were hit with some massively negative fundamental data out of the UK and even though the GBP/USD found a way to recover back above the 1.4750 level on Friday, I think it's possible the pound sterling/yen correlation is showing risk aversion towards the UK economy, based on the UK's fundamentals which are growing alarmingly negative.

The dollars fundamentals were bad last week and the yen gained a lot of ground on dollar. The euro's fundamentals were great last week and the euro gained on yen. The pound sterling's fundamentals were abysmal and the yen gained on the pound... are you seeing a pattern here? I am. As risk aversion still remains the order of the day, to me it's obvious that the yen was the weakest against the currency which had the strongest fundamentals, and that currency was clearly the euro, not the dollar or the pound sterling.

So, what exactly is putting the pound at such risk? Read on...

UK sovereign debt risk

2009-05-18T17:13:00.000-07:00

Not only do those debt and budgetary issues put the GBP at risk, the potential for a ratings downgrade on UK sovereign debt adds a tremendous amount of risk. Just like Treasuries and Bunds, Gilts are AAA rated but it's my opinion their rating is now at risk. With UK government expenses running almost 125% higher than revenues, how can their sovereign debt rating not be at risk?

The way the UK is dealing with the staggering expense-to-revenue situation is by printing more money but anybody with half a brain cell in their head knows that's not an answer to the problem. In a perfect and honest world the UK's debt rating would have already been reduced to at least emerging market levels (BBB) even though their budget, expense-to-revenue, and debt-to-GDP ratios rival that of any third world country. At this point Great Britain's monetary and fiscal situation reminds me of another island, Haiti.

According to the latest UK debt figures, the DMO will need to raise an additional £197 billion in public debt in 2010, £154 billion in 2012 and 2013, and £125 billion in 2013 and 2014. So, what does all this mean for us as Forex traders, especially for those that trade the pound? It's very simple, and it won't matter what your chart or your techs say, should Standard and Poors, Moodys, or Fitch drop the triple-A rating on Gilts, the pound sterling will be brutalized, end of story.

Treasury bull bubble ready to burst

2009-05-18T17:11:00.000-07:00

This week the Treasury is set to auction $101 billion worth of new debt. I'm not even sure why they are referring to these events that involve the Fed buying US debt as a "Treasury auction"... it would be the equivalent of me listing a product on ebay, borrowing money from a bank at 0% interest, bidding up my own product, and then buying it myself with the bank's money and promising the bank I'll repay them when I re-sell my product again sometime in the future.

There's not even any logical sense in this sham the Fed and Treasury are running and it's going to end up backfiring on them because this type of manipulation will burst the bull bubble in Treasuries, it will send the yield on the 10-year far above the 3.00% level and that will put downside pressure on mortgage lending rates making it even harder for potential homeowners to borrow which will even further cap home prices and prevent them from rising. Yeah, that sounds like a great plan to me... and then we have the whole issue for how this sham floods the money-supply which I don't even have time to get in to right now.

In my view, the days of the great Treasury bull run should be officially over. Treasury prices should be starting their march back down while yields should be starting their march back up. Treasury supply should far exceed demand and all of those factors are nothing but bearish for Treasuries. But, with $101 billion worth of fresh US debt flooding the markets this week, I believe equities will be one of the beneficiaries...

Forex Education

2009-05-18T17:10:00.002-07:00

Forex Software - Claims, claims, and more claims about smart forex software designed to replace an intelligent forex professional when it comes to trading decisions. If it were as easy as a simple software program every bank or financial institution would be on board. Alternatively, invest your time reading reliable reviews from those with real experience using a specific forex software package or Web-based system. Forex Justice enables you to avoid the pitfalls of forex software purchases.

Forex Training

2009-05-18T17:10:00.001-07:00

For those who’ve decided to learn forex and want to receive formal training there are many options. Online or offline - be careful. Investigate how long the company has been in business. Check with the local Better Business Bureau to see if they’re registered. If so, you should have access to a rating system that reveals negative write-ups and more

Forex Managed Accounts

2009-05-18T17:08:00.000-07:00

If you are too busy to trade and can find a trustworthy company that will trade on your behalf by searching through our forex managed accounts reviews and ratings, this might be the best solution for you. Again, do all the appropriate 'off-site' research that would be suggested when trusting your funds with anyone, especially when fx trading

Forex Software – A Buyer’s Guide

2009-05-18T17:07:00.000-07:00

1.Take off your blinders. Don’t believe everything you read. Websites and advertisements are worded a certain, compelling way for a good reason – to make a sale. You’re kidding yourself if you think these software sellers have one iota of a conscience. They don’t and will sleep perfectly fine at night regardless of the number of people they’ve financially burned in any given day.

2.Research, research, research! Before turning over your money, become an expert. This means you have to do some work. There are plenty of review sites and forums out there that offer so-called “unbiased” opinions. But, remember point one – don’t repeat my early mistakes; scrutinize everything you read. To be an expert means you must study reviews, ask questions in forums, and download free trials prior to making your final decision. When it comes to purchasing forex software, there is no such thing as doing too much homework.

3.Know Good from Evil. There are three types of forex software and they range in both price and options. If I were you, I would consider both your budget and level of experience before purchasing. One type of forex software gives you more information and data but may be too overwhelming for beginners, while a second type of forex software allows visibility of trading activity and helps you make smarter decisions. A third type of forex software is designed for the most advanced forex trader and may not be appropriate for your level or frequency of trading. My goal is to help you understand the difference and make the most cost-effective forex software investment decision.

Types of Forex Software

2009-05-18T17:06:00.001-07:00

1.Trading Platform – Often inherent in your broker’s Forex system, this software is an all-in-one solution. It gives the trader a wealth of information and basic tools, without a lot of guidance. Great for those who can trade without advice; a beginner might not know what to do with all of the information. With trading platform software, guesswork and luck may help the novice.

2.Signal Software – Inviting more involvement from the forex investor, signal software requires a certain degree of experience on your part. Signal software permits you to witness spread changes and make decisions based on those variances. I would not recommend this type of forex software for the beginner as it is better suited for the more advanced forex trader.

3.Charting Applications – Useful for trend analyses and predictions, forex-charting software is appropriate for the more experienced forex investor. Data streams and features generate alerts on buy and sell recommendations. Forex charting application software can be set up for automated transactions, hence, eliminating the need for human intervention. Newcomers beware - this type of forex software requires a great deal of foresight to be used properly.

With forex software, the most important point I can emphasize is that your needs will change as your level of expertise grows. For example, I still use one of the original types of forex software I purchased years ago, but now I understand the complex tools and can take full advantage of the features. Additionally, I have more than one type of forex software in my collection because they all offer something unique.

Forex software is available in many forms: CDs, downloads, and interactive, Web-based programs. Whichever forex software you choose, make sure its credentials support its claims. Forex software needs to be more than functional. It must ultimately deliver the expected results you are anticipating!

Forex Charting

2009-05-18T17:04:00.000-07:00

It is another tool that is either used by signal providers or available directly to forex traders for further analysis before a buy/sell decision is made. Live streaming data-feeds, detailed trade analytics, and purported profit-boosting features count among the numerous ways that aid you and your signal provider to invest your money.

When it comes to forex signal providing, the old saying, “You can’t judge a book by its cover” has real meaning. I have visited many forex websites filled with fancy Flash animation and dazzling features that provided unreliable signal advice and practiced unscrupulous trading tactics. As a general rule of thumb, the simpler and more straightforward the site is, the better. Forex Justice is one of the most trusted sites on the Web to learn about traders’ troubles, brokers’ behaviors, and fx currency trading.

The Power of Suggestion

2009-05-18T17:02:00.000-07:00

A forex signal or alert is a communication to you indicating when it’s time to buy a particular currency pair and at what price. Best generated by professional forex signal providers, trained individuals or companies who devote their time aiding in buy/sell decisions, forex traders rely on the advice of these so-called experts when it comes to investing in the forex market.

The credentials and reliability of a signal provider can run the gamut. From just enough forex knowledge to be dangerous to more forex knowledge than is needed, choosing a qualified forex signal provider is no joking matter.

Forex signal providers make investing in the forex market as easy as possible. Depending on the system you choose, forex signals can be either manual or automated and provide entry/exit points for major or pre-selected currency pairs. With manual, the forex signal simply generates a buy alert from the signal provider. With automated, the forex signal both alerts you when it’s time to buy and makes the purchase for you by working together with your bank or broker.

When I first started trading forex, alerts came in the form of telephone calls and facsimiles. Now, with advanced digital technology, forex alerts come in the form of e-mails, SMS (Short Message Service, a way of sending text messages to mobile devices), or desktop software. With so much at stake, signal providers are very good at quickly getting alerts to traders. Simultaneous transmissions enable dozens of private clients, whose investments may vary by millions of dollars, to receive forex signals that pertain to the same currency pairs and price purchase points. This levels out the playing field and affords the small-time investor the same opportunities as the heavyweight.

Forex traders invest at varying frequencies. Day traders buy and sell on the basis of small short-term price movements that happen within a 24-hour period, and must act quickly to keep up with market volatility. Swing traders buy and sell within a one-to-four day period and use trends and patterns to judge the overall intrinsic value of currency pairs. Long-term forex investors, who hold a position for five or more days, study historical behaviors before making a buy/sell decision

FOREX SECRETS

2009-05-08T17:11:00.001-07:00

How did the taipans and billionaires get so filthy rich?!
Besides the more obvious hard work and diligence and always saving little by little in their piggy banks, the really rich guys know how to work up the foreign exchange. Basically, foreign exchange trading or simply FOREX trading is just the buying and selling of the world’s currencies. Money today is not the same as money tomorrow. Money has time value. The worth of a currency can go up or down. There is one secret that FOREX traders live by. And it is buy low, sell high. Don’t ever forget that rule. However, the trick is to know when to buy and when to sell. In FOREX trading, everything is by speculation. Sure, there are graphs to aid decisions. Business pages also give out strategies for the day. But the next step is always a guess based from the previous actions. FOREX traders like to call their speculations as smart guesses. Usually, patterns on the currency values can be derived from how the politics of a specific country is running. For example, if there is a plan to oust the president, most probably the value of that country’s currency will go down—how low, we don’t know. Usually. Because there are still a lot of factors to consider why a currency is going strong or not. Improvement on the tourism sector can mean more foreign investments. This will be good for a particular currency, but this may affect how the other countries are doing. These are just trade scenarios. As the cliché goes, one man’s medicine may be another man’s poison. One country’s good tidings may be another country’s, well, downfall. That is why in FOREX trading, another secret to live by is to be aware of the national news in the country concerned. Current events have a say on the economics of a country. Money makes the world go round, so to speak. But, if one is truly serious in earning their first million in FOREX trading, another secret is—it might be a good idea to invest in a FOREX trading training school. Learn from the pros and conquer the world afterwards. Let me leave you one last secret I learned from my father. If everyone is going in this direction, go the other way. This applies to FOREX and other areas of life. You won’t ever get rich by following the crowd.

WHY FOREX

2009-05-08T17:10:00.001-07:00

24-HOUR TRADING
Compared to stocks Forex-Trading is 24-hours. A forex trader can trade right away once they spot an oppotunity to buy low and sell high. Remember, money has time value. And a lot of factors in the economics and politics of a government affect how low a currency will drop or how high a currency will gain. It is fairly easy to say buy low and sell high. But the trick is to know when to do it. With 24-hour trading the FOREX trader has the ultimate advantage already. Since, afterall, Time is Money.

High liquidity
A market or business is considered very liquid if the assets involved can enable the person to directly meet his payment obligations. In other words, if cash is at hand—immediately. What is a more liquid market than the FOREX market? FOREX has high liquidity, because it can be traded swiftly, without considerable loss of value, and anytime within the trading hours or in FOREX trading’s case—24/7.

No commission
FOREX trading need not have brokers in between to facilitate. With other forms of money market ventures and stock trading, brokers come in handy; because they are able to handle varied forms of portfolios and company stocks for the investor. Even if FOREX trading is involved with multiple currencies, it is a very direct business where the trader himself can act on his own; thus no commissions are leaked out and all profits are kept!

Steady market availability
In all businesses, businessmen strive for a steady market, if not an increasing one. Why spend time in a trading scene when it is short-term? Because FOREX trading is all about the buying and selling of currencies, it is a continuously moving market. Money make the world go round, as the cliché goes. The market will always be there. The trader only has to be aware of the rising and falling of the currencies. When is the currency starting to be weak? When is it going strong? Is there a trend?

Taking action
This benefits and advantages all the more make FOREX trading a very attractive business venture. For first time FOREX traders, why not inquire now at your home bank on how to start making your money work for you? FOREX trading is the way to go.

THE HISTORY OF FOREX

2009-05-08T17:08:00.000-07:00

The Forex trading market is a relatively new phenomenon. Never before in the history of the world have we seen such an amazing event. In only 30 years, this industry has developed from almost nothing to a daily US$1.5 trillion market. How did this happen? Was it by design? Or was it by accident?

Well the answer falls somewhere in between. There are three distinct time frames that set the stage for today's style of currency trading. The first time frame is the pre-currency trading era of the 1950s. The second time frame is the worldwide, politically volatile atmosphere of the 1970s. The third time frame is what has occurred in this free market economy since the demise of the gold standard 30 years ago. In each time frame, there have been three catalysts: war, gold, and foreign banks- that have played a significant role in propelling currency development.

FOREX: As an Ideal Home Business

2009-05-08T17:05:00.001-07:00

There are several advantages of Forex trading including:

- You can adapt your participation to your own schedule

The Forex market is open for trading 24 hours per day, Monday through Friday, unlike the stock market or any other business in which you must work around "business hours". With Forex trading, you can work in the middle of the night if you want.

- Large marketplace

Forex trading is the largest marketplace in the world. It shadows all other markets, even the stock market. That means there is opportunity for anyone to participate. The daily trading volume is nearly 4 trillion dollars!

- Low barrier to entry

It takes less than $100 to get started Forex trading. If you can scrape together that amount of cash, even if it takes a garage sale or selling some of your extra stuff on eBay or Craigslist, you can jump into Forex trading.

Some pitfalls to watch out for.

Be aware of these potential problems if you decide to enter the Forex market:

- Investing decisions based on emotion rather than logic

As with any type of investing, it's very easy to get caught up in the prospect of making big money. Place some limits on yourself so that you don't use money you need for living expenses.

- Investing without a solid knowledge of the playing field

No serious athlete would step out onto the baseball diamond or basketball court without thoroughly understanding the "rules of the game", and neither should you venture into any type of investing without the same level of understanding.

- Trading too frequently

Although there are no "commissions" when trading Forex, you will be responsible to pay the "spread", which is the variance between the ask price and the bid price. If you do very many trades, these "spreads" can really add up. Just make sure you understand the cost of your trades before you make them.

Conclusion

Forex can be an ideal avenue for you to make extra money, or even as a foundation for a home-based business. It is wide open for anyone: you don't need to have any specific credentials or background. Why not take a share of this market today?

Forex: The Future

2009-05-08T17:03:00.001-07:00

Futures traders have to not only compete in the Futures market but also against themselves. You have the potential to be a successful Futures trader, but you also have the potential to be your own worst enemy. We, as humans, are naturally emotional. Our egos want to be validated - we want to prove to ourselves that we know what we are doing and that we are capable of taking care of ourselves. We also have a natural instinct to survive.

All of these emotions and instincts can combine to provide us with trading successes every now and then. Much of the time, however, our unchecked emotions get the best of us and lead us to trading losses unless we learn to control them.

Many Futures traders believe it would be ideal if they could completely divorce themselves from their emotions. Unfortunately that is next-to-impossible and some of our emotions may actually help us to improve our trading success. The best thing that you can do for yourself is learn to understand yourself as a trader. Identify your strengths and your weakness, and pick a trading style that is right for you. Don't get too far down the road, like James did, before you spend time learning about you.

In this section you will learn about the following four psychological biases that may be affecting your trading results and what you can do to overcome them.

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and European overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.

The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case scenario you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smart trader.

Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.

Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controlling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!

So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.

FOREX: Limiting Risk in FOREX Currency Trading System

2009-05-08T16:57:00.000-07:00

FOREX trading can be risky, but there are ways to limit risk and financial exposure. Every FOREX trader should have a trading strategy – knowing when to enter and exit the market and what kind of movements to expect. Developing strategies requires education - the key to limiting FOREX risk. At all times follow the basic rule: Do not place money in the FOREX that you cannot afford to lose.
Every FOREX trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted. There is a vast amount of information on FOREX trading available both on the Internet and in print. If you want to be successful at FOREX, know what you are doing.
Even the most knowledgeable traders, however, can't predict with absolute certainty how the market will behave. For this reason, every FOREX transaction should take advantage of available tools designed to minimize loss. Stop-loss orders are the most common ways of minimizing risk when placing an entry order. A stop-loss order contains instructions to exit your position if the currency price reaches a certain point. If you take a long position (expecting the price to rise) you would place a stop loss order below current market price. If you take a short position (expecting the price to fall) you would place a stop loss order above current market price.
As an example, if you take a short position on USD/CDN it means you expect the US dollar to fall against the Canadian dollar. The quote is USD/CDN 1.2138/43 - you can sell US$1 for 1.2138 CDN dollars or sell 1.2143 CDN dollars for US$1.
You place an order like this:
Sell USD: 1 standard lot USD/CDN @ 1.2138 = $121,380 CDN
Pip Value: 1 pip = $10
Stop-Loss: 1.2148
Margin: $1,000 (1%)
You are selling US$100,000 and buying CDN$121,380. Your stop loss order will be executed if the dollar goes above 1.2148, in which case you will lose $100.
However, USD/CDN falls to 1.2118/23. You can now sell $1 US for 1.2118 CDN or sell 1.2123 CDN for $1 US.
Because you entered the transaction by selling US dollars (buying short), you must now buy back US dollars and sell CDN dollars to realize your profit.
You buy back US$100,000 at the current USD/CDN rate of 1.2123 for a cost of 121,223 CDN. Since you originally sold them for CDN$121,380 you made a profit of $157 Canadian dollars or US$129.51 (157 divided by the current exchange rate of 1.2123).

FOREX: Risk of Forex Trading

2009-05-08T16:56:00.001-07:00

Every FOREX currency trading system has inherent risks. Despite the claims you may see on some FOREX web sites, FOREX is not risk-free. You are trading with substantial sums of money and there is always a possibility that trades will go against you. There are several trading tools, however, that can minimize your risk, and with caution, and above all education, the FOREX trader can learn how to trade profitably and while minimizing losses.
Risks
Assuming you are dealing with a reputable broker, there are still risks to FOREX trading. Transactions are subject to unexpected rate changes, volatile markets and political events.
Exchange Rate Risk – refers to the fluctuations in currency prices over a trading period. Prices can fall rapidly resulting in substantial losses unless stop loss orders are used when trading FOREX. Stop loss orders specify that the open position should be closed if currency prices pass a predetermined level. Stop loss orders can be used in conjunction with limit orders to automate FOREX trading – limit orders specify an open position should be closed at a specified profit target.
Interest Rate Risk – can result from discrepancies between the interest rates in the two countries represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction.
Credit Risk – is the possibility that one party in a FOREX transaction may not honor their debt when the deal is closed. This may happen when a bank or financial institution declares insolvency. Credit risk is minimized by dealing on regulated exchanges which require members to be monitored for credit worthiness.
Country Risk – is associated with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with 'exotic' currencies than with major currencies that allow the free trading of their currency.

FOREX: Trading Market Size

2009-05-05T22:22:00.000-07:00

Most of the experienced traders around the world consider the Forex market as the best and most profitable of the capital markets. During many years forex trading had been the great and exclusive domain of major banks, very large financial institutions and the countries central banks; a good example of such a bank would be the U.S. Federal Reserve Bank. But over the last few years, thanks to the internet era, the market has been opened to anyone willing to learn the right techniques in forex trading and with the intentions of making substantial profits as the above mentioned institutions, that annually and consistently make pretty high profits from trading in the Foreign Exchange market.

The foreign exchange market (FOREX) will exist wherever one currency is being traded for another. This market, also known as “currency market”, is by far the largest market in the world in terms of all the cash value traded per day, this trading includes all that is being performed between large commercial banks, central banks, currency speculators, governments, and other financial markets and institutions. The trades taking place in the forex markets across the globe it’s known to exceed on average $1.9 trillion/day. Retail traders, this is, small speculators are only a small part of this market, but this doesn’t mean they can’t grab huge profits if they have learn the right way to trade the Forex. These individual traders participate in the market through broker firms.

Pre-Currency Trading Era – The 1950s

2009-05-01T23:44:00.001-07:00

Entering into the 1950s, the United States of America had a distinct advantage over war-torn Europe. While Germany was heavily sanctioned, England, France, Italy, and several other Old World nations were just coming to terms with the heavy investment needed to rebuild their countries.
As a way to make it easier for the rest of the world to rebuild, the Bretton Woods Agreement was adopted. It was innocuously simple: in an effort to keep the United States of America (USA) from buying everything in sight, the Bretton Woods Agreement kept the USA in check by requiring all foreign currencies be pegged to the US Dollar. Some pegs were strong, some pegs were weak, but at the end of the day they never moved more than 1% in any direction. Like today's problem with the Chinese Yuan, forced to a peg against the dollar, it kept a constant, controlled flow of US dollars out of the country.
The peg would not have been so bad if not for the fact that the US dollar also had a unique relationship with gold. Just like currencies, gold was pegged to the dollar at a fixed value of US$35/ounce. What made it even worse was that US currency, at the time, was directly exchangeable for gold. This strategy was fine as long as the Fort Knox gold reserves exceeded $23 billion.
After World War II, the USA became the primary economic super power. Many foreign countries began to acquire US currency in lieu of gold. The dollar gained prominence in a way no other currency ever had before.
At the same time, we began to see the rebuilding of the Old World and foreign trade began to gain momentum. In 1950, foreign countries held US $8 billion. We also saw the oil business begin its ascent as a prominent import/export industry.

The 1970's United States Currency Policy Meltdown

2009-05-01T23:42:00.000-07:00

Once again, we are hit with the triumvirate of war, the restrictive gold standard, and dollars in foreign banks.
This time, each problem was feeding directly off of the others. The Vietnam Conflict had drained our gold reserves heavily. By 1970, Fort Knox only held US$12 Billion.
The growth of the oil business and the increase in foreign trade caused a boom in the demand for US dollars in foreign banks. Over US$ 47 Billion was sitting in overseas banks.
On paper, our gold reserves were over-leveraged by almost 4 to 1. As a nation, we did not know how to react to such an overbearing assault on our currency. Then along came the invention of the Eurodollar to make our nightmare worse.
Foreign banks with US dollars would make low-interest loans in US dollars to importers and exporters. Although the dollars were never repatriated, the US was still on the hook to exchange these “credit”-created dollars for the gold we kept on reserve.
Then came a miracle in disguise . The Bretton Woods Agreement collapsed. In the over-leveraged gold-dollar environment, many countries began to feel frustrated with the artificial peg.
In blatant defiance to the agreement in 1971, Germany declared that they would float the Deutsche mark. They were tired of the artificial peg that was keeping their economy depressed.
In the first hour of trading, over US$1 billion were exchanged for Deutsche marks. For the first time, the public had voiced their opinion against being so heavily weighted with dollars.
With Germany completely ignoring the Bretton Woods Agreement by floating their currency, the US government had nothing left to do but put the final nail in the coffin of the U.S.'s currency policy. The Bretton Woods Agreement was dissolved.
Three short months after the Deutsche mark began to float, the US moved off of the gold standard. Gold was allowed to float freely like any other currency. Oil, although priced in US dollars, soon switched to a peg against gold. Gold and oil prices jumped ten-fold.
The currency dynamics were soon changed on a global scale and it became accepted practice that countries began to float their own currency.

New Rules of Currency

2009-05-01T23:41:00.000-07:00

In 1971, the Smithsonian Agreement replaced the Bretton Woods Agreement and authorized “forward currency contracts”, adding validity to the Eurodollar phenomenon. It didn’t work. A year later the European Joint Float was established. It, and the Smithsonian Agreement, were scrapped in 1973. Even though they were dissolved the concept of “forward currency contracts” stayed as part of the banking system.

Once currencies began to “free-float”, they immediately moved away from their gentlemanly 1% fluctuations on either side to huge price ranges, going anywhere from 20-25% daily.

From 1970-1973, the total foreign exchange volume went from US$25 Billion to US$100 Billion. With oil prices up, gold prices up, and an economy still reeling from the rapid currency shift, “stagflation”, rising inflation while real incomes remained the same, soon hit the United States.

How to Trade Your Demo

2009-05-01T23:39:00.001-07:00

Use this time to make a plan and develop your strategies.

Choose the right currency pair. Find out based on your risk parameters, which currency is best suited for your trading style. Some may be too volatile and some too slow so decide which currency pair is most appropriate for your strategy and time frame.
Decide on how long you plan to stay in a trade. If you are an inter-day trader, what is the average time of your trade? - a few minutes, a couple of hours, a full day, or swing trade (couple of days to a week).
Before you enter a trade you should also have clear exit plan. Place your stops and limits accordingly.
Know how much you are willing to risk and how much you are looking to gain.
Keep track of important news and technical levels, which may be tested within your time frame.

Getting Started

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With no commitment or cost, you can open a Virtual Trading Account. The account has the full capabilities of a "real" account including live market rates, access to real-time market analysis, and the ability to execute trades off streaming prices. The virtual account (or Demo Account) gives you the ability to learn about the forex markets and test your trading skills without any risk.

Rollover

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In the spot forex market, trades must be settled in two business days. If a trader sells 100,000 Euros on Tuesday, the trader must deliver 100,000 Euros on Thursday, unless the position is rolled over. As a service to our traders, FOREXYARD automatically rolls over all open positions to the next settlement date at 5:00 pm New York time. Rollover involves exchanging the position being held for a position expiring the following settlement date. The positions being exchanged are usually not valued at the same price. The difference in amount varies greatly based on the currency pair, the interest rate differential between the two currencies, and fluctuates day to day with the movement of prices.

For positions open at 5.00 pm EST there is a daily rollover (interest payment) you pay for an open position depending on your established margin level and position in the market. If you do not want to earn or pay interest on your positions, simply make sure they are closed by 5.00 pm EST, the established end of the market day.

Margin / Leverage

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FX accounts are margined: a trader can hold a market position much larger than the value of the trader's account value. The online trading platform which FOREXYARD offers has margin management capabilities, which allow lenient margin requirement of up to 1/2%. However, we do not recommend using leverage of more than 10 times your account value. Using leverage exaggerates both gains and losses. Even when market conditions are relatively calm, using leverage can generate large gains or losses. In the case where a trader surpasses the maximum leverage allowed (which can happen when account equity shrinks as a result of trading losses), the trading system will close all open positions in the account. This prevents client's accounts from falling into a negative balance, even in a highly volatile, fast moving market.

Today's Currency World

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In the 30 years since the collapse of the last gentlemanly agreement on currency rates, many momentous events have occurred that have affected currencies worldwide. The Japanese yen gained prominence because of Japan's heavy export relationship with the United States. The USSR collapsed. We have had several undeclared wars, the south Asian economies have risen and collapsed, and several investor bubbles have come and gone.
Each time, currencies have come away with a newly earned respect by the masses. There has also been a constant element of surprise that keeps you guessing what's next.
Current conditions, such as the United States' perpetual war on “terror”, the permanent introduction and dominance of the euro currency, the steady O.P.E.C. increases in oil prices, and gold's renaissance as a store of value, will likely have a tremendous impact on the future of what it means to trade currencies.

This could be a fundamental shift in the next phase of currency development.

Buying / Selling

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First, the traders should determine whether they want to buy or sell. If they want to enter a short order - whereby they will profit if the exchange rate falls - they simply need to click on the SELL rate. The opposite holds true for traders who enter buy orders: they can simply click on the BUY rate, and thus will profit if the exchange rate goes up.

EASIEST AMONG ALL

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Forex is quickly becoming the most popular and lucrative way to invest your money. Online forex trading is fast finding a large number of interested people these days. Thanks to the advent of the internet the entire process has become that much easier. Before we all were to start with trading it is always preferable that you equip yourself with at least the basic knowledge about the entire process. You should for instance understand the forex market is generally speaking a technical market with its own processes and terms which you need to understand first.

Benefits of Forex Accounts in Trading

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The forex account provides the benefits in both the cases, whether the trader employs a local broker or online forex trading, the accounts aids by leveraging the deposits. It also wipes out the risks, as much as possible and gives heavy profits.

Types of Forex Accounts

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There are mainly two types of forex trading accounts, firstly the regular account and secondly the online trading account. Even in the Forex trading accounts, there are two further diversifications like the normal account and the mini forex. But with the advancement in time, the emergence of online trading accounts have increased on a very high level, after all it does not include the tedious calculations of the forex trade. In these accounts, everything is specified, right from the forex charts to the fresh researches.

Base Currency and Variable Currency

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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.

Brief History of Forex Trading

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

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

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

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

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

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

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

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

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

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

WHAT IS FOREX????

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Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of over $1.9 trillion changing hands daily; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location and no central exchange (off-exchange). It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers.

Traditionally, retail investors' only means of gaining access to the foreign exchange market was through banks that transacted large amounts of currencies for commercial and investment purposes. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders and hedge funds all use the FOREX market to pay for goods and services, transact in financial assets or to reduce the risk of currency movements by hedging their exposure in other markets.