Day Trading the Forex Market Profitably
Being a forex day trader can be very lucrative. The currency market is by far the most liquid and volatile market in the world and with this come various opportunities. No matter what type of market you chose to day trade you must know the “personality” of the market you are trading.
Every market has it’s own characteristics and it is important to know what they are before attempting to profit from it. The forex market is no different. In this article we will go over very important general day trading principles/rules and then we will see what a day trader has to recognize when specifically day trading the forex market.
As the term implies, day traders are concerned with what happens in the market today. Not tomorrow, not next week and not next month, but today. The day trader’s job is to capture intraday price swings. Depending on the system or trading method employed, this can mean capturing one intraday swing or various intraday swings. The general job of a day trader is (then we will go over the more specific job of the forex day trader):
To control risk
One of the most important jobs as a day trader is to control your risk exposure. Sure, controlling risk is a concept you must use in any type of trading, however in day trading you must look at this issue from a different angle. Since your job is to capture various price swings during the day naturally your profit objectives will be much smaller than that of a swing trader (who places a single trade aiming for a much larger profit objective). So, when placing several trades during the day it can be easy to “drift” away from your pre-determined stop loses. A common (very common actually!) day traders thought is “if I extend my stop loss just a bit I hope the market will turn around”! Hope is one of the trader’s biggest enemies. These little extensions of stop losses add up and suddenly without noticing you are losing more dollars per trade than planed making your risk/reward ratio turn against you.
To be disciplined
This principle is key for any type of trading but particularly for day trading. If I had to name one single aspect of a day trader that can make him or her a winner or a loser it is discipline. You can have a so-so system but still make money if you are disciplined. However, you can have the best trading system in the world but if you are not disciplined I guarantee you will not be a successful trader. So, what is all this discipline everyone talks about when discussing trading? Very simple, it’s respecting and strictly following your trading plan, your trading system, your money management rules, and your commitment to the business. Being disciplined with regard to each and everyone of these components is essential for your success.
It is so easy to deviate from your trading plan, the rules of your trading system or any of the above mentioned components, especially when day trading. Why? Two reasons. First, because the trader is trading very frequent and does not have time to cool down, think, and evaluate. Second, because reality is replaced by hope. Your trading system rules (reality) says: “get our of the trade” hope says “hang in there, maybe it will still be profitable”. Your money management rules (reality) say “risk only 2% of your account on this trade” hope says “since I lost on the last trade I will risk 4% on this next one so I can make up for the loser and also be profitable”. Your trading plan (reality) says “trade each day 4 hours, give yourself Wednesday or Thursday a vacation to rest” hope says “Since I am not doing very well now I don’t need this rest day, and I will also trade 7 hours per day to make up”. I know (not hope!) you now understand the point!
To focus on the appropriate time frame
As a day trader your primary concern is to catch intraday swings. Your trades start and finish the same day. Your world is the day you are trading in. You don’t care what will happen in the market tomorrow or the day after tomorrow. Your objective when trading is focusing on the appropriate time frame chart. My opinion is that day trading should be done on a 1, 5 or 10 minute bar chart. Remember, you are looking to capture several fast moves during the day and hence you must focus on the charts that best illustrate events as they happen in a short period of time. However, the fact that you are day trading on a 1,5 or 10 minute bar chart does not mean you can’t use a larger time frame chart for the purpose of analysis. This however, is very subjective and depends very much on the traders strategies and methods of trading. As an example, many day traders would look at one hour bar charts in order to have a view of how the market has been behaving in the last week. Is it moving sideways (and so maybe I should only place trades between support and resistance areas)? Is it trending (and so maybe I should only be looking at placing trades in the direction of the higher time frame trend)? Are there any major support and/or resistance levels I should be aware of (areas where I should refrain from placing trades since it is uncertain how the market will react when reaching them)? Did the market brake out of a congestion area?
Again, it is very subjective. Some day traders believe that with proper larger time frame analysis they can select better day trades. My personal opinion is that the more you analyze the more conflicts you will have and the more uncertainties will appear (especially if you are new to trading). I like making things simple and I found it very useful when trading (proof of this is that all of the trading systems I use are 100% mechanical). Don’t get me wrong, this is not to say that larger time frames should not be used at all for analysis purposes. But, try to keep it simple and if you see that looking at larger time frame charts interferes with your correct decision process when placing day trades then simply stop.
To trade volatile and liquid markets
Since your job as a day trader is to capture intraday swings it is crucial that the market you are trading has enough movement to allow you to do this. It is also important that the market you are trading has enough liquidity so that order fills do not suffer from excessive slippage. You have to select a market that it’s volatility is permanent and not a temporary occurrence. Since you are basing your trading method on catching intraday price swings you have to know that you are trading in the right place. As a day trader volatility is your allay and you have to know that you can count on it every single day (or at least 90% of the days). Liquid markets will provide you with good order fills. As a day trader this is very important since you are aiming at smaller profit objectives and hence larger slippage will eat away more of your profits. When trading several times a day this adds up and can be the difference between success and failure.
As a forex day trader you have to apply all the above rules and principles plus other criteria that are unique to the forexmarket.
Time of day trading
The forex market is a 24 hour market. Never stops except on weekends. Within this 24 hour period different currencies behave in different manners. As a day trader it is very important to know the “personality” of the currency you are trading. For example, the GBP/USD is more volatile in early to mid European session than any other liquid pair. For a day trader trading in these hours it would be wise to take advantage of the price swings the GBP/USD pair offers instead of trading some other currency pair that constantly shows no movement. The USD/CAD pair is “silent” in the early to mid European session but starts to have more price movement toward the start of the US session. Every time Non Farm Payroll is released most if not all currency pair have a very small price range up to release time. As a day trader it wouldn’t be wise to trade during these pre-announcement hours with strategies that are based on breakouts. It would probably be smarter to use strategies that are based on range support and resistance.
Spread and liquidity
Most forex brokers will provide you with a very narrow spread for the most liquid currency pairs. As an example, many brokers are now offering a 2 pip spread for EUR/USD and USD/JPY and a 3 pip spread for USD/CHF and GBP/USD. These are the most liquid pairs and the ones a day trader should focus on.
Volatility
As a day trader volatility is you friend, a friend you cannot afford to trade without. In it’s basic definition, volatility is simply the amount of price change with relation to time. Volatile currency pairs have various price swings (price changes) during a small period of time (one day). These price swings are what a day trader lives on. In the forex market volatility many times comes hand in hand with liquidity. The most liquid pairs are the ones that are the most volatile. The big 4: EUR/USD, GBP/USD, USD/JPY and USD/CHF are the most liquid pairs that provide the best volatility and hence opportunity for the forex day trader. Within these four pairs, the GBP/USD is the most volatile. Although it’s not the most liquid (the EUR/USD is), but it’s the most volatility. This pair, traded with the right broker (one that provides a 3 pip spread) can present many profitable opportunities for the astute day trader.
Specific news announcements
Currency rates are affected by rumors, news, economic indicators and government reports. As a day trader you must always be aware of what economic reports are scheduled on the day you are trading and at what time. Why? Simply because many of these reports can have a strong momentary impact on the market once they hit the news wires. This impact can be of 10 pips or 100 pips depending on the report and it’s difference from the market consensus. The most important and impacting economic indicators and government reports are issued by the US government. They affect every USD/X or X/USD currency pair. Again, always know what are the release times and the importance of the economic report. For example, suppose you are in a EUR/USD trade at 8:25 a.m. You know that an economic report is scheduled for release at 8:30 a.m. You might consider either exiting the trade before the release (in order to avoid unnecessary speculation as to what impact the report will have on the market) or entering your profit objective and stop loss into your deal station (for risk exposure reasons).
In conclusion, the forex day trader has to be prepared not only with the basic day trading rules, skills and principles. His job is to incorporate into his trading the characteristics and uniqueness of the forex market. Remember, every currency pair might present different opportunities and it is your job to always focus on the ones that best fit the purpose and objectives of day trading. I hope to have contributed to your forex trading education and I thank you for taking the time to read this article
Friday, August 6, 2010
Forex Tips
Forex Tips To Help You Achieve Success
A Few Forex Tips To Help You Achieve Success
You can earn a lot of money through Forex and it in fact only requires that you learn from some tips that will show you how to maximize your profits from dealing in foreign currencies. The simplest Forex tip is to use weekly charts to boost your profitability. This means that you have to take the trouble of checking the weekly charts so as to be able to gain a proper perspective of the currency market.
Such weekly charts are ideal for learning and finding out more about the major trends that are taking place and they will also help you understand the proper support as well as resistance levels as too gains insights about entry points.
Don't Overtrade
Another simple Forex tip is learning to avoid from doing too much trading. It pays to understand that fewer trades you enter into the better are the chances that you can realize a handsome profit. It is more important that you concentrate on getting things right rather than indulging in quantity trading. Smart Forex operators earn money from doing the right things well and avoiding doing the bad things. In fact, the more successful traders earn high amounts of money from doing only limited amount of trades.
A healthy appetite for risk is essential to succeeding with Forex and so you have to learn how and when to take risks which however must be judiciously taken and which should not deteriorate into starting to gamble in the hope that you will make a major killing. At the very least a person that is averse to taking risks must abstain from doing Forex deals.
For those people that do small Forex trades it is not a good idea to branch out because it is in fact necessary that they concentrate and focus on their limited trades instead of trying to expand their dealings without having already tasted success.
You can also succeed with Forex by setting yourself realistic targets. The more realistic you are the better are the chances that you will be able to work hard enough to realize your objectives. You should decide to engage you in Forex and then give your all to succeeding and also keep in mind that your targets are not too farfetched or unrealistic.
With these tips in mind you should get started with Forex and bear in mind also that to be successful you will need
to learn how to focus your efforts on the best trades that should be used with best odds of succeeding. Weigh your options and set realistic targets and then do your best to realize a profit.
A Few Forex Tips To Help You Achieve Success
You can earn a lot of money through Forex and it in fact only requires that you learn from some tips that will show you how to maximize your profits from dealing in foreign currencies. The simplest Forex tip is to use weekly charts to boost your profitability. This means that you have to take the trouble of checking the weekly charts so as to be able to gain a proper perspective of the currency market.
Such weekly charts are ideal for learning and finding out more about the major trends that are taking place and they will also help you understand the proper support as well as resistance levels as too gains insights about entry points.
Don't Overtrade
Another simple Forex tip is learning to avoid from doing too much trading. It pays to understand that fewer trades you enter into the better are the chances that you can realize a handsome profit. It is more important that you concentrate on getting things right rather than indulging in quantity trading. Smart Forex operators earn money from doing the right things well and avoiding doing the bad things. In fact, the more successful traders earn high amounts of money from doing only limited amount of trades.
A healthy appetite for risk is essential to succeeding with Forex and so you have to learn how and when to take risks which however must be judiciously taken and which should not deteriorate into starting to gamble in the hope that you will make a major killing. At the very least a person that is averse to taking risks must abstain from doing Forex deals.
For those people that do small Forex trades it is not a good idea to branch out because it is in fact necessary that they concentrate and focus on their limited trades instead of trying to expand their dealings without having already tasted success.
You can also succeed with Forex by setting yourself realistic targets. The more realistic you are the better are the chances that you will be able to work hard enough to realize your objectives. You should decide to engage you in Forex and then give your all to succeeding and also keep in mind that your targets are not too farfetched or unrealistic.
With these tips in mind you should get started with Forex and bear in mind also that to be successful you will need
to learn how to focus your efforts on the best trades that should be used with best odds of succeeding. Weigh your options and set realistic targets and then do your best to realize a profit.
Essential Elements
Essential Elements of a Successful Trader
Courage Under Stressful Conditions When the Outcome is Uncertain
All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.
You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.
However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.
Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.
Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.
The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.
For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.
The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).
So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.
Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?
If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.
Patience to Gain Knowledge through Study and Focus
Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.
To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.
Courage Under Stressful Conditions When the Outcome is Uncertain
All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.
You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.
However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.
Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.
Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.
The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.
For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.
The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).
So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.
Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?
If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.
Patience to Gain Knowledge through Study and Focus
Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.
To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.
How to deal with Online Forex Brokers
How to deal with Online Forex Brokers
Online forex brokers can turn out to be your competitive advantage in the line of foreign currency trading. They are deemed as a valuable asset especially if you wanted to enter into a high stakes game of currency trading. Because of these, forex brokers are highly esteemed in the market and there are some misconceptions that have also been formed around them. With the industry booming, it's about time that some of those misconceptions be straightened out once and for all.
The Truth behind Trading with Brokers
Most of the time, we feel way too assured for our own good when we get the services of online forex brokers. We tend to feel that we are in the hands of experts so all we have to do is sit back and relax as they do all the needed work for us. So when things don't turn out quite the way we expect them to, we tend to put all the blame on the brokers. Sometimes we even feel cheated that we are paying for nothing. But the truth is that we are also to blame for the losses we incur.
All forex brokers know that in the trading arena, losses amounting to 95% are but a common thing. This is why most of them choose to abide by the rules of day trading. Exchanging currencies are very dynamic and at the end of the day, all your broker ever really does is to provide you with leads. The hand that still makes all the vital decisions is yours and not your broker.
Brokers and Offered Leverage
One of the selling points used by most forex brokers is the leverage they offer. Leverage is the profits that you can be promised by relying on just one forex broker alone. Some even go as far as giving 300:1 and unfortunately some people take the bait. In truth, 20:1 is the maximum that brokers can handle and assure you with. It's easy to believe that they can do it with a spectrum of trading methods but at the end of the day, keep in mind that these brokers are human too. They can only do so much to cover that much and also consider the fact that you may not be their only client.
Listening to Your Forex Broker
One of the great offers that a forex broker can perhaps give you as an extra benefit is their word of advice. You would especially appreciate this if you are new in the game. But the thing is, you should not swallow every piece of advice that your forex broker will give you. Online forex brokers are hired to help you find opportunities but they should never be the ones made to handle the course of your business. At the end of the day, you should still listen to your own gut feel and instincts.
Also, you should never buy most of the things that your forex broker tells you out of the context of work. As much as possible, keep your relationship at a professional level.
Online forex brokers can turn out to be your competitive advantage in the line of foreign currency trading. They are deemed as a valuable asset especially if you wanted to enter into a high stakes game of currency trading. Because of these, forex brokers are highly esteemed in the market and there are some misconceptions that have also been formed around them. With the industry booming, it's about time that some of those misconceptions be straightened out once and for all.
The Truth behind Trading with Brokers
Most of the time, we feel way too assured for our own good when we get the services of online forex brokers. We tend to feel that we are in the hands of experts so all we have to do is sit back and relax as they do all the needed work for us. So when things don't turn out quite the way we expect them to, we tend to put all the blame on the brokers. Sometimes we even feel cheated that we are paying for nothing. But the truth is that we are also to blame for the losses we incur.
All forex brokers know that in the trading arena, losses amounting to 95% are but a common thing. This is why most of them choose to abide by the rules of day trading. Exchanging currencies are very dynamic and at the end of the day, all your broker ever really does is to provide you with leads. The hand that still makes all the vital decisions is yours and not your broker.
Brokers and Offered Leverage
One of the selling points used by most forex brokers is the leverage they offer. Leverage is the profits that you can be promised by relying on just one forex broker alone. Some even go as far as giving 300:1 and unfortunately some people take the bait. In truth, 20:1 is the maximum that brokers can handle and assure you with. It's easy to believe that they can do it with a spectrum of trading methods but at the end of the day, keep in mind that these brokers are human too. They can only do so much to cover that much and also consider the fact that you may not be their only client.
Listening to Your Forex Broker
One of the great offers that a forex broker can perhaps give you as an extra benefit is their word of advice. You would especially appreciate this if you are new in the game. But the thing is, you should not swallow every piece of advice that your forex broker will give you. Online forex brokers are hired to help you find opportunities but they should never be the ones made to handle the course of your business. At the end of the day, you should still listen to your own gut feel and instincts.
Also, you should never buy most of the things that your forex broker tells you out of the context of work. As much as possible, keep your relationship at a professional level.
futures trading
futures trading
Efficient order management, live charts, real time market quotes, commodity forex news and analysis – these are few of the necessary elements required by a trader for commodity forex trading.
Majority of the commodity forex brokers provide fully integrated and customizable futures trading platforms without levying any additional charges or license fees. Some of the brokers may grant free access only for web based or browser based trading software but for java application based software they impose one time license fees or insist on minimum commitment on brokerage business.
What should you expect from futures trading platforms?
Look out for a state of the art futures trading platform that works on application based software and that offers:
* Multi segment platform that can allow trading across various exchanges and markets such as E-Minis, Globex commodities and forex, pit traded commodities and many other global futures markets.
* Live streaming quotes, market depth, multiple market windows, fast, reliable and efficient order management.
* Facilities to trade directly from the charts.
* Surfeit of technical analysis, charting and other analytical tools like options calculator and currency converter to develop trading strategies.
* Real time access to global news, fundamental research and technical analysis.
* Demo version with a demo user id and password. It helps you get a complete idea about various features and functionalities of the futures trading platform.
Efficient order management, live charts, real time market quotes, commodity forex news and analysis – these are few of the necessary elements required by a trader for commodity forex trading.
Majority of the commodity forex brokers provide fully integrated and customizable futures trading platforms without levying any additional charges or license fees. Some of the brokers may grant free access only for web based or browser based trading software but for java application based software they impose one time license fees or insist on minimum commitment on brokerage business.
What should you expect from futures trading platforms?
Look out for a state of the art futures trading platform that works on application based software and that offers:
* Multi segment platform that can allow trading across various exchanges and markets such as E-Minis, Globex commodities and forex, pit traded commodities and many other global futures markets.
* Live streaming quotes, market depth, multiple market windows, fast, reliable and efficient order management.
* Facilities to trade directly from the charts.
* Surfeit of technical analysis, charting and other analytical tools like options calculator and currency converter to develop trading strategies.
* Real time access to global news, fundamental research and technical analysis.
* Demo version with a demo user id and password. It helps you get a complete idea about various features and functionalities of the futures trading platform.
Fx Trading Tournament
Fx Trading Tournament
Forex or Fx as is fondly known in the global foreign exchange trading community, could probably rank as the most fancied investment avenue. I am sure that a popular search engine would yield millions of results for forex or fx. What does it imply? It simply means that a lot has been written on the subject of Fx trading and I don’t intend to bore you any more with stuff like basics of forex, introduction to forex and fundamentals of forex.
I am going to write something about Fx trading tournaments. Have you ever heard of it? Well, unlikely, as it is probably a new idea. I am inclined to say that it is indeed an innovative approach to forex training. Carry on further with a short FAQ on Fx Trading Tournaments.
What does it mean?
Fx trading tournament has nothing to do with any of your favorite sports. Fx trading tournament or alternatively Fx championship is an innovative opportunity offered by few forex brokers to forex investors to test their trading skills. Essenially, it is an event where large numbers of forex traders participate in online foreign currency trading at one common forex platform.
Advantages of Forex
Most of you must have often heard the term Forex or Fx. Forex is nothing but foreign exchange or international currency exchange. Simply speaking, if you are an American, then British Sterling Pound or European Euro or any other currency is a foreign exchange for you.
Huge amounts of Forex change hands in the global trade and commerce. Besides the international business transactions, forex has also established a firm foothold in the investment portfolio of large number of people. You may wonder how you can invest in forex. Is it like investment in stocks and bonds? Is it suitable to a layman like me? Well, according to me it is neither easy nor difficult. You must give it a try, provided you are willing to learn forex trading.
Let me tell you one astounding feature of forex markets. Rates of international currencies fluctuate tremendously depending upon the country specific factors. To realize the true potential of how the vast scale fluctuation or volatility in the forex rates can help you in reaping huge benefits, you must partake in online forex trading.
Let me first brief you on the Advantages of Forex Trading:
* Liquidity: Global forex trading witnesses a daily turn over of few trillion US dollars.
* Market Availability: Forex trading is a round the clock market place. Forex market wakes up with Sidney, moving around globally as each market comes to life. Tokyo wakes up next, then London and finally US.
* Low Trading Costs: Like all the other markets, forex trading requires an intermediary called as a forex broker. However unlike other markets, the forex trading brokers do not charge any commissions for executing your trade. On the contrary the forex trading brokers make a small profit from bid/ask spread on the currency pair.
* Small Capital and High Leverage: You do not need to deploy huge capital amounts as the exposure or leverage ratios are high of the order of 200:1. Most of the forex brokers allow you to start with a capital as low as 100 USD.
Forex or Fx as is fondly known in the global foreign exchange trading community, could probably rank as the most fancied investment avenue. I am sure that a popular search engine would yield millions of results for forex or fx. What does it imply? It simply means that a lot has been written on the subject of Fx trading and I don’t intend to bore you any more with stuff like basics of forex, introduction to forex and fundamentals of forex.
I am going to write something about Fx trading tournaments. Have you ever heard of it? Well, unlikely, as it is probably a new idea. I am inclined to say that it is indeed an innovative approach to forex training. Carry on further with a short FAQ on Fx Trading Tournaments.
What does it mean?
Fx trading tournament has nothing to do with any of your favorite sports. Fx trading tournament or alternatively Fx championship is an innovative opportunity offered by few forex brokers to forex investors to test their trading skills. Essenially, it is an event where large numbers of forex traders participate in online foreign currency trading at one common forex platform.
Advantages of Forex
Most of you must have often heard the term Forex or Fx. Forex is nothing but foreign exchange or international currency exchange. Simply speaking, if you are an American, then British Sterling Pound or European Euro or any other currency is a foreign exchange for you.
Huge amounts of Forex change hands in the global trade and commerce. Besides the international business transactions, forex has also established a firm foothold in the investment portfolio of large number of people. You may wonder how you can invest in forex. Is it like investment in stocks and bonds? Is it suitable to a layman like me? Well, according to me it is neither easy nor difficult. You must give it a try, provided you are willing to learn forex trading.
Let me tell you one astounding feature of forex markets. Rates of international currencies fluctuate tremendously depending upon the country specific factors. To realize the true potential of how the vast scale fluctuation or volatility in the forex rates can help you in reaping huge benefits, you must partake in online forex trading.
Let me first brief you on the Advantages of Forex Trading:
* Liquidity: Global forex trading witnesses a daily turn over of few trillion US dollars.
* Market Availability: Forex trading is a round the clock market place. Forex market wakes up with Sidney, moving around globally as each market comes to life. Tokyo wakes up next, then London and finally US.
* Low Trading Costs: Like all the other markets, forex trading requires an intermediary called as a forex broker. However unlike other markets, the forex trading brokers do not charge any commissions for executing your trade. On the contrary the forex trading brokers make a small profit from bid/ask spread on the currency pair.
* Small Capital and High Leverage: You do not need to deploy huge capital amounts as the exposure or leverage ratios are high of the order of 200:1. Most of the forex brokers allow you to start with a capital as low as 100 USD.
Forex Terms
Forex Terms
* ADP Employment Change The change to employees, sent in by Automatic Data processing, Inc, measures the change in the number of workers in the U.S.. Generally, the increase in this index has positive effects on consumer spending which stimulates economic growth. Therefore, a high value is considered positive for the dollar, while a low value is considered negative.
* Average Hourly Earnings The average hourly wage notified by the Bureau of Labor Statistics is an important indicator of labor cost inflation and market tightness. The Central Bank of America gives them great importance when deciding on interest rates. A high indicator is positive for the dollar, while a low negative.
* Building Permits A guide for building permits shows the number of permits issued for new dwellings. The building permits are a first indication of the state housing sector. A high indicator is positive for the currency, while a low negative.
* Business Inventories Commercial Stock, notified by the Census Bureau of America, which counts the monthly percentage change in stocks of manufacturers, retailers and wholesalers. A downward trend of this indicator is positive for the dollar, and reducing their stocks of the retailers make larger orders to wholesalers, who in turn take their orders to manufacturers.
* Capacity Utilization The operating ratio measures the percentage of resources available actually used by a country’s total production. It is indicative of the overall growth and demand in a country. A high indicator is positive for the currency, while a low negative.
* Chicago Purchasing Managers The index of orders in the processing of Chicago suggests economic conditions across the states of Illinois, Indiana and Michigan. This indicator shows the trend of business and associated with the index of industrial production ISM. It is widely used to illustrate the universal economic conditions in the U.S.. A result above 50 indicates growth and is considered a positive sign, while a score below 50 indicates recession and is considered negative.
* Construction Spending The construction costs, announced by the Census Bureau of America, is an indicator that measures the total expenditure in the U.S. for all types of structures. A high indicator is positive for the dollar, while a low negative.
* Consumer Credit Consumer credit measures the total amount that consumers borrow. Indicates whether consumers can afford high costs, which fuel economic growth. A high indicator is positive for the dollar, while a low negative.
* Consumer Confidence The consumer confidence shows the level of trust consumers have in economic activity. A high level of confidence stimulates economic growth, while lower level leads to an economic downturn. A high indicator is positive for the currency, while a low negative.
* Consumer Price Index The consumer price index measures the change between the retail prices of a representative basket of goods and services. The consumer price index is a key indicator to measure inflation and changes in buying patterns. A high indicator is positive for the currency of the country leads to higher interest rates to curb inflation, while contrary evidence is a low negative.
* Current Account The current account measures the quarterly change in net input-output current, including goods, services and interest payments to and from the country. A current account surplus shows that capital inflows are greater than the outflow. A high indicator is positive for the currency of the country while a low is negative.
* ADP Employment Change The change to employees, sent in by Automatic Data processing, Inc, measures the change in the number of workers in the U.S.. Generally, the increase in this index has positive effects on consumer spending which stimulates economic growth. Therefore, a high value is considered positive for the dollar, while a low value is considered negative.
* Average Hourly Earnings The average hourly wage notified by the Bureau of Labor Statistics is an important indicator of labor cost inflation and market tightness. The Central Bank of America gives them great importance when deciding on interest rates. A high indicator is positive for the dollar, while a low negative.
* Building Permits A guide for building permits shows the number of permits issued for new dwellings. The building permits are a first indication of the state housing sector. A high indicator is positive for the currency, while a low negative.
* Business Inventories Commercial Stock, notified by the Census Bureau of America, which counts the monthly percentage change in stocks of manufacturers, retailers and wholesalers. A downward trend of this indicator is positive for the dollar, and reducing their stocks of the retailers make larger orders to wholesalers, who in turn take their orders to manufacturers.
* Capacity Utilization The operating ratio measures the percentage of resources available actually used by a country’s total production. It is indicative of the overall growth and demand in a country. A high indicator is positive for the currency, while a low negative.
* Chicago Purchasing Managers The index of orders in the processing of Chicago suggests economic conditions across the states of Illinois, Indiana and Michigan. This indicator shows the trend of business and associated with the index of industrial production ISM. It is widely used to illustrate the universal economic conditions in the U.S.. A result above 50 indicates growth and is considered a positive sign, while a score below 50 indicates recession and is considered negative.
* Construction Spending The construction costs, announced by the Census Bureau of America, is an indicator that measures the total expenditure in the U.S. for all types of structures. A high indicator is positive for the dollar, while a low negative.
* Consumer Credit Consumer credit measures the total amount that consumers borrow. Indicates whether consumers can afford high costs, which fuel economic growth. A high indicator is positive for the dollar, while a low negative.
* Consumer Confidence The consumer confidence shows the level of trust consumers have in economic activity. A high level of confidence stimulates economic growth, while lower level leads to an economic downturn. A high indicator is positive for the currency, while a low negative.
* Consumer Price Index The consumer price index measures the change between the retail prices of a representative basket of goods and services. The consumer price index is a key indicator to measure inflation and changes in buying patterns. A high indicator is positive for the currency of the country leads to higher interest rates to curb inflation, while contrary evidence is a low negative.
* Current Account The current account measures the quarterly change in net input-output current, including goods, services and interest payments to and from the country. A current account surplus shows that capital inflows are greater than the outflow. A high indicator is positive for the currency of the country while a low is negative.
What are Forex Brokers?
What are Forex Brokers?
A forex broker can have many different meanings within the Foreign Exchange Trading markets, especially in the street jargon. At its basic meaning, a broker is the person or entity that stands between the trader (you) and the market. It is the entity / platform, where you will post your wanted transaction and it will be executed in the market. In the days we live almost all Forex Brokers have an online platform where you see the prices and decide what you will buy or sell. On this platform you provide the broker – through the platform – with your transaction (buy or sell) and the broker will execute it in the market meaning go to the market, find what you want to buy/sell and execute the transaction for you. Bear in mind that the foreign exchange market is what we call OTC (over the counter), so there is no formal exchange center like in the case of shares, but all interested parties that buy or sell currencies make up the market.
Thus for the retail customer a forex broker can be considered as his/her entry point to the foreign exchange market. A forex broker in this case can be an entity that provides you with an online platform or telephone access to market data and transaction execution. Your broker will execute your transactions on time (high importance), the broker will hold your trading capital (high importance) for you to be able to trade, the broker will provide you through their platform with real time prices (high importance) for you to make accurate decisions, but also the broker will train you to use their platform and trade on the forex markets, provide you with analyses/expectations of the trading item you choose and also assist you in all forex trading needs you might have.
What are the differences between Forex Brokers?
The differences between the various forex brokers are many and should be reviewed before choosing the forex broker you will trust with your money and use their platform to enter the forex market. Below is a non-extensive list of differences that will be analyzed in more details in separate articles.
* Attachment to a leading financial institution. Some of the forex broker are attached or even are subsidiaries of a large financial institution (I.e. dbfx.com attached to deutsche bank). This should provide you more comfort due to the fact that they are expected to be more professional, have more financial support and also much less risk of being a fraudster.
* Regulated by a Financial Regulator in a country, which and for how long. Most forex broker nowadays are regulated by some authority in their country of registration (United States NFA, UK FSA, CY CYSEC etc)
* Platform used by the forex broker. There are various platforms that forex brokers use with their pros and cons (web based, downloadable, mobile phone etc)
* Type of account and technical details. Different brokers have different type of accounts in size, lots of trade, commission received, leverage, rollover interest policy and other technical’s that will increase or decrease your risk and cost management for each trade.
* Level of information and service: Each forex broker provides their clients with different level of analytical information and service. Some have online chat sessions, answer emails and phones immediately, provide their customers with deep and accurate information/predictions, watch the trades of their customers and intervene when needed. Some brokers provide advanced information, as charts and analyses for free, some other provide it as a premium service
* Last but not least – does the forex broker suit your need? Do you feel comfortable with the platform, at the same time with their customer service, the information and training they provide, their payment in and out policies, as well as your cost of trading. Does it all make you feel comfortable? Its important
What do you have to look out for?
When choosing a forex broker you should look out for all the differences described above. First you need to estimate the trustworthiness of the forex broker to hold your money, as a second you need to review their platform and technical’s with regards to risk management of your trade, as well as costs of trading, then you need to evaluate the level of information they provide you with and the personal service that they offer to their customers. In order to help you with the choice we reviewed the biggest forex brokers and provide you the information in a separate table (Forex Broker Comparison Chart).
Additionally many forex brokers to lure clients into their platform offer certain offers for example free trading cash with the first deposit. This should not be given high importance since it is just a marketing trick, but who wouldn’t like some more cash to trade with. And at the end of the day, no one is forcing you to trade with just one online broker, or to stay with one that does not suit your needs.
How do Forex Brokers make their money?
Forex brokers claim that they make their money due to the buy/sell commission they receive in the form of spread. Spread is the difference between the buy and sell price and can very between brokers and between currency pairs. This is true for a large percentage of the income of broker and for a large percentage of forex brokers, but it is not absolute and should be taken for granted. When you open a position in the market you basically open a position with the broker and the broker in his turn, if he just wants to be a broker and profit from the spread will transfer your position in the market automatically. According to this theory, the forex broker will profit significantly from the amount and volumes you trade. Thus this forex broker will want you to win more money from the market and continue trading at large volumes to increase their profits.
There are some cases of brokers though that when the client opens a position on their platform – they maintain the position and thus become the market for the client. In this case when your position is closed at a loss, the amount of money lost will be a profit for the broker. These kinds of brokers are more dangerous to the client, since it is not their benefit to provide your winning tips and information. It is very difficult to know this information from outside, but bearing this in mind you will understand on the way, whether the broker is acting like a real broker wanting you to win and increase your volumes or whether they acting like a casino wanting you to lose to their benefit.
What you should know?
As a newbie in the forex trading market you should know that you are about to enter the most risky and at the same time most fascinating financial trading market in the globe. Before you do that though and before you risk you money on it, you should treat it with care. Choose a forex broker with valid information and not based on marketing material. Train yourself in risk management first and then in trading for profit. It is more important to realize and calculate, how much you can lose, than how much you would win. Keep in mind that trading is by a large factor a psychological game. Study the psychological site of trading and keep it in mind to decide when you are ready for the first jump. And also don’t be in a rush. There is no one pushing to start trading real money tomorrow – other than maybe the marketing executive of the broker you just signed up for the demo account, but they are doing this to increase their personal budget for holidays, while your hard earned money is lost, from excessively fast decisions.
A forex broker can have many different meanings within the Foreign Exchange Trading markets, especially in the street jargon. At its basic meaning, a broker is the person or entity that stands between the trader (you) and the market. It is the entity / platform, where you will post your wanted transaction and it will be executed in the market. In the days we live almost all Forex Brokers have an online platform where you see the prices and decide what you will buy or sell. On this platform you provide the broker – through the platform – with your transaction (buy or sell) and the broker will execute it in the market meaning go to the market, find what you want to buy/sell and execute the transaction for you. Bear in mind that the foreign exchange market is what we call OTC (over the counter), so there is no formal exchange center like in the case of shares, but all interested parties that buy or sell currencies make up the market.
Thus for the retail customer a forex broker can be considered as his/her entry point to the foreign exchange market. A forex broker in this case can be an entity that provides you with an online platform or telephone access to market data and transaction execution. Your broker will execute your transactions on time (high importance), the broker will hold your trading capital (high importance) for you to be able to trade, the broker will provide you through their platform with real time prices (high importance) for you to make accurate decisions, but also the broker will train you to use their platform and trade on the forex markets, provide you with analyses/expectations of the trading item you choose and also assist you in all forex trading needs you might have.
What are the differences between Forex Brokers?
The differences between the various forex brokers are many and should be reviewed before choosing the forex broker you will trust with your money and use their platform to enter the forex market. Below is a non-extensive list of differences that will be analyzed in more details in separate articles.
* Attachment to a leading financial institution. Some of the forex broker are attached or even are subsidiaries of a large financial institution (I.e. dbfx.com attached to deutsche bank). This should provide you more comfort due to the fact that they are expected to be more professional, have more financial support and also much less risk of being a fraudster.
* Regulated by a Financial Regulator in a country, which and for how long. Most forex broker nowadays are regulated by some authority in their country of registration (United States NFA, UK FSA, CY CYSEC etc)
* Platform used by the forex broker. There are various platforms that forex brokers use with their pros and cons (web based, downloadable, mobile phone etc)
* Type of account and technical details. Different brokers have different type of accounts in size, lots of trade, commission received, leverage, rollover interest policy and other technical’s that will increase or decrease your risk and cost management for each trade.
* Level of information and service: Each forex broker provides their clients with different level of analytical information and service. Some have online chat sessions, answer emails and phones immediately, provide their customers with deep and accurate information/predictions, watch the trades of their customers and intervene when needed. Some brokers provide advanced information, as charts and analyses for free, some other provide it as a premium service
* Last but not least – does the forex broker suit your need? Do you feel comfortable with the platform, at the same time with their customer service, the information and training they provide, their payment in and out policies, as well as your cost of trading. Does it all make you feel comfortable? Its important
What do you have to look out for?
When choosing a forex broker you should look out for all the differences described above. First you need to estimate the trustworthiness of the forex broker to hold your money, as a second you need to review their platform and technical’s with regards to risk management of your trade, as well as costs of trading, then you need to evaluate the level of information they provide you with and the personal service that they offer to their customers. In order to help you with the choice we reviewed the biggest forex brokers and provide you the information in a separate table (Forex Broker Comparison Chart).
Additionally many forex brokers to lure clients into their platform offer certain offers for example free trading cash with the first deposit. This should not be given high importance since it is just a marketing trick, but who wouldn’t like some more cash to trade with. And at the end of the day, no one is forcing you to trade with just one online broker, or to stay with one that does not suit your needs.
How do Forex Brokers make their money?
Forex brokers claim that they make their money due to the buy/sell commission they receive in the form of spread. Spread is the difference between the buy and sell price and can very between brokers and between currency pairs. This is true for a large percentage of the income of broker and for a large percentage of forex brokers, but it is not absolute and should be taken for granted. When you open a position in the market you basically open a position with the broker and the broker in his turn, if he just wants to be a broker and profit from the spread will transfer your position in the market automatically. According to this theory, the forex broker will profit significantly from the amount and volumes you trade. Thus this forex broker will want you to win more money from the market and continue trading at large volumes to increase their profits.
There are some cases of brokers though that when the client opens a position on their platform – they maintain the position and thus become the market for the client. In this case when your position is closed at a loss, the amount of money lost will be a profit for the broker. These kinds of brokers are more dangerous to the client, since it is not their benefit to provide your winning tips and information. It is very difficult to know this information from outside, but bearing this in mind you will understand on the way, whether the broker is acting like a real broker wanting you to win and increase your volumes or whether they acting like a casino wanting you to lose to their benefit.
What you should know?
As a newbie in the forex trading market you should know that you are about to enter the most risky and at the same time most fascinating financial trading market in the globe. Before you do that though and before you risk you money on it, you should treat it with care. Choose a forex broker with valid information and not based on marketing material. Train yourself in risk management first and then in trading for profit. It is more important to realize and calculate, how much you can lose, than how much you would win. Keep in mind that trading is by a large factor a psychological game. Study the psychological site of trading and keep it in mind to decide when you are ready for the first jump. And also don’t be in a rush. There is no one pushing to start trading real money tomorrow – other than maybe the marketing executive of the broker you just signed up for the demo account, but they are doing this to increase their personal budget for holidays, while your hard earned money is lost, from excessively fast decisions.
FOREX TRADING
As a new online forex trader you firstly have to understand that trading currencies does not come in short cuts, learning the fundamentals of trading is a process that requires both time and dedication by both practicing through a forex demo account and by widening your knowledge through basic study of the markets and the terminology used during trading. It is important to fisrt of all understand that forex is the acquisition or purchase of one currency from a trader or a financial institution in with the goal to exchange the currency for another at an equivalent rate. As the currency market fluctuates based on a number of related and unrelated factors currencies will go up and down therefore bringing opportunities for profits during exchange. The forex market is a speculative market; meaning that predictions (speculations) are calculated on clear speculations that traders will come to based on breaking news, political pressures or other information released internally or through the media which might cause currencies to fluctuate upscale or downscale. The clear speculative form of the online currency market enhances it to rank as the most liquid online trading market with more than $1,9 million traded daily. Savvy investors are getting out of the stock market and into forex trading and this industry has seen may other professionals and normal people join in the fun and games. It is a very new industry, only emerging in 1978. This was seven years after the Gold Standard was discarded, and when currency was first allowed to float in relationship to supply and demand. By the same token, till 1995, as usual the only traders who could benefit from this market was banks, and large multi-nationals, but all that has now changed. It is all thanks to the internet and computer technology that market which were once closed to the man in the street have opened up. Internet entrepreneurs are becoming rich and benefiting from many highly profitable markets today and the growth in popularity of forex trading has been fast, exponential as well as explosive. This is not surprising that it has fast become the worlds most profitable trading market.
Forex is unlike the traditional form of trading in which there is a central trading floor and buyers and sellers are brought together. Forex floats on the air waves of the internet, it is virtual money, and trading takes place through foreign exchange clearing houses or brokerage firms. All around the word trader are conducting business over high speed broadband and they have all the information they need at their fingertips. This market is the most profitable, because it is the largest marketplace in the world and it accounts for trading in excess of $1.9 trillion daily. These figures have been confirmed by 1998 figures from the fourth Central Bank Survey of Foreign Exchange and Derivatives Market Activity. Obviously it is believed that these amounts are significantly higher now twelve years down the line. To give this amount some perspective, activity in the Forex market is 75 times more than the New York Stock Exchange on any given day. The trading which takes place on this trading market, also using figures from 1998 are $16 billion, and the London Stock Exchange is $11 billion. From this we see that activity in Forex is vastly superior to that taking place in stock market trading. As well as being the most profitable market in the world foreign exchange is also the most persistent and powerful, even when under threat of negative economic indicators. Forex is of a macro-economic nature and currency “trends” far better than any and every other market commodity. Most commodities are fundamentally of the supply and demand nature and can change dramatically over night. This was seen with the September 11 disaster and the dot com market adjustment. Currency is predictable and stable and the fundamentals are less random, much like interest rates which only adjust in small increments, and gradually over time. This fundamental predictability is illustrated quite simply by looking at the US$. Of the 1.2 trillion dollars of Forex traded daily 83% is spot foreign exchange and 95% is swap activity and all of this involved the US$. The second most active is the Euro at 37% and at 24% the Japanese yen in thirds. Pounds Sterling is fourth at 10% and at 7% the Swiss Franc is in fifth place; CAD (Canadian $) and AUD (Australian $) rank 6th place jointly at 3%.
In forex trading self traders concentrate mostly on spot Forex the definition of this is a trading transaction which takes place and is liquidated, and settled within 2 working days. So the reason for this type of trading is because it is highly profitable, fast and easy. In the majority it allows for good profits because of constant market fluctuations and only entails buying weaker and selling stronger. Leverage is applied with regard to Forex trading and it allows the trader to amplify profit by holding a position with $100 000 with a margin deposit of only $1 000. This is known as managing risk, and the end result is a very profitable trade which is potentially very liquid. Traders should understand that when trading forex trades will be based on the limitations or the frames set by his broker; as his forex broker which in the vast majority of cases is the online forex operator or forex site as abbreviated commonly by users. The forex market is a 24 hour market and starts operations at 6:00 PM EST on Sundays in Sydney all the way to Friday at 4:00 PM EST when it will close its doors to traders for the weekend in New York.
Forex is unlike the traditional form of trading in which there is a central trading floor and buyers and sellers are brought together. Forex floats on the air waves of the internet, it is virtual money, and trading takes place through foreign exchange clearing houses or brokerage firms. All around the word trader are conducting business over high speed broadband and they have all the information they need at their fingertips. This market is the most profitable, because it is the largest marketplace in the world and it accounts for trading in excess of $1.9 trillion daily. These figures have been confirmed by 1998 figures from the fourth Central Bank Survey of Foreign Exchange and Derivatives Market Activity. Obviously it is believed that these amounts are significantly higher now twelve years down the line. To give this amount some perspective, activity in the Forex market is 75 times more than the New York Stock Exchange on any given day. The trading which takes place on this trading market, also using figures from 1998 are $16 billion, and the London Stock Exchange is $11 billion. From this we see that activity in Forex is vastly superior to that taking place in stock market trading. As well as being the most profitable market in the world foreign exchange is also the most persistent and powerful, even when under threat of negative economic indicators. Forex is of a macro-economic nature and currency “trends” far better than any and every other market commodity. Most commodities are fundamentally of the supply and demand nature and can change dramatically over night. This was seen with the September 11 disaster and the dot com market adjustment. Currency is predictable and stable and the fundamentals are less random, much like interest rates which only adjust in small increments, and gradually over time. This fundamental predictability is illustrated quite simply by looking at the US$. Of the 1.2 trillion dollars of Forex traded daily 83% is spot foreign exchange and 95% is swap activity and all of this involved the US$. The second most active is the Euro at 37% and at 24% the Japanese yen in thirds. Pounds Sterling is fourth at 10% and at 7% the Swiss Franc is in fifth place; CAD (Canadian $) and AUD (Australian $) rank 6th place jointly at 3%.
In forex trading self traders concentrate mostly on spot Forex the definition of this is a trading transaction which takes place and is liquidated, and settled within 2 working days. So the reason for this type of trading is because it is highly profitable, fast and easy. In the majority it allows for good profits because of constant market fluctuations and only entails buying weaker and selling stronger. Leverage is applied with regard to Forex trading and it allows the trader to amplify profit by holding a position with $100 000 with a margin deposit of only $1 000. This is known as managing risk, and the end result is a very profitable trade which is potentially very liquid. Traders should understand that when trading forex trades will be based on the limitations or the frames set by his broker; as his forex broker which in the vast majority of cases is the online forex operator or forex site as abbreviated commonly by users. The forex market is a 24 hour market and starts operations at 6:00 PM EST on Sundays in Sydney all the way to Friday at 4:00 PM EST when it will close its doors to traders for the weekend in New York.
Gold Price is Speculated to Rise
A light modulation of the price of Gold was recorded in Asia with speculations that its price may move upwards as investors are buying the metal in an effort to protect their wealth by the prospect of weaker growth and possible reduction of prices of other assets. Bullion for immediate delivery rose to 0.2 % reaching U.S. $ 1186.95 an ounce and traded at 1186.05 an ounce at 9:55 am in Singapore. Yesterday the chairman of the Federal Reserve Ben S. Bernanke said the economic outlook of the U.S. remains “unusually uncertain “, with “no high probability” of deflation.
The dollar, which normally follows the opposite path from gold, suspended the three-day ascent against the basket of six major currencies as investors looked for shelter from the slower growth in selling the currency. Today, the dollar fell to a seven-month low against the yen. Silver for immediate delivery and platinum showed a slight difference in 17.6725 an ounce and 1 517 an ounce respectively. 0.3 % rise recorded palladium reaching 450 dollars an ounce.
The dollar, which normally follows the opposite path from gold, suspended the three-day ascent against the basket of six major currencies as investors looked for shelter from the slower growth in selling the currency. Today, the dollar fell to a seven-month low against the yen. Silver for immediate delivery and platinum showed a slight difference in 17.6725 an ounce and 1 517 an ounce respectively. 0.3 % rise recorded palladium reaching 450 dollars an ounce.
Commodities show inflation
Many economists are sounding an alarm bell regarding deflation. The commodity market movement however, appears to contradict these concerns. The demand for basic agricultural products, raw materials and other commodities remains high pushing the prices to an upwards rally. A clear indication is the wheat price which currently is on highest peak of the last 22 months – partly justified however, due to the unprecedented drought that has gripped Russia. At very high levels also is the price of coffee, even sugar – which had received strong pressures during the first months of the year is now in recovery orbit.
According to data from Reuters, the price index of goods to the central bank of Australia was in July in the second highest ever, recording gains of 25 % since March. It is obvious that commodity prices have again picked up after a short break due to the sliding of the global economy.
Why this trend is happening can be explained quite easily as China, which is very close to winning the title of second largest economy in the world, has a high development rate. The demand for raw materials and other goods has not diminished despite the shift of Beijing to a more restrictive policy. Even the economy of United States, despite the slowdown, continues to grow at a relatively good pace.
Therefore the increasing price of goods is only reflecting the recovery of the global economy and especially the boom from Asian emerging forces. News for Australia and other major exporters of commodities such as Canada, Russia and Brazil are better than ever. However, this is not as good for consumers in the west countries who see the commodity prices to rise, while unemployment remains stubbornly high and the monthly income under pressure.
However, the consumer price index is now very low which suggests that a small increase in inflationary pressures is more welcome by the threat of deflation. By the term of deflation we are referring to the price deflation. In this case, the deflation is something good because it forces the constructors / suppliers of goods or the providers of services to lower the cost of the their products due to competitive forces such as telephony, higher productivity rate (because the use of computers) or during an global economy crisis as the one we experience now.
The reduction of the prices in consumer goods over time is not bad at all as this increases the quality of life standards as consumers can buy more with less money. This is exactly what reverses a static market to a market that moves upwards as people will start buying and investing even if deflationary pressures continue.
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