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Friday, April 30, 2010
FXCM Balance Sheet as of February 2010
Highlights include:
* $137,870,045 Million in Capital (Assets Minus Liabilities) – an increase of over $20 million since the last update four months ago.
* $152,167,482 In Operating Cash (Excludes Client Funds) – an increase of about $25 million since the last update.
* $365,319,721 In Customer Deposits – an increase of almost $45 million (!) since the last update.
FXCM’s figures have managed to surprise me as I figured that the increased competition in the market will take its toll on all brokers, especially the US ones, however it doesn’t seem to be the case with FXCM. It would be interesting to understand whether all US brokers managed to achieve a similar impressive growth.
FXCM believes that financial transparency in the retail forex industry is more important than ever and will continue to publicly post its balance sheet on its Web site quarterly here
Balance Sheet (Unaudited)
FOR THE MONTH ENDED FEBRUARY 28, 2010
(Amounts in USD)
CUSTOMER CASH $365,319,721
OPERATING CASH $152,167,482
OTHER ASSETS $11,204,504
FIXED ASSETS $10,095,086
TOTAL ASSETS $538,786,793
CUSTOMER DEPOSITS $365,319,721
OTHER LIABILITIES $35,597,027
TOTAL LIABILITIES $400,916,748
FXCM CAPITAL $137,870,045
TOTAL LIABILITIES AND FXCM CAPITAL $538,786,793
Drew Niv, CEO of FXCM, commented: “FXCM is proud of our continued financial discipline and strong balance sheet. We believe clients should have the necessary information to make intelligent choices.”
FXCM Holdings LLC consists of FXCM Australia Ltd., Forex Trading LLC, Forex Capital Markets LLC, Forex Capital Markets Ltd., FXCM Asia Ltd., and FXCM DMCC.
# # #
About FXCM Holdings LLC
Forex Capital Markets (FXCM) is a leading global forex broker that caters to both retail and institutional markets. Founded in 1999, FXCM is one of the largest brokers, regulated by several of the world’s most respected financial authorities.
At the heart of FXCM’s client offering is No Dealing Desk* forex trading, Clients have Direct Market Access to some of the world’s largest forex liquidity providers, enabling FXCM to offer clients spread as low as 1 pip on major crosses. Clients also have the benefits of mobile trading, one-click order execution and trading from real-time charts. FXCM’s CFD product† offers no requite trading and allows traders to trade oil, gold, silver and stock indices, along with forex on one platform. In addition to currency and CFD trading, FXCM offers educational courses on forex trading, and provides free news and research through DailyFX.com.
*Please note that FXCM Micro, in its discretion, may or may not offset individual transactions unlike transactions in most FXCM Standard accounts.
† CFDs are not available to residents of the United States of America and its territories.
Risk Disclaimer: Trading FX and CFDs on margin carries a high level of risk, and may not be suitable for all investors read full disclosure.
CME posts strong results, ponders another Forex venue?
* First-quarter net income was $240 million and diluted earnings per share were $3.62, both up 21 percent from the same period last year. First-quarter 2010 results included $6 million in non-operating income for the recovery of a bankruptcy claim and a $6 million reduction in certain tax reserves, offset primarily by $10 million of professional fees related to the company’s joint venture with Dow Jones. These three items increased net income by $2 million. First-quarter 2010 figures include the results of Dow Jones Indexes beginning March 19, 2010.
* First-quarter 2010 operating margin was 60 percent, in line with first-quarter 2009. Operating margin is defined as operating income as a percentage of total revenues.
First-quarter net income was $240 million and diluted earnings per share were $3.62, both up 21 percent from the same period last year. First-quarter 2010 results included $6 million in non-operating income for the recovery of a bankruptcy claim and a $6 million reduction in certain tax reserves, offset primarily by $10 million of professional fees related to the company’s joint venture with Dow Jones. These three items increased net income by $2 million. First-quarter 2010 figures include the results of Dow Jones Indexes beginning March 19, 2010.
What’s more interesting is that CME announced plans to handle a range of off-exchange derivatives contracts, such as interest-rate swaps, swap options, and so-called “cap” and “floor” contracts. The exchange is also working on clearing capabilities to accommodate foreign-exchange forwards, swaps and options alongside over-the-counter spot deals.
Here this becomes interesting, is this CME’s another take on the retail FX market after the much hyped FXMarketspace launch and crash? It would be extremely interesting to see how CME would like to implement this. Although this is inline with my perception of the global FX marketplace becoming more centralized via several clearing venues this is surely not going to be easy for CME as it already failed once and the market has more than enough of such venues at this point.
Places To Get a Great Forex Trading System
It’s very important that if you’re exploring forex trading or already trading that you have a trading system. One aspect of that trading system are the actual setup rules which usually contain entry and exit techniques. Traders put a lot of time and effort in developing these setup rules too often neglecting other aspects such as position sizing or relative size of your profits compared to losses. Therefore it’s important to find a comprehensive forex trading system.
Where can you find a comprehensive forex trading system? Throughout the last three years, I’ve been through many trading systems obtained mostly from books, forums, or other websites. I’ve found that almost every time, I’ll mold that system into something totally different than the original incarnation, something that fits my personality and style of trading. Many times, the original system will also need to be expanded to include things that were neglected or forgotten. Those of you searching for the perfect system may find this method of modifying existing forex trading systems desirable. There are places where you can find the whole package without any need for modification.
This brings me to the question, "where did you get your forex trading system?" I think there are four main ways of getting a trading system.
- Buy it. There are tons for sale out there on the net but heed caution. Many were just copied from forums, books, or other websites. Sometimes when you buy forex education, part of the package will include a trading system. For instance, Rob Booker provides his Arizona rules as part of his mentoring program.
- Get a free one. There are many free systems that can be found in books, forums, or other websites. I guess one can question whether a system found is a book is free since you paid for the book.
- Create an original system yourself. My main trading system is an original creation. There may be other systems out there that are similar to it since it’s a culmination of years of exposure to other systems and experiences.
- Modify someone else’s system and make it your own. As I stated above, I have done this many times.
Rich is Trading Forex Again
So after yet another hiatus from trading forex, I just recently had my first trade in months. It was a successful one also. But the question I want to answer is, “Is this blog dead?” The answer is no. I’ve made a living over the past 3 years ducking in and out of here depending on what’s going on in my life. Sometimes I’m just too swamped at my real job, other times I just don’t feel like writing, but I always come back. The great thing is I’ve built up a lot of content over the years so a lot of it applies to the type of forex trader you’re trying to become.
So where do I go from here? I’m in the mood to start trading forex again so that’s what I’m going to do. I’m also going to talk a little about stocks. I’ve had a lot of success, believe it or not, trading the stock market in the last couple of months and I think I’ve learned some things that I could apply to trading forex. So you’ll hear me talk about some of these things also.
Stay tuned….
Popularity: 68%
Greece Weighs on the Euro…Still
Since I last posted on this issue, there have been a handful of key developments, the most important of which was the approval of an emergency loan packaged. Under the terms of the agreement, the EU will lend €30 Billion to Greece, and the IMF will lend an additional €15 Billion. Both loans will have 3-year terms and 5% coupons. While George Papaconstantinou, Finance Minister of Greece, “insisted that this was ‘not tantamount’ to asking for a bailout,” the markets were of the opposite mindset, which is why the Euro immediately advanced 1.5% when news of the loan package broke on April 12.
Since then, the Euro has cooled, the Greek stock market has dropped, and borrowing costs have surged: “The spread between the government’s 10-year bonds and benchmark German debt [has risen] to 549 basis points, the highest in at least 12 years. Credit- default swaps tied to Greece’s debt jumped 149 basis points to a record 635.” What happened?!
It seems that despite the assurances of Eurozone countries that “parliamentary approval would take ‘one week or two weeks at the maximum’ ” and analysts’ assertions that “Greece is as close to activating the rescue package as one can imagine,” the markets were simply not convinced. Some EU member countries have warned that “new legislation” will be required to lend money to Greece and “a group of German professors are readying a challenge to the rescue plan in Germany’s constitutional court.” In short, until Greece has the money in hand, nothing can be taken for granted. In addition, Greece must refinance €8 Billion in short-term debt that expires on May 19, and investors are skeptical that it can do so at tolerable interest rates, if at all. For example, a US Dollar-denominated bond offering that was projected to bring in $5-10 Billion attracted only $1-4 Billion in institutional interest.
Of course, there is also the concern that even if Greece can raise enough short-term cash to remain solvent, it will once again face trouble in the medium term: “An infusion of cash won’t fix Greece’s long-term problems, and the ‘only choice’ for Greece could be a ‘dramatic economic contraction,’ ” said one expert.Even if default wasn’t previously inevitable, it is quickly becoming self-fulfilling, since investors’ nervousness is leading to higher interest rates (aka borrowing costs), which is making it more difficult for Greece to reduce its budget deficit, which will cause investors to become more nervous, etc etc.
Unsurprisingly, experts have begun to look at alternative scenarios, such as leaving the Euro. The consensus is that it would be mechanically and legally feasible, but economically catastrophic. It would result in massive currency devaluation and economic recession, and wouldn’t even eliminate the sizable chunk of Greek debt that is denominated in foreign currency. In short, it remains a last resort or last resorts, and isn’t even on the table at the moment.
If investors learned anything from the credit/housing crisis, it is that things can quickly go from bad to worse, and they don’t want to have to learn that lesson a second time with Greece and the Euro. In the end, investors will stay away until there is more clarity surrounding Greece’s finances. Until then, betting on the Euro would be an “aggressive call.”
No Credit Risk in Forex
First of all, what do I mean by credit risk? Often used interchangeably with the terms settlement risk and counterparty risk (depending on the type of security/investment in question), credit risk refers to the possibility that one party (all financial transactions necessarily involve two parties) will not honor its side of the financial agreement. In the case of forex, this refers to the risk that either the buyer or the seller will not be able to fulfill its promise to deliver currency at the agreed-upon exchange rate. For example, let’s assume that I’ve signed a contract to exchange $100 Dollars for Euros at $1.35. There is a risk that after you hand over the Dollars, the counterparty will not be able to supply the Euros, and even worse, that it won’t be able to return your Dollars.
With regard to transactions involving other types of securities (especially derivatives), this risk is very real, albeit minimal. Anyone who signed a long-term financial contract with Lehman Brothers or Bear Stearns is probably fighting in bankruptcy court to collect pennies on every dollar that they are owed. As I said, however, this is essentially a non-risk in forex. While currency markets fluctuated wildly in the wake of both bankruptcies, these fluctuations were completed unrelated to the possibility that Lehman Brothers and Bear Stearns would not be able to honor their trades, and in fact forex markets continued functioning with very little interruption. In fact, “In the dreadful week following Lehman Brothers’ collapse, more than $150bn of Lehman’s FX trades were settled successfully.” How was this possible?
The answer is CLS, or Continuous Linked Settlement, which is an interconnected system used exclusively for settling foreign exchange transactions, and owned by its member banks. CLS handles 55% of all forex transactions (but a much higher proportion of the volume), amounting to Trillions of dollars in activity per day, and involving 17 of the most popular currencies. Basically, all trades involving major financial institutions (7,000 at last count) pass through CLS, and are netted out at the end of each day such that each participating bank only has to make and receive payment once (for each currency) rather than 10,000 separate times.
As far as retail forex trading is concerned, this doesn’t mean that every trade that you make passes through CLS or even that your broker is itself a member of CLS (chances are that it isn’t). Instead, your broker probably settles all of these trades internally, and then must settle with its market makers at the end of each day, who in turn, settle with each other through CLS. Even though you aren’t directly connected with CLS, its existence still makes seamless forex trading possible for you.
At the same time, CLS doesn’t do anything to limit the possibility that your broker will go bankrupt (like Lehman Brothers), and that you won’t have to line up outside of bankruptcy court to try to reclaim the balance of your account. (Still, this is unlikely if you’ve selected a reputable broker with a healthy capital position). Instead, it means that when you place 100 trades over the course of a day, you can now take for granted the fact that all of them will be settled on time at the correct exchange rate.
Gold Rises as “Alternative Currency”
Before you accuse me of sounding like an infomercial, consider that while gold has been an investable commodity for quite some time, its trading pattern has changed recently, especially in the context of forex. Before, the link between gold and forex was inverse and clear: “When the greenback strengthens…this tends to pressure gold since it reduces the need to buy as a hedge against a soft dollar. Also, a strengthening dollar makes commodities generally more expensive in other currencies.” In other words, a rising Dollar is usually accompanied by falling gold prices, and vice versa.
Over the course of 2010, this relationship has steadily grown weaker and weaker, and in the last month, it has almost completely broken down. To understand the rationale for such a change, one needs not to look any further than the sovereign debt crisis currently facing Greece and indirectly, the Eurozone. This crisis has affected the way that investors think about gold; while previously it was primarily viewed as an inflation hedge, now it is seen as a hedge against fiscal/financial crisis. In this regard, it has assumed the characteristics of a “safe haven” currency, much like the US Dollar.
“Gold is going to move higher regardless of what happens in the currency market, as long as there are fears of problems in Europe. People are starting to have more skepticism to a lot of these sovereign entities,” explained one analyst. At the moment, that means that the inverse correlation between the Dollar and Gold (Dollar Up = Gold Down) appears to have reversed itself, such that a rising Dollar is also accompanied by rising gold. In this case, there may be correlation (since investors are buying both gold AND the Dollar as safe haven vehicles) but there is no causation between the two as there was before.
At the moment, the correct interpretation is that anything is preferable to the Euro (whose sovereign debt problems are the most pressing). Thus, gold prices are rising at basically the same rate as the Euro as falling, and gold prices in local currency (EUR, CHF, GBP) terms are already at record levels.
Base Currency and Variable Currency
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.
Markets Force Action!
In the meantime, unemployment figures came in better than expected in Germany which may ease the political tension over the bailouts which may allow the government to take action more swiftly. European stocks are higher as earnings have been improving. So what we are seeing is an improving economic picture, with this debt situation looming as the fly in the ointment. While having a lower Euro is good for growth, there needs to be a debt resolution to prevent it from falling beyond the point of no return.
In other news, UK home prices were higher; New Zealand maintained interest rates, and US initial jobless claims were better than the previous month. So this all adds up to a resumption of moderate risk-taking, with all eyes and ears on the EU and its debt crisis.
In the forex market:
Aussie (AUD): The Aussie is higher on risk-taking and on a report that home prices growth is slowing showing signs that the previous five rate hikes have been helping to allow growth to proceed moderately.
Loonie (CAD): The Loonie is higher this morning on risk-taking as oil is higher to just above $84. The BOC Governor Carney will be testifying today and the market may be concerned that he may attempt to further squash hopes of a rate hike in a follow up to yesterday’s quote about nothing being “pre-ordained”. The Loonie is getting an added boost from the New Zealand decision to keep rates stable.
Kiwi (NZD): The Kiwi is higher on risk-taking as well despite the fact that the RBNZ maintained rates at a record low 2.5% citing “elevated risks” in the marketplace. Future rate hikes will be forthcoming down the road provided a broad-based recovery continues. In addition, trade balance figures came in better than expected, showing signs that indeed recovery is taking place.
Euro (EUR): Unemployment figures came in much better than expected, and Euro zone confidence figures came in better than expected despite all of the problems related to the Greek debt crisis. I wrote a while back that the term “Chermany” was going to be important in the global economy in the near future. China is to the US what Germany is to the rest of the EU. They export goods and encourage debt. China has prospered due to its currency peg; and Germany due to its EU participation. If Germany continues to drag out this bailout process, they may ultimately be responsible for the Euro’s demise.
Pound (GBP): The Pound is higher this morning as UK home prices advanced the most since 2007, halting a two-day decline as risk appetite returned to the market. Expect the Pound to continue to trade sideways until after the outcome of the next week’s elections.
Dollar (USD): The Dollar is lower this morning as the Fed left rates unchanged yesterday and continued with the “extended period” language. They also signaled that sustained job gains would be necessary to consider moving on rates. Initial jobless claims figures dropped 11K to 448K, but don’t let the “Lamestream” Media fool you into believing that the jobs picture is getting better. This is most certainly a case of “less bad” and at this pace the Fed will be keeping rates low for a very LONG “extended period”.
Yen (JPY): The yen is lower on a resumption of carry trades as yield-seeking is taking place.
Within the next two weeks, we should have a good idea of what level of risk there is in the marketplace. There are two major elections occurring over that time span, one in the UK, the other in Germany.
If the current regime in Germany can maintain its power in the May 9th elections, than expect a resolution to happen rather quickly despite its unpopularity. If the balance of power should shift, then there could be further delays which could cause problems with Greece’s next debt payment due in mid-may.
So until these elections pass, I expect some range-bound trading. We will certainly have days of different measures of risk based on economic data points, but the election and subsequent resolution to the EU debt crisis is paramount.
So my bias is toward risk appetite, with a quick trigger to get out if risk-aversion should heat up. In other words, I am keeping my trading short-term and taking what the market gives me, rather than trying to guess what will take place. I advise traders out there to do the same.
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!
Interest Rate Differentials
Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when you buy the US dollar. Of course, an even more important factor normally is the relative value of the currencies, which changed 15% from low to high during 2005 – disregarding the interest rate differential. From a pure interest rate differential viewpoint, you have an advantage of 100% per annum in your favour by being long US dollar and an initial disadvantage of the same size by being short.Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions!
Such a situation clearly benefits the high interest rate currency and as result, the US dollar was in a strong bull market all through 2005. But it is by no means a certainty that the currency with the higher interest rate will be strongest. If the reason for the high interest rate is runaway inflation, this may undermine confidence in the currency even more than the benefits perceived from the high interest rate.
Friday, March 12, 2010
Forex trading examples
An investor has a margin deposit with Saxo Bank of USD 100,000.
The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.
The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.
Day 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.
Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.
Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.
Day 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.
As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.
This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.
Example 2:
The investor follows the cross rate between the EUR and the Japanese yen. He believes that this market is headed for a fall. As he is not quite confident of this trade, he uses less of the leverage available on his deposit. He chooses to ask the dealer for a quote in EUR 1,000,000. This requires a margin of EUR 1,000,000 x 5% = EUR 10,000 = approx. USD 52,500 (EUR /USD 1.05).
The dealer quotes 112.05-10. The investor sells EUR at 112.05.
Day 1: Sell EUR 1,000,000 vs. JPY 112.05 = Buy JPY 112,050,000.
He protects his position with a stop-loss order to buy back the EUR at 112.60. Two days later, this stop is triggered as the EUR o strengthens short term in spite of the investor's expectations.
Day 3: Buy EUR 1,000,000 vs. JPY 112.60 = Sell JPY 112,600,000.
The EUR side involves a credit and a debit of EUR 1,000,000. Therefore, the EUR account shows no change. The JPY account is credited JPY 112.05m and debited JPY 112.6m for a loss of JPY 0.55m. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the loss calculation.
This results in a loss of JPY 0.55m = approx. USD 5,300 (USD/JPY 105) = 5.3% loss on the original deposit of USD 100,000.
Example 3
The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:
He asks Saxo Bank for a quote in USD 1,000,000 against the Canadian dollar. The dealer quotes 1.5390-95 and the investor sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.
Day 1: Sell USD 1,000,000 vs. CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD 1.5357 = Buy CAD 1,535,700 for Day 61 due to the interest rate differential.
After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.
Day 31: Buy USD 1,000,000 vs. CAD 1.4865 = Sell CAD 1,486,500 for Day 61.
Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61.
The USD account receives a credit and debit of USD 1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD 49,200 = approx. USD 33,100 = profit of 33.1% on the original deposit of USD 100,000.
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Benchmarking the Economic
Next Major Fundamental Driver
During the worst of the financial crisis through the end of 2008 and even into the opening months of 2009, the market’s primary concern was risk appetite. Interest rate cuts were pervasive and expected return was the last thing on any traders mind. Sharp losses in nearly every investment class leveraged capital preservation into the upper echelons of importance. However, with interest rates bottoming out and safe havens no longer essential, we have seen speculative funds slowly finding their way out of risk-free zones and coming off of the sidelines to once again be put back to work. This leads us to a natural market truism: when fear isn’t the dominant influence, greed takes over
EUR/USD: Trading the Euro-Zone GD
Trading the News: Euro-Zone Gross Domestic Product
What’s Expected
Time of release: 08/13/2009 9:00 GMT, 05:00 EST
Primary Pair Impact : EURUSD
Expected: -0.5%
Previous: -2.5%
4Q 2008 Euro-Zone
The advanced GDP reading for the Euro-Zone showed the economy contracted 1.5% in the fourth quarter to mark the biggest downturn since the series began in 1995, while the annual rate of growth slipped 1.2% from the previous year, which is the first full-year drop on record, and conditions are likely to get worse as the International Monetary Fund forecasts economic activity to contract 2.0% in 2009. As the region faces its first recession in over a decade, fears of a deepening downturn may lead policymakers to take further steps to shore up the economy, and the European Central Bank is expected to lower the benchmark interest rate by another 50bp to a record-low of 1.50% as the outlook for growth and inflation falter. Meanwhile, as the overnight rate falls close to zero, the Governing Council may look beyond the interest rate to manage monetary policy, and is likely to adopt unconventional measures to stimulate the economy.
Bearish Scenario:
If we see substantially deeper available liquidity on the Offer side of the market, this tells us that major price providers in the market are looking to sell the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bearish bias on EURUSD ahead of the data release.
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How You Can Master The Forex Market (Part I)
New to the Forex market?
Forex Versus Stocks
In the forex market, over $3.2 trillion worth of trades are traded daily, which makes the currency trading market the most liquid market in the world – trading in 1 day what Wall St. trades in 1 month. No matter what time of the day or night it is, the forex market is always moving, and around the world active traders are buying and selling currencies.
50 times more leverage than trading stocks
With stocks, the maximum leverage is 2:1. But when you trade Forex with CMS Forex, you can use up to 100:1 leverage. For example, if you invest $1,000 in stocks, with 2:1 leverage you may buy up to $2,000 worth of shares. However, if you invest $1,000 margin on a foreign currency trade, at 100:1 leverage, you can control up to $100,000 in currencies. Leverage is one of the most appealing and risky factors of the forex market. Traders should note that trading using leverage may increase potential gains as well as losses on any given trade.
Scratch-out the middleman
Spot currency trading bypasses expensive middlemen that are always associated with trading stocks. With forex, clients are able to interact directly with the currency market, and can buy and sell at the simple click of a mouse. No mess. No hassle. No middleman.
Forex Overview
Fundamental analysis involves examining the intrinsic value of a nation’s currency based on economic news releases that reflect the strength, or weakness, of a country’s economy. Fundamental traders follow these news announcements, known as “fundamental indicators,” because they paint a picture of a currency's strength in relation to other countries.
Fundamental indicators are reports that include statistical data on things such as employment, gross domestic product (GDP), international trade, retail sales, housing, manufacturing, and interest rates. The stability, growth, or decline in any of these sectors may have an effect – direct or indirect – on the value of a country’s currency.
Factors That Move The Forex Market
Central banks play a key role in the Forex market because they have the responsibility of changing the country’s “base” interest rate. A central bank has to find a fine balance when setting interest rates as it wants to maintain growth in the economy, but at the same time it has to be careful to curtail inflation. The bank’s decisions on whether to raise, cut, or hold the interest rate fuels speculation in the Forex market, where the value of a currency, or group of currencies, changes in real time.
In addition to information about a country’s economy, the value of a currency is connected to national and international political events, elections, and changes in government trade policies. The prices of sensitive commodities like oil and gasoline are an important fundamental indicator as high prices can hurt consumer spending and confidence, and curtail the activities of certain businesses and government services.
Trading Forex
Buying and Selling Currencies
Traders can generate profits (or losses) whether a currency is rising or falling by buying one currency, which is anticipated to gain value against another currency or selling one currency, which is anticipated to lose value against another currency. Taking a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. Alternatively, a short position is one in which the trader sells a currency that he anticipates to depreciate and aims to buy the currency back later at a lower price.
Technical Analysis Articles
It is highly recommended that you practice with the VT Trader platform as you read through these articles. It is easy to and to sign up for a if you dont have one already.
Relative Strength Index
The Relative Strength Index (RSI) is one of the most popular indicators used by technical traders. It is an oscillator, which means it moves back and forth between 0 and 100 levels. It was first introduced by Welles Wilder in an article in Commodities Magazine (now known as Futures) in June, 1978. The RSI is used most often by day traders and other short term investors, but the information it provides can help all investors.
The RSI is a trend following oscillator that ranges from 0 to 100. It gives an indication whether the currency is currently "overbought" or "oversold", or in other words, it is a measure of momentum.
If a currency’s price is increasing, RSI will move upwards towards 100, implying buying or accumulation of the currency pair.
If the pair's price is decreasing, RSI will move downwards. This implies selling pressure or distribution.
When Wilder introduced the RSI, he recommended using 14-days as the default period. Since then, the 9-day and 25-day period RSIs have also gained popularity.
USD Falls as Stocks Reach New Yearl
The GBP/USD rose as the Bank of England kept its asset purchasing plan at £175 billion and maintained the key interest rate at 0.50%, as forecast. Some investors had expected an increase in the BOE’s quantitative easing program. The pair was also supported by increasing risk appetite and rising UK home prices. The GBP/USD outlook improved as the pair rose above 1.66 today. There are resistance in the 1.70 area and support in the 1.64.
Financial and Economic News and Comments
The US trade deficit widened more than expected to $32.0 billion in July from a revised 27.5 billion in June, data from the Commerce Department showed. Exports increased 2.2% m/m to $127.6 billion in July, led by autos/parts. Imports, outpacing exports, rose a record 4.7% m/m to $159.6 billion, also driven by autos/parts, with additional large contributions from crude oil and pharmaceuticals. Exports fell 22.4% y/y and imports dropped 30.4% y/y; consequently, the monthly trade deficit was $32.9 billion smaller than last year.
US initial jobless claims fell 26,000 to a lower-than-expected 550,000 in the week ending September 5, the lowest level since July, from the previous week’s upwardly revised 576,000, figures from the Labor Department showed. The 4-week moving average declined 2,750 to 570,000. Continuing claims in the week ending August 29 dropped 159,000 to 6,088,000 from the preceding week’s upwardly revised 6,247,000. The 4-week moving average of those continuing claims decreased 37,750 to 6,182,500. The insured unemployment rate for the week ending August 29 slid to 4.6% from the prior week’s 4.7%. In short, the declines in both initial jobless and continuing claims signal the end of the recession (yellow areas), as shown in the chart below.
Forex Managed Accounts
Thursday, February 25, 2010
CMS FOREX
Our customer base stretches around the globe. Traders in North America, Europe and Asia have seen why CMS is the leading online distributor of Forex. While many other financial institutions have been falling in recent years, CMS has always been profitable and has been always growing! The time has never been better to enter this booming global industry. Join today CMS if you want to be part of a financial powerhouse with unlimited growth potential.
Capital Market Services LLC is a Futures Commission Merchant (FCM), a member of the National Futures Association (NFA) and regulated by the Commodity Futures Trading Commission (CFTC).
CMS Forex was founded by professional Forex traders, currency traders and software developers, and as a result has been able to identify the needs of operators from the beginning. Since 1999, CMS Forex's mission has been to provide the most powerful technology combined with the currency trade execution quality, competitive services and reliable customer service. During the past seven years, CMS Forex has quickly become one of the leading online institutions of the world retail foreign exchange, providing security, software user-friendly Forex trading.
CMS Forex is positioned as an industry leader in the Forex market and continues its growth as it strives to offer its customers the best business environment. Based in New York, CMS Forex and its subsidiaries now have offices in Boston, Tokyo, Bermuda, St. Petersburg and Shanghai. Bermuda Capital Market Services International and CMS Japan were created to strengthen the global reach and better serve our international clients.
CMS Forex strives to serve both retail and institutional segment of the Forex community. Their commitment to providing innovative technology from foreign exchange trading, fair dealing practices and excellent customer service sets CMS Forex as a major force that traders look for advanced Forex chart up to date Forex news, Forex education and information.
CMS Forex Partners in New York, St. Petersburg, Shanghai and are dedicated to go the extra mile to satisfy customer needs, by creating and constantly improving on the already sophisticated and easy trading software, VT Trader ™. These attributes, plus many others, demonstrate that CMS Forex has built from the base of a service that really stands on its own.
England Forex Bank
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World's Forex
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History of Forex Trading Briefly!
Foreign Exchange Market
In foreign exchange market is a cash in foreign currency of the big banks. In this market, currencies are bought and sold and exchange rates are determined. Unlike Stock Market, Forex operates on a 24 hour clock which allows after-hours trading. The foreign exchange market gives you the freedom and flexibility to build your portfolio is not on your timetable the Stock Exchanges.
Saturday, February 20, 2010
Benefits of Forex Trading Customers
Forex deals are based on money market securities of a variety of nations to create a market where millions of people involved in the trades are done on a daily basis. This currency trading is like the U.S. market because people buy and sell stocks in the same way, but the exchange and the over all results are much larger. Those who make transactions on the Forex stock market include UBS, Deutsche Bank, HSBC, and many others like Citigroup and Merrill Lynch and more American financial firms.
To get your hands dirty in forex trading, contact any company large broker assistance would be far more beneficial to you. Sure, anyone can get involved in the forex market, but requires some education in the flow of foreign exchange market and right where you should put your money at any time.
To get your hands dirty in forex trading, contact any company large broker assistance would be far more beneficial to you. Sure, anyone can get involved in the forex market, but requires some education in the flow of foreign exchange market and right where you should put your money at any time.
What is Forex (Foreign Exchange)?
Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for another. The foreign exchange market is the largest financial market in the world with the equivalent of more than $ 1.9 trillion changing hands daily, more than three times the aggregate amount of the equity of U.S. Treasury and mixed markets. Unlike other financial markets, the Forex market has no physical location, no central exchange (off-exchange)
An Introduction To The World Wide Forex Market
The Basics of Forex are similar to the stock market in any country, but in a much larger scale, that involves people, currencies and trade worldwide, in almost all exchange rates and country.Different change to occur every day. What dollar value can be one day could be higher or lower the next. The trading on the currency market is one that has to look close, or if you are investing huge amounts of money, you could lose large amounts of money. The main commercial areas of the currency, which occurs in Tokyo, London and New York, but there are also many other places in the world where the forex market takes place.
Currency Trading - Forex
The foreign exchange market, often referred to as FOREX, is the market for different currencies, making it the largest financial market in the world with a daily average turnover of approximately $ 3 billion. It is a market which, in essence, is based on world trade. Goods and services are exchanged 24 hours a day around the world. As the transactions that take place all the time These transactions across national borders require payments in non-domestic currencies. That is where the forex market comes in.
Some Interesting Facts about Automated Forex Trading
When you're in the Forex market, its main goal as an investor is undoubtedly profit from foreign currency movements in the market. A range of income opportunities in the forex market and some of them are:
The options for zero commission trading
24-hour trading
Unrestricted access to Forex traders worldwide
Opportunity to make money in both rising and falling markets
For trade leverage, investors have the opportunity of trading with low margin
In short, if they really take a serious approach to making profits, foreign investment is a suitable option for you. With the advent of automated forex trading, Forex investors have had success with the variety of its investment in the foreign exchange market. Some of them even claim they have not experienced losses since 1999 when it began using the automated installation of foreign exchange trading.
3 Tips For Forex Trading
However, blindly jumping on it can be treacherous. I'm not trying to scare you. Like everything in life before it can become a professional who needs to understand the basics, then you can grow and develop from there and the currency market is no difference.
2. Finding a Forex trading system automated to help build your business in Forex. The following advice on how Forex trading is the purchase of a huge system. The system should reduce the amount of work to do to make money. That's why it is influential, which benefits from a large system.
3. Have a plan of daily action. You need a different strategy and set goals. What do you get? What do you expect from the shops? These are some things you want to plan. Failure to declare, you want to make a good profit from its foreign exchange trading company. More information HowToForexTrade.net