There has been a growing interest in forex dealing software programs ever since the introduction of automated systems became commonplace and accessible. Formerly, this arena was solely manipulated by any big investors be it financially or not as well as banks but is now starting to rise up the interests of tiny and mid level investors. This is the place to where the dealing of currency from one country to another happens. Trillions of dollars are traded here each day without stopping making it the largest and most active financial marketplaces of the world.
Today dealing with forex is relatively simpler with the advent of the internet and superior connectivity technology anyone with an internet link, forex dealing software and some knowledge of accounts and brokering can actually indulge in this. This marketplace never closes, and to know about what is happening in the marketplace, you have to keep a constant monitoring system in place. Before you trade in any currency the automated system allows you to not just select the currency, but also its asking and selling price. All that’s required is a tiny seed amount and a broker because your buy and sell orders would be executed instantly.
You do not have to have great professional expertise in this market as the forex trading computer software handles all the jobs for you. In the case of supervised accounts utilizing the automatic dealing systems, the program automatically manages all the details for you. This process can actually save you a lot of time since the trading won’t be done by you but the auto systems itself. Over and above, the automated dealing programs are equipped to control more than one account simultaneously - a facility manual dealing does now allow you to do. With these systems you can trade in several market places with several systems working in tandem.
There is this added benefit with forex trading software programs where you can trade anytime you wish, without having to be there in person. Being away from the computer won’t scrap any chance of you creating money since you can still have all the chances that you want. Thus it becomes more handy to work with several systems, and put many of your forex schemes into action. You can broaden your investment and get the utmost profits that you desire with the nominal risk involved since the activation of each system is intended to be carried out by various specified trade factors.
The best part about this forex trading computer software is that it does not take into consideration any human factors which often stand in the way of making rational dealing decisions. This way you have the ability to manage and monitor several currencies at the same time as well as deal them as you like.
Using a forex trading software programs does not spare you from learning the basics of trading, fundamental and technical analysis, study of market indicators, etc. to enjoy sustainable profits. The forex marketplace is still reliant on a number of elements and variables therefore success can’t be guaranteed even if you are using the top rated automatic systems. It is possible to set the program of the forex dealing computer software with ease and you can even customize the settings to suit your own tastes.
Monday, July 27, 2009
Trading Software
Auto and Truck Sales
# Importance (A-F): This release merits a C-.
# Source: Individual auto manufacturers, seasonal factors by the Commerce Department.
# Release Time: Varies by auto maker from the first business day to the third business day of the month (data for month prior).
In Brief
Auto and Truck Sales measure the monthly sales of all domestically produced vehicles. They are considered an important indicator of consumer demand, accounting for roughly 25% of total retail sales. Demand for big ticket items such as autos and trucks tends to be interest rate sensitive, making the motor vehicle sector a leading indicator of business cycles.
Each auto maker reports sales individually. The reports are typically released over the course of the first three business days of the month. Using the individual reports, a total annual sales pace can be calculated after applying Commerce Department seasonal factors. It is this annual sales pace that the market refers to when discussing auto and truck sales for the month.
In Depth
Vehicle sales figures rarely grab the attention of the market probably for two reasons. First, though the specifics of the data are not terribly difficult to understand, their implications are a little hard to trace. Second, unlike many economic releases, vehicle sales are not released all at once and at the same time every month. This makes it difficult for the market to quickly interpret what the numbers mean for the overall consumption picture and to react accordingly.
This is what happens in terms of vehicle sales during the course of any given month:
1. The individual vehicle manufacturers report their sales results during the first three or four days of the month.
2. A day after the last manufacturer reports the Bureau of Economic Analysis releases its estimate of unit auto sales.
3. About a week after that the BEA releases its estimate of unit truck sales.
4. The Census Bureau releases its retail sales report, including a measure of sales at automotive dealers, usually around the 13th of the month.
5. Roughly two weeks after that the BEA releases its personal income and outlays release, including a measure of spending on motor vehicles and parts.
Each item in this list warrants a more detailed discussion.
Manufacturers
Most vehicle manufacturers usually always report sales results on the first business day of the month; Ford does not report until the third business day. As these individual results trickle out over the news wires throughout the day, diligent economists and market analysts are busy calculating running totals and applying seasonal factors to them--the BEA supplies factors for the coming six months in advance--in order to come up with approximations for auto and truck sales rates. These figures are some of the first hard spending data for any given month; comparing these derived rates to those from months and years prior is a big help when it comes to formulating a consumption forecast for the month.
Unit Sales
Once economists and analysts have translated individual sales results into annual rates, they turn to the BEA to provide "official" unit sales rates. Unfortunately, though the BEA is using the same seasonal factors as the rest of us, more often than not it produces unit rates that are modestly different than the ones that market previously had in mind. Thankfully, however, these differences usually pop up in the individual sales categories--domestic car sales, import car sales, domestic truck sales, and import truck sales--but wash out when all the vehicle types are aggregated.
Retail Sales
With unit sales rates in hand we can proceed to forecast the auto sales contribution to the retail sales figure. And this link is important. In fact, autos often prove to be such a significant swing factor that retail sales are scrutinised on both a total and an excluding-autos basis. It is also worth remembering that the auto term in the retail report is notoriously difficult to estimate; it is not at all rare to see it decline (increase) during a month when unit auto sales rise (fall). Still, by the time the retail sales report rolls around, a few other preliminary spending gauges can be used in conjunction with the unit auto data to get a pretty good read on whether retail consumption rose or fell for the month.
Personal Consumption Expenditure
With unit sales rates and retail auto spending data in hand analysts can hone their estimates for the auto category in the personal consumption release. Many analysts place relatively more emphasis on the retail auto figures to sharpen their PCE estimates, but the unit auto numbers typically have better predictive power for that series. Besides, it is not commonly known that the BEA does not rely at all on the the retail sales data to produce its consumption estimates. Thus, as an important component of the monthly consumption figures that go directly into the quarterly GDP calculation, the PCE auto data are most important to economic forecasters.
The Forex Market
For the last three decades Foreign Exchange market, - briefly Forex or FX, had integrated into the world's biggest financial market. The volume of daily transactions is about 1-3 trillion of US dollars. The trading instruments on this market are the currencies of different countries, so the fluctuation of currency's rates allows to gain a real profit.
Of course monetary assets of different countries exchanged since the term money appeared as well as an idea to obtain profit from currency's rates difference. Now it is not a new idea, but the transformation of foreign exchange market to the modern stage with an opportunity to conduct conversional operations of such volumes arose only after an introduction of floating rates regime by the state-members of IMF. Within this regime's framework the rate of one currency to another is defining only by the supply and demand on the market.
Presently Forex market is a global telecommunication network of banks and different financial organizations. It does not have any fixed trading place and time restrictions - the trade starts on Monday morning in New Zealand and closes on Friday evening in USA
The advantages of Forex market are:
Round-the-clock trading access: the ability to trade for 24 hours a day;
Liquidity:
The market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
Leverage:
An ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you'd have an opportunity to work with 1 000 000 USD (leverage 1:100);
Objectivity:
No exterior regulated structures, so the currency's rate is establishing in accordance with current supply and demand on the market;
Globality:
Everyone can become a market participant irrespective to the living place, as trading requires only your skills and Internet access.
At present mostly all the operations on the market are conducting only to obtain profit. With the development of Internet and other means of communication this sector of the financial markets becomes more accessible and attractive for the investors of different levels.
How to Make Forex Give the Lifestyle You Want
In order to be rich and make loads of money with forex, it is a must for anyone who is serious to have accurate knowledge with the trade. Sure there is no need for any diploma in trading Forex, but in order to succeed, investing time and effort to learn profitably is a dogma.
Lately people have been buzzing about how a great income potential is forex. Getting tired of a monotonous life in the corporate world, there will come a time that people want to be free from all and have a rich lifestyle, to work from home and enjoy the greater things in life. Indeed Forex is a serious consideration and worth inveting on.
Before Forex was not accesible to anybody. But thanks to the modernization and internet, everybody has the fighting chance to get rich and be merry.
Yes Forex has low cost to operate, lower cost to start, very abundant information resources, flexible trading hours and very high income potential, everybody can get started in Forex in one way or another.
It is one thing to start trading and being profitable Forex trader is different. In order to become profitable in every trade, you will find it imperative to invest some time in learning courses and practicing in a demo account rather than saving all the pain of losses. Concepts such as Moving Averages, Fibonacci levels, Bollinger Bands, etc; are the basic knowledge every trader must have.
But having a good knowledge of these concepts is not everything you need. Fear is your worst enemy. To become a profitable trader, one thing that can free you of this fear is education. As you learn in the ways of the trade, you will find yourself more confident to what trading plans you have. You have to understand that there will be losses and it has happend to the richest traders today. If you truly understand that, there is no way that you can get poor in Forex.
You want to change the way you live for the better? A profitable forex trader must be ready with education and psychological preparation. This is the only way to make the market work in your favor.
Trade Forex or Invest in Real Estate?
Most people who want to establish a financially-secure future choose to invest or trade in real estate. Indeed, if you take a look at the list of names of the wealthiest people in any category, most of them have allocated major portions of their assets in real estate. Donald Trump, who made his fortune in real estate is very popular and his success story is an inspiration to all of us.
Books like Rich Dad, Poor Dad , by Robert Kiyosaki and other property investing books written in the last fifteen years, introduced the average person to real estate investing. Thanks to these books, many people have opened their minds to new possibilities which they can now envision for themselves.
This article will not dispute the validity and the wisdom of investing in real estate. However, it might not be the best option for everybody. Each of us has different limitations and our circumstances vary. At the start -- for most of us -- we have to choose which area to specialise in since there is only so much money to go around. What I can do, is to at least highlight a few aspects of trading and investing in both areas. I then leave it to you to decide what you would like to focus on.
I should let you know that I have not yet invested in real estate myself, but I have considered it and I have asked myself the same questions you might be asking yourself now. I have read a lot on the subject matter and my assessment is purely based from my readings. Individuals using real-estate as their vehicle to create wealth may have different perspectives and I strongly advise you to seek their counsel to gain a more balanced outlook on this issue.
PASSIVE INCOME OR CAPITAL GAINS
If you like the idea of buying property to receive rent revenue, then the real estate market maybe better for you. You can structure your properties and contractual agreements to maximise the passive income you get from your tenants.
However, if you prefer to buy a property mainly because you think you can resell it at a higher price later, then you want to make money mainly from capital gains. If this is your philosophy, then forex could be a better trading vehicle for you than real estate because exchange rates fluctuate faster than real estate prices. Furthermore, transactions are easier and they are instantaneous to complete.
CAPITAL
To buy real estate, you need have at least 10% of the acquisition cost of the property, if your bank is willing to lend you the other 90%. If the house costs $350,000, you will need to cough up $35,000. That is a year's gross income for many people.
If you want to start trading forex, most brokers allow you to open a trading account for just $200. With $50, you can trade 10,000 units of a currency, if you have a margin ratio of 200:1.
LIQUIDITY
Whenever you want to buy or sell currencies, there is always someone willing to buy from - or sell to - you at the most competitive price. The forex market is the biggest market in the world and if you have hundreds of thousands of dollars you want to exchange for another currency, you can do so within a couple of seconds. To buy or sell a house or an apartment, you expect to wait for weeks, if not months.
PRODUCT HOMOGENEITY
In the real estate market, one house is not the same as another. Each property is unique. One might have a better foundation, a worse design or a prettier garden than another. Knowledge of these strengths and weaknesses become a significant factor if you are to make money from a transaction. Therefore, if you enjoy or if you are good at selling, promoting, negotiating and bargaining based on these differences, the real estate market is for you. Further, your lawyers, accountants, advisers, real estate agents and consultants play a significant role in your success.
If you want to trade currencies, there is no need to negotiate the price with the other party. If you are a seller, there is no need to educate potential buyers as to the benefits of your product. If you are buying, you have piece of mind that you are getting the best possible price for the currency from your broker at that particular point in time.
TRANSACTION COSTS
Buying and selling real estate is much more expensive than buying and selling currencies.
'SHORTING' MARKETS
When you have a property and you suspect that its price will go down in the future, your options are limited: hang on to the property or sell it now. In forex, if you suspect that a particular currency will depreciate in value, then you can exchange it for another currency. You buy it back again after it has already reduced in value to realise your gain.
MEDIATED TRANSACTIONS
In real estate you are dealing directly with the other party, taking on the other side of the transaction. This is why you need to go through a lot of paperwork and consult your lawyers to ensure that you know about the options available to you when the other party fails to fulfil his or her end of the bargain.
In forex, you do not have to worry about whether a buyer or a seller is going to fulfil his or her end of the bargain for whatever reason, because you are not directly dealing with that particular person. You are dealing with the broker who ensures that somebody will always take the other side of your trade.
CONVENIENCE
The forex market is open 24 hours a day. You do not have to meet the buyers or sellers in person. You do not have to conduct meetings with lawyers, accountant, bank representatives and so on. You can buy and sell currencies in your pyjamas at midnight if you like and the transaction will be complete before you go back to bed.
CONCLUSION
All in all, if you are an investor looking to make money from a combination of rent revenue and capital gains, you may want to invest in real estate for the long-term. If you are a trader wanting to profit purely on capital gains, then trading forex is probably better for you than trading real estate because you can start with a small fund and your rate of return is limited only by your ability to trade well. The transactions are mediated, it is more convenient and transaction costs are a lot smaller. The market is also more efficient due to product homogeneity and liquidity. Lastly, there are opportunities to profit regardless if the prices are going up or down.
I believe that if done right, neither venture is more or less riskier than the other. The risks are up to you to manage. With this article, I hope I helped you make a decision appropriate to your circumstances.
Tips to Make Money Fast in Forex
This is all about making a fortune with Forex. Most traders just go with the flow and make average gains, with this article you will learn what makes some traders stand out and a lot richer than others!
We are going to assume that you know how to trade, and has quite an experience in trading.
With simple changes in your trade selection, money and risk management, and mindset, you can change that average gains into larger ones!
Fast money is in Forex, it is a lifestyle. here is it how its done.
Tip 1. Embrace Changeability and Risk With a Smile
Forex systems have instability.
If you cannot manage and calculate your risk, then don't ever think about trading in Forex. Many traders back away from forex because of this ( why do you even traded in the first place?). But taking manageable risks has its rewards.
It's just simple, you know what your losing if ever it doesn't work out, yet what you gain is unpredictable but sure is high! That is what I call excitement, my friend.
To a well-educated Forex trader, this is something you shouldn't be afraid of, might as well embrace it.
Tip 2. Trade Less, gain more
Most traders think that if they don't trade, another door has closed, or miss some move. The tendency, they trade frequently. Most of the trades that come big come a few times in a year. Focus on the trades that make the really big gains. Be alert, and informed.
Tip 3. Diversify is a no-no
Most Investors accept the fact that diversification can make money fast - in reality it does exactly the opposite.
Tip 4. Money and Risk Management
This article has been concentrating on the Big gains, because this is your money, so every penny should be controlled, this is where money management kicks in.
Control your risks, but increase your chances of success:
- Give yourself staying power by buying options at or in the money, this prevents you from getting stopped out. Many traders lose not by the market direction, but because they were stopped out by a instable move, and options will give you staying power.
- Keep your stop in its original position - until the move is well in profit, before moving it up.
- Trading fast and selectively - have the courage to trade when you feel it is good. and enjoy the cash.
Tip 5. Compound growth has its benefits
The way to make money fast in forex, is to understand the power of compound growth. For example, if you target 50% a year in your trading, you can grow an initial $20,000 account, to over a million dollars, in under 10 years.
Break the norm, and gain more. Follow some of these tips and make your way into the big gains!
by Ryan Joseph Ferrer
Currency Trading Courses - Why They're More Likely...
Should you use a Forex Robot and seek gains with no effort or use a currency trading course and make the effort to learn skills? The answer is in Forex trading, it's a myth you will make profits with no effort and all the cheap software packages lose money. A good currency trading course on the other hand, can cut your learning curve and give you the skills you need to win.
The idea of spending a hundred dollars or so on cheap software and earning a big income with no effort is obviously not true, if it were 95% of traders wouldn't lose money. These systems never have a track record verified by a third party and simply produce, back tested simulations or you get figures from the vendor with no third party check.
Forex trading can be learned by anyone but you must understand what your doing and put in some effort; if you don't do this you won't win, you simply don't get financial freedom for the cost of a night out. This is where a good Forex course can help you.
A good currency trading course, will give you a strategy and in most instances, the good courses will demonstrate how to make big gains in live trading via live newsletters.
This means that you can see how profitable the course is in a live trading scenario and sharpen your skills at the same time. The best courses will also give you a 100% money back guarantee, so you have nothing to lose and everything to gain by trying them. You also get unlimited support with the best courses, in case you have any questions or queries.
If you want to win at currency trading, you need to learn skills and get confidence and that's a fact.
The good news is the best currency trading courses only cost a hundred dollars or so and while you have to make some effort to learn, the time you spend can put you on the road to a great second or even life changing income.
So the choice is between a software package which claims it can make you big gains with no effort or a currency trading course which can teach you skills that will give you the knowledge you need to enter the 5% of traders who make big Forex profits.
Automated Forex Systems - Let Technology Easily Pu...
Learning the right strategies in forex market trading does not necessarily spell out a success in this field. One has to know how to implement these strategies before they get converted to cash. However, putting these two into practice entails a lot of time, effort and money and for somebody who wants to venture into trading but does not have the luxury of time, this could be a big obstacle.
Now that technology is present in almost all sectors, it has also found a way to provide a solution to this obstacle, and that is through the automated Forex system. Though a lot of traders had been skeptical about this system, later on, they also came to realize that this system can be their key to success in Forex market trading.
An automated Forex system functions with the use of an artificial intelligence. Patterned according to the strategies of a seasoned trader, this artificial intelligence makes it possible for the system to address trading issues and matters, which simplies the whole process. It also makes it capable to adapt to any type of trading environment that makes it flexible and versatile.
Because of this capacity of an automated Forex machine, it is now possible to for a trader's investment to grow with the use of this innovation. A notable increase of earnings to as much as 400% has been attributed to this machine. Coupled with the theoretical knowledge in Forex market trading, this automated Forex machine will surely be a trader's secret to success.
Forex Robots - Why Don't Banks and Professional Tr...
The answer is they simply don't work and never make the gains they claim for users instead, they wipe out users equity quickly and the reason why is enclosed in this article.
All the Forex Robots you see online are sold cheaply, for about a hundred dollars and they present track records that would make the true super traders envious. Not only do these cheap software packages claim to make more money than the world's top traders but they do it with minimal downside volatility.
So why haven't all the top investment houses and banks, sacked there dealing teams and replaced them with a hundred dollar piece of software not only would they save hundreds of millions of dollars ,they would have better performance as well!
This haven't happened, because they work and the track records they produce are never backed up by an audit from an independent third party. You get back tests on paper but making money knowing all the closing prices, proves nothing. Anyone can make money if they know the price in advance but that's not the real world of trading. You get some vendors which put out real figures but where is the check from a neutral party? Why do you see lot's of traders in forums saying they never made the same gains?
These which promise easy money, for a hundred dollars outlay simply fail to deliver and you would never see a serious investor bank or investment house use one or sack any of their highly paid dealers and replace them, with a cheap bit of software for this reason.
Of course you can learn to trade Forex yourself and make some great gains and in return for some effort and accepting the known fact that, you need to have confidence in what your doing and learn skills you can enjoy Forex success and make a lot more money than any Forex Robot.
$ecreT @bout Forex
In order to succeed successfully in forex trading you need to know what the purpose of trading forex is. Forex trading as you know is the trading of online currency and the key to success is to buy low and sell high just as with any other market. You task as a forex trader is to try to determine the trend of the particular currency you are looking to either buy or sell and to utilise the forex trading strategies to ensure that a profit is made.
Now that you know the purpose of forex trading the next step in knowing all about forex is to understand the codes, definitions and numbers used when trading. All currencies used in forex trading are assigned a three letter code. An example of this is the US dollar which is USD or the Euro EUR. Online currency trading is done in combinations that are known as a cross and these are represented by 6 letter words with the more expensive currency coming first. An example of this is GBPUSD which will show you how many US Dollar you will need to pay for one British pound. These rates are shown as five digit numbers for example GPBUSD = 1.6262 which means that 1 British pound is worth 1.6262 US dollars. When the rate changes the change will be displayed in bold, eg GPBUSD = 1.6264 which will mean that the rate has moved by 2 points. Knowing this is the key to successful forex trading and your key to profit.
When you enter the forex trading market you will enter as a buyer or a seller of a particular currency. If you are a seller you price is known as the ASK price and the buyers price is known as the BID. You can only buy currency from a seller with an asking price the same as the BID price.
These are the main beginner’s points to note when it comes to forex trading and knowing what the purpose of trading forex is and knowing all about forex before you enter into the market can make a big difference when it comes to your profits.
The use of high leverage
By offering high leverage, the market maker encourages traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases his profits, but increases the risk that the trader will receive a margin call. While professional currency dealers (banks, hedge funds) never use more than 10:1 leverage, retail clients are generally offered leverage between 50:1 and 200:1[2].
A self-regulating body for the foreign exchange market, the National Futures Association, warns traders in a forex training presentation of the risk in trading currency. “As stated at the beginning of this program, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all customers. The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital; in other words, funds you can afford to lose without affecting your financial situation.“ [17]
Not Be@ting the M@rket
The foreign exchange market is a zero sum game[7] in which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.
Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is a nonrival good, the arbritrages themselves are a rival good. (To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of a treasure map.)
Retail traders are - almost by definition - undercapitalized. Thus they are subject to the problem of gambler's ruin. In a fair game (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole - which has nearly infinite capital - he will almost certainly go bankrupt.
The retail trader always pays the bid/ask spread which makes his odds of winning less than those of a fair game. Additional costs may include margin interest, or if a spot position is kept open for more than one day the trade may be "resettled" each day, each time costing the full bid/ask spread.
According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) "Even people running the trading shops warn clients against trying to time the market. 'If 15% of day traders are profitable,' says Drew Niv, chief executive of FXCM, 'I'd be surprised.' "[15]
Paul Belogour, the Managing Director of a Boston based retail forex trader, was quoted by the Financial Times as saying, "Trading foreign exchange is an excellent way for investors to find out how tough the markets really are. But I say to customers: if this is money you have worked hard for – that you cannot afford to lose – never, never invest in foreign exchange." [16]
Not e@ting the M@rket
The foreign exchange market is a zero sum game[7] in which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.
Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is a nonrival good, the arbritrages themselves are a rival good. (To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of a treasure map.)
Retail traders are - almost by definition - undercapitalized. Thus they are subject to the problem of gambler's ruin. In a fair game (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole - which has nearly infinite capital - he will almost certainly go bankrupt.
The retail trader always pays the bid/ask spread which makes his odds of winning less than those of a fair game. Additional costs may include margin interest, or if a spot position is kept open for more than one day the trade may be "resettled" each day, each time costing the full bid/ask spread.
According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) "Even people running the trading shops warn clients against trying to time the market. 'If 15% of day traders are profitable,' says Drew Niv, chief executive of FXCM, 'I'd be surprised.' "[15]
Paul Belogour, the Managing Director of a Boston based retail forex trader, was quoted by the Financial Times as saying, "Trading foreign exchange is an excellent way for investors to find out how tough the markets really are. But I say to customers: if this is money you have worked hard for – that you cannot afford to lose – never, never invest in foreign exchange." [16]
@ll about forex
Forex scam
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A forex scam is any trading scheme used to defraud individual traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading "has become the fraud du jour," according to Michael Dunn of the U.S. Commodity Futures Trading Commission. [1] But "the market has long been plagued by swindlers preying on the gullible," according to the New York Times [2]. "The average individual foreign-exchange-trading victim loses about $15,000, according to CFTC records" according to The Wall Street Journal. [3]. The North American Securities Administrators Association says that "off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud." [4]
“In a typical case, investors may be promised tens of thousands of dollars in profits in just a few weeks or months, with an initial investment of only $5,000. Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted – stolen – for the personal benefit of the con artists.”[5]
In August, 2008 the CFTC set up a special task force to deal with growing foreign exchange fraud.”[6]
The forex market is a zero-sum game[7] , meaning that whatever one trader gains, another loses, except that brokerage commissions and other transaction costs are subtracted from the results of all traders, technically making forex a "negative-sum" game.
These scams might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits, [8] improperly managed "managed accounts", [9] false advertising, [10] Ponzi schemes and outright fraud. [4] [11] It also refers to any retail forex broker who indicates that trading foreign exchange is a low risk, high profit investment. [12]
The U.S. Commodity Futures Trading Commission (CFTC), which loosely regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry.[13]
An official of the National Futures Association was quoted [14] as saying, "Retail forex trading has increased dramatically over the past few years. Unfortunately, the amount of forex fraud has also increased dramatically..." Between 2001 and 2006 the U.S. Commodity Futures Trading Commission has prosecuted more than 80 cases involving the defrauding of more than 23,000 customers who lost $350 million. From 2001 to 2007, about 26,000 people lost $460 million in forex frauds. [1] CNN quoted Godfried De Vidts, President of the Financial Markets Association, a European body, as saying, "Banks have a duty to protect their customers and they should make sure customers understand what they are doing. Now if people go online, on non-bank portals, how is this control being done?"
MONEY, CURRENCY, ANDFOREIGN EXCHANGE (FOREX)
The most basic questions and concepts we must address involvethe differences between money, currency, and foreign exchange(FOREX). All too often these terms are interchanged. With equalfrequency, the differences are blurred and misconceptions aredeveloped. Aren’t the three terms one and the same? The answeris no.The Barter Process and the Evolution of MoneyMoney is the primal evolution of barter. It was developed as aconvenient means for exchanging goods and services. If my edu-cation correctly serves me, the first recorded book entries dateback 5,000 years ago to the Sumerians who were defined as thefirst society. Book entries could only become a reality as numericsystems were developed. This is how money allegedly originated.Certainly, there were methods to exchange goods and serv-ices before the Sumerians. The barter process appears in cavewall drawings and remains widely used today. However, barterlacks efficiency because it inevitably involves considerable nego-tiation to consummate a transaction. Value must be determinedthrough a process of bidding and offering. Sound familiar? Forexample, suppose an ancient tribesman trapped a few beaverswhile a fellow tribesman caught several fish.
Not needing all the beavers or all the fish, the two may decide to exchange beaver forfish. Depending on the perceived value of beaver pelts in themind of the fisherman versus the relative hunger of the trapper,some ratio of beaver to fish would be agreed upon.Understandably, perceived values will change. The first inklingof seasonality can be deduced from the previous example by over-laying the need for warmth during the winter onto the nonseasonalrequirement for food. Logically, pelts should fetch more fish astemperatures cool. The trapper is likely to fatten up during winter,but go hungry in the summer. This suggests that the trapper willexpand his product line to include meat as well as pelts. This over-comes seasonal problems. Both the trapper and fisherman mustspend the better part of their day accumulating their bounties.Perhaps neither has time to build or maintain shelter. However,another tribesman discovers that his lack of skills as hunter or fish-erman is offset by his ability to construct sturdy huts.The hut builder introduces the concept of cyclical supply anddemand as well as an underlying seasonal influence. He mustbuild huts when the weather is mild and there is easy access tothe ground. His unique challenge derives from his product’s dura-bility coupled with seasonal supply. He develops a prolongedbarter whereby he swaps a hut for a year’s supply of fish or meat.Thus, the hut builder’s commitment to exchange today is carriedforward in payments. Heavens! Was this the first mortgage?The model grows more complex when the hut builder dis-covers that the value of his trade exceeds his requirements forfish and meat. Since he cannot consume all he has bartered for,he decides to use his excess to acquire a wagon from the wagonmaker to transport his building materials and increase his effi-ciency. Perhaps he also exchanges fish and meat for tools. Theincreased efficiency only brings the hut builder more fish andmeat. He decides to train other hut builders with the under-standing that they will work for him and receive a portion of hismeat and fish. The first real-estate tycoon is made. In all likeli-hood, he doesn’t even pay for the land!We see an economic system emerging from barter. All thewhile, however, transactions and relative values must be negoti-ated. Eventually, the hut builder’s tradesmen may decide to gooff on their own. Suddenly, there is competition in the real-estatemarket.
With equal certainty, the tribe will have many fishermen, hunters, wagon builders, toolmakers, and other tradesmen.If competition becomes heated, arguments can develop, and,alas, we see the makings of war.This is not necessarily a historically correct portrayal. Themetaphor simply illustrates how a barter economy develops andfunctions. Reviewing and understanding this fundamental eco-nomic system is important when we seek to determine FOREXtrading strategies based upon relative values for global goods andservices. With the decline of colonization, nations have becomeregional. Since global resources are highly regional, nationalwealth becomes a function of location, population, and sophisti-cation. In turn, national wealth determines a currency’s relativestrength or weakness.Although this concept will be covered in later chapters, Iwon’t hold you in total suspense. Some basic examples can beillustrated by Middle East oil or South African gold and plat-inum. These natural and valuable resources provide foundationsfor national economic security. They also fuel currencyexchange. Japan relies upon ingenuity to efficiently convert rawmaterials into finished goods. The yen’s value rises and falls rel-ative to Japan’s innovation and related exports. Each nation reliesupon particular resources to derive wealth. As we will see, thiswealth is a driving force behind fluctuating currency values.However, it is not the only driving force.Returning to our barter example, we can identify a need for amore efficient method of exchange. A toolmaker observes thatsome metal materials have a mysterious attraction. A shiny yel-low metal is far heavier than the harder bronze he uses for an axor hammer. His neighbor takes a fancy to the yellow metal andoffers to exchange his skills as an artisan for a portion of theshiny yellow metal. Incredibly, the entire tribe, as well as othertribes, finds this yellow metal universally attractive. Of course,this metal is gold. After a sufficient quantity of gold becomesavailable, tribal members decide to mold it into uniform piecescalled coins. They examine a fundamental product like fish andsee that one fish fetches two beaver pelts. If they set the value ofone fish equal to one gold coin, then one gold coin buys twobeaver pelts. Thus, the value of a gold coin is established as aratio to a common barter product with a relatively stable per-ceived value.Money, Currency, and Foreign Exchange
This example of converting gold into money does not takeseasonal or cyclical values into consideration. It is only a way toexplain the probable transition from barter to money. You areprobably saying, “Tell me something I don’t know.” I emphasizethat basic concepts translate into a more precise understandingof how FOREX works.In reality, gold is a convenient example rather than a histori-cally accurate account of how money emerged. Gold and even sil-ver were too scarce to be effective forms of money. This is why thePhoenicians resorted to shells, while other cultures minted cop-per, tin, and iron or used glass, beads, and stones. This does notimply that gold and silver were not used for exchange. However,gold and silver’s widespread use for day-to-day transactions wasnot common until far more sophisticated economies evolved.As we will see, gold and silver were symbols of wealth andstores of value. These metals were used for more substantialtransactions often involving exchange between kings or noble-men. These metals represented the first significant form ofFOREX. Equally important, gold and silver were used to measureoverall and relative wealth. You may say, “Wealth is wealth.”This truism stands; however, there is a concept of relative wealththat plays an important role in determining modern interna-tional currency trends.The Family Tree of Money, Currency, and FOREXMost of us are familiar with trading cards. Whether trading base-ball or Pokémon cards, children probably develop their first senseof value and negotiating skills by swapping trading cards. Indeed,some of us learned through this same primal exercise in FOREX.We can analyze card swapping in three ways. We can assumeeach card represents a form of currency whereby a specific cardis likened to the yen while another symbolizes the dollar. Weimmediately comprehend that the card’s value is directly associ-ated with its scarcity relative to demand. Children instinctivelyknow that the more rare the card, the more valuable it becomesrelative to other cards or simply for outright purchase.By the same token, children grasp the concept of storingvalue when they refuse to relinquish extremely valuable cards regardless of the offer.
Of course, this is where children mayappear irrational. After all, every card should have a price, right?Interestingly, adults and, more significantly, entire societies canenter periods of irrational savings. The concept of storing value,regardless of alternatives, can be seen as a confidence crisis. Inthe child’s case, he or she lacks confidence that he or she willsecure a replacement card. Suddenly, this card is the only suchcard in the child’s mind—a must have or must keep. Whensocioeconomic panic sets in, history suggests we fall back on pri-mal wealth symbolism like gold, property, or essential assets.Today, we call this a flight to quality.Experienced currency traders might legitimately disagreewith equating each unique card with a unique currency. It is notnecessarily the case that the scarcest currency fetches the high-est price or attains the greatest perceived value. In fact, the mostabundant currency, like the dollar, is frequently viewed as themost valuable. Therefore, another viewpoint is that each playingcard represents a unit of currency similar to the $1, $5, $10, and$20 bills going up to the highest denomination. In this example,the trading card becomes money rather than currency. What’sthe difference?Simply put, money represents the means of exchange withinits country of origin. When we think of money, we immediatelyresort to the bills and coins in our pockets or purses. We rarelyconjure up an image of equalizing values between our pocketcash and the money of western Europe or the Pacific Rim. Thedifference is subtle, but consider that money has a fixed valuewithin its place of origin. If baseball cards had a fixed value, theywould not be negotiated. You would simply trade a known Xnumber of cards for a known Y quantity of cards. In turn, theratio of cards to each other permits different mixes of cards tobuy goods and services. Observation tells us this is not the case.Trading cards change value in accordance with the inventories ofthose making the bids and offers.Today, money, currency, and FOREX are like a family tree.Currency is money once removed. They are similar, yet theyoperate in different forums for different purposes. Another wayto view trading cards expounds upon the market concept of thebid and offer. At any given moment, groups of children sportingdifferent card inventories gather in separate markets to set theirMoney, Currency, and Foreign Exchange relative card values.
Depending upon the inventories availablewithin each market, the same cards will take on different values.Given the sophistication and indulgence of our newest genera-tions, kids might plan to be in different markets at the same timeby communicating bids and offers via cell phone or email.Behold, children participating in arbitrage!When card values are exchanged in broad markets, we see ametaphoric example of FOREX. Taking this forward anotherstep, money is used to buy local goods and services. Assume abushel of soybeans is worth $6. We know that a $1 bill and $5bill will purchase a bushel of beans. If we use a $10 bill, wereceive $4 in change. A drought may drive soybeans higher,whereas good weather may lower prices. If the price is stable at$6, what is the same bushel worth in pounds (£)? The answer liesin the relative value of pounds to dollars. Consider that if thepound loses value against the dollar, U.S. soybeans become moreexpensive in the United Kingdom, but remain the same price indollars. This is another way to differentiate money from cur-rency. Recognize that this example uses a single commoditypriced in two currencies. When soybeans are sold in the UnitedKingdom, local influences may make the price in pounds higheror lower. Thus, local supply and demand prevails to set localprices.It does not take a great deal of perception to know where theexample culminates. If we remove the soybeans and simply tradepounds against dollars, we are dealing in FOREX. In the FOREXmarket, the supply and demand for different currencies at anygiven moment establishes an exchange value—hence the expres-sion foreign exchange. When you trade FOREX, you attempt toanticipate fluctuations in relative currency values. More oftenthan not, you are not concerned with the price of local goods andservices in local monies. There is an obvious link between localcurrency strength and weakness that is associated with inflationand deflation. If the dollar is inflating while the pound is not,there is a very good chance the pound will appreciate against thedollar. Unfortunately, FOREX relationships have become highlyanticipatory. This means that today’s inflation might be dis-counted by tomorrow’s anticipated price correction. The subtleaspects of forecasting will be explained in later chapters. For now,keep this concept in the back of your mind as we move forward.
The Mechanisms of Money, Currency, and FOREXWith a modest understanding of money, currency, and FOREX,the next step in building a trading strategy involves breakingeach component down into its mechanism. Here, distinctionsbetween money and currency tend to blur. With concentration,we can maintain differentiation to develop more profound inter-pretations of intermarket events. Today’s money consists of cashand book entries. Both use common denominations or units.U.S. money begins with the unit of currency called the dollar.This is fractionalized or multiplied as required to refine purchaseprices. The fractions are on a base-10 system beginning with1/100thof $1 called the cent (¢). The physical representation of1¢ cent is the penny. Cent is the unit, whereas penny is the coin.Five cents is coined as the nickel. We are still dealing with thecent, but our physical money can be either 5 pennies or 1 nickel.Of course, 10¢ is a dime, 25¢ is a quarter, and, oddly, 50¢ is a 50-cent piece.I indulge in this elementary-level exercise because it is exceed-ingly important to make the leap from fractional units to currencyunits. The entire process of FOREX trading is based upon commonfractional values known as pips. A pip is the common denomina-tor between currencies much like the cent is the denominator forthe dollar. While writing this text, I could only identify one U.S.product where domestic prices were quoted in fractions of apenny. Perhaps you can identify more. What is it? For somestrange reason, U.S. retail gasoline is priced ending in nine-tenthsof a cent. I’ve always wondered why this is always rounded up tothe nearest cent. Who is keeping all those one-tenths?Those familiar with Charles Dickens’ novel Great Expecta-tions might associate the word pip with that book’s central char-acter. We less-literary folk must direct our attention to the lastsignificant decimal of a quoted currency. Again, this seeminglysimple definition takes on monumental importance because pipsdetermine the most common intraday and interday spreads andare also used to price transactions. The spread in pips can be themarket maker’s commission and, thus, your trading cost. As wewill discuss in further detail, the pip is used when currencies arequoted against each other in the cash, Interbank, or electronicspot FOREX markets. When the reciprocal is correlated to theMoney, Currency, and Foreign Exchange dollar in U.S. futures and options, the pip disappears. Each mar-ketplace has its own language and structure.
Once you under-stand each market’s operations, including its advantages anddisadvantages, you can make an educated decision about howand where to participate.When conducting seminars on FOREX trading, I often drawthe parallel between components like money or currency andquantum physics versus cosmetology. Admittedly, this correla-tion is a scientific stretch and is not intended to infringe uponthe territorial imperative of our most brilliant academicians.FOREX trading does not require the CERN particle acceleratorto identify its inner most workings. However, the perspectivesare similar to emphasize a FOREX trader’s required multiplicity.The tiniest particles within our universe were born out of thegreatest cosmological event presumed to be the Big Bang.Money is derived from the most fundamental human prem-ise—faith. This faith that money is, in fact, valuable must begoverned by multiple facilities that include government treasur-ies, central banks, commercial banks, consumer banks, specialtybanks (savings and loans, credit unions, government lendinginstitutions like Fannie Mae and Freddie Mac, and so on), theInternational Monetary Fund, and international currency mar-kets. In addition, each sovereign’s taxing authority plays a role inthe amount of money citizens have available to spend and theamount governments have to spend or waste as they see fit. Eachlink in money’s governing chain plays a role in determiningvalue. Relationships between money institutions such as banks,coupled with the monetary policy of the governing institutionslike the Federal Reserve or Treasury, determine the money sup-ply. When correlated with demand, money establishes its valuerelative to domestic goods and services as well as its value asinternational currency.The Regulation of Money SupplyAs you can see, our very simple explanations of money, currency,and FOREX begin to become more complex. The amount ofmoney we have is primarily regulated by interest rates and trans-actions commonly called open market operations. In the UnitedStates and many other nations, money supply is also a function of reserve requirements.
The focus on money and related bank-ing mechanisms alone can fill a book. Indeed, many texts havebeen written on the subject. A basic understanding of howmoney supply is regulated is another essential piece of theFOREX trader’s strategic puzzle. This is because money becomesa commodity for FOREX trading. Money translates into curren-cies that can be exchanged at rapidly fluctuating values to gen-erate a profit or, heaven forbid, a loss.Three Expressions of Money Supply in the United StatesIn the United States, money supply is expressed as three num-bers referenced as M1, M2, and M3. These three expressionshave different presumed transaction velocities. M1 is cash incirculation plus primary bank deposits called demand deposits.M2 takes savings deposits into consideration. Following theU.S. Savings and Loan Crisis, many analysts discounted M2 asa relic because banking structurally changed to give savingsdeposits more flexibility. With check-drawing privileges, savingaccounts are almost the same as demand deposits with theexception that they pay nominal interest. The advent of moneymarket accounts required a third category encompassed in M3.Together, these three measures of supply comprise the totalamount of local currency capable of circulating within theUnited States.During the 1970s through the 1980s, FOREX traders keenlyfocused on money supply. It was a Friday ritual to bet on thechange in M1 and M2, and therefore the change in U.S. currencyvalue relative to other currencies. The premise was simple. If M1and M2 grew appreciably, the dollar should weaken against othercurrencies —all things being equal. If the supply of U.S. currencyshrank while demand remained stable, the dollar’s value shouldincrease. Also, flooding the money supply implied increasinginflation. Inflation meant devaluation.The Facilities and Principles for Regulating FluctuationThe classic formula for determining domestic price levelspostulates that the price level is equal to the velocity of moneyMoney, Currency, and Foreign Exchange multiplied by the money supply.
Referencing college texts suchas the famous 1948 book Economics by Paul Samuelson:P MVPrice Money Supply Transaction VelocityMore money in circulation chasing the same number ofgoods at an increasing velocity leads to inflation (a rising pricelevel). Of course, this is a market truism, too! The price of anycommodity is a function of how much money we throw at it andhow fast we throw it. This is easy to understand if we imaginean auction. If the room is crowded with people holding fists fullof cash, it’s a good assumption the value of auctioned items willbe high. If a small crowd with lousy credit shows up, it isunlikely auctioned items will reach their upset prices.As FOREX trading became more popular and sophisticated,pricing models grew more anticipatory. In other words, traderswanted to get the jump on money supply by examining theunderlying elements driving M1 and M2. Interest rates are firstin line. Central banks have the authority to change lending ratesbetween themselves and commercial banks as well as the loanrates between commercial banks. Lower rates permit more bor-rowing that, in turn, increases cash in circulation. The more cashthere is circulating, the greater the demand for goods and serv-ices. As demand grows, the economy grows.Of course, too much cash creates excessive demand. Whentoo much cash chases a static supply of goods and services, pricesare forced higher. This is the most fundamental market dynamic.The relationship between price and money supply has a role indetermining relative currency value. Money in circulation rep-resents currency.The Federal Reserve’s ability to increase money supply iscomplemented by tools to limit money supply. The most obvi-ous tool is the capacity to raise interest rates to discourage bor-rowing. This drains cash in circulation with the objective oflimiting demand for goods and services.It is essential to understand that these actions and their asso-ciated results are generalizations that have subtle or even bluntharmonics. For example, increasing interest rates also entice sav-ings. Saving money removes it from circulation.
Our central bank has a solution to this potential problem. In addition to set-ting interest rates, the Federal Reserve can change the ratio ofdeposits to loans through an adjustment in the reserve require-ment. The reserve requirement is the amount of cash that a bankmust hold to cover immediate withdrawal demands.The mixture of reserves and interest rates becomes a complexeconomic elixir as we examine the theoretical and actual effectsof altering reserves and interest rates. If a bank is permitted to loana portion of its deposits, the amount of money expands by thereserve ratio. This is called the multiplier because the reserverequirement actually multiplies the amount of cash in circulation.Although this book is not intended to be a text on money andbanking, the subject is inseparable from understanding whatmakes FOREX fluctuate. If you learn anything about modernFOREX, it should be that it is part of a regulatory mechanism.For all practical purposes, money as it is created today is a fic-tion. Assets backing much of the world’s currency do not actu-ally exist, although government authorities will beg to differ!Whether we examine operations of the U.S. Federal Reserve(affectionately called the FED),or look at western European cen-tral banks operating under the Maastricht Treaty, the principlesand facilities are designed to achieve the same results—regulatemoney in circulation.Efficient Economic Theory in Modern Currency TradingRecall our first discussion of barter and the evolution of money.We know monetary value is associated with the ratio of a unit ofcurrency such as $1 and the amount it can buy. What is theamount it can buy? Obviously, we must know the referencecommodity. Is it an amount of gold or sugar? Assume it is sugar.Suppose $1 can buy 10 pounds of white sugar. Assume £1 canbuy 20 pounds of sugar. It stands to reason that £1 will have avalue of $2. It is simple algebra.This simplistic algebraic relationship was expressed byNavarro Martin de Azpilcueta who lived during the time ofChristopher Columbus (1492—1586). He postulated that the val-ues of the same goods in different countries created a ratio for theMoney, Currency, and Foreign Exchange relative value of different currencies.
In its original expression,the theory was simple and suggested the relationship wasabsolute. The concept of purchasing power parity was remark-able for Azpilcueta’s time since it came at the leading edge of theAge of Mercantilism. Of course, his assumption lacked economicsophistication because it presumed that goods within each coun-try were the same. As mercantilism evolved into internationalcommerce, it became clear that divergent goods exclusivelyavailable from certain countries drove currency parity. Similargoods might be used to define an approximate currency relation-ship. Thus, an ounce of gold could be used as a standard to deter-mine the relative value between currencies. However, the forcesthat determined the gold ratio were independent.Silk and spices came from the Orient. Weapons, ships, andmechanical devices came from Europe. How can these dissimi-lar goods be reconciled? History students know that mercantil-ism was a primary catalyst for colonialism. Nations simply tookover resources in foreign lands. Thus, foreign products could bevalued in local currencies.How does this apply to modern currency trading? The foun-dation of any nation’s wealth was previously established by itsnatural resources. Thus, if silk were an exclusive product ofChina, then China’s wealth would be defined by demand for silkfrom nonproducing nations. A nation rich in gold would be richif other nations relied upon a gold standard. This empiric con-clusion was challenged during the 1980s and 1990s. A phenom-enon labeled Japan Inc. suggested that a nation could becomewealthy based upon its ability to convert another nation’s rawmaterials into finished products.This will be covered in greater detail later. However, the evo-lution of efficient economic theory actually altered the way cur-rencies fluctuated. Most notably, post World War II Germanytook full advantage of a consumer economy to build wealth anddrain gold reserves from other nations. Japan also capitalized onbeing prohibited from building or maintaining a war machine.Radios, TVs, and cars became the measure of the yen anddeutsche mark. Explosive economic growth followed both WorldWars. By the 1960s, Western economies were becoming morediversified and complex. Growth was being restricted by mone-tary standards, primarily gold.
Learning from the Great Depression, U.S. and European mon-etary policy looked for an alternative to asset-backed currency.Eventually, gold was abandoned as a standard. Floating curren-cies took gold’s place. Some proponents of asset-backed currencyinsist we must return to a gold standard. Although gold appearsto be demonetized, it continues to play a role in cross-parity cal-culations. As we will see, gold remains a hidden reserve asset andpotential monetary measuring stick.The Ongoing Evolution of FOREXIt is often said that the more things change, the more theyremain the same. Currency markets demonstrate that this is par-tially true. Although the concept of money has evolved toinclude paper bills, coins, checks, credit and debits cards, andelectronic book entries, the essential function remains the same.Although international currencies have progressed from asset-backed valuation to floating parities, currency is still distin-guishable from region to region. However, FOREX has changedits methods and philosophies many times over the past fewdecades. Indeed, by the time you finish this book, there are likelyto be a dozen new twists to FOREX. From strategies to tradingforums, FOREX is a moving target with massive profit possibili-ties. That is why FOREX is emerging as the most exciting andfastest moving market in the world!Money, Currency, and Foreign Exchange
U.S. Forex Market Commentary
The euro extended recent gains vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.4115 level and was supported around the $1.3980 level. The common currency has been well-bid from the $1.3890 level during yesterday’s North American session and was higher again today on China’s latest call to lessen its reliance on the U.S. dollar by advocating a new supranational currency. Data released in the U.S. today saw May personal income rise 1.4% while May personal spending up 0.3%. These data suggest U.S. consumers have raised their marginal savings rate substantially, to the detriment of countries like China that export heavily into the U.S. Despite China’s latest calls for a new global currency and despite the unprecedented level of debt being sold by the U.S., recent Treasury auctions have performed very well with a high percentage of indirect bidders – suggesting China may still be recycling its massive current account surplus back into U.S. assets. The May PCE deflation was up 0.1% and final June University of Michigan consumer sentiment printed at 70.8, up from 68.7 in May. The improvement in consumer sentiment took confidence levels to their highest level since September. In eurozone news, German consumer prices were unexpectedly higher in June, up 0.4% m/m and 0.1% y/y. Bank of Italy reported the eurozone’s economic contraction eased in June with the EuroCoin indicator falling to -0.61 from -0.89 in May – the fourth consecutive increase. France’s finance ministry reported it expects more joblessness over the next several quarters. Euro bids are cited around the US$ 1.3435 level.
STERLING
The British pound appreciated sharply vis-Ã -vis the U.S. dollar today as cable tested offers around the US$ 1.6560 level and was supported around the $1.6365 level. Cable came within 60 pips this week of establishing a multi-month high dating to November 2008. Cable bids are cited around the US$ 1.6125 level. The euro moved lower vis-Ã -vis the British pound as the single currency tested bids around the £0.8505 level and was capped around the £0.8570 level.
SWISS
The Swiss franc appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the CHF 1.0795 level and was capped around the CHF 1.0945 level. Data released in Switzerland saw the June KOF leading indicator climb to -1.65 from -1.85 in May. U.S. dollar offers are cited around the CHF 1.1165 level. The euro and British pound came off vis-Ã -vis the Swiss franc as the crosses tested bids around the CHF 1.5210 and CHF 1.7850 levels, respectively.
Best Forex Trading Robots Review - Learn to Avoid ...
Recently the surge of forex robots has made it easier for new people to invest and earn in forex business. Now we can easily trade and earn by investing in foreign exchange trading over the internet and from the comforts of our homes.
The introduction of forex robots have made all the difference to the people who want to take less risk and want more returns on their investment. The creators of these robots have claimed that the end user of this system need not learn all the intricacies of studying the complex algorithms and currency movement charts. Only thing you need to learn is basic operation of this software and you are good to go.
Now many people think that these programs can be scams and in reality few of them are scams. In fact the programs which offer huge return on investment in very short period of time are most likely a scam. There are some critical points you need to remember if you want to get the most out of these programs. That’s why it is very important that you first read and study all the forex robots reviews available online from the experts in this field.Now major advantages of using forex robots are ease of use and savings of your time and money. But there are certain facts which you need to take into account when going for any kind of
automated forex trading software like:
1) Volatility of forex market: We all know that foreign exchange market is very dynamic and volatile in nature. This market has a very less correlation between its past trades and future trades.
2) Many external factors affecting market movements: There are several external factors or events which causes continuous low and high movements of currency exchange rates. Sometimes study of these movements can be very complex to analyze.
And that’s where these forex robots come into the picture. They play a very crucial role in analyzing the complex movements. Because of these reasons the software which you are going to purchase should be very reliable and should have past results to prove its authenticity.
Forex Trading Education - Extremely Important Tips...
What are some of the differences between the stock market and the forex market? Well, first of all, the stock market is where stocks are sold and bought whereas the forex market involves trade of currencies. The forex market is much larger than the stock exchange. Almost two trillion dollars are traded daily in the forex market. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries.
One characteristic that differentiates the forex market from the stock market is that what is traded, bought and sold on the forex market is something that can easily be liquidated. This means that it can be turned back to cash fast, or often that it is actually going to be cash.Another difference between the stock market and the Forex is that Forex trading has a much higher leverage than the stock market. When someone decides to invest in the Forex, they can expect much higher profits than the stock market, especially as their level of experience increases.
Being a global market, the forex exchange operates at twenty four hours a day. This is because the various countries involved in currency trade are located in so many different time zones. The stock exchange on the other hand is only open during the business day, and closes on banking holidays and weekends.This are just some of the many differences between the stock and forex markets. For those who want to get started in the forex trade, some brokers provide the service of trading using the mini-forex system. It requires a smaller initial deposit usually of around $100, therefore you have less chances of losing a lot of money.For a novice trader,the forex can be a complex jungle of terminologies and symbols. It is therefore a good idea to use an experienced broker to transact your investments as well as educate you on what this terminologies mean. Such brokers will provide excellent advice since they have invaluable experience gathered over time. Some names in the forex market are indicated using symbols. In such cases, the first half of the symbol indicates one currency, and the other half is the second currency that is being used. The symbol “usdjpy” means “US dollars” and Japanese yen. It is important to learn what currency symbols mean when learning about the Forex. There are many books and websites dedicated on teaching traders about using the Forex.
Before choosing a broker to transact your deals in the forex market, certain factors should be considered. Choose a broker that offers low spreads. The spread is calculated in pips, or the difference between the price at which currency can be purchased and the price it can be sold at any given time. Forex brokers don’t charge a commission and only make their money off of the spreads.
Forex fund isn't the type of solution
They may show you all sort of safety precautions and a track record that has lists many years of successfully performance, but there's no such thing as a sure bet - even with managed accounts. You are surrendering the destiny of thousands of dollars to an independent managed Forex fund, who you hope will do a good job at managed your investments. Also, there's an amount of dilution because you are never sure if your account is given the type of attention you need. On the other hand, many managed Forex funds now use PAMM systems to make sure that all of their clients are given precisely the same allocations, which lessens this concern.
Another concern is the level of charges charged to your account. You need to also ensure that the main fee that they are making profits from is the performance fee, which you only pay to them if they make you money. You always must remember that managed Forex funds exist as a way to try to profit for themselves from your investment. If things go well, you both earn cash ; if things go bad, only you loss money. Still, for backers looking to make significant returns, that are typically not correlated to the stock exchanges, managed Forex funds are a cool place to invest some of your capital. Just make efforts to pick a good one, and know that any real fund will have its swings and roundabouts, and that if performance seems to good to be true, it doubtless is.
Forex market simply jumped in the market
it's important to let go of losses early so you have enough capital to sink your teeth into an opportunity that does work.No indicator or strategy has all the answers -- stop looking for the holy grail of trading
The market can easily whipsaw you to tears if you aren't carefulIf you place close stops they will often be taken out before the market goes your wayReally, the list of anecdotal learning is endless and difficult to put into words. However, I recognize that this isn't enough to make me a successful trader, though from time to time I'm starting to taste success. It's finally time for me to bite the bullet and learn more about trading.No, don't worry, I'm not going to buy some stupid multi-thousand dollar Forex training course. That would be stupid. Forex trading is very related to trading in general and there is no shortage of information on either subject. To make a long story short I've purchased four books recently:
Currency Trading for Dummies
Swing Trading for Dummies
The 10 Essentials of Forex Trading
Technical Analysis for DummiesAll of these were available at a nearby bookstore -- so I didn't have to order something online and wait for delivery.More importantly, let me list the credentials of the authors of the above books. Respectively, they are:
Mark Gallant: Chairman and founder, GAIN Capital Group. Brian Dolan: Chief currency strategist, FOREX.comOmar Bassal, Head of Asset Management, NBK CapitalJared Marinez, FXCHIEF and founder of The Market Traders Institute, Inc.
Barbara Rockefeller, International economist and traderMy advice? Never, ever, fail to look for the ideas of experts. Even if you don't agree with everything they say, which is appropriate, they should be able to increase your understanding and improve your own thinking.I've had some days with a NAV appreciation of 10%, 20% or more. I'd like to have a lot more days like that... and I don't think that online sources created for the purpose of flogging affiliate commissions will do that for me.
Forex scalping and the picking
What Is Scalping?Quite simply, very short term trading.Why Don't Brokers Like Scalping?Well, some brokers don't like scalping because of how they are set up. If they are not able to execute your trades quickly or efficiently enough then they risk being the source of your profits.Does Scalping Work?I've seen some people claiming that it works great as well as others claiming that it is impossible to do profitably. The reality is that if you can predict the direction that an equity pair will move, either up or down, then you can hop into the market and grab a few pips when it happens.How Easy Is It To Predict Equity Pair Price Changes?Well, that's the million dollar question! I don't have any books to sell or anything, but a lot of people claim to have solutions for you. Personally, I think if they really had solutions that worked they wouldn't waste time telling you about it, they'd be busy trading. However, in an effort to be informative, when you spend enough time watching a market (which is quite boring) you'll get a feel for it's current state and how it is moving. Often, until conditions change, you can be fairly accurate with your predictions.Can Anyone Do This?If you find a market maker that doesn't mind scalping, you can try. However, you must know how to place stop and limit orders with their trading platform. In particular, it would be very nice if you were able to have someting known as a trailing stop. As well you will want to understand the concept of leverage as it applies to a forex account. Basically, I'd suggest throwing $100 at a starter account and playing around, carefully, until you've made enough bad decisions to learn how things work. After that, you should have the tools needed to try out various strategies.How Much Effort Is It?Scalping is very time consuming. You have to spend a lot of time watching the markets, to the point that it would be difficult to do well if you had an existing full time job. Also, scalping is very demanding from a psychological point of view, as you will have large amounts of your capital ready to put into play, but you may have to wait hours before you spot a good entry point. Then, upon entry, you might find you are back out with a small loss in no time. Alternately, you might get a small profit, take it, and then watch the market skyrocket after your exit. The shorter your trading is the more attention it will take and the more nerve wracking it will be.Are You Scalping?I'm thinking about it. I've been opening up a grid strategy to catch swing trades, but I have noticed that using half of the scalping mentality to accumulate positions in trends may be able to have a significant positive impact on my results. I guess I'll end up letting you know how things work.
Automated Forex Trading
For beginners in the Forex trade, be warned that most of the trading systems sold or offered online are considered junk and useless. Oftentimes, these systems provide tested simulations and cleverly hyped marketing strategies that do not work. By using ‘junk’ trading systems, you can lose your investment.
There are simple trading systems offered online which can yield higher returns when used properly and consistently. The simpler the automated trading system, the easier it is to use; you see, complicated systems do not guarantee success at all times so be very careful when choosing the appropriate Forex system.
For example, if you think that a certain currency is going to maintain four weeks high standing, buy it. If you have a low-standing currency, you can sell it before the price goes down further. This system is also called breakout wherein all your moves within the Forex market is based on the highs and lows. Soon, you will be able to penetrate the market’s big trends.Big trends usually last for several weeks, months, or even years. Take a look at the Forex chart and study it. The whole system is automatic and the rules are quite objective. This system is also known as a Forex robot and it can operate fifteen minutes everyday. The creator of this Forex robot was Richard Donchian, a Forex trader.
If you want a simple system, the Forex robot may work for you. Traders who prefer complex trading systems often expect more from this system and so they would rather opt for another system which can meet their expectations. The Forex robot is not fussy and it can help you in identifying the top picks and the bottom picks.
Successful Forex traders spend enough time and effort to make informed trading decisions. As a wise trader, you should not rush things. Allow the system to work. Don’t believe in the myth that complex and expensive systems are more efficient. If you’re serious in Forex trading, you can earn lots of profits with minimal effort.
Observe today’s market trends. If you think that the Forex robot will work for you, considering the existing trends in the Forex market, you can use it because it is logical, very simple, and continuously works. the automated trading system can be obtained for free online just case you want to see how it works. If you think that the Forex robot is another junk like all other systems, check its background. Try to review ratings and testimonials to find out more about this excellent and efficient system.
The modern world is very different from that of long ago. Many of today’s basic tasks are now handled automatically. If you want an automated Forex system, you can make use of the Forex robot. Hurry and look for this system online; if you want, you can also check Richard Donchian to find more info about it. You will greatly benefit from this system over the long run. Don’t overexert yourself in studying the Forex market because with the aid of the automated system, you can go a long way.
Asia Session
Upcoming Economic Data Releases (London Session) prior expected
6/2/2009
5:45
SZ
GDP (QoQ)
1Q
-0.30%
-1.50%
6/2/2009
5:45
SZ
GDP (YoY)
1Q
-0.60%
-1.70%
6/2/2009
6:45
FR
Producer Prices (MoM)
APR
-0.40%
-0.20%
6/2/2009
6:45
FRProducer Prices (YoY)
APR
-5.50%
-6.40%
6/2/2009
7:30
SZ
SVME-Purchasing Managers Index
MAY
34.7
36.5
6/2/2009
8:30
UK
Net Consumer Credit
APR
0.1B
0.1B
6/2/2009
8:30
UK
Net Lending Sec. on Dwellings
APR
0.8B
1.0B
6/2/2009
8:30
UKMortgage Approvals
APR
39K
41K
6/2/2009
8:30
UK
M4 Money Supply (MoM)
APR F
0.10%
6/2/2009
8:30
UK
M4 Money Supply (YoY)
APR F
17.40%
6/2/2009
8:30
UK
PMI Construction
MAY
38.1
39.5
6/2/2009
9:00
EC
Euro-Zone Unemployment Rate
APR
8.90%
9.10%
London Session
Sterling, the AUD and the NZD have all made huge gain vs the USD this morning; the EUR has also seen a sizeable rally. The weakness of the USD can be linked to the US treasury market and fears over the ballooning size of the US budget deficit.
The rise in long term US interest rates and weaker USD are consistent with the view that the market has reduced its ‘safe-haven’ long positions which were built during the height of the financial crisis. Even though it is possible that there could be further bad news ahead, demand for safe haven assets is presently out of favour. For now focus is on how the US will reduce its deficit and fund its debt going forward, and crucially who will buy the debt. Treasury Secretary is visiting China. He reassured his hosts overnight that he wants to shrink the budget deficit to around 3% of GDP. These reassurances are necessary given the huge proportion of US debt that is owned by the Chinese and other overseas investors. However, it will be a huge effort for the US government to reduce its budget deficit. In the meantime it seem reasonable that overseas investors will demand higher yields to compensate them for holding Treasuries given the increased risk associated with higher supply and given the longer-term inflationary threat implied by QE. The Fed, however, are trying to keep long-term interest rates down through QE to re-inflate the economy. There is a risk therefore that QE could put overseas buyers off. However, if the Fed does not announce more QE there may be risk that the economic recovery could falter. US policy makers will have to tread carefully in the months ahead with respect to the amounts of QE. In the meantime, the market is playing safe by selling the dollar.
The weakness of the USD is feeding the rally in commodities and giving significant support to gold. The AUD and the NZD have surged, and further upside to ‘risky’ currencies is likely if the Fed does increase its QE plan. Sterling is also benefitting from the rally in risk, with cable bursting through the USD1.6250 area in early London trading before meeting some resistance ahead of USD1.6400. News overnight from the UK Hometrack survey showing house stable prices in May also helped sterling as did the better than expected manufacturing PMI data which rose to 45.4 in May from an upwardly revised 43.1 in April. EUR/GBP has pushed down towards the EUR/GBP0. 8670 level before running into support. PMI data from Italy and Spain and final PMIs from Germany and France all showed improvement lending support to the EUR’s rally vs the USD. EUR/USD surged higher in early European hours but ran into sellers at EUR/USD1.4240
This afternoon, US personal spending and ISM data is due. Canadian Q1 GDP will be released.
Asia Session
Upcoming Economic Data Releases (London Session) prior expected
6/1/2009
7:50
FRPMI Manufacturing
MAY F
43.1
43.1
6/1/2009
7:55
GEPMI Manufacturing
MAY F
39.1
39.1
6/1/2009
8:00
ECPMI Manufacturing
MAY F
40.5
40.5
6/1/2009
8:30
UKPMI Manufacturing
MAY
42.9
44
01-02 JUN
JUN
US
Geithner to Give Speech, Hold Talks With Officials in Beijing
2-Jun
New York Session
If this wasn’t enough, yields in the US also pushed lower on the back of another excellent Treasury auction. The 7-year saw a 2.82 bid/cover with more than 67% of the offer going to indirect bidders (foreign central banks). The results were well above recent trends and suggest US funding concerns are way overdone at this point. Bonds were bought hand-over-fist and the 10-year yield dropped -15 basis points to 3.54%. This impacts the US rate differential (making US assets relatively less attractive from a rate of return standpoint) and could weigh on the dollar if sustained.
EUR/USD was ultimately higher on the back of the dollar-negative developments and the pair popped from a session low 1.3989 to a high of roughly 1.4010/15. The air above 1.40 remains thin and we would expect good resistance into that area. GBP/USD recovered from a collapse into 1.6235 to sit near 1.6370 at the NY close.
The only economic data of note was US initial jobless claims and they jumped to a higher than anticipated 627K from 612K the prior week. This was the biggest change in claims in about one month and puts a damper on expectations for a speedy job market recovery.
Upcoming Economic Data Releases (Asia Session) prior expected
6/25 22:45 GMT NZ GDP QoQ 1Q -0.90% -0.70%
6/25 23:01 GMT UK Bank of England Releases Financial Stability Report 25-Jun
6/25 23:30 GMT JN Tokyo CPI YoY JUN -0.80% -1.30%
6/25 23:30 GMT JN Tokyo CPI Ex-Fresh Food YoY JUN -0.70% -1.00%
6/25 23:50 GMT JN All Industry Activity Index (MoM) APR -2.40% 2.30%
Asia Session
Although USD/JPY stayed in a 40 or so pip range between 96.04 and 95.62 with no net move on the session, the EUR/JPY and AUD/JPY pairs both made moves higher, by about 70 and 50 pips respectfully. NZD/JPY suffered the same fate as the other Kiwi anchored pairs, dropping an easy 60 pips in one quick swoop. Traders abandoned the Kiwi Dollar today as they feared that this fifth consecutive negative quarter would force the hand of the RBNZ to lower rates once again.
Have a nice weekend…
Upcoming Economic Data Releases (London Session) prior expected
6/26/2009
6:00
GE
Import Price Index (MoM)
MAY
-0.80%
0.30%
6/26/2009
6:00
GE
Import Price Index (YoY)
MAY
-8.60%
-10.30%
6/26/2009
6:50
FR
Consumer Confidence Indicator
JUN
-40
-39
6/26/2009
9:30
SZ
KOF Swiss Leading Indicator
JUN
-1.86
-1.75
The rise of risk appetite evident during Asians ho...
There have been no UK data releases this morning. Investors continue to trade the range in cable (GBP/USD1.6185 – 1.6600 range). EUR/GBP remains in its downtrend but there are signs of the sterling rally vs the EUR losing momentum. This week’s disappointing OECD forecast for the UK economy (GDP at -4.3% in 2009) combined with yesterday’s weak retail sector outlook from the CBI and this week’s weak BoE lending data have raised doubts on previous forecasts that the UK economy will return to growth during the final quarter of this year. This morning key data releases have been confined to soft import price data for Germany (flat m/m in May) and confirmation that the French economy contracted by -1.2% q/q in Q1. German lander CPI data are mostly still awaited. Overnight, the NZD was hit by weaker than expected Q1 GDP. The -1.0% q/q contraction prompted NZD/USD to fall back to the 0.6420 level and pushed AUD/NZD higher as the market took on board the greater prospect of another rate cut from the RBNZ.
USD/JPY is little changed from the NY close, the JPY unable to hold on to overnight gains as risk appetite rose. Japanese CPI data overnight weakened further (-1.1% y/y) highlighting the difficulties for the BOJ when faced with rates already close to zero (0.1%) and a relatively strong exchange rate. Some brighter news came with the better than expected all industry activity index which rose to 2.6% m/m in April. There is no consensus in the market with respect to Japanese workers’ summer bonuses. Speculation that these will weaken the yen due to increased purchases of overseas assets are being balanced by talk that lessened bonuses this year are more likely to be spent on necessities.
EUR/CHF is mostly holding above the 1.5300. Intervention by the SNB earlier this week has been taken as a signal that the SNB are serious about offsetting CHF strength. There is still uncertainty whether the SNB can protect the 1.500/1.5100 level indefinitely. To some degree this will depend on the strength of the global recovery which should bring a decline in demand for the CHF. Today’s release of the June KOF leading indicator fell to -01.65 highlights the weakness of the Swiss economy.
This afternoon US May personal income and expenditure data and the final Michigan confidence data are due.
