Currency Trading Is Not The Monopoly Of The Nerds And The Geeks

The general perception is that any and every person who is involved in the business of trading of currency or foreign exchange is a person who has a super high IQ. To hear words and phrases like liquidity ratio, central bank intervention and inflationary demand makes us feel as if we are back in the boring and inherently avoidable lecture on economics that we were forced to attend in our college.
However, all these preconceived notions apart, forex or currency trading is not the domain for the super intelligent alone.
There is no doubt that you need brains to get involved in forex trading. Then, I bet you cannot name a single sphere of human activity that does not need the application of one's mind. A bit of brains and lot of research can help you make a tidy sum in currency trading.
Till recently, the forex trading market was not open to individual investors. To take part in the process of buying and selling of currency, you either had to be a big bank with lots of deposits and assets under your belt or you had to be a big financial institution that carried out the business of trading in forex as its primary activity. Today you do not need a lot of capital to earn money in currency trading. A few thousand dollars as the initial capital is sufficient to get you started.
The advantages of trading in currency are manifold. The biggest advantage is that the currency trading market is a market that remains open round the clock. No other financial market stays open and operation twenty-four hours a day. This round the clock functioning results in constant and immediate reflection of economic, political and social events. A smart investor can take advantage of the fluctuation to make huge profits.
Further, the forex market works without any centralized exchange. There is direct interaction between the persons involved in currency trading over the telephone or electronic network.
However, just because it is easy to enter the currency trading market does not mean it is easy to make profit in the currency trading market. It is very important to possess knowledge of the forex market. You will have to grasp and establish your command over basic concepts. You will have to understand the significance of the technical indicators of the functioning of the forex market. Trying to gain complete knowledge of the currency market without actually entering into the field is like trying to learn swimming without entering the water.
By arriving at a judicious combination of knowledge, instincts and risk, one can make a lot of money in the currency trading market, or the forex market as it is known as, with very little initial investment.
by Sara Chambers

Online Forex

Q1: When you consider that the foreign exchange market has become the world's largest financial market, with over $1.5 trillion USD traded daily, where does it go from here?
A1:The FX market is unique, in the UK there is no central exchange, we trade via the inter bank market. With more and more private individuals taking up margin trading and new forex brokers setting up, I can only see the market grow in the near future.
Q2: Other than great liquidity, what are the principal benefits attached to the forex market?
A2: There is less to consider when trading the forex markets, there are only a number of variables that affect the pricing.
Main advantages include
Forex Market allows 24 hour trading
Greater leverage — with most brokers offering 100 — 1,
Less starting capital required,
More Liquidity — day trading has to have enough volume to make it worth our while. The currency market is more liquid than all the world stock markets put together. Currencies are always in action,
Free trading systems
Better for shorting — There are artificial controls built into the market to prevent it from going down too fast. The reason is that we live in a biased world that likes to see things go up instead of down. One of these artificial contraptions is the "uptick rule," which comes into play when shorting stocks, making it more difficult to sell a stock short than to buy it. This is unheard of in the currency market. Selling currencies short while day trading is just as easy as buying them.
Ideal for Short Term Traders —
Q3: Limited market access, liquidity issues-after market hours, commission fees, capital requirements and short selling/stop restrictions are just some of the issues investors face when considering other markets. Given that the forex market removes many of these traditional barriers and therefore does not restrict the forex traders' ability to make a trade at the right time, are we likely to see an increase in trading volumes this year?
A3: With all these advantages, traders are finding it hard not to trade currencies, online trading volumes across all products is increasing at a substantial rate, however FX trading, predominantly amongst retail investors is becoming very popular.
Q4: There is stiff competition amongst online forex service providers for retail forex traders with some claiming to offer the same degree of technical analysis enjoyed by the world's largest banks and institutional traders. Is this possible?
A4: Technical Analysis has come a long way, more and more forex provides now have partnerships with firms who provide analysis. However the banks still have an advantage, the markets are still not under perfectly competitive economic model. The banks will always have access to information that is not readily available, ISX FX currently sources its information from a number of banks to fill this gap.
Q5: Do you subscribe to the theory that forex is less volatile than stocks because the market is much deeper?
A5: As a bet on the direction of a national economy, no currency has ever dropped 25 percent in a day, or imploded as rapidly and completely as an Enron or a Parmalat. In the wake of those scandals, many companies are meting out information more cautiously, making it harder to get the real "scoop" on stocks one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. If you treat forex trading like a business, including proper money management, you have a better chance of success."
Q6: U.S. interest rates-decade lows; global trade wars and terrorism fears have dominated the headlines recently. What impact has this had on retail volumes?
A6: The above factors have all led to a decline in the dollar. This coupled with tighter regulation of brokers has given investors more confidence in brokers. Also the stock market crash has driven individuals to look at the profit opportunities offered by forex.
Q7: Stateside the Commodity Futures Trading Commission (CFTC) has brought 58 actions against firms, since its new powers were awarded in 2000. Given that certain brokers continue to abuse the system, with investor money sometimes not being traded in the markets promised. What can investors do protect themselves?
A7: The retail forex market is in essence betting, as with any bookmaker there is always a risk that you will not get your winnings, or the odds will be highly stacked against you. With tighter regulation and increased competition, this risk of default has largely disappeared. The risk of price manipulation still exists and this will never really go away. Investors need to ensure that they have an independent price source and trade with a broker who offers true one click dealing. Most brokers work on the basis of the law of large numbers, acting like the bucket shops of 50 years ago, they do not hedge any positions and are directly competing against there clients. This will always lead to price manipulation and further actions by authorities will inevitably be taken.
Q8: What is this best way for "currency rookies" to get involved in the market?
A8: Like with any new form of trading you need to know what you are doing, especially as there is margin involved. Take all the time you need to learn this new trading skill well -- practice everything you learn with a demo account before you consider going 'live' with your own money. Investors should read books, attend seminars and paper trade until they are comfortable with there strategy.

The History of FOREX Trading

The origin of Forex trading traces its history to centuries ago. Different currencies and the need to exchange them had existed since the Babylonians. They are credited with the first use of paper notes and receipts. Speculation hardly ever happened, and certainly the enormous speculative activity in the market today would have been frowned upon.
In those days, the value of goods were expressed in terms of other goods(also called as the Barter System). The obvious limitations of such a system encouraged establishing more generally accepted mediums of exchange. It was important that a common base of value could be established. In some economies, items such as teeth, feathers even stones served this purpose, but soon various metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value. Trade was carried among people of Africa, Asia etc through this system.
Coins were initially minted from the preferred metal and in stable political regimes, the introduction of a paper form of governmental I.O.U. during the Middle Ages also gained acceptance. This type of I.O.U. was introduced more successfully through force than through persuasion and is now the basis of today's modern currencies.
Before the First World war, most Central banks supported their currencies with convertibility to gold. However, the gold exchange standard had its weaknesses of boom-bust patterns. As an economy strengthened, it would import a great deal from out of the country until it ran down its gold reserves required to support its money; as a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities had hit bottom, appearing attractive to other nations, who would sprint into buying fury that injected the economy with gold until it increased its money supply, drive down interest rates and restore wealth into the economy.. However, for this type of gold exchange, there was not necessarily a Centrals bank need for full coverage of the government's currency reserves. This did not occur very often, however when a group mindset fostered this disastrous notion of converting back to gold in mass, panic resulted in so-called "Run on banks " The combination of a greater supply of paper money without the gold to cover led to devastating inflation and resulting political instability. The Great Depression and the removal of the gold standard in 1931 created a serious lull in Forex market activity. From 1931 until 1973, the Forex market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the Forex markets during these times was little.
In order to protect local national interests, increased foreign exchange controls were introduced to prevent market forces from punishing monetary irresponsibility.
Near the end of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The conference held in Bretton Woods, New Hampshire rejected John Maynard Keynes suggestion for a new world reserve currency in favor of a system built on the US Dollar. International institutions such as the IMF, The World Bank and GATT were created in the same period as the emerging victors of WWII searched for a way to avoid the destabilizing monetary crises leading to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that reinstated The Gold Standard partly, fixing the USD at $35.00 per ounce of Gold and fixing the other main currencies to the dollar, initially intended to be on a permanent basis.
The Bretton Woods system came under increasing pressure as national economies moved in different directions during the 1960's. A number of realignments held the system alive for a long time but eventually Bretton Woods collapsed in the early 1970's following president Nixon's suspension of the gold convertibility in August 1971. The dollar was not any longer suited as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.
The last few decades have seen foreign exchange trading develop into the world's largest global market. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.
The European Economic Community introduced a new system of fixed exchange rates in 1979, the European Monetary System. The quest continued in Europe for currency stability with the 1991 signing of The Maastricht treaty. This was to not only fix exchange rates but also actually replace many of them with the Euro in 2002. London was, and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance.
In Asia, the lack of sustainability of fixed foreign exchange rates has gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates in particular in South America also looking very vulnerable.
While commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have discovered a new playground. The Forex exchange market initially worked under the central banks and the governmental institutions but later on it accommodated the various institutions, at present it also includes the dot com booms and the world wide web. The size of the Forex market now dwarfs any other investment market. The foreign exchange market is the largest financial market in the world. Approximately 1.9 trillion dollars are traded daily in the foreign exchange market. It is estimated that more than USD 1,200 Billion are traded every day. It can be said easily that Forex market is a lucrative opportunity for the modern day savvy investor.
by Divyansh Sharma

Forex Made Easy for Everyone

Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. That is some figure to chew on. Forex is the commonly used term for foreign exchange. As a person who wants to invest in the forex market, one should understand the basics of how this currency market operates. Forex can be made easier for beginners to understand it and here's how.
Foreign exchange is the buying and the selling of foreign exchange in pairs of currencies. For example you buy US dollars and sell UK Sterling pounds or you sell German Marks and buy Japanese Yen. Why are currencies bought or sold? The answer is simple; Governments and Companies need foreign exchange for their purchase and payments for various commodities and services. This trade constitutes about 5% of all currency transactions, however the other 95% currency transactions are done for speculation and trade. In fact many companies will buy foreign currency when it is being traded at a lower rate to protect their financial investments. Another thing about foreign exchange market is that the rates are varying continuously and on daily basis. Therefore investors and financial managers track the forex rates and the forex market it on a daily basis.
Those who are involved in the forex trade know that almost 85% of the trading is done in only US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. This is because they are the most liquid of foreign currencies (can be easily bought and sold. In fact the US Dollar is most recognizable foreign currency even in countries like Afghanistan, Iraq, Vietnam etc).
Being a truly 24/7 market, the currency trading markets opens in the financial centers of Sydney, Tokyo, London and New York in that sequence. Investors and speculators alike respond to the ever-changing situations and can buy and sell simultaneously the currencies. In fact many operate in two or more currency market using arbitrage to gain profits (buying in one market and selling in another market or vice versa to take advantage of the prices and book profits).
While dealing in forex, one should have a margin account. Quite simply put if you have US$ 1,000 and have a forex margin account which leverages 100:1 then you can buy US$ 100,000 since you only need 1% of the US$100,000 or US$1,000. Therefore it means that with margin account you have US$ 100,000 worth of real purchasing power in your hand.
Since the foreign currency market is fluctuating on a continuous basis, one should be able to understand the factors that affect this currency market. This is done through Technical Analysis and Fundamental Analysis. These two tools of trade are used in a variety of other markets such as equity markets, stock markets, mutual funds markets etc. Technical Analysis refers to reading, summarizing and analyzing data based on the data that is generated by the market. While fundamental Analysis refers to the factors, which influence the market economy, and in turn how it would affect the currency trading. Of course there are other economic and non economic factors which can suddenly affect the trading of the forex markets such as the 9/11 tragedy etc. One needs to have a shrewd acumen and a few number crunching abilities to strike gold in the forex market.
by Brian Kolewe

Your Mother Could Make Money In Forex Trading

The question would be not whether she could but rather would she enter the Forex trading market. The Forex day trading arena is a veritable snake pit ripe for scam artists to bilk money out of unwary investors. On the other hand, it is a forum for educated traders with the correct education, tools, and trading strategy to make a handsome income.
Becoming a successful Forex trader basically comes down to four things; 1) attaining the correct education, 2) using Forex tools which 3) use your own personal trading strategy, and 4) finding the correct Forex broker to fulfill your requirements. Let's look at these individually:
Attaining the correct education. Your Mother may not know the difference between a Forex PIP and one of the backup singers for Gladys Knight. So would you send her to one of those infomercial Forex riches classes to find out? We hope not! There are literally hundreds of training courses and materials out there for proper training. Word of mouth recommendations might be the best path to follow here.
Forex tools can also do many things like send trading signals and various buy/sell alerts to your desktop or mobile device based on what your personal trading philosophy dictates. Many of these tools are software based and some are provided via your favorite Forex trading sites. Not all people base decisions based on these signals though and use things like technical and fundamental analysis to determine when to buy or sell.
It also is essential to develop your own personal trading strategy. Your ability to assume certain risks might not exactly be what other traders or your broker recommends. A Forex trading strategy is not something generic and involves your personal game plan.
Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.
One of the most important ways to make the greatest return (and, also carry a greater loss risk) in Forex trading is with the use of a margin account. These accounts may let you trade as much as $100k in currency for as little as $1000. Margin accounts are the lifeblood of Forex trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.
Used correctly and together, the above items can lead to a comfortable part or full time income. If you don't use all the information available to you, though, you may as well let Mom take the weekend visit to Vegas with her money to see Gladys Knight. Make sure that she has developed her own Forex trading strategy and has used "paper trades" many times before actually beginning trading for real. Better that ole Mom is equipped to make some real money rather than throwing it away on the gaming tables.
by Wayne Watson

How To Get Started In Forex Trading

You may have been hearing about the foreign exchange market (Forex) and the investment advantages it offers. You would like to try it out, but don't know where to start. This short guide will give you the basics in Forex and tell you what you need to participate in this fast growing field.
Foreign exchange used to be limited to large players such as national banks and multi-national corporations. In the 1980's the rules were revised to allow smaller investors to participate using margin accounts. Margin accounts are the reason why Forex trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment.
Forex is not simple, however, and education is needed to make wise investment decisions. Although it is relatively easy to start trading on the Forex, there are risks involved, so finding out as much as possible about the market is a good move for any beginner.
Forex traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.
Opening a Forex account is as simple as filling out a form and providing the necessary ID. The form will include a margin agreement that states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the broker — most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading.
Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in Forex trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage — using borrowed money — varies with accounts. High leverage gives you more money to trade for a given investment.
HOWEVER — beginner traders are advised get accustomed to Forex by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are at provided by most Forex brokers.
Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new Forex investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits.
Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all Forex brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites.
Almost every broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast Internet connection, and an up-to-date operating system such as Windows XP. Once your account is set up, you can access it from any computer — just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone.
Trades are commission free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the 'spread' — the difference between bid and ask prices.
by Hana Lee

The Forex Market and Understanding Foreign Exchange Rates

Unlike the stock exchange, the Forex Market (foreign exchange market) is a relatively new player to the investment world. Today's current Forex market model started in the early 1970's, and today it represents the biggest financial market around, even surpassing the stock market. With trading surpassing $2 trillion dollars per day, the Forex market attracts more and more investors all the time. Before an investor starts trading on the Forex market, he should grasp the fundamentals of how exchange rates work.

Exchange rates

Basically, the exchange rate represents the rate of exchange between two currencies. Most currencies are traded, or paired up against the dollar. The five most common currencies traded on the market are the dollar (USD), euro (EUR), the yen (JPY), the British pound (GBP), and the Swiss franc (CHF). Some other currencies that are traded are the Australian dollar, the Canadian dollar, and the Hong Kong dollar.

In the exchange rate or ratio, the numerator represents the quote currency and the denominator the base currency, which always equals one.

Let's say that an investor wants to exchange euros for dollars. In this case, the euro currency is the quote currency, or how much currency you have to exchange. The base currency is the dollar. The investor researches the current exchange rate (euros converted into dollars) either on the Internet, through the bank, broker, etc., and then multiplies that amount by the number of euros to exchange. Let's say that the exchange rate is 1.57959. That means that 1.57959 euros must be paid to receive one dollar. If he has 1000 euros to exchange, then he can receive $1,579.59 (1000 x 1.57959).

On the flip side, the exchange rate can also tell the investor how much he'll receive if he converts dollars back into euros. If he has $1000, he can either divide that amount by the same euro to dollar exchange rate ($1000/1.57959 = 633.07 euros), or look up the conversation rate for dollars to euros on the Internet, etc. (i.e. .633072) and multiply it by the amount of dollars to exchange ($1000 x .633072 = 633.07 euros).

Once the exchange rate concept is understood, the investor can feel more confident in investing in the Forex market.

Futures Versus Forex (Foreign Exchange Market)

Todays current futures market is quite unlike the futures of the 19th century. Todays future market is a worldwide one that includes manufactured goods, financial currencies and treasury bonds, and agricultural products.
When you speculate on futures it is not the actual good that is speculated upon rather it is the contract for the goods that is traded as value. Every futures contract includes a buyer and a seller. The following is an example of a futures speculation: A farmer agrees to deliver 1000 bushels of corn to a baker at a price of $5.00 a bushel. If the daily price of corn futures falls to $4.00 a bushel, the farmer's account is credited with $1000 ($5.00 — $4.00 X 1000 bushels) and the baker's account is debited by the same amount. Futures accounts are settled every day.
Using the above as an example this is how the contract settlement would play out: If the price of corn futures is still at $4.00 the farmer will have made $1000 on the futures contract and the baker will have lost an equal amount. However, the baker can now purchase corn on the open market at $4.00 a bushel — $1000 less than the original contract, so the amount he lost on the futures contract is made up by the cheaper cost of corn. Also, the farmer must sell his corn on the open market for $4.00 a bushel, less than what he anticipated when entering the futures contract, but the profit generated by the futures contract makes up the difference.
Speculators profit by daily fluctuations in the futures market by choosing to buy from the seller (buying short) or from the buyer (buying long).
The FOREX market has advantages over the futures market. FOREX is the largest financial market in the world. It is a liquid market and stop orders can be executed more easily and with less slippage than in other markets. The FOREX market is open 5 days a week, 24 hours a day. Traders can take advantages of opportunities as they become available. FOREX transactions are usually instantly executed. FOREX transactions are commission free. Brokers earn money on the spread.
Some investors feel that due to built in safeguards that FOREX trading is safer than futures trading.
by Jeff Slokum

FOREX: What Is It And How Does It Work?

The Foreign Exchange market, also referred to as the "Forex" is the biggest and largest financial market in the world. It has a daily average turnover of US$1.9 trillion- just imagine that amount of money! Don't you want to join this trillion-dollar industry?
Forex is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). So basically, Forex is trading.
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency.
The other 95% is trading for profit, or what you call speculation. Investors frequently trade on information they believe to be superior and relevant, when in fact it is not and is fully discounted by the market.
On one side of each speculative stock trade is a participant who believes he has superior information and on the other side is another participant who believes his information is superior.
For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid- meaning its in cash or convertible to cash) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors.
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur — real time- day or night.
The Forex market is considered an Over The Counter (OTC) or 'interbank' market. This is because the transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange compared to stocks and futures markets.
Understanding Forex quotes
Reading a Forex quote may seem a bit confusing at first. However, it's really quite simple if you remember two things: 1) The first currency listed first is the base currency and 2) the value of the base currency is always 1.
The US dollar is the centerpiece of the Forex market and is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 110.01 means that one U.S. dollar is equal to 110.01 Japanese yen.
When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote we previously mentioned increases to 113.01, the dollar is stronger because it will now buy more yen than before.
The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.7366, meaning that one British pound equals 1.7366 U.S. dollars.
In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.
In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.
Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.
When trading Forex you will often see a two-sided quote, consisting of a 'bid' and 'offer'. The 'bid' is the price at which you can sell the base currency (at the same time buying the counter currency). The 'ask' is the price at which you can buy the base currency (at the same time selling the counter currency).
by Frederic Madore

The 6 Advantages Forex Trading Has Over Other Investments

There are many different advantages to trading forex instead of futures or stocks, such as:
1. Lower Margin
Just like futures and stock speculation, a forex trader has the ability to control a large amount of the currency basically by putting up a small amount of margin. However, the margin requirements that are needed for trading futures are usually around 5% of the full value of the holding, or 50% of the total value of the stocks, the margin requirements for forex is about 1%. For example, margin required to trade foreign exchange is $1000 for every $100,000. What this means is that trading forex, a currency trader's money can play with 5-times as much value of product as a futures trader's, or 50 times more than a stock trader's. When you are trading on margin, this can be a very profitable way to create an investment strategy, but it's important that you take the time to understand the risks that are involved as well. You should make sure that you fully understand how your margin account is going to work. You will want to be sure that you read the margin agreement between you and your clearing firm. You will also want to talk to your account representative if you have any questions.
The positions that you have in your account could be partially or completely liquidated on the chance that the available margin in your account falls below a predetermined amount. You may not actually get a margin call before your positions are liquidated. Because of this, you should monitor your margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.
2. No Commission and No Exchange Fees
When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.
Even though you do not have to pay a commission charge to a broker to match the buyer up with the seller, the spread is usually larger than it is when you are trading futures. For example, if you were trading a Japanese Yen/US Dollar pair, forex trade would have about a 3 point spread (worth $30). Trading a JY futures trade would most likely have a spread of 1 point (worth $10) but you would also be charged the broker's commission on top of that. This price could be as low as $10 in-and-out for self-directed online trading, or as high as $50 for full-service trading. It is however, all inclusive pricing though. You are going to have to compare both online forex and your specific futures commission charge to see which commission is the greater one.
3. Limited Risk and Guaranteed Stops
When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for Live Cattle were going to continue their upward trend in December 2003, just before the discovery of Mad Cow Disease found in US cattle. The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your position and this could have wiped out the entire equity in your account as a result. As the price just kept on falling, you would have been obligated to find even more money to make up the deficit in your account.
4. Rollover of Positions
When futures contracts expire, you have to plan ahead if you are going to rollover your trades. Forex positions expire every two days and you need to rollover each trade just so that you can stay in your position.
5. 24-Hour Marketplace
With futures, you are generally limited to trading only during the few hours that each market is open in any one day. If a major news story breaks out when the markets are closed, you will not have a way of getting out of it until the market reopens, which could be many hours away. Forex, on the other hand, is a 24/5 market. The day begins in New York, and follows the sun around the globe through Europe, Asia, Australia and back to the US again. You can trade any time you like Monday-Friday.
6. Free market place
Foreign exchange is perhaps the largest market in the world with an average daily volume of US$1.4 trillion. That is 46 times as large as all the futures markets put together! With the huge number of people trading forex around the globe, it is very hard for even governments to control the price of their own currency.
by David Morrison

Investing in Forex

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.
A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.
I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.

Forex The Future Investment

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

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

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

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

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

by Mike Pachuta

FOREXYARD Introduces Forex Automatic Trading

Online Forex Broker FOREXYARD forges ahead with an ever widening array of products by launching its FSA (Forex Strategy Automator) account. The new product is more than just a new account type. It allows traders to choose pre-made strategies to trade on their behalf, essentially Forex Automatic Trading. Basically, where once a user would need to go through the steps of learning all there was to learn about forex trading, customers now need only choose a strategy that suits his or her needs and desires and the rest is automated. The technology is also revolutionary for experienced traders, allowing them to diversify their portfolios. The technology is completely web based, requires no download, and can be used on any computer or browser type.

The technology allows novices and experts alike to step into the forex market with little or no knowledge whatsoever. FOREXYARD makes only one assumption; that a customer can decide for himself who best to manage his portfolio. Customers need only imagine that they are stepping into a full service brokerage where they can meet and learn everything about their account manager including performance history. So at a click of a button, a customer can choose who best to manage his money - based on real performance.

Forex traders more familiar with the Meta Trader platform will also be very comfortable with this new account type. FOREXYARD customers using the aptly named FSA (FOREX STRATEGY AUTOMATOR) account can now utilize all the benefits found on MT4, but on a legitimate broker's software. Foreyard's new software allows an EA (Expert Advisors) the ability to upload strategies on to the platform making them readily accessible to all of Foreyard's customers. The new functionality will allow traders the world over to choose any number of Auto-Forex Trading Strategies to work for them while EAs can upload their own strategies just like on MT4.

Established in 2005, FOREXYARD is an online foreign exchange broker providing thousands of customers the vehicle they need to trade. By providing this new technology, Forex Automatic Trading, FOREXYARD hopes to take some of the bite out of learning forex

Europea faces tough path to recovery

BRUSSELS (AP) -- Europe may join the United States in leaving recession when growth figures come out next month -- but lackluster jobs and inflation data released Friday strongly suggest the continent's hoped-for recovery will be slow and fragile.

A day after official figures showed the U.S. economy finally returned to growth, the data released by the EU statistics agency Eurostat gave fewer reasons for joy: eurozone unemployment rose to a 10-year high of 9.7 percent in September.

Consumer prices fell on the year for the fifth consecutive month -- good for hard-pressed consumers, but an ominous sign of just how shaky demand for good remains.

The 0.1 percent annual drop in consumer prices was more moderate than September's 0.3 percent drop and does suggest companies and consumers are slowly spending more after a long freeze in demand.

The European Union will reveal growth figures on Nov. 13 for the 16 countries that use the euro and for the broader, 27-member EU. Many expect the eurozone -- with its 327 million people and euro9.3 trillion ($14 trillion) economy -- to show at least some growth, after shrinking 4.8 percent in the second quarter from the same quarter the year before.

Compared to the first quarter, the eurozone economy contracted only 0.2 percent in the second, indicating the recession had at least bottomed out.

Major European companies gave subdued outlooks as they released their quarterly earnings this week. Chemical firm BASF, the world's largest, warned that "major risks still exist" and "the recovery will be slow and uneven." Auto maker Volkswagen reported net income fell 86 percent and chief financial office Hans Dieter Poetsch said, "We predict no substantial global recovery in 2010."

Europe's growth path -- a steady, but slow, emergence from recession -- faces some of the same hurdles as does the U.S. Although the world's largest economy was confirmed to have exited recession in the third quarter with annualized growth of 3.5 percent, analysts warn that -- like Europe -- it is still saddled with increasing unemployment and swelling government debt.

Both Europe and the U.S. benefitted from stimulus such as cash-for-clunkers incentives for auto buyers. That program has been wound up in the U.S. and in Germany, Europe's single largest economy.

In Asia, where governments have had to spend less on bailouts and interest rates are in most countries not as low as in the U.S. and Europe, recovery is gaining a better grip. China's economy, for example, grew at an 8.9 percent rate in the third quarter. Even in Japan, whose economy more closely resembles the U.S. or Europe, the unemployment rate has fallen for two months and the Bank of Japan is considering removing some stimulus measures.

Friday's data shows the effects of the stronger euro exchange rate, which recently hit a 14-month high of $1.5020 against the dollar, hurting Europe's crucial export sector and dampening the effect of higher oil prices. It's a burden the U.S. does not face, with the dollar weakening substantially in recent years and giving a boost to exporters.

Of all the trends, however, it is the steady rise in joblessness that worries experts most. Across the entire European Union, some 22.12 million people are now out of work, 15.32 million of them in the eurozone.

"Unemployment is a lagging indicator and the depth and length of the recession that most countries have suffered will continue to impact for some time to come," said Howard Archer, economist at IHS Global Insight in London.

"Furthermore, even though the eurozone economy highly likely returned to expansion in the third quarter and activity is continuing to improve in the fourth quarter, growth is unlikely to be strong enough to generate net jobs for some considerable time," Archer said.

Rising unemployment is expected to weigh on consumer spending, and while billions of euros (dollars) in stimulus measures by governments and central banks have helped in the short term, those efforts are only temporary.

European Union leaders insisted Friday that it was too soon to withdraw all their various stimulus programs. They said they would wait until a recover "is fully secured," but avoided setting a date until they meet again for talks in December.

They also warned that reforms were required "to prevent high unemployment levels from becoming persistent" by making labor markets more flexible.

4 Types Of Technical Indicator You Need When Trading Forex

If you have any experience in using any kind of charting packages to assist you with your forex trading, you will know that there are endless different technical indicators you can use. In this article I'm going to be asking what are all these indicators and which ones do you really need?

As you can guess from the title of this article, there are essentially four different types of technical indicator and they are as follows:

1.Trend indicators.

MACD, Parabolic SAR and the various moving averages are a few examples of trend indicators and they can all be used to identify a trend. It's widely argued that you should only trade with the trend so all of these indicators will help you to take the decision out of your hands, and therefore dictate which way you should be trading. Your only decision now is at what level to enter the trade.

2.Momentum indicators.

These types of indicators are essentially oscillating indicators and are most useful for determining overbought and oversold positions and can be very useful in signalling the start of a new trend. Examples include RSI, Stochastics and CCI.

3.Volume indicators.

As the name suggests, these types of indicators show the volume of trades behind a particualr price movement which can be extremely beneficial because a price movement backed up by high volume is a much stronger signal than a price movement based on low volume. Examples here include Chaikin Money Flow, Force Index, Money Flow Index and Ease Of Movement.

4.Volatility indicators.

Volatility indicators generally use ranges to show the behaviour of the price and the volume behind any movements. This is useful because any dramatic change in behaviour can provide a good entry signal. Common examples include Bollinger Bands, Average True Range and Envelopes.

So there you have the four different types of technical indicators available to you. Which ones you use is entirely up to you, but it's generally advised that you have at least one type of each in order to provide additional confirmation for entering a trade.

Trading forex using technical analysis is all about probabilities in that when you enter a long position, for example, you want all of your chosen signals to be signalling an upwards movement, therefore indicating a high probability of an upwards movement taking place.

If you use a strict stop loss policy and use these different types of indicators to confirm positions, then over time this high probability trading method should provide you with more winners than losers in the long run.

Tips to Find the Forex Method that will Give your Economy Rebound

The Forex Market is indeed to be one of the great places to produce tremendous wealth, even in an recent economy of uncertainty. Better than Stocks and Futures Markets combined, Forex has opened its doors to individuals that want to have wealth sooner than they thought, and even larger than they ever dreamed of, and yes, that is you and me. In a such situation of the economy, companies turn their heads on Forex for additional income.

Did you know that the Forex Market is like fire? Because, if you do not know how to nourish or control fire, it takes over you and does some damage that can scar for for a very long time. But if you know where to direct it, place it, control its intensity and quantity, then fire is not a damaging element anymore, but useful. Evolution and time has taught man to control fire.

Same as in Forex, if you do not know how to make Forex work for you, your loss can be heartbraking and traumatizing. Forex Traders fail in forex, but not because it was just too risky, if you dig down deep, they tend to use a trade method that doesn't work, for them. Remember that no matter how "effective" a trade method is, it won't work unless it works for you. There are many forex trader success stories, using the method that works for them.

But what is a good trade method?

Here are some guidelines in order to determine if a trade method will benefit you the most:

1. It must be a complete method, with setup conditions, entry rules, initial stop rules, and exit strategy rules, leaving no decision to chance.

2 . It must include specific risk management, money management, and portfolio management guidelines.

3. It must be based on technical analysis, but it must not be a 100% mechanical system.

4. It must take less than an hour a day to apply after learning how to trade with it.


In evolution and time, there are forex methods that some may not be aware of, on how Forex is flame that can be put to our good use and maybe it becomes an important resource of convenience, financial convenience. Find a good trading method using the guidelines mentioned, there are good methods out there that you can use to experience financial freedom with Forex, it is possible to have your economy rebound with Forex. Start now.

Growing Popularity of Forex Trading

Today it is very hard to ignore the fact that forex market is the world's biggest financial market. Over the past few years, it has become the most popular market with trades amounting to more than USD 3 trillion every day. Generally referred as currency trading market, it always involves the combination of two currencies. For example- either you can buy Euro or sell US dollars, or you can buy and sale any other combination of globally accepted currencies.

In recent times, fx trading has gained huge popularity and turned out to be a very profitable money making option. If we look at the present scenario, it can be recognized as one of the most potentially rewarding types of investments available in the global market. Though this form of trading involves great risks but the potential to earn profits are enormous relative to initial capital investments. The major reason of growing recognition is its very low dealing costs, high leverage margin, 24 hours trading a day and high liquidity market. For example, with a $5000 account, you can make about $5000 per month.
Obviously it decidedly depends on the manner that you trade and the strategy you follow but good and experienced traders can double their money every month.

The key positive sign of fx currency trading that can help you consider it as a money-making affair can be its size. Its wide yet easily accessible size prevents almost all attempts by others to influence the market for their own gain. Consequently, when you invest in foreign currency market, you can be certain that the deal you are making has the same opportunity for profit as other investors do throughout the world.

So, if you are looking to get involve in this type of currency trading, it is always better to enjoy trading with the help of a forex broker. A forex broker can be the key person who can guide you to earn more profits from market, as a result it is always better to carefully select a right forex broker for right deal. Apart from all this, the next major fact about this form of currency trading is- in this form of trading there is no centralized location of foreign currency trading. With the help of various online platforms you can trade currency from any parts of the world. With the help of internet connection and active forex trading account you can easily trade in foreign currencies.

Today it can be considered as one of the few trading markets in the world that always provides you with opportunities to trade because of currencies strengthening or weakening. The supply and demand are the factors that determine the price in any market. Now when there are too many buyers and sellers, similar to the current situation in forex market, the price volatility can be much higher, market may be more dynamic and chances to make money can be even more. The price may go up and down more frequently and this dynamic nature helps in making decent money. Consequently, if you are looking to choose Forex as your business, its better you do not get worried about competition but must make sure you develop a proper strategy to earn money and enjoy good success in fx trading.

Forex Indicators For Better Trading Accuracy

For some traders, they prefer to use the forex indicators to make some trading decisions. They spend hours in front of the computers to observe the movements of the indicators to make sure that they have already made the perfect decision. For them, they accuracy on examining the indicators is the life of their trading sessions. Once they made mistake, it would be a bit hard to recover.

Some traders are using the forex indicators to see the forex signal. The signal gives them some hints to make a decision. Most of the traders prefer to combines some forex indicators. These forex indicators would give them some forex signals combination. They need to determine the direction of the market to make some decision. Are they going to buy, or they want to get the sell position? The decision could be made after they see and examine the forex indicators.

Those traders realized that not all the time those signal forex combinations are correct. They might make misjudge of a movement of the market that surely might impact the whole trading process. To avoid this situation, those traders should really understand about the forex indicators. This is the best way to eliminate some mistakes that might be done.

Best Refinancing

How can I find the best refinancing deal :

There are a number of factors that will affect the ability for you to refinance now, most importantly value of the home compared to neighboring properties and your documented ability to repay. If you bought your home in September using a down payment, most likely you will have equity available. Lenders are more conservative now than on how much risk they are willing to take, including most likely your current lender...if they are still in business. As an independent broker and correspondent bank, we have the ability to marry you up with the ideal lender for your individual situation with the lowest fees in the industry. Please get in touch with me at your convenience.


Start by calling the bank you currently have your mortgage with and ask their opinion. It will cost you a few thousand to re-finance because you have to go through closing again so, where is that money coming from? HSBC has been the most competitive in New York State and don't carry a lot of Junk fees. They also service their loans themselves.
They will be very helpful to you.

Once you’ve assessed your situation, you can start to narrow down the lenders! Talk to your current mortgage lender first; just because you don’t like your current loan doesn’t mean you can’t change its terms and conditions under the guidance of your current lender. There might be something you’ve overlooked and the best refinancing deal could be right under your nose – not far and away at another lender. Still, after you talk to your own lender, schedule face-to-face “appointments” with as many other lenders as possible. Every lender will have different words of advice for you for your mortgage refinancing – it’s your job to discern this advice!

The best way to evaluate the different lenders is to compare the refinancing deals they offer. What can you expect them to put on the table?


Your current lender will likely offer no-cost mortgage refinancing. But don’t be fooled by the name – there are still fees and high interest rates you may have to cope with. And of course, if you’re refinancing because you have issues with the way your current lender operates, this obviously is not the best refinancing deal for you.

You may also want to consolidate your debts, and that can be a big task! But the bigger the difference mortgage refinancing will make in your life, the more time and effort you will have to put into it to get the best refinancing deal.
But ultimately, to determine if you’re getting the best refinancing deal, you simply have to do a cost/benefit analysis; compare what you’re paying today with what you could be paying tomorrow. It’s worth the time and effort to get to know the different lenders out there so as to secure the best refinancing deal. And if you approach this task carefully, you’re sure to find that there is a way you can refinance your mortgage to greatly benefit your finances. I hope you get the best refinancing deal out there because is a crazy world.

Mortgage Refinancing Rate:

Mortgage Refinancing Rate is the option of understanding about the mortgage refinancing. It is fact that refinancing is not a smart move for everyone. There are expenses and fees you will have to pay when refinancing your mortgage with Mortgage Refinancing Rate. Mortgage Refinancing Rate fees and expenses are very similar to the ones you paid when you took out your first mortgage. These expenses include a survey, appraisals, underwriting, and attorney fees. Many homeowners write off Mortgage Refinancing Rate because someone told them when interest rates go up their payments would skyrocket. This unwanted surprise in your mortgage payment amount is often called payment shock. Should you avoid Mortgage Refinancing Rate with an Mortgage Refinancing Rate? Here are several tips to help you decide if the potential savings are worth the risk when refinancing with Mortgage Refinancing Rate. By the time you complete mortgage refinancing with Mortgage Refinancing Rate, your loan representative will have all but eliminated any possibility of this happening. Your loan representative will show you the payment schedule outlining the maximum you could every pay and when those changes could possibly happen. Mortgage Refinancing Rate have built-in safety features, and when structured properly unwanted surprises will almost never happen. Mortgage Refinancing Rate are ideal for short-term Mortgage Refinancing Rate. If you will be keeping your home for less than seven years, you could save yourself thousands of dollars by choosing Mortgage Refinancing Rate. You can learn more about your Mortgage Refinancing Rate options. Mortgage Refinancing Rate is something every homeowner experiences soon or later. Mortgage Refinancing Rate is simply trading your current mortgage in for a better one. The motivation for r Mortgage Refinancing Rate is to get a better interest rate, lower payments, better conditions, or cash equity out of your home with Mortgage Refinancing Rate. Here are several reasons a savvy homeowner would Mortgage Refinancing Rate. Improve Your Interest Rate, Lower Your Monthly Payment, Refinance Your ARM to a Fixed Interest Rate, Shorten Your Term Length to Build Equity Faster, and Cash Out Equity.

tiger

INDIAN TIGER

China to launch state investment company end-September: report

SHANGHAI (AFP) — China's long-awaited state investment company, which is set to manage part of its massive foreign exchange reserves, will be formally launched on September 28, state press said Wednesday.

Lou Jiwei, a former vice finance minister, will be chairman of the new company while Gao Xiqing, vice chairman of the social security fund, will be appointed as the general manager, China Business News reported.

China's forex reserves, the world's largest, surpassed 1.33 trillion dollars at the end of June, with about 70 percent generally believed to be held in US dollar denominated paper, principally US government bonds.

The new agency, tasked with diversifying and maximising returns on part of the country's huge forex reserves, already invested three billion dollars of foreign exchange reserves in US private equity group Blackstone in May despite not yet being formally launched.

World Petroleum

World oil prices are only marginally higher than spring 1990's average of $15 a barrel, just before the Persian Gulf crisis that doubled prices to $30 by the fourth quarter. Despite efforts by the Organizations of Petroleum Exporting Countries (OPEC) to cut its output by 5 percent, or by 1 million barrels a day (mbd), to 22.3 mbd, prices have remained stable. The reasons for this are: low demand from the industrialized countries, mainly the United States, due to slowed economic activity; seasonally slack use of oil for heating, or gasoline for longer-range driving in the spring; and the still-abundant stocks that were built up before and during the winter, which turned out to be a mild one.

The World Economy and Exchange Rates

The inertia of 1990's global economic slowdown will keep 1991's real GDP growth at 1.0 percent - the weighted average of 1.3 percent for the developed economies, 2.6 percent for the developing countries (LDC's), and 4.4 percent for Central Europe and the USSR. World economic growth in 1990-91 is the trough in the business cycle that last peaked in 1988 and which is projected to slope upward starting in 1992. A recovery to 3.3 percent in real GDP growth in 1992 will reflect rebounds in the developed economies of 1.8 percent, 2.7 percent in the LDC's, and 3.9 percent in Central Europe and the USSR.

Inflation is projected to subside substantially in 1991, and by more in 1992. Weaker overall demand, and crude oil prices at or under $20 per barrel, will slow increases in consumer prices, which should eventually lead to real output gains in 1992 for most countries. Significant recoveries in economic activity are expected in North America, Latin America, and the Middle East in 1992. Central Europe and the USSR will remain in recession. Stronger growth in Asia will be driven by a 14-percent nominal gain in export earnings in 1992, a portion of which derives from Japan's increased import demand.

Agricultural commodity prices have trended downward since 1989. Both agricultural raw materials and food have lost 11.2 and 8.8 percent, respectively, of their values from 1989. Current prices for food are only 8 percent higher than in 1985, whereas raw materials prices are still 30 percent higher. Sagging world demand, large crop harvests, and tighter worldwide money have pushed inflation down and dragged agricultural commodity prices down as well. Agricultural export subsidies could potentially increase if GATT negotiations do not succeed, bringing further deterioration in agricultural trade and prices.

Excess reserves

Foreign exchange reserves are important indicators of ability to repay foreign debt and for currency defense, and are used to determine credit ratings of nations, however, other government funds that are counted as liquid assets that can be applied to liabilities in times of crisis include stabilization funds, otherwise known as sovereign wealth funds. If those were included, Norway and Persian Gulf States would rank higher on these lists, and UAE's $1.3 trillion Abu Dhabi Investment Authority would be second after China. Singapore also has significant government funds including Temasek Holdings and GIC. India is also planning to create its own investment firm from its foreign exchange reserves.

Levels

Reserves of foreign exchange and gold in 2006

See also: List of countries by foreign exchange reserves

At the end of 2007, 63.90% of the identified official foreign exchange reserves in the world were held in United States dollars and 26.5% in euros [1].

Monetary Authorities with the largest foreign reserves in 2009.

Rank Country/Monetary Authority billion USD (end of month) change in year 2007 1 People's Republic of China $ 2132 (Jun 2009) 1[1] +32.9% 2 Japan $ 1019 (Jun 2009)[2] +8.7% - Eurozone $ 531 (Feb 2009) +16.6% 3 Russia $ 401 (Jul 2009) 2 [3] ▼ 4 Republic of China $ 321.09 (Apr 2009) [4] +2.7% 5 India $ 276 (Aug 2009) 2 [5] +64.4% 6 South Korea $ 232 (Jun 2009) ▲ 7 Brazil $ 219 (Aug 2009) 3 +105.9% 8 Hong Kong $ 233 (Aug 2009) +14.6% 9 Singapore $ 166 (Mar 2009) +19.1% 10 Germany $ 144 (Feb 2009) -

Note:

• Note 1: China updates its information quarterly.
• Note 2: Russia and India update their information weekly and monthly.
• Note 3: Brazil updates its information daily.

These few holders account for more than 60% of total world foreign currency reserves. The adequacy of the foreign exchange reserves is more often expressed not as an absolute level, but as a percentage of short-term foreign debt, money supply, or average monthly imports.

On July 15, 2009, the People's Bank of China announced China's foreign exchange reserve had reached $2.132 trillion by far the largest holders of foreign exchange reserves and the first time a country had surpassed the $2 trillion benchmark.

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.

Forex Bank

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Forex AB is a Swedish financial services company. The company was started in 1927 as a currency exchange service for travellers, at the Central Station in Stockholm. The owner of Gyllenspet's Barber Shop, according to the legend, discovered that most of his customers were tourists in need of currency for their trips. The owner began keeping the major currencies on hand.

The company was subsequently acquired by Statens Järnvägar (now SJ AB), the Swedish State Railways, which expanded the operations until it was sold off to one of the managers, Rolf Friberg, in 1965. The company was the only one apart from the banks that was licensed to conduct currency exchange in Sweden.

The company, which is still wholly owned by the Friberg family, has expanded into Denmark, Finland, Norway and Iceland and has over 60 shops, usually located at train stations or airports. The decrease in the business brought on by introduction of the euro has made the company look for alternative sources of revenue, like applying for a banking licence and attempting to move into more regular transaction services, earlier handled by Svensk Kassaservice, a subsidiary of the state owned Swedish postal company, Posten.

Since 2003 Forex is a licensed bank.

Foreign exchange market

The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies. ^[1]

The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

• its trading volumes,
• the extreme liquidity of the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
• the variety of factors that affect exchange rates.
• the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
• the use of leverage

As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank for International Settlements,^[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:

Market size and liquidity

Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.

Presently, the foreign exchange market is one of the largest and most liquid financial markets in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. ^[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.^[3]

Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%.^[4] In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.

Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.

Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—[1]; [2]) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.

FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).

Top 10 currency traders ^[5]
% of overall volume, May 2009

Rank	Name	Market Share
1	Deutsche Bank	20.96%
2	UBS AG	14.58%
3	Barclays Capital	10.45%
4	Royal Bank of Scotland	8.19%
5	Citi	7.32%
6	JPMorgan	5.43%
7	HSBC	4.09%
8	Goldman Sachs	3.35%
9	Credit Suisse	3.05%
10	BNP Paribas	2.26%

Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over US$50-60 billion (see retail trading platforms).^[6] Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey.^[3] These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually 0–3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100/1.2300 for transfers, or say 1.2000/1.2400 for banknotes or travelers' checks. Spot prices at market makers vary, but on EUR/USD are usually no more than 3 pips wide (i.e., 0.0003). Competition is greatly increased with larger transactions, and pip spreads shrink on the major pairs to as little as 1 to 2 pips.

Market participants

Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.

Banks

The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.

Commercial companies

An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.