All Information about Forex

Welcome

2011-01-31T07:44:00.000-08:00

Welcome to my forex site. thanks for visiting forex-moneymarket.blogspot.com I hope you are find what do you want. In this site you will find anything all about forex online trading which one this bussines is the bigest investment offer the world. in this area you will find forex historical, forex information about trade, forex strategy, and most wanted forex e-book, forex broker and so on. and offcourse its all free. Please if this site is usefull for you bookmark this link, and post your comment every thread for me to improve this blog quality. enjoy......

Interview with FxCompany

2009-07-17T03:19:00.000-07:00

I’ve been contacted by a representative of FxCompany that asked me if I can do an on-line interview with him. So, I decided that the readers of my blog would probably be interested to hear what one of the popular MetaTrader broker can say about its business and the overall market situation. I’ve sent the questions to Mr. Andrew Mecow, the Head of Partners Department, and soon received his answers. And now you can read the whole interview and see if FxCompany, as a broker, can be interesting to you.

To me, on-line Forex broker market looks very close to oversaturated. Understanding that FxCompany is quite a new on-line broker, what keeps up you in the market? What’s your main attractor for your customers?

European stocks rises; USD slightly higher

2009-07-17T03:17:00.000-07:00

FXstreet.com − Stock markets in Europe are rising today's Friday session, following the green numbers in Asia, on economic recovery optimism despite speculations on CIT Group will file for bankruptcy. Exports fell more than imports in Europe in May, indicating that trade remains substantially weaker than last year after the credit crisis collapses.

Forex Trading Information

2009-07-17T03:05:00.000-07:00

FOREX — the foreign exchange (currency or forex, or FX) market is the and the most liquid financial market with the daily volume of more than $3.2 trillion. Trading on this market involves buying and selling world currencies taking the profit from the exchange rates difference. Forex trading can yield high profits, but it is also very risky. Everyone can participate in Forex trading via the Forex Bookers

Don’t forget to check and bookmark myForex blog to get the latest updates about Forex market and this site’s content. You can also join a friendly Forex traders community at the Forex Forum

2009-06-09T05:39:00.000-07:00

(FILES) Photo taken May 20, 2005 shows a bank teller counting Chinese currency 100 yuan notes in Beijing. China will not bow to international pressure to alter its currency policies, Premier Wen Jiabao said March 13. "At the end of the day the decision is for China to make," Wen told reporters at an annual press conference, referring to calls for Chinese authorities to loosen controls on the tightly managed yuan, or renminbi (RMB). AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)

Forex Formula

2009-06-09T05:34:00.000-07:00

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eToro Review - Is eToro Online Forex Trading Platform Scam? Does It Work?

2009-06-09T05:29:00.000-07:00

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Tim Geithner : What’s In Your Wallet?

2009-06-09T05:27:00.000-07:00

What’s in U.S. Treasury Secretary Timothy Geithner’s wallet? Not much.

While testifying in front of a House Appropriations Subcommittee on Capitol Hill Thursday Geithner was shown a $50 Billion Zimbabwean bank note (rendered worthless by Zimbabwe’s hyperinflation) by U.S. Representative John Culberson (R- TX) and asked if he had ever seen one himself. Geithner immediately pulled a piece of Zimbabwean currency out of his own pocket and showed it off to the committee. At the next break in the hearing I approached Geithner and asked how he happened to have a piece of foreign currency in his pocket. His response was “I often have some foreign currency in my wallet. Want to see?” He pulled a very thin and mostly empty wallet from his pocket.

Amongst many empty slots in the thin weathered leather wallet there could be seen three credit or debit cards with Visa and Mastercard logos (all inserted into the wallet upside down so that the card issuers could not be seen) and an old and yellowed looking identification card of indeterminate origin.

From inside the wallet Geithner extracted a small pile of receipts and paper including a New York City MTA farecard, pointing out that there were European Euros tucked amongst the paper.

Notably not seen in the U.S. Treasury Secretary’s wallet? Any U.S. dollars.

- Photo Credits: Jim Bourg/Reuters (U.S. Treasury Secretary Timothy Geithner puts a piece of foreign currency back after showing off the contents of his wallet to a photographer during a break in his congressional testimony in Washington, May 21, 2009.)

Hedge funds

2009-06-09T05:16:00.002-07:00

After the 1996 the hedge funds are considered to be quite aggressive at currency speculation. These funds deal with billions of dollars and so they are capable to have an appropriate reaction on any intervention of the Central bank with an aim to support the currency.

Retail forex brokers

Forex market is also a place of work for such traders as retail forex brokers. Usually there are 2 types of them: those brokers offering speculative trading and those providing physical delivery of the assets.

Forex brokers are also called market makers who are dealing with quite small part of the whole forex (about $25-50 billion a day). There are also retail traders who can only deal via retail brokers or banks.

Investment management firms

2009-06-09T05:16:00.001-07:00

Another participants of the Forex market are the investment management firms, like pension funds. Their aim in playing at the Forex is to ease deals in foreign securities. Let consider the example, investment management firms with an international equity portfolio participate in foreign currencies’ trades with an aim to pay for the foreign equities buying. The deals conducted at the Forex are not considered to be speculative or profitable ones.

However sometimes such firms have speculative specialist currency overlay operations that trade the currency to get profit and limit the risks. At the same time there are not too much such firms, therefore those existing manage quite big amount of money and can get great profits.

Central banks

2009-06-09T05:14:00.001-07:00

Another important players at the Forex are the Central banks of the different countries. Their purpose of taking part at the trades is to take control over such factors as supply of the money, inflation level and interest rates. Central banks sometimes use their reserves of the foreign currency to make the market more stable. According to Milton Friedman there is the most appropriate way of stabilizing the market for the Central banks by buying at low exchange rates and sell at high exchange rates. On the other hand we cannot be sure that this way will be a really effective one, as the Central banks cannot become a bankrupt in case they incur a great losses and it is not clear whether they are profitable or not.

Only the talks about possible Central bank’s intervention may lead to currency stabilization, however the real banking intervention is also often used commonly in those countries with the so called dirty float regime of the currency. The aims Central banks have are not reached all the time, as the rest of the market assets are much bigger. And several similar situations have already occurred – 1992-1993 European Exchange Rate Mechanism crisis and later several crunches in the Southeast Asia.

Central banks

2009-06-09T05:14:00.000-07:00

Commercial companies

2009-06-09T05:13:00.001-07:00

A certain part of the inter-bank market relates to the work oh those companies that need foreign currency to make a certain payment. Such companies are not the constant players of the market and do not trade really large amounts of currency like banks do. However the currency’s exchange rate in a long prospective is affected by the trade flows. Sometimes commercial companies cover large positions that are not known by the rest of market participants and thus having significant impact onto the market.

Commercial companies

2009-06-09T05:13:00.000-07:00

Banks

2009-06-09T05:12:00.000-07:00

The most part of the every day speculative trading and commercial turnover relates to the inter-bank market as big and well-known banks can trade large sums of money every day. Sometimes the customers make these deals but usually so-called proprietary desks acting on behalf of the banks make them.

Forex brokers were the main driving force of the market in the past that assisted inter-bank trading and searched for appropriate counterpart to this or that buyer or seller. Nowadays the great part of this business is done by the electronic systems. Now traders simply listen what is happening at the inter-bank trading but the turnover today is significantly lower then in a recent years.

Market participants

2009-06-09T05:11:00.000-07:00

The difference of the Forex and stock market is in the levels of access that is the integral part of the Forex market. The highest level is designed for the inter-bank market (the participants are large banks). The bid/ask spreads of this level are commonly not available to those traders outside this level. There is a certain trend, the lower the level of access the bigger the bid/ask spread (it can vary from 0-1 to 1-2 pips for most traded currencies). The main factor determining the amount of the spread is the volume. In case trader is able to provide many transactions for large sums then the spread of bid and ask price will be as low as possible. Such spread is considered to be a better one. As for the levels of access themselves the determining factor here is so called size of the “line”, i.e. the amount of money you deal with. The share of the inter-bank market is about 53% of all deals. After the inter-bank market there go other not so big large investment banks, international corporations hedging risks and paying employees, other hedging funds and several large retail forex traders. According to experts such bodies as pension and mutual funds, insurance companies are the important part of the Forex market and all financial markets. Moreover another important participants of the Forex market are the hedge funds and Central banks of different countries.

The USD is growing but is everything so good?

2009-06-09T05:10:00.000-07:00

The recent US economic numbers are quite low but the USD keeps strengthening. The level of the jobless claims turned to be less then 400 k still these numbers are to big. The number of new job claims reached the point of 372k. As for the prospects we suppose the US labor market will continue to fall as there are new layoffs almost every day. For instance, Merrill Lynch fired 4000 of its staff and New York Times is going to cut 100 jobs. We have already considered the amount of US layoffs previously in this month. However we gave a bit wrong estimation as we supposed that job cuts in such companies as Dell, Motorola, ATA and Aloha Airlines will be at the point of 14k but it has reached 18k point.
As for the data reports we can see decrease to the 7 years ago level in the numbers of Philly fed survey. The only growth (by 0.1 percent) was reported according to leading indicators. Therefore the question arises – what is the reason of the USD growth? The answer is – the risk appetite. The level of the Dow Jones index is quite positive at the moment. And it seemed that any further moves will be good after the yesterday’s Dow hike. However the situation hasn’t improved. So, we suppose all traders should be quite careful when believing in USD growth.

Market psychology

2009-06-09T05:09:00.000-07:00

The market psychology and the way the trader perceives the events may have following impact on the forex market:

Flights to quality: some groundbreaking events at the international area can cause a “flight to quality” which is a situation when investors sell the more risky investments and buy those more safe that are also called a “safe heaven”. So those currencies considered to be stronger will be more demanded and therefore get higher price for themselves.

Long-term trends: usually currency markets follow long-term trends of their development. And despite the fact there is no seasonality among the currencies some trends can be seen from the business cycles. These cycles are considered to provide long-term price trends that can be caused by economic and political directions.

“Buy the rumor, sell the fact”: this statement is not something surprising when considering financial markets. The price of the currency usually reflects the possible affect of this or that event before it has happened, so the matter is that you should do quite opposite actions as soon as this event has already occurred. This statement also concerns the situations when the market being oversold or overbought. Moreover the statement also applies to the anchoring – the situation when investors concentrate only on the reference of the outside events to the price of the currency.

Economic numbers: the economic indicators can show the condition of the economic policy, and some reports may have strange effect – the importance of this or that report grows to market psychology and thus the report may affect some close changes in the market instantly. Over the last years such indicators as money supply, employment, inflation, and trade balance have experienced such importance

Political conditions

2009-06-09T05:08:00.000-07:00

The political conditions of any scale (from regional to international ones) can have great impact on the currency markets. Let’s consider following example, the instability in the political sector may affect the economy of this country in a wrong way. The strengthening of the political faction that is usually considered to respond financially may cause quite different consequences. And the events occurred in the one country may easily affect the neighboring country and contribute to some changes of its currency.

Factors affecting currency trading

2009-06-09T05:07:00.000-07:00

What can impact the currency trading?

There are many factors that can contribute to the forming of the exchange rates however such of them as supply and demand are the major ones. The changes in supply and demand data also cause the corresponding changes in the price of one currency against another one. The Forex market provides the most comprehensive information about the current situation in the world.

Usually a complex of several elements can impact the supply, demand for currency as well as its value. We can divide them into three categories: economic factors, political conditions and market psychology.

Economic factors

Economic factors imply the economic policy pursued economic conditions that can be estimated on the basis of economic reports and surveys as well as other important indicators.

Economic policy includes the fiscal policy of the government (budget and spending) and monetary police (i.e. those methods the Central bank of the country uses to affect the supply and the “cost” of the currency. The interest rate level shows the “cost” of the currency.)

As for economic conditions, this division comprises following components:

Government budget deficits or surpluses: the broadening of the government budget deficits as well as it’s narrowing commonly causes negative reaction of the market. And the effect shows itself in the value of the currency of the country given.

Balance of trade levels and trends: the trade flow between countries reflects the demand for the services and goods. And this demand reflects the demand for the currency of the country needed to participate in trading process. The level of the country’s economy competition is shown in the surpluses and deficits of trade of goods and services. For instance, trade deficits may cause negative consequences for the currency of the country.

Inflation levels and trends: usually the high or growing inflation leads to the lost of the value by the nation’s currency. This happens due to the fact that inflation destroys the purchasing power and the demand for this or that currency consequently. But growing inflation may also lead to the strengthening of the currency due to forecasts about possible growth of the short-term interest rates by the national Central bank with an aim to restrain the inflation.

Economic growth and health: the economic growth and the health of the country is reflected by the data provided in such reports and survey like GDP, the level of employment, retail sales, capacity utilization and etc. Commonly the healthy economy of the country is accompanied by the better currency and the demand for it.

Market size and liquidity

2009-06-09T05:05:00.000-07:00

The Forex has several features making it a unique one. For instance, the volume of trades and market liquidity, a great number of the market participants and traders from all over the world, 24 trading hours a day, a great number of factors that can contribute to the exchange rate setting, low net margins (but not the profits) in comparison with other markets.

Therefore it is almost the real market of perfect competition even considering the fact of possible affect by the Central banks. In average daily trades amount at the forex market reaches the point of $3.21 trillion and consists of:

$1,005 billion related to spot transactions
$362 billion for outright forwards
$1,714 billion related to forex swaps
$129 billion estimated gaps in reporting

Moreover about $2.1 trillion is traded in derivative securities.

Forex futures appeared in 1972 at the Chicago Mercantile Exchange, since then they are traded more actively then the other futures. The amount of the part taken by the futures at the forex market estimated in 7% of the total Forex market volume.

The daily turnover of the traditional Forex transactions in the whole world reached the point of $2.7 trillion (as for the April 2006). It is estimated after the analysis of the data provided by the semi-annual London, New York, Tokyo and Singapore Forex Committee data. In case we will include the volume of the non-traditional forex derivative securities and products that are traded on exchanges the total number will grow to $2.9 trillion daily. This exceeds the all equity markets turnover in 10 times. The volume of the Forex trades grew by 38% in the period of time between April 2005 and April 2006. One of the main reasons is that the Forex become more influential as an asset class and the fund management assets (like hedge and pension funds) increased. Another reason that contributed to the Forex popularity growth is the great range of execution venues (like online trading platforms, etc).

There is not any central exchange at the forex as the market participants deals directly with each other. However the largest forex trading center is in London. According to IFSL data the share of London in the traditional transactions turnover for the whole world is 32.4% (April 2006).

There are 10 big international banks that possess about 73% of all trading volume. They are the source of the bid and ask prices for the market. The bid/ask spread term means the difference between the seller and buyer prices. Those currency pairs traded most actively has quite low bid/ask spread (commonly at the point of 0-3 pips). Let’s consider the following case: the possible bid/ask quote of EUR/USD is 1.2200/1.2203 on a retail broker. The common lot or the minimal amount of the currency units is 100,000.

However the situation for banks clients differs a bit. The bid/ask spread is usually increased to 1.2100/1.2300 (transfers) and 1.2000/1.2400 (banknotes) for them. The prices can differ but as we have already said the most actively traded currency pairs’ spread like EUR/USD one is estimated at 3 pips. Sometimes the spread can be at the point of 1-2 pips for main currencies because of the competition for big deals.

May 1st morning Forex Overview

2009-06-09T05:04:00.001-07:00

May 1st morning Forex Overview

Both dollar and euro rose versus the yen on Friday morning in Asia, as the fear of spreading of swine flu started to vanish. But events, that are about to happen in both Europe and the States will hit the Forex market with declining rates for both currencies.

American currency was pressured in early European trades due to end of month dynamics for fixing. Euro was rising in the first half of the day, reaching the level of 1.3385 against the dollar, and then decreasing back to the level of 1.3200.

Pound of sterling increased to its two-week high against the American dollar, as risk-sensitive currencies became more popular among traders due to positive outlook on the future of global economy.

The Yen was weakening significantly due to some concerns about further economic decline in Asia. The Australian dollar went up on Friday, as traders are waiting for coming out of information from the Australian Reserve Bank regarding its further policy.

Although euro is now higher than other currencies, it is likely to decrease next week after the announcement of policy settings of the Central Bank of Europe. The American banks’ stress tests are also considered to give weakening result to the American currency, if the banks will require more capital.

Investopedia explains USD (United States Dollar)

2009-06-09T04:54:00.000-07:00

Investopedia explains USD (United States Dollar)
The United States dollar was originally created through the Coinage Act of 1792, which specified that a dollar of currency would be equal to between 371 and 416 grains of silver, and an "eagle" (US$10) at between 247 and 270 grains of gold. Gold coins with equivalent weights were used, and based on this system, the value of the dollar (in purchasing power), would be equivalent to the purchasing power of the gold or silver on which it was based.

In 1933, gold coins were taken back, and the gold standard was changed, setting the price of a troy ounce to $35. This gold standard continued until 1968, when a series of pegs to gold were put in place until 1975. In January of 1975, the U.S. dollar was removed from the gold standard, and was allowed to float freely on the international currency markets.

USD (United States Dollar)

2009-06-09T04:52:00.002-07:00

What Does USD (United States Dollar) Mean?
The currency abbreviation for the United States dollar (USD), the currency for the United States of America. The United States dollar, or U.S. dollar, is made up of 100 cents and is presented with the symbol $ or US$ to differentiate it from other dollar-based currencies. The U.S. dollar is considered a benchmark currency, and is the currency used the most in transactions across the world. The currency is actually used as an official currency in many countries outside of the U.S., while many others use it alongside their own as an unofficial currency.

A Tax on Forex Trading?

2009-06-09T04:52:00.001-07:00

On June 1, the Forex Blog reported that Brazil is considering a forex tax on capital inflows as a way of discourage the inflow of speculative capital that is causing the Real to appreciate. It turns out that Brazil is not alone; England and France, among others, are also mulling taxes on forex transactions. Their goal is not necessarily to discourage capital inflows, but rather to raise money to fund projects that would otherwise not be viable under current budgetary conditions. The UK “levy would raise $30bn-$50bn a year - enough to double spending on health in low-income countries.” The French plan, meanwhile, would “involve taking 0.005% of the proceeds of currency transactions, perhaps on a voluntary basis, to benefit global aid projects.”

While Brazil and England/France appear to be pursuing different ends, together their plans capture the idea behind the “Tobin Tax.” Originally proposed by Nobel Laureate James Tobin after President Nixon declared the end of the gold standard, the tax would be levied on all forex transactions with the proceeds deposited in forex stability funds. One of the most popular versions would only impose the tax during periods of volatility (i.e. speculation) so as not to punish those exchanging currency for “mundane” reasons.

While still a fringe idea, the tax initially gained momentum following the 1997 Southeast Asian economic crisis, and has found new followers in the wake of the ongoing credit crisis. Consider the unprecedented volatility in currency markets of late, manifested in wild daily fluctuations.

Even the US Dollar, the world’s reserve currency, has been on a veritable roller coaster of late, rising and falling by 10% in a matter of months. Prior to the rise of forex speculation (already a $1 Quadrillion/year market!), it was rare for a currency to move that much in a year. Given that such speculation probably accounts for 90% of daily turnover, it seems obvious as to who is causing this volatility.

Don’t get me wrong; there’s a role for speculation in the forex markets, just like there’s a role for speculation in all securities markets. When markets function efficiently and players act rationally, currences should and will reflect economic fundamentals and act to minimize global imbalances. Due to the rise of the carry trade and the herd mentality, however, the oppose often obtains in practice. This can cause currency runs and or artificially inflated currencies that compel Central Banks to act counter to the way they otherwise would (i.e. by raising interest rates rapidly to deter capital flight, crimping economic growth.)

A Tobin tax would work both to minimize speculation in the short-term (by taxing trades) and promote stability in the long-term (by providing Central Banks with funds that they can use to fight speculative “attacks.” Besides, given that forex traders already enjoy favorable tax treatment - i.e. taxed below the short-term speculative rate - it wouldn’t be the end of forex trading as we know it.

Chinese Yuan Inches Towards Reserve Currency Status

2009-06-09T04:44:00.000-07:00

The last week brought a few more developments in China’s quest to turn the Yuan into a viable reserve currency. Don’t get me wrong - I used the term “inches” in the title of this post for a reason - the Yuan will not supplant the Dollar anytime soon, if ever. Still, China deserves credit for their resolve on forcing the issue, as well as for providing an alternative to the Dollar monopoly.

An important boost came from Russia’s Finance Minster, who suggested that, “This could take 10 years but after that the yuan would be in demand and it is the shortest route to the creation of a new world reserve currency,” as long as it was accompanied by economic and exchange rate liberalization. The Head of the World Bank, Robert Zoellick, agreed: “Ultimately, that’s a good thing. And ultimately it’s good if you’ve got, I think, some multipolarity of reserve currencies to create, to make sure that people manage them well.”

These soft endorsements were precipitated by comments from a top Chinese banker that companies should start to issue bonds denominated in Yuan. “Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), also said he is exploring the possibility of issuing loans to trading companies in yuan, allowing Chinese and foreign companies to settle their bills in yuan rather than in dollars.” This would serve two ends simultaneously; not only would Chinese capital markets be strengthened, but the Chinese Yuan would benefit from the increased exposure. Already, “HSBC and Standard Chartered have both said they are preparing to issue bonds denominated in yuan” and international monetary institutions might not be far behind.

Conspiracies aside, the Chinese Yuan will become a reserve currency when it is ready to become a reserve currency. I’m sure this seems self-evident, but it’s important for China (and China watchers) not to get ahead of itself. It doesn’t make sense for risk-averse investors to hold a currency that is still essentially pegged to the US Dollar and that isn’t fully convertible. If there’s no pretense that the Yuan fluctuates in accordance with market forces, and if investors aren’t guaranteed the ability to withdraw RMB if need be, what possible reason would they have to hold it in the first place?

Summarizes one columnist, “China would have to gradually make the yuan convertible on the capital account; it needed a more liquid foreign exchange market; its bond markets and banking system needed to be more developed; and there had to be proper monitoring of cross-border capital flows.” The importance of having functioning capital markets cannot be understated. Simply, investors and Central Banks buying Yuan would not want to simply invest in paper currency; instead they would want stocks and bonds that trade transparently.

Currently, foreign investors are limited to savings accounts and investing/lending to firms that record earnings opaquely and are ultimately subject to the whims of the Central government. This system has functioned well in the past, only because investors were betting generally on the Yuan’s appreciation, and not necessarily on specific opportunities within China. If China wants the Yuan to be a serious contender with the Dollar, it needs to give investors more and better options. Ironically, if China had taken these steps in the past, it wouldn’t have found itself with $2 Trillion worth of Dollar assets that it is desperately trying to dispose of.