Scams to be wary of

A FOREX scam is one that involves trading but will turn out to be a fraud; you have no chance of getting your money back once you have invested it. If you were to invest money with a company stating they are involved in FOREX trading you want read closely to learn if they are permitted to do business in your country. Many companies are not permitted in the FOREX market, as they have defrauded investors before. In the last five years, with the help of the Internet, FOREX trading and the awareness of FOREX trading has become all the rage. Banks are the number one source for FOREX trading to take place, where a trained and licensed broker is going to complete transactions and requirements you set forth. Commissions are paid on the transaction and this is the usual. Another type of scam that is prevalent in the FOREX markets is software that will aid you in making trades, in learning about the foreign markets and in practicing so you can prepare yourself for following and making trades. You want to be able to rely on a program or software that is really going to make a difference. Consult with your financial broker or your bank to learn more about FOREX trading, the FX markets and how you can avoid being the victim while investing in these markets

WisdomTree Unveils New Multi-Currency ETF

The latest addition the Wisdom Tree family of currency ETFs officially debuted, and in its first two days of trading, the Emerging Currency Fund (CEW) returned an impressive 2.2%. It’s not worth annualizing this figure, but suffice it to say that its performance is already turning heads.

According to the prospectus, CEW “is an actively managed exchange-traded fund that seeks to provide the investor with a liquid, broad-based exposure to money market rates and currency movements within emerging market countries.” Investors will gain exposure both to the currencies themselves and to their respective short-term interest rates, via “short-term U.S. money market securities and forward currency contracts and swaps of the constituent currencies…designed to create a position economically similar to a money market security denominated in each of the selected currencies.”

Chosen from three regions (Latin America, Africa/Europe/Middle East, and Asia), the inaugural 11 currencies are as follows: Brazilian real, Chinese yuan, Chilean peso, Indian rupee, Israeli shekel, Mexican peso, Polish zloty, South African rand, South Korean won, Taiwanese dollar and Turkish new lira. According to WisdomTree, these currencies were selected not necessarily for economic reasons, but rather because of their relatively high liquidity and low correlation with each other. In addition, “The selected currencies are equally weighted in terms of dollar value at each currency assessment date and after each quarterly re-balancing,” to reflect fluctuations in exchange rates. Naturally, WisdomTree reserves the right to rejigger the portfolio in terms of constituent makeup, but this would probably only be effected to improve overall liquidity, rather to replace an under-performing currency.

The advantage of CEW lies in its automatic diversification, such that investors gain access to a variety of currencies but only have to transact in the fund itself. WisdomTree also points out that, “Emerging market currencies often move independently of domestic stock, bond and money market investments…[and] exhibit low correlations to other alternative asset classes, such as commodities and gold.” The chart below [courtesy of CEW promotional materials] makes this point indirectly, and it probably comes as a surprise that US stocks are collectively more volatile than individual emerging market currencies. “Incorporating a 10% allocation of emerging currency into balanced port folio mixes of the domestic stocks and domestic bonds over the last ten years…raised annual returns by an average of 0.66%, while lowering overall portfolio volatility” in a hypothetical exercise.

“In terms of taxation, WisdomTree says normal capital gains rules will apply to the sales of fund shares. However, income from the portion of the fund invested in U.S. money market securities usually will be taxed as ordinary income, while the tax treatment of the local currency forward contracts could vary with the situation.” The fund’s expense ratio, meanwhile, is .55%.

If the preceding paragraphs read like a sales pitch, I apologize, as that was not my intention. At the same time, I’m personally quite positive about CEW (as well as ETFS in general, for that matter), since it provides quick and easy exposure to a bunch of quality currencies, eliminating the need to buy them separately. Not to mention that this fund is debuting right when both the carry trade and emerging markets (and their currencies) are coming back in vogue.

I’m not sure if the timing was deliberate, but it could certainly have been worse. It’s tough to say whether the market rally of the last two months is sustainable, but if the decline in risk aversion that ignited the rally continues to obtain, it will be good for CEW.

What is Rate of Change (ROC) and How To Compute It?

Forex article

Rate of Change or ROC is a technical indicator that measures the changes between the percentage compared to the most recent price and the price "n" periods in the past. It is also said that it monitors the momentum of the market. It estimates the market’s rate of change comparative to the previous trading intervals. In the highest level, the indicator might say a market is quite overbought. Valleys or troughs also points out an oversold market situation.

It can also stand alone as an essential indicator used by many technicians interested in market momentum. It has a horizontal median called equilibrium. It is this median that tells us everything we need to know about this type of rate. A few technicians in the market often use a very simple approach for the Rate of Change learning. It is concern with buy and sells signals based upon the zero line or the midpoint. This presumes oversold or overbought market conditions which pave the way of crossover. You may sell when the rate of change line go across from above to below on the other hand you may buy when the indicator intersect from below to above.

It trades with price changing amount during the exact time and match to it as an oscillator that shows the cyclical movement. It goes up along with the prices up-trending and it decreases when the prices go down. If prices go high, changes gives the according significant rate changing.

Mostly, it is best to use this indicator as an antecedent to change in market direction. One good thing to do is to establish extreme zones for the study, much like the Relative Strength Index or Stochastic. However, a good technical analyst must know how to tolerate the study in extreme bull and bear markets. It can generate many sham signals under those market conditions. In addition, the indicator is parallel to an oscillator when it comes to the market accelerating or decelerating.

To compute it, here’s a good example:

Period (10) - the number of bars, or interval, used to calculate the study using the value you specify, it may be computed as the change from the current price relative to the price from the number of specified intervals prior to the current price.

The general formula is as follows:

ROCt = (Pricet / Pricen) * 10000

ROCt is the rate value for the current period. Pricet is the current price. Pricen is the price you specify for the nth interval (open, high, low, close, midpoint or average).

Take the example below which use current price of 7485 and a 7440 price n intervals ago:

ROC = (7485 / 7440) * 10000 = 1.006 * 10000 = 10006

There is a tendency to loss in futures trading. Past results on the other hand are not analytical of future results.

It may also be calculated by using the following formula:

(Closing Price Today - Closing Price "n" Periods Ago) / Closing Price "n" Periods Ago.

Guide to the Best Forex Resources

Forex market is the biggest financial market in the world. Moreover, currency trading is one of the fastest growing forms of investing.

Here’s how to find information and resources to deepen your knowledge about the fast and exciting world of foreign exchange and how to use it for trading purposes.

Internet has changed the way people view forex markets. No longer are the best currency analyst reports unavailable to the public, live real-time data too expensive for common investors, or capital requirements too high.

In fact, many companies have introduced mini forex accounts, with starting capital requirements for selected accounts in some brokerages under $1000. These smaller accounts have made currency trading available to everyone, increasing the need to be educated on forex and currency trading.

Ways to Learn About Forex Markets

There are many ways you can learn about forex markets. If you’re a business student, many universities have classes in foreign exchange operations and macroeconomic mechanisms that affect currency fluctuations.

Outside of the formal education field, you can learn about forex and currency trading from traders, salespeople, and analysts. Moreover, you can learn foreign exchange operations from educators through specifically arranged seminars, courses, and mentoring.

And don’t leave out forex magazines and books for background information and latest news to keep you ahead of the curve.

Forex Trading Systems and Solutions

Once you’ve covered the basics of foreign exchange operations, you might also want to know the ways currency trading is done, through brokerages, forex trading systems, and with different currency trading systems.

The tools and services you’ll need for you own forex trading or operations will depend on your particular approach to forex.

In fact, many corporations do not want to take any risks with forex fluctuations and will hedge their positions. Others, traders and speculators, seek to profit from the fluctuation with their systems and views.

From this site, you’ll find information on resources that will help you understand better the complex world of investments for forex markets and currency trading.

The Value of Trade Balance to Local Economy

The balance of trade also referred as trade balance, which sometimes is symbolized as NX, is the difference of the monetary value of imports and exports in one economy in a given period of time. The balance of trade is considered the biggest part of a country’s balance of payments.

Imports, domestic spending, foreign aid, and investment abroad are called debit items while credit items includes exports, foreign investments in domestic economy and foreign spending in domestic economy.

A trade surplus is a positive balance of trade which is consists of more exporting than importing. A trade deficit is the negative balance of trade or sometimes called a trade gap. The trade balance can sometimes be divided as services balance and goods balance just like in the United Kingdom which they use the terms invisible and visible balance.

The balance of trade is a part of current account which includes transactions that includes income derived from international investment and international aid. Thus, if the current account comes as a surplus then the nation’s international net asset increases also while deficit will decrease the international net asset.

A good trade surplus is achieved when a country exports products more than buying imported goods. A trade deficit is eventually experience as a result of the opposite of a trade surplus. The trade balance is alike to the difference of a country's output and the domestic demand. These factors may affect the trade balance: prices of goods manufactured, taxes and tariffs, trade agreements, business cycle (home or abroad), and exchange rates.

The trade balance is different in many business cycles. For instance, export growth like oil and industrial goods which improves when there is economic expansion.

In developed countries like; Japan, China and Germany usually run at trade surpluses in which they experience a higher savings rate. Around the world there are different natural resources which a country may have for instance, countries from the coastal regions are major producers of fish, Canada can be a major producer of lumber because of its huge forests while in the Middle East, has the most oil reserves.

International trade is important so in order to sustain the balance of trade. A country should be totally self sufficient without international trade. Through international trades, each country will have the opportunity to produce specialize goods efficiently. In relation, when a nation specializes in producing these goods, the total production increases instead of trying to be self sufficient. Nations will benefit from international trades and also meets their needs. Generally, nations will trade to other nations when they gain from the trade. But the gains are not usually equal in terms of benefits and profit

Forex trading article

How Interest Rates Play a Role in the Currency Markets

Interest rates play the foremost important role in moving the prices of currencies in the Forex market. As the institutions that set interest rates, central banks are therefore the most influential factors. Interest rates dictate flows of investment. Since the currencies are representations of a country’s economy, differences in interest rates affect the relative worth of currencies in relation to one another. When central banks change interest rates they cause the Forex market to experience movement and volatility. In the realm of Forex trading, accurate speculation of central banks’ actions can enhance the trader's chances for a successful trade.

An increase in interest rates encourages traders to invest within that market and causes the demand for the currency to rise. As demand rises, the currency becomes scarcer and consequently more valuable. Investors are drawn to the currency, causing it to appreciate, because they will gain a higher yield on their investments, as in the Jane example. In order to purchase the country's assets (stocks or bonds), Jane will have to convert her domestic currency to the target country's currency also increasing demand. Conversely, a fall in interest rates discourage investors from purchasing assets in that particular economy, as the return on their investment is now smaller. The economy's currency will depreciate as a result of the weaker demand.

Forex Rebates

Forex rebates are a relatively new concept, but a great way for traders to maximize their Forex profits. There are a number of companies in the market today who cater expressly to provide rebates to individual traders. The explosion in the currency market over the past 5 years has been incredible. No longer is the currency market the preserve of the rich and well connected investor. Today, anyone with an internet connection and a laptop can partake in this activity.

Today there are literally hundreds of forex brokers offering their services to the investment community. One way they can promote their services is to recruit a number of agents, or introducing brokers, to help them sign up new clients. In return, these introducing brokers are paid a fee by the forex broker for each new client that signs up through the introducer. This fee will depend on how much trading the client does with the broker, in terms of how much volume of notional currency is traded.

Forex is trading lots. Each lot is a notional sum of $100,000. Typically, the introducer is paid a commission of around $10 for each lot which is traded by the new client. In an attempt to persuade traders to join the broker they are promoting, what some companies and organizations are now doing is to offer a rebate of part of this commission. This is usually around half - so that the trader will receive around $5 for each lot he or she trades. Over a period of weeks or month, this soon adds up to a substantial sum if the trader is trading regularly.

Rate of change (ROC)

The margin between the present price and the one that existed n-time periods ago is indicated by the oscillator called theRate of Change. ROC increases when the prices trend up whether it declines when they trend down. The scale of the prices changes calls the corresponding ROC change.

Overbought or oversold at the short- and long-term periods are perfectly shown by the 10-day ROC. The more security is supposed the higher the ROC is though the ROC decline shows the approaching rally. This indicator should be monitored during the trade in order to find out the start of the market changes. The current trend may go on in case the overbought or oversold indicators take dramatic values and the overbought market may keep its trend for a while as well.

The ROC (Rate of Change) Indicator is a difference between the price of the current period and the price of the previous period, which is located n periods back from the current one:

ROC = P_i - P_i-n,

P_i - the price of the current period,

P_i-n - the price of the period, which is located n periods back from the current one.

As usual, they use the relative (in percentage) value of the velocity of the ROC:

ROC% = 100% * (P_i - P_i-n) / P_i-n

A 10-day ROC tends to oscillate in a fairly regular cycle. Often, price changes can be anticipated by studying past cycles of the ROC and applying the predicted pattern to the current market.

To construct a 10 day rate of change oscillator, the latest closing price is divided by the close 10 days ago:

ROC = [ (Close-Close 10 periods ago) / (Close 10 periods ago) ] * 100

Taking into consideration the fact whether the As Percent parameter is chosen the Rate of Change can be equal either to the Change in Value function or to the Percent Change in Value function. Despite these variations, the function gives the information of the data volume changes that have happened during the certain period. The easier graphing of the Percent Rate of Change value is reached by its multiplying by 100.

The margin between the present price and the one that existed n-time periods ago is indicated by the Price Rate-of-Change. It's values can be represented in points as well as in percents. The same data, though incarnated as a ratio, is shown by the Momentum indicator.

The sinusoidal motion of the security prices first rising and then declining is a common fact. The bulls' and bears' resistance causes the expectations changes that are the reason for the wave-like pricing.

The ROC measures changes in prices amount during the certain time and represents it as an oscillator showing the cyclical movement. The ROC increases along with the prices uptrending and it decreases when the prices go down. High prices changing gives the according significant ROC changing.

Various periods of time are applied for the ROC calculation. They are from the daily volatile chart that is taken of 1 day to the long period lasting up to 200 days and even more. 12-day ROC as well as a 25-day one are the widest spread for trading at short and medium periods. Gerald Appel along with Fred Hitschler have offered these periods in their book, Stock Market Trading Systems.

Short- and medium-term oversold or overbought are perfectly shown by the 12-day ROC. The security is supposed to be highly overbought if the ROC is high, whether a rally is expected in case the ROC is low. Though waiting until the market turning up or down is not always the best way out as far as an overbought market keeps its trend for a while. Moreover, high overbought or oversold figures mostly show the present trend to keep its positions.

The back and forth cycles are quite common for the 12-day ROC. That's why the prices can be forecasted by analyzing recent cycle movements.

Forex Markets Worldwide

Forex is a buying and selling system also referred to as FX or foreign market exchange. Those concerned in the foreign exchange markets are some of the largest businesses and financial institutions from around the world. They deal in multiple currencies from many nations to produce a balance as some are going to gain money and those who fall down. The basics of forex are similar to the form of dealing found in any country, only much bigger and complex. Forex buying and selling involves individuals, currencies and trades from around the world, between every last country.
Different currency rates happen and change every day so the measure of the dollar on one particular day of trading might be different on the next trading day. Forex trading can be hard to keep track of so you must dedicate yourself to keep an eye out on your funds, especially if you have invested a great amount of them, there is a chance you could lose it all. Primarily, trading in the forex exchange occurs in Tokyo in New Your and in London as well as several other spots around the globe.

Euro Continues Rally on Eurozone Members Growth

The euro gained versus the dollar and other several currencies today as countries like Germany and France indicated a unexpected growth for the previous quarter, surprising traders and analysts, raising the positive sentiment towards the Eurozone currency.

A perfect scenario for a bullish pattern in the euro-dollar chart was set today as the German and French economies grew in the second quarter, as the Federal Reserve affirmed yesterday that interest rates in the United States shall remain low for an extended period of time, forcing the dollar down versus most of the 16 main traded currencies. Today, speculations indicate that a report is likely to show an economic rebound for all the current Eurozone country members, which is also favoring the outlook for the euro, which has been bearish since last week when it reached the highest level in months.

The euro is likely to remain high during the day if the report confirms the Eurozone diminishing contraction. Risk has returned to markets, and signs coming from main economies in Europe like Germany and France helped the euro to pare half of last risk aversion wave losses in the beginning of the week, but it is hard to determine until what level it may climb, since markets remain highly volatile.

EUR/USD traded at 1.4262 as of 9:47 GMT from a previous rate of 1.4155 yesterday. EUR/JPY traded at 137.35 from 135.23 yesterday.

If you want to comment on the Euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

Crude Oil Reverts Canadian Dollar Falling Trend

After losing for five consecutive days, the Canadian currency rebounded versus its U.S. counterpart as stocks in Toronto climbed and the crude oil rebounded followed by most of the main traded commodities.

The Canadian dollar, which reached a 10-month high versus the greenback during the past week, returned to more reasonable rates as pessimism came back to equities markets following the end of the past week. Today, the Canadian trade deficit diminished more than forecasts, helping to loonie to climb with favorable crude oil prices and stock markets movements.

USD/CAD traded at 1.0877 as of 17:32 GMT from a previous rate of 1.1075 just a few hours earlier.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

GLobal stocks, euro up on German, French growth surprise

PARIS (Reuters) - World stocks, commodities and the euro rose on Thursday as Germany and France surprised investors by reporting a return to GDP growth, while the dollar dipped after the Federal Reserve's less gloomy outlook for the U.S. economy.

Overall the euro zone remained just in recession in the second quarter, data showed on Thursday, although the 0.1 percent drop in GDP was much smaller than originally expected.

Germany and France provided the big shock by ending their recessions in April-June, earlier than many policymakers and economists had expected.

Gross domestic product in the euro zone's two biggest economies rose unexpectedly by 0.3 percent in the quarter, boosting hopes of a lasting recovery and sending the euro rising against the dollar and yen.

"(The GDP figures are) better than expected and that supports the euro a little bit," said Antje Praefcke, currency strategist at Commerzbank in Franfurt. "But overall, it's still the effect of post-Fed trading with stocks being a little more on the positive side."

The euro climbed 0.4 percent to $1.4262 and was up 0.9 percent against the yen at 137.60.

The dollar drifted lower as investors switched to riskier assets such as commodities after the Fed on Wednesday gave its clearest statement to date that it saw the U.S. recession nearing an end. It was down a quarter percent against a basket of major currencies .DXY.

The Fed said the U.S. economy was showing signs of leveling out two years after the onset of the deepest financial crisis in decades and it moved to phase out one emergency measure.

It is the first time since August 2008 that the Fed's statement has not characterized the economy as contracting, weakening, or slowing. But it cautioned that the economy remains fragile as employers continue to cut jobs and businesses trim investment.

World stocks as measured by MSCI were up 0.8 percent on Thursday.

The FTSEurofirst 300 .FTEU3 index of top European shares was up 1 percent at 951.34 points, led by banking shares such as UBS (UBSN.VX) and Deutsche Bank (DBKGn.DE), while mining shares such as Rio Tinto (RIO.L) and Anglo American (AAL.L) rallied along with metal prices.

Japan's Nikkei share average .N225 rose 0.8 percent, driven higher by big auto exporters and tech shares.

COMMODITIES ON THE RISE

The more positive Fed comments on the economy had pushed key U.S. stock indexes up more than 1 percent overnight, though shares lost steam near the end of the session. .N

At 5:17 a.m. EDT on Thursday, futures for the S&P 500 were up 0.9 percent, Dow Jones futures were also up 0.9 percent and Nasdaq 100 futures were up 0.8 percent.

Oil rises on positive economic news

LONDON (Reuters) - Oil rose back above $71 a barrel on Thursday after positive economic news from the United States and Europe's two largest economies, despite data showing U.S. crude inventories rose much more than expected last week.

U.S. light crude for September delivery rose $1.61 cents to $71.77 a barrel by 1111 GMT, having ended a four-day falling streak on Wednesday.

London Brent crude gained $1.27 to $74.16.

Gross domestic product (GDP) in France and Germany, the euro zone's two biggest economies, rose by 0.3 percent each in the second quarter against expectations for a decline of 0.3 percent.

The unexpectedly bullish news added to sentiment that the worst of the deepest financial crisis in decades was over, particularly after the U.S. Federal Reserve made its clearest statement yet that it sees the recession nearing an end.

This in turn pressured the dollar, as investors moved to riskier assets, including commodities, after the Fed on Wednesday held its benchmark rate near zero and said it would likely keep it there for an extended period to guide the way to recovery.

"There's this global good feeling at the moment. It's reverberating through everything, commodity markets equally as well," said CMC Markets analyst James Hughes in London.

"Retail sales numbers could derail the markets later this afternoon, but that's not likely because the economy doesn't turn around on good feeling."

A Reuters survey of 74 economists this week said a jump in new car sales fueled by the "cash-for-clunkers" trade-in program likely powered U.S. retail sales to a third straight monthly gain in July.

INVENTORY DATA

U.S. crude inventories rose much more than expected last week on higher imports and lower demand from domestic refiners, U.S. Energy Information data showed on Wednesday.

But forecasts that an oil demand recovery is at hand led traders to shrug off the bearish weekly data from the world's biggest consumer of energy.

Analysts at Barclays Capital forecast a bullish upswing in global oil demand, seven times larger than the forecast from the International Energy Agency, although they said there was continuing upside risk.

"In the U.S., a swing up in industrial output, consumer sales, final sales and a turn in the wholesale goods inventory argue for an impending sharp change in the underlying dynamic of U.S. oil demand," Barclays Capital said in its weekly oil data review.

Potentially tightening supplies and adding support, reports from the U.S. National Hurricane Center said the Atlantic could get its first named storm of the year as a tropical depression strengthens toward the U.S. Virgin Islands.

Stock futures point to higher Wall St open

(Reuters) - Stock index futures pointed to a higher start on Wall Street on Thursday ahead of Wal-Mart Stores Inc (WMT.N) results and U.S. July retail sales data.

By 4:12 a.m. EDT, futures for the S&P 500, the Dow Jones Industrial average and the Nasdaq Composite were up 0.6 percent.

Wal-Mart, the world's largest retailer, is due to report earnings per share of $0.85 in the second quarter, compared with $0.86 a year earlier, according to a Reuters survey of 22 analysts. Wal-Mart shares in Frankfurt (WMT.F) were down 0.2 percent.

U.S. retail sales for July is due at 8:30 a.m. EDT. Economist in a Reuters survey expect a 0.7 percent rise compared with a 0.6 percent rise in June, and excluding automobiles sales are seen up 0.1 percent compared with a 0.3 percent decline in the prior month.

The U.S. Labor Department will release weekly jobless claims at 8:30 a.m. EDT. Economists in a Reuters survey forecast a total of 545,000 new filings compared with 550,000 in the prior week.

U.S. unemployment levels are likely to stay higher for longer following the country's severe recession and ongoing banking crisis, according to a study by the Federal Reserve Bank of Kansas City released on Wednesday.

In Europe, Germany and France enjoyed a surprising return to economic growth in the second quarter of the year, ending their recessions earlier than many policymakers and economists had expected.

European shares rose 0.7 percent, with sentiment improving after the U.S. Federal Reserve said the U.S. economy was showing signs of leveling out and after growth data from Germany and France. .EU

The euro rose against the dollar and yen after the GDP data from Germany and France.

Hedge fund manager John Paulson, who made a fortune betting against financial companies after foreseeing the credit crisis, stocked up on shares of Bank of America (BAC.N) during the second quarter, a regulatory filing showed. Bank of America shares in Frankfurt (BAC.F) rose 4.8 percent.

Citigroup Inc (C.N) has been forced by U.S. regulators to hire external consultants who will consider whether the New York company's current management is capable of leading it out of financial crisis, the Financial Times reported on its website.

Other U.S. data to be released include import/export prices for July, due at 8:30 a.m. EDT, and business inventories for June, due at 1400 GMT.

Dr Pepper Snapple Group Inc, Kohls Corp, Nordstrom, Estee Lauder Co Inc and Autodesk Inc (ADSK.O) are also due to release their second quarter results on Thursday.

Anheuser-Busch InBev (ABI.BR) reported second-quarter profit above analyst forecasts, but said the second half of the year would be significantly weaker.

Large U.S. food companies, including Kraft Foods Inc (KFT.N), General Mills Inc (GIS.N) and Hershey Co (HSY.N), said the country could "virtually run out of sugar" unless the Obama administration eased import curbs, the Wall Street Journal said.

Monsanto Co (MON.N) said on Wednesday chief financial officer Terry Crews would retire after 32 years at what has grown to become the world's largest seed company, as it tackles new competitive threats.

What are PIPS?

Currencies are quoted using 5 significant digits. The last digit, called a "pip", represents the smallest potential move in an exchange rate, and is very similar to ticks or points in other financial products. In the example below, a 10 pip increase in the Ask price would result in a quote of 1.2287. Likewise, a 10 pip decrease in the Ask price would result in a quote of 1.2267. Half-pips are a more recent development offering traders even tighter spreads and more competitive and transparent accuracy in pricing. When trading foreign exchange, the value of a pip is dependent on two variables – the amount of currency and the currency pair.
USD Value of a Pip

Below, we have calculated the US Dollar value of a 1 pip movement for some of the more frequently traded currency pairs. Please note, all values are calculated using 100,000 units of the base currency (the left-hand currency in the pair).

Forex Order Types

Margin Order Types

The basic landscape in Forex trading involves a number of order types that facilitate efficient transactions. Below, we have defined several of the most common terms.

1. Limit
A limit order is commonly used to enter or exit markets at a specified price or better than the market price. In addition, a limit order allows the trader to manage the length of time that the order is current or outstanding before it is canceled.

2. Stop if Bid
A Stop if Bid order is used to buy or sell a currency is the Bid price breaches the specific level in the price field. Typically, Stop if Bid orders are used to buy a Forex position in order to make sure a certain level is broken.

3. Stop if Offer
A Stop if Offer order is used to buy or sell a currency is the Ask price breaches the specific level in the price field. Typically, Stop if Offer orders are used to sell a Forex position in order to make sure a certain level is broken.
Linking orders offers traders a logical aggregation of order types that outline contingencies in market participation, making it much easier to trade in moving markets.

4. One Cancels Other (OCO)
This most common linked order, OCO, stipulates that if one part of the order is executed, then the other part is automatically canceled. In Forex trading, OCO often refers to a buy order and sell order linked together so that when one of the orders is executed, the other is canceled. Consider the OCO as follows: the trader protects an existing position from loss (stop order) and ensures that profits are taken (limit order).

5. If Done (ID)
These contingent trade orders, also known as slave orders become active only if the primary order is executed first. An example would be a working order to buy EURUSD at 1.2500 and a contingent order to sell at 1.2400 Stop if Bid – if the first order is done.

6. Trailing Stop
A Trailing Stop Order is a stop order that has a trigger price that changes with the spot price. As the Forex online market rises (for long positions) the stop price rises according to the proportion set by the user, but if the market price falls, the stop price remains unchanged. This type of stop order helps an investor to set a limit on the maximum possible loss without limiting the possible gain on a position. It also reduces the need to constantly monitor the market prices of open positions.

7. Tom-Next
Spot Forex positions are traded with a standard Value Date of 2 business days – the theoretical delivery date for the currency exchange if we were going to take delivery of a currency. For example, positions opened on Monday would have a Value Date of Wednesday.

As we are speculating on Forex and not actually taking delivery (settlement), positions are never allowed to reach their Value Date and are 'Rolled Over' to a new Value Date instead. So if the position we opened on Monday is still open on Tuesday, it will be closed then reopened again immediately at almost the same market price with the new Value Date of Thursday.

8. Spot Trades

A spot Forex trade is an immediate execution of one currency against another at an agreed rate, settlement of which traditionally takes place two business days later. Finexo offers spot trading on streaming real-time prices for over 150 different currency crosses, with deep liquidity on the most liquid currency pairs.

In the Forex Trade module, if the Bid/Ask fields are highlighted green, then the platform is delivering a live-tradable price.

9. Forward Outright

A Forward Outright is a trade that will commence at an agreed upon date (in the future). There is no centralized exchange for Forwards and forward trading is often customized to meet the needs of the buyer and seller. Forward Outrights are expressed as a price above (premium) or below (discount) the spot rate. The forward Forex price is the sum of the spot price and the margin. This price is a reflection of the Forex rate at the forward date where if the trade were executed at that rate there would be no profit or loss.

Basic Forex Information

What is the Forex market?

The online trading environment for foreign exchange encompasses the largest, most dynamic capital market in the world with more than USD 3 trillion traded daily. The Forex market is a continuous, 24/5 marketplace open from Sunday afternoon (4 PM EDT) through the close of the US markets on Friday (5 PM EDT). The Forex market is where investors can trade one currency against another currency.

What is a currency cross?

Currencies are always priced in pairs. All trades take place between two different currencies resulting in the concurrent purchase of one currency and sale of another. For example, when you trade EURUSD, the currency cross is Euros versus US dollars. One currency will be bought (long position) while the other currency is sold (short position).

What is the Bid-Ask Spread?

The bid-ask spread is the buying and selling spread between two currencies. The bid price is the price at which the currency is sold. The ask price is the price at which the currency is bought. The difference between the bid price and the ask price is known as the bid-ask spread. The bid-ask spread differs between currency crosses with more common crosses (majors) having tighter spreads.

US Dollar on a Seesaw Ride

The US Dollar jumped higher against most currencies on Friday after a data release showed that the rate of job losses in the US slowed more than expected last month.

The data capped a week filled with very strong data that suggested the US economy will recover before other economies, and that will lead to higher interest rates and boost the value of Dollar related assets.

This Forex trading pattern was a turn for the Dollar which has been trading down on good news during this crisis. This appears to mark a return to simple fundamentals where trades are made based on economic growth and interest rate speculation.

At the close, the Dollar was up 1.3% to the Euro to 1.4181, up 1.5% to the Japanese Yen to 97.54 up .92% to the British Pound to 1.6681, up .34% to the Canadian Dollar to 1.0811, up .6% to the Australian Dollar to .0837 and up 1.2% to the Swiss Franc to 1.0808. The Dollar did lose .3% to the New Zealand Dollar to .672 - it's only loss of the day.

Rising oil prices have them Dancing Down Under

The Dollar has fallen to a year low against almost every major currency, given the problems that the US is facing, it is understandable - but the stock market gains are what is puzzling to me.

Forex Investors and traders are pumping up the markets because historically, when people have a sense of security they tend to abandon the the USD and the Yen and test their luck with stocks.

If the pundit, Nuriel Roubini is right though, the global economic challenge that we are facing is far from over. Only yesterday did the US revise 4th quarter 2008 and 1st quarter 2009 figures to show a decline twice than what was originally disclosed. Worse even, than at the worst time during the Great Depression.

The US Economy is still in freefall. The fact that Tim Geithner, the US Treasury Secretary, has now began telling news outlets that the biggest challenges lay ahead with the enormous deficit is a big warning sign of that.

Broker trading companies investing and trading in the markets have begun to recognize this as the Dollar has matched the economy. The market seems to have reversed from a psychological one to a fundamental one and this is good.

I still believe that the real money to be made lies with Australia and New Zealand. The risk is less because of the low value of their currency in comparison with the big four, Yen, Euro, Pound and US Dollar, and the yields can be higher.

The Aussie and Kiwi have been doing very well as of late, and the Australian honesty we saw last week has seemingly driven much confidence in the competence of the leadership there.

Oil is rising and with it other commodities that rely on the slippery black stuff to help extract it - the $71 per barrel that oil is now is very good for both down under dollars.
Keep an eye out this week for the unemployment numbers from the US and the British GDP figures. They will go a long way to showing us how to move in the coming days.

Forex Patterns & Probabilities

While most books on trading deal with general concepts and shy away from specifics, Forex Patterns and Probabilities provides you with real-world strategies and a rare sense of clarity about the specific mechanics of currency trading. Leading trading educator Ed Ponsi will explain the driving forces in the currency markets and will provide strategies to enter, exit, and manage successful trades. Dozens of chart examples and explanations will guide you each step of the way and allow the reader to "look over the shoulder" of a professional trader hard at work at his craft. This book provides traders with step-by-step methodologies that are based on real market tendencies. The strategies in this book are presented clearly and in detail, so that anyone who wishes to can learn how to trade like a professional. It is written in a style that is easy to understand, so that the reader can quickly learn and use the techniques provided. From the Inside Flap In recent years, traders have turned to the foreign exchange market expecting to capture substantial profits. While the high availability of leverage within this arena can improve your chances of making money, ultimately the success of your endeavors depends upon how well you understand and operate within this market. Nobody knows this better than author Ed Ponsi. As a professional trader and leading educator of traders, Ponsi has developed a proven approach to trading today's forex market, and now, with Forex Patterns and Probabilities, he wants to share it with you. While most books on trading deal with general concepts and shy away from specifics, Forex Patterns and Probabilities provides you with real-world strategies and a rare sense of clarity about the specific mechanics of currency trading that will allow you to take advantage of both trending and range-bound markets. Written in a straightforward and accessible style, Forex Patterns and Probabilities will help you make the most of your time in this market. You'll be introduced to a variety of elements that are essential to forex trading success and discover the best ways to enter, exit, and manage trades. Dozens of chart examples and explanations will guide you each step of the way and allow you to "look over the shoulder" of a professional trader hard at work at his craft. Divided into four comprehensive parts, this detailed guide: * Explains the playing field of the forex market, using powerful metaphors that relate trading scenarios to situations in everyday life * Outlines several specific trading strategies—including the FX-Ed Trend Technique—designed for trending markets * Delves into a variety of non-trending trading techniques—from the volatility-based Squeeze Play to the hedge fund–inspired Interest Rate Edge—which are all based on unique market tendencies * Offers an insider's view on how to emulate the behavioral patterns of successful professional traders—and how to escape the mindset of the amateur * And much more Today's forex market contains some of the most profitable trading opportunities in the world. With the practical strategies and trading methodologies found in Forex Patterns and Probabilities you can uncover these opportunities and achieve long-term financial success along the way.

Online Trading (Trading Currency and Stock Trading)

Forex Knowledge is what I say to explain all about Forex. This blog will give anything information about Forex such forex indikator, forex strategy, forex broker, forex tutorial, ebook forex, and all information about forex. So let's start increase your forex knowledge with this introduction.

What is FOREX? The Foreign Exchange market, also referred to as the "FOREX" or "Forex" or "Retail forex" or “FX” or "Spot FX" or just "Spot" is the largest financial market in the world, with a volume of over $2 trillion a day. If you compare that to the $25 billion a day volume that the New York Stock Exchange trades, you can easily see how enormous the Foreign Exchange really is. It actually eq9 P a g e uates to more than three times the total amount of the stocks and futures markets combined! Forex rocks! What is traded on the Foreign Exchange? The simple answer is money. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the Euro dollar and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY). Because you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy. In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to the other countries' economies. Unlike other financial markets like the New York Stock Exchange, the Forex spot market has neither a physical location nor a central exchange. The Forex market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period. Until the late 1990’s, only the “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start with! Forex was originally intended to be used by bankers and large institutions - and not by us “little guys”. However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to 'retail' traders like us. All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site.

What is a Spot Market? A spot market is any market that deals in the current price of a financial instrument. Which Currencies Are Traded? The most popular currencies along with their symbols are shown below: Symbol Country Currency Nickname USD United States Dollar Buck EUR Euro members Euro Fiber JPY Japan Yen Yen GBP Great Britain Pound Cable CHF Switzerland Franc Swissy CAD Canada Dollar Loonie AUD Australia Dollar Aussie NZD New Zealand Dollar Kiwi Forex currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency. When Can Currencies Be Traded? The spot FX market is unique within the world markets. It’s like a Super Wal-Mart where the market is open 24-hours a day. At any time, somewhere around the world a financial center is open for business, and banks and other institutions exchange currencies every hour of the day and night with generally only minor gaps on the weekend. The foreign exchange markets follow the sun around the world, so you can trade late at night (if you’re a vampire) or in the morning (if you’re an early bird). Keep in mind though, the early bird doesn’t necessarily get the worm in this market - you might get the worm but a bigger, nastier bird of prey can sneak up and eat you too… Time Zone New York GMT Tokyo Open 7:00 pm 0:00 Tokyo Close 4:00 am 9:00 London Open 3:00 am 8:00 London Close 12:00 pm 17:00 New York Open 8:00 am 13:00 New York Close 5:00 pm 22:00 source: school of pipsology

What to look for in an online Forex broker/dealer

What to look for in an online Forex broker/dealer:
1. Low Spreads.
In Forex trading the ‘spread’ is the difference between the buy and sell price of any given currency pair. Lower spreads save you money.
2. Low minimum account openings.
For those that are new to Forex trading and for those that don’t have millions of dollars in risk capital to trade, being able to open a micro trading account with only $250 (we recommend at least $1,000) is a great feature for new traders.
3. Instant automatic execution of your orders.
This is very important when choosing a Forex broker. Don’t settle with a firm that re-quotes you when you click on a price or a firm that allows for price ‘slippage’. This is very important when trading for small profits. You want what we call a WYSIWYG (pronounced wiz-ee-wig) broker! This means you want instant execution of your orders and the price you see and "click" is the price that you should get...WYSIWYG = What You See Is What You Get!
4. Free charting and technical analysis
Choose a broker that gives you access to the best charting and technical analysis available to active traders. Look for a broker that provides free professional charting services and allows traders to trade directly on the charts.
5. LeverageLeverage can either make you super rich or super broke. Most likely, it will be the latter. As an inexperienced trader, you don't want too much leverage. A good rule of thumb is to not use more than 100:1 leverage for Standard (100k) accounts and 200:1 for Mini (10k) accounts.

The Factor to choose Forex Broker

Before selecting an online Forex broker, you should closely examine their features and
policies. These include:
• Available Currency Pairs
You should confirm that the prospective broker offers, at minimum, the seven major currencies (AUD, CAD, CHF, EUR, GBP, JPY, and USD).
• Transaction Costs
Transaction costs are calculated in pips. The lower the number of pips required per trade by the broker, the greater the profit that the trader makes. Comparing pip spreads of half dozen brokers will reveal different transaction costs. For example, the bid/ask spread for EUR/USD is usually 3 pips, but if you can find 2 pips, that’s even better.
• Margin Requirement
The lower the margin requirement (meaning the higher the leverage), the greater the potential for higher profits and losses. Margin percentages vary from .25% and up. Low margin requirements are great when your trades are good, but not so great when you are wrong. Be realistic about margins and remember that they swing both ways.
• Minimum Trading Size Requirement
The size of one lot may differ from broker to broker, spanning 1,000, 10,000, and 100,000 units. A lot consisting of 100,000 units is called a “standard” lot. A lot consisting of 10,000 units is called a “mini” lot. A lot consisting of 1,000 units is called a “micro” lot. Some brokers even offer fractional unit sizes (called odd lots) which allow you create your own unit size.
• Rollover Charges
Rollover charges are determined by the difference between the interest rate of the country of the base currency and the interest rates of the other country. The greater the interest rate differential between the two currencies in the currency pair, the greater the rollover charge will be. For example, when trading GBP/USD, if the British pound has the greater interest differential with the U.S. dollar, then the rollover charge for holding British pound positions would be the most expensive. On the other hand, if the Swiss Franc were to have the smallest interest differential to the U.S. dollar, then overnight charges for USD/CHF would be the least expensive of the currency pairs.
• Margin Account Interest Rate
Most brokers pay interest on a trader’s margin account. The interest rates normally fluctuate with the prevailing national rates. If you decide to take an extended break from trading, the money in your margin account will be accruing interest. Keep in mind that most brokers DO NOT allow you to accrue interest unless your margin requirement is at least 2% (50:1).
• Trading Hours
Nearly all brokers align their hours of operation to coincide with the hours of operation of the global Forex market: 5:00 pm EST Sunday through 4:00 pm EST Friday.
Other Policies
Be sure to scrutinize a prospective broker’s “fine print” section to be fully aware of all the nuances that a specific broker may impose on a new trader. Finding the right broker is a critical part of the process. It’s not easy and requires some real work on your part. Don’t pick the first one that looks good to you. Keep looking and trying different demo accounts.

Retail forex platform

Retail forex trading is a segment of the vast foreign exchange market. It has been speculated that it represents 2 percent of the whole forex market which amounts to $50-60 billion ^[1][2] in daily trading turnover. Due to the increasing tendency in the past years of the gradual shift from traditional intrabank 'paper' trading to the more advanced and accurate electronic trading, there has been spur in software development in this field. This change provided different types of trading platforms and tools intended for the use by banks, portfolio managers, retail brokers and retail traders.

One of the most important tools required to perform a forex transaction is the trading platform providing retail traders and brokers with accurate currency quotes.

History and new developments

Since 1996, when retail forex trading was introduced, several brokers who lacked the sufficient tools developed their own trading platforms tailored specifically to their needs. These platforms were good enough at the time but required constant investments in R&D and its development cost too much. This was the first wave.

The second wave was in the early 2000s: several software companies entered the retail forex trading market by launching their own versions of trading platforms. Typically these versions were cumbersome for both front-end users (retail traders) and back-end users (retail brokers) due to the misunderstanding of the developers about the forex market and also because of the insufficient programming tools/languages at the time. Simultaneously most of the retail brokers kept using and developing their own systems as they waited for better platforms which were yet to be developed.

There are currently few to no brokers which were part of the first wave trading systems. By now most of the first wave brokers have either vanished, merged or progressed to the second wave trading platforms – the most common example of which is Metaquotes.

It is only in the last couple of years that the advanced trading platforms started to emerge. These platforms put much stronger emphasis on the user interface (GUI) making it more accessible to the retail traders while making trading on it very simple and intuitive. Moreover a very strong emphasis was put on the back-end which allowed the retail brokers better control over their operations, better reporting and accurate system and ways to manage marketing campaigns. Gradually this wave is replacing the previous second wave with a major shift now to the friendlier and more intuitive systems of the third wave which according to Aite Group are necessary in order to maintain growth ^.

forex scam

Not beating the market

The foreign exchange market is a zero sum game in which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.

Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is a nonrival good, the arbritrages themselves are a rival good. (To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of the treasure map.)

Retail traders are - almost by definition - undercapitalized. Thus they are subject to the problem of gambler's ruin. In a fair game (one with no information advantages) between two players that continues until one trader goes bankrupt, the player with the lower amount of capital has a higher probability of going bankrupt first. Since the retail speculator is effectively playing against the market as a whole - which has nearly infinite capital - he will almost certainly go bankrupt.

The retail trader always pays the bid/ask spread which makes his odds of winning less than those of a fair game. Additional costs may include margin interest, or if a spot position is kept open for more than one day the trade may be "resettled" each day, each time costing the full bid/ask spread.

According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) "Even people running the trading shops warn clients against trying to time the market. 'If 15% of day traders are profitable,' says Drew Niv, chief executive of FXCM, 'I'd be surprised.' "

Paul Belogour, the Managing Director of a Boston based retail forex trader, was quoted by the Financial Times as saying, "Trading foreign exchange is an excellent way for investors to find out how tough the markets really are. But I say to customers: if this is money you have worked hard for – that you cannot afford to lose – never, never invest in foreign exchange."

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.

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.“

Convicted scammers

• Russell Cline
• Russell Erxleben
• Richard Matthews, Jr.
• Joel N. Ward

Forex scam

A forex (or foreign exchange) scam is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading "has become the fraud du jour" as of early 2008, according to Michael Dunn of the U.S. Commodity Futures Trading Commission. But "the market has long been plagued by swindlers preying on the gullible," according to the New York Times . "The average individual foreign-exchange-trading victim loses about $15,000, according to CFTC records" according to The Wall Street Journal. The North American Securities Administrators Association says that "off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud."

“In a typical case, investors may be promised tens of thousands of dollars in profits in just a few weeks or months, with an initial investment of only $5,000. Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted – stolen – for the personal benefit of the con artists.”

In August, 2008 the CFTC set up a special task force to deal with growing foreign exchange fraud.”

The forex market is a zero-sum game , meaning that whatever one trader gains, another loses, except that brokerage commissions and other transaction costs are subtracted from the results of all traders, technically making forex a "negative-sum" game.

These scams might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits, improperly managed "managed accounts", false advertising, Ponzi schemes and outright fraud. It also refers to any retail forex broker who indicates that trading foreign exchange is a low risk, high profit investment.

The U.S. Commodity Futures Trading Commission (CFTC), which loosely regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry^.

An official of the National Futures Association was quoted as saying, "Retail forex trading has increased dramatically over the past few years. Unfortunately, the amount of forex fraud has also increased dramatically..." Between 2001 and 2006 the U.S. Commodity Futures Trading Commission has prosecuted more than 80 cases involving the defrauding of more than 23,000 customers who lost $350 million. From 2001 to 2007, about 26,000 people lost $460 million in forex frauds. CNN quoted Godfried De Vidts, President of the Financial Markets Association, a European body, as saying, "Banks have a duty to protect their customers and they should make sure customers understand what they are doing. Now if people go online, on non-bank portals, how is this control being done?"