Gross Domestic Product (GDP)
GDP Deflator
Trade balance
Unemployment rate
Non-Farm Payrolls (NFP)
Average hourly earnings
Consumer price index (CPI)
Producer price index (PPI)
Employment cost index
Tan Kan, BOJ (Bank of Japan report)
Business climate index (IFO)
Humphrey-Hawkins testimony
Consumer confidence
Industrial production index
Capacity utilisation
Durable goods orders
Factory orders
Leading indicators index
Productivity
Retail sales
Confederation of British Industries (CBI)
Money supply M1, M2, M3
Atlanta Fed index
Average Workweek
Beige book
Building permits
Business Inventories
Chicago PMI (Purchasing Managers Index)
Construction spending
Consumer credit
Current account (Balance of payments)
Existing home sales
Export prices
Help-Wanted Index
Housing starts
Import prices
Jobless claims
Michigan consumer sentiment index
ISM services index
New Home Sales
Personal income
Personal Spending, Consumption
Philadelphia Fed index
Real Earnings
Redbook
Unit Labour Cost
Wholesale inventories
NAPM or PMI (National Association of Purchasing Managers Index)
Macroeconomic performance characterises economic development, indicating economic growth or decline. Based on these measures, price shift trends may be predicted. Thus, it may be said with certainty that publishing of favourable data may lead to considerable and long-term shift in exchange rates. These performance indicators include Nonfarm Payrolls, GDP, Industrial Production, CPI, PPI and a number of other marcoeconomic performance indicators.
The date and time of a specific indicator being published are known in advance. There are so-called calendars of economic indicators and major events in the functioning of some countries (noting specific dates or approximate release time). The market prepares for such events. There are expectations and forecasts on the value of a given indicator and its interpretation.
The release of data may lead to sharp exchange rate fluctuations. Depending on how market participants interpret a given indicator, an exchange rate may swing either way. This swing may either reinforce or adjust an existing trend, or even start a new one. A given outcome depends on several factors: the market situation, the economic situation of countries hosting the currencies, prior expectations and attitudes, and, finally, the value of a given indicator.
Monday, October 29, 2012
Sunday, October 28, 2012
Forex strategies
Each beginner on the international currency market approaches their operations with utter seriousness. The very first day poses a very justified question: what is the way to play in order to at least avoid loss in the long term? Forex trading strategies will help.
Forex strategies: programmes for functioning on the market
By applying a specific algorithm applicable to a specific market situation, the Forex strategy determines a trader’s action on the market. On the internet, you will find a number of various Forex strategies invented by traders that will guarantee profit given a specific market state. Successful traders have their own Forex strategies which they will obviously never share with the public because this is their own income mechanism, honed over the course of months if not years.
Newbies and Forex strategies: is success guaranteed?
There is another obvious fact as well: not even the most loss-proof play methodology will bring a new user millions straight away. The market always changes, and newcomers simply cannot adjust to the new situation here in time. Forex strategies are based on success and failure, on chasing profits along a road that is known for its pitfalls.
What Forex strategies to use
There are a number of universal Forex trading strategies that allow you to stay afloat for a long time without going in the red. Overall, using some Forex strategy on the market is required, because random bets will not bring a positive result. This has been proven time and time again. Of course, sometimes this may turn into a very successful deal or two, but stable profit becomes impossibility over time.
The experience of professional traders shows that a personal Forex trading strategy is the most efficient and comfortable solution for a trader. You will no doubt agree that an active, risk-taking person and their more cautious, risk-aware colleague who scrutinises the situation before making a move are unlikely to use the same methods. Only by trying out new things will you be able to select a path that suits you the most. You will see that rules that clash with your own values are hard to follow.
Forex strategies: programmes for functioning on the market
By applying a specific algorithm applicable to a specific market situation, the Forex strategy determines a trader’s action on the market. On the internet, you will find a number of various Forex strategies invented by traders that will guarantee profit given a specific market state. Successful traders have their own Forex strategies which they will obviously never share with the public because this is their own income mechanism, honed over the course of months if not years.
Newbies and Forex strategies: is success guaranteed?
There is another obvious fact as well: not even the most loss-proof play methodology will bring a new user millions straight away. The market always changes, and newcomers simply cannot adjust to the new situation here in time. Forex strategies are based on success and failure, on chasing profits along a road that is known for its pitfalls.
What Forex strategies to use
There are a number of universal Forex trading strategies that allow you to stay afloat for a long time without going in the red. Overall, using some Forex strategy on the market is required, because random bets will not bring a positive result. This has been proven time and time again. Of course, sometimes this may turn into a very successful deal or two, but stable profit becomes impossibility over time.
The experience of professional traders shows that a personal Forex trading strategy is the most efficient and comfortable solution for a trader. You will no doubt agree that an active, risk-taking person and their more cautious, risk-aware colleague who scrutinises the situation before making a move are unlikely to use the same methods. Only by trying out new things will you be able to select a path that suits you the most. You will see that rules that clash with your own values are hard to follow.
Saturday, October 27, 2012
Central banks
Bank of Japan (BOJ)
European Central Bank (ECB)
Bank of England (BOE)
Federal Reserve System (FED)
Swiss National Bank (SNB)
Reserve Bank of Australia (RBA)
Bank of Canada (BOC)
Reserve Bank of New Zealand (RBNZ)
Central banks meeting dates
Interest rates
Central banks are the apex financial institutions of their respective countries. In some countries, central banks are known as Reserve Banks. In addition to overseeing the commercial banking system in a country, a central bank is also in charge of printing of a nation’s legal tender as well as exerting monetary policy controls on a nation’s economy. Examples of central banks are the Federal Reserve Bank (US), the European Central Bank (ECB), the Bank of Canada (BoC), the Bank of Japan (BoJ) and several others. Every nation in the world has a central bank.
Structure of a Central Bank
Generally speaking, a central bank has a head, known as the Governor or the Chairman, and a board of governors. They are responsible for the management of the bank. A central bank will also have several departments which are in charge of the various functions of the bank. So a central bank will have a division that conducts banking supervision and regulation of banks, another division for currency operations (printing, circulation and money supply controls), and another division for carrying out monetary policy functions. The exact structure of a central bank will differ from one country to another, according to the peculiarities of each nation’s financial sector.
Functions of the Central Bank
Monetary policy is the primary task of any central bank. Monetary policy refers to issues such as determining what currency a country will have, whether that currency will have a fixed or floating exchange rate, issues pertaining to determination of interest rates and foreign reserve maintenance policies.
The central bank is also in charge of printing and circulation of a nation’s legal tender, as well as the control of the supply of a nation’s currency.
A central bank is also in charge of maintaining a country’s foreign reserves, and in determining what currency a nation will hold reserves in.
Stability of a nation’s financial system is another function of the central bank. In this role, a central bank becomes a lender of last resort. We saw this function exerted by the Federal Reserve Bank in the US in providing $700 billion bailout for the US banking and automobile sector under the Troubled Assets Relief Program (TARP) following the collapse of several banks in the US during the global financial meltdown of 2008.
A central bank also serves as the bank for the host nation’s government and its agencies.
Central banks provide emergency lending to commercial banks by providing a lending window at the interest rate it has determined. This is another way of functioning as a banker of last resort.
European Central Bank (ECB)
Bank of England (BOE)
Federal Reserve System (FED)
Swiss National Bank (SNB)
Reserve Bank of Australia (RBA)
Bank of Canada (BOC)
Reserve Bank of New Zealand (RBNZ)
Central banks meeting dates
Interest rates
Central banks are the apex financial institutions of their respective countries. In some countries, central banks are known as Reserve Banks. In addition to overseeing the commercial banking system in a country, a central bank is also in charge of printing of a nation’s legal tender as well as exerting monetary policy controls on a nation’s economy. Examples of central banks are the Federal Reserve Bank (US), the European Central Bank (ECB), the Bank of Canada (BoC), the Bank of Japan (BoJ) and several others. Every nation in the world has a central bank.
Structure of a Central Bank
Generally speaking, a central bank has a head, known as the Governor or the Chairman, and a board of governors. They are responsible for the management of the bank. A central bank will also have several departments which are in charge of the various functions of the bank. So a central bank will have a division that conducts banking supervision and regulation of banks, another division for currency operations (printing, circulation and money supply controls), and another division for carrying out monetary policy functions. The exact structure of a central bank will differ from one country to another, according to the peculiarities of each nation’s financial sector.
Functions of the Central Bank
Monetary policy is the primary task of any central bank. Monetary policy refers to issues such as determining what currency a country will have, whether that currency will have a fixed or floating exchange rate, issues pertaining to determination of interest rates and foreign reserve maintenance policies.
The central bank is also in charge of printing and circulation of a nation’s legal tender, as well as the control of the supply of a nation’s currency.
A central bank is also in charge of maintaining a country’s foreign reserves, and in determining what currency a nation will hold reserves in.
Stability of a nation’s financial system is another function of the central bank. In this role, a central bank becomes a lender of last resort. We saw this function exerted by the Federal Reserve Bank in the US in providing $700 billion bailout for the US banking and automobile sector under the Troubled Assets Relief Program (TARP) following the collapse of several banks in the US during the global financial meltdown of 2008.
A central bank also serves as the bank for the host nation’s government and its agencies.
Central banks provide emergency lending to commercial banks by providing a lending window at the interest rate it has determined. This is another way of functioning as a banker of last resort.
Friday, October 26, 2012
Forex market participants
All operations on financial market are done via the system of special institutions: central banks, commercial banks, dealers and brokers. Every Forex participant has its own volume of deals on the currency market. For example, central banks have the biggest turnover that exceeding hundreds of millions US dollars a day. Commercial banks and dealers have smaller turnover. Daily turnover of brokers is considered to be about 25-30 millions of US dollars that makes 2% from the general volume of all Forex trading.
Central banks of countries
These banks regulate money and credit flows with instruments defined by law. The main functions of central banks are emission (issue) of money, carrying out of monetary and credit policy and national currency policy. For example if a bank carries out currency intervention it may lead to the rise or fall of the national currency rate.
Commercial banks
These are financial intermediaries that accept deposits from legal and private persons, take advantage of investing this money, return it to depositors, close and operate bank accounts. Every country has some big commercial banks that are able to influence currency rates. In 2006 the Deutsche Bank turnover was of 19.26% from the whole Forex market turnover
Brokers
Brokers are legal or private persons that represent agents or negotiators in trading who meet buyer and seller of securities or currency together. Broker works in the name, by order and at the expense of his client and may provide some additional services. Broker gets a commission bonus for fulfilling customer's orders.
Dealers
Dealers are companies or private persons that operate on the market at their own expense and in their own name, in other words they sell and buy currencies or any other assets with their own money.
Central banks of countries
These banks regulate money and credit flows with instruments defined by law. The main functions of central banks are emission (issue) of money, carrying out of monetary and credit policy and national currency policy. For example if a bank carries out currency intervention it may lead to the rise or fall of the national currency rate.
Commercial banks
These are financial intermediaries that accept deposits from legal and private persons, take advantage of investing this money, return it to depositors, close and operate bank accounts. Every country has some big commercial banks that are able to influence currency rates. In 2006 the Deutsche Bank turnover was of 19.26% from the whole Forex market turnover
Brokers
Brokers are legal or private persons that represent agents or negotiators in trading who meet buyer and seller of securities or currency together. Broker works in the name, by order and at the expense of his client and may provide some additional services. Broker gets a commission bonus for fulfilling customer's orders.
Dealers
Dealers are companies or private persons that operate on the market at their own expense and in their own name, in other words they sell and buy currencies or any other assets with their own money.
Thursday, October 25, 2012
Forex currencies
The history of currencies
USD
EUR
GBP
JPY
CHF
DEM
Currency codes
The word value comes from the Latin “valeo”, “I stand”.
Valuable currencies today are:
Monetary units of countries with indication of type (paper, gold, silver);
Monetary units of a number of foreign countries, including payment and credit documents expressed in such monetary units and usable for international accounts (cheques, bank bills etc.)
Basically, the Forex currency market is the sum of all transactions made by its participants (banks, exchanges, funds, investment, brokerage and external trading firms, as well as private persons, i.e. traders) to exchange some types of currency. Each second, the Forex market processes thousands of transactions, bringing profit to participants.
The Forex currency market has the following classification of currency types:
Freely convertible currencies have no limit on financial transactions of any kind, may be used by residents and non-residents of a country, and can be converted into any foreign currency;
Partially convertible currencies are usually those with a number of restrictions on use by non-residents and a specific range of allowed transactions. Thus, most Western European currencies are partially convertible; restrictions on use by non-residents were removed in 1958, and now any amount on an account in such currencies may be converted to a freely convertible equivalent;
Non-convertible currencies have restrictions for both residents and non-residents barring a number of financial transactions. They are not convertible and are used only inside their specific countries. For instance, non-convertible currencies are used in developing and dependent countries, and tied to the currency of a metropolitan country that sets exchange rates to give itself an advantage. Non-convertible currencies are not used on the Forex market.
The Forex currency market has two types of operations: buy and sell; each currency has demand and supply, allowing transactions with no real restrictions on volume or time. The Forex currency market also entails regulation of the exchange rates of various countries by balancing supply and demand.
The Forex currency market has a number of so-called primary currencies – most daily transactions are conducted in these:
USD – the U.S. dollar. No doubt the backbone of the Forex market. Traders often call the USD the buck, the greenback, the dolly.
EUR – the euro, common currency for the European space, second on Forex in terms of popularity. Before the euro, the DEM Deutschmark, Germany’s national currency, took its place.
GBP (Great Britain Pounds) – the pound sterling, Britain’s national currency. Financier slang also includes the names sterling, pound, and cable.
CHF – the Swiss franc. The slang term swissy is used alongside the official name.
JPY – the Japanese yen.
The Forex currency market also uses:
AUD – the Australian dollar, often referred to as the aussie by financiers.
СAD – the Canadian dollar.
NZD – the New Zealand dollar, also known as the kiwi among Forex currency market traders.
Another incredibly important concept on the currency market is the currency exchange, which is a key link in the chain of currency market trading services.
Essentially, the currency exchange is a place where transactions are made. In this case, the currency is in free trade, shaping the process of constant currency exchange fluctuations. The main characteristic of the currency exchange is that exchange rates are shaped and noted as part of its operation, through the effect of supply and demand on the selling and buying of currencies. This very process is the main objective of the Forex currency exchange: shaping the exchange rates based on objective effects of the economic factors of specific countries. The currency exchange essentially regulates exchange rates.
With the development of technology, more and more people today use the currency exchange online, trading in real time via an internet connection. The online currency exchange fulfils a number of functions besides affecting exchange rates: it lays the technical groundwork for free trade, creates and applies the rules for trading participants to enter (covering e.g. funds, business reputation), and creates the conditions and rules for making the transactions themselves. The obligation of monitoring observance of these conditions lies with the currency exchange as well.
The largest currency exchanges are in London, New York and Tokyo. Thus, the online currency exchange can cover practically the entire world and provide nearly equal conditions for all currency market participants. This has made the Forex currency exchange the largest exchange in the world, with a turnover of more than several trillion dollars per day.
USD
EUR
GBP
JPY
CHF
DEM
Currency codes
The word value comes from the Latin “valeo”, “I stand”.
Valuable currencies today are:
Monetary units of countries with indication of type (paper, gold, silver);
Monetary units of a number of foreign countries, including payment and credit documents expressed in such monetary units and usable for international accounts (cheques, bank bills etc.)
Basically, the Forex currency market is the sum of all transactions made by its participants (banks, exchanges, funds, investment, brokerage and external trading firms, as well as private persons, i.e. traders) to exchange some types of currency. Each second, the Forex market processes thousands of transactions, bringing profit to participants.
The Forex currency market has the following classification of currency types:
Freely convertible currencies have no limit on financial transactions of any kind, may be used by residents and non-residents of a country, and can be converted into any foreign currency;
Partially convertible currencies are usually those with a number of restrictions on use by non-residents and a specific range of allowed transactions. Thus, most Western European currencies are partially convertible; restrictions on use by non-residents were removed in 1958, and now any amount on an account in such currencies may be converted to a freely convertible equivalent;
Non-convertible currencies have restrictions for both residents and non-residents barring a number of financial transactions. They are not convertible and are used only inside their specific countries. For instance, non-convertible currencies are used in developing and dependent countries, and tied to the currency of a metropolitan country that sets exchange rates to give itself an advantage. Non-convertible currencies are not used on the Forex market.
The Forex currency market has two types of operations: buy and sell; each currency has demand and supply, allowing transactions with no real restrictions on volume or time. The Forex currency market also entails regulation of the exchange rates of various countries by balancing supply and demand.
The Forex currency market has a number of so-called primary currencies – most daily transactions are conducted in these:
USD – the U.S. dollar. No doubt the backbone of the Forex market. Traders often call the USD the buck, the greenback, the dolly.
EUR – the euro, common currency for the European space, second on Forex in terms of popularity. Before the euro, the DEM Deutschmark, Germany’s national currency, took its place.
GBP (Great Britain Pounds) – the pound sterling, Britain’s national currency. Financier slang also includes the names sterling, pound, and cable.
CHF – the Swiss franc. The slang term swissy is used alongside the official name.
JPY – the Japanese yen.
The Forex currency market also uses:
AUD – the Australian dollar, often referred to as the aussie by financiers.
СAD – the Canadian dollar.
NZD – the New Zealand dollar, also known as the kiwi among Forex currency market traders.
Another incredibly important concept on the currency market is the currency exchange, which is a key link in the chain of currency market trading services.
Essentially, the currency exchange is a place where transactions are made. In this case, the currency is in free trade, shaping the process of constant currency exchange fluctuations. The main characteristic of the currency exchange is that exchange rates are shaped and noted as part of its operation, through the effect of supply and demand on the selling and buying of currencies. This very process is the main objective of the Forex currency exchange: shaping the exchange rates based on objective effects of the economic factors of specific countries. The currency exchange essentially regulates exchange rates.
With the development of technology, more and more people today use the currency exchange online, trading in real time via an internet connection. The online currency exchange fulfils a number of functions besides affecting exchange rates: it lays the technical groundwork for free trade, creates and applies the rules for trading participants to enter (covering e.g. funds, business reputation), and creates the conditions and rules for making the transactions themselves. The obligation of monitoring observance of these conditions lies with the currency exchange as well.
The largest currency exchanges are in London, New York and Tokyo. Thus, the online currency exchange can cover practically the entire world and provide nearly equal conditions for all currency market participants. This has made the Forex currency exchange the largest exchange in the world, with a turnover of more than several trillion dollars per day.
Wednesday, October 24, 2012
Forex volumes
Become a forex trader, and buy and sell in the world's largest financial market!
Here are the key figures*:
Over $1.9 trillion dollars a day traded in 2004
That grew to $3.2 trillion by 2007 – a 70% increase
Daily volume is now nearly $4.0 trillion – and the market is still growing
Forex dwarfes other markets:
It has 11 times the daily volume of all other global exchanges combined
Its daily turnover is 40 times the New York Stock Exchange (NYSE)
$300 are traded every day for every person on the planet
A week's worth of forex trading is more than the annual United States GDP
The major forex trading centres are the United States, Great Britain and Japan. Market activity peaks when more than one is open.
Here are the key figures*:
Over $1.9 trillion dollars a day traded in 2004
That grew to $3.2 trillion by 2007 – a 70% increase
Daily volume is now nearly $4.0 trillion – and the market is still growing
Forex dwarfes other markets:
It has 11 times the daily volume of all other global exchanges combined
Its daily turnover is 40 times the New York Stock Exchange (NYSE)
$300 are traded every day for every person on the planet
A week's worth of forex trading is more than the annual United States GDP
The major forex trading centres are the United States, Great Britain and Japan. Market activity peaks when more than one is open.
Tuesday, October 23, 2012
How to make profit?
How to make profit?
One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.
Here are the answers!
How do you make money?
Let's take an example based on the graph below:
You open an Classic Account with €2,000
You think the Euro will go down against the US dollar
You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
There is no margin left in your account at this point
The Euros you sold are worth $257.000 US dollars
You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
The Euro ask price reaches 1.2750 US dollars and you buy
This costs $255,000 US dollars
You have now sold 200.000 Euros for $257.000 and bought them for $255,000
The difference is $2,000 US dollars or €1568 Euros
Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!
Here's another example:
This time you think the Euro will go up
You open a Cent Account with 20 US dollars
You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
It does and the cost is $1912.50
Because you have 1:100 margin this only costs you $19.12 – we provide the rest
The Euro then goes up to 1.2850 US dollars
You sell your 1500 Euros for $1927.50
Your profit is $15.00 – a 75% return on your $20 investment!
How do we make money?
You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?
Notice in the example above that we talked about bid prices and ask prices. These aren't the same:
The bid price is what you pay when you're buying currency
The ask price is what you get when you're selling - and is less than the bid price
The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.
Managing your risk
In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:
Change the default 1:100 margin for your account - 1:10 for low risk or 1:500 for high risk
Manage your money by spreading it over several investments
One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.
Here are the answers!
How do you make money?
Let's take an example based on the graph below:
You open an Classic Account with €2,000
You think the Euro will go down against the US dollar
You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
There is no margin left in your account at this point
The Euros you sold are worth $257.000 US dollars
You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
The Euro ask price reaches 1.2750 US dollars and you buy
This costs $255,000 US dollars
You have now sold 200.000 Euros for $257.000 and bought them for $255,000
The difference is $2,000 US dollars or €1568 Euros
Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!
Here's another example:
This time you think the Euro will go up
You open a Cent Account with 20 US dollars
You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
It does and the cost is $1912.50
Because you have 1:100 margin this only costs you $19.12 – we provide the rest
The Euro then goes up to 1.2850 US dollars
You sell your 1500 Euros for $1927.50
Your profit is $15.00 – a 75% return on your $20 investment!
How do we make money?
You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?
Notice in the example above that we talked about bid prices and ask prices. These aren't the same:
The bid price is what you pay when you're buying currency
The ask price is what you get when you're selling - and is less than the bid price
The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.
Managing your risk
In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:
Change the default 1:100 margin for your account - 1:10 for low risk or 1:500 for high risk
Manage your money by spreading it over several investments
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