The Best Time to Trade The Forex

We all know by now that forex is a highly dynamic market with lots of price swings in a single minute. This characteristic allows you to enter the market many times a day and gain some profit from the trades.

You can easily find out an appropriate time to enter into the forex market when the activity or the volumes of transactions are the highest. When we consider the working hours of the market, we must remember three facts:

• There are three major markets -- London, New York, and Tokyo

• The working hours are throughout the day – it starts from Sunday 5pm (EST) through Friday 4pm (EST).

• Like any other active markets, there are good times and bad times to trade in forex also. Choosing to trade when the market is at its best can increase productivity and generate significant financial benefits. It will be wise to assume that trading intermittently throughout the day will produce the best results.

Forex Trading activities are found to be heaviest when major markets overlap. Statistics says, nearly two-thirds of New York activity occurs in the morning hours when European markets are also open. So you can figure out that at any given time, somebody somewhere in the world is buying and selling currencies.

Forex Trading Offers Fantastic Liquidity

The great liquidity offered by the forex trading and a market that is open for five and a half days a week offers you an exceptional array of choices to trade when you want.

But the volume of transactions reaches its peaks when the major market hours overlap -- the time when Asian market including Australia & New Zealand, the European market and the U.S. market are open simultaneously.

A typical trading day starts with New Zealand, before moving across to Australia, Japan and Asia, Europe and North America. The UK and the US markets account for around half of the total world market, therefore the times at which both are open are particularly busy.

Let’s find out quickly what are the overlapping timings:

* New York Market trade times: 8am - 4pm EST
* London Market trade times: 2am - 12Noon EST
* Great Britain Market trade times: 3am - 11am EST
* Tokyo Market trade times: 8pm - 4am EST
* Australia Market trade times: 7pm - 3am EST

So there are two times when two of the major markets overlap during trading hours -- between 2am and 4am EST for Asian/European markets and between 8am to 12pm EST for European/U.S. markets.

The market is open 24 hours a day doesn’t mean that it is always active. You can make money when the market is moving up or when it is moving down. It will be very difficult to make profit when the market doesn’t move at all.

Forex Trading is Open 24 Hours a Day

From practical experience it has been found out that the session when the London market is open with any other major market, the volume of transaction and market movement reaches its zenith.

Another interesting fact is - from actual trading figures you can see that during the middle of the week (Tuesdays and Wednesdays) the movement of all major currency pairs reaches their highest.

Choosing the right time between the start and the end of the week can also make differences to your trading success. If you are operating outside America you may have to wake up extremely early to catch the European markets and end your day extremely late to catch the Asian market.

So the time for trading is as important as your strategy for trading. If you have some preoccupation for which you can not use these hours you can go for an automated platform for the execution of the trades.

Forex Pips & Spreads - The Brokers Commission

The pip is the smallest measure of price move used in forex trading. For instance, if the currency pair EUR/USD is trading at 1.3000 and then changes to 1.3010, the pair is said to move by 10 pips. It is an acronym for Percentage in Point (pip).

In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one/10,000th of an exchange rate or in USD/JPY, it is one/100th, likewise you can find for others.

Spread on the other hand is the difference between buy (long) or sell (short) for a currency pair. The bid/offer spread is the difference between the buying (bid) and selling (offer) price. The ask prices are the immediate execution prices for quick buyers or traders and bid prices are for quick sellers.

In Forex market you will find brokers who generally do not charge any commission from you. But they get their money by charging you a spread. As spread is the difference between the bid price and the ask price for any currency being traded, the broker will add this spread onto the price of the trade and keep it as their fee for trading.

Lower Pips & Spreads = Higher Forex Profits

Wider spreads will result in a loftier asking price versus a slashed bid price. The consequence is that you have to pay more when you buy and get less when you sell. This spread is charged only on one side of the transaction, usually on the "buy" side of the trades. To find out which brokers offer the best pips and spreads read our Forex broker reviews.

If the quote between EUR/USD is said to be 1.2222/4, the spread equals 2 pips as the difference between 2 and 4 is 2. But if the quote is 1.22225/4, the spread is 1.5 pips. So spread is the primary cost of trading for you and in differences in them makes a big impact.

Although it may not seem like much of a difference to be trading with a 5 pip spread vs. a 4 pip spread, it can add up very quickly when you multiply it with how many trades you make and how much money you're trading. You will find the difference to be as high as 25% on your trading costs.

Spreads affect the return on your trading strategy in a big way. As a trader your sole concern is buying low and transaction high. Wider spreads mean buying higher and having to sell lower. A half-pip lower spread can even affect your profitability.

Choose a Low Spread Forex Broker

Spreads can vary based on the currencies you're trading and what type of account you open. Most brokers will be offering different spreads for different currencies. For the most popular currency pairs like the EUR/USD or GBP/USD you will get the typical lowest spreads, while for currencies that have less demand will be traded with higher spreads.

The spreads will vary depending on the types of accounts. A mini account may have higher spreads than a full contract account.

It is important to realize that as the spread is the difference between bid prices and ask prices as determined by the free market they are not always guaranteed. So with a fluctuating market when the spreads widen, you will be charged with that wider spread. Spreads are tighter when there is good market liquidity but it will widen as liquidity dries up.

Fixed Spread Forex Trading Helps Secure Profitability

Forex spreads are only meaningful when they are supported with good execution. For example, when you find a tight spread, but your trade is filled a few pips in the wrong direction, or your transaction is rejected, you are in trouble.

It means that your broker is showing tight spreads but in effect delivering wider spreads. Be aware of such rejected trades, and delayed execution, which are strategies to deceive the traders.

It should now be clear that the lower the pip and spread a broker is offering then the more chance you have of achieving profitable Forex trading.

The Forex Currency Pairs

Foreign Exchange trading is in general the trading of many currencies of the world. It is emerging as the largest and least regulated market providing the greatest liquidity to investors.

This trading is always done in pairs – Currency Pairs, one currency is bought and the other is sold. Together, they make up what is known as the "exchange rate".

For example, you may buy Euros with Dollars, anticipating that the Euro to increase in value relative to the Dollar. If the Euro rises relative to the Dollar, you sell the position and can earn a profit.

Most commonly traded currencies or the “majors” are:

US Dollar (USD)
Japanese Yen (JPY)
Euro (EUR)
British Pound (GBP)
Canadian Dollar (CAD)
Australian Dollar (AUD)
Swiss Franc (CHF)

Most commonly traded currency pairs are:

US Dollar and the Japanese Yen (USD/JPY)
Euro and US Dollar (EUR/USD)
US Dollar and Swiss franc (USD/CHF)
British Pound and US Dollar (GBP/USD)

While quoting currency pairs, the first currency is referred to as the base currency and the second as the counter or quote currency. The base currency is always equal to 1 monetary unit of exchange, for example, 1 Dollar, 1 Pound, 1 Euro.

Trading Forex Currency Pairs for Maximum Profit

It is also known as domestic currency or accounting currency and sometimes also referred to as the primary currency of a Forex currency pair. The price represents how much of the quote currency is needed to get one unit of the base currency.

When a currency is quoted against US Dollar, it is known as direct rate. Any currency not against the US Dollar is called a cross rate.

The quote currency is translated into a certain number of units of the base currency. This is also referred to as the foreign currency, secondary currency or counter currency. For example, if you find that a quote of USD/JPY is at 1.30, it says that for every 1 US Dollar, you get 1.30 Japanese Yen. When you quote for AUD/JPY of 67.73, it says that for every 1 Australian Dollar, you get 67.73 Japanese Yen.

Currency pairs are generally traded as 100,000 units of the base currency. For example, if you were buying EUR/USD at 0.95 you would be paying Dollars for Euros as follows:

100,000 x .95 = $95,000 for 100,000 Euros

When you find a quote going up, it means that the value of the base currency is rising or in other words, it is getting stronger. If a quote is going down, it means that the base currency is weakening.

The dominant base currencies are:

Euro - EUR/USD, EUR/GBP, EUR/CHF, EUR/JPY, EUR/CAD
British Pound - GBP/USD, GBP/CHF, GBP/JPY, GBP/CAD
US Dollar - USD/CAD, USD/JPY, USD/CHF

The currency pairs are usually traded and quoted with a ‘bid’ and ‘ask’ price. The ‘bid’ is the price at which you are willing to buy and the ‘ask’ is the price at which price you are willing to sell.

For example, if the USD/EUR currency pair is quoted as - USD/EUR = 1.5 and you purchase the pair, this means that for every 1.5 euros that you sell, you get US$1. If you sold the currency pair, you receive 1.5 euros for every US$1 you sell.

The key to successful trading lies in selecting one or two pairs of currencies that you wish to trade in as a beginner. As you gain confidence, you may wish to add more pairs in your trading portfolio. But for a new trader or investor it is always advised to have limited pair just to ensure simplicity.

orex Market Terminology - Understanding The Basics

When you first start trading the Forex market you can become overwhelmed with the amount of information there is to consume.

One of the hardest parts for a new trader is learning the lingo. Some of the terms used in currency exchange are self-explanatory, whereas others are not. In this section I provide brief definitions of some of the most common Forex trading terms.

Spot Deal

A deal taking part between two parties who can deliver a certain amount of different currencies to each other within 2 business days of each other (excluding Canadian dollar where the trade is executed within 1 business day)

Market Order

This is the execution you make when deciding to buy a currency. In other words you see a currency exchange rate quote on screen and you place a ‘market order’ when you click the button to execute the trade.

Entry Orders

This is basically and advance order, you decide at what price you want to buy or sell a currency and you place an ‘entry order’. As soon as the currencies reaches this rate your trade is executed.

Stop-Loss Order

This is a function offered by some brokers which is aimed at reducing your risk, you can decide the maximum and minimum amount of profit or loss you want to exit a trade at. In other words if you decide you are happy to make $1,000 from one trade but don’t want to lose anymore than $1,000 should the trade go the other way you can place this safety net on your trade.

Bid

This is the currency rate that you wish to buy or sell at.

Offer

This is the currency rate you will actually get when buying or selling

Spread

The difference between the bid and offer rates

Pip

This is the last decimal of the exchange rate with the exception of the Japanese Yen where it is the second decimal.

Lot

The amount of units of the base currency when you enter the market.

Margin

The minimum amount of money you need for each lot to trade, for example the margin may be 1 lot for $100 and therefore you would need $300 in your account to trade 3 lots.

Trend

The direction the market is currently moving in.

Long Position

This is used to describe a market in a long-term buy trend

Mini Forex Account

A mini forex account is designed for those new to online trading and those with limited investment capital. Those with less than US$5,000 often favour mini accounts although regular accounts may be opened with a minimum of $2000-$5,000. The amount varies from broker to broker.

A mini forex account can be opened with a minimum of US$300-500 and this figure varies between brokers.

A mini forex account is intended to introduce traders to the excitement of forex trading while minimising risk.

• A mini forex account can be opened at anytime but many traders practice on a demo account first to test their trading strategies and techniques.
• Trading size is normally 1/10th the size of a regular account. Some brokers have smaller lot sizes. This reduces the risk associated with forex trading.
• Margin requirements differ depending on the broker. The NFA states the margin should be no less than 1% of the base currency traded. However not all brokers follow these guidelines. Some brokers offer margins as low as US$50 per lot on their minis.
• Some brokers have software in their Trade Stations that automatically calculates the required margin while others manually set the margin and vary it accordingly.

The CFTC is enforcing a 1% margin requirement for registered FCMs and their affiliates that only offer trading in the Forex Market.

The new NFA rule requires a minimum 1% margin at all time to maintain an open trade. (Note this may change from time to time so although we use 1% as the example at some stage in the future the margin maybe different. However using similar calculations one can easily calculate the new margins)Some deal stations automatically calculate this according to the formula and hence the margin requirements are continually varying.

Based on a 1% margin requirement

Example 1:

GBP/USD rate: 1.7442/1.7447

Account type: $10 000/lot

1% leverage: 10 000x0.01 (1%) =100units

With the GBP/USD, the margin required is:

1.7447 (GBP/USD) x100 (units of base currency GBP) = USD174 for each lot.

Example 2:

EUR/USD rate: 1.2326/1.2331

Account type: $10 000/lot

1% leverage: 10 000x0.01 (1%) =1000units

With the EUR/USD, the margin required is:

1.2331 (EUR/USD) x100 (units of base currency EUR) = US$123 for each lot.

• On a mini forex account where the margin is only US$50 per lot, a trader with $500 can withstand a larger market swing than a trader with a regular account with higher margins but if they have a margin call will lose more capital. A margin call occurs when the balance of the trading account falls below the required minimum balance required. The broker then closes all open trades.
• Mini forex accounts have become very popular as many stock investors are taking positions in the forex market to spread their risk.
• It pays to compare mini forex accounts at different brokers to find the best rates on overnight positions and the most competitive spreads.
• Pip values vary between the different currency pairs. Based on a US$ 10K account, a 25 pip profit on a mini account Euro trade is $25 and since this is a small amount, a mini account allows traders to focus on technical analysis instead of the profit and exit at the right point rather than take profits early. On a regular account (100K), 25 pips would give US$250 profit.

Following a Risk Management Plan

One of the essentials of trading in any investment market is establishing a risk management plan. New traders often jump into the market head first with no real pre-determined trading plan. The outcome can be disastrous in a short period time. The Forex market, just like other investment markets such as the stock market and futures market, require a trading plan that’s free of emotion and heavy on discipline. Only then can a trader’s hard earned money and valuable time translate into respectable profits.

The risk-reward ratio

The risk-reward ratio is basically the risk you’re willing to take to make a certain profit. Any risk management plan that’s worth its money has a decent risk-reward ratio of at least 1:3. What exactly does a 1:3 ratio mean? It means that for every unit of risk you take, you’ll reap three times that amount in reward. A 1:4 ratio means that for every unit of risk you take, you’ll earn four times that amount. The larger the ratio is, the greater reward you make. However, with higher risk-ratios, you’ll have to wait longer to make that trade. You might end up missing some lucrative trades in the interim, and your “ideal” trade might never show up.

Here’s how it works

Let’s say you risk 50 pips (units) to make a deal worth 100 pips. You’re risk-reward ratio is 50/100, or 1:2. If your risk management plan limits your trades of at least a 1:3 ratio, then you shouldn’t make the trade. However, if you risk 50 pips for a potential 150-pip gain (50/150 or 1:3), then it’s worth it.

What about risking more than you can make?

Some investors don’t mind risking more than they can make on a deal. Is this real good advice to follow though? If you’re a real risk taker, then take the chance. But if you’re in the market to make a real profit over the long run, then don’t do it. It is just not sound risk management planning.

Suppose you want to risk 100 pips to make a potential 50 pips. Your risk-ratio is 100:50, or 2:1. That means that you’re willing to give up more than you can make on the deal – not the best logic. True, you can make 50 pips, but you’re risking more than you can even make on the trade.

An automated Forex trading system platform provides traders an online environment to place orders 24/7, from the comfort of their home.

Forex market is a non-centralized market. There is no common market place for Forex traders and there is no so-call ‘standard’ in foreign currency exc

There is an old saying that is loosely translated to 'if I don’t help myself, who will?’ now while this isnt very elloquent, it does convey what i want to tell you.

No entrepreneurship, no success, no money making scheme, is done if you don’t have a hand in it. So don’t rely on what other people can do for you, just get it done for yourself.

Now while this rule applies to everything, it’s specifically useful regarding the forex market (foreign exchange). The forex is the biggest, most liquid market on the planet. Basically it trades currencies and is estimated that over 2 trillion dollars pass hands each day. Just to give you perspective, the new your stock exchange (also a huge endeavor), 'only' processes about 50 billion dollars a day. Get the picture?

I bet I can guess your thoughts right about now. Well, maybe not the actual thought so much as the sentiment. You want some. 2 trillion is too much to be ignored and any person with a sturdy head on their shoulders would want a piece of the action. But in order to do that, you need to know at least the minimum for forex trading.

We understand that you can’t know or operate everything; you will need porters, or advisers or just plain friends to call when you’re in a bind, but don’t you want to be the one to make the call about whets best for you? The only way you can do that is if you learn, so make sure you understand whets going on before you take even a step into the world of forex trading.

How do you start trading Forex?

Now you need to find a forex system that will help you along with your trading. You need to find the right system for you, so don’t ever tire of looking. You can find trading systems all over the market (the internet really) and they could and will help you make hundreds, if not thousands of times over any dime you pay up front.

You might think it’s difficult to get your trading system personalized or up and running in general, even if it’s standard. You might even find it hard to make a choice, but all it ever comes down to is knowledge, and that is what we are here for.

You can find the trading system for you if you just take into account 5 different pointers (that’s it, five!!) but before we get there, there are three things you have to know. So lets start there, and then we can move on to the pointers.

The first things you have to know is don’t fall into the gadget trap.

Just because it’s shiny doesn’t mean you need it. It’s actually, almost on the contrary. The simpler the system the better it will probably be for your forex needs, so stay away from the forex trading/cappuccino making/ironing/phone/camera combo. Stick to the basics and you will be fine. Another thing that should be obvious to you is that you, as your trading system, should be in the business of cutting losses and running with any profit possible.

You need a system that can identify possible profits and (ideally) instantly cut losses. This could save you a great deal of money, so don’t turn on your computer before you’re convinced that this is what your system does. The last of the three things you should know is that you need a system that can recognize long term trends. if your computer is only analyzing days when deciding to sell or buy, then you will never get more then pennies to your dollar, and that just isn’t enough when there are two trillion to be had.

Now lets get to the five must knows when it comes to getting started with the forex market. First of all, your trading system should be simple (for conviction read above). You need an extensive investment management system, but only some essential general rules. Anything more will only confuse your computer and will long term hurt your profit potential.

Secondly, don’t be happy with short term trends; go for the longer weekly based trends so that your profits will really be impressive. If you analyze what happens to the market on daily/hourly charts then it can really understand the market, and only then will you be happy you left your day job.

The third is that the best way to trade in foreign currencies is the breakout method, so ask around, find from peers and experts, and learn all about this method before you get started.

The forth thing that I want to enlighten you with today is that you need to develop a timing tool for your market entrances and exits. Watch for breaks in the market and have them sketched on your chart so that you can see what is going on in the market.

And my last parting words of wisdom? The fifth is that you should have time management become an important part of your chosen system. you need your time to yield the best results, because two trillion isn’t when you want it, its once a day, and days come and go as they please, not at your request.

So get started, there is no doubt in my mind that if you stick to what you have read here then you will be that much closer to becoming a millionaire.

Have fun!!

How does a faulty Forex dealer cheat your money?

Forex market is a non-centralized market. There is no common market place for Forex traders and there is no so-call ‘standard’ in foreign currency exchange price. Different Forex dealers offer very different deals to their customers.

As an individual FX trader, you depends solely on the dealer to make a transaction in your trades, thus picking up the right dealer is extremely crucial in your risk.

You may wonder how does a faulty dealer can cheat on your money as all investment call have to go thru your decisions.

Well, here's a typical example:

Often a bad dealer is not totally scams.

They are smart persons that trick money from traders that are not well-aware. These dealers, often known as retail market makers, will often encourage their clients to trade on margin and set stop loss orders, which allow the market makers to close out trades almost at will during busy markets at prices they have set. If the market maker does not offset the trader's position, the loss generated when a stop loss is triggered becomes the market maker's gain.

Trade prices are easily skewed one way or the other depending on the retail trader's position, which is known by the market maker.

Traders can be encouraged to take risky positions just before major economic announcements. If all else fails, the market maker can quote extreme prices (known as spiking) to trigger stop loss orders while the client is at work or asleep.

The vast majority of retail FX traders are not profitable. For those losing retail speculators, much of the funds they had on deposit will be, in some form or another, transferred to the market maker.

Pick the best Forex broker if you value your money!

As you can see, a stop loss order may not always on your side.

Be very clear on who you are dealing with in Forex trading to avoid being cheated. In case you are worry about your money being cheated by dishonest FX broker, why not check out our FX brokers recommendation section and pick a reliable broker yourself!

Understanding the risks in Forex trading

Forex: To trade, or not to trade? Many are reluctant to involve in Forex trading because of its ‘risks’. Generally speaking, there are risks everywhere in our life: Factories may malfunction, customer may not walk-in if you open a shop, stock market may crush, and if you are employed you may get fired during company downsizing. There are risks everywhere! The important issue here is how you learn and maintain your risk. So if you are considering participating in Forex market, you should learn managing the risk involved, instead of being terrified.

Picking up the right Forex dealer

One of the best methods to avoid unnecessary risks is avoid fraud dealer.

Forex is a special trading business with no centralized market. Thus, unlike regulated futures exchanges, there is no central market place for Forex buyers or sellers therefore the price offered by different Forex dealers may vary a lot. When you are trading in Forex market, you are totally relying on the dealer’s integrity for a fair deal.

Further more, you need to select a right Forex dealer to avoid scams. There may be Forex dealers that are not regulated legally and there maybe investment scams, especially on the Internet. Be very careful on who you are dealing with in Forex and always check cautiously on the investment offer.

Stop loss order

The Forex market could move against you. No one can predict with certainty which way exchange rates will go, and the Forex market is volatile. Fluctuations in the foreign exchange rate between the time you place the trade and the time you attempt to liquidate it will affect the price of your Forex contract and the potential profit and losses relating to it. To avoid losing all of your investment capital, you should have a pre-arrangement on your risk profile. A solid risk profile will limit the Forex dealer not to overtake risk that you cannot handle. For example, if you have 100,000 to invest, you can say that you are willing to risk 10,000 of that capital with the potential to gain another 100,000. This can be easily implemented by a fund manager, so your losses can be limited to 10% or 5% of invested capital.

Avoid too high margin trade

Another way to manage your risks well in Forex market is to trade without overleveraged. Forex dealers want you to trade with high leverage values as this means more spread income for them. Also, trading in high leverage may increase your profit or your losing. There are high possibilities that one lose money more than he or she can afford in margin trading.

Forex can be extraordinarily beneficial to a variety of people. It gives huge leverage rates, it gives incompatible liquidity to your money, it gives convenience to trade on the Internet, and it can definitely give you a lot of money if you trade smartly. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your ‘wings’. Seminars, eBooks, Internet, papers, video courses – all these are handy to get yourself ready. You can also try out your skill on the demo account provided free. After all, Forex trades 24hours a day and there is always money to make in the market, so why not be patience until you are fully ready for it?

Diversification in Forex trading

Diversification is another way to manage risks in Forex market. Trading one currency pair will generate few entry signals. If you wish to lower your risk in Forex market, it would be better to diversify your trades between several currencies.

Try simultaneously trade on different pair of currency. Say you have capital of $1,000, instead of putting all your money to long EUR/USD, you can split the money half to long EUR/USD and GBD/USD ($500 each) as these two currencies are highly correlated and tends to move in the same directions.

Conclusion

Needless to say, knowledge is another key of handling your risks well. Before you get into Forex market, the best thing you should do is educate yourself. What drives currency price movement? How to read analysis data? How to read chart indicators? Learn detail about how currency price move and how to trade foreign currency exchange in order to avoid unnecessary risks.

You come to this article probably because of you are new to FOREX and were looking for some readings on the Internet. To be frank, Forex can be very profitable but the risk lie beneath is equally great. But what else in life does not involve risk? You can be fired from your job, factory may malfunctions, stock market may collapse, your boss may runaway with your wages, and hey! These are all risk. Learning in risk management is the key to handle your life.

Trade smartly, and gain the maximum out of Forex – good luck!

10 Tips for your success in Forex trading

1. Implement a trading plan.

“If you fail to plan, you plan to fail”. A trading plan is especially crucial in Forex trading to stay ‘in-control’ against the emotional stress in speculative situation.

Often, your emotions will blind and lead you to the negative sides: greed causes you to over-ride on a win while fear causes you to cut short in your profits. Hence, a well organized operation has to be predetermined and strictly followed.

2. Trade within your means

If you cannot afford to lose, you cannot afford to win. Losing is a not a must but it is the natural in any trading market. Trading should be always done using excess money in your savings.

Before you start to trade in Forex, we suggest you to put aside some of your income to set up your own investment funds and trade only using that funds.

3. Avoid emotion trading

If you do not have a trading plan, make one. If you have a trading plan, follows it strictly! Never ever attempt to hold your weakened position and hope the market will turn back in your favor direction. You might end up losing all your capital if you keep holding. Move on, stay within your trading plan, and admit your mistakes if things do not turn as you want.

4. Ride on a win and cut your losses

Forex trader should always ride till the market turns around whenever a profit is show; while during losing, never hesitate to admit your mistakes and exit the market. It is human nature to stay long on loses and satisfy with small profits – this is why as we mentioned earlier that a strictly followed trading plan is a must-have.

5. Love the trends

Trends are your friends. Although currency values fluctuate but from the big picture it normally goes in a steady direction. If you are not sure on certain moves, the long term trend is always your primary reference. In long run, trading with the trends improves your odds in the Forex market.

6. Stop looking for leading indicators

There aren't any in the Forex market. While some firms make a lot of money selling software that predicts the future, the reality is that if those products really worked, they wouldn't be giving the secret away.

7. Avoid trading in a thin market

Trade on popular currency pairs and avoid thin market. The lack of public participation will cause difficulties in liquidate your positions. If you are beginners, we suggest the big five: USD/EUR, USD/JPY, USD/GBD, USD/CHF, and EUR/JPY.

8. Avoid trading in too many markets

Do not confuse yourself by overtrading in too many markets especially if you are a beginner. Go for the major currency pairs and drill down your studies in it.

9. Implement a proper trading system

There is hundreds of trading systems available on line. Pick one that you are most comfortable with and stick with it. Stay organized in your trades and fully utilized stop-loss or limit functions in your trades.

10. Keep learning

The best investment is always the investment on your brain. Without a doubt, Forex trading needs much more than just a few guidelines or tips to be successful. Experience, knowledge, capital, fortitude, and even some help of luck are all crucial in one’s success in the FX market. if you lose in a trade, do not lose the experience in it. Learn from your mistakes and regain your position in the next trade.

Forex Trading Costs

Typically, while trading currencies on the forex market, the investor does not have to worry about costs stemming from trading commissions. That having been said, there are costs associated with forex trading that the prudent investor should keep track of.
Costs Associated With Forex Trading
Spread (which is often charged in lieu of a direct commission)
Rollover (associated with holding trades overnight)
Fees associated With the Spread
The main method that a forex broker will use to make money is by having a bid/ask spread. The broker will offer a variety of currency pairs, and the investor can use his currency to buy into any of the currencies that the broker holds relative to the current spreads. The broker will sell you the currency you are interested in at a price higher relative to the price at which he will buy back the same currency from you for your original currency: this is the method that he uses to ensure he is making a profit. This spread allows the broker to “buy low” and “sell high.” Thus as an investor, one should try to find a broker whose spreads, on average, tend to be quite small.
Spread Fee Example
Let us cement this idea with an example. Suppose that you are interested in buying Japanese yen with U.S. dollars. The broker might have a bid/ask spread at 5:00pm of 98.03/98.09. With 100 USD, you would be able to buy 9803 JPY. Now, suppose you regretted your investment and immediately wanted to convert your money back into dollars. You would only be able to sell back the yen to the broker at the ask rate, garnering 99.94 USD. Thus, the transaction, in effect, has a cost of .06 USD since no economic or financial conditions have changed in the timeframe of that trade.
Understanding Rollover Fees
Another type of fee is the rollover fee. This is somewhat of a different concept because sometimes, instead of having to pay the rollover fee, the investor is credited this sum of money. Rollover fees apply when a forex position is enacted after all the major markets have closed. Since the investor typically waits a few hours to receive the destination currency, the interest that he could otherwise have obtained by putting that currency in his bank account is lost. Thus rollover fees constitute the difference between the interest rates of the bought currency and the sold currency, compounded appropriately. If the investor buys into the currency with the higher interest rate, he will be paid the appropriate rollover amount at the start of the next trading session. If he buys into the currency with the lower interest rate, he gets charged the appropriate rollover amount.
High Leverage and Margin
Margin trading also provides another type of cost that is even more prevalent in forex trading than it is in stock trading. Forex trading typically requires a very high amount of leverage because of the size minimums placed on certain types of forex trades. Traders who do not have enough cash must trade via financing. Typically, forex brokers allow leverage ratios of up to 100:1; this means that an investor must only own 1 dollar out of every 100 invested. Even more risky is the fact that most forex traders do not even have to okay their decisions to borrow equity from their brokers: the necessary dollar amounts are automatically transferred when needed.

How to Trade Forex

Trading foreign exchange is exciting and potentially very profitable, but there are also significant risk factors. It is crucially important that you fully understand the implications of margin trading and the particular pitfalls and opportunities that foreign exchange trading offers. On these pages, we offer you a brief introduction to the Forex markets as well as their participants and some strategies that you can apply. However, if you are ever in doubt about any aspect of a trade, you can always discuss the matter in-depth with one of our dealers. They are available 24 hours a day on the Saxo Bank online trading system, SaxoTrader.

The benchmark of its service is efficient execution, concise analysis and expertise – all achieved whilst maintaining an attractive and competitive cost structure. Today, Saxo Bank offers one of Europe's premier all-round services for trading in derivative products and foreign exchange. We count amongst our employees numerous dealers and analysts, each of whom has many years experience and a wide and varied knowledge of the markets – gained both in our home countries and in international financial centres. When trading foreign exchange, futures and other derivative products, we offer 24-hour service, extensive daily analysis, individual access to our Research & Analysis department for specific queries, and immediate execution of trades through our international network of banks and brokers. All at a price considerably lower than that which most companies and private investors normally have access to.

The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.

Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type. Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements.

Working with statistics

Trade Balance

The trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets.

The trade balance is a major indicator of foreign exchange trends. Seen in isolation, measures of imports and exports are important indicators of overall economic activity in the economy.

It is often of interest to examine the trend growth rates for exports and imports separately. Trends in export activities reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of domestic economic activity.

Typically, a nation that runs a substantial trade balance deficit has a weak currency due to the continued commercial selling of the currency. This can, however, be offset by financial investment flows for extended periods of time.

Gross Domestic Product

The Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity available. Reported quarterly, GDP growth is widely followed as the primary indicator of the strength of economic activity.

GDP represents the total value of a country's production during the period and consists of the purchases of domestically produced goods and services by individuals, businesses, foreigners and the government.

As GDP reports are often subject to substantial quarter-to-quarter volatility and revisions, it is preferable to follow the indicator on a year-to-year basis. It can be valuable to follow the trend rate of growth in each of the major categories of GDP to determine the strengths and weaknesses in the economy.

A high GDP figure is often associated with the expectations of higher interest rates, which is frequently positive, at least in the short term, for the currency involved, unless expectations of increased inflation pressure is concurrently undermining confidence in the currency.

Consumer Price Index

The Consumer Price Index (CPI) is a measure of the average level of prices of a fixed basket of goods and services purchased by consumers. The monthly reported changes in CPI are widely followed as an inflation indicator.

The CPI is a primary inflation indicator because consumer spending accounts for nearly two-thirds of economic activity. Often, the CPI is followed but excludes the price of food and energy as these items are generally much more volatile than the rest of the CPI and can obscure the more important underlying trend.

Rising consumer price inflation is normally associated with the expectation of higher short term interest rates and may therefore be supportive for a currency in the short term. Nevertheless, a longer term inflation problem will eventually undermine confidence in the currency and weakness will follow.

Producer Price Index

The Producer Price Index (PPI) is a measure of the average level of prices of a fixed basket of goods received in primary markets by producers. The monthly PPI reports are widely followed as an indication of commodity inflation.

The PPI is considered important because it accounts for price changes throughout the manufacturing sector.

The PPI is often followed but excludes the food and energy components as these items are normally much more volatile than the rest of the PPI and can therefore obscure the more important underlying trend.

Studying the PPI allows consideration of inflationary pressures that may be accumulating or receding, but have not yet filtered through to the finished goods prices.

A rising PPI is normally expected to lead to higher consumer price inflation and thereby to potentially higher short-term interest rates. Higher rates will often have a short term positive impact on a currency, although significant inflationary pressure will often lead to an undermining of the confidence in the currency involved.

Payroll Employment

Payroll employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the net number of new jobs created or lost during the month and changes are widely followed as an important indicator of economic activity.

Payroll employment is one of the primary monthly indicators of aggregate economic activity because it encompasses every major sector of the economy. It is also useful to examine trends in job creation in several industry categories because the aggregate data can mask significant deviations in underlying industry trends.

Large increases in payroll employment are seen as signs of strong economic activity that could eventually lead to higher interest rates that are supportive of the currency at least in the short term. If, however, inflationary pressures are seen as building, this may undermine the longer term confidence in the currency.

Durable Goods Orders

Durable Goods Orders are a measure of the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. Monthly percent changes reflect the rate of change of such orders.

Levels of, and changes in, durable goods order are widely followed as an indicator of factory sector momentum.

Durable Goods Orders are a major indicator of manufacturing sector trends because most industrial production is done to order. Often, the indicator is followed but excludes Defence and Transportation orders because these are generally much more volatile than the rest of the orders and can obscure the more important underlying trend.

Durable Goods Orders are measured in nominal terms and therefore include the effects of inflation. Therefore the Durable Goods Orders should be compared to the trend growth rate in PPI to arrive at the real, inflation-adjusted Durable Goods Orders.

Rising Durable Goods Orders are normally associated with stronger economic activity and can therefore lead to higher short-term interest rates that are often supportive to a currency at least in the short term.

Retail Sales

Retail Sales are a measure of the total receipts of retail stores. Monthly percentage changes reflect the rate of change of such sales and are widely followed as an indicator of consumer spending.

Retails Sales are a major indicator of consumer spending because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity.

Often, Retail Sales are followed less auto sales because these are generally much more volatile than the rest of the Retail Sales and can therefore obscure the more important underlying trend.

Retail Sales are measured in nominal terms and therefore include the effects of inflation. Rising Retail Sales are often associated with a strong economy and therefore an expectation of higher short-term interest rates that are often supportive to a currency at least in the short term.

Housing Starts

Housing Starts are a measure of the number of residential units on which construction is begun each month and the level of housing starts is widely followed as an indicator of residential construction activity.

The indicator is followed to assess the commitment of builders to new construction activity. High construction activity is usually associated with increased economic activity and confidence, and is therefore considered a harbinger of higher short-term interest rates that can be supportive of the involved currency at least in the short term.

Forex trading examples

Example 1

An investor has a margin deposit with Saxo Bank of USD 100,000.

The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.

The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.

Day 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.

Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.

Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.

Day 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.

As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.

This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.

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Example 2:

The investor follows the cross rate between the EUR and the Japanese yen. He believes that this market is headed for a fall. As he is not quite confident of this trade, he uses less of the leverage available on his deposit. He chooses to ask the dealer for a quote in EUR 1,000,000. This requires a margin of EUR 1,000,000 x 5% = EUR 10,000 = approx. USD 52,500 (EUR /USD 1.05).

The dealer quotes 112.05-10. The investor sells EUR at 112.05.

Day 1: Sell EUR 1,000,000 vs. JPY 112.05 = Buy JPY 112,050,000.

He protects his position with a stop-loss order to buy back the EUR at 112.60. Two days later, this stop is triggered as the EUR o strengthens short term in spite of the investor's expectations.

Day 3: Buy EUR 1,000,000 vs. JPY 112.60 = Sell JPY 112,600,000.

The EUR side involves a credit and a debit of EUR 1,000,000. Therefore, the EUR account shows no change. The JPY account is credited JPY 112.05m and debited JPY 112.6m for a loss of JPY 0.55m. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the loss calculation.

This results in a loss of JPY 0.55m = approx. USD 5,300 (USD/JPY 105) = 5.3% loss on the original deposit of USD 100,000.

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Example 3

The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:

He asks Saxo Bank for a quote in USD 1,000,000 against the Canadian dollar. The dealer quotes 1.5390-95 and the investor sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.

Day 1: Sell USD 1,000,000 vs. CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD 1.5357 = Buy CAD 1,535,700 for Day 61 due to the interest rate differential.

After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.

Day 31: Buy USD 1,000,000 vs. CAD 1.4865 = Sell CAD 1,486,500 for Day 61.

Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61.

The USD account receives a credit and debit of USD 1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD 49,200 = approx. USD 33,100 = profit of 33.1% on the original deposit of USD 100,000.

Forex Trading Basics

The global foreign exchange market is the biggest market in the world. The 3.2 trillion USD daily turnover dwarfs the combined turnover of all the world's stock and bond markets.

There are many reasons for the popularity of foreign exchange trading, but among the most important are the leverage available, the high liquidity 24 hours a day and the very low dealing costs associated with trading.

Of course many commercial organisations participate purely due to the currency exposures created by their import and export activities, but the main part of the turnover is accounted for by financial institutions. Investing in foreign exchange remains predominantly the domain of the big professional players in the market - funds, banks and brokers. Nevertheless, any investor with the necessary knowledge of the market's functions can benefit from the advantages stated above.

In the following article, we would like to introduce you to some of the basic concepts of foreign exchange trading

Margin Trading

Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, Saxo Bank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.

In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed.

Base Currency and Variable Currency

When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.

The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.

Dealing Spread, but No Commissions

When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.

The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.

This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USDEUR presents price swings of 150-200 points.

Spot and forward trading

When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security. If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.

Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.

Interest Rate Differentials

Different currencies pay different interest rates. This is one of the main driving forces behind foreign exchange trends. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate.

Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when you buy the US dollar. Of course, an even more important factor normally is the relative value of the currencies, which changed 15% from low to high during 2005 – disregarding the interest rate differential. From a pure interest rate differential viewpoint, you have an advantage of 100% per annum in your favour by being long US dollar and an initial disadvantage of the same size by being short.

Such a situation clearly benefits the high interest rate currency and as result, the US dollar was in a strong bull market all through 2005. But it is by no means a certainty that the currency with the higher interest rate will be strongest. If the reason for the high interest rate is runaway inflation, this may undermine confidence in the currency even more than the benefits perceived from the high interest rate.

Stop-loss discipline

As you can see from the description above, there are significant opportunities and risks in foreign exchange markets. Aggressive traders might experience profit/loss swings of 20-30% daily. This calls for strict stop-loss policies in positions that are moving against you.

Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This means that there will nearly always be an opportunity to react to moves in the main currency markets and a low risk of getting caught without the opportunity of getting out. Of course, the market can move very fast and a stop-loss order is by no means a guarantee of getting out at the desired level.

But the main risk is really an event over the weekend, where all markets are closed. This happens from time to time as many important political events, such as G7 meetings, are normally scheduled for weekends.

For speculative trading, we always recommend the placement of protective stop-lossorders. With Saxo Bank Internet Trading you can easily place and change such orders while watching market development graphically on your computer screen.

History of Foreign Exchange

Brief history of Forex trading

Initially, the value of goods was expressed in terms of other goods, i.e. an economy based on barter between individual market participants. The obvious limitations of such a system encouraged establishing more generally accepted means of exchange at a fairly early stage in history, to set a common benchmark of value. In different economies, everything from teeth to feathers to pretty stones has served this purpose, but soon metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.

Originally, coins were simply minted from the preferred metal, but in stable political regimes the introduction of a paper form of governmental IOUs (I owe you) gained acceptance during the Middle Ages. Such IOUs, often introduced more successfully through force than persuasion were the basis of modern currencies.

Before World War I, most central banks supported their currencies with convertibility to gold. Although paper money could always be exchanged for gold, in reality this did not occur often, fostering the sometimes disastrous notion that there was not necessarily a need for full cover in the central reserves of the government.

At times, the ballooning supply of paper money without gold cover led to devastating inflation and resulting political instability. To protect local national interests, foreign exchange controls were increasingly introduced to prevent market forces from punishing monetary irresponsibility.

In the latter stages of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.

The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.

The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.

But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.

The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.

But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD 3,000 billion is traded every day, far more than the world's stock and bond markets combined.

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FAP TURBO REVIEW
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We have looked at their proof report ( a report showing Fap Turbo trade real monetary accounts with starting values of $370.00 and $ 2500.00 and TRIPLE them plus in under a month. This shows the actual trading of the robot and can be refreshed every 15 minutes. The creators of this program have also shown us a video of their trading on an account with a $10,000 deposit, after 3 months the balance was a net profit of 30 577.

Forex Trading System

The point of a currency trading system takes extent to deduce the software itself and how to program all the options available to you into solid. Essentially, two humans could acquire just so the identical piece of software and one could produce a substantial amount of resources and the other one could birr indigent.

This could happen for a variance of reasons, lead off the wider learning and sympathetic of the markets you posses, the surpassing you will perceive how the variables you are able to select money the software will interact shadow each other. Adjoining, mart conditions vary from bit to date, the exceeding astute plutocrat will take meaning that and adjust able systems variables according to what is fully happing fame the marketplace at that moment .

Forex Allows You to Respond

In today's market place, the U.S.Dollar constantly fluctuates against the other major currencies of the world. There are several factors that contribute to the fluctuation of the U.S.Dollar and the other foreign currencies of the Forex Currency Market due to the global increase in world trade and foreign investments which have lead to many national economies becoming interconnected with one another.

This connection, and resulting fluctuations in currency exchange rates through Forex currency trading, has created a huge international Forex Currency Market that has created exciting profitable investment opportunities trading in the U.S.Dollar as a buyer or seller in the Forex Currency Market as a excellent alternative investment for many investors and currency brokers.

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Is The U.S. Dollar Topping? what is next? /Aussie,Euro Surges Vs USD and etc

A tentative bottom in action for the U.S. economy

After having plunged for many months, growth appears to have found a bottom in the United States. Some banks are beginning to lower credit standards on businesses and commercial real estate loans, as few key indicators start the manifest a slight better picture. A milder scenario might anticipate a tentative stabilization for the U.S. economy that must be confirmed over the course of the year. The real estate market is leading the way, but other sectors are beginning the move. For the second consecutive month, pending home sales rose in March 3.2%, as construction spending moved up 0.3% for the first time in five straight months. In effect, despite staying below the benchmark of 50 for the fifth straight month, the ISM non-manufacturing index rose to the highest level since October of last year and reached 43.7 in April (40.0 expected) from 42.2 in March. New orders climbed to 47, while employment moved up to 37 from 32.3.


Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.

Growth improving and the U.S. Dollar Declining?

he U.S. dollar to decline further

The economy is on the move again in the United States. The housing market appears to be designing a bottom at current levels, industry’s output is increasing and consumer confidence is improving. In April, new home sales moved up 1,000 to 352,000 units from March’s 351,000. Inventories declined 13,000 month-on- month and are down 160,000 year-on-year and In would take 10.1 months to buy all the new homes in storage, down from 10.6 months in March and 12.4 months in January. In reality, the economic growth of the past ten years will not be repeated in the foreseeable future. However, improvements could be seeing in the final part of this year supported by the monetary and fiscal incentives. The process is challenging, but even a moderate growth would help mitigate the huge budget deficit, albeit an increase of inflation is inevitable.


Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international

ECB: What is Next?

Despite the unstable economic environment, the worst might be over in the United States and in Europe. As a result, rates should remain on hold for some time and then climb again along with the economic expansion. The U.S. dollar is moving away from the lows of the past days, but the medium term trend remains bearish for now.

Aussie, Euro Surges vs USD

The dollar tumbled sharply against the Aussie, falling past the 0.80-handle for the first time since October. The greenback also struggled versus the euro, slipping to 1.4168 and the sterling, falling just shy of the 1.62-level. Crude oil extended gains, edging up past the $66 per barrel level while US equity bourses were relatively unchanged on the session.

The economic reports released earlier in the session were mixed, with growth and manufacturing reports deteriorating while a key sentiment survey improved by better than estimates. The preliminary Q1 GDP revealed a larger than expected contraction in economic activity, posting a 5.7% decline compared with a 6.1% decline in the previous quarter. The core PCE prices held steady at 1.5%, while corporate profits reversed a steep 10.7% decline in the previous quarter to improve by 1.1%. The New York NAPM index improved in May to 361.6 from April at 356.0. Meanwhile, the Chicago PMI disappointed in May, falling to 34.9 and missing estimates for an improvement to 42.0 from 40.1 in April. The PMI employment component fell to 25.0 from 31.8, while new orders fell to 37.3 from 42.1.

On an upbeat note, the University of Michigan consumer sentiment survey beat forecasts for an improvement to 68.0 in May from 65.1 in April, with the final reading edging up to 68.7. The expectations component jumped to 69.4 versus 63.1 a month earlier, while the conditions

GBP Breaks above 1.60

The greenback was mixed in the Wednesday session, slumping sharply against the sterling to a near 7-month low and edging up versus the yen.

Economic data from the US was better than expected earlier today. Existing home sales shot up by 2.9% in April to 4.68 million units, reversing a downwardly revised 3.4% decline in March. Traders will look ahead to data on Thursday, including weekly jobless claims, April durable goods orders and new home sales.



This article contains the following sections:
1:Sterling Rallies

2:Euro Regains Footing

Greenback Rallies Sharply

The greenback reversed previous session’s losses, rallying sharply against the euro by over two big figures to 1.4111 and the sterling by nearly four big figures at 1.6244. US equities bourses pulled back further with the Dow Jones and Nasdaq sliding by over 1.2%, while the S&P 500 lost over 1.8%.

With markets eagerly anticipating the May US labor report due out on Friday, the May ADP private-sector payrolls were worst-than-expected, posting a loss of 532k jobs and exceeding expectations for a loss of 520k jobs from 491 private sector jobs lost previously. April durable goods orders increased by 1.7%, albeit less than the 1.9% increase from March, while factory orders improved by 0.7% from 0.9%. The May non-manufacturing ISM report improved to 44 versus 43.7 a month earlier, remaining beneath the key 50-level though.

Data slated for release on Thursday include weekly jobless claims, Q1 labor costs and non-farm productivity. The key reports will be released on Friday, consisting of the May unemployment rate, which is seen creeping up to 9.2% and the non-farm payrolls reading, expected reveal a 520k job loss from 539k loss of jobs a month earlier.

Dollar Tumbles to ’09 Lows

The greenback slid across the board in the Tuesday session, tumbling to its lowest level of the year against the euro at 1.4321 and a seven month low versus the pound at 1.6590. The dollar remains under pressure amid renewed skepticism over its position as the world’s reserve currency, with comments from Russian President Medvedev reiterating his proposal for a new global currency.

Dallas Fed President Richard Fisher expressed optimism, saying the Fed has been successful in pulling the economy back from the brink and is beginning to see the results from its efforts to support the credit markets. Although he said the US economy is “getting less worse” with time, he believes it is still “not out of the woods” and expects the recovery to be very slow. He did offer a somewhat upbeat assessment, saying consumer confidence was picking up somewhat and retail sales was no longer plunging. Fisher said the aggressive action adopted by the Fed helped stave off the worse of the US downturn.

The US data released earlier in the session was better than expected. The April pending home sales sharply beat expectations for an increase of 0.5% from the March reading at 3.2%, instead posting highest increase since 2001, advancing by 6.7%.

VOLKSWAGEN STYMIES PORSCHE ATTEMPS TO MERGE

VOLKSWAGEN STYMIES PORSCHE ATTEMPS TO MERGE

Volkswagen froze talks over a merger that could bail out its majority owner Porsche SE , leaving the luxury car maker scrambling to reassure investors a deal to unite the two was still alive.


Porsche insisted the talks to create a sweeping automotive empire were still on and that it faced no short-term financing issues, but the standoff heightened market concern about how the firm would fund its 9 billion euro ($12.1 billion) debt pile -- sending its shares down more than 9 percent at one stage.

A Porsche source confirmed a report it had asked German state bank KfW whether it could qualify for 1 billion euros in loans. Porsche said it had not applied for state aid.

2010 MAZDA

The all-new 2010 MAZDA3 4-Door features pulse-racing details like class-leading technology, distinctive design and a signature thrilling performance that sets it far apart from common compact cars. It is also one of Mazda's most economical cars, making the thrill even more rewarding.

EXTERIOR

The MAZDA3's stunning good looks brings bold style to a category not known for it. Taking key design cues from the Nagare concept vehicle, the new design features a strong, dynamic exterior characterized by long, sweeping lines that elongate the vehicle and a bold, aggressive stance that pushes the width while also bringing it visually lower to the ground.

Its aerodynamic curves are set off with available low-slung fog lights and Self-leveling Bi-Xenon High-Intensity-Discharge (HID) headlights complete with an Adaptive Front-lighting System (AFS) that peers around corners as you maneuver. Available rain-sensing windshield wipers, dual body-color power heated mirrors with side marker turn-signal lights and newly-designed 16-inch steel or alloy wheels, or available 17-inch alloy wheels that accent its long lines. While available chrome dual exhaust outlets and LED taillights leave a bold, unmistakable impression, completing the visual feast that is the 2010 MAZDA3's bold new design.

INTERIOR

The completely redesigned, sporty interior features a smooth, sculpted cockpit that gives it a larger, more stylish feeling with proper focus on the driver. Blue LED lighting welcomes you as you enter the MAZDA3. Available leather-trimmed seats with an 8-way power-adjustable driver's seat with memory and 5-level variable heated front seats, so your ride's always just how you like it.

New available advancements include Bluetooth® hands-free phone and audio capability*, dual-zone automatic climate control, a compact navigation system and a 10-speaker Bose® Centerpoint® Surround System with AudioPilot®

With nerves already stretched after VW called off merger talks set for Monday, a source close to Volkswagen Chairman Ferdinand Piech told Reuters that a meeting scheduled for Wednesday was also canceled. Discussions could only resume if Porsche sheds more light on its finances, the source said.

The news focused attention on the potential financial risk posed by Porsche's complex web of derivative contracts, which have undermined its attempts to forge closer ties with conservatively funded VW.

"We must get a clear idea of the true state of affairs at Porsche. We need absolute transparency with regard to the present situation," Volkswagen Chief Executive Martin Winterkorn wrote in a letter to staff seen by Reuters.

FOREIGN EXCHANGE AND CAR LOAN

FOREIGN EXCHANGE AND CAR LOAN

Rarely do people get the opportunity of purchasing the car they always wanted from the money that’s already saved up in their bank accounts. This is actually a dream come true for many people. That is the main reason why individuals who want to own their dream car opt for car financing. Car financing rates go hand in hand with car financing.

Whether you are looking for a brand new flashy Ferrari or an average second hand car just to travel around the city you could still find the best rates from an online auto finance provider. Some of these online finance providers would not even consider your bad credit history. With the competitive market in car financing the rates have come down in a rapid phase and also the options involved in a finance agreement which are beneficial for the customer are higher in numbers these days.

With all sorts of car finance plans in the internet it is sometimes hard for a newcomer to the field to figure out which plan would give them the best benefits. Comparing the prices from several of these companies will help you in big time to come to terms in who will provide you with the best option.

Times have changed for the better. Many auto finance companies today provide car financing loans to clients even if they suffer from bad credit scores. Some companies do not consider the credit history of a person, but focus more on his or her ability of repaying the loan with their current assets. Car financing rates are usually higher in almost every company; therefore one must be sure of their ability of paying back.

The World Wide Web provides ample support with regard to auto car financing rates.

If the car dealer you are interested in has a website, all you need to do is log in to the particular website and browse through their web pages. A rate trend index will provide you with the weekly updates in car finance news and events. Experts’ comments would also help you gain few tips in finding the next best car finance for your needs. After all getting a car finance could well be the biggest investment in your life and hence you are required to be double cautious about it.

FOREIGN EXCHANGE SCENARIO

This fact sheet deals with the translation of trading stock values assuming the taxpayer has not chosen to use an average rate of exchange for foreign currency amounts

Classic Cars orders and pays US$3,000 for gearboxes from its supplier. The effect of the terms of the contract is such that these items become Classic Car’s stock on hand when payment of the items is made. These items remained on hand at year’s end. The exchange rate on 1 May 2004 is A$1.00 = US$0.50. On 30 June 2004, the market selling value of these gearboxes is US$3,100. The replacement value is also US$3,100. The exchange rate on 30 June 2004 is A$1.00 = US$0.60.

The exchange rate to use is the rate prevailing on 1 May 2004.
The translated value is A$6,000.
The exchange rate to use is the rate prevailing on 30 June 2004.
The translated value is A$5,167
The exchange rate to use is the rate prevailing on 30 June 2004.
The translated value is A$5,167.

Forex rates and car price

I was curious why forex rate changes don't show up in car prices that have some component of imports. For most of the C+ higher segment this ranges from 25% to 100% (CBUs). In a simplistic model if a car price has X% import component then a Y% appreciation in INR should lead to about X*Y decrease in the price. Following is a table assuming 15% rupee appreciation (as with INR vs. many currencies recently)

Car Price Import fraction Expected decrease
10L 0.3 4.00% - 45K INR
12L 0.4 6.75% - 81K INR
24L 1.0 15.00% - 3.6L INR

So the variations could be pretty large based on localisation content. Who gets to pocket these "gains" ? Why these don't get passed on to the poor buyers. Have there been precedents where a company has passed on such gains to the end buyer. I understand it would be cumbersome to change a car price everyday as forex rate moves but periodically it could be possibly done

Predict the Next Hottest-Selling Cars

It's called the Car Stock Exchange and it may be considered a game, but is it? Yes, you use play money to buy fantasy stocks, but those stocks are tied to real vehicles that you believe will either be a sales boom or bust. CSX trading may deliver a real predictive message about how new vehicles will do in the American marketplace. You are becoming an automotive forecaster while attempting to outsmart your peers by trading car stocks for play profits that will earn you prizes for your superior performance. Expect to hear new lingo around the water cooler, something like, "I went long G8 and short Sequoia and made big bucks, CSX bucks."

Now you have a chance to compete with our team and your friends by employing the Wall Street trading strategy of "buying low — selling high," and not necessarily in that order, as CSX allows you to "short" car stocks that you believe will fall short of their predicted sales targets six months from their on-sale showroom release dates. You'll have to ask yourself questions like, "Sequoia sold just 23,273 in all 2007. Can the all-new model really sell 18,900 in its first six months based on a full-year 2008 estimate of 42,000?" Or, "The new BMW 1 Series is cheaper than the 3 Series, which sold 142,490 in 2007, so even with fewer model variants, should the 1 Series sell more than 9,000 units in its first six months?" As your CSX Car Stock Guru blogger, I will only give you the facts, leaving it up to you to make your own "investment" decisions.

We'll start with 25 "car stock" choices and add a new vehicle stock weekly in a so-called initial public offering (IPO), to use Wall Street jargon, then retire them after their first six months of sales. The stocks are priced based on the expected six-month sales projection. For example, the BMW 1 Series has a 9,000-unit six-month forecast, so it's priced at $9 per share. Toyota Corolla at 137,250 units is priced at $137 and Nissan Murano at 33,750 has a starting price of $34 per share