Frequently Asked Question

Topic Covers | Checking Account, Retail Banking, Savings Account



If I want to have some cash in a liquid account for unexpected emergencies, what is best? A savings account or another type?


It's always a good idea to keep some money set aside in a liquid form, but it's a double-edged sword, because the more liquid your money, the less it's earning. If you never have an emergency, then you can miss out on the chance for substantial earnings by keeping that money in a simple savings account. For more aggressive growth without losing the liquidity, you can consider a money market account or a high-yield savings account. A high-yield savings account may require you to maintain a certain minimum monthly balance.

If you are concerned about liquidity but don't feel like you need your money all in cash, you can also consider bond or certificate of deposit (CD) ladders. When you create a ladder of bonds or CDs, you invest in instruments with varying maturity dates so that you regularly have funds converting to liquid cash while also taking advantage of the higher returns that these instruments offer.

Mutual funds and money market funds are another option, but these generally require liquidation and three days or so to settle and make the funds available.

It's one thing to keep a few hundred dollars sitting in an emergency savings account with a very low interest rate, but if your emergency account has several months' worth of expenses, then you might consider mixing and matching many different instruments so that your savings are still accessible (possibly on a graduated timeline), you avoid penalties for withdrawal and you maximize the growth opportunities available.

 

Top 7 Questions About Currency Trading Answered

Top 7 Questions About Currency Trading Answered


Although forex is the largest financial market in the world, it is relatively unfamiliar terrain for retail traders. Until the popularization of internet trading a few years ago, FX was primarily the domain of large financial institutions, multinational corporations and secretive hedge funds. But times have changed, and individual investors are hungry for information on this fascinating market. Whether you are an FX novice or just need a refresher course on the basics of currency trading, read on to find the answers to the most frequently asked questions about the forex market.
Tutorial: The Ultimate Guide To Forex Trading
How does the forex market differ from other markets?
Unlike stocks, futures or options, currency trading does not take place on a regulated exchange. It is not controlled by any central governing body, there are no clearing houses to guarantee the trades and there is no arbitration panel to adjudicate disputes. All members trade with each other based on credit agreements. Essentially, business in the largest, most liquid market in the world depends on nothing more than a metaphorical handshake.


At first glance, this ad-hoc arrangement must seem bewildering to investors who are used to structured exchanges such as the NYSE or CME. (To learn more, see Getting To Know Stock Exchanges.) However, this arrangement works exceedingly well in practice; because participants in FX must both compete and cooperate with each other, self regulation provides very effective control over the market. Furthermore, reputable retail FX dealers in the United States become members of the National Futures Association (NFA), and by doing so they agree to binding arbitration in the event of any dispute. Therefore, it is critical that any retail customer who contemplates trading currencies do so only through an NFA member firm.
The FX market is different from other markets in some other key ways that are sure to raise eyebrows. Think that the EUR/USD is going to spiral downward? Feel free to short the pair at will. There is no uptick rule in FX as there is in stocks. There are also no limits on the size of your position (as there are in futures); so, in theory, you could sell $100 billion worth of currency if you had the capital to do it. If your biggest Japanese client, who also happens to golf with the governor of the Bank of Japan tells you on the golf course that BOJ is planning to raise rates at its next meeting, you could go right ahead and buy as much yen as you like. No one will ever prosecute you for insider trading should your bet pay off. There is no such thing as insider trading in FX; in fact, European economic data, such as German employment figures, are often leaked days before they are officially released.
Before we leave you with the impression that FX is the Wild West of finance, we should note that this is the most liquid and fluid market in the world. It trades 24 hours a day, from 5pm EST Sunday to 4pm EST Friday, and it rarely has any gaps in price. Its sheer size and scope (from Asia to Europe to North America) makes the currency market the most accessible market in the world.
 

Commodity Prices And Currency Movements

Find out which currencies are most affected by fluctuations in gold and oil prices, and improve your trading.
Predicting the next move in the markets is the key to making money in trading, but putting this simple concept into action is much harder than it sounds. Professional forex traders have long known that trading currencies requires looking beyond the world of FX. The fact is that currencies are moved by many factors - supply and demand, politics, interest rates, economic growth, and so on. More specifically, since economic growth and exports are directly related to a country's domestic industry, it is natural for some currencies to be heavily correlated with commodity prices. The top three currencies that have the tightest correlations with commodities are the Australian dollar, the Canadian dollar and the New Zealand dollar. Other currencies that are also impacted by commodity prices but have a weaker correlation are the Swiss franc and the Japanese yen. Knowing which currency is correlated with what commodity can help traders understand and predict certain market movements. Here we look at currencies correlated with oil and gold and show you how you can use this information in your trading.

Gold Trading

The materials of primary importance for every Forex novice are presented in this section.

Here you can find all the information needed to prepare yourself for Forex trading: articles about Forex, glossary, definitions of economic and technical indicators, information about gold and oil, calendar of Forex market holidays and detailed description of the world key financial markets. In the Frequently Asked Questions subsection you can find the answers that will undoubtedly help you to study the fundamentals of currency trading.

In this section you can find information about a variety of economic indicators which you can use every day while trading on Forex market. The indicators described in this sector will help you to analyze the macroeconomic situation in different countries.

Crude oil along with currency and gold is one of the leading indicators of almost every process in the global economy. The volatility of the oil price tends to depend on economic and political events. However, due to some oil specifics, there is always a certain time lag for oil exporters and consumers, which makes oil deals a very delicate investment. In order to understand more deeply the intricacies of crude oil as a trading instrument, you can refer to this section.


 

Gold Price Fluctuations

Fluctuations

As a rule, the gold price depends on worldwide economic situation. Moreover, the gold price has always been an indicator of effectiveness or unprofitability of alternative investment instruments. Gold depreciated in the period of funds turnover and extensive use of different instruments of capital increase. On the contrary, in case of economic stagnation, downturn or recession, gold seemed to be the most stable and liquid instrument of capital fixation and its future saving. The analogy can be drawn to the foreign exchange market: gold can be compared to the Swiss franc which is considered a safe-heaven asset to ride out high volatility.

In other words, when bulls are ruling the market, consumption is rising pulling all the economic sectors up, gold pales into insignificance. But it is temporary.... In August 1998 Russia was going through a tough period: treasury bills depreciation, oil crisis, and subsequent rouble devaluation hit everybody. That time Russians trying to save their capital bought almost all gold at banks and did not regret it. Since August 1998 the price of one ounce has increased three times. Even though the 20% VAT was charged at that time, gold justified investor hopes. However, during that period individuals were able to buy gold only at Russian banks. Meanwhile, the price of one ounce formed on the internal market, and the price of gold was higher than on the world market due to a limited number of providers and high demand within Russia. Now there are possibilities for Russians regardless of crisis locality to buy gold on the world open market. It became possible not only because of financial and stock institutes’ development in Russia, but because numerous brokers appeared providing opportunities to enter the international markets.

As for the current crisis, it has fundamental features. It not only runs through the economic structure of different countries, but provokes recession as well. That is why buying gold is considered as one of the safest way of capital saving. Last year gold quotes surpassed the level of USD 1000. Prices of other precious metals are near the highs. First time for the last 30 years silver approached USD 21 for an ounce. Platinum and palladium rose in price up to USD 2,273 and USD 582 respectively. However, later on prices of precious metals started declining, except for gold. Moreover, despite production downturn and persistent demand for gold among companies, gold hold steady at a high price due to its speculative and capital saving characteristics.

Other factors have influence upon the gold price. For example, the US dollar and the oil price. Meanwhile, the gold price movement is inversely related to the US Dollar and directly related to the oil price dynamics. It is explained by the fact that when the foreign exchange market volatility and the US Dollar rate are decreasing, gold appears to be an alternative investment harbour. While the price of an oil barrel is increasing, gold is the means of petrodollars accumulation.

Transaction Operations

Deposit operations

Being a financial asset, gold can yield revenue if lent. These operations are executed when it is necessary to attract a metal in the account or deposit it for a certain period of time. Gold deposit rates are usually lower than currency rates, which can be explained by high currency liquidity. Standard deposit periods are 1, 2, 3, 6 and 12 months, but they can be changed. Bank attracting precious metals within the framework of deposit contracts can use them for making profit during some time, for instance, financing gold mining or for arbitrage operations, etc. Owners of gold get income from invested gold and avoid expenses of storing a physical metal.

Forwards

Except for the operations mentioned above, other transactions can be executed on the world market. For instance, forward deals which provide for real metal delivery during more than two business days. Making such deal, a buyer ensures himself against gold price increases on the spot market in future. Insurance implies fixing the price which mutual settlement will be executed at. However such deal does not give the possibility to use more auspicious conjuncture. Forward cannot be cancelled. It can be only balanced (forward position is closed) by buying and selling of the stipulated by the deal amount of metal at the current price with future selling it at price the stipulated by the forward contract. Such transactions are made frequently on the interbank gold market. If selling a metal for exact period is necessary, a seller works it off under conditions of spot and then makes a swap deal: he buys a metal on conditions of spot and sells it on conditions of forward at the same time.

Transactions with CFDs

We were considering physical metal markets’ organization and functioning before. However, tehre is another point of trading virtual instruments that arouses interest.

There are hardly any events that had such influence on the financial markets as CFD introduction. The era of unprecedented interest and exchange rates started in the 1970-ies and gave rise to the need for new financial instruments which could be used for managing increased risks. Prosperity of derivative financial instruments industry is connected with its possibility of fast and effective reacting to changing market tendencies. Eventually, a virtual section of the gold market became an independent field with huge turnover which was many times bigger than that of the physical market.

Future (futures contract) is a legal contract binding the parties; one party agrees to execute and the other – to accept delivery of goods in certain amount (and of ertain quality) at a definite time in future at the price set while contract concluding. In world practice, gold futures contracts are traded on several stock exchanges, and the biggest amount of gold contracts is concluded on COMEX in New York. Operations with gold have been executed since 1974 there. The main aims of futures operations are hedging and speculation. Such deals are especially attractive as you do not need to have much money or many goods. Small investments can bring much profit provided the conditions are suitable.

Another popular form of fixed-term contracts is gold options introduced in 1976 and widely spread in 1982 after their execution in the USA.

Option is a fixed — term contract. The client can either buy a call option or sell a put option of a certain standard amount of goods at a fixed price on the exact date (European options) or during the whole specified period of time (American options). The seller of the option sells the right to the counterpart to execute the transaction or cancel the deal. The buyer of the option pays for this right to the seller – option money. The buyer has the right to exercise the option at a fixed price. Therefore, the active party in transactions with the options is the buyer, because this person makes a decision on fulfillment of conditions of the option contract.

Option transactions are often used for hedging. So, if the investor hedges against risks of increases in the gold price, he will be able to buy a call option or sell a put option; if the investor hedges against risks of decreases in prices, he will be able to sell a call option or buy a put option.Compared with other instruments of hedging, an option is attractive, because, besides fulfillment prices fixing to hedge against adverse changes in market conditions, it gives the opportunity to take advantage of favourable conditions. In addition, options promote development of speculative operations. The maximum size of losses of the buyer is limited by the paid bonus, the gains are potentially unlimited. Consequently, the situation for the seller is vice versa.

Options can be involved in over – the – counter market. Such options are called dealer's options. Their main distinction is that they are not issued by an exchange, but an actual legal entity that guarantees the execution of the option.
 

Dealer options can be Divided

Dealer options can be divided into two groups:

Options for selling on the retail market to meet the private speculative demand. Initially, obtaining such options was associated with increased risk, because in the second half of the the 70-ies in the USA there were a lot of cases of fraud involving options because of high market volatility. The reaction of authorities was to introduce new requirements to organization of trading dealers' options. Particularly, it was foreseen to deposit gold in the custodian bank and the option bonus for the dealer before the execution of the option or after the expiration of validity. Gold trading options. The subjects of the deals are gold miners, industrial customers and large-scale dealers.

Deals with such kind of options feature large volumes and longer period of validity. The purpose of such options is to smooth the price risk of producers and consumers of the metal, in other words, it is not the speculative motive, but hedging of the process participants. Unlike stock options characterized by possible transparency of information concerning its key parameters, dealers' options are sold either directly or through a dealer network. Anyway, all the deals with options must be accompanied by appropriate accounting which ensures fulfillment of the option contract terms and reduction of participants' risks.

The volumes of trading futures and options (paper gold) considerably exceed the turnover of buying and selling the noble metal (the latter amounts to only a few percent). At the same time, being the second to the economic meaning of physical gold market, industry of derivatives have recently had a huge impact on the underlying asset price dynamics, because of the superiority of volume. The participants of gold stock deals are interested in high market volatility, because it gives opportunities to maximize the profit. These actions of speculators often sharply increase the movement of the market. Hence, there were the fantastic rise of gold price in 1980 and its rapid drop in 1997 – 1999.

Three Types Of Spot Operations

“Swap” operations

This term is frequently used in economic literature. When it comes to the gold market, it can be interpreted as buying or selling a metal followed by an immediate opposite operation. Such transactions’ volume is larger than that of spot transactions because gold swap does not have such influence on the precious metals market as “spot” operations. A standard operation includes 32 thousands troy ounces (1 ton).

 

 

There are three types of spot operations with gold:

Swap by time (financial swap)

It is a classic type of a swap operation. It corresponds to a combination of cash and fixed-date transactions: buying (selling) of one and the same metal amount on conditions of “swap” and selling (buying) on conditions of “forward”. The date of closer operation’s execution is called the date of valuation, and a further date of operation’s execution is known as the date of swap ending. An agreement can be concluded for any period of time: from 1 day to several months. Usual terms of a swap agreement is considered to be 1, 3, 6 months and 1 year. The essence of such operations consists in the possibility of converting gold into a currency with keeping the right to buy back gold after swap expiration. Before the contract expires, the parties can agree to extend the contract or eliminate the swap making opposite calculations. Swap operations have become popular. First of all, benefit from attraction of financial resources is obvious in comparison with USD deposits’ attraction, because rates of swaps' interest are lower. Moreover, the possibility of smooth gold attraction which can be used for remains of metal accounts managed by banks, for example. Finally, these operations are very popular among central banks. If they want to convert their own gold reserves, they can be sure that their activity will not seriously influence the gold market; instead of being sold directly on the market, gold moves between contractors.

Swap by metal quality

Sometimes, under certain conditions, a market participant needs gold of higher pureness than he actually has. This wish can be met using swap by metal quality. Such swap provides buying (selling) of one quality metal and against selling (buying) gold of another quality at the same time. The party that is selling metal of higher quality receives a reward depending on deal’s volume and risk related to substitution of one type of gold for another.

Swap by place

Such swap provides buying (selling) gold at one place against selling (buying) it at another place. One of the parties receives reward because gold price varies depending on location can be more expensive at one place.

Gold as an investment

Spot markets

 

Current buy and sell transactions are executed on terms of “spot” with the value date (date of entry/ writing-off of metal and currency) being the second day after that of settling a deal. The international market of current transactions is known as spot market.
Standard lot volume on the spot market is equal to 5 thousands of troy ounces. A troy ounce is a generally accepted measure of weight of precious metals; it is 31.1034807 grams. Such operations are aimed at forming precious metals equity of lending institutions and clients’ requests processing. The starting point of gold price setting is the London market - loco London. The term “loco” means the place of metal delivery. It is the most important condition for operations with precious metals.
 

Glossary

Markets & Accounts

Special personal account opened with the company by a client. This account is used to offset the client's and dealer's obligations, resulting from the deals concluded under the present agreement.
Account history – a full list of completed transactions and non-trading operations of a certain trading account.
Accounting currency – currency unit in which deposit/withdrawal operations are performed.
Adviser –a trading account control algorithm in a form of a program engineered in MetaQuotes Language 4 that sends requests and orders to the server via the client terminal (platform).
Balance – total financial result of all fully executed transactions and deposits/withdrawals to/from an account.
Base currency – currency unit in which an account, balances, commission fees and payments are nominated and calculated.
Broker – the firm that provides crediting services and trader support.
Bull market – market that tends towards escalating rates.
Bulls – traders that count on currency rate escalation.
Client – physical or legal party executing operations within the company.
Client log file – file, created by the client terminal, which records all requests and orders sent from the client to a dealer with 1 second accuracy.
Client terminal – Client terminal MetaTrader 4 or 5 software product that lets the client get information about financial market trades in real time mode (volume defined by the company), perform technical analysis of markets, operate, set/change/cancel orders and receive messages from the dealer and the company as well.
Closed transaction – consists of two opposite trading operations of equal volume (the position opening and closing): buying followed by selling or selling followed by buying. Contract specifications
General trading conditions (such as spread, lot size, minimal trading operation volume, trading operation volume increment, initial margin, lock margin etc) for each instrument.
Currency pair – two currencies which make up a foreign exchange rate, for example, EUR/USD.
Dealing – non-cash currency trading.
Dealing center – company that provides access to the money market.
Developer – “MetaQuotes Software Corp.” is the trading platform developer.
Equity – the secured part of the client account, including open positions, that is bound to the Balance and the Floating rate (profit/loss) by the following formula: Balance + Floating + Swap, i.e. the funds on the client account minus the current loss of the open positions, plus the current profit of the open positions.
Figure – price change for 100 pips. For example, price change EUR/USD from 1.3770 to 1.3870 – this means figure increase.
Force major circumstances – occurrences which could not be foreseen or prevented. These include: natural disasters; wars; acts of terrorism; government actions, actions of executive and legislative government authority, hacker attacks, and other unlawful acts towards servers.
Free margin – determines the state of an account. Calculated according to the formula: Equity - Margin = Free margin.
Hedging – operation that protects an asset or liability against a fluctuation in the foreign exchange rate.
Initial margin - cash cover required by the company for open positions maintenance.
Intraday trade – trade oriented at gaining profit within one day.
Lot Size– a quantity base currency in one lot, that is specified in the contract.
Margin – the required equity which an investor must deposit to collateralize a position equal to 1% (when leverage = 1:100) of an open position deposit.
Margin level – determines the state of the account. Calculated according to the formula: (Equity / Margin) * 100%.
Margin trading – use of borrowed money to buy securities with the expectation of increasing profits. Margin trading can bring big returns, but is also risky.
Market opening – trade resumption after a weekend, holidays or after an interval between trading sessions.
Market opening price gap – either of the following situations:
Market opening quote Bid is greater than market closing quote Ask;
Market opening quote Ask is less than market closing quote Bid.
Market-makers – major banks and financial firms that pledge to provide liquidity by accepting the other side of a trade in a currency, security or futures contract.
Non-trading operation – depositing or withdrawing funds from a trading account, or extending credit.
Normal market conditions – condition of a market that meets the following requirements:
absence of noticeable breaks in relation to the trading platform quotes;
absence of rushing price dynamics;
absence of significant price gaps.
Obvious mistake – opening/closing client positions or executing client order at a price that differs greatly from the price quoted per instrument in present flow quoting at the moment of processing. Or some other dealer activity or inactivity that deals with wrong determination of market prices at the present moment.
Open position – the result of the first part of a completed transaction; at the opening of a position, the client accepts the following liabilities:
- to execute the opposite operation of equal volume;
- to maintain equity not lower than 10% of the necessary margin.
Pending order – the client instructs the dealer to buy or sell once the price reaches the order level.
Pips (points) – the smallest unit of price for any foreign currency, also referred to as points.
Price prior to non-market quoting – closing price of minute bar, prior to minute bar with non-market quoting.
Price Gap – either of the following situations:
– Present quoting Bid is greater than prior quoting Ask;
– Present quoting Ask is less than prior quoting Bid.
Quote flow – sequence of numerical data describing the price value of an instrument at a certain time period.
Range – the distance between levels of support and levels of resistance.
Resistance level – highest channel’s borderline.
Rising trend - occurs, when every following value of the wave curve is higher than the previous rate value. The lows of the waves are connected with a straight line of the trend line.
Server log file – file, created by the server, which records all requests and orders received from the client by a dealer, as well as the processing result with 1 second accuracy.
Spike – a comparatively abrupt upwards or downwards movement of a price or value level (usually exceeding spread). Spikes have a peculiarity of recurrence during a certain period of time, from several minutes to several hours. According to InstaForex Public Offer Agreement, all positions opened and closed by non-market quotations are to be cancelled which guarantees the safeguard of funds against spikes.
Spread – the difference in pips between the Bid and the Ask quote.
Support level – lowest channel’s borderline.
Swap – the amount of money deducted from or added to a client account for the overnight position.
Ticker – a unique identification number given to each open position or a pending order in a trading platform.
Trade operation volume – number of lots multiplied by lot size.
Trader – a person, who trades currency on Forex market in order to gain profit.
Trading Account – a unique personalized stock-taking operation register on the trading platform, where complete closed transactions, opened positions, non-market operations and orders are reflected.
Trading operation – an act of buying or selling of any instrument performed by the client.
Trading platform – software and technical facilities that provide the transmission of financial trading information in real time mode, execution of trading operations with account of mutual obligations between the client and the dealer, and control of conditions and restrictions. For the purposes of the present regulation, it consists of “Server” and “Client terminal ”.
Transaction – trade operations where money resources move from base currency into quoting currency and vice versa.
Trend – current general direction of the price movement.
Trend lines – straight lines with a positive slope, plotted on a graph through low points when the tendencies are uprising, and with a negative slope, drawn through the high points when tendencies are declining; the lines define the current trends; the trend line gaps are usually indicative of tendency changes.
 

Technical Indicators

The FXCM IG index Trading Platform allows you to work with a wide range of technical indicators. In other words, you can use various technical analysis tools.

The technical analysis history enables you to distinguish between basic indicator types. These indicators will, sooner or later, be used by all traders for analyzing financial market positions. These traders 4 have built-in indicators that trigger almost every basic indicator that is present nowadays. Working with Trader 4 enables you to use all of them when trading.

A few of Trader 4 terminal indicators are:

 

Standard Deviation
Relative Vigor Index - RVI
Relative Strength Index - RSI
Parabolic SAR
On Balance Volume - OBV
Moving Average of Oscillator - OsMA
Moving Average Convergence/Divergence - MACD
Money Flow Index - MFI
Momentum
Market Facilitation Index - BW MFI
Moving Average - MA
Gator Oscillator - Gator
Fractals
Force Index - FRC
Envelopes
Elder-rays
DeMarker - DeM
Commodity Channel Index - CCI
Ichimoku Kinko Hyo
Bollinger Bands - BB
Awesome Oscillator - AO
Average True Range - ATR
Average Directional Movement Index - ADX
Alligator
Accumulation/Distribution - A/D
Accelerator/Decelerator Oscillator - AC
 
Start working on your technical analysis.

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Articles about Forex

What to Begin with

 

 

 

There may emerge a question: “How people can earn on Forex being far from the world of finance and who do not know the oats of currency speculations. On the whole, trading on Forex market is absolutely simple. Even if you just predict the rates movement, your trading activity will be successful and profitable. If you feel that euro loses its cost, then you just buy dollar in EUR/USD currency pair, i.e. you put SELL order and finally get profit or lose if your intuition was wrong. However, we have described trading with intuition which can often bring profit, but it does not make you a professional trader, as you cannot draw up any exact forecasts. But you do have all chances to gain on Forex! Professional traders use different tools set while trading: starting from mass media information (fundamental analysis) to a total indicators array and Expert Advisors. Daily, every trader operates in the field of around 4 trillion dollars scale. And each one is able to have a piece of this huge pie! There is no need to be a certificated financier or analyst, logical thinking and some patience will be enough to study the trading mechanism of stock markets. One of Forex market advantages is the provided leverage. A small amount on an account can advance by 100,200 or 600 times! In such a way, you get a substantial sum, make big trades and can wait for high dividends. However, while working on Forex market it is worth remembering about the ways of capital and risk management.

Trading Terminal

Presently, the most comfortable and popular trading terminal is MetaTrader. This program is quite comprehensible, reliable and handy, moreover, it is absolutely free. A newcomer may consider that MetaTrader is uneasy for operating due to options plenty. Although, after getting wise to the program it is clear that this one is easier than Photoshop. To play on Forex and get money you have to know only a few options of this terminal, it is so user-friendly that it can be compared to learning ICQ or antivirus program. Modern technologies develop constantly, so the software moves with the time. MetaTrader terminal allows its users to trade automatically on Forex, in addition to manual operations. A lot of high-skilled traders have their own trading market strategy. There is a signal – then sell. Another signal – buy. Now such actions can be completely fulfilled by the automated program – bot. Let’s say, a trader has effective strategy which makes all actions of the trader following the strategy. In other words, such program is called Expert Advisor or Automatic Trading System.
Advisor can play on Forex doing the trader’s work without his participation - in autopilot mode!

Forex Advatanges

Everyone who is interested in doing this business can work in the international currency market Forex through Internet staying on-the-job. Only Forex works 24 hours except for weekends and holidays! For drawing stable profits and significant income you will have to allow only 2-3 hours of your free time. High yield rate of Forex currency market: during the day the deposit can be extended ten-fold. Even if you don’t think you are lucky and you are not a professional currency trader, it is much better than putting your funds into bank and watch how they are decreased by inflation. Analysis effectiveness and changes forecasting on Forex market: having analyzed various trends of the market and economic situation in the world, it is possible to forereach the rate fluctuations and direct your funds in the right way. Total mobility of Forex market and perfect operational control of trading within it. You can earn in the Internet having just 1 dollar or 1000 dollars as well. Aside from this, the trades are executed momentarily. The operations can be stopped for a while and you can close your account any time, you also can manage your trading wherever you are through Internet from a personal computer, laptop or cell phone.

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Economic Indicators

Macroeconomic indicators based on the Gross National Product (GNP), Gross Domestic Product (GDP) and other statistical data characterizes the state and efficiency of a national economy. They are released in the form of reports and have significant impact on the currency rates. Below you can find the list of the major macroeconomic indicators.

Gross Domestic Product (GDP)
Consumer Price Index (CPI)
The Producer Price Index (PPI)
Employment Indicators
Retail Sales Index
NAPM
Consumer Confidence Index
Beige Book
Durable Goods Orders
Employment Cost Index (ECI)
The Productivity Report
Unemployment Rate
Non-farm Payrolls
Factory Orders
Current Account (Balance of Payments)
Initial Claims (Jobless Claims)
Tankan Survey
ZEW Survey
Personal Consumption / Expenditures (Personal Spending)
Personal Income
Capacity Utilisation
University of Michigan Consumer Confidence Index
Philadelphia Fed Index
Chicago PMI Index

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Forex Useful And Informative Links

The materials of primary importance for every Forex novice are presented in this section. Here you can find all the information needed to prepare yourself for Forex trading: articles about Forex, glossary, definitions of economic and technical indicators, information about gold and oil, calendar of Forex market holidays and detailed description of the world key financial markets. In the Frequently Asked Questions subsection you can find the answers that will undoubtedly help you to study the fundamentals of currency trading.

Economic Indicators

In this section you can find information about a variety of economic indicators which you can use every day while trading on Forex market. The indicators described in this sector will help you to analyze the macroeconomic situation in different countries.

All about Oil

Crude oil along with currency and gold is one of the leading indicators of almost every process in the global economy. The volatility of the oil price tends to depend on economic and political events. However, due to some oil specifics, there is always a certain time lag for oil exporters and consumers, which makes oil deals a very delicate investment. In order to understand more deeply the intricacies of crude oil as a trading instrument, you can refer to this section.

Articles about Forex

If you want to improve your awareness of Forex currency market and get to know trading issues more deeply, you are welcome at the Articles about Forex section. You can find a lot of specialized literature on the currency market trading there.

 

 

Technical Indicators

Trading platform MetaTrader4 will enable you to work you with a wide range of technical indicators. So, every trader can use different indicators for analysis. Each of the indicators in this section is the result of mathematical calculations based on changes in price and volume. The indicators help traders to improve their trading performance.

World Financial Markets

In the section World Financial Markets you will find the description and the operating time of stock, currency and commodity world markets, from NYSE and LSE to Forex and MICEX. What is more, there is a short description of each market to assist you to decide on the time you want to trade and information about how to enter an exchange correctly.

Glossary

In the Glossary section you can browse a lot of terms related to the world's financial markets with thorough descriptions. If you do not know a meaning of a term, you can always find it in our glossary. Market-makers – major banks and financial firms that pledge to provide liquidity by accepting the other side of a trade in a currency, security or futures contract.

 

Trading Gold

Companies offers you to read some articles about one of the most efficient investment tools. Today almost everybody who is interested in gold trading, can be provided with a seamless access to the international gold market and invest his/her money in this precious metal. What is more, you can use gold in futures deals, which can bring a considerable profit to you. It is very rational to invest in gold during the period of a financial crisis, when other investment tools are not as powerful. In this section you can learn all the details about trading gold.
 

Why I should trade FOREX?

Trade Forex

 

Main Question raised in your mind might be: Why should you trade FOREX? There are lots of reasons why you should involve in FOREX trading. FOREX market is truly a global market where it opens 24 hours a day through out the whole week (weekends excluded). With the ease of Internet access, transaction in FOREX can be done in anytime regardless on your location. This gives you the convenience to work on any time, anywhere which in turns gives you the freedom you cannot have in investing other kind of trading.

More over, trading in FOREX gives you an equal prospective in rising and falling market. As trades are always done in pair of currency pairs, FOREX traders can always find chance to make money in anytime, regardless on the fall or rise period of one single country currency. Also, FOREX trading offers incredibly high leverage rates to the traders. By trading currency in margin up to 200 to 1, you can start off your FOREX trade with minimum capital and huge ROI.

Conclusion

Wrapping things up, I hope that the article gives you a better general understanding about FOREX trading. With the flexibility you can get, FOREX trading suits perfectly into most people investment plans. Like with any new form of trading you need to know what you are doing, especially as there is margin involved. If you are new to FOREX, take all the time you need to learn this new trading skill well -- practice everything you learn with a demo account before you consider going 'live' with your own money. Investors should read books, attend seminars, Forex traning course and do paper trade until they are comfortable with there strategy.

Major currency traded in FOREX Market

Major currency traded in FOREX Market

There are seven major currencies, the US dollar (USD), Euro (EUR), Japanese yen (JPY) British pound (GBP), Swiss Franc (CHF) Canadian dollar (CAD) and Australian dollar (AUD). The US dollar is the most traded currency followed by the Euro and the Yen. The Euro is the relatively new currency of the European Union although some member states, including the UK, have not changed their currency. Also, if you live in a country using one of the major currencies, when you first start trading it makes sense to begin with that currency. Not only are you familiar and comfortable with the currency, but you are in a better position to judge its strength. The internet has a wealth of information on the financial climate of a country, but if you live there you have access to all newspaper content, as well being in the unique position of experiencing first hand changes at the consumer level.

Starting in FOREX Trading

Starting in FOREX Trading

To start trading on FOREX, one must first learn how to read FOREX quotes. Foreign exchange quotes are always listed in pairs (e.g. USD/JPY 109.2): the first listed currency is known as the base currency with a constant value of 1 unit while the currency listed in the second is known as counter. In our given example, USD/JPY 109.2 means a dollar of United States Dollar is equal to 109.2 Japanese Yen. In other words, the quote shows the relative value of one currency compare to the other. It means the value USD had been increased when USD/JPY quote goes up
However, a two-sided quote (e.g. EUR/USD 1.2435/1.2440) consisting of a 'bid' and ask is often seen. The bid price is the price at which you can sell the base currency while the ask price is where you can buy the base currency. The different of bid & ask price is commonly known as spread. In the example of EUR/USD 1.2435/1.2440, this means you can buy 1 Euro Dollar with 1.2440 USD or sell 1 Euro 1.2435. Currency brokers make their profit through these differences of bid & ask price and this is how they manage to provide their services to individual investors without charging them commission fees. If you are new to trading it makes sense to deal in the more popular currencies. There are two main reasons for this. Firstly you do not want to be left with a currency where there is little interest and you may have difficulty selling. Secondly the spread between the bid/ask prices is likely to be narrower, making it easier to make a profit.

Being new to FOREX Trading?

Being new to FOREX trading?

 Don’t worry, getting started in FOREX trading is easy and you can always test your skills first in a demo account before you go live with real money. To get started in FOREX trading, we have to get to know what FOREX is. FOREX trading involves buying and selling the different currencies of the world. Buying one currency and selling another at the same time make a FOREX deal. FOREX market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily and the figure is nearly 30 times larger than the total volume of equity trades in United States.

Who are the major players in FOREX market?

Although FOREX trading involves such a big volume of trades nowadays, it is not made available for the publics until year 1998. In the past, the FOREX market was not offered to small speculators or individual traders due to the large minimum business sizes and extremely strict financial requirements. At that time, only banks, big multi-national cooperation and major currency dealers were able to take advantage of the currency exchange market's extraordinary liquidity and strong trending nature of world's main currency exchange rates. Only until the late 90s, FOREX brokers are allowed to break huge sized inter-bank units into smaller units and offer these units to individual traders like you and me. As a fact in FOREX trading, FOREX is mainly traded in large international bank. According to Wall Street Journal Europe, 73% of the trade volume is covered by the major ten. Deutsche Bank, topping the table, had covered 17% of the total currency trades followed by UBS in the second and Citi Group in third taking 12.5% and 7.5% of the market. Other large financial cooperation in the list is HSBC, Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro, and Morgan Stanley.

Building up a Portfolio

Portfolio

 

So you've got your brokerage account and done exhaustive research on some companies you're interested in. Time to take the plunge. As a general rule, it's not a good idea to buy shares at the start of the trading day (currently 8.30am). Prices can be quite erratic owing to the way the big institutions buy and sell shares to each other.

You don't have to buy the shares all in one go. You can set up your phantom portfolio first and then gradually select stocks from the list, judging to see if the timing is right. It is an investment truism that you should buy on the dips and sell at the peaks. While this may seem obvious, share prices do tend to move in waves. After a period of rising prices, investors tend take some profits, and the share price can fall, even if there is nothing fundamentally wrong or changed about company. This is a good time to buy. The trend is still upwards, but you've managed to buy the shares when they were a little cheaper.

Of course, this theory only works when the markets are fairly stable. In volatile times, trying to time buying decisions correctly is almost impossible.

Income, growth or both?When building up a portfolio, it is also important to decide what you want from it. For example, if income is important to you, you should look for fairly stable shares that pay out high and growing dividends. The dividend yield figure (see earlier) is an important indicator of this. But really, if income is that important - if you're looking to supplement pension income, for example - you would probably be better off looking at alternative investments, such as gilts and corporate bonds. (These are explained in Part Nine.)

Investing in the stock market is really a capital growth game, whether you're a trader or an investor. What you have to decide is what level of risk you are prepared to take in return for what level of reward (These are explained in Part Eight.)

Monitoring your portfolio
In these days of computers and the internet, monitoring your portfolio has never been easier. Even if you don't have an internet dealing account, you can still see how your shares are performing on This is Money's portfolio service.Share prices are delayed by 15 minutes, but if you desperately want live prices, a number of other investment-related websites offer this, usually for a monthly fee.

Online portfolios will tell you how much your portfolio is worth, how much you've invested and how much profit or loss you've made. in many cases, portfolio valuations can be sent to you by e-mail or even fired to your mobile phone or personal organiser. In this way you can easily see which companies are performing well and which are doing badly. The difficult part is knowing is how to respond to the information you receive. This is dealt with in part 9.
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Excerpt From Case Study

 'My ideal stock is one where things have gone wrong in the company, but it looks as if things are changing'(Anthony Bolton, Fidelity Investments)

Case Study

 

Now pay attention and learn from my mistakes! I opened an internet sharedealing account about a year-and-a-half ago. As an internet journalist I thought I ought to test out the services I write about. I invested a relatively small amount in a couple of technology-related investment trusts. In about three months I'd doubled my money.

This investing lark was a piece of cake. Shares only seemed to go up, never down. So I invested some more and bought more technology stocks - companies I thought I knew about.

The internet is undoubtedly changing the way the world works and communicates. It is a major revolution and those companies that are making that revolution happen are going to be massive. That was the investment philosophy, anyway. Then came the first sharp correction in about March 2000. Technology companies both sides of the Atlantic had become ridiculously overvalued. The bubble was about to burst. But did I sell? Did I hell! Strange psychology comes into play. When prices are falling you always think they'll start rising again soon. When they're rising, you always think they'll continue doing so, even if you've already made a tidy paper profit.

I invested more - more than I could afford to lose, another classic investor mistake - and became addicted to the daily excitements of live share prices, sometimes swinging 20% throughout the day, and 'real-time' online dealing. And that's the potential problem with internet dealing. It can become addictive. It's there on your computer screen just a few mouse clicks away. And so you dabble when you should just leave well alone. You're tempted to think more and more short-term when novice investors like me should be thinking about investing for five years at least. Each time you deal, the stamp duty and dealing charges eat away at your capital. The sometimes very wide bid-offer spreads (the difference between the buying price and the selling price) leave you sitting on a loss as soon as you've bought. If the price than falls, your losses are instantly compounded. You panic and sell - you're capital is further eroded.

To cut a long story short, I broke every rule in the investment handbook, including not taking profits when I could. The result is that, along with the rest of the technology sector, my original capital has been decimated. After investing for a year-and-a-half I'm poorer, but hopefully wiser.

These are the lessons I've learned so far. They may seem obvious, but you'll be surprised how difficult it is to do the obvious:

• Decide clearly whether you are a short-term, speculative trader or a long-term investor. Don't fall between two stools.
• Impose stop losses and stick to them rigidly - protect your capital at all costs.
• Never try to guess the bottom of a falling market.
• Don't be afraid to sell up completely and go to cash occasionally.
• Be patient and wait for investment opportunities. Don't dive in at the first opportunity without thinking.
• Take profits when you can and don't be too greedy.
• The trend is your friend - in other words, don't try to beat the market. If it's going down, you probably will, too.
• Don't become obsessed with your favourite stocks. There's not much room for sentiment in investing. Diversify your portfolio across different business sectors so that you're not putting all your eggs in one basket.
• Buying shares solely based tips reduces investing to the level of gambling. Do your own research and follow your own hunches.
• Consider other ways of investing, too, such as unit trusts.