Forex Daily Outlook

Tuesday, July 28, 2009

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What is Forex Trading?

The foreign exchange (Forex) market is a nonstop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements.

Foreign exchange market conditions can change at any time in response to real-time events. The main incentive of currency dealing to private investors and the attractions of short-term Forex trading are: 24-hour trading, 5 days a week, with nonstop access to global Forex dealers.
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Odicy : Bannière Wordans Animée


Further incentives to Forex trading:

  • An enormous liquid market making it easy to trade most currencies
  • Volatile markets offering profit opportunities.
  • Standard Forex instruments for controlling risk exposure.
  • The ability to profit in rising or falling markets.
  • Leveraged trading with low margin requirements.
  • Many options for zero commission trading.

Forex trading
The investor's goal in Forex trading is to profit from foreign currency movements.

Forex trading or currency trading is always done in currency pairs. For example, the exchange rate of on Aug 26th, 2003 was 1.0857. This number is also referred to as a "Forex rate" or just "rate" for short. If the investor had bought 1000 euros on that date, he would have paid 1085.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.60 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a "risk-free" investment. One example of a risk-free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation. (Please note that past performance is not indicative of future performance)

When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position. However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.

Exchange rate

Because currencies are traded in pairs and exchanged one against the other when traded, the rate at which they are exchanged is called the exchange rate. The majority of the currencies are traded against the US dollar (USD). The four next-most traded currencies are the euro (EUR), the Japanese yen (JPY), the British pound sterling (GBP) and the Swiss franc (CHF). These five currencies make up the majority of the market and are called the major currencies or "the Majors".

Some sources also include the Australian dollar (AUD) within the group of major currencies. The first currency in the exchange pair is referred to as the base currency and the second currency as the counter or quote currency. The counter or quote currency is thus the numerator in the ratio, and the base currency is the denominator. The value of the base currency (denominator) is always 1. Therefore, the exchange rate tells a buyer how much of the counter or quote currency must be paid to obtain one unit of the base currency.

The exchange rate also tells a seller how much is received in the counter or quote currency when selling one unit of the base currency. For example, an exchange rate for EUR/USD of 1.2083 specifies to the buyer of euros that 1.2083 USD must be paid to obtain 1 euro. At any given point, time and place, if an investor buys any currency and immediately sells it - and no change in the exchange rate has occurred - the investor will lose money. The reason for this is that the bid price, which represents how much will be received in the counter or quote currency when selling one unit of the base currency, is always lower than the ask price, which represents how much must be paid in the counter or quote currency when buying one unit of the base currency. For example, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015, representing a spread of 1000 pips (also called points, one pip = 0.0001), which is very high in comparison to the bid/ask currency rates that online Forex investors commonly encounter, such as 1.2015/1.2020, with a spread of 5 pips. In general, smaller spreads are better for Forex investors since even they require a smaller movement in exchange rates in order to profit from a trade. Most Forex dealers, including Easy Forex™, are compensated by the spreads that are embedded in the currency rates.

Margin – Amount to Risk

Banks and/or online trading providers need collateral to ensure that the investor can pay in case of a loss. The collateral is called the margin and is also known as minimum security in Forex markets. In practice, it is a deposit to the trader's account that is intended to cover any currency trading losses in the future. Margin enables private investors to trade in markets that have high minimum units of trading by allowing traders to hold a much larger position than their account value. Margin trading also enhances the rate of profit, but has the tendency to inflate rates of loss, on top of systemic risk.

Leveraged financing

Leveraged financing, i.e., the use of credit, such as a trade purchased on a margin, is very common in Forex. The loan/leveraged in the margined account is collateralized by your initial deposit. This may result in being able to control USD 100,000 for as little as USD 1,000. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or may have to deposit. This may work against you as well as for you. You may sustain a total loss of the margin funds deposited and any additional funds deposited to maintain your positions.

Five ways private investors can trade in Forex directly or indirectly:

  • The spot market
  • Forwards and futures
  • Options
  • Contracts for difference
  • Spread betting

A spot transaction

A spot transaction is a straightforward exchange of one currency for another. The spot rate is the current market price, also called the benchmark price. Spot transactions do not require immediate settlement, or payment "on the spot." The settlement date, or "value date," is the second business day after the "deal date" (or "trade date") on which the transaction is agreed to by the two traders. The two-day period provides time to confirm the agreement and arrange the clearing and necessary debiting and crediting of bank accounts in various international locations.

Risks

Forex trading is risky. There are ways to reduce risk such as setting a Stop Loss on deals. Read more about the risks involved and how to lower exposure to risk.

Source: Easy Forex (click to visit)

Sunday, July 26, 2009

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Forex Market History

This article is an overview into the historical evolution of the foreign exchange market. It follows the historical roots of the international currency trading from the days of the gold exchange, through the Bretton Woods Agreement, to its current setting.

The Gold exchange period and the Bretton Woods Agreement.
The Bretton Woods Agreement, established in 1944, fixed national currencies against the dollar, and set the dollar at a rate of 35USD per ounce of gold. In 1967, a Chicago bank refused to make a loan in pound sterling to a college professor by the name of Milton Friedman because he had intended to use the funds to short the British currency. The bank's refusal to grant the loan was due to the Bretton Woods Agreement.

This agreement aimed at establishing international monetary steadiness by preventing money from taking flight across countries, and curbing speculation in the international currencies. Prior to Bretton Woods, the gold exchange standard - dominant between 1876 and World War I - ruled over the international economic system. Under the gold exchange, currencies experienced a new era of stability because they were supported by the price of gold.

However, the gold exchange standard had a weakness of boom-bust patterns. As an economy strengthened, it would import a great deal until it ran down its gold reserves required to support its currency. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities would hit bottom, appearing attractive to other nations, who would sprint into a buying fury that injected the economy with gold until it increased its money supply, driving down interest rates and restoring wealth into the economy. Such boom-bust patterns abounded throughout the gold standard until World War I temporarily discontinued trade flows and the free movement of gold.

The Bretton Woods Agreement was founded after World War II, in order to stabilize and regulate the international Forex market. Participating countries agreed to try to maintain the value of their currency within a narrow margin against the dollar and an equivalent rate of gold as needed. The dollar gained a premium position as a reference currency, reflecting the shift in global economic dominance from Europe to the USA. Countries were prohibited from devaluing their currencies to benefit their foreign trade and were only allowed to devalue their currencies by less than 10%. The great volume of international Forex trade led to massive movements of capital, which were generated by post-war construction during the 1950s, and this movement destabilized the foreign exchange rates established in the Bretton Woods Agreement.

1971 heralded the abandonment of the Bretton Woods in that the US dollar would no longer be exchangeable into gold. By 1973, the forces of supply and demand controlled major industrialized nations' currencies, which now floated more freely across nations. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970s, and new financial instruments, market deregulation and trade liberalization emerged.

The onset of computers and technology in the 1980s accelerated the pace of extending the market continuum for cross-border capital movements through Asian, European and American time zones. Transactions in foreign exchange increased intensively from nearly $70 billion a day in the 1980s, to more than $1.5 trillion a day two decades later.




The explosion of the Euro market
The rapid development of the Eurodollar market, where US dollars are deposited in banks outside the US, was a major mechanism for speeding up Forex trading. Likewise, Euro markets are those where assets are deposited outside the currency of origin. The Eurodollar market first came into being in the 1950s when the Soviet Union's oil revenue - all in US dollars - was being deposited outside the US in fear of being frozen by US regulators. That gave rise to a vast offshore pool of dollars outside the control of US authorities. The US government imposed laws to restrict dollar lending to foreigners. Euro markets were particularly attractive because they had far fewer regulations and offered higher yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euro markets an advantageous place for holding excess liquidity, providing short-term loans and financing imports and exports.

London was and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. London's convenient geographical location (operating during Asian and American markets) is also instrumental in preserving its dominance in the Euro market.

Source: Easy-Forex.com

Wednesday, July 22, 2009

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Reliance Insurance to Earn Extra Money....!

GOOD NEWS...!

Rest assured with an insurance which covers hospital expenses and life, while you earn extra income with a little effort.

It starts from an investment as low as INR 400 or 600 to cover INR 50,000 accidental death benefits for 1 year. Alternatively, you can also choose from INR 800 or INR 999 to cover INR 1,00,000 accidental death benfits for year. Unfortunately, right now it is available only in India and for Indians only.


Some examples of the plan are as below,
Plan 1: INR 400 investment
BENEFITS
  • Rs. 50,000 Accidental Death
    Benefits
  • Cashless Facility Given TPA
  • More than 4500 Network Hospitals
    in India
  • Network Hospitals in Your City
  • Duration: One Year
  • Age Limit 5 Years To 50 Years.
  • POLICY DISPATCHING TIME WITH IN 45 DAYS

Plan 2: INR 800 investment

BENEFITS

  • Health Care and Accident Care Policy
  • Rs. 1,00,000 Accidental Death
    Benefits
  • Cashless Facility Given TPA
  • More than 4500 Network Hospitals
    in India
  • Network Hospitals in Your City
  • Duration: One Year
  • Age Limit 5 Years To 50 Years.
  • POLICY DISPATCHING TIME WITH IN 45 DAYS

It is just a sample of the product. There are different plans and products to meet individual requirements. Apart from insurance plans, there are health supplements like high quality natural protein, spirulina, green tea, clothing, household items and so on.

It is not all, you a get a membership and unique member ID. With this ID you can earn money by referring your family or friends. You don't have to sell hard, because the investment is negligible considering the benefits we enjoy. Most of the people you talk to, would be interested in buying an insurance. Moreover, the company is reliable and proven, India's pride, Reliance Company ! It is eligible for tax benefits as well.

All that is possible when you join Vrksha SaveLife Group to buy a Reliance Insurance and work with the team. They help you in learning, teaching and give information and training in required fields.

Above all, the group is REGISTERED with Indian Government and is fully LEGAL.

Interesting? Exciting? Then no more waiting, contact me or my friend in India.

Monday, July 20, 2009

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How to try Forex trading for FREE...?

Forex Trading for FREE...!?

Don't think that I am fooling you around. It is only for the trial. You can join, learn and try with the demo account having USD 50,000 in your credit. All these are for FREE. There are so many tools to learn and practice from texts, e-book, videos, demo account and so on...all for FREE. It is none other than Easy Forex.



Then if you like it and feel confident....go ahead with the real trade. That is when you need an investment, which is not big again. I started with USD 25 only. You can trade currencies and commodities like gold, silver and oil. The trading tool requires no downloads and it is so easy and user friendly to use.

What if you don't like the platform or the idea? Just quit. You are not compelled for anything here. That is why I am still continuing in this platform.

Moreover, they make personal phone calls to you to guide, give market picture or for any other assistance; if you want them to do so, again for FREE. And, if you decide to invest USD 250 or more you will get access to dealers room chat and a personal dealer to guide you. Isn't it exciting?



I have seen earnings of 5 dollars to 500 dollars and my friends are earning up to 1200 dollars also sometimes. I think sky is the limit if you have ideas, planning, patience, calculation and learning abilities.

All the best...!

Sunday, July 19, 2009

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Well, it's Wellness Business...!


Information technology saw a sudden 'boom' and became a dream business/job for everyone. Billions of dollars (trillion dollar industry) are flowing in and out, in this sector.

According to experts, next industry to 'boom' is Wellness 'Industry'...! That means, it is the next 'trillion dollar' industry. [Click on the book picture to go to the website and read more.]

By the way, what wellness is all about?

In simple terms, wellness is an extended version of health. Having a feeling of well being not only physically but also mentally, spiritually, socially (and economically) is called as wellness.

Any service or product related to achievment of this goal is considered under this industry. For example, health care sector, alternative medicines & natural healers, healthy food & drinks, spas & massages, relaxation services & products, beauty sector, fitness centers and so on. So, it extends into so many products and services and is supported by many other industries. Hence, the money involved is huge!

How is it becoming so important all of a sudden?

Olden days, our lifestyle and food habits were different. They were more healthy and natural. There was no much pollution or stress.

Hence, health problems faced were different. They usually would be by infection or physical injuries. Treating the body with one or few medicines was the solution. Example: treating the malaria with drugs like Chloroquine.

But, nowadays health problems are different. Causes for them are multidimensional (genetic, food, lifestyle, pollution etc) and most of the times unknown or unpredictable. They are not only related to body and not just occur as a physical symptom or sign. That is where it needs attention from many sides and multiple approaches to tackle. Added to this people are becoming more aware and informed about health problems and are becoming more conscious towards protecting their health. Example: Diabetes prevention and treatment is not possible only by giving a 'drug'.

All the above reasons have contributed to the growth of 'wellness' industry and is becoming the next trillion dollar industry.

Stay Well...!

Saturday, July 18, 2009

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My Forex Story...!

I did not know much about trading shares / stocks or currencies and commodities until last year. No matter who ever explained, I was unable to understand the core of how it works!

All of a sudden, from nowhere, I started trading currencies and commodities with the help of a web based program. They gave a demo account initially to practice and then I started real trading after understanding the basics.

Initially I made very little but steady growth of gains and in between I lost some money due to hasty, immature and greedy decisions. These three are very important to avoid in any trading of such kind, may it be forex or stocks. Later on I learnt to be patient, studious and not to be greedy in this market. Now I am spending 30-60 minutes a day (sometimes once in 2 days) and maintaining steady and gradual growth.

The platform I found is Easy-Forex (click to go to the website)

The platform has very good, user-friendly interface for which you don't have to download anythinig. It is just a web based program and hence the advantage is 'you can use it from anywhere' just like email. They are very professional in maintaining your accounts and giving expert support in learning or understanding the market. Joining, learning or maintaining your account needs no money...it is all for FREE. You need money only if you wish to trade and when you start trading.

Are you thinking that I am trying to drag you into this business? Definitely not ! Because I would like to warn you about the risks involved as well. Forex trading is quite risky and there are chances of losing (or gaining)huge money. So, I recommend you not to invest an amount which is your hard earned money for life. Invest only small amount of money which you think would not harm your life even if you lose it.

Note: Please study and practice well before you jump into any investments.

All the best...!

Friday, July 17, 2009

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Network Marketing ? Not for me...!



'They' say 'New Age' marketing is only through Network Marketing !

I don't know how far it is true. However, I do see many MLM (Multi Level Marketing or Network Marketing in other words) companies in the market. Some are BIG, some are medium and some are working within just a small territory or group of people. Of course, there are thousands (may be millions) of MLM companies / systems in the graveyard as well.

What ever 'they' claim, I am unable to prove successful in this business, to be honest. I have tried several 'successful' business models of this MLM, but none worked for me. Amway, Nuskin, Questnet and Savelife Insurance are few of them to quote...! (I don't mind if you think I am an idiot to try so many, reason is below).

One thing I have realized (learning about business was my benefit by paying their tuition fee !) is 'you need to be a good sales person with lots of patience to be successful (?) in network marketing. In addition, you need to spend a lot of time to learn, sell and to grow your network. It is not just 1 to 2 hours effort in a week and make thousands of dollars, don't believe 'them'. Nothing works like that in this world. Do let me know if there is any ! Hmm...forgot to mention that making new friends was one more benefit.
I am not saying that this is a failure business model. What I mean is this business, as any other, needs lot of effort, time, patience and some money to spend. If you are ready to dedicate yourself with all these you may succeed. I have met some people who are 'successful' !
All the best...!
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Business to keep us busy...

Dear all,

The word 'business' gives a picture in our mind. That is nothing but 'money' !

However, practically, it is not only about money in business. It demands quite a wide knowledge of the market, customers, opportunities, technical know-hows, soft skills related to human resource management-marketing and so on. Finally you have 'money' in business.

Traditionally 'business' means, selling a product and taking money for it. It is true even now. However, the scope of 'product' nowadays is so wide that it has included everything under the sun, sometimes proving to be 'inhumane' business.

Usually, either 'products' or 'services' are sold in business for monetary benefits. Products can be physical or virtual. Services can range from real serving to consultation services and brokerage.

However, what we are concentrating in this blog is 'how to make some extra money' apart from our regular income to fulfill our dreams or may be for some, basic needs.

Please remember that this is not a business portal or a fraud business but just a place to share our experiences and show opportunities to others who are also in search of such opportunities.

Please ignore and leave this blog, should you feel that we are making some money out of this. It is just a friendly gesture to help each other. Of course, some business may give any of us referral charges.

In addition, please share your 'bad' experiences as well, if any, with us so that people would be more careful while choosing some business opportunities or so called 'business sites' (business only for the site owner...!)

Note: Please share only legal ideas /
businesses.