Forex Trading | Currency Exchange | Currency Trading | Foreign Exchange Blog Wed, 02 Nov 2011 03:10:30 +0000 en hourly 1 Are we in a disinflation spiral leading to to a recession Wed, 02 Nov 2011 03:10:30 +0000 Are we in a disinflation spiral leading to to a recession post from Forex Trading Blog

The word disinflation very simply means the slow down of inflation. Often when inflation is very low already and disinflation kicks in, there is worry that it could soon lead to a recession. This means we need to understand the nature of inflation in its various forms. In my opinion there are two forms of inflation –  ”price inflation” and “monetary inflation”.
Price inflation is one where prices of commodities rises. Typically this is tied to a rise in oil and fuel prices, since energy costs are intrinsically tied into the cost of production of products and services. Monetary inflation is the result of increased money supply in the economy. This is usually the result of easy credit and high lending activity. A natural effect of monetary inflation is the rise in asset prices. Inflation is measured by an index called the “consumer price index” and the percentage change in this index from one year to the next is commonly called the inflation rate.  This is a measure of price inflation.
If disinflation continues until the inflation rate is zero, the economy enters a deflationary period, with decreasing general prices on all goods and services produced. An example of this happened during the month of October 2008, when U.S. consumer prices fell (deflation) by 1.01% but the overall annual inflation rate simply decreased (disinflation) from an annual rate of 4.94% to 3.66%. So the distinction between deflation and disinflation at that point was simply one of which time period was being referring to, the monthly basis or the annual basis. Over the year, prices were up 3.66% while over the month prices were down 1.01%.
Many economist argue that despite extensive monetary easing (reduced interest rate) in almost all major economies, which increased the money supply significantly from the 2008 – 2009 lows, we are likely to see disinflation. Their argument is supported by the deleveraging phenomenon that has started in the consumer segment. Though I agree with them in expecting a change in consumer behavior, it is almost certain that governments will intervene in every available venue to introduce inflation which is the driving factor for growth – (at least in theory).


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How is CRR (cash reserve ratio) used as a tool for credit control? Wed, 02 Nov 2011 03:00:15 +0000 How is CRR (cash reserve ratio) used as a tool for credit control? post from Forex Trading Blog

CRR also known as cash reserve ratio was introduced in India in 1950 as a means to safe guard consumer deposits in private banks as well as ensure liquidity in the banking sector. Since then, it has become an important monetary tool in the reserve banks arsenal to control money supply in the economy. When the RBI feels that the money supply is increasing and causing an upward pressure on inflation, the RBI has the option of increasing the CRR thereby reducing the deposits available with banks to make loans and hence reducing the money supply and inflation.

In the United States, a reserve requirement (or liquidity ratio) is a minimum value, set by the Board of Governors of the Federal Reserve System, while Bank of England is the supervisory authority in United Kingdom.

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Is Social Forex Trading Here To Stay! Wed, 20 Apr 2011 04:26:46 +0000 Is Social Forex Trading Here To Stay! post from Forex Trading Blog

Forex vendors of all form and type (brokers, signal providers, blogs, news site et al) have all been marketing themselves aggressively online. However now there seems to be a new social trend in forex as with all other industries. Etoro was among the first to give a serious push in this direction with their social trading platform – which allows new traders to piggyback on the laurels of the more experienced traders. For example there are 10 expert traders who have shown consistent results over a certain time period. Some perform better than others, but have a higher risk profile. As a beginner in forex trading, you need not go through the learning process, but simply choose to copy the trades of one of the 10 experts for a small fee paid to the expert. You make money, the expert makes money and Etoro makes money – everyone is happy. At least that is the vision!

Another early entrant in social forex trading is Currensee. They have a similar system called the Trader Leaders Investment Program. Below is a sample of how the Trade Leaders list looks. There are performance indicators, a risk factor, strategy overview and other useful information based on which a beginner can make his or her decision.

More recently there have been a slew of new players entering the market. These include Myfxbook, Fxstat, Meetfx, Forexdesk and Meetpips. While most of them focus on extensive post trade analysis to improve and refine a traders strategy, fxstat has recently introduced there own form of social forex trading and is running its beta version.

True to history there are other forms of trading such as mirror trading which have been around for longer; their campaigns lacked the community essence at its core. It looks like Facebook has made its mark on the forex market as well.

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Pound to Euro Which Way Is The Currency Pair Moving Thu, 23 Dec 2010 22:04:09 +0000 Pound to Euro Which Way Is The Currency Pair Moving post from Forex Trading Blog

The pound valued via 0.85 pound to euro for the first time in a lot more than six months amid increasing hypothesis that the Bank of England won’t prolong its asset-purchase plan to assist the economic recovery.
The pound to euro strengthened typically for a sixth day, the longest profitable streak after April 8. The key financial institution, led by Governor Mervyn King, yesterday predicted larger inflation for following yr and mentioned it’s “ready to reply in both direction” as price-rises are equally probably to exceed or undershoot the 2 % goal more than two years.
“The pound is nonetheless has tailwinds from the inflation report,” said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. “There was selective studying; when Mervyn King stated there are strong upside and downside risks, people just go through the first element of the sentence.”
BOE (Bank of England) officers voted to depart their bond- acquire program at 200 billion pounds on Nov. 4th, declining to stick to the U.S. Federal Reserve in building stimulus, as UK persuaded them to not indulge in further assistance. Gross domestic product grew 0.8 % in the third 25%, twice as rapid as analysts had forecast.

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Forex Rates In Pakistan-A Synopsis Thu, 23 Dec 2010 04:34:04 +0000 Forex Rates In Pakistan-A Synopsis post from Forex Trading Blog

Currency swings are prompting regional governments to introduce insurance policies to gradual money flows. Financial institution Indonesia set a one-month minimal holding time period for traders in its bills yesterday, whilst South Korean regulators cut boundaries on financial institutions’ currency-derivative situations on June 13. United states of America this 1 week proposed a investment gains tax on all stock trades and Pakistan announced a similar evaluate on June 5.
The Financial markets in developing countries such as Pakistan and China are not as matured as that of individuals in developed western nations. The foreign currencies of these countries do not have as much status as those of developed nations for liquidity and therefore these are not considered desirable for creating earnings in currency promotes.
For example, Combined States Greenback is concerned in practically 80% of all the currency dealings that transpire all more than the world every day. Likewise German Tag, British Pound, Swiss franc, Japanese’s Yen among other people is involved in considerable quantity of transactions. One of the common comes equipped with of these currencies is that the economies of the nations they belong to are very well designed and relatively secure over time. In developing nations, inside difficulties similar to inflation, political unrest, decrease in exports may lead to the decline of the worth of its Forex in opposition to those of others.
In 2008, International exchange reserves of Pakistan fell drastically which affected the value of Pakistani rupee and a request for a loan from World-wide Financial Create funding for was approved. The Pakistani rupee appreciated in 2009 although not to its former levels. Such type of international loans and foreign funding within Pakistan impact the transaction charges and there is a scope for profit.
The fluctuations in Forex rates in Pakistan can often be there in any Forex apart from the depreciation. One crucial purpose for low liquidity of a currency is that the country may not be making products that are desired in other countries particularly individuals which develop and produce items needed for Pakistan. The issue in any developing region is similar to those of Pakistan. One need to often just know that very difficult work of analyzing the tendencies as well as collecting facts from right sources is the key to good results in any expense or trade.

Forex Rates In Pakistan-A Synopsis post from Forex Trading Blog

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What is a Mini Forex Account? Thu, 23 Dec 2010 03:37:54 +0000 What is a Mini Forex Account? post from Forex Trading Blog

A miniature currency account is designed for those new to online buying and selling and those with constrained investment capital. Individuals with much less than US$5,000 generally favor miniature info although regular details may be opened up with a minimum of $2000-$5,000. The exact amount ranges from broker to broker.

A partial currency account can be opened up with a minimum of US$300-500 and this figure varies in between brokers.

A mini currency account is meant to introduce traders to the pleasure of currency buying and selling although minimizing risk.

  • A mini currency accounts can be opened up at whenever but a lot of traders practice on a forex demo account initially to test their buying and selling approaches and techniques.
  • Trading measurement is usually 1/tenth the measurement of a normal account. Most brokers possess more compact lot sizes. This lowers the risk related with currency buying and selling.
  • Margin demands differ relying on the brokerage service. The NFA says the margin ought to be no less than 1% of the foundation forex traded. Having said that not all brokers follow these guidelines. Some brokers offer margins as low as US$50 per lot on their minis.
  • Some brokers possess software in their Trade Channels that instantly calculates the expected margin though other individuals by hand set the margin and range it accordingly.

The CFTC is enforcing a 1% margin necessity for registered FCMs and their affiliates that only offer you buying and selling in the Currency Market.

The new NFA rule involves a minimal 1% margin at all time to sustain an open trade. (Observe this may change from time to time so although we use 1% as the illustration at some phase in the future the margin perhaps different. Having said that employing related calculations one can quickly calculate the new margins) Most deal stations mechanically determine this according to the formula and therefore the margin needs are continually varying.

On a mini forex account the place the margin is only US$50 per lot, a dealer with $500 can stand up to a bigger market swing than a investor with a normal account with greater margins but if they have a margin call could lose a lot more capital. A margin phone occurs when the balance of the buying and selling account falls below the expected minimum stability expected. The brokerage service then closes all open up trades. Partial currency details have become quite preferred as quite a few inventory investors are getting situations in the currency market to spread their risk. It will pay to evaluate little currency details at distinct forex brokers to discover the finest charges on in a single day positions and the most aggressive spreads. Pip values range amongst the various forex pairs. Based on a US$ 10K accounts, a 25 pip revenue on a miniature account Euro trade is $25 and because this is a small amount, a mini accounts allows traders to concentrate on technical analysis as an alternative of the revenue and exit at the suitable direct rather than take revenue early. On normal accounts (100K), 25 pips would give US$250 profit.

What is a Mini Forex Account? post from Forex Trading Blog

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The Best Forex System. What Is It? Thu, 23 Dec 2010 03:30:58 +0000 The Best Forex System. What Is It? post from Forex Trading Blog

The question of what is the best forex hard drive is one that a lot of investors ask as they commence their voyage into currency trading. There genuinely is no clear reply to this query simply because what works for one dealer may not work for another, on top of that, personal trading style preference, everyday schedules, and other components appear into perform for any given dealer when identifying what currency hard drive is very best for them. There are having said that most definite distinctions that can be produced in between forex methods that are really worth going after and individuals that can be regarded as to be in the realm of scams.

The first direct that should be produced relating to currency methods is that there simply is no “holy-grail” buying and selling system. Quite a few investors believe when beginning their buying and selling education that there is most kind of indicator or trading software package that could offer them the power to make cash from basically pushing a button. Alas, this is simply not how successful trading operates, nevertheless many merchants search for years for this elusive “holy-grail” currency drive only to run into one disappointment soon after another.

The reason why rigid indicator primarily based trading systems and robotic “specialist advisers” simply aren’t regularly worthwhile buying and selling approaches is simply because the currency market alterations over time and buying and selling circumstances can fluctuate greatly from one day to the next. Because any software program trading computer or rigid indicator based mostly trading computer need to be constructed to operate with particular market problems, it is basically inherently impossible for this kind of techniques to be rewarding in all marketplace problems and throughout changing financial periods.

Therefore, the greatest forex hard drive is going to be much more of a “handbook” trading procedure as an alternative of a rigid rule-based trading system. All successful traders use most amount of human discretion; this is what really separates the professionals from the amateurs in the globe of financial industry speculation. Realizing once to commerce and once not to trade can actually generate or escape you, and blindly getting buying and selling indicators from most systematic trading technique should in no way allow you to generate the variety of discretion it will take to turn into a regularly profitable trader.

Stock market are not static entities that behave the same each day, yet rigid forex “robots” and indicator primarily based methods are designed for specific marketplace circumstances, these situation may or may not be current at any provided time, and they additionally may fade over time and not exist previously again. So, the best forex trading system will be one that supplies a way to commerce the marketplace in any marketplace condition and more than shifting intervals of time. Basic currency trading methods derived close to value motion analysis offer you a way to trade the industry no matter if it is trending, consolidating, peaceful, or unstable, and the best aspect is that cost motion trading does not fade or become invalid could financial variables alter drastically. It is this capability of forex price tag action methods to adapt to altering industry problems and time durations that generate them the very best forex systems any dealer can commerce the industry with.

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What Is Forex Day Trading? Thu, 23 Dec 2010 03:18:42 +0000 What Is Forex Day Trading? post from Forex Trading Blog

Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close for the trading day. Traders that participate in day trading are called active traders or day traders.

Some of the more commonly day-traded financial instruments are stocks, stock options, currencies, and a host of futures contracts such as equity index futures, interest rate futures, and commodity futures. Indeed, many day traders are bank or investment firm employees working as specialists in equity investment and fund management. However, with the advent of electronic trading and margin trading, day trading has become increasingly popular among at-home traders.

As modern trading is electronic, the exchanges are run by computers, and are accessible via the Internet, so traders can work from almost anywhere in the world using only a few tools and services. Some of these tools are things like a computer, Internet access, and a telephone, so most people already have some of the tools that are needed for day trading.

There are several basic strategies by which day traders attempt to make profits:

  1. Trend following
  2. Contrarian investing
  3. Range trading
  4. Scalping
  5. Opening Only Orders
  6. Rebate trading
  7. News trading
  8. Price action
  9. Algorithmic trading

What Is Forex Day Trading? post from Forex Trading Blog

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What Is Range Trading Thu, 23 Dec 2010 03:12:42 +0000 What Is Range Trading post from Forex Trading Blog

Range trading, or range-bound trading, is a trading style in which a financial product (fore example currency or stock) is watched that have either been rising off a support price or falling off a resistance price. Let’s talk in the context of forex trading. That is, every time the currency pair hits a high, it falls back to the low, and vice versa. Such a currency pair is said to be “trading in a range”, which is the opposite of trending. The range trader therefore buys the currency at or near the low price, and sells (and possibly short sells) at the high. A related approach to range trading is looking for moves outside of an established range, called a breakout (price moves up) or a breakdown (price moves down), and assume that once the range has been broken prices will continue in that direction for some time.

The same principles of range trading are equally applicable in the stock market as well as other financial markets.

What Is Range Trading post from Forex Trading Blog

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Important Elements Of An Effective Forex Trader Thu, 23 Dec 2010 03:05:39 +0000 Important Elements Of An Effective Forex Trader post from Forex Trading Blog

All the overseas trade trading knowledge in the globe is not heading to improve, until you possess the nerve to buy and sell currencies and put your cash at chance. As with the lottery “You gotta be in it to win it”. Have confidence in me when I say that the basic process of hitting the buy or retail key is really tricky to do when your own real income is put at danger.

You should really feel anxiety, even anxiety. Right here lies the moment of truth. Do you possess the braveness to be afraid and act anyway? Once a fireman runs into a burning up building I believe he is afraid but he does it anyway and achieves the desired outcome. Except if you can overcome or acknowledge your anxiety and do it anyway, you could not be a productive investor.

Even so, as soon as you discover to management your anxiety, it will get less complicated and less complicated and in time there is no concern. The opposite reaction can grow to be an problem – you’re overconfident and not centered enough on the chance you’re taking.

Each the inability to initiate commerce, or close up a shedding trade can develop significant mental troubles for a trader heading forward. By calling attention to these likely stumbling blocks beforehand, you can adequately prepare before your first real trade and create great trading habits from day one.

Start out by analyzing on your own. Are you the kind of particular person that can control their feelings and flawlessly perform trades, oftentimes beneath very tense conditions? Are you the form of particular person who’s overconfident and prone to consider a lot more threat than they should? Before your initially real commerce you do glimpse within oneself and get the answers. We can correct any inadequacies prior to they outcome in paralysis (not pulling the set off) or a enormous decline (overconfidence). A massive loss can prematurely end your trading career, or delay your success until you can increase additional capital.

The problem doesn’t end with “pulling the trigger”. In truth which can come subsequent is equally or maybe much more tricky. When you are in the trade the subsequent hurdle is remaining in the trade. When trading overseas trade you exit the commerce as soon as doable once entry when it is not working. Most people who possess been prosperous in non-trading ventures find this principle difficult to implement.

For example, real estate tycoons generate their lot of money riding out the bad times and promoting during the growth periods. The trouble with attempting to adapt a ‘hold on until it will come back again’ tactic in foreign trade is that a lot of the time the currencies are in long-term persistent, directional tendencies and your equity will be wiped out prior to the forex comes again.

The other aspect of the coin is remaining in a trade that is working. The a lot typical pitfall is closing out a profitable position without a legitimate reason. After once more, anxiety is the culprit. Your unconscious demons can be scaring you non-stop with inquiries enjoy “what if news comes out and you wind up with a decline”. The actuality is if news happens out in a forex that is going up, the information has a larger chance of being beneficial than adverse (much more on why that is so in a later article).

One more typical pitfall is closing a successful place because you are bored stiff with it; its not moving. In Football, soon after a super star running back again breaks cost-free for a 50-yard achieve, he arrives out of the sport briefly for a breather. Once he reenters the sport he is a serious threat to acquire much more yards – this is indisputable. So once your position takes a breather after a winning move, the subsequent most likely event is additional gains – so why close it?

If you can be courageous below fireplace and strategically patient, forex trade buying and selling may be for you. If you’re a natural gunslinger and reckless you could need to tone your act down a notch or two and we can assist you make the vital adjustments. If putting your money at risk helps make you a anxious wreck its due to the fact you lack the expertise foundation to be sure in your selection making.

Important Elements Of An Effective Forex Trader post from Forex Trading Blog

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