Monthly Archives: January 2009

Author : Gerald Greene

Currency movements are an accepted risk when making international payments and can have a real and significant impact on profitability and cash flow for businesses involved in international trade Over time movements in a nations currency will largely reflect how well or how poorly as nation is managing its international trading accounts

A nation that is importing considerably more than it is exporting will tend to have a weak currency One needs to look no further than the current trend of the US Dollar to see how this principal works in the real world

Currency risks for companies involved in international trade necessitate pro-active management, which in turn requires a certain level of expertise Currency movements are not correlated to investments such as equities and bonds Investment portfolios are thus valuable diversified by the addition of a foreign exchange component Currency movements are momentum based Rather than responding to standard fundamentals, a currency’s value is in itself one of the most important fundamentals

Foreign currency ETFs are bought and sold just like regular ETFs, throughout the day Foreign exchange (forex) markets form the core of the global financial market, a seamless twenty-four hour structure dominated by sophisticated professional players – commercial banks, central banks, hedge funds and forex brokers – and often extremely volatile Many investors, particularly American ones, tend to ignore currency movements, and few financial analysts are trained to analyze the details of forex markets

Countries are trading more goods and services, an increasing number of firms now operate across national borders, and savers and borrowers have greater access than ever before to global financial markets Over the past decade, world trade has grown twice as fast as world output, foreign direct investment three times as fast, and both currency trading and share trading about ten times as fast This means that huge amounts of currencies are now being traded every business day Up to three trillion dollars a day is the current estimate

This heavy volume of trading means that no one entity, central banks included, can control the currency market The currency market will punish those nations that manage their financial affairs poorly and it is beyond the power of the central bankers to reverse long term trends without a change in policy Generally, under such conditions countries that are heavy users of energy and have to import a large percentage of their energy needs would experience problems in maintaining a stable currency Market forces will overpower the limited power of the central bank and take their currency lower

Exchange rate movements will favor surplus energy producing countries, like Russia and Canada, over energy deficit countries like the United States You would expect a rise in the currency of the energy producing country and a decline in the currency of the energy importing country This is a long term negative influence on the value of the US Dollar as the US is now paying through the nose for it’s oil imports

Fundamental analysis yields very little benefit when a market is in such a state By definition, all that can be known is known, and is already reflected in prices Fundamental analysis is based on the belief that there are cause-and-effect relationships that need to be understood in order for pricing anomalies to be sensibly identified and acted upon Technical analysis is based on the assumption that past price relationships are indicative of future price relationships Fundamental analysis is concerned with the reasons or causes for currency movements Many Forex traders who rely on fundamental analysis plan their trading strategies around a number of key U S economic indicators

Fundamentally, the US now lacks the industrial base to correct its trade imbalance According to the Bureau of Census, roughly 25,000 manufacturing plants have been shuttered since 1998, and in recent years, because of weak market conditions, manufacturing companies have cut back on plant and equipment spending

This does not bode well for the strength of the US Dollar no matter how many rabbits Fed Chairman Ben Bernanke tries to pull out of his magic hat

Gerald ‘Taipan’ Greene is a retired forex trader and portfolio manager who worked in Asia for over 20 years. The nickname was acquired in Hong Kong and is now used for a number of financial, political, and Internet business related blogs. One of them is at Learn to Trade Forex Continue reading →

Author : Amit Kheterpal

Now if you are a new forex trader then your best bet as always is to manage your money in a correct way Bad money management can ruin you chances of making success out of your forex trading foray There are literally thousands of people who venture into the world of currency trading but then beat a hasty retreat as they do not have good money management practices and hence lose their money very quickly

Here are a few tips that can be very helpful while take a leap into the dungeons of the currency trading with little or no knowledge I will call them rules for the trade each and every time you do those trades

Always make sure that you have a put a limit on the number of dollars you want to trade or for that matter what will be the size of the trade The other way to say this is to tell that how many trades you can leave open at any given point of time In forex markets leverage plays a big role so make sure that your leverage does not exceed 10% of the entire account By this I mean that you will only trade for $20 if you have $200 in your account This is known as pip value and you should try to restrict it to $ 2 for $2000 account I am reasonably sure that this will help you in your currency trading

Now make a ground rule about how much you are wiling to accept as risk and stop your losses when that threshold is reached which means that when you trade plan ahead and effective planning is key to success Set a limit for your stop loss so that you do not lose money fast or infinitely and set a limit to your profit too as that will help in narrowing the risk bandwidth

So plan ahead and plan for both loss and profit

Manage your risk and manage it to la level of 2% per trade

Do not over leverage your money

Remember it is easier to get swayed when you are making money and throw caution to winds but the fact is that will only decrease you chances of success in the long run Strategize as if you are in marathon and not in a 100 meter dash That is the key to your success in the forex markets Remember money management will also help in every aspect of the forex trading including reaping in the profits and also maximizing them

The author has been through beginners forex trading trials and tribulations and he has evolved a mantra for success for beginners learning forex trading. Continue reading →

Author : Amit Kheterpal

Each day there are thousands of people who venture into the world of forex trading They have heard stories of traders winning million of dollars in a single trade and then sipping tea in their mansions These stories are correct but I am sure all these traders have some time of the other learned the hard way the tips for successful trading

As a beginner in the forex trading markets you will be tempted to throw caution to winds and you will come up against all sorts of fancy things that you think you should be doing to make that extra buck There are tons of sales people out there who will sell you anything promising huge profits in a day, make sure to test these by way of free trials and also seek the information which is hidden in the details

Here are my five tips for making money from the foreign exchange markets

Tip#1:- The trades and the currency values change so fast that you can be trapped in a situation which you never wanted to be in So make sure to cut you losses early and take in profits if you reach your prescribed threshold level of profits The day trading is a fast game and you need to play according to its rule Be very cautious in day trading and wlays keep yourself fresh as that increases your thinking power tak adequate rest in between a fe wtrading calls to make sure that your brain is working at its best

Tip#2: Some traders will wait for some magic to happen and buy or sell at a level where you make more profits That is never going to happen or it may happen only once when your timing was right just purely by chance So make sure that you make trades and rake in profits and remember every drop counts towards a large amount of profit

Tip#3: Change your strategy and never fall in love a particular strategy as there is no room for emotion in business As they say that change is permanent , make sure you keep experimenting till you hit the nail in the head

Tip#4: Make sure you negotiate with the broker as you start making more and more trades Brokers would love to give you discounts to keep your business

Tip#5: Trust the technology to help you and that means investing in forex trading software and trust me that will be money well spent

That are lessons you learn while trading and you will make huge money over the long term in the currency markets Patience and due diligence are the virtues that you need to learn and be aware of

The author has been through beginners forex trading trials and tribulations and he has evolved a mantra for success for beginners learning forex trading. Continue reading →