Market overview for Friday 13th January 2012

Currencies

The euro on Friday dropped to its lowest against the U.S. dollar in nearly 17 months and tumbled to an 11-year low versus the yen, pressured by talk of a downgrade in the credit ratings of several euro zone countries later in the session.

A senior euro zone government source said Standard & Poor's is set to downgrade the ratings of euro zone countries, but not Germany's.

This was later confirmed by French Finance Minister Francois Baroin, who said France and other euro zone countries have been warned that it would be downgraded by S&P.

The euro plunged to a low of $1.26240, its weakest level since late August 2010. It last traded at $1.26641, down 1.3 percent on the day. The euro was on track for its third straight weekly loss.

The single euro zone currency also fell to 97.200 yen, its lowest since 2000 and last changed hands at 97.336, down 1.1 percent.

Losses in the euro propelled the dollar index to its highest since mid-September 2010 at 81.784. It was last 81.548, up nearly 1 percent on the day.

The dollar, meanwhile, was 0.3 percent higher against the yen at 76.900 yen.


Energy

Oil prices fell on Friday, posting a loss for the week, as anticipation of downgrades by Standard & Poor's of several euro zone countries countered the supportive effect of anxiety about Nigerian strikes and Iranian threats to shipping.

After the U.S. stock market close and oil price settlements, the credit ratings agency did lower ratings for France, Italy, Spain and others in the European single-currency bloc, though it left Germany's AAA rating intact.

Ahead of its contract expiration on Monday, Brent February crude fell 82 cents to settle at $110.44 a barrel. It fell intraday to $109.71, just above its 100-day moving average of $109.69, after retreating from a $112.50 high.

U.S. February crude fell 40 cents to settle at $98.70 a barrel, having swung from $97.70 to $100.19. For the week, U.S. front-month crude lost 2.82 percent, wiping out the previous week's 2.76 percent gain.


Precious metals

Gold fell 1 percent on Friday, after the dollar surged against the euro and fears about an imminent credit downgrade of euro zone countries prompted bullion investors to take profits on the recent rally.

Spot gold was down 1 percent at $1,633.90 an ounce. It was still up about 5 percent so far this year, thanks to buying by investors re-entering the market after a 10 percent drop in December.

U.S. gold futures for February delivery settled down $16.90 an ounce at $1,630.80.

Silver was down 2.5 percent at $29.51 an ounce. Spot platinum was down 0.7 percent at $1,481.24 an ounce.

Spot palladium was down 0.2 percent at $635.22 an ounce.


Stock indices

U.S. stocks dropped on Friday, snapping a four-day winning streak after news reports that Standard & Poor's would downgrade credit ratings on several euro-zone countries.

Friday's slide came as investors' focus shifted back to the euro zone's debt crisis.

The Friday selloff shows Europe's debt problems can still make U.S. investors skittish. However, it is notable that the major U.S. stock indexes finished well off the day's lows.

The Dow Jones industrial average dropped 48.96 points, or 0.39 percent, to 12,422.06 at the close.
The Standard & Poor's 500 Index lost 6.41 points, or 0.49 percent, to 1,289.09.
The Nasdaq Composite Index fell 14.03 points, or 0.51 percent, to 2,710.67.

Investors will look to earnings next week for insight on how the euro zone's debt woes may affect profits.




Disclaimer & Risk Warning

Trading with financial instruments on margin carries a high level of risk, and may not be suitable for all investors. Trading with financial instruments is not suitable for an investor seeking an income since profits are not guaranteed. It is recommended to seek independent investment advice if necessary.
This communication is provided for information purposes only and no information contained herein constitutes a solicitation for the purpose of purchase or sale of any financial instrument, nor should it serve as the basis for any investment decision. Accordingly, Clients should consider that the communication and information contained herein, is not prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Windsor Brokers Ltd does not guarantee the accuracy or completeness of any information or analysis supplied and shall not be liable to any client or third person for the accuracy of the information or any market quotations supplied through this service to a client, nor for any delays, inaccuracies, errors, interruptions or omissions in the furnishing thereof, for any direct or consequential damages arising from or occasioned by said delays, inaccuracies, errors, interruptions or omissions, or for any discontinuance of the service. 

Market overview for Thursday 12th January 2012

Currencies

The euro climbed to a one-week peak against the U.S. dollar on Thursday as a solid sale of Spanish and Italian debt and more upbeat comments about the euro-zone economy from the European Central Bank chief eased concerns about the region's debt.

Spain sold the targeted amount at its auction of a new, three-year bond and two existing bonds maturing in 2016, while yields halved at an Italian sale, reflecting the success, at least for now, of what amounts to a back-door bailout by the ECB.

The ECB, meanwhile, held rates steady at 1 percent as widely expected after two successive rate reductions, with bank president Mario Draghi citing "signs of stabilization activity at low levels" in the euro zone economy.

In late afternoon New York trading, the euro was about 1 percent higher at $1.28297, having touched a session high of $1.28460. That is up sharply from a 16-month low of $1.26615 hit on Wednesday.

Euro/dollar gains pushed the dollar 0.7 percent lower versus a currency basket to 80.770, but it was within sight of 81.49 hit on Wednesday, its highest in 16 months.

Against the yen, the dollar was down 0.2 percent at 76.770.


Energy

Oil prices tumbled on Thursday in a late sell-off sparked by a report that a proposed European Union ban on imports of Iranian crude would be phased in over six months.

Having traded higher for most of the day, oil prices dropped soon after 2 p.m. EST (1900 GMT) following a Bloomberg News report, citing an unidentified EU official with knowledge of the matter, that the embargo would be delayed or phased in over six months.

In London, ICE Brent crude for February delivery settled down 98 cents at $111.26 a barrel, well off the day's peak of $115.12, the highest level since Nov. 9.

U.S. February crude oil settled at $99.10, falling $1.77, off the session high of $102.98. In post-settlement trading, the contract further dropped to a session low of $98.50, the lowest since Dec. 30 with selling picking up steam after prices dropped below $100.


Precious metals

Gold rose to a one-month high on Thursday, as comments by the president of the European Central Bank on cheap money stabilizing the region's banking system extended the metal's gain to a third consecutive day.

Gold gained despite sharp declines in crude oil and grain prices. Gold has gained around 6 percent in 2012.

Spot gold was up 0.3 percent at $1,645.90 an ounce, having touched a one-month high at $1,661.71.

U.S. gold futures for February delivery settled up $8.10 an ounce at $1,647.70. Trading volume was 10 percent above its 30-day average, consistent with recent stronger turnover after thin holiday trade.

Silver was up 0.3 percent for the day at $30.01 an ounce.

Spot platinum rose 0.2 percent to $1,492.06 an ounce, while spot palladium dropped 1.3 percent to $631.97 an ounce.


Stock indices

The S&P 500 closed at a five-month high for the third day on Thursday but had difficulty extending gains in the face of lackluster economic data and another European bond market test.

In its fourth day of gains, the S&P 500 has risen 1.4 percent, but it's added only 0.3 percent since Tuesday as investors look for more convincing evidence of an improving U.S. economy, solid corporate earnings and progress toward resolving the euro zone's debt crisis.

The Dow Jones industrial average gained 21.57 points, or 0.17 percent, to 12,471.02.
The Standard & Poor's 500 Index added 3.02 points, or 0.23 percent, to 1,295.50.
The Nasdaq Composite Index rose 13.94 points, or 0.51 percent, to 2,724.70.




Disclaimer & Risk Warning

Trading with financial instruments on margin carries a high level of risk, and may not be suitable for all investors. Trading with financial instruments is not suitable for an investor seeking an income since profits are not guaranteed. It is recommended to seek independent investment advice if necessary.
This communication is provided for information purposes only and no information contained herein constitutes a solicitation for the purpose of purchase or sale of any financial instrument, nor should it serve as the basis for any investment decision. Accordingly, Clients should consider that the communication and information contained herein, is not prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Windsor Brokers Ltd does not guarantee the accuracy or completeness of any information or analysis supplied and shall not be liable to any client or third person for the accuracy of the information or any market quotations supplied through this service to a client, nor for any delays, inaccuracies, errors, interruptions or omissions in the furnishing thereof, for any direct or consequential damages arising from or occasioned by said delays, inaccuracies, errors, interruptions or omissions, or for any discontinuance of the service. 

Market overview for Monday 9th January 2012

Currencies

 

The euro rallied from a 16-month low against the dollar on Monday as market participants pared bearish bets on the single currency ahead of key European events this week although investors remained overwhelmingly negative due to sovereign debt concerns.

 

With euro net short positions at a record according to recent data from the Commodity Futures Trading Commission, the currency was susceptible to short-covering. But gains were contained as German Chancellor Angela Merkel reignited fears of a Greek default.

 

The Swiss franc traded slightly higher against the euro after news that Swiss National Bank Chairman Philipp Hildebrand resigned in the wake of a scandal over a controversial currency trade made by his wife just weeks before he set a cap on the country's soaring currency.

Versus the Swiss franc, the euro was down 0.2 percent at 1.21250 francs.

 

In late afternoon New York trade, the euro was 0.4 percent higher versus the dollar at $1.27720 after hitting its lowest level since September 2010 at $1.26660 in thin Asian trade.

 

The dollar was down 0.2 percent against the yen at 76.827 yen, staying above a two-month low of 76.30 yen hit last week.

 

Forex Trading Scams Vs. What Really Works

Forex trading is becoming extremely popular these days. So is shooting craps in Las Vegas but that does not mean it is always profitable. The difficulty many people experience is they are lured by the many training programs that profess to teach the would-be Forex trader how to trade successfully. When you enter the world of Forex trading and become a customer of the Forex trading industry, it can be very difficult to know what will really work for enabling you to learn to actually get consistent profits and multiply your account. Ironically some of the most “professional” forex training courses, forex trading videos, forex seminars, and surefire Forex trading strategies do not actually produce successful businesses among their students. The reasons for this are varied. For one thing, the general approach to trading that is taught in most trading education programs is designed to benefit brokers more than traders. And practically the entire world of trading is so caught up in this general approach that they have become blinded to the insights that should be common sense.

When people first see our trading method the most difficult challenge for many is overcoming the disbelief that trading really can be this simple and yet far more profitable than what others are doing. Once you see it you will be amazed that everyone is not trading this way. It is much easier, more reliable, less risky and much more profitable. Some of our students are now in the category of the most profitable Forex traders in the world. There is no question about that and real accounts do not lie. Many of them also find it amusing to see how other traders are working so hard, spending many long hours trading and not getting nearly the amount of profit that they are easily getting themselves. This Forex trading method is definitely not for everyone. But it is definitely much easier and more profitable than anything we have seen. Interestingly, many people will always be drawn to things that are more difficult and less profitable.

Market overview for Friday 6th January 2012

Currencies


Evidence that the U.S. economy is strengthening while Europe grapples with another recession helped send the euro to a near 16-month low against the dollar on Friday, with more losses likely as long as euro zone funding concerns continue.


The dollar got a big boost against most major currencies, touching its highest since February against the Swiss franc,   after a report showed a larger-than-expected rise in U.S. nonfarm payrolls in December and the jobless rate dropped to a three-year low.


Better-than-expected U.S. economic data in recent weeks has highlighted a growing contrast between the recovery in the world's largest economy and Europe, which is widely believed to be either in, or headed toward, a recession.


In early afternoon New York trade, the euro was 0.5 percent lower against the dollar at $1.2718 after hitting a low of $1.2696, its weakest since September 2010.


The euro was 0.6 percent lower against the yen at 98.02 after touching a low of 97.88, its lowest since mid December 2000.


The dollar was last 0.4 percent higher against the Swiss franc at 0.9554 after climbing as high as 0.9578.


The U.S. currency fell 0.1 percent against the yen to 77.06 yen, but remained off the trough touched this week which was the lowest since mid November.


Energy


Brent crude prices edged up on Friday and gained more than 5 percent for the week as anxiety over Iran and potential supply disruptions countered the dollar's strength on better-than-expected U.S. jobs growth and concerns about Europe's economy.


Choppy trajectories characterized trading and U.S. crude closed slightly lower, a day after government data showed oil inventories rose last week.


Brent February crude rose 32 cents to settle at $113.06 a barrel, having tested support below Brent's 200-day moving average of $112.73 after retreating from its $113.68 intraday peak.


Brent's premium to U.S. crude rose above $11 a barrel, gained 5.28 percent for the week, after slipping slightly last week at in low-volume, end-of-year trading.


U.S. February crude fell 25 cents to settle at $101.56 a barrel, but posted a 2.76 percent weekly gain.


Precious metals


Gold eased on Friday, snapping a five-session winning streak, but trade was choppy as investors digested a report of better U.S. job growth and the unemployment rate near a three-year low.


The metal still notched its biggest weekly gain in five weeks after it broke ranks with a slumping euro in the last two days.


Spot gold fell 0.3 percent to $1,617.19 an ounce.


U.S. gold for February delivery settled down $3.30 at $1,616.80.


Spot silver fell 1.9 percent to $28.72 an ounce, headed for a weekly climb of nearly 4 percent -- its biggest rise in a month.


Platinum group metals fell, with platinum down 0.9 percent for the day to $1,397.40 an ounce, and palladium dropped 3.9 percent to $610.43 an ounce.


Stock indices


U.S. stocks were on track to post gains for the first week of 2012 on Friday as signs of a sustainable economic recovery overshadowed lingering concerns about the euro zone's debt crisis.


The government's report on non-farm payroll jobs for December was the latest in a list of economic numbers that were stronger than anticipated.


Data this week painted a rosier picture on the labor, housing and retail markets, auguring a recovery in growth in 2012.


The Dow and S&P were on track to rise more than 1 percent this week and the Nasdaq added nearly 3 percent, with most gains coming from cyclical sectors tied to growth, including financials and energy.


The Dow Jones industrial average shed 42.23 points, or 0.34 percent, to 12,373.47.
The Standard & Poor's 500 Index dipped 1.55 points, or 0.12 percent, to 1,279.51.
The Nasdaq Composite gained 8.75 points, or 0.33 percent, to 2,678.61.




Disclaimer & Risk Warning


Trading with financial instruments on margin carries a high level of risk, and may not be suitable for all investors. Trading with financial instruments is not suitable for an investor seeking an income since profits are not guaranteed. It is recommended to seek independent investment advice if necessary.
This communication is provided for information purposes only and no information contained herein constitutes a solicitation for the purpose of purchase or sale of any financial instrument, nor should it serve as the basis for any investment decision. Accordingly, Clients should consider that the communication and information contained herein, is not prepared in accordance with legal requirements designed to promote the independence of investment research, and is not subject to any prohibition on dealing ahead of the dissemination of investment research.We does not guarantee the accuracy or completeness of any information or analysis supplied and shall not be liable to any client or third person for the accuracy of the information or any market quotations supplied through this service to a client, nor for any delays, inaccuracies, errors, interruptions or omissions in the furnishing thereof, for any direct or consequential damages arising from or occasioned by said delays, inaccuracies, errors, interruptions or omissions, or for any discontinuance of the service. 

Avoiding Forex-Related Frauds and Scams — by Marquez Comelab

A lot of people have been ?burnt' from scam operations on the Internet. Their sites may look so perfectly legitimate that you doubt whether they would have gone through all that trouble building a trading platform just to steal your money. Beware.

The first thing I look for is the geographical location of the broker. If I find that they are based in a country where the financial industry is, in my opinion, relatively unregulated and under-developed, I quickly forgo signing up. This is terrible news for honest brokers in those countries, but your job as a trader is to protect your capital. If you lose that, then you cannot trade. The onus is on them to convince you that they will do the right thing by you as an investor.

I started out with an Australian broker. Currently I am using an American one. I have not tried UK-based brokers but the British financial industry is one of the best. Companies that are based in countries such as Japan , Germany and France are probably just as good too, if their website speaks your language.

Notice any license numbers that they may have registered with regulatory bodies that act like government watchdogs who oversee the finance and investments industries. These are organisations that impose strict rules to safeguard your investment. Some of these rules may include the requirement that brokers segregate all customer funds from the operational funds of the business. Your money is required to be put in highly-reputable banks and the funds are only withdrawn from these accounts upon specific withdrawal requests.

Take note that there are some fake regulatory bodies being thrown around in cyber-space as well. Take a look at how long they have been operating for. Try and search out any reviews or comments made about them. See if you can find forums where traders have discussions about their brokers.

Below is a list of things to keep in mind to help you avoid being a victim of a scam:

? Stay Away From Opportunities That Sound Too Good To Be True

There are people who may have just acquired a large amount of money just and recently are the same and are shopping around for safe investment vehicles. These may include retirees who have access to their retirement funds. It is understandable why retirees would be drawn to ?high-return, low-risk investments'. This is also what makes them very vulnerable. If you identify yourself to be one of these people, be careful. A lot of deceitful characters are after your money. Furthermore, only allocate a tiny amount of your money to trading until you can start growing it. Not all people can trade successfully, so it is a venture you should take on haphazardly. It is your life savings at risk.

? Avoid Individuals Or Organizations Who Claim To Predict Or Guarantee Large Profits

Any form of trading is hard. Trading currencies is no different. Be wary of statements that make it sound easy. Statements like:

a) ?Whether the market moves up or down, in the currency market you will make a profit?;
b) ?Make $1000 per week, every week?;
c) ?We are out-performing 90% of domestic investments?;
d) ?You'll make returns of 70% a year?;
e) ?Here is a no-risk strategy?.

If they could make such returns, why would they even bother letting you know about it.

? Be Wary Of Companies Who Downplay Investment Risks

Hold your wallet tight and zip up your purse when companies say that written risk disclosure agreements are routine formalities imposed by the government. Watch out for statements like:

a) ?With a $10,000 deposit, the maximum you can lose is $200 to $250 per day?;
b) ? We promise to recover any losses you have ?.

? Be Wary Of Companies That Claim To Trade In The ?Interbank Market'

Do not believe it when some people say that they have access to the ?Interbank market' or that they can give you access to trade in that market because that's where bargain prices can be obtained. This is not true. The ?interbank market' is not a place, it is not a physical building. It is simply a loose network of currency transactions that are negotiated between big financial institutions and other large companies.

? Ethnic Minorities Are Often Targeted

Ethnic newspapers and television ?infomercials' are sometimes used to attract Russian, Chinese and Indian minorities. Sometimes these ads offer so-called ?job opportunities for account executives to trade foreign currencies', whereby the recruited ?account executive' is expected to use his own money to trade currencies and would often times be encouraged to recruit members like their friends and family to do the same.

? Seek Out The Company's Background

Check any information you receive to be sure that the company is who they claim to be. If at all possible, try and get the background of the people operating the company. Do not rely solely on oral statements and promises made by the company's employees.

? If You Are In Doubt, It Is Not Worth Risking Your Money

If after trying to solicit information and at the end of it all, you are still in doubt about the credentials of a particular company, my suggestion is to start looking elsewhere.

You may find further information by contacting government ?watchdogs' because they keep up to date with trends and reports regarding scams and other fraudulent activities. Please check the resource section of this site for the information of organizations that regulate the securities industry, sorted by country. There is also a list of brokers that you may want to look at.

by Marquez Comelab

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The Benefits of Trading The Forex Market — by Marquez Comelab

Historically, the FX market was available most to major banks, multinational corporations and other participants who traded in large transaction sizes and volumes. Small-scale traders including individuals like you and I, had little access to this market for such a long time. Now with the advent of the Internet and technology, FX trading is becoming an increasingly popular investment alternative for the general public.

The benefits of trading the currency market:

1. It is open 24-hours and it closes only on the weekends;
2. It is very liquid and efficient;
3. It is very volatile;
4. It has very low transaction costs;
5. You can use a high level of leverage (borrowed money) with ease; and
6. You can profit from a bull or a bear market.

Continuous, 24-Hour Trading

The currency exchange is a 24-hour market. You may decide to trade after you come home from work. Regardless of what time-frame you want to trade at whatever time of the day, there would be enough buyers and sellers to take the other side of your trade. This feature of the market gives you enough flexibility to manage your trading around your daily routine.

Liquidity And Efficiency

When there are a lot of buyers and a lot of sellers, you can expect to buy or sell at a price that is very close to the last market price. The currency market is the most liquid market in the world. Trading volume in the currency markets can be between 50 and 100 times larger than the New York Stock Exchange (Source: Oanda.)

When you are trading stocks, you may have experienced events where one piece of news accelerates or decelerates the price of the underlying stock you may have bought into. Perhaps a director has been kicked out by the shareholders of a company or the company has just released a new product and big investors are buying the shares of a particular company. Share prices can be drastically affected by the actions or inactions of one or a few individuals. So if you are relying on television reports and newspapers to get your news, most of the opportunities or warnings will have come too late for you to take advantage by the time you get them.

The value of currencies on the other hand is affected by so many factors and so many participants that the likelihood of any one individual or group of individuals drastically affecting the value of a currency is minute. Because of its sheer size, the currency market is hard to manipulate. The ability for people to engage in ?insider trading' is virtually eliminated. As an average trader, you are less disadvantaged. You are likely to be playing on relatively equal ground along with all the other traders and investors whom you are competing against.

Why Trade the Forex? — by Susan Walker

My purpose for writing this article is to demonstrate to you the advantages of trading on the Forex market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote "If It Doesn't Go Up, Don't Buy It". He said "Everyone who invests is a trader, only the time period is different." It is a lesson that I took seriously after taking a beating in the stock market in 2000.

So now, let's compare features of currency trading to those of stock and commodity trading.

Liquidity — The Forex market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

Trading Times — The Forex market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage — Depending on your Forex account size, your leverage may be 100:1, although there are Forex brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the Forex market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.

Trading costs — Transaction costs in the Forex market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.

Minimum investment — You can open a Forex trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.

Focus — 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.

Trade execution — In the Forex market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.

While all of these features make trading the Forex market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

by Susan Walker

10 Interesting Forex Trading Facts

Forex trading is actually over- the- counter financial market for trading currencies and has a global coverage. In the forex market, umpteen different buyers and sellers trade in different currencies and the forex exchange market determines the relative value of each currency. The core purpose of this market is to facilitate the international business community as it allows the conversion of one currency into another. Forex market is also used for speculation purpose and it is all about that how well can you play with a currency in terms of its future worth or value in the market.
For all those who are interested in Forex trading, here are some facts about this system to give you more knowledge on this so let’s get to the 10 interesting forex trading facts

10. Forex is the most liquid market and so trading is very convenient and easy on this.
9. You have to pay no commission on all your forex dealings, unlike the futures and equity trading.
8. Most commonly traded currencies in the forex market as per the Wall Street Journal Europe are; U.S. Dollar (USD), the Japanese Yen (JPY), the Euro (EUR), the British Pound (GPB), the Canadian Dollar (CAD), the Australian Dollar (AUD), and the Swiss Franc (CHF).
7. Among all the currencies, the hottest currency is U.S Dollar and it is involved in nearly 90% of the transactions.
6. There are some financial institutions which play very active role in the forex trading and therefore account for 73% of the total forex market trading volume and these institutions are; Deutsche Bank (17.0%), UBS (12.5%), Citigroup (7.5%), HSBC (6.4%), Barclays (5.9%), Merrill Lynch (5.7%), J. P. Morgan Chase (5.3%), Goldman Sachs (4.4%), ABN AMRO (4.2%), and Morgan Stanley (3.9%).
5. Although the forex trading encompasses nearly the whole world but the main forex trading centers are London, New York, Tokyo, Sydney, and Frankfurt.
4. The three prime forex trading countries are the United Kingdom (32.4%), the United States (18.2%), and Japan (7.6%).
3. If you have a risk-averse attitude and intend to invest in a safe but low-profile currency then go for the Swiss Franc.
2. If you take an active part in forex trading, then be sure not to miss the world news as it will be of great patronage to you in your dealings in forex market.
1. An interesting definition of forex market by Howard Abell is, “The [Forex] trading system gives the trader the ability to control his or her emotional states rather than allowing them to control him. A [Forex trading] system is a disciplined method for organizing dynamic, ever-changing market phenomena.” I am sure this will help you get a feeling on what is the forex market all about.

Introduction To Forex Trading — by Marquez Comelab

There are many markets: markets for stocks, futures, options and currencies. These are probably the most accessible markets for everyday traders like you and I. People easily understand the basics of trading shares, so I will occasionally use examples from that market.

I began trading shares first and then I moved on to trading currencies; therefore, most of the examples I will be using in this book are derived from trading currencies.

If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.

The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.

The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.

It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.

The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.

The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.

THE MAIN 'PLAYERS' IN THE FOREX MARKET

The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.

Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.

Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.

Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.

Large commercial and investment banks are the 'price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.

Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.

Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.

by Marquez Comelab

What Is Forex Trading? — by David Morrison

Forex trading is nothing more than direct access trading of different types of foreign currencies. In the past, foreign exchange trading was mostly limited to large banks and institutional traders. However recent technological advancements have made it so that small traders can also take advantage of the many benefits of forex trading just by using the various online trading platforms to trade.

The currencies of the world are on a floating exchange rate, and they are always traded in pairs. About 85 percent of all daily transactions involve trading of the major currencies. Four major currency pairs are usually used for investment purposes. They are: Euro against US dollar (EUR/USD), US dollar against Japanese yen (USD/JPY), British pound against US dollar (GBP/USD) and US dollar against Swiss franc (USD/CHF).

If you think one currency will appreciate against another, you may exchange that second currency for the first one and be able to "stay" in it. If everything goes as you plan it, eventually you may be able to make the opposite deal in that you may exchange this first currency back for that other and then collect profits from it. As a note bear in mind that no dividends are paid on currencies.

Transactions on the FOREX market are performed by dealers at major banks or FOREX brokerage companies. FOREX is a necessary part of the worldwide market, so when you are sleeping in the comfort of your bed, the dealers in Europe are trading currencies with their Japanese counterparts. Therefore, the FOREX market is active 24 hours a day and dealers at major institutions are working 24/7 in three different shifts. Clients may place take-profit and stop-loss orders with brokers for overnight execution. Price movements on the FOREX market are very smooth and without the gaps that you face almost every morning on the stock market. The daily turnover on the FOREX market is somewhere around $1.2 trillion, so a new investor can enter and exit positions without any problems.

The fact is that the FOREX market never stops; even on September 11, 2001 you could still get your hands on two-side quotes on currencies. The currency market is the largest and oldest financial market in the world. It is also called the foreign exchange market or FX market for short. It is the biggest and most liquid market in the world, and it is traded mostly through the 24 hour-a-day inter-bank currency market.

When you compare them, you will see that the currency futures market is only one per cent as big. Unlike the futures and stock markets, trading currencies is not centered on an exchange. Trading moves from major banking centers of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S. it is truly a full circle trading game. In the past, the forex inter-bank market was not available to small speculators because of the large minimum transaction sizes and strict financial requirements. Banks, major currency dealers and sometimes even very large speculator were the principal dealers. Only they were able to take advantage of the currency market's fantastic liquidity and strong trending nature of many of the world's primary currency exchange rates.

Today, foreign exchange market brokers are able to break down the larger sized inter-bank units, and offer small traders like you and me the opportunity to buy or sell any number of these smaller units. These brokers give any size trader, including individual speculators or smaller companies, the option to trade at the same rates and price movements as the big players who once dominated the market.

by David Morrison