The forex market spans the globe and all time zones making it available 24 hours a day. The forex market is highly liquid and there are always traders willing to buy and sell currency pairs. Major currency trading centers are London, New York and Tokyo. There are several advantages forex markets have over stock and commodity markets. The forex market is recession proof and there is no way for the forex market to crash. By online currency trading forex investors can still make a profit in troubled economic times.
There are no government imposed fees; no commissions, no exchange fees and transaction costs are low compared to stick and commodity transactions. There are no middlemen in forex markets that take a percentage of the profit or investment keeping costs to a minimum. Online currency trading forex gives investors the ability to choose the size of their investments. Traders can buy large lots of currency or may choose a mini lot. Forex traders can buy or sell currencies anytime no matter what the currency’s position and transactions take place in seconds. Currency traders have access to large amounts of leverage which enables the investor to control a large lot of currency for a small investment. Leverage of 100:1 is common and some brokers offer leverage as high as 400:1. The use of leverage increases risk so it is absolutely necessary that traders understand the wise use of leverage and the risks involved.
Online currency trading forex is easily accessible to the small investor. There are many free educational and training programs available to new investors. Currency trading is perfect for day traders and the only thing needed is an internet connection.
]]>Forex futures were created by the Chicago Mercantile Exchange in 1972 just after the old system of fixed exchange rates was abandoned. Since some commodity traders did not have access to the interbank currency market and believed that currency markets were about to undergo significant changes they created the International Money Market, the forerunner of today’s dynamic forex market. Today the IMM is a division of the Chicago Mercantile Exchange and in 2009 daily volume averaged about 754,000 contracts. Other exchanges that trade forex futures are Euronext, the Tokyo Financial Exchange and the Intercontinental Exchange located in the United States.
Forex futures serve two purposes; they can be used by companies to remove the currency exchange rate risks that can occur during cross border business transactions or they can be used by currency speculators to profit from changes in currency exchange rates. Those who trade forex futures trade on margin and such transactions can be very risky. It is absolutely necessary that new forex traders understand how forex futures contracts work. Fortunately for novice traders there are several free educational and training programs available online. Many forex brokers provide clients with training and mentoring programs. Most offer demo accounts so those curious about currency trading can trade in real time without risking any real funds. There are forex brokers that specialize in trading forex futures. Since forex trading is risky it is a good idea for the new investor to study currency markets until a thorough understanding of forex markets has been acquired.
]]>Global currencies are constantly fluctuating and the basic goal of currency trading is to predict a currency’s rise in relation to other foreign currencies. Currency fluctuations can take place for a wide variety of reasons but like most markets supply and demand are the driving forces. As demand for a particular currency increases the price of that currency will rise and vice versa. Factors that can influence currency exchange rates include political conditions, economic indicators such as employment figures, consumer confidence levels, housing data, economic and monetary policies, inflation, interest rates and economic growth or decline.
For investors interested in world currency trading there are many free training and educational courses available online. Many of these have been written by widely recognized currency experts and can provide essential information to the new currency investor. Currency trading can be a very lucrative alternative to stock and commodity markets but involves more risk. The volatility of currency markets makes it possible for the savvy trader to make higher profits than would be possible in stock and commodity markets. That same volatility can also lead to huge losses so education and training are essential.
Most world currency trading brokers offer new investors demo or practice accounts. Investors trade virtual currencies in real time using varied amounts of leverage. Demo accounts allow the new trader to get a feel for world currency trading and how the market moves. Minimal regulation and the lack of a central currency exchange make the world currency trading market an over the counter market. Market participants include large and central banks, corporations, hedge funds and investment management services, governments and individual currency trading brokers usually referred to as retail forex brokers. For the average small investor world currency trading transactions are usually handled by a retail currency broker. There are several broker review sites online to help potential traders select the right broker for their individual needs.
]]>Before any new trader enters the forex options market education is absolutely necessary. New forex traders need to learn how major economic factors and current events influence currency markets. An understanding of forex ‘technicals’ is essential for the novice trader. Technicals are short term trading patterns that provide investors clues that will lead to successful trades. Most forex experts recommend that new traders open a practice account to learn how the forex market works. Most brokers offer clients demo accounts and trades in real time can be made using different levels of leverage. Demo accounts offer ‘hands on’ trading with no real money put at risk.
New investors interested in trading forex options need to open an account with a reputable forex broker. In the US forex brokers are strictly regulated by the Commodity Futures Trading Commission. Not all brokers offer forex options so new investors should make sure the broker they select offers forex options. Regular accounts usually have a minimum deposit requirement of around $2,000 but a mini forex account can be opened for as little as $100.
Generally there are two types of options available to investors. Traditional options let the investor buy one currency of a pair with the other paired currency at a guaranteed exchange rate (the strike price) until the forex option expires. Should the currency move in the investor’s favor the investor can exercise the option and the currency can be sold at a profit. Single payment options trading (SPOT) work differently. A spot option allows the investor to predict a currency pair’s movement. For example an investor may predict the euro will move from $1.40 to $1.41 in two weeks. If the prediction is realized the investor receives a payoff. The ability to trade forex options gives investors protection while allowing them to realize huge profits.
]]>Before engaging in any live currency trading the novice investor should take advantage of the many excellent free training and educational programs available on the internet. These programs cover all the factors that affect currency markets and will help the new investor understand all of the technicalities associated with live currency trading. A live currency trading room provides the new trader with a live trading and learning environment. A live currency trading room gives the new investor the chance to chat with experienced traders, see charts and develop strategies by observing seasoned traders.
There are many things a new trader must learn before engaging in any liver currency trading. The forex market has its own unique terms such as ‘pips’, the abbreviations used to represent the various currencies and many other terms that every trader needs to know. Learning how to interpret current news and how it affects currency markets is very important. For example earlier in the year as soon as reports detailing the fiscal crisis in Greece began to appear the euro fell on global currency exchanges. Investors that acted on these reports profited from the euro’s fall in forex markets. Economic reports have a great impact on currency markets. Employment figures, balance of trade reports, retail sales reports, consumer confidence reports all have a profound impact of currency markets affecting live currency trading.
There are many live currency trading rooms available online. Most offer practice accounts so new traders can trade in real time without risking any capital until they are confident enough to enter the exciting world of live currency trading. A live currency trading account can add value to any portfolio and thanks to the internet trades can be conducted from anywhere there is an internet connection and most trades can now be conducted using mobile phones with internet access.
]]>Credit downgrades have hammered the euro in currency markets. Standard & Poor’s downgraded Greece to ‘junk’ status and downgraded Portugal to A-. On Wednesday S & P’s downgraded Spain putting further pressure on the multi nation currency. The ratings agency said that a longer than expected period of low growth could hamper Spain’s efforts to cut its deficit. Standard and Poor’s said its outlook is negative and a further downgrade is possible if Spain’s fiscal position deteriorates further. Standard & Poor’s said, “In our opinion, Spain is likely to have an extended period of subdued economic growth, which weakens its budgetary position. We now project that real GDP growth will average 0.7 percent annually in 2010-2016, versus our previous expectations of above 1 percent annually over this period. “The downgrade sent the euro to a one year low vs. the US dollar and Spain is now the third EU country to suffer a credit downgrade. Many analysts say that since Spain has a much larger economy than Greece further downgrades could create serious problems for the euro zone. Win Thin of Brown Brothers Harriman in New York stated, “Indeed, Spain is the 800 pound gorilla in the room. Greece and Portugal are small countries, but Spain is about five times their size with regards to GDP.” Spain still has top ratings from ratings agencies Moody’s and Fitch.
IMF chief Dominique Strauss-Kahn told German members of Parliament that Greece may need as much as 100 to 120 billion Euros over the next three years. German Green Party leader Jorgen Trittin said that German legislators were told that Greece should be taken off the market for the next three years to allow the debt ridden nation to get its finances in order. Market pressures have made borrowing costs for Greece unsustainable. Trittin stated, “The package will run over three years. Greece should be removed de facto from financial markets for three years.” Some German lawmakers demanded that Greek banks be included in the rescue package but the IMF and the ECB opposed the inclusion of banks.
Greek Prime Minister George Papandreou said his nation is ready to make the changes necessary to emerge from the country’s debt crisis. Papandreou addressed Greece’s high borrowing costs and stated, “The interest rates on our bonds today is… prohibitive. This is yet further proof the markets do not regulate themselves and they do not, by definition, function rationally.”
Quick Forex Tip: The best way to be a successful forex trader is to keep up with current forex market news. Keeping up with market fluctuations and exchange rates will help you to successfully navigate potential forex opportunities. Once you learn about forex, you’ll want to start using your knowledge to engage in live currency trading - so you can turn your forex knowledge into profit.
]]>German Finance Minister Wolfgang Schaeuble told the widely circulated Bild newspaper that Greece must adopt new and tougher austerity measures as a condition for the approval of the $60 billion aid package. The Athens government has already implemented tax hikes and wage and pension cuts. The austerity measures are unpopular and have prompted strikes and demonstrations. Schaeuble told reporters, “The fact that neither the EU nor the German government has taken a decision (on providing aid) means that the response can be positive as well as negative. This depends entirely on whether Greece continues in the coming years with the strict savings course it has launched. I have made this clear to the Greek finance minister.” On Friday Greece surrendered to market pressure and asked for the loan package from the EU and the IMF. At the present time the aid package is valued at 45 billion Euros ($60.49 billion USD)but some economists say more may be needed.
In Germany the Greek aid package is a political hotspot and opposition to the aid package runs deep among the German public. Greek Finance Minister George Papaconstantinou is in Washington for talks with the IMF and is negotiating a three year loan plan with the agency. Papaconstantinou said that investors will “lose their shirts” if they bet that Greece will default. He also said the funds will be available “rather soon” and that Greece will not restructure its debt. Papaconstantinou’s words failed to calm markets and the yield on Greece’s two year bond rose 169 basis points to 12.62%. Greece faces the maturity of 8.5 billion Euros ($11.3 billion USD) worth of bonds on May 19th. Any delay in implementing the loan package could cause a selloff of Greek assets and put global markets under pressure. IMF Managing Director Dominique Strauss-Kahn said that the talks will end “in time to meet Greece’s needs.”
EU governments have indicated they are ready to loan Greece 30 billion Euros and the IMF will provide an additional 10 to 15 billion Euros. Germany’s Chancellor Angela Merkel said Germany is ready to approve the loan package if the Athens government approves more austerity measures. Germany has taken a hard line regarding the Greek aid package which is highly unpopular throughout Germany. The measures are highly unpopular in Greece and have prompted strikes and protests throughout the country. Merkel said the austerity measures must be sustainable. Investor concerns over Concern over sovereign credit risk have pushed the euro and Greek bank stocks lower in global markets and have pushed the cost of insuring Portugal’s debt to record highs.
Quick Forex Tip: The fastest and easiest way to engage in forex trading is with the internet. Since the advent of the internet, currency trading has boomed. If you are just getting started with forex, you’ll definitely want to try out online currency trading forex. Online currency trading allows you to trade forex from the comfort of your own home and is a great way to get involved in the forex market.
]]>The Greek tragedy continues as Moody’s downgraded Greece from A2 to A3 and EU officials say Greece’s debt figures may have to be revised upward. After Moody’s cut Greece’s rating US and European equities fell and sparked risk aversion among investors who sought the safety of US Treasuries. Moody’s downgraded Greece’s rating to A3 just four notches above ‘junk’ status and bond spreads hit record levels. The EU’s statistics agency said that last year’s Greek budget deficit was actually 13.6% of GDP and not the 12.7% estimated by the Athens government. The news sent the euro lower for the sixth straight trading session to $1.3260. Mike Lenhoff of Brewin Dolphin stated, “Today it is a Greek story. The market seems to be pricing in some default or restructuring. The Moody’s downgrade is another part of the saga. Each time we have some sort of announcement and get closer to a resolution, there seems to be another stage to overcome.” In mid day trading the Dow Jones Industrial Average fell 78.97 points to 11,045.95 and the Standard & Poor’s 500 Index was down 9.67 points at 1,196.27. The Nasdaq Composite Index also fell 17.98 points, to 2,486.63. In Europe the pan-European FTSEurofirst 300 closed at 1,083.88 points, a decline of 1.1%.
Many economists now believe that the only way Greece can finance its debt is to trigger the EU/IMF loan mechanism. Rising bond spreads are making it difficult for Greece to finance its debt in a sustainable manner. Ben May of Capital Economics, said in a client note, “There seems little hope of a significant fall in yields before the markets see cash in Greek hands. The only way Greece stands a chance of refinancing the 8 billion euros or so of debt that matures in mid-May without paying an exorbitant interest rate will be to put the bailout package in motion as soon as possible.” Austrian Finance Minister Josef Proell said that the Athens government is hesitant to accept conditions attached to the aid package and said that “the time for action is now.”
In Athens about 10,000 students and government workers marched to parliament demanding that the government resist further spending cuts and austerity measures putting the Papandreou government in a difficult political position. Also adding to investor fears is the possibility that the German government of conservative Angela Merkel will delay the aid package should Greece ask for help.
Quick Forex Tip: If you have extensive knowledge of forex markets, you may want to trade forex futures. A forex future is an agreement to buy or sell a specific amount of currencies at a predetermined price on a set date in the future. Essentially those who trade forex futures are hoping to profit from a currency’s future fluctuations.
]]>The US dollar and the yen pared earlier gains after a rise in risk sentiment among investors. Investor demand for riskier assets was prompted by positive US data which pushed US stocks higher and eased fears caused by recent fraud charges brought against Goldman Sachs. Investors remain wary of the euro due to the ongoing Greek debt crisis and a recent statement by European Central Bank Governing Council member Axel Weber who said Greece may require 80 billion euros to avoid default. The amount is far greater than the 30 billion euro aid mechanism approved by EU finance ministers earlier in the month. Lee Hardman of Bank of Tokyo-Mitsubishi UFJ stated, “No one believed that initial amount would be enough to cover Greece’s funding needs. The short-term liquidity risk may be reduced, but that doesn’t resolve the issue of debt sustainability. It’s difficult to see a way out for Greece.”
The Greek debt crisis has been further exacerbated by the transportation faced by European nations due to the massive ash cloud from a recent Icelandic eruption which has sent millions of pounds of ash towards Europe. Airlines report losses of $300 million dollars per day because of the grounding of most flights in Europe. Greece’s Aegean Air is losing 50,000-600,000 euros per day because of the flight disruptions and the airline has cancelled about 60% of its international flights. The disruption of European air travel forced the Athens government to reschedule its meetings with EU, ECB and IMF officials. The Euro Zone economy, which is already fragile, has been adversely affected by the giant ash cloud. The disruption is so serious that European Commission President Jose Manuel Barroso ordered the formation of a group to study the economic impact of the ash cloud. Last Sunday Barroso stated, “The volcanic ash cloud has created an unprecedented situation. I have asked Vice President Kallas to coordinate the Commission’s response and fully assess the impact of the situation created by volcanic ash cloud on the economy, and the air travel industry in particular.”
Euro Zone recovery has been shaky at best and the ash cloud is adding to the euro’s woes in currency markets. According to a forecast by Ernst & Young the euro zone will grow by 1% this year after contracting 4% in 2009. Giovanni Bisignani, director general and CEO of the International Air Transport Association stated, “This crisis is costing airlines at least $200 million a day in lost revenues and the European economy is suffering billions of dollars in lost business.”
Quick Forex Tip: Generally there are two types of options available to investors. Traditional options, which let the investor buy one currency of a pair with the other paired currency at a guaranteed exchange rate until the forex option expires, and single payment options, which allow the investor to predict a currency pair’s movement. The ability to trade forex options gives investors protection while allowing them to realize huge profits.
]]>On Monday the Greek government will begin talks with EU and IMF officials to hash out details of a loan agreement which could provide Greece with loans estimated at 45 billion Euros ($63 billion USD). Greek Prime Minister told reporters, “We will have to make a decision about whether we activate this mechanism in the next few weeks.” Most investors believe Greece will ask for outside aid as high borrowing costs pressure the debt ridden nation. A lack of clarity about how the agreement will work has also sparked investor concerns. Many investors are wondering if the parliamentary approval required to set the aid mechanism in motion will delay the implementation of the loan package. Germany remains opposed to the proposed bailout. Greek Finance Minister George Papaconstantinou said it would take “one week, two weeks maximum” for the EU to implement the aid mechanism. Papaconstantinou also said, “We are quite comfortable that once the framework is in place, meaning the program together with the financing elements, we will be able to move very fast.”
Last month the Athens government implemented several austerity measures and cut the pay of about 600,000 public workers, froze pensions and raised taxes in an attempt to reduce the nation’s debt by a third to 8.7% of GDP. The European Commission said that if Greece taps the aid agreement there should be no need for further austerity measures. Greece’s central bank governor said the country should close several “loss-making and spendthrift” government agencies. Bank of Greece Governor George Provopoulos told reporters, “This is how we will manage to positively please the markets by ourselves, by reducing the deficit by 5 percent (of GDP), instead of the 4 percent we have pledged for in the Stability and Growth Plan.” The austerity measures are unpopular with Greek citizens. A recent poll showed that about half of those polled said their incomes no longer covered their needs and a majority believes that if the government triggers the aid package their standard of living will deteriorate further.
Prime Minister Papandreou said that the loan package was not a ‘bailout’ and will give Greece more time to deal with predicted economic contraction. Papandreou stated, “It gives us the room to maneuver to make the necessary changes to make our economy a viable one.” Greece faces future bond sales in April and May. In Madrid Papandreou said that Greece will not default. Papandreou stated, “We will not default. The problem is the cost of borrowing, and how long we can sustain that. I don’t see a problem even in May, but that doesn’t mean that we have closed the option of using this mechanism.”
Quick Forex Tip: Knowledge of the foreign exchange market, or forex, allows traders and investors to make a profit by trading one currency for another. Those who wish to be involved in the world currency trading market should learn as much as they can about currency exchange and market rates by keeping up with current forex news. The world currency trading market is the world’s largest and about $4 trillion dollars in currencies are traded every day. Because currency markets are open twenty four hours a day, there are incredible opportunities to make a profit.
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