The forex market in general is dominated by the interbank market and currency trading in the UK is heavily influenced by the interbank market. Currency trading UK is regulated by the Financial Service Authority. Regulation is much lighter in the UK and there can be little or no difference between a regulated broker and an unregulated one. Outside the United States most regulatory bodies addressing currency transactions provide little or no requirements for brokers and regulation is nominal at best. Despite the criticisms of the Financial Services Authority they do provide a measure of consumer protection and most reputable UK forex brokers are regulated by the FSA.
Under FSA regulations UK forex brokers are required to ensure the quality of the bank in which client funds will be held. Client finds must be kept separate from company funds and at no time can client funds be used for company assets should insolvency occur. All brokers regulated by the FSA must submit regular financial reports and submit to a detailed annual audit by the agency. These regulations provide a higher degree of protection to investors who are currency trading in the UK. Should a broker go out of business investors are protected by the Financial Services Compensation Scheme. This is a find of last resort and enables the FSCS to compensate investors if a broker is not able to meet his or her obligations. Clients are compensated by 100$ on the first £30,000 ($48,085.15 USD), 90% on the next £20,000 ($32,056.76 USD) and there is a £48,000 ($76,925.29 USD) limit.
Currency trading UK has become extremely popular among small investors and gives the average investor the chance to profit even during difficult economic times. The only thing necessary is an internet connection and trades can even be conducted using mobile devices such as blackberries and smart phones.
]]>What sets the international currency trading market apart from other markets is its size, liquidity and the use of large amounts of leverage. Most International Currency Trading is conducted electronically making it especially well suited for day traders and small investors. International Currency Trading was once the exclusive domain of large banks and very wealthy individuals but now the average investor has access to this dynamic market. There are several levels of access to International Currency Trading markets. At the very top is the interbank market which is composed of large banks and central banks. The interbank market accounts for 53% of all currency transactions. At the bottom are retail forex brokers who facilitate currency transactions for small investors.
Retail brokers are a rapidly growing sector of the International Currency Trading market. Reputable brokers in the US are usually members of the National Futures Association, a self regulatory organization and are regulated by the Commodity Futures Trading Commission. In 2009 stricter capitalization requirements were imposed on retail forex brokers eliminating marginal brokers and protecting investors. Most brokers will provide new investors with training programs and demo accounts. International Currency Trading requires a great deal of education and training. Investors need to learn all of the factors that can influence currency exchange rates. Currency markets can be volatile and exchange rates can change several times in one day.
The International Currency Trading market has no central exchange like stock and commodities markets. Currency markets are dispersed throughout the world and the primary trading centers are, in order of importance, London, New York and Tokyo. The geographic dispersal means that markets are always open somewhere in the world and traders can jump on the internet and hopefully make very profitable trades.
]]>Most forex brokers offer those interested in e currency trading training courses and demo accounts. Demo accounts allow new traders to trade in real time without risking actual funds. Many experts recommend that new traders use a demo account until they feel comfortable and confident trading. Most brokers will provide their own software trading platform that the new trader will download. In addition there are several trading platforms available for free on the internet. Most trading platforms offer access to a wide selection of currency pairs. Many brokers also offer data feeds providing investors with the latest market quotes from around the world.
Forex markets provide investors with the use of large amounts of leverage. Leverage can work to the advantage or disadvantage of any trader. The use of leverage allows the investor to control a large block of currency for a small investment. For example if a trader invests $1,000 using leverage of 100:1 he or she will control a block of currency worth $100,000. Since currency moves are measured in ‘pips’ which is the smallest unit that a currency can move the use of leverage is necessary to make a decent profit. Leverage can lead to huge profits but it can also lead to huge losses for the trader.
Investors interested in e currency trading need to educate themselves about the factors that can influence currency movements. Factors influencing currency moves include economic data, political developments and market psychology. Savvy investors know how to interpret current events and how they will influence currency markets. For example bad economic news can prompt a flight to safe haven currencies. (The US dollar and the Japanese Yen) In other words investors park their funds in safe haven assets and hope things will improve.
E currency trading is steadily growing and more investors are joining the exciting world of e currency trading every day.
]]>Selecting a reputable forex broker is not difficult thanks to broker reviews and forex forums on the internet. Although some review sites and blogs may be operated by an individual forex broker for their own benefit these are relatively easy to spot. There are lists of individual forex broker available on the net making it easy for new traders to compare forex brokers. Broker review sites contain the real life experiences of traders who have worked with individual forex brokers and can be a very valuable source of information. There are several factors that new traders should look for when selecting a forex broker.
Security is a prime consideration. Traders should check the reliability and track record of any forex broker they are considering. Reputable forex brokers are members of the National Futures Association, a self regulatory body and their purpose as stated on their website is to; “safeguard market integrity, protect investors and help our Members meet their regulatory responsibilities.” In the US forex brokers are regulated by the Commodity Futures Trading Commission. Recent regulations implemented in 2009 have put most marginal forex brokers out of business.
Init5ial deposit requirements vary from broker to broker. It is not difficult to find a forex broker with affordable deposit requirements. New traders should only risk what they can afford initially. Spreads are also an important consideration. Most forex brokers make money by widening the bid-ask spread beyond the quoted values in the wholesale interbank market which means less money for the investor. It should be no problem finding a forex broker that offers competitive spreads.
Deposits and withdrawal policies should also be considered. There is simply no excuse for unnecessary delays in processing withdrawals so it is a good idea to check each broker’s deposit and withdrawal policies. Leverage offered should also be taken into consideration. It is essential that new traders understand leverage which while it can lead to huge profits can also lead to large losses.
There are hundreds, if not thousands, of reputable forex brokers offering investors their services. Thanks to industry competition new forex traders should have no trouble finding a forex broker that suits their needs.
]]>The forex market is unique and differs from, stock and commodity markets in several ways. The forex market is the world’s largest and most liquid and has no central exchange. Forex markets are located throughout the world and trading takes place 24 hours a day except on weekends. Forex online currency trading allows investors to use larger amounts of leverage than are available in other markets. Leverage of 100:1 and even 400:1 are common in forex markets. Since most traders are conducted electronically the forex market is perfect for day traders. Most transactions can be done in a matter of seconds and thanks to the internet the average investor can participate in global currency markets.
There are several participants in forex markets. Large banks and central banks account for about 31% of all trades. London is the main currency trading center and about $1.36 trillion dollars is traded daily. New York accounts for about 16% of all forex trades followed by Tokyo at 6.0%. Since Interbank forex trading accounts for a majority of trades the interbank trade has a great influence on currency exchange rates. Most interbank trading is done by the bank’s proprietary desks for its own account. Some banks may trade on behalf of very wealthy clients.
Other participants include commercial banks, hedge funds, pension funds, investment management firms, and retail forex brokers. Most small investors will establish an account with a retail forex broker. Most brokers will supply their clients with their own trading platform. Most brokers also provide novice traders with training programs and demo accounts. A demo account allows the new trader to trade in real time using varied amounts of leverage. Demo accounts help those interested in forex online currency trading to get a ‘feel’ for currency markets.
Education is very important for anyone interested in forex online currency trading. Many factors influence currency exchange rates including economic reports, political conditions and market psychology. Fortunately there are many excellent training programs available for free on the internet and novice traders can gain a thorough understanding of forex markets and the fantastic opportunities they provide investors.
]]>The already troubled euro remains under pressure as spreads widen between Greek and German bonds. A lack of details about the timing and amount of the EU/IMF aid package caused investors to sell the euro. The euro fell against the dollar for the seventh straight trading session and briefly fell below $1.33. Last Friday Greece requested aid and tried to reassure markets that the 45 billion Euros ($60.5 billion USD) loan package will arrive soon enough to prevent a default by the debt hobbled nation. On Monday German Chancellor Angela Merkel said that Greece will have to implement even more austerity measures and prove the measures are sustainable to obtain German approval for the aid package. The gap between German and Greek bonds widened to 679 basis points, the highest since the euro was launched in 1999. The lack of details about the EU loan package has made investors wary. Marco Annunziata of UniCredit MIB stated, “It is extraordinary that a euro zone member country finds itself a mere three weeks away from a potential default, with a clear possibility that uncertainty will only be resolved at the last minute.”
French Finance Minister Christine Lagarde also stated that Greece must adopt additional austerity measures to gain France’s approval of the loan package. Lagarde recognized that investors have perceived the situation surrounding the agreement as “chaotic” causing euro volatility and sending bond spreads to record levels. Lagarde said the EU must address the Greek debt crisis together and said that there will be no default by Greece and that “it will take what it will take” to save Greece. Lagarde also said that Greece must cut wages ‘significantly’, cut more spending and raise the retirement age. Lagarde said that the IMF will monitor Greece’s implementation of further austerity measures. The French Finance Minister believes that Greece got itself into the currency situation by using inaccurate statistics to report on its budget and deficits. Lagarde said that the E.U.’s statistics agency, Eurostat, must have the power to monitor the budgets of EU member nations. Lagarde pointed out that future growth will require solid public finances and that nations cannot borrow from future generations to fuel [present growth.
The euro fell 0.5% against the US dollar to $1.3323 and fell 0.1% vs. the Japanese yen trading at 125.55 yen. Michael Malpede of Easy Forex in Chicago stated, “Aid for Greece still doesn’t seem like a completed deal, so all the uncertainty about the timing and details of a Greek plan limits demand for euro.”
Quick Forex Tip: Currency trading in the UK is heavily influenced by the interbank market. Currency trading UK is regulated by the FSA. Regulation is much lighter in the UK and there is often very little difference between a regulated and unregulated broker. Outside the US, most regulatory bodies addressing currency transactions provide little or no requirements for brokers and regulation is nominal at best. Despite the criticisms of the FSA they do provide a measure of consumer protection and most reputable UK forex brokers are regulated by the FSA.
]]>According to experts at Commerzbank AG the euro may be in for a short bounce after the Greek bailout package is implemented. The risk of the bailout failing is small as a failure could destroy the credibility of the EU and its multi nation currency. Should the EU be slow in implementing the loan package the IMF would still be able to provide loans in a timely manner. Greece has called for the activation of the EU aid package and will need 45 billion euros ($60 billion USD) this year. Greek Prime Minister George Papandreou asked for the implementation of the loan package after rising borrowing costs and investor fears of a default prompted the prime minister to ask for aid. High borrowing costs have undermined the Athens government’s ability to cut the nation’s 300 billion euro deficit. In a live broadcast Papandreou said, “It is a national and imperative need to officially ask our partners in the EU for the activation of the support mechanism we jointly created. The time that was not granted to us by the markets will be given to us by the support of the euro zone.” In recent weeks Greek officials have repeatedly said they would not seek outside help but market pressures forced the Athens government to make the tough decision.
European stocks rallied briefly and the euro gained a modest 0.1% but gains were limited by concerns that the aid package will be a short term solution at best. Investors are also concerned that Greece may have to implement more austerity measures limiting growth in a nation already plagued by high unemployment. On Thursday thousands marched in the streets of Athens demanding that the government not bow to pressure and cut spending further. Austerity measures have included tax hikes and wage and pension cuts. Many analysts fear that Greece’s debt crisis could spread to other EU member states most notably Portugal and Spain. Simon Brown of Prospreads in London stated, “On the one hand it could be perceived a relief that Greece is taking the financial help but it does not address the systemic risk and begs the question as to whether countries like Spain may look for the same rescue package in the near future.”
The decision to ask for aid was made after a grueling seven hour cabinet meeting and some ministers voiced fears of further austerity measures which are unpopular throughout the country. Ben May of Capital Economics said, “This certainly does not mark the end of the crisis, there’s still much further to go. They’ve still got the medium-term problems of getting their public finances in order, and obviously the issue of competitiveness.”
Quick Forex Tip: The International Currency Trading market has no central exchange like stock and commodities markets. Currency markets are dispersed throughout the world and the primary trading centers are, in order of importance, London, New York and Tokyo. The geographic dispersal means that markets are always open somewhere in the world and traders can jump on the internet and hopefully make very profitable trades at any time of the day.
]]>Greek borrowing costs are in the news in advance of the April 20th meeting between the Athens government and the EU, ECB and IMF. Greek borrowing costs have reached new highs. On Wednesday 10 days of talks will begin in Athens and will address austerity measures Greece will have to take well into 2010 to prevent default. Also on the table will be a discussion of the 30 billion euro loan package that EU finance ministers agreed to earlier in the month. The talks had originally been scheduled for Monday but fell victim to the ash cloud which has disrupted air travel across Europe. New data showing that Greece’s unemployment rate had risen caused market concerns in addition to the ongoing fiscal crisis in Greece. EU officials said that the talks would take place by videoconference if necessary. Greek Finance Minister George Papaconstantinou said the aid mechanism would only be used if needed. Papaconstantinou said there was “no chance” that Greece would fail to cover May’s borrowing costs . Colin Ellis of Daiwa Capital Markets stated, “We now expect Greece to have to tap some form of external aid to get through May… (but) until you actually get that announcement you could see spreads continue to drift.”
European Central Bank Governing Council member Axel Weber said that Greece may need as much as 80 billion euros in aid during the next few years to prevent default. Weber also said the situation in Greece is worsening and that “the numbers are changing all the time.” Piet Lammens of KBC in Brussels stated, “The markets are considering more and more the prospect that not only will there be a (Greek) support package, but on top of that, debt holders will have to get some restructuring of their bonds.” On Tuesday Greece paid investors 3.65% in an attempt to attract investors to 1.95 billion euros of 13-week T-bills Jens-Oliver Niklasch of LBBW said, “It looks like the T-bill sale was quite successful in terms of them having raised more than they initially planned. But the borrowing cost was quite high. Greece won’t be able to cover its financing needs with T-bills.”
IMF Chief Economist Olivier Blanchard said that lending finds to Greece at high interest rates will make economic recovery for the already debt ridden nation impossible. In an interview with Le Monde Blanchard stated, “Of course, Greece must tighten its belt to pull itself out of the trouble it got itself into. But lending it rescue funds at high interest rates doesn’t make sense, because it would make a recovery impossible.” Recently implemented austerity measures include tax hikes, wage and pension freezes and remain unpopular.
Quick Forex Tip: Most forex brokers offer those interested in e currency trading training courses and demo accounts. Demo accounts allow new traders to trade in real time without risking actual funds. Many experts recommend that new traders use a demo account until they feel comfortable and confident trading. These trading platforms are available from most brokers. Additionally, there are several trading platforms available for free on the internet, offering access to a wide selection of currency pairs.
]]>The euro fell on Friday as investors and traders remain concerned how Greece will refinance its debt. The rise in risk aversion benefitted the US dollar and the yen which are regarded as safe haven currencies. Declines in equities caused investors to dump riskier assets in favor of the dollar and yen. Recent US retail sales data also supported the dollar. Niels Christensen of Nordea in Copenhagen stated, “Risk aversion and speculation of Yuan revaluation is supportive for the yen. We’ve had some good data out of the U.S. lately, including retail sales on Wednesday, and the recent backdrop is supporting the dollar, while the Greece situation is weighing on the euro.” The Athens government has asked for talks with the EU and the IMF and many believe that the meeting is a first step for the troubled nation to seek outside aid. Details about how the loan mechanism would be implemented remain unclear causing investor concern. The euro was down We’ve had some good data out of the U.S. lately, including retail sales on Wednesday, and the recent backdrop is supporting the dollar, while the Greece situation is weighing on the euro.” The euro was down 0.3% vs. the dollar trading at $1.3533 and against the yen the euro fell 0.8% to 125.34 yen.
The pound fell on concerns that upcoming elections could result with no clear victory for either party resulting in political gridlock which could hamper the UK’s ability to deal with ongoing economic problems. The high yielding Aussie dollar came under pressure and fell 0.4% vs. the greenback to $0.9310 and against the yen the Aussie fell 0.8% to 86.29 yen. The yen also gained on speculation that China may tighten policies and Greece may request the implementation of the $61 billion aid package. The dollar has fallen for the past two weeks against the yen after financial giant Goldman Sachs was charged with fraud by the US government making US assets less attractive to investors. Vassili Serebriakov of Wells Fargo & Co stated, “The Greece story isn’t going away soon, and we expect further tightening from China. That’s triggered some caution in the market, and that’s why you’re seeing the yen doing better.”
The Kiwi dollar fell 2.1% against the yen 65.31 yen on speculation that investors will unwind recent carry trades. The Aussie dollar remains under pressure for the same reason. Markets will be watching the results of this weekend’s conference of EU finance ministers and Monday’s talks between Greece and EU and IMF representatives.
Quick Forex Tip: Selecting a reputable forex broker has been made easy thanks to broker reviews and forex forums on the internet. There are lists of individual forex broker available on the net making it easy for new traders to compare forex brokers. Broker review sites contain the real life experiences of traders who have worked with individual forex brokers and can be a very valuable source of information.
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Fed Chairman Bernanke testified in front of the Joint Economic Committee of Congress and said that he sees moderate growth and subdued inflation. Bernanke cited the fast paced growth of US Gross Domestic Product during the fourth quarter. Bernanke said the growth was a result of a realignment of inventories and credited stimulus programs also. Bernanke stated that, “growth in private final demand will be sufficient to promote a moderate economic recovery.” And said there were “significant restraints” and expressed concern that 44% of the unemployed have been jobless for more than six months. Bernanke said inflation was ‘subdued’ and told lawmakers that “the moderation in inflation has been broadly based, affecting most categories of goods and services.”
Regarding rate hikes Bernanke did not address the issue in his testimony but addressed the issue during the question and answer period. In response to questions about rate hikes Bernanke said, “The Federal Open Market Committee has stated clearly that they currently anticipate that very low, extremely low rates will be needed for an extended period.” Bernanke qualified his statements by saying that the Fed’s commitment to low rates is based on certain economic conditions such as underused productive capacity, high unemployment and limited inflation expectations. Bernanke added, “If those conditions cease to hold and we anticipate changes in the outlook then of course we will respond to that.”
Bernanke warned that the risk of economic contraction is “not negligible” and that growth has been slowed by weakness in the construction industry and massive state and city budget problems. Bernanke cited signs that layoffs are slowing and said employment “has turned up.” Analysts say that Bernanke’s comments showed caution about economic recovery. Jeffrey Friedman, of Lind-Waldock in Chicago stated, “It implies he won’t be tinkering with short-term interest rates in the near future.” Lawmakers asked questions about China’s currency policies which has become a Washington talking point in advance of next week’s G 20 meeting. Bernanke was asked if the Chinese Yuan, which many experts consider undervalued, was a factor in causing the global recession. Bernanke said it was just one of many factors causing the recession. Bernanke said, “I think it would be good for the Chinese to allow more flexibility in their exchange rate. It would give them more autonomy in their monetary policy so they could address inflation and bubbles within their own economy.”
Quick Forex Tip: Education is very important for anyone interested in forex online currency trading. Many factors influence currency exchange rates including economic reports, political conditions, and market psychology. Fortunately there are many excellent training programs available for free on the internet to help novice traders gain a thorough understanding of forex markets and the fantastic opportunities they provide investors.
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