Tag Archives: currency

Forex Trading Articles

Discovering The Cross Currency Triangulation

The important aspect of the cross currency triangulation is that most of the major currencies are not traded at the Forex trading platform against each other in the Interbank market and considered as the standard currency pairs.

From the day when EUR is accepted as one of the major currency in the Forex market the currency exchange market has been realigned and likewise certain changes in the currency pairs arrangements also took place and now currency pairs that are available for making trades includes EUR/JPY, GBP/JPY and EUR/GBP and many other currency pairs have been developed gradually in the market including commodity currencies as well.

The need of Forex arises because all the big companies and other nations wish to expand their business activities and trading at large scale and for transacting business outside one home country requires currency exchange and for that they require a platform that facilitates services to exchange the currencies in the desired currency in an easy manner with effective processes.

With the emergence of EUR as strong currency now traders, companies, exporters, importers, governments, investors and tourists all require a procedure to transact business in EUR as well along with the USD at the same time as allocating profits to send back to their home countries.

Before the acceptance of the triangulation method, UK company selling in Switzerland and fetching currency in Swiss Franc need to sell Swiss Franc for USD and then sell the USD for getting GBP.

Before the emergence of the cross currency triangulation processes currencies are sent back to the home country after getting repatriated with USD. This process is difficult and takes quite lengthy time to conduct but now with triangulation with the cross currency enable the traders to take advantages of bid and ask prices directly from the interbank market.

The investors and traders having enormous capital to invest and are well-experienced enough of forex trading can detect the discrepancies amid the bid and ask spreads through various cross currency pairs and is became possible with EUR, although such arbitrage trading possibilities lie for few seconds but those few seconds are enough for he traders to pull out the profits and today the online trading and connectivity is another plus point that provide them ability to get over the existed challenges of the Forex market.

There are numerous triangulation opportunities exist at the Forex trading platform that enables profiting from the exchange rate disparities and can be realized through various methods. For instance the trader places two buying position at the pair and one sell likewise places sell two pairs and buying one pair.

The triangulation opportunities available with the currencies like CHF, EUR, GBP, JPY and USD in order to convert EUR to home currency.

This can be a good trading strategy to hedge your investments against the risk of exchange rate interest parity.

Forex Trading Articles

Understanding The Difference Between Currency Futures And Spot Forex Trading

Forex is the largest market in the world in terms of the total cash value traded. Any person, company or country may participate in the market. Forex investors may engage in currency futures as well as trade in the spot forex market. The difference between these two investment options is minor as explained below.

The introduction of Forex futures occurred at the Chicago Mercantile Exchange in 1972. Forex futures also referred to as currency futures serve two primary purposes as financial instruments. First, they can be used by companies or individuals to remove the exchange rate risk inherent in international transactions. Second, they can be used by investors to speculate and profit from currency exchange rate fluctuations.

With currency futures, the price is determined when the contract is signed and the currency pair is exchanged on the delivery date, which is usually sometime in the distant future (typically no more than 3 months). However, most participants in the futures markets are speculators who opt to close out their positions before the settlement date.

In the spot FX, the price is determined at the point of trade, and the physical exchange of the currency pair takes place right at the point of trade or within a short period of time thereafter (the standard settlement timeframe for foreign exchange spot trades is 2 days from the date of trade execution). Forex trading is not conducted on a regulated exchange. It is referred to as an over-the-counter (OTC) transaction. For example, whenever someone goes to a bank to exchange currencies, that person is participating in over-the-counter (OTC) trade.

Whether you decide to jump right in to spot FX or want to speculate a little, the Forex market offers countless opportunities with unlimited risk.

Contact a Spot Forex management and investment research firm who specializes in providing investors alternative market opportunities that diversify portfolio risk. Forex indicators help identify attractive investment opportunities in any economic environment. Use forex strategies to designed or reduce capital draw down that can occur in the extremely volatile Forex market.

General Forex

Currency Trading Tips 4 Psychological Threats Every single Trader Should Know About

The mental part of trading better known as trading psychology is regularly overlooked by most traders. Consequently, these forex traders suffer from the psychological manipulation of the Forex market The reality is that the markets and currency prices are an expression of what traders are feeling.

For illustration, whenever Fx traders are feeling doubtful a support or resistance level is formed. The emotions that are felt by the market individuals define what currency prices will do next.

Trading psychology plays an essential role in Forex trading and understanding how your emotions and personality can affect your trading is necessary for success. In this part of my currency trading tips series I would like to discuss 4 psychological threats that you should know about and that can stop you from reaching your financial goals.

Greed:

Greed is one of the primary causes why Fx traders lose money. The good amount of leverage in trading currencies enables Forex traders to produce very fast and large profits, but the same theory is applicable to losses. Just because you have great returns in a few hours on a trade it does not mean you should expect it every single day. For that reason, it is significant to set reasonable targets when you are managing your trading account.

Fear:

Fear is the feeling that tells us to not do things that we feel are far too risky. Fear is an emotion we need in our lives but when our amounts of fear are way too high it may stop us from doing things that are necessary. The primary fear Forex traders face is the fear to lose money. This a usual fear since no one wants to lose money, but it is illogical if it doesn’t let a Forex trader take and manage his trades correctly.

As an illustration, a trader might take a couple of losses and then be too fearful to take the next trades what could be profitable trades that could have taken care of the previous losses. This is an instance of the negative effects of fear.

Hesitation:

Hesitation is understood to be the lack of action because one is feeling skeptical or uncertain. Currency trading can sometimes be extremely fast paced and a trader’s power to respond to the markets will impact their success and gains. Subsequently, hesitating to take action and take advantage of the great opportunities the market has to offer can be very adverse to your trading career.

Ensuring that you never miss out on great trading opportunities because of hesitation can be easily done by just using a strict trading plan and using efficient trading systems.

Uncertainty:

When you feel uncertain you just don’t know or have any idea of what is going on in the markets. Such a thing happens to all traders, nonetheless; not everyone responds the same way. The reality of the matter is that uncertainty is an emotion that can make you make unreasonable decisions, and irrational decisions lead to losses.

The best piece of advice I can give you to fight uncertainty is that “when in doubt, stay out”. I have learned that whenever you are unsecure or uncertain about a trade you are more likely to lose money and commit mistakes.

Taking control of your trading career will require to also taking control of your emotions. The easiest method to take your emotions out of your trading is by using a trading plan, a solid trading strategy, and focusing on the process rather than on the profits.

Best regards,

Jay Molina

Pro Currency trader & Mentor

Forex Trading Articles

Global Effects of Currency Wars on Currency Exchange Rates

Some countries intentionally lower their currency exchange rates to boost exports and stimulate domestic economy.

Competitive devaluation is a term describing a fierce competition among two or more countries that intentionally try to reduce the exchange rates and currency value of their home currency to support local manufacturers and boost exports. The word “Currency war” was coined by journalists covering the world financial markets, and is widely used as a more popular substitute to competitive devaluation.

The currency war was invented in modern times, when the first of such event occurred in 1930s. Prior to that time, countries and governments preferred to maintain high levels of exchange rates and currency value of their home currencies. However, the globalization of the world economy changed the rules of the game. Usually, competitive devaluation is pursued by governments that wish to establish export led economy. In such a scenario, the advantages of lower exchange rates and currency value are obvious – lower cost of goods manufactured and exported resulting in higher demand for domestically manufactured goods due to their lower price on foreign markets. This process has positive impact on the economy by improving unemployment figures and boost GDP growth.

The other side of the coin is that a competitive devaluation jeopardizes foreign debt servicing when it is denominated in a foreign currency. Moreover, a currency war could lead to higher inflation and diminishing living standard in the country because people experience reduced purchasing power of their national currency both when purchasing imported goods and travelling abroad.

There are several methods to force a competitive devaluation and reduce currency rates of a country’s national legal tender. Quantitative easing is practiced by central banks when they fear a potential or actual recession and increase the money supply domestically. This practice involves printing of new money that is intended to support the local economy, which was a major tool to avoid deepening financial crisis in the United States, the UK and the euro-zone in 2007 and later.

As a rule, large scale currency wars occur only during times of global recession when a critical mass of large economies decide to devalue their currencies simultaneously. Recently, many world economists and politicians warned that a new currency war is at the door and the world community should act to avoid a large scale competitive devaluation. China is the usual suspect of implementing policy of competitive devaluation because its economy is heavily dependent of exports, while Beijing refuses to let its national currency float free.

Many leading economic powers like the US benefit from current lower currency exchange rates and currency value of their home currencies due to higher demand for domestically produced good abroad in times of crisis. Germany is one of the few leading world economies that could benefit from a currency appreciation of the Euro because the country runs a large current account surplus. In contrast, most euro-zone economies like Britain would benefit from depreciation of the Euro.

The currency war is a relatively new phenomenon and is still subject to extensive theoretical studying, while all the pros and cons of implementing such a policy are yet to be revealed.

Forex Trading Articles

Dont Bother To Invest In Currency Trading

Forex trading market has been emerging the largest money making marketplace in the world with the passage of time. It contains the best currency rates for those individuals, who have the interest in the currency trading. It is time and again called as the gigantic money trading market all over the world. There are hundreds of thousands of forex traders and marketers available out there, who are doing the currency trading online with one another for nabbing the largest forex returns. There are several types of best forex currency rates accessible online nowadays.

If we talk about the gigantic currency values in the global forex market, it will be consisted of US dollar,Singaporedollar,New Zealanddollar, Swiss Franc andUKpound. Many forex brokers and stock investors have immense self belief in these types of forex currencies. These are valuable and worth mentioning foreign currencies. So, you should invest in it all the time. Currently, thousands of stock marketers and forex investors have been buying and selling the forex shares by keeping in mind the value of the international currencies.

If you are new in the currency trading and want to invest in it accordingly, you will really need to consult with a professional forex broker online so as to get done the job successfully. The advantage of having the forex brokers is that they are experienced in currency trade over the years. That is why they would definitely propose the best forex trade guidelines and manuals according to your own needs and desires. With best forex brokers, the forex marketers and investors will be surely able to generate the longer forex returns beyond your imaginations. Besides, there are unique forex news and stories accessible online, through which you will be certainly able to improve your knowledge, skills and expertise in the forex trading online for all time.

There is no uncertainty and reservations about that people want to know about the forex trade nowadays. This is the emerging marketplace at the present era. It has the best currency rates for the forex marketers and brokers to buy and sell the forex shares properly. Oh yes, several banks are offering the currency trading services to their valued customers in recent times. If you want to excel in currency marketing, you will definitely need to read the latest forex news online so as to get done the job. Believe me or not this is the best opportunity for those, who want to invest to their money in the proper channel. Definitely, forex can help you change the entire complexion of your life in a split of seconds.