Tuesday, August 23, 2011

Future of Commodity Market in India


The shadow of uncertainty about the existence of the Commodity
Future markethas always been there in India. So the market participants & every
member of this community have always been in multilema about its full size growth.
Because of this ambiguity, the very market has not got as much response
as it should have got.
So, my dear readers, through this editorial, I have tried to share few latest
facts which will not only help to boost up your confidence in this market
but also help you out to rejig your strategy to be early bird to catch the worm.
As per one of the latest report ASSOCHAM the size of commodity future market is
likely to reach more than double by 2010 to Rs.1200000 crore. Along with the
growing size of commodity market, the size of employment is also bound to vault
and it is expected that this market may create
additional employment for at least 100000 people.
Recently in a Seminar in Mumbai, a FMC’s member very strongly favored the
participation of Banks as traders. Earlier the same had been proposed by
ASSOCHAM as well. If it gets materialized, this will bring much more liquidity
& better practices to the market than today it is. Banks could also work as
mediators between cultivators and FMC to discover better prices for farmers’
produce. Commission is also planning to bring small and marginal farmers to
the exchanges through aggregators. For this, banks will be asked to provide
credit to the aggregators who will in turn handle the margins and mark
to market, enabling hassle-free trading for farmers.
So, Future prospect of commodity derivative trading is upbeat in India.
I hope, every member of this community will grow like any thing.
There is no scope for doubtfulness.

Relation Of US Dollar & Gold


The domestic economy affects the exchange rate of a country. The supposed scene of the US economy
on the economic cycle (i.e. boom, bust, expansion or contraction) is one consideration.
Things like economic growth, economic outlook and inflation gives an indication on the economic health of the country.
One of the key problems with the US economy is its debt levels. The US owes net around $3 trillion
to overseas nations. This has the effect on putting downward pressure on the USD. Furthermore,
the US pays more interest on their debt to overseas nation than the interest they receive.
Differences in interest rates from one country to another also affect the demand of foreign currencies.
Set simply, international investors would rather put their money in a country that pays higher interest
on their investments. This is exactly what happening in the US.FED is reducing its interest rate time & again.
Countries like China, Russia, England and Japan clutch vast amounts of reserves in foreign currencies and the
USD is just one of the many they hold. It is projected that countries (excluding the US) hold around $13 trillion
in US currency. The major problem here is that if the US economy continues to demonstrate weakness
and the USD continues to plunge, then many nations who hold USD as foreign currency reserves might
sell it and replace it with another nation’s currency, or with gold.
Two things primarily affect the price of gold. Geopolitical tensions and as an inflation hedge.
When tensions in the Middle East are perceived to be at a very dangerous level, that is, they
could boil over and cause a war in some countries or the supply of oil will be affected, then people
will invest in gold. It is seen as a safe asset to hold in times of difficulty. Inflationary expectations
also influence the prices of gold. This was evident in the 1970s when inflation was very high and
the price of gold increased as well. As mentioned above, central banks hold gold in their reserves,
just in case there is a geopolitical tension or world inflationary pressures.
Earlier USD used to be considered the safe shelter; this is not the case any more.
Many investors/central banks are now buying gold as their safe haven asset to protect
itself from worldwide economic shocks or tensions. The USD diversification is set to
continue with the US having such a large foreign debt and weakening economic conditions.

Forex Weekly Outlook


Some Stability but stocks still remain weak
Last week’s currency trading review
The Dollar was under pressure as the relief rally extended gains early in the week but when stocks crashed on Thursday and Friday the safe haven demand for the USD saw losses pared back. The big gainer was gold which soared towards $1900 an ounce. CPI data was as expected at 0.2% in July m/m. A big shock was the Aug Philly FED Index dropping to -30 vs. 3.2 forecast. The Euro was contained in a 1.43-1.45 range with the market focused now on the idea that Eurobonds as a solution to the Debt crisis. Hurting sentiment is Eurozone growth concerns with Q2 GDP a paltry 0.2% vs. 0.8% previously q/q. TheEUR/USD is up +1.03% currently at 1.4394, after opening the week at 1.4246.
The Japanese Yen Q2 GDP was better than expected at -0.3% vs. -0.6% q/q forecast. The USD/JPY was extremely contained though with market happy to hold in a 50 pip range with dips below Y76.50 causing verbal intervention. The USD/JPY is down -0.21% currently at 76.53, after opening at 76.69. The GBP was the best performing currency in the market surging above 1.6500 after above forecast inflation data. CPI is remaining high at 4.4% y/y vs. 4.2% previously. The market was able to overlook a changed BOE vote that came in at 9-0 voting for no change after two rate hike voters changed their decisions. TheGBP/USD is up +1.13% currently at 1.6457 after opening at 1.6271. The AUD was well supported early in the week with the US equity rebound but then came under pressure as the market reversed on Thursday. The RBA Minutes states they were close to raising rates on inflation concerns but held back on global market uncertainty which proved a wise decision given the volatility since the US rating downgrade. The AUD/USD is up +0.54% currently at 1.0402 after opening at 1.0346.
The Forex Trading Economic Data Ahead Preview
In the States; On Tuesday, July Home Sales forecast at 1% vs. -1%. On Wednesday, July Durable Goods Orders forecast at 2% vs. -1.9% previously. On Wednesday, Weekly jobless claims forecast at 402k vs. 408k previously. On Friday, Q2 GDP forecast at 1.1% vs. 1.3% initially Q/Y. Also Fed Chief Bernanke speaks in a widely anticipated Jackson Hole conference. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone; On Tuesday, Aug PMI Services forecast at 51.0 vs. 51.1 previously. Also, Aug PMI Manufacturing forecast at 51 vs. 51.6 previously. On Wednesday, Aug German IFO forecast at 111.2 vs. 112.9 previously. On Friday, ECB President Trichet Speaks. In the UK, On Wednesday, Nationwide Consumer Confidence forecast at 45 vs. 51 previously. On Friday, Q2 GDP forecast at 0.2% vs. 0.2% initially. We will provide our previews and reviews of these data releases in the daily summary.
In Japan; On Friday, CPI forecast at 0% vs. -0.4% previously y/y. In Australia; On Friday, RBA Governor Stevens Speaks. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY








Currency
Sup 2
Sup 1
Spot
Res 1
Res 2
EUR/USD
1.4150
1.4226
1.4375
1.4452
1.4536
USD/JPY
75.00
76.25
76.80
77.31
78.86
GBP/USD
1.6256
1.6421
1.6495
1.6592
1.6661
AUD/USD
1.0246
1.0315
 1.0430
1.0559
1.0786
XAU/USD
1784.00
1821
1868
1900
1931
OIL/USD
80.00

82.50
 83.05
Euro – 1.4375                    
Initial support at 1.4226 (Aug 15 low) followed by 1.4150 (Aug 12 low). Initial resistance is now located at 1.4452 (Aug 18 high) followed by 1.4536 (Jul 27 high)

Yen – 76.80
Initial support is located at 76.25 (Mar 15 low) followed by 75.00 (Psych level). Initial resistance is now at 77.31 (Aug 10 high)followed by 78.47 (Aug 8 high).
Pound – 1.6495                                                        
Initial support at 1.6421 (Aug 18 low) followed by 1.6256 (Aug 15 low). Initial resistance is now at 1.6592 (Aug 17 high) followed by 1.6661 (May 3 high).

Australian Dollar – 1.0430
Initial support at 1.0315 (Aug 19 low) followed by the 1.0246 (Aug 12 low). Initial resistance is now at 1.0559 (Aug 18 high) followed by 1.0786 (Aug 3 High).
Gold – 1868
Initial support at 1821 (Aug 19 low) followed by 1784 (Aug 18 low). Initial resistance is now at 1900 (Psych level) followed by 1931 (1723.70 plus 0.618 of 1478.83-1814.95).

Oil – 83.05
Initial support at 82.50 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 85.00 (Intraday resistance) followed by 87.00 (Intraday Resistance).








Thursday, August 4, 2011

Commodity Derivates

The origin of derivatives can be traced back to the need of farmers to protect themselves
against fluctuations in the price of their crop. From the time of sowing to the time of crop
harvest, farmers would face price uncertainty. Through the use of simple derivative products,
it was possible for the farmer to partially or fully transfer price risks by locking-in asset prices.
These were simple contracts developed to meet the needs of farmers and were basically a
means of reducing risk.
A farmer who sowed his crop in June faced uncertainty over the price he would receive for his
harvest in September. In years of scarcity, he would probably obtain attractive prices. However,
during times of oversupply, he would have to dispose off his harvest at a very low price.
Clearly this meant that the farmer and his family were exposed to a high risk of price uncertainty.
On the other hand, a merchant with an ongoing requirement of grains too would face a price
risk - that of having to pay exorbitant prices during dearth, although favourable prices could
be obtained during periods of oversupply. Under such circumstances, it clearly made sense for
the farmer and the merchant to come together and enter into a contract whereby the price of
the grain to be delivered in September could be decided earlier. What they would then negotiate
happened to be a futures-type contract, which would enable both parties to eliminate the price
risk.
In 1848, the Chicago Board of Trade (CBOT) was established to bring farmers and merchants
together. A group of traders got together and created the `to-arrive' contract that permitted
farmers to lock in to price upfront and deliver the grain later. These to-arrive contracts proved
useful as a device for hedging and speculation on price changes. These were eventually
standardised, and in 1925 the first futures clearing house came into existence.
Today, derivative contracts exist on a variety of commodities such as corn, pepper, cotton,
wheat, silver, etc. Besides commodities, derivatives contracts also exist on a lot of financial
underlying like stocks, interest rate, exchange rate, etc.


A derivative is a product whose value is derived from the value of one or more underlying
variables or assets in a contractual manner. The underlying asset can be equity, forex, commodity
or any other asset. In our earlier discussion, we saw that wheat farmers may wish to sell their
harvest at a future date to eliminate the risk of a change in prices by that date. Such a
transaction is an example of a derivative. The price of this derivative is driven by the spot price
of wheat which is the 'underlying' in this case.
7
The Forward Contracts (Regulation) Act, 1952, regulates the forward/ futures contracts in
commodities all over India. As per this Act, the Forward Markets Commission (FMC) continues
to have jurisdiction over commodity forward/ futures contracts. However, when derivatives
trading in securities was introduced in 2001, the term 'security' in the Securities Contracts
(Regulation) Act, 1956 (SC(R)A), was amended to include derivative contracts in securities.
Consequently, regulation of derivatives came under the purview of Securities Exchange Board
of India (SEBI). We thus have separate regulatory authorities for securities and commodity
derivative markets.
Derivatives are securities under the SC(R)A and hence the trading of derivatives is governed
by the regulatory framework under the SC(R)A. The Securities Contracts (Regulation) Act,
1956 defines 'derivative' to include -
1. A security derived from a debt instrument, share, loan whether secured or unsecured,
risk instrument or contract for differences or any other form of security.
2. A contract which derives its value from the prices, or index of prices, of underlying
securities.

Derivative contracts are of different types. The most common ones are forwards, futures,
options and swaps. Participants who trade in the derivatives market can be classified under
the following three broad categories: hedgers, speculators, and arbitragers.
1. Hedgers: The farmer's example that we discussed about was a case of hedging.
Hedgers face risk associated with the price of an asset. They use the futures or options
markets to reduce or eliminate this risk.
2. Speculators: Speculators are participants who wish to bet on future movements in
the price of an asset. Futures and options contracts can give them leverage; that is, by
putting in small amounts of money upfront, they can take large positions on the market.
As a result of this leveraged speculative position, they increase the potential for large
gains as well as large losses.
3. Arbitragers: Arbitragers work at making profits by taking advantage of discrepancy
between prices of the same product across different markets. If, for example, they see
the futures price of an asset getting out of line with the cash price, they would take
offsetting positions in the two markets to lock in the profit.


Whether the underlying asset is a commodity or a financial asset, derivatives market performs
a number of economic functions.
8
• Prices in an organised derivatives market reflect the perception of market participants
about the future and lead the prices of underlying to the perceived future level. The
prices of derivatives converge with the prices of the underlying at the expiration of the
derivative contract. Thus, derivatives help in discovery of future as well as current
prices.
• The derivatives market helps to transfer risks from those who have them but may not
like them to those who have an appetite for them.
• Derivatives, due to their inherent nature, are linked to the underlying cash markets.
With the introduction of derivatives the underlying market witnesses higher trading
volumes, because of participation by more players who would not otherwise participate
for lack of an arrangement to transfer risk.
• Speculative traders shift to a more controlled environment of the derivatives market.
In the absence of an organised derivatives market, speculators trade in the underlying
cash markets. Margining, monitoring and surveillance of the activities of various
participants become extremely difficult in these kinds of mixed markets.
• An important incidental benefit that flows from derivatives trading is that it acts as a
catalyst for new entrepreneurial activity. Derivatives have a history of attracting many
bright, creative, well-educated people with an entrepreneurial attitude. They often
energize others to create new businesses, new products and new employment
opportunities, the benefit of which are immense.
• Derivatives markets help increase savings and investment in the long run. The transfer
of risk enables market participants to expand their volume of activity.


Derivatives markets can broadly be classified as commodity derivatives market and financial
derivatives markets. As the name suggest, commodity derivatives markets trade contracts are
those for which the underlying asset is a commodity. It can be an agricultural commodity like
wheat, soybeans, rapeseed, cotton, etc or precious metals like gold, silver, etc. or energy
products like crude oil, natural gas, coal, electricity etc. Financial derivatives markets trade
contracts have a financial asset or variable as the underlying. The more popular financial
derivatives are those which have equity, interest rates and exchange rates as the underlying.
The most commonly used derivatives contracts are forwards, futures and options

India GDP lower than expected

The Indian rupee managed to see some gain v/s the US dollar after Asian peer and European
currencies rose against the US dollar. However, a lower than expected Indian GDP capped any
major rise in the domestic currency. The USDINR June future on MCXSX closed the session at
45.2425, off 3 paisa. It fell to 45.17 during the morning session.
Indian government data showed, economy grew 7.8% in the January-March period, its slowest pace
in five quarters, dragged by weaker mining and manufacturing output. It widely missed the median
estimate of 8.2%.Despite a weaker than expected, local shares rallied on expectation of resolve in
Greece public debt issue as it has been driving global market lower from past few sessions. The
benchmark NIFTY gained 87.05 points, or 1.59%, to close at 5,560.15.
In European currencies, euro and pound gained v/s the Indian rupee. The EURINR June future
closed the session up 45 paisa at 65.07 and the GBPINR June contract at 74.56, up 7 paisa. The Euro
rose in the overnight market on hopes of fresh bailout package for Greece. The EURUSD rose to
1.4424 during New York session yesterday and currently trading above 1.44 levels in Asia. The
GBPUSD has corrected a bit from 1.65 levels and currently slightly above 1.6450 levels.
The CPI data from EU yesterday did not give much support to Euro while it still suggest rate hike by
ECB in July. Based on preliminary figures, EU inflation is expected at 2.7% in May, down from 2.8%
in April. Germany presented a breadth of data Tuesday to underline its strong recovery. Adjusted
unemployment fell to 7.0% in May to less than 3 million unemployed Germans, the lowest rate
since Germany began recording jobless data in 1999, the Federal Labor Office showed.
The US economic data released yesterday was negative for US dollar. Home prices, regional
manufacturing and consumer confidence data had a weaker reading yesterday.
In recent Chinese data, Manufacturing PMI decreases to 51.6 in May from 51.8, almost in line with
expectation by market. However, local shares may struggle on the backdrop of weak Chinese data.

Growth slowing down

The world economy is now at a crucial stage and further consolidation in the 2nd half of the year may put pressure on policy makers.

The economic slowdown has been a fact now, but the question is how long this situation will persist?
In the US, the most known Weekly Leading Index (WLI) Growth indicator of the Economic Cycle Research
Institute (ECRI) declined to 2.0 during the last week of June making it 10 consecutive weeks of decline from
the 11-month interim high of 7.8 for the week ending on April 15. A significant decline in the WLI has been a
leading indicator for six of the seven recessions since the 1960s.
Apart from US, other concerns are the EU debt problem, slowing down of Chinese growth and tightening
policy by central banks in emerging Asia.
Inflation pressures have prompted most Asian central banks to be among the quickest to withdraw monetary
stimulus as growth gather speed following the global recession in 2009. India, South Korea, Thailand and
Taiwan raised their benchmark interest rates further to contain rising prices, while China raised banks cash
reserve requirements.
The recent data shows Asia's economy continues to slow due to tightening policy and staggering growth in
the US & Europe. Comments from Asian central bankers suggest tighter policy will remain a near-term
priority despite growth is slowing down. Purchasing manufacturer indexes for India and South Korea, China
and Taiwan for June slipped, recent data revealed.
However, Asian economies are still at a better shape than that of Europe ex Germany. The high EU debt is a
major concern for the global economy. Rising sovereign yield in most of the EU economies is causing
government debt refinancing difficult. Rating agencies such as S&P, Moody and Fitch has been continuously
downgrading sovereign rating of EU countries.

Most of the EU economies are now violating the Maastricht treaty which formed the EU. As per the treaty
member states must avoid excessive government deficits. Their performance is measured against two
reference ratios- 3% of GDP for the annual deficit and 60% of GDP for the stock of government debt. Apart
from that, inflation should not exceed by more than 1.5 percentage points that of the three best performing
Member States in terms of price stability in the previous year.


Due to rising debt/GDP and high fiscal deficit, government across Europe including UK are tremendous
pressure and most specially from rating agencies. A cut in sovereign rating causes rise in sovereign yield and
resulting government debt financing difficult.
France, Italy, Ireland, Portugal, Spain and Greece have undergone vast reforms in the form austerity
measures to cut down their fiscal deficit and debt to GDP ratio.
French government announced a three-year freeze on public spending which has started from this year. The
Italian government approved austerity measures worth 24 billion euros for 2011-2012 including a three-year
freeze on pay for civil servants, wage cuts for ministers and new taxes for stock options and bonuses.
Ireland adopted two austerity plans in 2009 totaling 7 billion euros. The measures include reduction in social
welfare payments and cuts of between 5 and 15 percent in civil servant salaries. Portugal has announced an
austerity package including a rise in sales tax by one percentage point to 21% and a cut in salaries for public
officials as well as an income tax surcharge for high earners. The Spanish parliament austerity plan includes a
pay cut for civil servants. The cuts are on top of a 50-billion-euroausterity package announced in January.


And most recently, Greek Prime Minister George Papandreou won approval of two bills to authorize his 78
billion-euro ($113 billion) package of budget cuts and asset sales, a key to receiving further international financial aid. The Greek austerity measures adopted are harsh and the country erupted in violence on the day
of the first parliamentary vote. The five-year plan put forward by the Greek Socialist government consists of
public spending cuts of €14.32 billion, tax rises worth €14.09 billion and the raising of €50 billion from
privatizations. The United Nations independent expert on foreign debt and human rights has said that the
austerity measures and structural reforms proposed to solve Greece’s debt crisis may result in violations of
the basic human rights of the country’s people.
The Greek if defaults could have caused significant impact to business and markets. Policymakers seem to
have avoided it as of now.

Germany, France and Italy and UK are the major holders of Greek debt. The bailout of Greece by EU-IMF is
nothing but bailing out of German, Italy and French banks. Despite the bailout event, overall business and
consumer sentiment remains weak in EU.
The recent data shows slowing down activity in manufacturing and services. Consumer confidence remains
weak. Industrial and Services confidence are sliding.
The austerity package is expected to have negative impact on growth yet the economic growth is needed if
the country has to service its debts. In the case of Greece, the country may sooner or later may default. Now
the further question is whether the defaults will end with Greece. Apart from Greece, no other EU countries
have a dirty balance sheet. However, small counties like Portugal and Ireland, whose public debt-to-GDP
levels are between 90% and 100% and that, have fairly bad unemployment levels may get pressure.
Italy’s public debt to GDP ratio is close to Germany, but the economy is far more diverse and resilient; its
unemployment rate, around 9%, is not disastrous. Spain’s unemployment rates are worrying, but at around
60% its debt-to-GDP level is less burdensome.
The euro zone problem does not seem to be a short term issue and it will have a long term impact on growth
of these countries.
Apart from EU, further weakening of economic activity in the US and most especially in China and other Asian
countries may have a serious concern. In such a scenario, we may see further fiscal stimulus and loose
monetary easing by government authorities.

Euro and GBP fell overnight, likely to stay weak

The Euro tumbled in Yesterday’s overnight session after the release of U.S. manufacturing data.
U.S. manufacturing expanded in July at the slowest pace in two years, indicating the industry that’s
been driving the economic expansion is starting to weaken.
The Institute for Supply Management’s factory index fell to 50.9 last month from 55.3 in June.
Market forecasted the index to drop till 54.5. This lead risk aversion and brought sell off
commodities and high yielding currencies.
The EURINR settled higher yesterday at 63.80, up 48 paisa and currently in Asia it is quoting at
63.30 levels. Further pressure in the Euro can be expected today on follow through selling pressure.
The cable was also pressurized by weakness in Euro along with weak manufacturing data from the
UK. The GBPINR August contract fell from a high of 72.85 and closed at 72.62, still up by 28 paisa
when compared to Friday’s closing. Today the GBPINR Aug contract is quoting at 72.40 levels at the
opening bell. The UK PMI for manufacturing dropped to 49.1 in July from a prior 51.3. The result
marks it´s worse in just over 2 years.
Pressure in high yielding currencies has pushed the USDINR higher today with the August expiry
future is currently trading up almost 15 paisa. The pair closed down 17 paisa yesterday at 44.2575.
All major Asian currencies declined, led by Malaysia’s ringgit and Singapore’s dollar on concern a
slowing U.S. economy will hurt the global recovery and damp demand for the region’s exports.
The Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, fell
0.1 % to 120.09 as of 10:16 a.m. in Hong Kong. The ringgit dropped 0.3 %to 2.9488 per dollar and
the Singapore dollar slipped 0.1 % to S$1.2016, according to data compiled by Bloomberg.
Today, we expected EURINR and GBPINR to trade weak while USDINR to trade higher.

Forex Genetic Software Making $6,450 A Day For Ian Harris!


Forex Genetic is open…Ian Harris, the “unknown” math teacher turned forex trader has finally come clean on the “secret” Forex Genetic EA he’s been sitting on for almost a year… and that’s made him as much as $6,450 a DAY in 2011: He’s got some awesome bonuses that are probably going to disappear after the first day (if not sooner) so the sooner you get in, the better deal you’re going to get.

Forex Genetic is the first “new” FX technology I’ve seen this year…You’ve probably seen a lot of “pitches” for forex software that claims to be the next best thing since sliced bread…Too bad most of them turn out to be rehashed versions of last month’s “next best thing”…Well, this one’s different (you’ll see why right away): I’ve never seen this Forex Genetic technology before — nobody has — and it’s safe to say this is going to be a serious “game changer” for everybody who gets in on it. Ian promised me the early-mover bonuses will remain available for at least a couple more hours — so make sure you don’t miss out on getting the best possible deal:

Don’t make this mistake…When I first heard there was a guy claiming to be making up to $6,450 a day with a UNIQUE Forex Genetic technology no other forex trader had seen before…I said, “Yeah right”…Then the guy behind it, Ian Harris, showed me the PROOF… and I just about spit up my coffee when I realized what he’d discovered.

This is HUGE… and that’s coming from somebody who thought he must be full of it when I first heard about it. So don’t make my mistake: Check the proof out for yourself right now, before Ian pulls it down (it’s not going to be up for long, and the BONUSES are almost gone)!




Forex Genetic is almost sold out…”Ian Harris? Who the heck is that?” That’s what I said when I started hearing rumors about this former math teacher turned forex trader… Well, everybody in forex sure knows who this guy is now — and the Forex Genetic EA he launched this week is selling out faster than most big “guru” products I’ve seen.

That’s the thing in forex — when something just flat out WORKS, word gets around fast…but you’re about to miss your shot at getting in on the action unless you act now. Ian’s already saying he may pull the plug on this as soon as tonight or early tomorrow — so if you’ve been waiting on this, now’s the time to check Forex Genetic out and try it RISK FREE for 60 days on your demo account and see if works or not! Good Luck!

Wednesday, August 3, 2011

Understanding Line Graphs, Bar and Candlestick Charts in Forex Trading World

There are several options for investment today, and Forex trading is rapidly growing in popularity. Several tools are available for even the most sophisticated investors in order to research the current market trends, or even learn the basics when starting. Forex trading software and currency exchange rates is one thing, but you also must understand the basics of each type of graph or chart with just a glance to be successful in this world.
The good news is that by using the standard information included in charts and graphs are usually easily accessible on any Forex trading system online. Price monitoring and recording of current trends could prevent major accidents, as well as helping to determine the next step you are proactive.
Just as with standard market trading, line graphs can be very useful in the world Forex market. With just a glance, it outlines the current price charts and historical trend with a visual pattern is recognized. However, you must understand the fundamental difference between the standard and the Forex market? definition, Äòprice, AO is completely different.
Understanding Line Graphs, Bar and Candlestick Charts in Forex Trading World

Forex prices are expressed as a pair of two different currencies, such as dollars and yen. If the yen / dollar bid price is 1.34 27/32, this means that 1.3432 U.S. dollars will buy you one yen, and you will receive $ 1.3427 for every yen converted to dollars.
Calculations used to determine the movement of prices and convert them into a visual tool requires technical analysis using statistical techniques and historical information to determine the direction of possibilities for the future.
One of the technical tools may be the average price calculated over a certain period. If you take the current price and compare the price of one hour ago and an hour from now, you'll be on your way to arrive at this number. The average price of more than 24 hours must be tracked every hour for 24 hours before concluding them and dividing by 24.
This is the average price in a day can also be implemented into a line graph. If you repeat this process for 30 days, you'll have a line graph showing the price movement of Forex trading is the average exchange rate, or a moving average of 30 days.
Many investors use this line to determine what calls should be used in subsequent trading, if the price drops below that, then, AOS time to buy. If it rises above, then, AOS time to sell.
In Forex trading, it, AOS also possible to track a wide range of other indicators such as average in one hour or the minute. This AOS does not need to understand the calculations involved, per se, but the difference between a separate line graphs can provide an indication of where your exchange is headed.
Bar and candle charts are a great way to actual research, and not the average, the price for a certain period of time. Maybe it would help, especially if you're a new investor, to read an educational book or take an online course in reading and understanding the information in the chart? certainly will pay many times in the future!

U.K. Budget Cuts, Bring it On!



Thwack! Did you catch the news of Chancellor of the Exchequer George Osborne's axe chopping down the U.K.'s ginormous public debt? If you didn't, then here's the lowdown for you!

Recall that the U.K. has been wrestling with its mammoth-sized public borrowing costs since 2009 when the global recession weighed heavily on the government's tax revenues and boosted welfare costs such as unemployment and health benefits.

The problem worsened when the government shelled out 200 billion GBP in order to stimulate the economy. In fact, according to the Organization of Cooperation and Development (OECD), the U.K. had one of the largest deficits when it went into recession! Uh-oh.

Today the public debt figure is sitting on the hot seat at 952.8 billion GBP, which roughly translates to 64.6% of GDP. Yikes! Even Pipcrawler cringed on that one! With debt that deep, it's a wonder that credit rating agencies like Fitch, S&P, and Moody's still kept their AAA ratings! Apparently, Chancellor Osborne has a few tricks up his sleeve that prevented these hotshots from downgrading U.K. debt.

This week, Mr. Osborne unveiled the much awaited game plan for tackling the U.K.'s swelling budget deficit. With these strategies, U.K.'s debt woes are expected to be over and done with by 2015. Sounds mighty ambitious, right? So what's the plan?

austerity.png

First, spending cuts amounting to 7 billion GBP will be implemented. This involves trimming benefits, such as pension credits and family benefit payments. On top of that, local governments will have to reduce their spending by 30% while the justice department and foreign offices will have to trim their budget by 24%. Also, Prime Minister David Cameron said that the annual defense budget will be reduced by 8%. It looks like everyone will have to tighten their belts now. But wait - there's more...

Chancellor Osborne also announced that around 500,000 public sector jobs would be lost in the next few years as the government starts implementing austerity measures. Banks will also feel the brunt of these cost-cutting measures since they will have to pay higher taxes to the government.

Now, for the million-dollar (or billion-pound) question: Will it work?

There's no doubt that that program is highly ambitious and unprecedented, as noted by rating agencies and U.K. government officials. According to Fitch, the spending cuts, while much larger than those of other nations facing rating downgrades, are necessary as the U.K.'s deficit is much larger than that of other countries.

Labour Party Leader Ed Miliband labeled the austerity measures as the "biggest gamble in a generation." But hey, what else can U.K. officials do? The global financial crisis has been very humbling and it's about time everyone got their act together.

This reminds me of what my daddy always used to tell me:

"Son, you can't build a home without a strong foundation."

With that said, I think that while the spending cuts may hurt over the next few years, it is a step in the right direction.

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Forex Training Courses can be the Answer you have been Looking if you’re Serious about Making Money

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Calculating Profit / Loss (Gain / Loss)

Calculating Profit / Loss (Gain / Loss)
The smallest price movement is calculated in units of points / pips. The value of each point will vary according to type of currency pairs (pair), the contract size is used.

Contract size is usually specified in units of lots, Standard lot (100,000), Mini lot (10,000), or Micro lot (1000).

There are three types of Currency Pair (Pair):

Direct Rates
Is a pair with USD as the counter currency (USD is located in the rear), example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
Indirect Rates
Is a pair with USD as the base currency (USD is situated in front), example: USD / JPY, USD / CHF, USD / CAD
Cross Rates
Pairs which did not contain the USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF

For example, Direct Rates currency (GBP / USD, EUR / USD, AUD / USD, and NZD / USD) way of calculating profit / loss are as follows:

(Selling Price - Purchase Price) x contract size x lot = Calculation of profit / loss

Example:

Buy 3 standard lot EUR / USD 1.2000
Sell ​​(liquid) 3 lots of EUR / USD 1.2010

Profit = (1.2010 - 1.2000) x 100,000 x 3 = $ 300

Sell ​​one standard lot of GBP / USD 2.0001
Buy (liquid) 1 lot GBP / USD 2.0000

Profit = (1.2001 - 1.2000) x 100,000 x 1 = $ 10

Ending in a special currency / USD, there is a way that is easy calculations:
From the above conclusion, it means a profit of 1 point for standard lot (100K) Currency Exchange ending / usd profit is $ 10. While the value of 1 point for 1 mini lot (10K) is $ 1 and for micro lots (1K) per point is worth $ 0.1

For example, the currency Indirect Rates (USD / JPY, USD / CHF, USD / CAD) method of calculating profit / loss are as follows:

[(Selling Price - Purchase Price) / Price Liquidation] x contract size x lot = Calculation of profit / loss

Example:

Buy 1 standard lot USD / JPY 110.00
Sell ​​(liquid) 1 lot USD / JPY 110.01

Profit = [(110.01 - 110.00) / 110.01] x 100,000 x 1 = $ 9.09

Currency Cross Rates For instance (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF) method of calculating profit / loss are as follows:

{[(Selling Price - Purchase Price) x Rate Base Currency Current] / Rate Pair Current} x contract size x lot = Calculation of profit / loss

Example:

Sell ​​1 lot of EUR / USD at price 0.6760 (EUR / USD is the base currency of EUR / GBP, because the front of the EUR / GBP is the Base Currency)
Buy (Liquid) EUR / USD at price 0.6750
Rate EUR / USD: 1.1840

Profit = {[(0.6760 - 0.6750) x 1.1840] / 0.6750} x 100,000 = $ 175.4

Forex market is 24 hours continuous open 5 days per week

World Forex Market
Forex market is 24 hours continuous open 5 days per week. The table below us for a second that is based on the New York Times when Day Light Saving Time (DST) and Eastern Standard Time (EST or ET). Starting on March 9, 2008 - 2 November 2008 using the DST (GMT 11 hour faster than the NY Times DST), whereas on 2 November 2008 - March 8, 2009 using the EST (GMT 12 hours faster than the NY Times EST), and so on. For the full list you can check in http://timeanddate.com/worldclock/timezone.html?n=179

Timezone New York (ET / EDT) GMT GMT
Tokyo Open 7:00 7:00 00:00 pm
Tokyo Close 4:00 am 9:00 16:00
London Open 3:00 8:00 15:00 pm
London Close 12:00 pm 17:00 00:00
New York Open 8:00 am 13:00 20:00
New York Close 5:00 pm 22:00 5:00


New York Timezone (DST) GMT GMT
Tokyo Open 7:00 6:00 23:00 pm
Tokyo Close 4:00 am 8:00 15:00
London Open 3:00 7:00 14:00 pm
London Close 12:00 pm 16:00 23:00
New York Open 8:00 am 12:00 19:00
New York Close 5:00 pm 21:00 4:00

Profit Target, Stop Loss and Trailing Stop

Profit Target, Stop Loss and Trailing Stop
Target profit is an order to liquidate a position automatically at a specified price when the trader has obtained a number of profit.

For Buy / Long position is located ABOVE the target opening price of the position of the Open Buy / Long.
(Note! Open Buy / Long ASK, Target and Stop Loss is based on BID)

Example: Buy EUR / USD 1.2000, 1.2050 Profit Target (for a profit target of 50 points)

For Sell / Short located BELOW the target price of open positions Sell / Short.
(Note! Sell / Short BID, Target and Stop Loss is based on ASK)

Example: Sell EUR / USD 1.2050, 1.2000 Profit Target (for a profit target of 50 points)

Stop Loss is an order to liquidate a position automatically at a certain price to limit losses that might occur if the market moves against the trader's position.

For Buy / Long position, located BELOW the stop loss opening price of the position of the Open Buy / Long.
(Note! Open Buy / Long ASK, Target and Stop Loss is based on BID)

Example: Buy EUR / USD 1.2050, Stop Loss 1.2000 (stop loss 50 points for loss)

For Sell / Short position is located ABOVE stop loss opening price positioning Sell / Short.
(Note! Sell / Short BID, Target and Stop Loss is based on ASK)

Example: Sell EUR / USD 1.2000, Stop Loss 1.2050 (stop loss 50 points for loss)

Stop Loss can also serve to protect the profit that you have obtained (lock profit). The trick is to change the stop loss position to the top (to Buy) or down (to Sell).

Example:
A trader Open Buy at 2.0000, TP (Take Profit) at 2.0050, SL (Stop Loss) at 1.9970. After a while, the price has moved into the expected direction (up) on the position of 2.0040. In this case the trader is at a floating profit position (open position and in a state of profit) by 40 points. To protect profit as much as 20 points, the trader can move the stop loss on open price + 20-point, ie 2.0020. Why 20 points? Condition is the profit you want to lock, must be smaller than the current floating profit (20 <40 points). When the floating profit then moved to 60 points, the trader can raise the stop loss to 2.0040 to lock the position of profit by 40 points, and so on. This is the basis of the trailing stop. After filling Take Profit and Stop Loss, then the data will be stored on the server Forex Broker. So you do not have to worry about and can always turn off the computer / internet connection disconnected. Take Profit and Stop Loss will continue to work WITHOUT having to turn on the computer and connect to the internet via a forex broker Stop Loss Profit Target position Buy (Long) Higher than Open Price (based on bid prices) Lower of Open Price (based on bid price) Sell ​​(Short) Lower of Open Price (based on the ask price) Higher than Open Price (based on the ask price) Trailing Stop is a facility provided by the forex broker that can change the stop loss to lock in profits automatically in multiples of a certain amount. Trailing Stop is the development of stop loss. Trailing Stop is generally only works when the trader's position PROFIT HAS MORE THAN THE MINIMUM VALUE OF CERTAIN predetermined broker (eg minimum 15 points). (IMPORTANT: Generally trailing stop running locally on your computer, not on the broker server! If your computer is off, trailing stop also become inactive) So if you do not profit more than the minimum amount you set a trailing stop, that his position is still DANGEROUS (unless you have used a stop loss). So you should set a stop loss first, then if necessary you can add features trailing stop as a complement. By using this feature you will avoid profit loss if you have exceeded the minimum trailing stop. Example: Buy EUR / USD 1.2050, 1.2000 Stop Loss, Trailing Stop 15 points. If the BID is now located at 1.2070 (had profit of 20 points) then the trailing stop will adjust stop loss to 1.2055 price (20 points minus 15 points profit, ie profit +5 points). That means your profits have been locked by 5 points (on the new position of stop loss is at 1.2055). Point A: And if the price were to move down to 1.2055 then it will automatically be liquidated on a profit of 5 points. This means that you are no longer possible loss because it has been locked. But if prices do not go down (as per point A) but prices continue to rise from 1.2050 to 1.2095 (had 45 points profit) then the trailing stop will adjust stop loss to 1.2080 price (45 points minus 15 points profit, ie profit +30 points). That means your profits have been locked

Calculation of Interest / Swap / Rollover / Interest to Stay

Calculation of Interest / Swap / Rollover / Interest to Stay
Interest / Swap / Rollover / Interest Staying the interest earned or paid traders if there are open positions exceed one day of trading. Limit one trading day is if the position is not closed until the closing time of the world Forex market, namely at the time of closing the New York Market at 1700 (New York time).

To convert New York time to your local time, please go to: http://www.timeanddate.com/worldclock/timezone.html?n=179

When trading forex, which used the actual day is 2 days ahead. Example: Trading on Thursday, then the actual day is Monday (interest calculated as 1 day). Trading on Friday, then the actual day is Tuesday (interest calculated as 1 day), and so on. While the special for Wednesday, the day actually is 3 days, ie Friday, Saturday and Sunday. (Interest is calculated 3 days). Although Saturday and Sunday closed the forex market, interest was calculated 3 days as compensation for trading off.

In the interest calculation: Traders will get a positive rate if the currency bought an interest rate greater than the borrowed

Example:
Pair USD / JPY. USD Swap Rate = 5.25%, JPY Swap Rate = 0.5%
Buy USD / JPY means a trader is buying USD by borrowing JPY. Because interest rates currency bought (USD) greater than borrowed (JPY), the trader will get an interest rate: 5.25% - 0.5% = 4.75% If a trader Sell USD / JPY (means borrowing USD and buy JPY), it will be charged for: -5.25% + 0.5% = -4.75%

Example 2:
Pair EUR / USD. Interest Rate EUR = 3.75%, USD Swap Rate = 5.25%
Buy EUR / USD means a trader buys EUR by borrowing USD. Because interest rates currency bought (EUR) is smaller than borrowed (USD), then the trader will be charged for: 3.75% - 5.25% = -1.5% If a trader Sell EUR / USD (meaning buying USD and borrow EUR) , then it will get an interest rate: -3.75% + 5.25% = 1.5%

Any Forex broker generally provides a list of interest rates (per day) for each pair is used. The list usually includes interest charged to posis Buy and Sell. (Can be in the $ or the point). If the point the trader must first convert into dollars by calculating the value per point pair in question.

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