Understanding Forex Trading; An Alternative to Stocks

Forex is the 'Foreign Exchange' marketplace for trading currencies internationally. Hence, the name. The Forex market is in fact, the largest financial network in the world accounting for daily average turnover in the trillions of dollars. Forex trading takes place through major banks, market makers, and brokerage houses around the world, and is open 24/7, five days a week. It's also a rapidly expanding market, as traders migrate over to Forex Trading and away from stocks.

In its simplest form, trading forex involves two currencies traded simultaneously, called a 'pair'. As an this example, the EUR/USD pair, trade the Euro against the US Dollar. A buyer of the pair therefore would be buying the Euro and selling the US Dollar. Forex pairs are described in the following format: XXX/YYY. The first currency in the pair; XXX, is referred to as the 'base' currency. The second symbol in the pair, YYY is the 'counter' currency. Prices will always be expressed in terms of the counter currency.

Expanding on this example, if the current price of the EUR/USD pair is shown as 1.3667, this means that 1 Euro (the base currency) equals $ 1.3667 US Dollars. Most major pairs are priced to 4 decimals, or 1/100th of one percent. The exception is the Japanese Yen pair, which trades only to 2 decimals. That's because there are typically over 100 Yen to the dollar. For instance, let's say the US Dollar is the base currency, in the USD/JPY pair where prices here are expressed in Japanese Yen. If the current price is 108.02, that means the base currency, the US Dollar, equals 108.02 Japanese Yen.

Prices in Forex are expressed in something called 'pips'. A pip is simply the minimum increment that a currency pair price can change. All that means is if the EUR/USD price changes from 1.3790 to 1.3791, the price is said to have gone up by 1 pip. Quotes on Forex pairs are on a bid-ask basis. The bid; price the market is willing to pay a seller at a point in time for a specific currency pair, the ask; the price that the market is willing to sell to a buyer in the same manner. The difference between the bid and the ask is called the bid/ask spread just like in stocks.

These Forex prices are always listed as Bid price first, Ask price second. For example, a typical EUR/USD quote could be 1.3784 Bid // 1.3787 Ask in which case the quote price would have a spread of 3 pips. The spread is how market makers are compensated, as opposed to 'commissions' paid for trading stocks or options. The spread will often vary depending on a number of factors such as: Current market conditions, specific brokers/market makers, and currency pairs being traded, just to name a few. In the EUR/USD example above, price quotes would be expressed simply as 1.3784/1.3787 or 1.3784/87.

Finally, we know that Forex trades in 'Lots' similar in a way to stocks. These lots can be delineated as types of lots including: standard, mini and micro. Standard lots trade 100,000 units of a currency pair while Mini lots trade 10,000 units and the micro lots trade 1,000 units. To illustrate this consider for example, a standard lot purchase, if the EUR/USD quote was 1.3784/1.3787, then buying this pair would mean buying 100,000 Euro dollars and selling short 137,870 US Dollars.

Essential Of Forex Trading Knowledge

It was a strange sight in the past to witness customers exchanging stacks of money with their agents at public places such as the international bus terminus, prominent official buildings or even at the airports.

These agents were prepared to sell you the foreign currency that you want with a little profit given to them. However, all these have changed over generations. Forex trading is now handled by licensed companies and unsolicited individuals are not allowed to operate illegally. With the invention of new technologies and the coming of professionals, Forex trading is now made easier and more systematic. It is also much safer to do business with these professionals to prevent scams.

At the beginning stage, most of the large companies would carry out their Forex trading via the different banks or even through the major institutes that deal with finances. These institutes had to be the ones that operate internationally. Forex trading has attracted a lot of popularity today because of the presence of modern technology. Via the use of the internet and the increasing telecom market, it is easier to spread messages and to bring across information on issues such as the economic polices worldwide. With the creation of the Forex Software that you can find on the internet, you will easily get the latest news about the Forex trading online. This has actually become a platform that facilitates the exchanges of trading since it makes it easy for you to seize opportunities on the spot and to implement your decisions immediately.

Apart from some problems at the beginning stage, Forex trading on the internet has become more standardized and the people who take part in Forex trading can now get a close to 100% secured access via the different companies that deal with Forex trading. The advantage of using these companies is that they are free from restrictions and give the customers more freedom of choice. As people now become more aware of the usefulness of Forex trading on the internet, it has helped to boost the popularity of advanced technology. Since it has been so successful to trade online, more people are entering this Forex trading platform and as a result, it has become commercially possible to use the Forex Software as a mean for trading exchanges to take place.

Surveys have shown that more and more people are getting involved in Forex trading. People joined for different reasons and in fact, some are even starting it as a hobby. In the conventional Foreign Exchange Market, this was usually dominated by big companies such as banks or Multi National Companies and you don’t get commoners involved apart from brokers. However, now there are many guide books on the trading methodologies, as well as trend analysis, so it will make it easy and safe for any newbies who might want to learn Forex trading online.

If you understand the margin trading concept that you apply in Forex, you can actually save a lot of money on deposits. It refers to the margin that is traded on and this margin differs depending on the banks’ policies but it will always in percentile terms based on the initial amount. How much you are allowed to play in Forex trading depends on what is the original amount given by the bank. The actual potential can be illustrated by the example below. Let’s say a bank has imposed a 2% as the margin deposit. This means you will only have to put in $20000 USD as a deposit in order to trade for two million dollars. As such, you will be able to increase by 200% for your profit. On the other hand, should you be unlucky and loses money in the Forex trading, the margin deposit of 2% will mean a loss of 200% too. Whether you are playing Forex trading online or offline, the rules are the same.

So long as you participate in investments, there will be the impending dangers of profits or losses. As it is, the Forex trader’s luck online can be anywhere between 2 to 25% on an average each day. As a newbie in Forex trading, it is essential that you know that your deposit’s interest rates will change depending on the currencies. As such, most traders play in a few different currencies in the world of Forex, which is what is known as the variable currency and the Base currency. This is applicable both in the conventional mode as well as the Forex online mode. In order to be a successful Forex trader, you will need to have an ability to analyze, a high level of knowledge on the subject and your intuition to act appropriately when the opportunities come. You must also be able to make full use of your Return on Investment (ROI) so as to gain the most profits from this lucrative financial market.

Has the bleeding stopped for the pound?

The UK’s concentration in financial services has compounded the problems for its economy and currency.

Concerns over the global crisis remain the key driver in the foreign exchange market as investors witness the continued dete-rioration of economies around the industrialized world. In February, the British pound stabilized somewhat vs. the U.S. dollar after dramatic losses in recent months. Looking back to what seems now like a lifetime ago, in November 2007 the pound/dollar pair (GBP/USD) touched a high of $2.1159 (the highest price since 1981) and was still trading above $2.000 in July 2008 before plunging to a late-January 2009 low of $1.3500 (the lowest price since 1985), and more recently con-solidating in the $1.4100-1.5000 range.

The British economy was especially hard hit during the fall months thanks to the UK’s strong reliance on banking and other financial services. Citing data from the British Consular Office, Charmaine Buskas, senior economic strategist at TD Securities in Toronto says, “10.7 percent of UK gross domestic product (GDP) comes from financial services. It accounts for one in 30 jobs. They had the same troubles as everyone else, but amplified and magnified.” Like the U.S., the UK also suffered a crash in its over-leveraged housing market at the same time the global financial crisis began to hit.

“The UK is suffering more than some because of its financial and housing sector exposure,” says Stephen Webster, chief European economist at 4CAST Inc. GDP freefall Webster says the UK’s economic situation is “dire in every sense.” “Economically, the UK officially slipped into recession as of the fourth quarter 2008,” he says. “Credit conditions remain tight and confidence weak.” Ruth Stroppiana, chief interna-tional economist at Moody’s Economy.com adds: “The ongoing lending logjam and the associated adverse impact on the availability of credit to households and [corporations] will take a heavy toll on the economy. Real GDP is expected to sink by almost 4 percent from peak to trough, almost double the 2-percent contraction of the early 1990s, but less than the nearly 6-percent fall in the early 1980s following the ‘winter of discontent.’

Terrorism and mafia pushing the economy downward

Due to recent global financial and economic melt-down many developed and developing economics are facing contraction in their economic indicators including GDP and international trade. Fortunately, Pakistan’s position was not so bad. Despite facing many problems Pakistan is doing fine in a number of sectors and sub-sectors. Pakistan is expected to achieve a GDP growth of about 3 per cent during FY09, as per latest estimate. However, two factors namely terrorism and increasing level of corruption are hindering achievement of rapid economic growth and social prosperity. Both those menace need to be addressed effectively and in most comprehensive manner. A latest World Bank (WB) report enlists corruption as one of the core reasons that hinder the development drive in Pakistan. Inefficient public expenditure process, higher cost of basic input, lack of skilled human resources, corruption and nepotism restrict Pakistan far behind in her development drive.

Pakistan is also facing unprecedented problem of terrorism that very few other countries are encountering. This grave problem is eroding the very socio-economic foundation of the country almost in a similar fashion as corrupt mafia is inflicting damages to the economy, although their mode of working slightly differs. The terrorists are challenging the writ of the government by creating chaos and uncertain condition. Reckless attacks and suicide bombings by the terrorists are victimising the country at large but mostly the innocent poor people and the labourers, shattering their meager sources of income and employment. Repeated terrorist acts are also triggering shock wares across the nook and corner of the country intimidating the foreign and local investors and vitiating business environment. The economic and social cost of increasing terrorism is quite colossal and unbearable. According to some estimate the country has incurred a loss of at least Rs680 billion since 2004 on war on terror. Some other estimate put the accumulated cost at over $ 34 billion. This includes both direct and indirect costs. The economy is suffering from losses of income and employment opportunities, especially in the war torn areas, cost of rehabilitation of hundred and thousands of uprooted people from FATA and Swat areas. Losses to agricultural output, mining, orchard and tourism are also very large. Other losses are reduced exports earning, reduced tax collection, reduced level of investment and escalated cost of utilities and inputs. The anti-terror campaign that began in Pakistan after the Word Trade Centre bombing in 2001, are becoming over-strained and over-stretched day by day, resulting in erosion of resources for the vital development projects all over Pakistan, particularly in FATA, parts of NWFP and Balochistan. Latest reports indicate that government is going to exercise big cuts in her development expenditures by up to Rs100 billion; this is mainly due to meeting the ever increasing expenditure being incurred on war on terror. One can easily learn the figures of costs being incurred by the lonely super power and its surrogates in Iraq and Afghanistan, which may now be approaching $ 10 trillion. Pakistan, being a poor developing country cannot think of such burden on her economy and expenditure head.

Several development projects already stated in the affected areas are afflicted with delays, which may ultimately result in large cost over-runs. Since the start of the anti-terrorism campaign, sense of uncertainty has been prevailing in the country, which is contributing to capital flight, as well as slow-down in domestic economic activities besides, making foreign investors jittery. It is apprehended that foreign direct investment, which witnessed a steep rise over the past several years may be adversely affected by the on-going anti-terrorism campaign in FATA and other areas of NWFP. Latest truce between the government and the militants in Swat and other areas of NWFP is certainly a positive development for the country both on economic and humanitarian ground. For increased economic and investment activities better law and order situation and a peaceful environment are the prerequisites.

Another serious problem facing the country is the increasing level of corruption and mismanagement prevailing in various public and the private sectors. Although, wide spread corruption is a third-word phenomenon Pakistan is increasingly becoming a hostage to it, as it is making the life of common men pathetic. People are now feeling the punch most severely and increasingly in their daily life. It is now a widely accepted notion that corruption and terrorism is a two-headed monster that is eating up the biggest chunk of the national resource pie. Like terrorism, corruption also retards the pace of development activities. It also impedes national prosperity and hinders government’s efforts aimed at providing basic social services and alleviating poverty. Among many other factors, corruption emanates primarily from poor governance. The magnitude of corruption in some leading public sector enterprises in Pakistan compels the government to pay huge subsidies amounting to hundreds of billion of rupees out of public exchequer. For example, to pay for the inefficiency and mismanagement of WAPDA and KESC, government has to keep huge provision in its national budget, every year. KESC which has the privilege of serving one of the most densely populated markets in the world of about 15 million domestic, industrial and commercial consumers, in a radius of 40 miles, perhaps, is the most corrupt and the most inefficient organisation in Pakistan. With such large number of metropolitan consumers KESC should have become a profit-earning organisation. The corruption curves of WAPDA and Pakistan Railways may not be much below. It is now widely believed that corruption and inefficiency in the implementation of development projects, both at federal, provincial, and local government levels are eating the biggest share of PSDP and provincial development budgets. Pakistan’s water sector is fraught with large and small scale corruption. According to a 2003 and 2006 survey by Transparency International (TI), Pakistan’s Water and Power Development Agency is perceived to be the second most corrupt institution in the country. Close to half of the more than 31,000 complaints received by Pakistan’s anti-corruption ombudsman in 2002 were related to this one institution. Pakistan is on the list of the most water stressed countries in the world, and forecasts indicate that available resources are depleting rapidly, possibly leading to a state of water scarcity in the next two decades.

Much of the water infrastructures are in poor condition and Pakistan has to invest almost to Rs60 billion per year in new large dams and related infrastructure over the next 5-10 years. In the energy sector, Pakistan will face acute power shortages of approximately 6,000 megawatts by the year 2010 (equivalent to about three Tarbela dams) and 30,700 MW by the year 2020.

Pakistan conducted its second National Corruption Perceptions Survey (NCPS) from April to July 2006 which indicated that the majority of respondents were of the view that corruption in Pakistan in last three years increased by 100 per cent. According to another survey conducted by TI Pakistan in 2006 bribe paid annually in Pakistan is about Rs46 billion.

Deep-rooted corruption in police and law enforcement, legal system, power and energy sector, taxation and custom, health and education etc are only adding to the woes of the common man and widening the gap of haves and have-nots. Another dimension of corruption is the rapidly emerging collusion among the ever greedy hoarders, adulterates, profiteers and smugglers who are making the life of the poor consumers from bad to worse. If Pakistan wants to accelerate her economic growth and prosperity she needs immediate and effective enforcement of good governance and transparent administration to counter the acute problems arising out of terrorism, corruption and hyper inflation.

Courtsey: The News

The Difference Forex and Futures

1. A Forex trader could trade more transaction compared to the futures market (the trading volume could be a times larger), and the risk will be strictly under control. The trading volume of the Forex market is 46 times larger compared to the futures market, moreover Forex traders could make more profit from the Forex market due to the larger trading volume (the transaction volume is a few times larger), the REFCO Switzerland rich transaction platform allowed transaction between 1-100 times to be carry on, moreover a Forex trader could decide his or her own transaction amount, for example: Your account has $30,000, the basic transaction unit is each $1,000 (which transaction amount in $1.00, million), namely, so the proportion of the margin of each transaction unit is 100:1.

2. The risk of the Forex trader is under control, such margin call will not happen compared to futures, through the Forex trading system, your risk will receive the strict limit, even if your margin if lower then the deposit required, the Forex trading system will automatically settle your position, this means even if a Forex trader suffered losses, moreover if the market is suffering from a disaster fluctuation, your loss could not surpass your account amount. In order to understand the advantages, please apply for the demo account to carry on the complete zero risk.

3. A Forex trader will receive a large limitation of liquidation and a relatively fair market because the trading volume of the Forex market is large and it is also the largest liquidation market in the world. At present the trading volume in the Forex market is 140 billion Dollars, such big market will completely digest your transaction cash.

4. A Forex trader may do 24 hours transactions and other markets are different, the Forex market is a 24 hour linkages market, it starts from every Sunday before dawn Australian Sydney market, substandard collect the transaction center Singapore, Tokyo, London, Frankfurt to New York continuously to open, such linkage market enable you to do 24 hours transactions, also provide flexibility for Forex trader to do transaction.

Difference Between Forex and Stock

1. The Forex market has a lot of advantages compare to stock market: A Forex trader could make profit through the market no matter if it is bearish and bullish which is different from the capital market, Forex has no strict regulation in speculation, no matter whether it is a long-term or a short-term transaction there is still a hidden profit, moreover, Forex market is a double-transaction market which means Forex traders could make profit through both upward and downward trend.

2. Forex traders could obtain a much larger transaction compared to the stock market, through the Forex trading, Forex traders could obtain 100 times larger transaction compared to the stock market. According to the present US situation, if a Forex trader invests $1,000 in the stock market, the trader may obtain $2,000 of stock domination property with a proportion of 2:1, but through Forex trading, a Forex trader can do transaction with a proportion up to 100:1.
Forex trader may make profit from the ordinary news, like the interest rate change, Forex market is closely related to various countries' politic, economy and culture, Forex traders could also obtain profit from other kinds of news, for example interest rate level change, will influence the interest of the Forex deposit.

3. Forex traders could do 24 hours trading. The stock market can only be traded during daytime at a specific time, generally from 9:30a.m. to 4:00p.m.. If you too have your own full time job, then you will face the dilemma - either to give up your full time job or forgo the trading opportunity. But Forex market can be traded 5 days a week and 24 hours a day, Forex traders can trade during their free time which is normally at night after working hour.

4. If a trader analyze based on technical analysis, Forex trading would be much more suitable for such traders because the Forex market has a very large trading volume. Currently the Forex market has daily trading volume of 190 billion Dollar, such giant market will completely digest a fore trader's transaction cash, under such situation the accuracy of the technical analysis would be much higher then any financial market, the chances of using technical analysis to make profit would be much more higher.

5. In the stock market there are hundred and thousand kinds of stocks, then choosing stock will be a very difficult matter. But in the Forex market, the currency combination is extremely limited, this may enable Forex traders to concentrate on these currencies combination, and could follow the trend quickly.

Pakistan agrees changes to confront economy slide

WASHINGTON - Pakistan’s government has agreed that a shift in fiscal and monetary policy will be necessary to confront a deteriorating economic situation, the International Monetary Fund said Wednesday.

In a statement following a 12-day visit to Islamabad and Dubai to meet with Pakistani officials, the IMF mission said the country is on track to comply with the economic programme agreed to under a $7.6 billion credit facility granted in November. But it said Pakistan’s economy has been hurt by worsening global economic conditions.

“The deterioration in the global economic environment and weaker economic activity call for an update of the economic framework and a recalibration of economic policies,” the statement said. “In particular, discussions focused on the fiscal program and the monetary policy stance.”

To achieve fiscal targets for fiscal years 2009 and 2010, which end in June, there was agreement that additional revenue-boosting measures and spending cuts will be necessary, the IMF said.
Meanwhile, the fund said that the current monetary policy stance is appropriate but that rates could be lowered in the future if both headline and core inflation decline, international reserves remain solid, and the government avoids resorting to central bank financing.

In Dubai, Pakistan Finance Minister Shaukat Tarin told that the IMF had agreed to release the second payment of the programme, worth a little over $800 million.

SBP plans bill to protect banks consumers rights

KARACHI - The State Bank of Pakistan is planning to introduce ‘Consumer Protection Bill’ soon with an objective to improve banks’ services towards consumers as well as to guarantee their protection in an increasingly market-oriented financial system.

The laws, regulations and codes of the said bill will be framed in line with international best practices, which would among others provide guidance on issues of transparency, confidentiality, availability of statements, account servicing, protection against fraud, unfair contracts and lending practices, methods of debt collection, arbitrary penalties, etc.

For this purpose, an appropriate dispute settlement mechanism will be established by SBP under its Consumer Protection Department which had already established last year.

The CPD is expected to monitor compliance with such new laws and regulations. According to the sources in the Ministry of Finance, SBP will be making consumer protection infrastructure to supplement and reinforce these laws.

The SBP on its part is focusing on effective compliance with customer service regulations and following it up with proper enforcement to motivate banks to render good service and deal fairly with customers, sources said.

In the coming years, the financial sector will increasingly be deregulated so as to increase competition. The challenge is to ensure that this deregulation does not disrupt the level or reliability of service to consumers. The government’s strategy in this area includes policy recommendations to secure consumer rights in an ever-growing highly liberal financial system.

Meanwhile, according to a document titled Poverty Reduction Strategy Papers II prepared by Ministry of Finance, the government is very much inclined to strengthen the supervisory regime of the SBP. The main focus of the strategy is the further refinement of regulations and the supervision framework. The govt wants to encourage Pakistan Banks’ Association (PBA) to adopt a Banking Code to commit banks to fairness, disclosure and ethical standards.

Courtsey: The Nation

Unveils £24bn loss

LONDON: Royal Bank of Scotland on Thursday reported a loss of 24.1 billion pounds ($34.3 billion) for 2008, the biggest in UK corporate history, and said it planned to place 325 billion pounds of assets in a state insurance scheme.

The bank said the record deficit reflected a 16.2 billion pound writedown against acquisitions, including its takeover of parts of Dutch rival ABN Amro in 2007, plus a further 7.9 billion pounds in operating losses.

RBS also announced plans to raise a further 13 billion pounds from the government through the issuance of B shares, and unveiled a cost-cutting programme aimed at reducing expenses by 2.5 billion pounds.

“We have moved purposefully to take major decisions that are necessary to restructure the group,” RBS chief executive Stephen Hester said in a statement.

“We are charting a path to standalone strength and with it the goal of justifying the support of the UK government and all our shareholders.”

The plan came as Britain launched a scheme that could end up insuring more than 500 billion pounds worth of toxic assets in a bid to get lending in the recession-hit economy. Under the government-backed insurance scheme designed to support ailing banks, RBS will be responsible for the first 19.5bn pounds of losses — or 6pc of the asset value.

Courtsey: The News

Sharifs disqualification panics businessmen, investors

KARAHI: The business community and economic experts have termed the disqualification of Sharif brothers a big domestic political upheaval which would derail the process of economic growth, hurting the pace of industrial development and production activities.

The capital market of Pakistan would face another fresh wave of political uncertainty, carrying potential risks for the positive and improved macroeconomic outlook. Therefore, the next few months are going to be crucial for the overall prospects of the economy, economic experts told TheNation on Wednesday.

The first victim of the disqualification decision was the Karachi Stock Exchange. Before the announcement of the decision, the KSE was moving in the positive zone, but as the news of disqualification hit the market, the equities hit the lower locks, landing the investors into a serious problem.

The KSE-100 index quickly lost 294 points and it closed at 5580 points. In other words, the KSE 100-index lost 5 per cent of its worth immediately after the announcement of the SC verdict. The stock market analysts are of the opinion that the market could face selling pressure for another couple of days because of political uncertainty triggered by the disqualification of Sharif brothers.

The stock market witnessed a positive trend in the morning session on Wednesday by gaining above 50 points and a massive change in political activities altered the whole scenario that threw the shares to the bottomline, said Shahid Ali, CEO Habib Metropolitan Financial Services (HMFS). The investors offered for sale their stakes but the buyers sidelined from the market while anticipating more erosion in the value of equities. The volume of KSE-100 index stood at 145.42 million shares, slightly higher than 135.55 million shares traded a day before. However, the market capitalization fell to 36.89 billion dollars (0.94 per cent) on Wednesday when compared with 37.24 billion dollars on Tuesday.

Courtesy: The News

IMF, Pakistan revise downwards macroeconomic targets

ISLAMABAD: The International Monetary Fund (IMF) and Pakistan on Wednesday revised downward all macroeconomic targets including GDP growth rate to 2.5 per cent from earlier envisaged target of 3.5 per cent for the ongoing fiscal year to approve the second tranche of $800 million for Islamabad under Standby Arrangement (SBA) programme.

Both sides also agreed to revise downward inflation target to 20 per cent from earlier set target of 23 per cent, FBR tax collection to Rs1,300 billion from earlier envisaged target of Rs1,360 billion for 2008-09.

Secretary Finance Dr Waqar Masood, while talking to The News from Dubai on Wednesday night, confirmed that the IMF executive Board would approve its second tranche for Pakistan by end March 2009 after both sides agreed on all major issues.

The successful completion of first review of the IMF for gauging the economy of Pakistan till Dec 31, 2008 and envisaging targets for the next two quarters will pave the way for convincing the Bretton Wood Institution to provide an additional $4.5 billion to Pakistan in its bid to further build up its foreign currency reserves that have already gone up to $10.2 billion.

However, the sources told this scribe that the Fund authorities linked decrease in discount rates with reduction in core inflation, which means that the central bank is unlikely to scale down discount rates in near future.

During the policy level talks held at Dubai on Wednesday, Pakistani side was led by Advisor to Prime Minister on Finance Shaukat Tarin while the IMF delegation was led by Masood Ahmed, head of its Middle Eastern Department of the IMF.

The GDP growth target was scaled down from 3.5 per cent to 2.5 per cent for the ongoing fiscal year 2008-09. The GDP growth target was envisaged at 4 per cent for the next budget 2009-2010.

The IMF prescriptions described as, one shoe fit for all, approach will result into lower GDP growth for the ailing economy of Pakistan in the context of tight fiscal and monetary policies for the next fiscal year as well, said an independent economist while talking to this scribe here on Wednesday.

The inflation, the official said, would be aimed at bringing down from 23 per cent to 20 per cent by June 2009. For the next fiscal year 2009-2010, the inflation target was envisaged at 6 per cent.

Both the IMF and Pakistan also evolved consensus for revising downward the FBR tax collection target from Rs1,360 billion to Rs1,300 billion for the ongoing fiscal year. Pakistani side explained to the IMF that the FBR was facing revenue shortfall by Rs20 billion alone in January 2009 and the same trend persisted in Feb 2009, leaving no other option to scale down the annual tax collection target.

The IMF agreed to reduce the tax collection target by Rs60 billion keeping in view shortfall being faced by the FBR, said the official sources.

The adjustment in nominal GDP growth by scaling down the real GDP as well as inflation paved the way for reduction in overall FBR tax target from Rs1,360 billion to Rs1,300 billion, which will be equivalent to 10 per cent of the GDP.

The IMF and Pakistan also agreed to set 10.6 per cent of the GDP for tax collection target of the FBR for the next budget 2009-2010, said the official.

The IMF had approved $7.6 billion loan under 23 month SBA program on November 2008 and provided front loaded $3.1 billion to Islamabad. The second tranche of $800 million by end March will help Islamabad to build up reserves position in months ahead.

Courtesy: The News

Gwadar may lose business to Iranian port of Chabahar

KARACHI: The Gwadar Port that was envisioned to become a trans-shipment port and shipping hub for the landlocked Central Asian States (CAS), Afghanistan and Western China may lose this opportunity to the fast developing Iranian port of Chabahar, a Gwadar Port official said.

The Gwadar Port is yet to become fully operational. The running of the port affairs was given to Port of Singapore Authority (PSA), one of the biggest port operators, so that it will fetch considerable business for making Gwadar Port a success.

The PSA has not fulfilled its business plan of making the port fully operational by 2008. The PSA says the government has failed to provide basic infrastructure including road and rail links that are the main impediments in Gwadar Port development.

To ensure that the port stays a viable destination the Gwadar Port official suggested resuming container business immediately even if in small amount through PSA or if they fail through own resources.

The government should bear the cost of road transportation to resume export activity from Gwadar Port, he said.

The official suggested restricting PSA to the present terminal and the areas adjacent to the terminal handed over to them may be retrieved and handed over to Gwadar Port Authority.
The official further said that master plan of Gwadar Port need to be approved, presently it is approved in principle but nothing so far has been done. Master Plan will protect the entire east bay and coastline east of Surbandar. By securing Master Plan, the basic theme of converting Gwadar Port into a hub port will be secured.

In order to attract sustainable business like Afghan Transit Trade or container cargo at Gwadar Port, one of the viable options is to complete road connectivity of the Port with Chaman and Afghanistan followed by shifting total or part of Afghan transit trade to Gwadar Port.
The land required for Free Zone has been dropped due to its high cost (Rs6.7 billion). It is suggested that the concerned agency at the Federal Government level may be requested to remand the case to the District Government authorities for review and submission of a workable plan, the official said.

The construction of East Bay Expressway may be undertaken on a fast track as the present arrangement for passage of the cargo truck within town has lot of repercussions. The concerned agency may be directed to execute the development work on priority.

According to government official it is justified to extend Rs.585million subsidy to the Gwadar Port to make it viable. Government supported Port Qasim for ten years to make port fully functional, he reminded. Similarly this will help the Gwadar Port to operate and serve the basic purpose of the port and generate revenues and job opportunities for the people.

He further stated that Stevedoring/Clearing/Ship Agency License to be given to locals and training should be given to the locals in cargo handling to reduce their grievances.

It is learnt that Port of Singapore Authority is trying to attract Afghan Transit Trade and get mining sector to export copper and chrome from Gwadar Port. In this regard PSA is briefing the government of Balochistan to work on connectivity.

It is also said that PSA is pursuing the government to add Gwadar Port in Afghan Trade Notification so that some trade should be started from Gwadar as well.

However ports and shipping industry shows reservation on PSA role and said that PSA submitted plan for 40 years specifying business in Gwadar.

According to the PSA business plan the port was to be operational by 50 percent in 2007 and 100 percent in 2008 and had indicated business comprising of coal and container cargo.
The plan also indicated approximate revenue generation for Gwadar Port Authority during the period 2007 and 2008. But PSA, so far relied totally on TCP to have business and lucrative subsidies. It has totally failed in bringing in business to Gwadar Port specially containers.
However PSA says that ports are not run in isolation, port are catalyst for trade and in the absence of basic infrastructures, free zone industrial areas and most importantly the connectivity links to the ports which are major hurdles in running the ports. PSA has fulfilled all agreed requirement but government so far has failed to fulfil the agreed requirements of the ports.

Courtesy: The News

Is It Easy To Learn Forex Trading?

If I said NO would you keep reading? Many would move on searching for a site that claims to offer some “Easy Forex Trading System.” Well, the truth is, the continual barrage of sites with guru’s who sell the idea that trading is easy are actually making it harder than it needs to be. Learning to trade Forex profibably requires a bit of work and the right Forex education. Can you accept that? If so you have taken the first step; you are closer to trading profitably than anyone who is searching for some "easy Forex system."

The time and work you put in with our Forex training will quickly provide you with the foundation you need to make trading the Forex market a lucrative career. I teach methods that simplify trading, rather than adding complexity to an already complex situation. You will gain knowledge of stress-tested Forex strategies supplemented with Forex training which focusing on what really matters in currency trading market.

I’ve seen struggling Forex traders spend five or more years attempting to become profitable. Ironically, these are often the traders who started off searching for (and believing they would find) an easy Forex system which requires no work on their part. But what happens is they become consumed the massive tsunami of counterproductive and often over-complex Forex strategies that flood the Internet. Eventually they become discouraged and give up on Forex trading altogether. It does not have to be this way! The market follows predictable paths, but you have to learn its language and understand the underlying logic of methods you are using to trade.

The Bottom line is that I will sincerely do everything in my power to help you learn Forex and realize your financial goals. This site was created for this purpose and together we will empower you to achieve.

Forex Home Business

The more you understand about any subject, the more interesting it becomes. As you read this article you’ll find that the subject of forex home business is certainly no exception.

When running a forex home business, a person quickly gains knowledge of how the business world works. Whether it be selling crafts, doing a home delivery business, or selling real-estate, after investing a lot of time and effort into a home or small business, a person quickly becomes aware of the few basic business truths that govern business.

One of those truths is that you have to have time and money to start a small business or any business for that matter. More often than not, the people that have the time dont have the money to invest in a home-based business and the people that have the money dont have the time. With Forex home business, it is quite possible to generate an income with a small time investment per day, after studying FOREX for a few months, and a very small investment as little as $50 in some cases.

The second truth, and these are probably quite obvious to most people, is that in order to make money a business has to have some sort of product to sell or perform some type of service. In the FOREX world, nothing is being sold and no service is being performed, but rather money is being exchanged. You are making a profit based on the actual exchange value of one currency against another currency. This eliminates the need for employees, such as customer service personnel and human resource people if your company were to become that big.

Is everything making sense so far? If not, I’m sure that with just a little more reading, all the facts will fall into place.

Also, because of the huge size of the FOREX market, trading nearly $1.5 trillion dollars a day, such things as social events, bad publicity, and changes in political climate will have no effect on your business. In fact, after studying FOREX, you will be able to see how these things will actually benefit your FOREX home business.

The third and last classical business truth is that most people are prevented from starting a home-based business because they dont feel good enough about themselves. They dont feel like theyre educated enough. I read stories all of the time about people that feel passionate about something or they just pick something that they are relatively good at or have done before and start a business. They just take a chance. If you want to do it, step out. Take that first step. Dont drop any huge sums of money, of course, but do a little research, make a small investment and start your adventure down to the road to FOREX trading.

You dont need a doctorite degree to get involved with FOREX trading, but after a couple of months of good study, its quite possible to generate a significant source of cash from FOREX trading. Forex traders study the political and economic trends in the economically important countries, including USA, Japan, England or the European Union, and make an assessment of the present or future purchase values of these currencies in comparison with each other. Again, the process of sale and purchase is like any other market activity, except that the time period varies. Blindly trade. Forex home business is not about gambling. Consider a situation where you think that the price of a given commodity, say, silver, gold, or wheat, will increase in the near future.

You can’t predict when knowing something extra about forex home business will come in handy. If you learned anything new about forex home business in this article, you should file the article where you can find it again.

Forex Home Business

The more you understand about any subject, the more interesting it becomes. As you read this article you’ll find that the subject of forex home business is certainly no exception.

When running a forex home business, a person quickly gains knowledge of how the business world works. Whether it be selling crafts, doing a home delivery business, or selling real-estate, after investing a lot of time and effort into a home or small business, a person quickly becomes aware of the few basic business truths that govern business.

One of those truths is that you have to have time and money to start a small business or any business for that matter. More often than not, the people that have the time dont have the money to invest in a home-based business and the people that have the money dont have the time. With Forex home business, it is quite possible to generate an income with a small time investment per day, after studying FOREX for a few months, and a very small investment as little as $50 in some cases.

The second truth, and these are probably quite obvious to most people, is that in order to make money a business has to have some sort of product to sell or perform some type of service. In the FOREX world, nothing is being sold and no service is being performed, but rather money is being exchanged. You are making a profit based on the actual exchange value of one currency against another currency. This eliminates the need for employees, such as customer service personnel and human resource people if your company were to become that big.

Is everything making sense so far? If not, I’m sure that with just a little more reading, all the facts will fall into place.

Also, because of the huge size of the FOREX market, trading nearly $1.5 trillion dollars a day, such things as social events, bad publicity, and changes in political climate will have no effect on your business. In fact, after studying FOREX, you will be able to see how these things will actually benefit your FOREX home business.

The third and last classical business truth is that most people are prevented from starting a home-based business because they dont feel good enough about themselves. They dont feel like theyre educated enough. I read stories all of the time about people that feel passionate about something or they just pick something that they are relatively good at or have done before and start a business. They just take a chance. If you want to do it, step out. Take that first step. Dont drop any huge sums of money, of course, but do a little research, make a small investment and start your adventure down to the road to FOREX trading.

You dont need a doctorite degree to get involved with FOREX trading, but after a couple of months of good study, its quite possible to generate a significant source of cash from FOREX trading. Forex traders study the political and economic trends in the economically important countries, including USA, Japan, England or the European Union, and make an assessment of the present or future purchase values of these currencies in comparison with each other. Again, the process of sale and purchase is like any other market activity, except that the time period varies. Blindly trade. Forex home business is not about gambling. Consider a situation where you think that the price of a given commodity, say, silver, gold, or wheat, will increase in the near future.

You can’t predict when knowing something extra about forex home business will come in handy. If you learned anything new about forex home business in this article, you should file the article where you can find it again.

How to Trade Forex

Trading foreign exchange is exciting and potentially very profitable, but there are also significant risk factors. It is crucially important that you fully understand the implications of margin trading and the particular pitfalls and opportunities that foreign exchange trading offers. On these pages, we offer you a brief introduction to the Forex markets as well as their participants and some strategies that you can apply. However, if you are ever in doubt about any aspect of a trade, you can always discuss the matter in-depth with one of our dealers. They are available 24 hours a day on the Saxo Bank online trading system, SaxoTrader.

The benchmark of its service is efficient execution, concise analysis and expertise – all achieved whilst maintaining an attractive and competitive cost structure. Today, Saxo Bank offers one of Europe's premier all-round services for trading in derivative products and foreign exchange. We count amongst our employees numerous dealers and analysts, each of whom has many years experience and a wide and varied knowledge of the markets – gained both in our home countries and in international financial centres. When trading foreign exchange, futures and other derivative products, we offer 24-hour service, extensive daily analysis, individual access to our Research & Analysis department for specific queries, and immediate execution of trades through our international network of banks and brokers. All at a price considerably lower than that which most companies and private investors normally have access to.

The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.

Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type. Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements

Forex Trading Education and Training

Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of Forex traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don’t get me wrong here, taking a Forex training program or a Forex trading course won’t guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.

Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many Forex training programs available, but not every one of them suits the needs of every Forex trader.

The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most Forex courses or Forex training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won’t help the trader to make consistent results.

The following subjects are what I consider the most important aspects of Forex trading and every Forex training program or Forex trading course should address:

Forex trading basics:

Review Forex Trading basic concepts such as: Forex Trading margin, Forex Trading type of orders, a little Forex Trading background, Forex Trading bid/ask rollover, etc. You need to make sure you understand every Forex Trading single concept to perfection.

Main drawbacks of Forex traders.

Being aware of the common Forex Trading mistakes made by Forex traders and knowing how to handle them will prevent new Forex traders from making those Forex Trading mistakes.

Technical and fundamental Forex Trading analysis.

These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor.

The three pillars of Forex trading. I consider that these three subjects have the most impact on every Forex trader trading account.

Forex trading system development.

Having the right Forex Trading system is a must if you want to have consistent Forex Trading profitable results. Having a Forex Trading system that doesn’t fit you will cause a series of problems that will make your Forex Trading account vanish away (second guessing the Forex Trading system, not following your system, etc.)

Money management.

This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)

Trading psychology.

Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.

Other important aspects every Forex training program should include are:

Developing habits for success (such as discipline patience, taking responsibility of every action, commitment, etc.,) understanding and taking our trading as a business, risk and trade management.

Another important aspect you should take into consideration when choosing a Forex training program is the mechanics of it, getting to know how the Forex training program works.

A good Forex Trading course will have the following:

A live conference room, where you can apply everything learned under live market conditions.
One-on-one feedback, every Forex trader has different needs and requires special attention. For instance a Forex trader wanting to improve the system and requires individual feedback from the instructor about it.

Online Forex Trading course, a course that could be accessible through internet. A plus is a course where you are able to access the course at the convenient time for you, so you don’t have to change your lifestyle.

A Forex forum, where members can talk just about everything related to the Forex market and the Forex training program.

Trading the Forex market is no easy task. It requires a lot of hard work. Making the right decision will definitely put the odds in your favor. Take your time when doing your diligence because it is a big and important step in a trader’s trading career.

Six Forex Trading Tips for Forex Trading Newbie's

You have decided to be a Forex trader in the forex market, and you have no idea on how to begin. Let's first start by defining what the forex market is and what it does.

The term "forex", also known as the foreign exchange is a market for the sale and purchase of all kinds of currencies. It originated in the early 1970's when floating currencies and free exchange rates were first introduced. At this time, the forex market traders were the ones who set the value of one type of currency against another.

Nowadays, the Forex Trading market forces determine the value of a currency against another. One unique aspect of the Forex Trading market is that very little trading qualifications are required of anyone intending to trade therein.

Independence from external control ensures that only the market forces influence the currency prices. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, the money moves so fast, it’s impossible for a single investor or Forex Trader to substantially affect the price of any major foreign currency.

In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.

1. The first thing you need to do is open a forex Trading account. You will have to fill an application form which includes a margin agreement stating if the Forex Trading broker will be allowed to intervene with any Forex trade when it appears too risky. Since most Forex trades are done using the Forex Trading broker's money, it is only logical that he protect his interests. However, once you have established an account, you can fund it and begin trading in the forex market.

2. Adopt a Forex trading strategy that has proven to be successful for you. Remember that Forex Trading strategies will work differently for different Forex traders, so don't try to adopt a Forex trading strategy that works well for another Forex trader. It might backfire on you. The two available approaches are either Forex Trading technical analysis or Forex Trading fundamental analysis. A combination of the two is a more preferred choice for experienced Forex traders.

3. Understand that prices move by trends. Forex Trading has a popular saying, “The trend is your friend.” There are certain movements that have been studied over many years in order to identify a pattern in the trend. These Forex Trading trends need to be understood in order to understand a good Forex trading strategy. For small Forex Trading accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most Forex Trading newbie’s will look to trade Forex in any direction, when they should be trading Forex with a trend.

4. Ensure you know which are the top five currencies pairs in the foreign exchange. These are USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.

5. For Forex Trading newbie's, it is advisable to maintain two Forex Trading accounts to ensure you learn to play the Forex trading game. Keep one real Forex Trading account, one that you will actually use to trade real money; and the second Forex Trading account should be a Forex Trading demo account, one that you can use to test alternative moves in the Forex trading game. You can easily use your Forex Trading demo account to shadow the trades in your real Forex Trading account so you can widen your stops to see if you are being too conservative or not.

6. Always examine the one hour, four hour and daily charts that concern your trades. Although you can trade Forex at 15 and 30 minute time intervals, doing so requires a handful of dexterity.

Basics of Forex Trading

Forex trading or Foreign Exchange Trading refers to the simultaneous trading—that is, buying and selling-of two different currencies. It is done between and among major financial institutions, central banks, retail currency traders or speculators, large international companies, government institutions, companies with overseas operations and the like.

The Forex Market operates 24 hours through a global electronic network where trading occurs over the telephone and computer networks.

The Top Forex Currencies

Each world currency is given a three letter code which is used in FOREX quotes, the instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:
EUR/USD, GBP/USD, USD/CAD, USD/JPY, USD/CHF, AUD/USD.

The Trade

Trade happens when you accept the offered price and when the dealer confirms.

A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.

Lets have the EUR/USD and AUD/USD for example.

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency. Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency. If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.
There are no further costs in the trade. There are no commissions and other fees as well.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The bid is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

Margin Trading

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.
The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in USD/YEN and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.

Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker.

It’s very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk manage

Forex Education

Although currency trading has a long history dating back to the middle ages, it is the changes that we have seen during the twentieth century which have created the Forex market we see today.

During the first half of the twentieth century the British pound was the world's principal trading currency and was the currency held by many as their main 'reserve' currency. As a result, London was also seen as the leading center for foreign exchange. However, the Second World War severely damaged the British economy and so the United States dollar took over as the world's principle trading and reserve currency and retains that position today. This said, there are now a number of other currencies, principally the Yen and the Euro, which are also seen as reserve currencies.

Since the Second World War there have been a number of events which have proved instrumental in shaping today's Forex market.

Until the start of the Second World War, as we said the British Pound Sterling was the World’s most prominent currency.

At the end of the Second World War the World’s economy, with the exception of the United States of America, was in disarray. Representatives from the United States of America, Britain and France met at Bretton Woods, New Hampshire with the objective of creating an infrastructure that would allow the rebuilding of the World’s economy. The result was the Bretton Woods Accord.

The Accord decided that the US Dollar would become the World’s benchmark and all other countries would measure the value of their currencies against it. Part of this agreement was the Gold Standard which fixed the price of Gold at $35 an ounce. All other currencies were pegged to the dollar at a certain rate. This rate was not allowed to fluctuate more than 1% in either direction (higher or lower). If a fluctuation greater than 1% did occur then the relevant central bank had to enter the market and restore the exchange rate to within the accepted band.
The Bretton Woods Accord also set in motion the establishment of the International Monetary Fund (IMF) which was designed to provide a stable system for buying and selling currencies and to ensure that currency transactions could take place smoothly and in a timely fashion.
In addition, the aim of the IMF was to create a consultative forum to promote international co-operation and to facilitate the growth of world trade, while at the same time breaking down exchange restrictions which hindered international trade.

It was also part of the established role of the IMF to make financial resources available to member states on a temporary basis where this was considered necessary to further the aims of the IMF. Such loans were normally only made on the understanding that the country concerned would make substantial changes to rectify the situation which gave rise to the need for the loan in the first place.

There are mixed opinions as to whether the Bretton Woods Accord was successful in restoring economic stability to Europe and Japan. Despite this, the agreement eventually failed in 1971. It was superseded by the Smithsonian Agreement.

The Smithsonian Agreement tried to succeed where Bretton Woods had failed. Rather than give a 1% margin, greater room for manoeuvre was introduced. Not long into this agreement, Europe made its first attempt at breaking free from the Dollar dominated system. In 1972 Europe formed the European Joint Float. Member nations included West Germany, France, Italy, the Netherlands, Belgium and Luxembourg. This agreement was very similar to Bretton Woods but with a larger band for rate fluctuation.

Just as their predecessors had failed, these agreements were flawed and subsequently fell apart. However, this time there was no new agreement to take its place. For the first time since WWII there was a ‘free float’ system in place. The value of each currency is now governed completely by the laws of supply and demand. Large banks, private companies and individual speculators are all active participants in the Forex market.

The next major milestone was the establishment of European Monetary System which effectively came into force in 1979. The European Monetary System got off to something of a shaky start when Britain (one of the principle members of the European Community) decided not to join the system and Italy joined only under special arrangements. Britain did however later agree to participate to a limited degree by joining the exchange mechanism of the European Monetary System in 1990.

The final major development to affect the Forex market was the establishment of the Euro as a single currency for European Union member states in 1998 with eleven of the participating states replacing their national currency with the Euro.

Of all these developments it was the free-floating of currencies in 1978 which did more than anything else to boost the growth of the foreign exchange market. In 1978 Forex trading showed a daily turnover of about 5 billion US dollars and this figure rose in the following ten years to reach 600 billion US dollars by 1988. By 1992 this figure had reached 1 trillion US dollars, Today The Forex market has is the largest Trading market with daily turnover of around 2 trillion US dollars.

Forex Trade TIPS & TRICKS

Always keep your trading systems simple. Too much information at one time on your trading screen could confuse and delay your decision to trade.

Broker - A lot of Forex brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.

Sample the Environment - It is important to remember that many registered and online trading agents have fictitious platforms which mirror the real-time, live platform clients register and trade on. It is not only advisable, but it is also actively encouraged to initially open a 'dummy' account where fictitious Forex trades can be undertaken that closely reflect what real trades may be like when they are eventually undertaken. Such platforms are designed to give those that are new to Forex a feel and an idea what real trades on live markets will be like when the decision is made to begin trading.

Buy low, Sell high - Forex trading does not involve the physical purchase of the currencies, but rather involves contracts for amount and exchange rate of currency pairs. The potential for profit comes from the fluctuations in the currency exchange market. Regular daily fluctuations in the value of one currency against another give a clear advantage over conventional stock market equities and instruments.

Manage Losing Positions - Trades will sometimes inevitably on occasion go against you. It is important to accept them as an inherent part of trading. Cut your losses and move on having learned from any mistakes made. Always remember however that you will not be able to trade without losing some positions. It is important to manage these well.

Patience - Do not over-trade your account. Good money management practice is important and will help with profitability. This will go a long way in helping you develop a strategy which fits with your personal trading capital. Operate a trailing stop loss policy say 15 to 20 pips behind the trade. Minimize your good trades as long as you are confident.

Flexible Mindset - Don't set yourself false targets and expectations. Experts will tell you trading is not an exact science and setting oneself unattainable targets will only lead to frustration and feeling of failure when these targets are not met. Always maintain an open mind. The market is a constantly changing environment tunes your mindset to understand this.

And lastly but definitely not least, it is most important for all market participants to remember that unique experiences and past performances do not guarantee future results. Trading results can vary in any combination of circumstances. If you do not have extra capital that you can afford to lose, you should not trade in the foreign exchange market.

Invest wisely and take advantage of the resources and technology available to you in the market.

Dollar-Euro Currency Exchange

This article provides an overview of the factors affecting the leading currency pair: Euro-dollar exchange, commonly expressed as EUR/USD.

The euro to dollar exchange rate is the price at which the world demand for US dollars equals the world supply of euros. Regardless of geographical origin, a rise in the world demand for euros leads to an appreciation of the euro.

Factors affecting exchange ratesFour factors are identified as fundamental determinants of the real euro to dollar exchange rate:

* The international real interest rate differential

* Relative prices in the traded and non-traded goods sectors

* The real oil price

* The relative fiscal position

The nominal bilateral dollar to euro exchange is the exchange rate that attracts the most attention. Notwithstanding the comparative importance of euro to US dollar bilateral trade links, trade with the UK is, to some extent, more important for the Euro zone than is trade with the US. The dollar and the euro have a strong predisposition to run together in the very short run, but sometimes there can be significant discrepancies. The very strong appreciation of the dollar against the euro in 2003 is one example of these discrepancies.

In the long run, the correlation between the bilateral dollar to euro exchange rate, and different measures of the effective exchange rate of Euroland, has been rather high, especially if one looks at the effective real exchange rate. As inflation is at very similar levels in the US and the Euro area, there is no need to adjust the dollar to euro rate for inflation differentials, but because the Euro zone also trades intensively with countries that have relatively high inflation rates (e.g. some countries in Central and Eastern Europe, Turkey, etc.), it is more important to downplay nominal exchange rate measures by looking at relative price and cost developments.

The fall of the dollarThe steady and orderly decline of the dollar from early 2002 to early 2004 against the euro, Australian dollar, Canadian dollar and a few other currencies (i.e., its trade-weighted average, which is what counts for purposes of trade adjustment), while significant, has still only amounted to about 10 percent.

There are two reasons why concerns about a free fall of the dollar should not be worth consideration. The first is that the US external deficit will stay high only if US growth remains vigorous. But if the US continues to grow strongly, it will also retain a strong attraction for foreign capital, which should support the dollar. The second reason is that the attempts by the monetary authorities in Asia to keep their currencies weak will probably not work.

The basic theories underlying the dollar to euro exchange rate:Law of One Price: In competitive markets free of transportation cost barriers to trade, identical products sold in different countries must sell at the same price when the prices are stated in terms of the same currency.

Interest rate effects:

If capital is allowed to flow freely, exchange rates become stable at a point where equality of interest is established.

The dual forces of supply and demand determine euro vs. dollar exchange rates. Various factors affect these two forces, which in turn affect the exchange rates:

The business environment:

Positive indications (in terms of government policy, competitive advantages, market size, etc.) increase the demand for the currency, as more and more enterprises want to invest there.
Stock market: The major stock indices also have a correlation with the currency rates.

Political factors: All exchange rates are susceptible to political instability and anticipations about the new government. For example, political or financial instability in Russia is also a flag for the euro to US dollar exchange because of the substantial amount of German investments directed to Russia.

Economic data:

Economic data such as labor reports (payrolls, unemployment rate and average hourly earnings), consumer price indices (CPI), producer price indices (PPI), gross domestic product (GDP), international trade, productivity, industrial production, consumer confidence etc., also affect fluctuations in currency exchange rates.

Confidence in a currency is the greatest determinant of the real euro-dollar exchange rate. Decisions are made based on expected future developments that may affect the currency. A EUR/USD exchange can operate under one of four main types of exchange rate systems:

Fully fixed exchange ratesIn a fixed exchange rate system, the government (or the central bank acting on its behalf) intervenes in the currency market in order to keep the exchange rate close to a fixed target. It is committed to a single fixed exchange rate and does not allow major fluctuations from this central rate.

Semi-fixed exchange ratesCurrency can move inside permitted ranges of fluctuation. The exchange rate is the dominant target of economic policy-making, interest rates are set to meet the target and the exchange rate is given a specific target.

Free floatingThe value of the currency is determined solely by market supply and demand forces in the foreign exchange market. Trade flows and capital flows are the main factors affecting the exchange rate. A floating exchange rate system: Monetary system in which exchange rates are allowed to move due to market forces without intervention by national governments. For example, the Bank of England does not actively intervene in the currency markets to achieve a desired exchange rate level. With floating exchange rates, changes in market demand and supply cause a currency to change in value. Pure free floating exchange rates are rare - most governments at one time or another seek to "manage" the value of their currency through changes in interest rates and other controls.

Managed floating exchange ratesGovernments normally engage in managed floating if not part of a fixed exchange rate system.

The advantages of fixed exchange rates are the disadvantages of floating rates:Fixed rates provide greater certainty for exporters and importers and, under normal circumstances, there is less speculative activity - although this depends on whether the dealers in the foreign exchange markets regard a given fixed exchange rate as appropriate and credible.

Advantages of floating exchange ratesFluctuations in the exchange rate can provide an automatic adjustment for countries with a large balance of payments deficit. A second key advantage of floating exchange rates is that it gives the government/monetary authorities flexibility in determining interest rates.

Exchange Rates

Because currencies are traded in pairs and exchanged one against the other when traded, the rate at which they are exchanged is called the exchange rate. The majority of the currencies are traded against the US dollar (USD). The four next-most traded currencies are the Euro (EUR), the Japanese yen (JPY), the British pound sterling (GBP) and the Swiss franc (CHF). These five currencies make up the majority of the market and are called the major currencies or "the Majors". Some sources also include the Australian dollar (AUD) within the group of major currencies.

The first currency in the exchange pair is referred to as the base currency and the second currency as the counter term or quote currency. The counter term or quote currency is thus the numerator in the ratio, and the base currency is the denominator. The value of the base currency (denominator) is always 1. Therefore, the exchange rate tells a buyer how much of the counter term or quote currency must be paid to obtain one unit of the base currency. The exchange rate also tells a seller how much is received in the counter term or quote currency when selling one unit of the base currency. For example, an exchange rate for EUR/USD of 1.2083 specifies to the buyer of euros that 1.2083 USD must be paid to obtain 1 euro.
At any given point, time and place, if an investor buys any currency and immediately sells it - and no change in the exchange rate has occurred - the investor will lose money. The reason for this is that the bid price, which represents how much will be received in the counter or quote currency when selling one unit of the base currency, is always lower than the ask price, which represents how much must be paid in the counter or quote currency when buying one unit of the base currency. For instance, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015, representing a spread of 1000 pips (also called points, one pip = 0.0001), which is very high in comparison to the bid/ask currency rates that online Forex investors commonly encounter, such as 1.2015/1.2020, with a spread of 5 pips. In general, smaller spreads are better for Forex investors since even they require a smaller movement in exchange rates in order to profit from a trade.

Margin

Banks and/or online trading providers need collateral to ensure that the investor can pay in case of a loss. The collateral is called the margin and is also known as minimum security in Forex markets. In practice, it is a deposit to the trader's account that is intended to cover any currency trading losses in the future.

Margin enables private investors to trade in markets that have high minimum units of trading by allowing traders to hold a much larger position than their account value. Margin trading also enhances the rate of profit, but can also enhance the rate of loss if the investor makes the wrong decision.

Leveraged financing

Leveraged financing, i.e., the use of credit, such as a trade purchased on a margin, is very common in Forex. The loan/leveraged in the margined account is collateralized by your initial deposit. This may result in being able to control USD 100,000 for as little as USD 1,000.

There are three ways private investors can trade in Forex directly or indirectly:

* The spot market * Forwards and futures * Options

A spot transaction

A spot transaction is a straightforward exchange of one currency for another. The spot rate is the current market price, also called the benchmark price. Spot transactions do not require immediate settlement, or payment "on the spot." The settlement date, or "value date," is the second business day after the "deal date" (or "trade date") on which the transaction is agreed to by the two traders. The two-day period provides time to confirm the agreement and arrange the clearing and necessary debiting and crediting of bank accounts in various international locations.

Forwards and Futures

Forwards make up about 46% of currency trading. A forward transaction is an agreement between two parties whereby one party buys a currency at a particular price by a certain date that is greater than two business days (a spot transaction).

A future contract is a forward contract with fixed currency amounts and maturity dates. They are traded on future exchanges and not through the interbank foreign exchange market.

Options

A currency option is similar to a futures contract in that it involves a fixed currency transaction at some future date in time. However the buyer of the option is only purchasing the right but not the obligation to purchase a fixed amount of currency at a fixed price by a certain date in future. The price is known as the premium and is lost if the buyer does not exercise the option.

Risks

Although Forex trading can lead to very profitable results, there are risks involved: exchange rate risks, interest rate risks, credit risks, and country risks. Approximately 80% of all currency transactions last a period of seven days or less, while more than 40% last fewer than two days. Given the extremely short lifespan of the typical trade, technical indicators heavily influence entry, exit and order placement decisions.

Euro Market

The rapid development of the Eurodollar market, where US dollars are deposited in banks outside the US, was a major mechanism for speeding up Forex trading. Likewise, Euro markets are those where assets are deposited outside the currency of origin.

The Eurodollar market first came into being in the 1950s when the Soviet Union's oil revenue -- all in US dollars -- was being deposited outside the US in fear of being frozen by US regulators. This resulted in a vast offshore pool of dollars outside the control of US authorities. The US government therefore imposed laws to restrict dollar lending to foreigners. Euro markets then became particularly attractive because they had fewer regulations and offered higher yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euro markets an advantageous place for holding excess liquidity, providing short-term loans and financing imports and exports.

London was and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. London's convenient geographical location (operating during Asian and American markets) is also instrumental in preserving its dominance in the Euro market.

Forex Forecasting

This article provides insight into the two major methods of analysis used to forecast the behavior of the Forex market. Technical analysis and fundamental analysis differ greatly, but both can be useful forecast tools for the Forex trader. They have the same goal - to predict a price or movement. The technician studies the effect while the fundamentalist studies the cause of market movement. Many successful traders combine a mixture of both approaches for superior results.
Technical analysisTechnical analysis is a method of predicting price movements and future market trends by studying charts of past market action. Technical analysis is concerned with what has actually happened in the market, rather than what should happen and takes into account the price of instruments and the volume of trading, and creates charts from that data to use as the primary tool. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.
Technical analysis is built on three essential principles:
1. Market action discounts everything! This means that the actual price is a reflection of everything that is known to the market that could affect it, for example, supply and demand, political factors and market sentiment. However, the pure technical analyst is only concerned with price movements, not with the reasons for any changes.
2. Prices move in trends Technical analysis is used to identify patterns of market behavior that have long been recognized as significant. For many given patterns there is a high probability that they will produce the expected results. Also, there are recognized patterns that repeat themselves on a consistent basis.
3. History repeats itself Forex chart patterns have been recognized and categorized for over 100 years and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time.
Forex charts are based on market action involving price. There are five categories in Forex technical analysis theory:
* Indicators (oscillators, e.g.: Relative Strength Index (RSI) * Number theory (Fibonacci numbers, Gann numbers) * Waves (Elliott wave theory) * Gaps (high-low, open-closing) * Trends (following moving average).
Some major technical analysis tools are described below:

Forex Market Overview

The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.
The main enticements of currency dealing to private investors and attractions for short-term Forex trading are:
* 24-hour trading, 5 days a week with non-stop access to global Forex dealers. * An enormous liquid market making it easy to trade most currencies. * Volatile markets offering profit opportunities. * Standard instruments for controlling risk exposure. * The ability to profit in rising or falling markets. * Leveraged trading with low margin requirements. * Many options for zero commission trading.
Forex tradingThe investor's goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always done in currency pairs. For example, the exchange rate of EUR/USD on Aug 26th, 2003 was 1.0857. This number is also referred to as a "Forex rate" or just "rate" for short. If the investor had bought 1000 euros on that date, he would have paid 1085.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.60 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a "risk-free" investment. One example of a risk-free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation.
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.

History of Forex Market

An overview into the historical evolution of the foreign exchange market

This article will follow the historical roots of the international currency trading from the days of the gold exchange, through the Bretton Woods Agreement, to its current setting.

The Gold exchange period and the Bretton Woods Agreement.

Prior to Bretton Woods, the gold exchange standard -- paramount between 1876 and World War I -- ruled over the international economic system. Under the gold exchange, currencies experienced a new era of stability because they were supported by the price of gold.

However, the gold exchange standard had a weakness of boom-bust patterns. As a country's economy strengthened, its imports would increase until the country ran down its gold reserves, which were required to support its currency. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities would hit bottom, appearing attractive to other nations, who would rush in and amid a buying frenzy inject the economy with gold until it increased its money supply, driving down interest rates and restoring wealth into the economy. Such boom-bust patterns abounded throughout the gold standard until World War I temporarily discontinued trade flows and the free movement of gold.

The Bretton Woods Agreement, established in 1944, fixed national currencies against the dollar, and set the dollar at a rate of USD 35 per ounce of gold. The agreement was aimed at establishing international monetary steadiness by preventing money from taking flight across countries, and to curb speculation in the international currency market. Participating countries agreed to try to maintain the value of their currency within a narrow margin against the dollar and an equivalent rate of gold as needed. As a result, the dollar gained a premium position as a reference currency, reflecting the shift in global economic dominance from Europe to the USA. Countries were prohibited from devaluing their currency to benefit their foreign trade and were only allowed to devalue their currency by less than 10%. The great volume of international Forex trade led to massive movements of capital, which were generated by post-war construction during the 1950s, and this movement destabilized the foreign exchange rates established in Bretton Woods.

The year 1971 heralded the abandonment of the Bretton Woods in that the US dollar would no longer be exchangeable into gold. By 1973, the forces of supply and demand controlled major industrialized nations' currencies, which now floated more freely across nations. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970s, and new financial instruments, market deregulation and trade liberalization emerged.

The onset of computers and technology in the 1980s accelerated the pace of extending the market continuum for cross-border capital movements through Asian, European and American time zones. Transactions in foreign exchange increased intensively from nearly billion a day in the 1980s, to more than $1.9 trillion a day two decades later.

Don't Be a Forex Trading Failure

Have you ever wondered why is it that very few traders succeed in the forex trading market while 95% of forex traders fail to achieve success? Below are 9 major reasons:

1. Get Rich Quick

It is this simple forex trading currency is not a get rich quick scheme, it will not make you a million dollars is days. Getting success requires patience and knowledge. It requires some forex education, patience, discipline, emotion control, etc. to get you into the world of successful Forex trading.

2. One Big Win-

What is the best systemPeople are always asking, "What is the best forex trading system around?" Sorry to disappoint you but there is no trading system that will make you rich. Many forex traders spend years trying to find the ultimate of forex trading but failed to find one. The main reason is the forex market changes every second and the forex markets move very quickly

3. No Education- No Knowledge

One of the reasons forex traders do not make money is because they don't have the right education or understanding of the Forex Market. You need certain forex training education, a forex course, a Forex Trading System and then a mentor to coach you. It does take time to learn and to get the right knowledge.

4. Discipline is the Key to Success

Discipline is so important in currency trading that it will reward you by accumulating your profits if you abide to it, and without it you will go broke. Do not chase loses.

5. It takes time-

Have some patienceForex traders chase after the price because they do not want to miss a golden trading opportunity. If you miss a trade let it go, remember the Forex Markets are open 24 hours a day 6 days a week so there is plenty of time and opportunity to make money.

6. You must manage your money and Trades

Most traders forget about risk and money management as they have the belief that they are never wrong and put all their money into every trade. The professionals never risk anymore than 10% per trade.

7. Learn to Control Your Emotions

Have a trading plan, plan the trade and then trade the plan. Most people will fail because they fail to have a trading plan without a plan you are trading blind and will go broke.

8. Keep it Real

If I had $1 for every person that thinks they can turn $1000 into $1,000,000 then I would have $1000,000. It takes time to build up your bank. Make sure you have realistic expectations.9. You Don't Have to Do it AloneOnce you have a trading plan, find a mentor, find someone that can help you. Remember it is strength in numbers. For more education lessons feel free to visit CFD FX REPORT they are the leading forex and stock market educators offering free education lessons, trading ideas. They can also help you find the best Forex brokers in the markets.