A Day in the Life of the Bank of Japan's Foreign Exchange Dealers

Outline of the Bank of Japan's Foreign Exchange Intervention OperationsJuly 2000Bank of JapanFinancial Markets DepartmentForeign Exchange Division
I. Introduction
Since the introduction of a floating exchange rate system in February 1973, the Japanese economy has experienced large fluctuations in foreign exchange rates, with the yen on a long rising trend. In order to mitigate the negative influence of such fluctuations on the Japanese economy, foreign exchange market interventions (hereafter "foreign exchange interventions" or simply "interventions") have been conducted from time to time. Although, these interventions have occasionally been reported in newspapers and other news media, the actual operational procedures seem not to be well understood. This article will therefore briefly explain the basics of foreign exchange intervention, focusing on the practical side.
The next section begins with the definition of foreign exchange intervention and goes on to outline its legal status. Section III explains the operation of intervention, including the decision-making procedures. The last section deals with the funding and foreign exchange reserve management that accompany foreign exchange intervention.
II. What Is Foreign Exchange Intervention?
A. Definition and the Legal Status of Intervention
Foreign exchange intervention is defined generally as foreign exchange transactions conducted by the monetary authorities with the aim of influencing exchange rates. In Japan, the Minister of Finance is legally authorized to conduct intervention as a means to achieve foreign exchange rate stability.1 The Bank of Japan, as the agent of the Minister of Finance, executes foreign exchange intervention operations in accordance with the directions of the Minister of Finance.2 The expression "Bank of Japan Intervention," often used in newspapers and other news media, might therefore be misleading (for an international comparison of foreign exchange intervention systems, please refer to the appendix).
1 The Foreign Exchange and Foreign Trade Law stipulates that the "Minister of Finance shall endeavor to stabilize the external value of the yen through foreign exchange trading and other measures" (Article 7, Section 3).
2 The Bank of Japan Law stipulates that the Bank buy and sell foreign exchange "as the agent of the government......,when its purpose is to stabilize the exchange rate of the national currency" (Article 40, Section 2). The Foreign Exchange Fund Special Account Law stipulates that the Minister of Finance may entrust operations involving the Foreign Exchange Fund that are stipulated in the Article 5 to the Bank of Japan (Article 6, Section 1).
B. Types of Foreign Exchange Intervention
Foreign exchange interventions are usually conducted in the Tokyo market. However, as most of the trading shifts to European markets after around 5:00 p.m. JST and then to the New York market, in cases where it is considered necessary to intervene during these hours, the Bank of Japan, as the agent of the Minister of Finance, requests foreign monetary authorities to conduct interventions on behalf of the Bank ("entrustment intervention"). The final decision to use this method is made by the Minister of Finance. The details of the intervention including the amount, currency pair, and method of intervention are also determined by the Minister. The funds necessary for intervention come from the Foreign Exchange Fund Special Account (explained later) irrespective of the market where the interventions are conducted.3 Similarly, when foreign monetary authorities need to intervene in the Tokyo market, the Bank can conduct interventions on their behalf upon request ("reverse-entrustment intervention").4
There are cases where two or more monetary authorities implement intervention jointly by using their own funds at the same time or in succession. This is called "coordinated intervention."
3 "Entrustment intervention" means intervention that is conducted in overseas markets with funds of the Japanese authorities. It is different from the intervention that is conducted in overseas markets with funds of respective foreign monetary authorities.
4 The funds of foreign monetary authorities are used in this kind of intervention.
C. Purpose of Foreign Exchange Intervention
The Foreign Exchange and Foreign Trade Law stipulates that the Minister of Finance shall endeavor to stabilize the external value of the yen by taking necessary measures including foreign exchange transactions.
III. Operational Procedures of Foreign Exchange Intervention
The Bank of Japan conducts foreign exchange intervention operations as the agent of the Minister of Finance, as mentioned earlier. The sections engaged in and responsible for intervention operations are the Foreign Exchange Division of the Financial Markets Department (hereafter BOJ Forex Division) and the Planning and Coordination Division of the International Department.5
5 Before the reorganization of May 2000, as a result of which dealers moved to the Financial Markets Department from the International Department, the former Foreign Exchange Division of the International Department had sole responsibility for the operation. In view of the ever closer linkages between domestic and foreign financial markets and the increasingly active cross-border flow of funds, it is expected that both monitoring and analytical ability will be greatly enhanced by the reorganization.
A. Collecting Information
The BOJ Forex Division closely monitors and analyzes developments in foreign exchange markets day and night through frequent contact with market participants, the Bank's overseas offices, and foreign central banks, as well as utilizing the services of information vendors. In addition, the Forex Division carries out research on developments in the areas which relate to the foreign exchange markets, such as developments in overseas securities and stock markets and commodity prices.
Information gathered in these ways is passed to the Policy Board and other related sections in the Bank as one of the factors on which a judgement of the state of financial and business activities in the Japanese economy is based.6 As the agent of the Minister of Finance, the BOJ Forex Division reports such information every day also to the Foreign Exchange and Money Market Division of the International Bureau of the Ministry of Finance (hereafter MOF Forex Division), which is in charge of foreign exchange intervention in the Ministry.
6 The Bank of Japan provides the public with information on the foreign exchange market through pre-recorded telephone services. This information includes the highest and lowest values as well as turnover, and is revised every hour. (, Japanese only)
B. Foreign Exchange Intervention Decision-Making
When foreign exchange rate developments are regarded as too volatile, the MOF Forex Division gets in touch with the BOJ Forex Division on the hot line, and is supplied with the background information on the volatile movements and other relevant information for making decision on intervention.
If the Minister of Finance decides to conduct intervention based on such information, the MOF Forex Division gives the BOJ Forex Division specific directions for the intervention. The Minister of Finance determines the details taking into consideration various factors in the foreign exchange markets in order to maximize the effectiveness and efficiency of the intervention. The BOJ Forex Division continues to monitor the market developments in parallel with the intervention and provides the MOF Forex Division with information, such as market reactions to it. There are cases where the method of intervention is modified based on the Bank's report.
C. Settlement
Once a dealer of the Bank reaches agreement on the terms of a transaction and makes a contract with the counterparty, the back office takes care of the remainder of the business. The back office in the Planning and Coordination Division of the Bank's International Department is responsible for confirming the terms of contracts made by dealers in the front office and also for carrying out the transactions (i.e., settlement).
Confirmation is done by matching the terms of contracts with the counterparties over the telephone or by SWIFT,7 based on the contract records kept by the dealers. Having confirmed the contract, the back office proceeds to settlement. Settlement for an intervention is made, in principle, through the authorities' accounts at the central bank whose currency is the subject of the intervention.
7 Abbreviation for The Society for Worldwide Interbank Financial Telecommunication, a data telecommunication system for transmitting messages relating to international banking transactions. The headquarters of the system is located in Brussels, and the Bank of Japan has been a member since 1987.
IV. Financing and Investment of Funds for Foreign Exchange Intervention
This section will briefly explain how interventions are financed as well as the basic policy for the investment of foreign exchange reserves, which have been accumulated partly as a result of interventions.
Intervention by the Bank of Japan as the agent of the Minister of Finance is conducted by the account of the Japanese Government, which is called the Foreign Exchange Fund Special Account (hereafter FEFSA).8 This fund consists of foreign currency funds and yen funds. In case of U.S. dollar buying/yen selling intervention, for example, the yen funds to be sold are raised by issuing Financing Bills (FBs). In the event of U.S. dollar selling/yen buying intervention, U.S. dollar funds held in the FEFSA are used for buying the yen in the markets.
The Japanese Government holds large amounts of foreign currencies in the FEFSA, partly as a result of foreign currency buying/yen selling interventions in past yen appreciation phases. The Minister of Finance makes decisions on investments of these currencies paying careful attention to liquidity and safety. Most of these funds have been invested in securities issued by the authorities of major industrial countries, which are almost immune from liquidity risk. The back office also plays a role in the implementation of such foreign currency funds investment.
8 The FEFSA system consists of two elements: the Foreign Exchange Fund and the narrowly defined Foreign Exchange Fund Special Account. The former is a fund prepared for foreign exchange trading by the Government. Purchases/sales of foreign exchange by this fund are not recorded as the revenues/expenses of the Government. In the latter, results of trading such as (1) profits/losses arising from foreign exchange trading and (2) payment/receipt of interest arising from fund-raising/investment accompaning foreign exchange intervention are recorded as the revenues/expenses of the Government.

(Appendix)
Systems of Foreign Exchange Intervention Abroad
United States
Euro Area
United Kingdom
Authority for Intervention
Government (Treasury Department) and Federal Reserve Board (FRB)-- Government has priority with regard to the decision.
European Central Bank (ECB)Intervention should be consistent with the general orientations formulated by ECOFIN.The general orientations are formulated after consulting the ECB, or on a recommendation from the ECB and "shall be without prejudice to the primary objective of the ESCB to maintain price stability."
Government (the Treasury) and Bank of England-- Intervention by BOE is restricted to occasions when it is necessary to attain the monetary policy objective.
Operation of intervention
Federal Reserve Bank of New York
ECB
BOE
Funds for intervention
Government (Foreign Exchange Stabilization Fund) and FRB (usually, each finances half of the amount used for intervention). Intervention results are reported to the Congress every quarter (also published in Federal Reserve Bulletin).
ECB
Government (Foreign Exchange Operation Account) and BOE. The Treasury is planning to disclose intervention on a monthly and quarterly basis on its Web site.
(Box)
A Day in the Life of the Bank of Japan's Foreign Exchange Dealers
-- Written by Masafumi Yamamoto, Foreign Exchange Division
Foreign exchange dealers are, in general, very early birds, and dealers at the Bank of Japan are no exception. We start work before 7:00 a.m. JST when morning trading in the Sydney market in Australia, which starts two hours earlier, peaks out. Our first job is to get ready for the morning market reports meeting by gathering, sorting, and analyzing information. We first check the previous day's developments in the New York and European foreign exchange markets, and then make our own forecasts for the day by listing up bull and bear factors as well as by exchanging views with market participants.
Information we gather ranges over various areas such as economic indicators, statements by high officials, political events, holidays, and rumors circulating in the market. All kinds of media are utilized, including paper media (newspapers, fax news services, magazines), on-line media (computer on-line services, e-mail communication), and voice (telephone conversations). As the volume of information is tremendous, and there is both useful and useless information, we have to screen it and formulate our own view.
There is no time for rest even after the morning meeting. Recently, the improvement in on-line communication media has made it easy for anyone to obtain global information on a real-time basis, dramatically increasing the efficiency of information gathering. However, as the whole market reacts simultaneously even to trivial news, we have to be alert at all times. It is often the case that foreign exchange rates fluctuate abruptly due to unexpected factors. This means that the market has to be analyzed from the standpoints of various areas such as macroeconomic analysis, time-series analysis (which requires sophisticated econometric methods), historical studies, political analysis, and even astrology. Thus, we have to keep on obtaining and analyzing information throughout the day.
Although electronic media have become so popular and useful that we are not able to live without them, conversations over the phone with market participants are still vital for monitoring the markets. Market participants' views occasionally differ significantly and it is often the case that subtle changes in their sentiment gradually grow to a strong trend in exchange rates. Frequent contacts with market participants are the most effective way to remain sensitive to market developments. Communication with market participants is also an important channel for providing them with accurate information on the Bank's monetary policy stance and on the statements of the Bank's officials and thus helps to prevent market reaction arising from misunderstanding.
We look most active when we are conducting intervention. The Bank of Japan, as the agent of the Minister of Finance, conducts foreign exchange transactions (i.e., intervention) in order to stabilize the yen's value. This is stipulated in laws such as the "Foreign Exchange Fund Special Account Law" and the "Bank of Japan Law." Specifically, the Foreign Exchange Division is the operational unit of intervention. When a large fluctuation in the yen is expected to have significant negative effects on the economy, the hot line connected to the Ministry of Finance rings. Several dealers and back-up staff members are quickly on standby, and the tension builds up in the dealing room. When intervention is decided, the room is thrown into an uproar as the dealers and the chief dealer shout their orders and directions.
After 5:00 p.m. JST, the majority of trading shifts to the European market, and usually, the Bank's representative offices in Europe and the United States take over the task of monitoring. It is not until then that we are released from the high tension that started in the early morning. However, when the exchange rates show too much volatility, we cannot close our business even after the Tokyo market closes. It is not uncommon that we continue monitoring during European and U.S. trading time by contacting dealers in overseas markets and people in charge of monitoring foreign exchange markets at foreign central banks. When the Bank of Japan requests foreign central banks to conduct interventions on behalf of the Bank, senior officials of the Bank play the roles of liaison and broker between the Minister of Finance and the foreign central banks. When this happens, work often continues till dawn.

Financing and Investment of Funds for Foreign Exchange Intervention

This section will briefly explain how interventions are financed as well as the basic policy for the investment of foreign exchange reserves, which have been accumulated partly as a result of interventions.
Intervention by the Bank of Japan as the agent of the Minister of Finance is conducted by the account of the Japanese Government, which is called the Foreign Exchange Fund Special Account (hereafter FEFSA).8 This fund consists of foreign currency funds and yen funds. In case of U.S. dollar buying/yen selling intervention, for example, the yen funds to be sold are raised by issuing Financing Bills (FBs). In the event of U.S. dollar selling/yen buying intervention, U.S. dollar funds held in the FEFSA are used for buying the yen in the markets.
The Japanese Government holds large amounts of foreign currencies in the FEFSA, partly as a result of foreign currency buying/yen selling interventions in past yen appreciation phases. The Minister of Finance makes decisions on investments of these currencies paying careful attention to liquidity and safety. Most of these funds have been invested in securities issued by the authorities of major industrial countries, which are almost immune from liquidity risk. The back office also plays a role in the implementation of such foreign currency funds investment.
8 The FEFSA system consists of two elements: the Foreign Exchange Fund and the narrowly defined Foreign Exchange Fund Special Account. The former is a fund prepared for foreign exchange trading by the Government. Purchases/sales of foreign exchange by this fund are not recorded as the revenues/expenses of the Government. In the latter, results of trading such as (1) profits/losses arising from foreign exchange trading and (2) payment/receipt of interest arising from fund-raising/investment accompaning foreign exchange intervention are recorded as the revenues/expenses of the Government.

Operational Procedures of Foreign Exchange Intervention

The Bank of Japan conducts foreign exchange intervention operations as the agent of the Minister of Finance, as mentioned earlier. The sections engaged in and responsible for intervention operations are the Foreign Exchange Division of the Financial Markets Department (hereafter BOJ Forex Division) and the Planning and Coordination Division of the International Department.5
5 Before the reorganization of May 2000, as a result of which dealers moved to the Financial Markets Department from the International Department, the former Foreign Exchange Division of the International Department had sole responsibility for the operation. In view of the ever closer linkages between domestic and foreign financial markets and the increasingly active cross-border flow of funds, it is expected that both monitoring and analytical ability will be greatly enhanced by the reorganization.
A. Collecting Information
The BOJ Forex Division closely monitors and analyzes developments in foreign exchange markets day and night through frequent contact with market participants, the Bank's overseas offices, and foreign central banks, as well as utilizing the services of information vendors. In addition, the Forex Division carries out research on developments in the areas which relate to the foreign exchange markets, such as developments in overseas securities and stock markets and commodity prices.
Information gathered in these ways is passed to the Policy Board and other related sections in the Bank as one of the factors on which a judgement of the state of financial and business activities in the Japanese economy is based.6 As the agent of the Minister of Finance, the BOJ Forex Division reports such information every day also to the Foreign Exchange and Money Market Division of the International Bureau of the Ministry of Finance (hereafter MOF Forex Division), which is in charge of foreign exchange intervention in the Ministry.
6 The Bank of Japan provides the public with information on the foreign exchange market through pre-recorded telephone services. This information includes the highest and lowest values as well as turnover, and is revised every hour. (, Japanese only)
B. Foreign Exchange Intervention Decision-Making
When foreign exchange rate developments are regarded as too volatile, the MOF Forex Division gets in touch with the BOJ Forex Division on the hot line, and is supplied with the background information on the volatile movements and other relevant information for making decision on intervention.
If the Minister of Finance decides to conduct intervention based on such information, the MOF Forex Division gives the BOJ Forex Division specific directions for the intervention. The Minister of Finance determines the details taking into consideration various factors in the foreign exchange markets in order to maximize the effectiveness and efficiency of the intervention. The BOJ Forex Division continues to monitor the market developments in parallel with the intervention and provides the MOF Forex Division with information, such as market reactions to it. There are cases where the method of intervention is modified based on the Bank's report.
C. Settlement
Once a dealer of the Bank reaches agreement on the terms of a transaction and makes a contract with the counterparty, the back office takes care of the remainder of the business. The back office in the Planning and Coordination Division of the Bank's International Department is responsible for confirming the terms of contracts made by dealers in the front office and also for carrying out the transactions (i.e., settlement).
Confirmation is done by matching the terms of contracts with the counterparties over the telephone or by SWIFT,7 based on the contract records kept by the dealers. Having confirmed the contract, the back office proceeds to settlement. Settlement for an intervention is made, in principle, through the authorities' accounts at the central bank whose currency is the subject of the intervention.
7 Abbreviation for The Society for Worldwide Interbank Financial Telecommunication, a data telecommunication system for transmitting messages relating to international banking transactions. The headquarters of the system is located in Brussels, and the Bank of Japan has been a member since 1987.

What Is Foreign Exchange Intervention?

A. Definition and the Legal Status of Intervention

Foreign exchange intervention is defined generally as foreign exchange transactions conducted by the monetary authorities with the aim of influencing exchange rates. In Japan, the Minister of Finance is legally authorized to conduct intervention as a means to achieve foreign exchange rate stability.1 The Bank of Japan, as the agent of the Minister of Finance, executes foreign exchange intervention operations in accordance with the directions of the Minister of Finance.2 The expression "Bank of Japan Intervention," often used in newspapers and other news media, might therefore be misleading (for an international comparison of foreign exchange intervention systems, please refer to the appendix).




1 The Foreign Exchange and Foreign Trade Law stipulates that the "Minister of Finance shall endeavor to stabilize the external value of the yen through foreign exchange trading and other measures" (Article 7, Section 3).

2 The Bank of Japan Law stipulates that the Bank buy and sell foreign exchange "as the agent of the government......,when its purpose is to stabilize the exchange rate of the national currency" (Article 40, Section 2). The Foreign Exchange Fund Special Account Law stipulates that the Minister of Finance may entrust operations involving the Foreign Exchange Fund that are stipulated in the Article 5 to the Bank of Japan (Article 6, Section 1).

B. Types of Foreign Exchange Intervention

Foreign exchange interventions are usually conducted in the Tokyo market. However, as most of the trading shifts to European markets after around 5:00 p.m. JST and then to the New York market, in cases where it is considered necessary to intervene during these hours, the Bank of Japan, as the agent of the Minister of Finance, requests foreign monetary authorities to conduct interventions on behalf of the Bank ("entrustment intervention"). The final decision to use this method is made by the Minister of Finance. The details of the intervention including the amount, currency pair, and method of intervention are also determined by the Minister. The funds necessary for intervention come from the Foreign Exchange Fund Special Account (explained later) irrespective of the market where the interventions are conducted.3 Similarly, when foreign monetary authorities need to intervene in the Tokyo market, the Bank can conduct interventions on their behalf upon request ("reverse-entrustment intervention").4

There are cases where two or more monetary authorities implement intervention jointly by using their own funds at the same time or in succession. This is called "coordinated intervention."




3 "Entrustment intervention" means intervention that is conducted in overseas markets with funds of the Japanese authorities. It is different from the intervention that is conducted in overseas markets with funds of respective foreign monetary authorities.

4 The funds of foreign monetary authorities are used in this kind of intervention.

C. Purpose of Foreign Exchange Intervention

The Foreign Exchange and Foreign Trade Law stipulates that the Minister of Finance shall endeavor to stabilize the external value of the yen by taking necessary measures including foreign exchange transactions.

Introduction

Since the introduction of a floating exchange rate system in February 1973, the Japanese economy has experienced large fluctuations in foreign exchange rates, with the yen on a long rising trend. In order to mitigate the negative influence of such fluctuations on the Japanese economy, foreign exchange market interventions (hereafter "foreign exchange interventions" or simply "interventions") have been conducted from time to time. Although, these interventions have occasionally been reported in newspapers and other news media, the actual operational procedures seem not to be well understood. This article will therefore briefly explain the basics of foreign exchange intervention, focusing on the practical side.

The next section begins with the definition of foreign exchange intervention and goes on to outline its legal status. Section III explains the operation of intervention, including the decision-making procedures. The last section deals with the funding and foreign exchange reserve management that accompany foreign exchange intervention.

Outline of the Bank of Japan's Foreign Exchange Intervention Operations

Bank of Japan
Financial Markets Department
Foreign Exchange Division

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Market Commentary Australia

The Australian dollar closed the week at a near 14-month low as well, as the liquidation of both commodities and carry trades continues. Any recovery should be only temporary.

Australian manufacturing improved 0.2 points to 47.2 in September from August, when it gained 0.1 points, according to the Australian Industry Group and PricewaterhouseCoopers. But it remains below the key 50 mark.

Surging exports of coal and iron ore boosted Australia's trade balance from a deficit of A$697 million in July to the second-biggest surplus on record A$1.36 billion in August.

Market Commentary Switzerland

The dollar/Swiss franc rallied sharply last week but not as much as dollar/euro.

The Swiss PMI fell to 47.8 in September from 52.5 in August.

Market Commentary Canada

The Canadian dollar closed the week at a near 14-month low, amid widespread liquidation of both commodities and carry trades. Any recovery should be temporary.

Canada’s economy grew a mammoth 0.7 percent in July, due to a surge in crude oil and natural gas production from June’s + 0.1 percent.

Market Commentary The UK

The pound sank as well under the weight of the credit crunch, housing problems and slowing economy. But it fared better than the euro.

The Bank of England’s measure of mortgage approvals fell to a new record low of 32,000 in August from 33,000 in July, and this is 75 percent below their peak. The crisis continues, as expected.


Not exactly unexpectedly, the net balance of lenders reporting a decline in the availability of secured credit to households was 39 percent in the three months to September. This was slightly better than the 47 percent fall reported in the three months to June.


Also, the Nationwide House prices contracted 1.7 percent in Septemberon top of -1.9 percent in August. On a yearly basis they fell 12.4 percent from -10.5 percent.

The current account deficit widened to 11 billion pounds, the largest in three quarters.

The manufacturing PMI fell to 41 in September from 45.3 the previous month, the lowest since the report began in January 1992, services PMI contacted to 46 in September, the lowest since the gauge began in 1996, from 49.2 in August, and the PMI construction fell to 38.8 in September from 40.5 in August.

The gross domestic product was unrevised at flat in the second quarter but was revised upward to 1.5 percent on a yearly basis from the previous estimate of 1.4 percent. In addition, services grew 0.2 percent from the first quarter, the weakest pace since 1995.

To make a long story short, the UK is probably already in its first recession since 1991, so the BoE must cut interest rates.

Market Commentary Japan

The dollar/Japanese yen remains the odd major pair out, and its lack of direction should continue. Yen crosses should help with direction.

Japanese retail trade rose to +0.7 percent in August from +0.1 percent in July, but slowed to 0.7 percent on a yearly basis from 2.0 percent.

That was the exception to the rule, as the rest of the economic data was atrocious.

Industrial production contracted 3.5 percent in August, the fastest pace in at least five years, after expanding 1.3 percent in July, while the unemployment rate rose to a two-year high of 4.2 percent from 4.0 percent previously and household spending contracted 4 percent, the most since September 2006, after -0.5 percent previously.




Housing starts for 53.6 percent in August on the year from 19.0 percent previously.

Construction orders contracted 0.3 percent in August on an annual basis from +42.3 percent in July.

The index of small business confidence slipped to 40.2 in September from 41.4 previously.

On this milieu, the Tankan index of confidence among big makers of cars and electronics fell to -3 in the third quarter from 5 in the second quarter. This is the first time that pessimists outnumbered optimists since 2003.

Market Commentary The Eurozone

The euro suffered colossal losses, as long liquidation has been taking its toll. The money markets in the Eurozone remain basically frozen, and the 3-month euro interbank rates climbing to a record high. The financial crisis spread further in Europe last week, and Fortis was rescued by a 11.2 billion euros package from the governments of Belgium, the Netherlands and Luxembourg. The troubles are piling high and fast.

The Eurozone PPI contracted 0.5 percent in August after expanding 1.3 percent in July, and decreased to 8.5 percent on the year from 9.2 percent. On this milieu, ECB head Trichet sounded confusing (sort of standard for central banks heads): risks for future growth to the downside, but no cutting of borrowing costs. With the Eurozone economy weakening, this talk is euro bearish.

The Eurozone services confidence index was flat in September 0 from 3 in August, the consumer confidence was stable at –19, the industrial confidence worsened to -12 from –10, the business climate indicator to -0.79 from -0.33, and the economic confidence to 87.7 from 88.8.

Meanwhile, the Eurozone retail PMI fell to 46.2 in September from 47.7 in August.

But the Eurozone PMI services managed to edge up to 48.4 in September from 48.2 in August. On an individual basis, the German PMI rose to 50.2 from 49.3, while the French PMI slipped to 50.1 from 50.4.

The Eurozone retail sales rose 0.3 percent in August but contracted 1.8 percent on the year. That monthly strength won’t last, as the regional economy is going down the drain.

German unemployment fell by 29,000 to 3.18 million in September after falling 40,000 in August. The ILO jobless rate was 7.2 percent, down from 7.3 percent in July. It is 7.3 percent in France it and 4 percent in Japan.


German retail sales expanded 3.1 percent in August after contracting an upwardly revised -1.0 percent in July. That number is too exotic, so it should be reversed next month. On the year, sales sank 3.0 percent from 0.6 percent previously.


The Eurozone unemployment rate climbed up to 7.5 percent in August from 7.4 percent in July, economic slowdown is spreading.



The final Eurozone PMI came in at 45.0 in September from 45.3 previously. On an individual basis, the German report fell to 47.4 from 48.1 and the French PMI to 43.0 from 43.6.


The EurozoneCPI probably peaked in July at a record 4.1 percent annual basis, after the August and September preliminary reports came in at 3.8 percent and then 3.6 percent, respectively.

Along the same lines, French PPI fell 0.5 percent in August from 0.7 percent in July, and slipped to 6.9 percent from 7.7 percent on a yearly basis.

Also, Italian PPI fell 0.2 percent in August from 0.8 percent previously and to 8.2 percent from 8.7 percent on the year.

Market Commentary United States

All in not well on our financial body. The organs seem to be in satisfactory condition, but the blood is not really circulating. The rapid changes of fortunes among the top firms did not bring a solution to the crisis, but created a short-term period of grace. But it’s grace under fire. The Federal Reserve's lending surged by a record $285 billion last week, and discount window borrowings rose $10.2 billion to $49.5 billion, as the financial crisis has been worsening.

The dollar exploded higher against the European currencies, initially after the House of Representatives unexpectedly failed to ratify the Bush administration's $700 billion TARP to rescue banks, and then on expectations that the House will actually pass the TARP by the end of the week. But it edged slightly lower on Friday after the House of Representatives (finally) approved the $700 billion TARP in a 263-171 vote. The revised plan is expected to thaw the frozen credit markets, but the traders doubt it will fail to prevent an economic recession.

We are not alone in this historical crisis. The European banking system is also under fire.

The acceleration of the downturn in Europe and the lack of liquidity underpinned demand for dollars. French President Sarkozy said the France is basically in recession. The fallout from the failed initial $700 billion bailout for Wall Street accelerated the financial crisis, which spilled over Europe (B&B in the UK, Fortis in Benelux, and West LB in Germany). Germany struggled to rescue lender Hypo Real Estate, and Ireland promised to guarantee all bank deposits. But the 300 billion euros Euro-TARP proposed by France was promptly torpedoed by Germany. EU governments to breach deficit limits, saying the financial crisis was so severe they could waive their usual strict application of budget rules.

It was the first time the EU appeared ready to invoke a 2005 clause that allows countries to bend the rules laid down in the Stability and Growth Pact if they fall victim to exceptional events outside their control.

Another week, another big name gone from the US financial roster– this time, Wachovia was initially morphed into Citigroup, just to switch out on Friday and merge with Wells Fargo, outside the realm of the FDIC. But the high-stake drama continues; Citigroup won a court order late on Saturday blocking Wells Fargo from buying Wachovia Corp until the court rules otherwise.

Surprisingly, the US jobless data, horrible as it was, only mattered for about 60 pips of nervous trading. It’s gotten so bad that this key report was put on the back burner, as in “what did you expect?” While the number might have been skewed by the tropical storms down south, don’t hope for an improvement – the opposite will happen. Payrolls fell by a more than expected 159,000 in September after a, upwardly revised 73,000 decline (from –84,000) in August and downwardly revised –67,000 from –60,000 in July. The jobless rate remained at 6.1 percent but only because it surged 0.4 percent a month earlier.


Initial jobless claims increased 1,000 to 497,000 in the week that ended September 27 from an upwardly revised (as nearly 100% of the times) 496,000 (initially 493,000) the prior week. What happened to the “exceptionally” high number from the previous week? Haven’t the tropical storms passed already? Let’s not kid ourselves, the total number of people collecting benefits is the highest since 2003.


For all it’s worth, the ADP's decline of 8,000 in private employment in September from 37,000 the month before was modest.

Consumer spending was flat in August from a revised +0.1 percent in July. Personal income rose by 0.5 percent after a revised 0.6 percent drop, the personal savings rate fell to 1 percent from 1.9 percent in July, while the disposable income fell by 0.9 percent after -.8 percent.


The Conference Board's confidence index increased to 59.8 September, a third consecutive increase, from 58.5 in August. That’s nice but irrelevant, since the survey was taken before the most recent financial meltdown.


In the same vein, the Chicago Purchasing Management index fell to 56.7 in September from 57.9 the prior month.


The ISM manufacturing index collapsed to 43.5 in September from 49.9 in August. This is a recessionary level as the credit crunch is strangulating the economy. Looking into details, new orders fell to 38.8 from 48.3, production to 40.8 from 52.1, and employment to 41.8 from 49.7.


Construction spending was flat in August after falling 1.4 percent in July.

Factory goods orders contracted 4 percent in August, as orders for motor vehicles succumbed 10.6 percent, the most since December 2002.


Elsewhere, the S&P/Case-Shiller 20 city index fell 0.9 percent in July and 16.3 percent on the year.

Here are some of the most frequently asked questions...

How much money do I need to start trading?
Depending on the amount your broker charges you for commission, you can start trading with an amount as low as $2,000. Remember that starting out with low trading capital may put you at disadvantage because you will only be able to trade in small share lot sizes.

I live in Europe, will your trading approach work here?
Although our customer base is 85% North American a great number of people from countries such as United Kingdom, Germany, Holland, Spain, Italy, Singapore, Egypt, Australia, New Zealand ... have been able to successfully implement our strategies. Concepts and techniques that are explained in the course work from anywhere in the world. The course has been designed to be useful in every country .

What does the "Part-Time Trading for Full-Time Profits" include?
The "Part-Time Trading for Full Time Profits"TM covers all aspects of stock trading and it includes a proven strategy that is explained with real life charts and examples. Will I be required to buy any additional products from your company in order to be able to implement your strategy?Absolutely not. We are not affiliated in any way with any software provider, brokerage house or any other investment services firm.

Can I use the strategy at stock markets other than NASDAQ and NYSE?
In the course examples we use NASDAQ and NYSE stocks, however our strategy can be applied to any other liquid stock market in the world. Do I need any specific academic background in order to be successful? Not at all. Successful active traders and daytraders come from many different professions. Very often, people who are very successful at school or at their businesses wrongly believe that their success will be automatically translated at stock trading. It is usually not the case. Active trading has its own learning pace and our strategy will prepare you to enter this exciting field.

What kind of Internet connection and computer hardware do I need?Although it is possible to successfully trade using regular phone line connection, we would recommend you to use either Cable or DSL Internet service if it is available in your area.

How to avoid common mistakes in Stock market

There IS money to be made in the Stock market. But it is securely locked up in a vault with one of the thickest doors you will ever find. The key to opening that vault is to know when to enter a trade and when to exit.

True, you also have to conquer the six common reasons for failure:

Poor understanding and knowledge
Undercapitalization
Unrealistic expectations
Lack of patience
Lack of discipline
High risk aversion

You can have an excellent understanding of financial markets, realistic expectations, plenty of capital and nerves of steel and still fail, because you need a tested and proven entry / exit system. You need to know when to get in, when to get out, and you need to understand why.

Why do we keep repeating this?

Because it's important. In fact this is the only thing that is stopping you from cleaning up the market and pushing money into your account until it is almost bursting at the seams!
Look, if you fail in the markets you only have yourself to blame.
There are no forces out there controlling prices, like you might think after watching too many Oliver Stone movies. There's no "source" you must get closer to in order to become a winning trader.

Although, don't get me wrong. Some people do profit from your losses. They are:

Your dealer/broker
Your ISP and software vendors

Traders who are better than you.

You are clever and ambitious. However, we have to tell you that the Stock market is so huge, and market forces are so complex and strong, that most players get churned. Not even you can make it alone in that environment. You simply are not smart enough to claw your way to Stock profits without some help. This is our experience, after watching many small traders get eaten by the big sharks.
But we can help you, because we have developed a strategy that works for people exactly like you. Whether you're a small trader with some experience. Or a hesitant onlooker with just a few thousand dollars to invest.
We call it the "Part-Time Trading for Full-Time Profits"™ and you have not seen anything like it. It's unique. It is solid gold!
Our trading strategy is so simple and so elegant it will astound you -- yet rests on a sophisticated analysis of human response to risk and change that has stood our most rigorous testing.
In clear, easy steps it shows you how to pick the best points to get in and a totally new way of picking exactly when to get out.
It is original. Not a re-mix of existing trading tactics.
There is nothing like it. You will not find it anywhere else.
It is simple enough for anyone to learn.
Its accuracy will astound you. We've been extensively testing and tracking the strategy, and it has never failed us.
You can start with as little as $2000.
This strategy teaches traders to be winners.
More than anything, our strategy is strikingly simple.
Simplicity
It has to be, of course. You don't want to have to attempt to understand the sophisticated, complex trading systems employed by the major corporate investors, with their teams of fully-resourced professionals using highly developed automated tracking networks and advanced mathematical formulas spread through several floors of their head office. Neither do you want to have to spend on an expensive, top-of-the-line computer stuffed with proprietary trading software.
Rather, you want a simple strategy which you can understand and quickly implement, and yet gets the same the trading results as those coming out from the corporate office tower blocks. Our strategy delivers the results, yet is striking in its simplicity and elegance.
Next, our strategy is efficient.

forex trading Secrets

Are you a FOREX Day Trader?

Looking for invaluable trading secrets and a FOREX trading strategy to help you become successful in the market?
Help Has Arrived!

Myfxsecrets, is excited to offer investors an opportunity to gain a wealth of FOREX knowledge, and to offer a service for affiliates to link to the FOREX community through audio transmission.Myfxsecrets is a FOREX Traders Haven!Myfxsecrets has envisioned a median that centralizes the FOREX community. Now, you can obtain a variety of ideas, strategies and knowledge, to assist you in your daily trading… it really is the community helping the community.Myfxsecrets offers a comprehensive information packet. The packet covers, the driving force behind the markets’ volatility, the introduction to the FMT, how to locate a trustworthy broker, a step by step breakdown of a successful trading strategy, that when implemented correctly can yield a consistent return, and more! Myfxsecrets believes in minimal, consistent gains; as opposed to most stratergies that promises large returns, but requires an extremely riskier form of investing.
Hi, I’m the Founder and CEO of Myfxsecrets. As a former FOREX broker and current investor, I've exhausted multiple FOREX theories. I have investigated many FOREX program's and software package's. I finally came to the realization that everyone was selling the same information and none of it worked. Sound familiar?

That is exactly why I created this packet and strategy. I am sure you’ve heard the stories about traders who took a few thousand dollars and turned it into millions. So, then you watched a couple of infomercials and took a couple of seminars and now you think you have what it takes to become rich over night. Before we go any further, I want you to know that I understand your frustration. I’ve heard the same stories and I’ve used the same software, and you know what… It’s bogus. But behind these myths some truths do exist. Throughout this unprecedented packet I will reveal to you the secrets behind these myths. I am going to equip you with all the necessary ammo needed to be successful in the FOREX Market.

How to Get Started In FOREX Trading

You may have been hearing about the foreign exchange market (FOREX) and the investment advantages it offers. You would like to try it out, but don't know where to start. This short guide will give you the basics in FOREX and tell you what you need to participate in this fast growing field.

Foreign exchange used to be limited to large players such as national banks and multi-national corporations. In the 1980's the rules were revised to allow smaller investors to participate using margin accounts. Margin accounts are the reason why FOREX trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment.

FOREX is not simple, however, and education is needed to make wise investment decisions. Although it is relatively easy to start trading on the FOREX, there are risks involved, so finding out as much as possible about the market is a good move for any beginner.

FOREX traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

Opening a FOREX account is as simple as filling out a form and providing the necessary ID. The form will include a margin agreement that states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the broker – most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading.

Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage – using borrowed money – varies with accounts. High leverage gives you more money to trade for a given investment.

HOWEVER – beginner traders are advised get accustomed to FOREX by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are at provided by most FOREX brokers.

Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new FOREX investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits.
Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all FOREX brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites.

Almost every broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast Internet connection, and an up-to-date operating system such as Windows XP. Once your account is set up, you can access it from any computer – just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone.

Trades are commission free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the 'spread' – the difference between bid and ask prices.

Foreign exchange market

Features:- •Market where foreign currencies are traded
¨Round the clock market
¨Global market
¨Large volume of transactions

Participants:- ¨Individuals: tourists, migrants
¨Firms: importers and exporters
¨Banks: short position, long position, square position
¨Governments/ monetary authorities: market intervention
¨International agencies: lending
¨Two tier market:
–First tier: ultimate customer and banker
–Second tier: between banks

Classification of participants:-
–Non-banking entitities: business transactions and hedging
¨Banks: foreign exchange dealers
¨Arbitrageurs: profit seeking from variations in rates in different markets
¨Speculators: profit seeking from movements in exchange rates

Types of markets:-
¨Spot market
¨Forward market
¨Derivatives markets: currency futures and options

Limiting Risk in your FOREX currency trading system

FOREX trading can be risky, but there are ways to limit risk and financial exposure. Every FOREX trader should have a trading strategy – knowing when to enter and exit the market and what kind of movements to expect. Developing strategies requires education - the key to limiting FOREX risk. At all times follow the basic rule: Do not place money in the FOREX that you cannot afford to lose.

Every FOREX trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted. There is a vast amount of information on FOREX trading available both on the Internet and in print. If you want to be successful at FOREX, know what you are doing.
Even the most knowledgeable traders, however, can't predict with absolute certainty how the market will behave. For this reason, every FOREX transaction should take advantage of available tools designed to minimize loss. Stop-loss orders are the most common ways of minimizing risk when placing an entry order. A stop-loss order contains instructions to exit your position if the currency price reaches a certain point. If you take a long position (expecting the price to rise) you would place a stop loss order below current market price.

If you take a short position (expecting the price to fall) you would place a stop loss order above current market price.
As an example, if you take a short position on USD/CDN it means you expect the US dollar to fall against the Canadian dollar. The quote is USD/CDN 1.2138/43 - you can sell US$1 for 1.2138 CDN dollars or sell 1.2143 CDN dollars for US$1.

You place an order like this:
Sell USD: 1 standard lot USD/CDN @ 1.2138 = $121,380 CDN Pip Value: 1 pip = $10 Stop-Loss: 1.2148 Margin: $1,000 (1%)
You are selling US$100,000 and buying CDN$121,380. Your stop loss order will be executed if the dollar goes above 1.2148, in which case you will lose $100.
However, USD/CDN falls to 1.2118/23. You can now sell $1 US for 1.2118 CDN or sell 1.2123 CDN for $1 US.

Because you entered the transaction by selling US dollars (buying short), you must now buy back US dollars and sell CDN dollars to realize your profit.
You buy back US$100,000 at the current USD/CDN rate of 1.2123 for a cost of 121,223 CDN. Since you originally sold them for CDN$121,380 you made a profit of $157 Canadian dollars or US$129.51 (157 divided by the current exchange rate of 1.2123).

List of risks to FOREX trading

Assuming you are dealing with a reputable broker, there are still risks to FOREX trading. Transactions are subject to unexpected rate changes, volatile markets and political events.

1. Exchange Rate Risk – refers to the fluctuations in currency prices over a trading period. Prices can fall rapidly resulting in substantial losses unless stop loss orders are used when trading FOREX. Stop loss orders specify that the open position should be closed if currency prices pass a predetermined level. Stop loss orders can be used in conjunction with limit orders to automate FOREX trading – limit orders specify an open position should be closed at a specified profit target.
2. Interest Rate Risk – can result from discrepancies between the interest rates in the two countries represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction.
3. Credit Risk – is the possibility that one party in a FOREX transaction may not honor their debt when the deal is closed. This may happen when a bank or financial institution declares insolvency. Credit risk is minimized by dealing on regulated exchanges which require members to be monitored for credit worthiness.
4. Country Risk – is associated with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with 'exotic' currencies than with major currencies that allow the free trading of their currency.

Risks of FOREX Trading

Every FOREX currency trading system has inherent risks
Despite the claims you may see on some FOREX web sites, FOREX is not risk-free. You are trading with substantial sums of money and there is always a possibility that trades will go against you. There are several trading tools, however, that can minimize your risk, and with caution, and above all education, the FOREX trader can learn how to trade profitably and while minimizing losses.

FOREX scams were fairly common a few years ago. The industry has cleaned up considerably since then, but you still need to exercise caution when signing up with a FOREX broker. Do some background checking – reputable FOREX brokers will be associated with large financial institutions like banks or insurance companies and they will be registered with the proper government agencies. In the United States brokers should be registered with the Commodities Futures Trading Commission (CFTC) or a member of the National Futures Association (NFA). You can also check with your local Consumer Protection Bureau and the Better

Forex trading signal | Forex trading strategy | Currency trading | Forex

For more information about forex, currency trading, forex trading strategy, forex trading signal, forex alerts, forex strategy system forex signal visit: www.official-forex-trading-system.com Foreign exchange trading involves buying and selling different currencies. It works on the theory that is similar with share market. As we know that to make the profit, you have to buy at lower price and sell at higher price, or we can also sell at higher price first and buy at lower price.
More: continued here

What is Online Forex Trading ?

Forex trading strategies are the key to successful forex trading or online currency trading. A knowledge of these forex trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in forex trading.
More: continued here

What is Forex Trading ?

If domestic stock market fails to interest you any more, consider trying your trading skills in Forex. The forex or Foreign exchange is the ideal place for those traders who look for a little more adventure in their money making games.

Forex trading involves the trading in all sorts of world’s leading currencies. This type of trading refers to a simultaneous buying and selling of different currencies. The forex trading always involves the combination of two or more currency; that is you have to trade one currency in comparison to the other. The currency combination used in this international currency trade is known by the term, ‘cross’. As for example, the Euro/US Dollar, or the GB Pound/Japanese Yen and you can deal in literally limitless combinations. However, the most commonly traded currencies belong to the group of “majors” like EURUSD , USDJPY , USDCHF and GBPUSD .

Global Forex trading provides the investors and financial institutions a new financial playground in the backdrop of a volatile currency environment in this age of globalization and free market. With the base camps in the topnotch cities like New York, Sydney, Tokyo, London, and Frankfurt, the Forex market is a kind of OTC or over the counter market where trading takes place directly between the two counterparts. Unlike the national stock markets, Forex is not under the regulation of a central exchange; it is operated on the “interbank” market. You can trade in this 24 hour market over telephone, or over the global electronic networks. These are some of the reasons behind this enormous growth.
At the core level, online foreign exchange trading can be defined as the exchanging of one currency for another. It is a kind of ’spread ‘ trade where buying of one currency must be followed by the sale of the other. You have to buy one currency and sell another simultaneously.
The online Forex trading system is described as an ergonomic process. A seasoned trader has great intuitive abilities. You can perform all the online trading functions from a single screen including placing a trade, leaving an order, position and order management, and margin analysis.
The foreign exchange market traditionally belonged to such big shots as banks, brokers and big export Houses. But picture has drastically changed with the invasion of the market by the internet. Nowadays, more and more common people are participating in the trading in Forex market. Are you confident about your trading skills? Then you can also join the band wagon of the big international investors. You will get all the necessary resources and information right in the internet. Being informed is important as side by side of great money making potentials, the functioning of foreign exchange market is characterized by volatility, unpredictability and risk factors.

Trading in the foreign currency proves to be exciting and in most of the cases profitable. Those who become enormously successful in this field have the unique ability of locating the risk factors. With the all invasive growth of internet the monopoly of big investors in the forex market has ended. But before stepping in this volatile world of foreign currency trading a small time investor should always keep in mind the implications and pitfalls that this market is entailed with.

Learn Forex Trading Basics and Boost Your Profits

Forex trading has been a common practice used by traders on Wall Street and around the world to supplement their income or ear a full-time income. With increasing global trade there is an increased desire to learn forex trading not just on Wall Street but on streets from Dallal Street in Mumbai, India to Rua XV de Novembro, in Sao Paolo, Brazil. Foreign trade generates capital flow due to trade in goods, services, commodities and investments.

Much of the demand in Forex is also from speculative trading. Various factors such as weather, national and international and economic policies affect the trade imbalances. Speculators monitoring these policy changes and weather conditions predict the price of foreign currency in the future and engage in speculative trading. It has been estimated that nearly $3 trillion or more is exchanged in all currencies on any given day trading the per transaction amount can be as high as $10 million. Larger deals are also frequently done. The path to learning and leveraging Forex trading techniques has a well defined beginning but is long and continuous process.

Forex trading usually can be done as a spot or forward delivery. On an average actual currencies are exchanged in two business days for spot trading. In contrast, forward transactions involve a delivery date in the future, sometimes from a month to a year in the future or more. Since forward transactions involve dealing with contracts in the future typically banks provide protection on the value of the projected flows of foreign currency by preventing exchange rate instability.

Stocks There automated forex

The two primary approaches forex broker of analyzing Forex markets are those backtesting forex software of countries with stable governments, reputable Most of the time margin calls occur when money management is not properly applied. A margin call occurs when the balance of the trading account forex signals line falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this online forex trading broker system moment, the specialist sells off (or buys back in the forex software lewiss of impecunious positions) all your trades, leaving the trader “theoretically” with the maintenance margin. This takes us to our next poor credit home equity refinance important term. If the trade goes against our trader, the position is to be closed by the broker. Of course it is not advisable to open a basis with such limited richards microfit stocks funds in our trading balance. Margin Trading (Leverage) : In contrast with other financial markets where finance you require the full deposit converting euro money into money of the amount traded, in the Forex market you require only 1/400 or .25% in balance to open a position (plus learn forex trading the floating gains/losses.) Most brokers forex software offer 100:1, where every trader requires 1% in balance or $1,000 USD.

One can learn to trade by creating an online Forex Account and simple forex trading system begin by using a learning remains without Online Forex trading has the potential of being extremely lucrative. If there automated forex signals is a sharp rise in the prime interest rate a Forex trader may take a position based on that information. While variables such as the economy, the forex signals free countries prime interest rates, war, poverty honest, and other factors are taken into forex signals account. The Currency exchange rates for these and all other currencies are driven finance degree by a number of factors and require stocks investors to be armed with a good deal of insight, up forex signals chart to the minute info and an aptitude for crystal-ball gazing. the US dollar, the Japanese Yen, the Euro, UK Douglas, citizens finance madison the Swiss stocks Franc and Canadian and Australian dollars. In practice this means that in excess of 80 per cent of transactions each day are in the major currencies, i.e. Generally, the most commonly traded currencies in the Forex forex trading markets are those of countries with stable governments, reputable banks and low inflation.

Online Forex Trading Systems

The bottom line with any forex trading system is, does it work and will it give you monetary success? Finding the best forex trading system is usually the best way for a trader to learn how to use the Forex and achieve monetary success. If you only rely on experience and instinct, you may not likely succeed in forex trading.

Therefore with an education in forex trading, you will be better equipped to handle the demands and the stress that comes along with the trade. While many of the systems on the market that claim to teach an effective forex trading system are very complicated, the best forex system should be commendably simple.

It should be simple enough to both understand and use yet effective enough to produce results that would keep even the more experienced forex trader motivated. Hence, it should not be viewed as a system for beginners only.

The developers of the 5EMA Forex System explain that there are many advantages to trading in the forex market. Although there are many things to learn at first, with perseverance, forex trading can be rewarding to many.

The forex trading market is the most volatile in the world and therefore can be a big risk. Some of the features of the 5EMA Forex System that make it enticing are usability, flexibility and versatility. We will discuss each of the features briefly to show you why this forex trading system is the ultimate forex trading system.

Why can you say that this accurate forex trading system has usability? As stated earlier, anyone can learn to gain maximum benefits or profits from forex trading, as long you are in the right frame-of-mind, and you learn to trust the best forex system trading tactics and techniques. This forex day trading system is easy to implement, as the complete user guide is worded with no technical jargon, and you can readily understand what is being relayed to you.

The included software with templates is also user-friendly, and you will be able to easily manage with these as your forex trading tools. Also, this day forex signal system trading method is said to be flexible because it was developed and designed for the swing-trader or the day-trader.

It is safe to say that this forex trading system is versatile, because aside from catering to different types of forex traders, the system can also work well for persons who do not have the time to monitor trends all day. The 5EMA Forex System can also view long term signals to help the forex trader decide ahead, and to allow him to keep his normal job, while still being a forex trader in his part time.

With this forex trading system you can: know the classification of forex trading markets, find out who the big players are in this game, and how significant their moves can be, plus understand what the main concepts of the forex market are. Also, in sections of the trading system guide, you will learn the important prerequisites that you need to have before jumping in and starting to trade. You will also learn what types of methods and analytical tools that are used by professional forex traders, and how to apply these skills on your own.

Finally, this forex trading system is explained in detail, including, the rules of trading, screenshots and graphs of sample trends and how to interpret them. You will learn the terms commonly used by forex traders, as well as the main rules of forex trading.

These are some of the reasons why this is one of the best forex trading systems online. And as the experienced forex traders have stressed, keeping the rules in mind will not only help you with your trading, but will allow you to reap maximum benefits in the long run.

Online Currency Trading

The currency of a nation is of great importance to the financial growth of that country. Every currency has a value relative to the other currencies on the planet. Thus currency trading can be described as the trade that uses the purchase and sale of large quantities of currency to leverage the shifts in relative value into profit.

Also it can be stated that currency trading provides really good opportunities and percentage returns, which is virtually impossible in a low leverage market.

Until recently, the currency trading market was quiet closed to the small investors. Banking conglomerates and large multinationals were the main movers of this market place. But in the recent years, however, new technologies have opened the doors to investors of all stripes to participation in the currency trading.

Thus making it difficult to miss the enormous benefit of this 'new' market for the individual investors. Higher returns with lower risk, given the same amount of market knowledge have a very small downside.

Why Currency Trading:

There are two reasons the relative value of a currency fluctuates. The first is because of a real market. The outside investors or visitors, who wish to buy things within a country, are forced to convert their domestic currency into the currency of the country they are buying within.

In similar terms, as money leaves the country, people must sell their currency for the foreign currency they will need to spend or invest abroad. Thus currency trading comes into picture.

The second force for currency fluctuation is speculation for currency trading. As investors feel a given currency will act strongly or weakly, they will buy or sell accordingly. This speculation can have drastic consequences on a national currency and consequently on a country's economy.

To understand better we can take the help of an example. During the East Asia Crisis in 1997, as nations in Asia began facing economic downturns, speculators used currency trading to realize enormous profits and in the view of many analysts, it helped to exacerbate the problem.

Currency Trading, in many aspects, has many real benefits over equity trading like the stock exchange. The spreads for currency trading are extremely low, making the cost to a trader very low as well.

The volatility of the currency market is extremely high, which means that a trader dealing with currency trading can generate enormous return on a given exchange. The ratio of volatility to spread can be said to be approximately 500:1 for the Currency Trading market, as compared to 100:1 for even the most ideal of stocks.

The Internet has made currency trading possible for ordinary people to trade currencies right from the comfort of their home. Initially the banks and financial brokers performed currency trading only. Online currency trading enjoys the best liquidity in the world and the trades are worth more than that on several stock exchanges of the world put together.

Actually, the orders for currency trading on the online source surpass that of the bond and stock markets put together. The main reason for currency trading by the means of the Internet is hedging for speculative purposes where people make profits worth billions of dollars in a matter of a few minutes or hours. Moreover, the currency trading market operates continuously throughout the world except on holidays.

Always keep in mind that as a currency trader, you must buy a currency whose value can rise and sell the currency, which can depreciate. You must keep purchasing for long intervals, that is buy at a low price and then sell the same at a higher price. Having a short position implies selling a currency that can fall and then purchasing it at a lower price. Most trading is speculative bases on events that can happen.

However, political developments also influence the trend of the currency markets. As a wise trader in currency trading, you must study the macro and micro economic factors that influence currency markets across the world. This includes a detailed study and analysis of the inflation rate, the rather fiscal and monetary policies, and the interest rates of that particular country. Thus currency trading is an important aspect of the nation’s financial growth.

Online Day Trading for Beginners

Up until recently, “day trading” was a practice that was shunned by Wall Street’s big boys. Nowadays, it's become much more popular and is a common practice amongst folks of all ages and financial trading backgrounds. Day trading, as the name implies, is when you buy and sell financial investments during the day and settle all your outstanding positions prior to the market closing. The main goal is to make fast profits from any price increases or decreases that happen during a single day of trading.

When the stock market closes down, any news that is put out later on can bear on the opening price of a financial instrument on the next trading day. From a strategical standpoint, day trading brings down the risk of incurring a loss overnight due to differences between an opening price and the previous day’s ending price. Stocks, options, futures, and currencies are the most frequently day traded financial instruments.

The most significant thing that a beginner needs to know about day trading is that while it can be highly profitable, it's also very risky. Modern statistics indicate that 70-90% of all day traders incur losses in their trades. These statistics are nearly as high as those affiliated with losses from gambling, and are a clear-cut indication that day trading isn't meant for amateurs who hope to “strike it rich” in a short period of time. Really, there are very few individual investors who have the time, money, and personality required to deal with the losses of day trading.

If you're seriously thinking about becoming a day trader, here is some basic advice about the practice that could help you along:

Funds needed. According to U.S. law, you'll need at the least $25,000 to day trade stocks (more than 8 roundtrip trades in a single calendar week). To day trade currencies, you only need a few hundred bucks. Because of the smaller startup capital requirement, it might be wise to start with trading currencies if you're a novice. Additionally, trading currencies is also a great deal simpler than trading stocks since you only have a fixed amount of currencies that you can decide to trade.

Sustaining losses. The majority of new day traders will incur terrible losses in their first few months. That's how come so many of them give up before they even begin to make money. Once you embark upon day trading, be sure you only utilize money that you are able to lose. It's a very bad idea to use money that's needed for things such as your mortgage payments, your life insurance policy, or your every day living expenses.

Limiting your losses. Among the biggest causes why day traders lose money is because they don't know how to restrict their losses. There's no particular formula on when and how to limit your losses, but perhaps this scenario could help you interpret what normally happens. An unskilled day trader purchases a stock and the price of the stock instantly begins falling. The day trader chooses to wait because he is confident the price will come back up again. The stock’s price continues to go down during the day, and the day trader kicks himself for not having cut his losses sooner. Upon market closing time, he assures himself he has no option but to hold on to the stock. In the evening, bad news about the stock is brought out, making the opening price of the stock to spiral down even more. Our day trader is now a good deal less wealthy than he would have been had he cut his losses when the stock first started dropping.

Day trading is not the same thing as investing. Day traders don't invest their money in financial instruments, at least not in the classical sense. They commonly check for stocks prices that are moving up or down. Their aim is to ride the wave, and settle their position before the trend begins to go the other way. You're not investing cash in a company because you believe it will produce value.

Day trading is not a hobby. Professional day traders sit down at their computers the entire day and watch for any price movements. There is nothing relaxing or fun about watching price fluctuations and ticker quotes. If you do not have the patience for this, then it's probably better you find another way of making extra money.

Becoming a prosperous day trader is by no means effortless, but it is possible. This advice was not intended to deter aspiring day traders in any way. But before you choose if this is the right direction to go, cautiously consider what has been written here. Day trading can be a tough business and you have to be prepared for it, both financially and mentally.

Larry Haywood is a stock market enthusiast, focusing on innovative and unique techniques for building up wealth via the stock market. For a limited time, you can claim the "Insider's Guide to Forex Trading" e-book absolutely free at my stock tips website.

Tips for Successful Forex Trading

Knowing how to trade in Forex is simply just not enough to be successful. In this largest and the most liquid financial market in the world, you need to have more than the knowledge and skills to be successful. You need to know about the different things involved in Forex to earn huge amounts of money.

Simply knowing how to trade Forex and about the major currencies traded, like the US dollar, the Japanese Yen, and others are just the basics. Knowing when to trade and what to trade is equally essential to be successful in Forex. Fore these you need to have a trading strategy. So, what exactly are the trading strategies involved in Forex? There are a number of money making strategies that you can use when trading in the Forex market.

If you use these strategies correctly, you will earn huge amounts of money in a very short time. Firstly, you have to realize that Forex trading is very different from stock trading. Therefore, strategies are also very different. The first strategy that you can use to earn a lot of money in the Forex market is the leverage Forex trading strategy. In leverage Forex trading strategy, it allows you, as an investor in the Forex market, to borrow money to increase your earning potential.

With this strategy, you can easily turn your money to 1:100 ratio. However, the risk involved can be great. This is why there are stop loss orders you can use to minimize the risk and also to minimize the loss. The leverage Forex trading strategy is one of the most commonly used strategy by Forex traders to maximize profits. In the stop loss order strategy, the Forex trader creates a predetermined point in the trade where the investor will not trade. As mentioned before, you can use this strategy to minimize risk and minimize loss. However, this strategy can also backfire to you, as the Forex trader. This is because you may run the risk of stopping your trades when the value of the currency goes higher than expected.

It is up to you to decide if you will be using this strategy or not.

These are some of the strategies you can use when trading in the Forex market.

Forex trading is a 24 hour market where you can trade anytime and anywhere you are. If you think that the Forex market conditions are good at a specific time, then you can trade at that specific time.

Also, the Forex market is the most liquid market in the world. This means that you can enter or exit the market anytime you wish to. This is to minimize the risk and there is also no daily trading limit.

Here are other tips that you should remember in order to earn money in the Forex market and be good in doing so:

• The first and the last ticks are usually the most expensive. So, for most traders, the rule of thumb is getting in late and get out early.

• When you are losing, you want to minimize the risk of losing more money. So, don't add money when you are losing.

• Select trades that move along with the trend. This can minimize the risk of losing money and maximize your chances of profits.

There are quite a few tools you can use when trading in the Forex market. One is the Forex charts. For the speculator, the chart is the most important tool that you can use to determine market trends and accurately predict the future value of the currency. Although it isn't actually 100% accurate, you can use the Forex charts as a guide to what's happening in the market.

You need to know how to read the different charts involved in the Forex market. There are daily charts, hourly charts, 15 minute charts and even 5 minute charts to get you closer to the action. You can compare each of the data in the chart to spot market trends and at the same time, spot potential money making trends.

These are some the strategies and tips that you should keep in mind in order to minimize the risks in Forex trading and maximize your earning potential. Depending on your skills and how you apply your strategies, you can really make a lot of money in the Forex market. However, to be a truly successful Forex trader, you need to accept the fact that you will sometimes lose money. Never get discouraged when you do. Analyze where you made your mistake, think of a solution to get back what you lost and continue trading.

Forex Trading Strategy: Channel Breakout

The Forex market, which is the largest exchange in the world, capitalizes upon certain trends to yield its traders profit.

A popular Forex trading strategy used in profitable Forex trading is commonly referred to as a channel breakout.

Channels in Forex Trading - Channels are lines that are created on a chart to show the range in which a currency has been trading over a certain amount of time. They are extremely easy to produce. By looking at the chart over a time period, you simply draw a line connecting the relative high point trading prices, and another line below it connecting the relative low point trading prices.

What you've done is produced a visualization of the trading range that has been occurring over the time period in question, for example six months.

Channel Breakout - When the price of a currency rises above the top channel line, this is an upwards channel break. Conversely, if the price of currency falls below the bottom channel line, this is a down side channel break.

Channel breakouts can and do occur on the upside and downside. Through proper Forex training in technical analysis, anyone can use this method to develop a successful currency trading strategy.

It is important to construct the channels properly, as not every crossing of the lines becomes a true breakout. If the channel lines are made improperly, you often see trading outside of this range only to come back inside.

That's why it is very important before anyone starts Forex trading to complete a thorough Forex education.

Managing Forex Channels Profitably - Once you get the knack of channels, you can start making significant profits. The important thing is to structure your trades with proper stops so that if you do get a false breakout signal, you have an acceptable loss or even perhaps a minimal gain.

You'll find that if you're on the right side of a true channel breakout, any of the small losses that you've accumulated will be rapidly wiped out, and you will be sitting on a nice large profit.

Every serious Forex trading investor uses channel breakouts. If you are considering taking part in investing in currency markets, you should take the time to get some Forex training in this strategy and other technical analysis techniques, which will develop the currency strategies that produce successful results.

Without putting time and effort on your part to fully understand the risks and rewards that any Forex trading strategy entails, you will not be able to achieve the results that you desire. Indeed, your profit is in your hands.

By: Andrew Daigle

Forex Trading Software

Do you need Forex trading software? Perhaps not, especially if you have all the time in the world, you can allocate hour upon hour to analyze the factors that can affect a single Forex trade with currency pairs, and you are satisfied with making as many as ONE trade per day, as well as not having the information readily at hand to let you know when to buy at the right time, or just as importantly, when to sell at the right time.

Without meaning to sound facetious, that is a pretty good description of what it is like for a Forex trader to attempt to assess and evaluate the truckloads of data that have an impact on a country's currency at any given point in time.

Almost regardless of how good you may be at Forex trading and how well you understand the Forex market, there is just not enough hours in the day anyway to make the most effective use of your time as a serious Forex trader if you do not employ technology and Forex software to help you.

When you are evaluating which of the many Forex trading software programs available, the first piece of advice is not to choose a package that locks you in to a particular Forex broker.

While the software may be good and meet all your needs, you still have a major "single point of failure" if that broker goes under or decides to close his doors for whatever reason. If the software is proprietary or locks you into that particular broker, you are hosed if that broker goes away.

One of the more obvious things to consider is the security and/or the encryption capabilities of the software. This is critically important, especially if you are using the type of Forex trading software that does the complete transaction on your behalf. You need to have this type of financial data encrypted to avoid the possibility that the transaction will be intercepted as it is transmitted to the Forex broker.

When you have chosen a program, start using it to become familiar with what it does, and just as importantly, what it does NOT do. Do not start making actual trades with it until you have learned the software well enough to understand what it is telling you or what it is advising you to do.

Become familiar with the different pieces of data that it is gathering for you and understand how it is making its evaluations and recommendations.

One of the things that you need to remember is that any Forex trading software is just another tool in your Forex trading toolbox. There is no single tool in that toolbox that is going to have all the answers for you.

Your job in becoming a successful Forex trader is to learn to get the inputs of all the necessary tools at your disposal and combine the information such that you can make intelligent and informed trades.

That still does not mean you will never make a losing trade, since even the most successful Forex traders make an occasional losing trade, but you will learn how to minimize your losses and above all, to maximize your gains and revenue.

Online Futures Trading - Advantages and Disadvantages

What Is Online Futures Trading? A futures contract is an agreement to buy or sell a commodity at a date in the future. Everything about a futures contract is standardized except its price. All of the terms under which the commodity or financial instrument is to be transferred are established before active trading begins, so neither side is hampered by ambiguity. The price for a futures contract is determined in the trading pit or on the electronic trading system of a futures exchange.

The internet now allows access to those electronic trading systems from anywhere in the world. This increases liquidity in those markets and makes them even more attractive to traders.

Trading on all futures exchanges takes place against a backdrop of statutory regulation and rules as laid down by each exchange and the Commodity Futures Trading Commission (CFTC). Regardless of whether your trading is executed within the trading pit or electronically, it is subject to the same rules, regulations and safeguards.

Advantages of online futures trading

Leverage. Futures operate on margin, meaning that to take a position only a fraction of the total value needs to be available in cash in the trading account.

Commission Costs. Electronically traded futures contracts require no human intervention to match buy and sell unlike a traditional futures pit. This means that commission costs can be cut dramatically, leading to significant savings for the frequent trader.

Liquidity. The involvement of speculators means that futures contracts are reasonably liquid. However, how liquid depends on the actual contract being traded. Electronically traded contracts, such as the e-mini's tend to be the most liquid whereas the pit traded commodities like corn, orange juice etc are not so readily available to the retail trader and are more expensive to trade in terms of commission and spread.

Ability to go short. Futures contracts can be sold as easily as they are bought enabling a trader to profit from falling markets as well as rising ones. There is no 'uptick rule' for example like there is with stocks. No 'Time Decay'. Options suffer from time decay because the closer they come to expiry the less time there is for the option to come into the money. Futures contracts do not suffer from this as they are not anticipating a particular strike price at expiry.

Automated trading. Electronic futures brokers offer the facility to programmers to interface directly with their trading software. This means that custom written trading software can automatically trade a strategy without any human intervention at all. A system can make buy/sell signals which are automatically routed to the exchange along with any stops and targets. Almost instant fills. With electronically traded futures there is no need to call up a broker and wait for a fill from the trading floor. Orders are instantly placed on the electronic order book and filled as soon as a match is found - for liquid contracts such as the emini S&P500 this will be within a second.

Level playing field. With traditional pit traded futures the professional in the pit has a major advantage over the retail trader in terms of speed of execution and costs. Electronic futures trading offers all participants exactly the same advantages.

Disadvantages of online futures trading

Leverage. Can be a disadvantage if it encourages trading with too high a risk for a particular strategy. A carefully devised money management plan is essential.

Overtrading. The instant nature of electronic futures trading coupled with low commission costs and tight spreads can encourage a trader to take additional trades to those determined by their trading plan.

Online futures trading offer significant benefits to the retail trader. However, a carefully developed trading plan must be formulated before attempting to enter this extremely competitive business.