Here's a revelation that changed my trading forever:
"Successful trading is imply a business of not making mistakes."
That has become such a cornerstone to my trading that I actually framed that saying and put it on my wall over my trading flat screens.
One of the most productive things you can do to become a profitable trader is to make a list of your most common mistakes.
Awareness is the first step.
Then watch your behavior and don't allow yourself to make those mistakes any more.
Each of us has her or his own challenges, so you must make your own list.
But to get you started, I'll expose my sins and share with you what have been my most common mistakes over the years. This is the official list of my own 7 most common mistakes. Perhaps you'll find it helpful:
1. Missing trades. When my setup occurs I need to make sure I'm aware of it and haven't been distracted by chat rooms, email, phone calls or lulled into boredom by a consolidating market.
I also need to make sure I don't hesitate to pull the trigger when I do see my setups.
2. Trading reversals that are not in extended trends and during which the internal market energy has not reversed.
3. Trading only 1 time frame without the confirmation of a longer term chart.
4. Trading while tired.
5. Over trading. Never try to make up for losses or missed trades. Never trade out of boredom. Never take any trade that doesn't match my rules 100%.
6. Not taking profits on my first exit soon enough. This is critical to adjust my cost position in the trade and therefore keep losses small.
7. Exiting my entire position too soon. I must keep at least part of my position alive until the energy of the trade has shifted so that I can ride the big moves.
Well, that's my confession.
Now you know my sins, but I imagine they're not so different than yours.
Have you committed these trading sins ... or your own unique ones?
The only solution is to REPENT!
That doesn't simply mean to say you're sorry.
It means to change your behavior.
Many people treat trading as:
an intellectual exercise.
a mathematical challenge.
or a research project.
Actually it's more about managing your behavior than anything else ... of course that's often the most difficult thing of all!
I couldn't have said it better!
Barry can be found at: http://www.myspace.com/topdogtrading
Happy New Year !!
Here's an article I found in my files. Given the approach of the New Year, now is an excellent time to re-enforce those good trading habits and thoughts ... enjoy!!
How many pips do you need to be wealthy? The answer may surprise you.
A very common thought and question among us forex traders. Of course this is variable in desires; however it is a good idea to put things into perspective. In reality, the following is what separates the gamblers from the traders.
About 2 years ago I sent out a similar letter that changed the outlook and the lives of many traders. While most at the time were mini-traders a simple 25 pip gain equated to a mere $25.00. "How can I live off of that?" I was repeatedly asked. It didn't take long to put this into perspective.
Determining Percent Return
Profits are one thing, percent return is another. Monthly profits may add up to look nice or not so nice, but what is the actual return? I am sure we have all heard traders say, "I made 1,000 pips last month." OK.. what was your percent return? Not only for one month, but for the life of your trading.
The simple return calculation is used to determine your return on an investment after you sold it. Or in this case, the profits after closing trades over a period of time.
Here is the formula:
Net Proceeds /Cost Basis - 1 x 100
Let's run through a simple example.
Suppose you traded one standard forex contract for a profit of 200 pips. This would be a raw profit of $2,000. The cost in this case was the spread and the margin needed to secure the contract; the most common margin is 100:1. Thus it cost a temporary, $1,000 to secure this contract. We say temporary because we all know we would not trade without a stop loss, most likely the stop would have been worth about $250.
Net Proceeds = $2000
Cost Basis = $20 (spread) + $1,000 margin
($2,000 /$1,020 - 1) x 100 = 96% (Just under 100% in a single 30 days)
So, if you are trading with a 100:1 margin and averaging around 200 pips per month, you are close to a 100% return per month.
What about per year?
Try it, you will be amazed. Hint: Don't forget to compound.
Take Home Message
Trade conservatively, a few 25 pip trades per week (300 pips per month) on a single lot can give you a return of just under 200% a month. Build your account slowly, trade with the same level of caution, just add more lots. This is the best method, the most realistic method and the lowest stress method of enjoying the rewards of forex.
Happy Trading from ForexJourney.com!!
I havent been much updating the blog with latest stuff as i have been quite busy with other stuff. Anyways A belated Merry Christmas to all of you's.
I have decided to give away blogging to the bank 2 away to everyone instead of just to the subscribers. Here is the link. It is in Torrent format .
Hopefully I will get free in the next few days and put up some decent forex ebooks for download. Till then enjoy the ones in our forex ebooks section!
Clarity. This is my word, my mission for 2008. I am going (notice I did not say “try to”), let me repeat, I am going to achieve clarity in all aspects of life including my trading. As many of my readers know I had a very eventful 2007. I became a dad for the first time. This has brought a new meaning to life. One that many of my friends have mentioned, but one I truly didn’t understand until I experienced it myself. It has been the greatest single joy of my life, not to mention a major adjustment in trading schedule.
I define have one simple New Year’s resolution that will permeate my life and my trading – seek clarity in every aspect of my Forex trading and perform every action with intent!
I know what you are thinking; it seems kind of pie in the sky, but think about it. We should approach all our actions with clarity and intent. Design the outcome well before we enter a currency trade. Keeping mental focus it what really separates long term profits and losses.
I encourage each of you to take the time now and revisit your Forex trading plan. Learn from your mistakes, because they are your most valuable teachers. My goal is to always present clear intent into my Forex trading in 2008, what’s your intent?
Happy New Year’s from ForexJourney.com
The BOE rate cut speculation arose last week when the Bank of England released its December monetary policy meeting minutes, which showed a unanimous vote for a 25-bp rate cut this month. Also, the bank heightened the impact of recent financial market turmoil and the consequent credit market tightness on the economy and inflation. The BOE and Fed are both likely to have a couple of rate cuts in the coming year, which weigh on their currencies.
In contrast, the European Central Bank may keep its benchmark rate unchanged. The euro rose to 0.7311 versus the sterling, and tested a resistance level at 1.45 against the dollar.
Financial markets in Australia, Hong Kong and the UK are closed for the Boxing Day. Currency trading will remain very light towards the end of this year.
Tomorrow will see US durable goods orders report, weekly job report and consumer confidence. Durable goods orders are seen to rise 2.0% in November, compared with a 0.2% decline in the previous month. Core durable goods orders are likely to increase 0.3%, versus a prior month¡¯s reading of ¨C0.4%. Weekly initial claims are expected to change from 346k to 342k. US consumer confidence is estimated to fell from 87.3 to 86.5.
EURUSD will face interim resistance at 1.45, followed by 1.4530 and 1.4550. Additional ceilings will emerge at 1.4580, backed by 1.46. Support starts at 1.4470, backed by 1.4430, 1.44 and 1.4380. Subsequent floors are eyed at 1.4350.
GBPUSD encounters interim resistance at 1.98, backed by 1.9850 and 1.9870. Subsequent ceilings will emerge at 1.99, followed by 1.9930 and 1.9980. On the downside, support begins at 1.9760, followed by 1.9730 and 1.97. Additional floors are eyed at 1.9670, backed by 1.9650 and 1.9620.
USDJPY encounters interim resistance at 114.50, backed by 114.80 and 115. Subsequent ceilings will emerge at 115.30, followed by 115.50 and 116. On the downside, support begins at 114.20 and 114, followed by 113.80. Additional floors are eyed at 113.50, backed by 113.20 and 113.
Hey all ,
Well, I have been pity keen on updating my Forex blog since quite a few days. I have been posting Forex books mostly or whipping up an article or two. I am looking forward to make the trading experience for our visitors much better.
All the recent Forex Books I have added are mainly on the Home Page with pics and reviews of them and of course the download link.
Up here , we have Forex made easy by James Dicks. I personally find this particular Forex Book of decent use to newbie Forex Traders and even Amateur Investors. Inspite of a few negative reviews of Forex Made Easy doing the rounds on the net, I believe it has a decent value attached to it.
Forex Made Easy by James Dicks is quick paced and informational. The books deals with relatively advanced techniques as well.
Well, now that we have the download for Forex made easy , you can check it out with out spending a dime and let me know whether you share the same views as me or not.
DOWNLOAD FOREX MADE EASY: 6 Ways To Trade the Dollar by James Dicks.
Like I always say, if you liked this post or the other content we have on our Forex Blog, do vouch for us by leaving back an appreciative comment or two(or even a critical comment for that matter) , Give us a digg or stumble or some link love from your own site/blog/forum.
Thanks all! Enjoy
I have been on a forex books posting spree for quite a while. Now, going back to whats actually happening in our Fx Market, The yen has suffered a major setback against all major currencies on Friday trading session. The greenback managed its best against the Yen since the 7th of November.
Sterling Goes in deep waters
The sterling continued to drift lower, falling to a record low versus the euro at 0.7254 as market sentiment anticipates the increased likelihood for additional BoE rate cuts in the coming year. With recent economic data from the UK remaining soft, combined with dovish commentary from the BoE – we expect the Bank to cut rates by another 25-basis point in January and possibility for further easing in the first half.
Retail sales were largely unchanged at 4.4% y/y, while slightly higher on the monthly reading to 0.4%.
Now, focussing on more statistics
Cable holds steady near 1.9830, with support seen at 1.98, backed by 1.9765 and 1.9720. Additional floors are eyed at 1.97, followed by 1.9650 and 1.96. On the upside, resistance begins at 1.9875, followed by 1.99 and 1.9930. Subsequent ceilings will emerge at 1.9960 and 2.
Figures and statistics supported by forexnews
Now, if you liked this story, you might like to give us a digg or a stumble or check out the Forex Books in our FOREX BOOKS SECTION
Or simply check out our homepage for the latest forex books we added including Forex Conquered, How I traded for a living, Mastering the Elliot Wave and much more.
Enjoy and do leave your comments back!
But looking back on them I thought, they were a little to complex for my liking. Since I have started the Beginner section I am writing this Introduction keeping that in mind.
So here goes the Simplest Introduction to Forex/Forex Trading/Currency Trading/Day Trading
Forex is the most fluid and largest Financial market in the world!
Forex literally stands for Foreign Exchange. And thats what it does-- Exchange Foreign Currencies.
Now why exchange Foreign Currencies?
Well, For Profit of course! Forex Trading is the business of buying and selling Currencies.
So basically, we look to buy currencies when they are of low cost hoping to sell them and making a profit when they become costlier.
Traditionally, Forex Trading( FX/day trading/currency trading/Foreign exchange/currency Exchange refer to one and the same) was reserved for Banks and advanced Investors.
But, Today nearly a person in every family in the United states is involved in Forex Trading.
Which brings us to another question. Why Forex? Why to invest in Forex instead of the huge number of other business/investment opportunities.
To answer this particular question, you must read this article of mine -- Why Trade Forex?
Now, moving ahead-- Why the sudden boom in Forex Trading.
This has been a direct result of advent of PC and the Internet which has brought the largest financial market online.
The Currencies are always traded in pairs. Most of the Forex Market is depended on the Four major currency pairs EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
JPY= Japanese Yen
GBP=Great Britain Pound
Each pair will have a particular value at a particular time.
To give a THEORITICAL example
if USD/JPY was equal to 1.00 today. That means that for one US dollar , you could buy one Japanese Yen.
The next day Imagine the Same USD/JPY now equals 1.5 , This means the USD dollar value has increased and now you can buy 1.5 JPY for 1 US dollar.
So, we look to make a profit by buying currencies that we think will have their value incremented in the near future.
Well, This brings us to the end of this Article.
Hope I was clear, If you have any doubts , do leave a comment!
and if you liked it do give a stumble or a digg!
The Day Trader's Manual by William Eng DOWNLOAD HERE
Part One - the Theory of Day Trading
1. Time, Price, and the Day Trader
2. Strategies for Profitable Day Trading
3. Day Trading Approaches Defined by Market Action
4. Chaos Theory and the Day Trader
Part Two - The Science of Day Trading
5. Tape-Reading Techniques
6. Spread Trading
7. Trading Market Profile
8. Using Chart Patterns
9. Mathematical Approaches to Day Trading
10. Sequential Patterns in Day Trading
11. Elliott Wave Theory and Day Trading
Part Three : The Art of Day Trading
Okay. Here we go. Another Forex EBook for download.
Currency trading for dummies!
Thank You for all the requests for ebooks that have been emailed, IMed, posted on the shoutbox.
We will try to complete such request. Please be patient and do understand if we cant get the ones you have requested.
Thanks and i hope you didn't miss downloading "Mastering Elliot wave" by Glenn Neely.
In case you missed it, don't worry, its still very much here!
Mastering Elliot Wave by Glenn Neely and Eric Hall
Hey, Another Popular Forex Ebook for download. We had a few requests to make this book available. So here is it .Enjoy!!
If you have a particular book in mind which you would like to see. Let us know and we will make our best effort to make it available to you for FREE!!
Mastering Elliot Wave: Presenting the Neely Method: The First Scientific, Objective Approach to Market Forecasting with the Elliott Wave Theory
Here's a review!
Elliot wave principle, Elliot wave, Mastering Elliot Wave, Glenn Neely, Eric hall, Forex ebooks, free downloads, forex ebook
If you are looking for a general introduction to Elliott Wave theory and practice, then this book is definetly not for you. In that case, I rather suggest starting with Prechter's "Elliott Wave Principle" from 1979.
If you are prepared to spend a lot of time working through the large number of conditions contained within this book, however, (especially using your own data) you will find this a most rewarding endeavor. Wave theory is not for the faint-hearted, it requires a lot of patience and application to give you the building blocks to come up with a view of the market.
Once we know how something works, we will not see it as a challenge. For those people that love challenge, they will lose interest. This is because it is no longer something to go after. You already have the answers and started looking somewhere else for new challenges. In the end such people will not accumulate wealth but he will gain knowledge. Knowledge in the end is what matters.
Last week I lose in Forex trading. I will update screenshot when I have the time. It seems to me that I am starting to lose interest in Forex for the above reason. For other reason I will not be trading forex till start of next year. Holiday season is coming, Im going home for a long vacation and forex has started to lose it appeal.
Those of you still struggling to understand it, keep up the work. Its a feeling undescribe by mere words once you have found the answer. At the time of writing we are seeing major turn on 3 pairs which are EurUsd, UsdChf and UsdJpy. Chrismast is coming and it would be a waste of time to trade now. Let us hope a new year wil bring new fortune to us all. Happy holidays everyone.
Bayangkan kalau anda mendapat income sebegini dibayar setiap minggu. Amacam? tak melompat cam beruk ke?
"TRADING FOR A LIVING BY DR ALEXANDER ELDER"
Below is a review of the book!
Dr. Elder is a practicing psychiatrist. He is of Russian origin and today he is well-known in Russia after his Moscow course of lectures on short-term investment in 1996.
The first half of the book focuses simply on psychology. The stock market is in fact just a reflection of the human psychology. As the Dr Alexander Elder points out in this book"Trading for a living" , so many people who are educated think that because they are "school smart" that they must be able to master the financial markets just as well. It's the psychology and the mentality that goes into it. The author likens a typical losing trader (in other words, most traders!) to an alcoholic in denial. Traders are addicted to losing money. They get such a thrill from trading that they don't care if they win or lose.
The second half (Trading for a Living) is the core of the book. It is various trading strategies and technical information. If you're an experienced trader, you'll recognize most of it. The rule is simple: "buy low, sell high" or "short high, cover low". I think the author did an excellent job of covering a wide variety of strategies and trading tools. If you are new to trading, it may confuse the daylights out of you.
This book is a must have for anyone venturing into online trading. Dr. Elder lays out the three essentials of becoming a successful trader: Mind, Method and Money Management.
1. Mind: The psychological aspect of trading. Tells you to observe your own emotions as you trade.
2. Method: Technical analysis. Almost every major indicator is discussed here.
3. Money Management: Gives you some tips on how much to risk.
I have found a lot more detailed information in this book compared to the ones i have read so far. I would rate the book 10/10 if not more than that. It is truely and really a good piece of work . If you don't mind the high price, buy the real version or else download from us for FREE!!!
We are committed to provide highly informational and popular Forex ebooks for free to our visitors.
The book is really worth it though. You will not be disappointed. I highly recommend it to the traders who look forward to improve the quality of their lives.
You might like to browse through our huge collection of forex ebooks!
Kalau saya jadi airmata,
Saya ingin lahir dari matamu, hidup dipipi mu dan mati di bibirmu
tapi kalau awak jadi airmata,saya tidak akan menangis
kerana saya tidak mahu kehilanganmu
begitu bermakna dari seseorang yang tidak dikenali.
Forex lak. minggu ni rugi. Nasib baik bisness lain masyuk banyak :)
The list of popular books by Jake Bernstein include
Jake Bernstein - Commodity Cycles.zip
Jake Bernstein - How to Trade the New Single Stock Futures.pdf
Jake Bernstein - Market Master.pdf
Jake Berstein - Introduction To Technical Analysis.pdf
Jake Bernstein - Timming Short Term Price Swings in S&P.pdf
Right now.. You can download the complete day trader vol 1 and 2 from us!!
You might like to browse through our huge collection of forex ebooks!
Easy to use and understand even if you are a beginner
Streamster™ trading software gives you the best trading experience available!
Arrange trading windows according to your preference, set advanced options, and much more...
You only need 5 minutes to open your account - and it's free!
Advanced Personalized Charting
The most sophisticated and easy-to-use charting tool with built-in advanced technical indicators
You can trade, view and modify open positions - directly on your charts
Modify parameters of technical indicators in real-time and see how they appear immediately
Build your chart collection by adding your saved chart configurations
News, Chat, Alerts and Support
Read real-time economic news and forecasts about global economy and markets
Get alerts narrated aloud prior to major scheduled market events
Chat with other traders about market events, exchange trading ideas and learn
Get help from our support professionals available 24h on support channels
Diversification and Practice
Trade $10,000 with only $100 in your account using 1% margin on Forex, Index and Commodity desks
If you look for long-term profits, you can invest in funds and reduce your investment risk
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You don't need to start on live market right away - practice with your virtual money first!
Buy and sell financial instruments with one mouse click
No commissions or exchange fees on your trades - you can trade as much as you like
You can start trading with as little as $1!
Open your account for free and get $5 cash reward so you can start trading right away!
Forex Conquered by John L. Person is a very popular forex book that illustrates easy to learn strategies for better trading in the forex market. This book will give you exact and detailed information on factors like how to on when to increase lot size, how to manage risk, whats the best time to move stops, and how to use automated trading programs.
You might like to browse through our huge collection of forex ebooks!
Long Eur/Usd @ 1.4620 or better
Short Usd/Chf @ 1.1320 or better
At the moment all jpy pair is at the height of its momentum. Entry is not adviseable. Wait for it to turn then a fresh entry will be available. I lost much on JPY pair this week due to miss calculation. At the moment my account is down by more than 2k. I will post result at the end of the week.
Here is the latest addition to our articles section.
10 ESSENTIAL TIPS FOR NOVICE FOREX TRADERS
If you are new to the world of online FOREX trading you will realise its not as simple as people make out to be or what the ever so promising Forex Brokers promise.
The fact is most people who dont know the in and out of online forex trading will lose and lose quickly.
To win at currency trading online you need to have the right FOREX strategy - Here are 10 tips and if you incorporate them in your trading strategies, you should get a head start in your thirst for consistent FX profits
1. Don't believe the hype
You will see lots of people selling forex ebooks for "only" $100 which promises to make you strike gold in the world of online forex trading. Yes , their is good advice out there - you can get all the information you need free on the internet.
2. Don't day trade
The biggest myth of FOREX trading is you can make money FOREX day trading or Forex Scalping.
Many novice traders fall for this myth and lose quickly and wonder why.
As I always say All short term volatility is random and there is no way of predicting where prices may go" up or down", so you might as well flip a coin.
For more on Forex Scalping , read this Article
If you want proof that FOREX day trading systems don't work, ask any vendor for a real time profits track record over the long term and you will not be able to fine one.
3. Work smart not hard
There is a lot of difference in hard work and smart work.You don'thave to work hard in online FOREX Trading, you need to work smart. This means focusing on getting the RIGHT FOREX education and learning and understanding the FOREX tools that actually work in the market not just hypothetically . If you focus on getting the right Forex information, you should be able to learn how to trade in a fortnight.
You will not be rewarded in FOREX trading market for working hard and spending lot of time, you get rewarded for being right and that means working smart.
4. Risk = Reward
If you don't like the idea of risk forget currency trading and pick up something else .
Many traders simply want to avoid as much risk as they can, putting stops to close, or snatching profits. If that's you - you will NEVER achieve currency trading success.
You need to be open minded and accept risk and losses to succeed in online FOREX Trading.
This is because to be a successful Forex trader, you need to be a enterpreneur and have to take risk, not avoid it. No Risk, no reward!
5. Do It on your own
Have confidence in your ability to understand the Forex Market. You are responsible for your own success.
If you follow someone else's strategy you will not have the right mindset to succeed. If you lack discipline and might want to quit after suffering a few losses. Do it on your own and your chances of success are manifolded.
6. Get a simple method
Simple methods always fare better than complicated ones, as they are much more easier to understand and follow.
There is never a correlation between how complicated a trading system is and how much profit it will make.
If you are just starting out in online forex trading, use support and resistance, a breakout methodology and some confirming indicators and that's just about it.
The above way of trading is perfect and will help you should get you the big profits from the big moves.
7. Trade Breakouts
A timeless way to trade FOREX markets.
It works well and will continue to work, simply look in our ebooks section for this powerful methodology.
8. Be patient
You do not get rewarded for how frequently you trade FOREX online- However, You do get rewarded for being quick on your feet and spotting and acting on the best trades and these don't come around very often.
Be patient and only trade FOREX signals from your system - don't be tempted to just trade for the sake of trading Forex.
9. Be realistic
There is potential for huge money in Forex Market, so what's realistic? The best Forex traders compound around 50 - 100% annualy so this is a good number to aim for or may be slightly lower.
These gains will compound quickly and build real wealth in the longer term.
Be realistic and don't try to become an overnight millionaire.
10. Know your edge
If you were good enough to understand the 9 forex tips mentioned above, you will understand that you must have an edge to make money in the long run in online FOREX market.
If after , devising your very own Online FOREX Trading strategy you don't know what your edge is - then you don't have one!
You need to know what your edge is over the majority of the losing traders to win in the Online Forex market.
If you incorporate the above 10 Forex tips in to your online FOREX Trading plan, You should be on your way to become a good Forex Trader.
Welcome to the world of Online FOREX trading! and Best of Luck!
You might like to read other articles in our Forex Articles section or download one of the huge number of forex ebooks in our Forex Ebooks section.
Now Master the Currency Market by Trading from Home! This Forex ebook how I trade for a living "Gary Smith deals in reality. If you are an amateur investor and interested in learning how to trade for real profits, not just all hype no substance trading platforms, this book is a must read for you.
Mixed week so far. GBP rate cut really messed things up. Things are really looking good for a Gbp correction where the rate cut made the correction very small and no clear market direction.
At the moment i am holding a lot of losing position hoping the market will turn back. At the same time doing hedging to cover the losing position. Hopefully next week all goes well and I manage to recover. If things do not go my way, then I will have to accept losses. Losses happen in forex and it happen a lot. Prepare for the inevitable.
Jangan sekali kali menganggap Forex adalah jalan utk mencapai kekayaan. Ianya mampu memberi pendapatan yang lumayan tetapi tidak utk mencapai kekayaan. Fakta, 10 manusia terkaya didunia tidak seorang pun dari mereka mencapai tahap kekayaan dengan forex. Malah kalau ada yang rajin, boleh kaji 100 orang terkaya didunia dan berapa ramai dari mereka kaya dengan Forex. Jawapan mungkin tidak ada seorang pun mencapai kekayaan dengan forex.
Ini kerana dalam forex langit tidak selalu cerah tapi malangnya laut sentiasa bergelora. Cabaran yang tinggi perlu dihadapi sebelum seseorang boleh hidup dilautan forex.
Nasihat ini telah banyak kali aku berikan kepada orang yang memerlukan. Kalau ingin jadi kaya, kita perlu mempunyai berbagai sumber pendapatan. Periuk nasi perlu ada lebih dari satu. Barulah boleh mencapai kekayaan, itupun kalau kekayaan yang diharapkan.
Secara ikhlasnya aku bermula dengan forex bukan kerana duit tapi kerana ilmu. Dalam dunia cuma 5% saja manusia mampu hidup sepenuhnya dengan trading forex. Kalau aku mampu tergolong dalam umat manusia 5% itu, maka aku akan jadi golongan manusia terbilang. Mudah saja cita cita aku.
Hey, here is a review of freedom rocks platform. It has as many critics as its supporters.
Yeah.. so lets get started with the review!
Yes, it does have an MLM aspect to it IF you want to share the product with others. It is a refreshing twist to finally have a product one can use and make money WITHOUT telling another soul, if they want to. So for me, whether or not you like or not, or are indiferent to MLM/NWM really doesn't have any bearing on what the product is and what it can do in helping me/others diversify their investments by entering the FOREX market. So, I say to those who hate MLM, ..JUST GET OVER IT !!!
I've been curious about the FOREX market for quite a few years now, but whenever I took a look at learning it, I was always leary of the systems out there that cost so much and have you try to outguess the market by reading charts, etc. Plus, those late night hours really didn't seem worth it.
So, last fall (about Sept 06) when someone I know emailed me about FreedomRocks, I became curious, but put it on the 'back burner' for a month or so. Then, after watching the movie and listening to a couple of calls (one with the owner and designer of the product), I decided to use the FREE trial to see if it was as easy as it was made out to be. So, i decided to make a little plunge in the freedom rocks platform.
Also, the owners were quite conservative and answered to questions straight forwardly. No tall claims or hype thats not worth with freedom rocks.
So, I invested some time in the demo on the FREE trial beginning about the end of Nov, '06. I was lucky enough to extend my trial through December. I was very much impressed with the ease of their system, and the returns in Dec were pity decent.
So, onthe 1st of January I decided to pay the monthly fee of $100 to use the software, and kept demo trading. At one particular point of time I had around a dozen demos opened with 3 brokers using various strategies to see how things would play out.
Since some of my demos had quite high margins (against the advice of FreedomRocks I must add) I did have 3 of the dozen that margined out by the end of January. Still, all the demos that were left and did have the margins low as well as better currencies chosen, did very well indeed.
So, on Feb 28 I took the actual plunge and opened a live account. For the next 10 days or so I watched as my account dipped to a 50% 'paper loss'. It was kind of 'interesting', I will say, but I just kept on doing what the system is set-up to do and waited for things to work out.
What I learned through that period was a confidence in this system that it DOES work as it claims AS LONG as you follow the system to wach single and don't try to 'change/adjust' anything. Even though this downturn in early March was global and massive, my account DID NOT come close to being margined out.
I also took note of Freedom rocks suggestion to take out profits periodically when the account is up until you have your inital investment back in your pocket, and that's what I have done. It took me about four months to get my initial investment back and now I am trading essentially on 'house funds'.
Todate, even though I am down in paper losses of nearly 30% , I know that I am earning interest daily and always buying low and selling high, so I can't loose (unless I get a margin call, which I've taken care of by following the system and what I've heard on the company calls).
For those whose experience has been negative with freedom rocks and there are quite a few of these people it might be a good idea to ask yourself a few questions, assuming you can be really truthful with the answers you give. I say this because I see things being said that are not what I've been hearing from the company for nearly 9 months now.
An interesting list of questions to answer for those who traded and lost with freedomrocks
So, did you follow the system verbatum? Did you listen to the corp calls where Mark answers anyones quesions about anything to do with the system and the market? Did you go through the excellent webinar trainings and follow everything laid out there and in print to set-up your trades? Did you demo trade long enough to really be comfortable and confident with this system BEFORE you choose to open a live account?
I'll end this 'reviewl' by asking you a couple more questions: How much dollars have you lost with other FOREX programs 'promising' to teach you how to profit in this risky but exciting market? What are you going to do now that you've cancelled one of the fewbut simple to learn and use systems for trading in the FOREX and for hopefully profiting in the FOREX.....OR, have you now totally given up on ever profiting from the FOREX?
Wishing you all the very best in trading or in whatever you choose to do for your investments.
You might also like read the review of Easy Forex trading platform here
You might like to browse through our huge collection of forex ebooks!
At the moment EU is looking good for a big dive. GJ is currently doing a correction before it continue its dive hopefully.
Good trading for all of you out there since today is a good day for me coz I am in profit now :D
Silahkan klik di sini.
Anda perlu melakukan verifikasi alamat email sebelum membuat account Liberty Reserve. Silahkan masukkan alamat email yang ingin digunakan untuk menerima kode aktivasi pada halaman registrasi Liberty Reserve tersebut. Untuk selanjutnya silahkan ikuti petunjuk yang diberikan pada e-mail yang anda terima beserta kode aktivasi dari Liberty Reserve.
Setelah anda mensubmit alamat email yang ingin digunakan untuk registrasi Liberty Reserve, maka anda akan menerima email dari Liberty Reserve dalam beberapa menit setelah itu dengan subjek "Liberty Reserve E-mail Verification Code" yang berisi kode aktivasi dari Liberty Reserve. Copy dan paste kode aktivasi yang anda terima itu ke dalam form kedua yang ada di halaman registrasi Liberty Reserve, kemudian klik tombol Next.
Setelah kode aktivasi anda masukkan, maka anda akan diminta untuk mengisi formulir pendaftaran. Silahkan isikan data-data yang diminta di sana dengan benar. Nama depan, nama belakang, nama account, password, alamat, dan lain-lain. Untuk nama account, itu bisa diganti kapan saja anda mau kelak setelah login. Jika tujuan pembukaan account Liberty Reserve ini adalah untuk melakukan deposit dan withdrawal dari Marketiva, maka anda perlu membuat account name itu menjadi nama lengkap anda.
Di halaman itu anda juga akan diminta untuk membuat pesan selamat datang pribadi, dimana pesan ini berguna untuk mengidentifikasi website yang dibuka kelak ketika login betul-betul website Liberty Reserve asli, bukan tiruan. Jadi, silahkan buat pesan pribadi anda di sana. Anda boleh membuat pesan apa saja misalnya "Semakin hari aku semakin bahagia dan semakin kaya" atau kalimat lain yang menjadi moto pribadi anda.
Di halaman registrasi yang terakhir anda akan diperlihatkan data-data account itu, seperti nomor account, password, login pin, dan security pin, silahkan simpan atau cetak informasi itu, karena itu akan diperlukan untuk mengakses account anda.
Setelah proses registrasi berhasil, maka anda akan menerima e-mail dari Liberty Reserve yang berisi nomor account, dan pin pengaman transfer.
Selamat menggunakan Liberty Reserve account!!!
Interesting article by Susan C. Walker - check it out!By Susan C. Walker, Elliott Wave International
September 7, 2007
Central bankers who "follow the yellow brick road" end up in Jackson Hole, Wyoming, every Labor Day weekend for their annual symposium sponsored by – who else? – the Kansas City Fed. (Who can forget Judy Garland saying to her little dog, "Toto, I've got a feeling we're not in Kansas anymore," in the 1939 movie, The Wizard of Oz?)
The Jackson Hole Resort serves as the Federal Reserve's equivalent of the Emerald City, as Fed governors and presidents meet with central bankers and economists from around the world to discuss economic issues. This year, the symposium focused on housing and monetary policy. Usually, the Fed chairman kicks off the symposium and, this year, the new chairman, Ben S. Bernanke, did the honors. He closed his speech with these words:
"The interaction of housing, housing finance, and economic activity has for years been of central importance for understanding the behavior of the economy, and it will continue to be central to our thinking as we try to anticipate economic and financial developments."
Then came the other speeches. And it seems that some of the guests in Emerald City were waiting for their chance to pull back the curtain and prove that the Wonderful Wizard of Oz isn't such a wizard after all. Bloomberg reported that "Federal Reserve officials, wrestling with a housing recession that jeopardizes U.S. growth, got an earful from critics at a weekend retreat, arguing they should use regulation and interest rates to prevent asset-price bubbles." Apparently, one academic paper presented at Jackson Hole graded the Fed an 'F' for the way it has handled the repercussions from the rise and fall of the housing market.
Truth be told, these folks are a little late to the table as critics of the Fed. We're glad they're joining us, but here's what they still haven't learned: It isn't because the Federal Reserve messes up by allowing credit, asset and stock bubbles to form that it's not a wizard. The Federal Reserve isn't a wizard for one particular reason that it doesn't want anybody to know – and that is that the Fed doesn't lead the financial markets, it follows them.
People everywhere want to believe in the Fed's wizardry. But all this talk about how the Fed will be able to help the U.S. economy and hold up the markets by cutting rates now is as much hooey as the Wizard of Oz promising Dorothy, the Scarecrow, the Tin Man and the Cowardly Lion that he could give them what they wanted: a return to Kansas, a brain, a heart, and courage. Because when the Fed does do something, it always comes after the markets have already made their moves.
If you don't believe it, you should look at one chart from the most recent Elliott Wave Financial Forecast. It compares the movements in the Fed Funds rate with the movements of the 3-month U.S. Treasury Bill Yield. What does it reveal? That the Fed has followed the T-Bill yield up and down every step of the way since 2000. And the interesting question becomes this: Since the T-bill yield has dropped nearly two points since February, how soon will the Fed cut its rate to follow the market's lead this time?
[Editor's note: You can see this chart and read the Special Section it appears in by accessing the free report, The Unwonderful Wizardry of the Fed.]
We've got our own brains, heart and courage here at Elliott Wave International, and we've used them to explain over and over again that putting faith in the Fed to turn around the markets and the economy is blind faith indeed.
"This blind faith in the Fed's power to hold up the economy and stocks epitomizes the following definition of magic offered by Teller of the illusionist and comedy team of Penn and Teller: a 'theatrical linking of a cause with an effect that has no basis in physical reality, but that – in our hearts – ought to be.'" [September 2007, The Elliott Wave Financial Forecast]
Because, you see, what makes the markets move has less to do with what the unwizardly Fed does and more with changes in the mass psychology of all the people investing in those markets. The Elliott Wave Principle describes how bullish and bearish trends in the financial markets reflect changes in social mood, from positive to negative and back again. To extend the metaphor: The Fed can't affect social mood anymore than the Wonderful Wizard of Oz could change the direction of the wind that brought his hot air balloon to the Land of Oz in the first place.
As our EWI analysts write, "With respect to the timing of the Federal Reserve Board rate cuts, we need to reiterate one key point. The market, not the Fed, sets rates." Being able to understand this information puts you one step closer to clicking your ruby red shoes together and whispering those magic words: "There's no place like home." Once you land back in Kansas, your eyes will open, and you will see that an unwarranted faith in the Fed was just a bad dream.
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.
- It is very important that you be sincere in researching any prospective brokerage firms to handle your financial portfolio. A good Forex broker will supply you with successful clients contact info with out any hesitation. Check out their client history and you should get a pretty good idea about them. Note that testimonials by traders should be used as a part of research in finding the right forex broker but not the deciding factor as many brokers have "special" clients who will speak just positive about them.
- Another good way to test the reliability of any Forex broker is the amount of information, literature and tutorials that they are giving to you. Most Forex brokers out there are of a decent reputation as well as a solid background.But, there are quite a few out there that don't have a good history or no history and it is wise to avoid such forex brokers.
- Another simple but good avenue to find out about prospective forex brokers is to ask your aquaintaces about the forex brokers they deal with. This will not only give you prospective referrals to great Forex brokers but will also equip you with decent ideas and resources that you may not have located. If you get a referral, be sure to do your own research on the broker. DO not commit to any broker until you have completely analysed them.
- A Forex trading margin heavily influences your money and various Forex brokers offer different margins. If you find a Forex broker, who is giving you a margin of ten to one isn't a very good find so it's worthwhile to put some time in research. Remember that forex market is all about customer service and catering to the customers.
So, if your prospective Forex broker doesnt return your calls with a reasonable turn around time ,Better look for another!
You might like to read other Forex related articles in the Articles section or browse through our huge collection of forex ebooks!
If you have a Forex related blog, forum or useful site, I would be interested in a link exchange. I am mainly looking to exchange links with currency trading sites, but anything related to financial trading will probably work too.
Just place a link on your site:
Title: Forex Trading Made Easy
The leave a comment here, stating where you've placed the link and also the details for your link to be placed on this site.
Here is one of the most famous Fibonacci Forex videos doing the rounds on the net. Enjoy!!
Last week started with a high momentum movement but in the middle of the week its slow down. During slow down period its getting harder to trade plus I was on the plane to Kuala Lumpur for one day.
Anyway here is the result. Not as good as last week and i expected more.
Btw just bought Nokia N95. Anyone here have any idea how to install software on this phone. Its different from previous Symbian.
Hey there, Here is the review of Easy Forex Trading platform!
Before choosing Easy Forex trading system, or any other online forex broker/agent for that matter, we advise investors to clearly understand the possible risks of the venture. Not to mentions that, trading in the Forex market should always be undertaken with risk capital.
Whenever you are in need of choosing a good forex trading platform, the investors must look at the overall package that you gain. It is somewhat similar to choosing a bike or a school for your kids, you would want to see competitiveness in all the features , outstanding benefits and clear excellence. In this regard I would definetly recommend you the EASY FOREX TRADING PLATFORM.
Ill jot down the reasons quickly for you!
Internet Based Platform With out the Need to Download Software – It is truely online trading. Unlike most other trading systems, there is no need whatsoever to download any software. You can trade the Forex online 24hours round the clock from any net activated pc anywhere in the world.
Start Trading From As meagre as $25 with Unique Features – You can open a simple trading account for as minute as $25 and start trading within few minutes of your initial deposit. Another feature is that deposits and withdrawals can be made through PayPal or Credit Card.
Registration is free and simple.
Unique "Freeze rate" Trading Feature – You can freeze a particular rate you see on your monitor for a certain period of time and then decide if you want to make the trade or not.
Live Training and Personal Services – An Easy Forex representative will train you as soon as you register there– you will be getting your own Account Service Manager. Your account can be tailored to suit your own trading style and spreads can be tailored as well.
Competitive Spreads – The spreads are competitive and you can trade with one of the lowest margins of all the trading systems. Also, in some cases they will allow spreads to be adjusted to suit the individual forex trader.
Guaranteed Rates and Stop-Loss – and also you may set an automatic Take Profit rate if you like.
No Hidden charges and No Additional Collateral Required for Trading – and you are never ever charged for profit withdrawals or deposits for that matter.
Special Incentives provided to Frequent Traders - If you are a frequent trader and do large number of trades in short time frame, you will be offered a tailor made account to suit your exact wants/needs (the spreads, leverage ratios, sms alerts, etc…
Unhindered access to Daily Forex Outlooks and Forecasts, Live News, Rates and more…
Working with reputable business partners and leading banks world wide - Liquidity is provided by UBS.
Full Transparency in their terms , Total Control of your account, Ultimate level of Data Security and Privacy.
Special Tailor-Made Terms to Individual Forex Traders/Investors.
Refer-a-Friend awarding Programs.
And Much much More...
In summary, we believe Easy Forex Trading Platform offers the best value for money in the current crop of trading platforms. Registration is fast and easy with. The spreads they provide are very competitive and margins are one of the lowest around!
Easy Forex is a golbal organisation working with leading banks like UBS!
You can join them here - Easy-Forex
Lately time doesnt allow me to take short term trade, as a result I revert back to my old system using 4H TF but with add on from my short term system. Result is very impressive.
Here goes for the signal, but before you take it seriously I must warn you to use SL appropriately. Losses are unavoidable in forex, the only thing that kept me alive this long in this hazardous market is maintaining small losses while taking big gain.
On the short term side (30m) GJ is still a short trade but slowly it has turned to long trade on 4H chart. Sooner or later GJ will have to go long due to intermediate buying pressure but be warned, GJ is an all time short market in long term period. Advise is to take the long and get out while you are in profit coz in the long run GJ will take a dive to the unknown.
Long Gbp/Jpy @ 224.76 or better
SL is on your own but calculation of lowest value somewhere 224.24
Your entry window should be from 224.76 - 224.24
TP 227.10, 234.90, 240.40
1. Dont blindly trust others opinions - It's your money at stake, not theirs.Use your brains too. Do your own analysis and make decisions.
2. Don't believe in Any company - Trading is not like investment. Just concentrateon the numbers and forget the press releases.
3. Don't break your own rules - You made them up for tough situations, just like the one you are probably in right now!
4. Never try to get even - Trading is never a game of catch-up. Every position will and must stand on its merits. Take your losses with patience and analytically, and take the next trade with unhindered discipline.
5. Don't trade over your head - If your last name isn't Buffett or Cramer, don't try tp trade like them. Concentrate on playing the game with good tactics, and don't worry about making or losing money.
6. Don't seek the Holy Grail! - There is no secret trading formula that will fetch you unlimited profits, other than good risk management. So stop searching for it.
7. Don't forget your discipline - Learning the basics is pity easy. Most newbie traders will fail in due course as a result of lack of discipline, not a lack of knowledge.
8. Don't try tochase the crowd - Listen to the beat of your heart . By the time the crowd acts, you might be too late…..or too early.
9. Don't trade the obvious pattern - The prettiest patterns can set you up the most painful losses. "If it looks too good to be true, it probably is".
10. Don't ignore the warning signs at any trustable sources -Major losses rarely come without any warning. Do keep a look out for warnings!
11. Don't count your chickens - Profits aren't booked until the trade is closed. The forex market gives and the market takes away with great fury with out a damn for any one.
12. Don't forget your plan - Always Remember the reasons why you took the trade in the first place, and don't get blinded unnecessarily by volatility.
13. Don't have a shrewd paycheck mentality - The market only pays off big time when you're right, and your timing is really, really ON TIME ;).
14. Don't join groups - Trading is not a team sport requiring unity . Avoid stock boards, chatrooms and financial news on TV. You dont wanna repent later and will end up cursing the group!
15. Don't ignore your intuition - Respect the little voice that tells you what to do, and what to avoid. That could be the voice of the winner trying to get into your thick head.
16. Don't hate losing in the market- Expect to win and lose with great regularity. Expect the losing to teach you more about winning, than the winning itself. Thats FX market for you.
17. Don't fall into the complexity hole - A well-trained eye is much more effective than a stack of automated indicators. Common sense is more valuable than a backtested system. AS they say common sense is very uncommon.
18. Don't confuse execution with opportunity - Overpriced software which promise you results won't help you trade like a pro. Pretty colors and flashing lights make you a faster trader, not a better one.
19. Don't project your personal life in trading forex- Trading gives you the perfect opportunity to discover sometimes just how screwed up your life really is.
20. Don't think its entertainment - Trading should be boring most of the time, just like the real job you have right now. But never look for entertainment in there. You wont get it!
You might like to read other Forex related articles in the Articles section or browse through our huge collection of forex ebooks!
If these can be avoided, a successful trading career awaits!
Top 10 Biggest Mistakes Forex Traders Make - Click here for the funniest movie of the week
It has been a good week for both long and short position. I still have some position still open coz havent reach my tp yet. Anyway here is a screenshot of it. Truly I enjoyed it. :)
November 12, 2007
When you're caught in the middle of a bad storm, you don't really care whether it's a tropical depression or a full-strength hurricane. You just know you're hanging on for dear life. The same idea applies to financial markets. When a market is trending up strongly, it's hard to tell whether it's just a bull market or a more dangerous financial mania.
The recent tremendous ride up for global and U.S. financial markets, including the Dow, looks and feels more like a mania than a mere bull, says Elliott Wave International analyst Peter Kendall. This distinction is important to recognize in the rising stage, because manias always result in a crash that takes them back beneath their starting point.
Kendall recently published his research into current financial manias throughout the world in SFO (Stocks, Futures and Options) magazine. The article, titled "Financial Manias and the Trade of a Lifetime," suggests an even more stunning finish for the current manias: "The speed and global scope of the unfolding credit crisis suggest that most of the fast-rising markets of the last decade will crash in unison," he writes.
----------------------------------------------------------------Editor's note: Elliott Wave International invites you to read the full five-page article with charts from the October 2007 SFO magazine by Elliott Wave International's Pete Kendall called "Financial Manias and the Trade of a Lifetime."
---------------------------------------------------------------As co-editor of The Elliott Wave Financial Forecast, Kendall searches for trends that help traders to move in and out of markets. By comparing other historic manias with the impressive rise of the DJIA since the late 1970s, he focuses on the skyscraper pattern that they all have in common. The four historical manias are the Dutch Tulip mania of the 1630s, the South Sea bubble of 1720, the U.S. stock crash of 1921-1932 and the dot.com bust of the 1990s and early 2000s. Once you can see the similarities, you will be better prepared to face the music when the crash comes. As Kendall writes, "once the belief that the markets will always rise becomes widespread, it actually signals the start of a price swing that tends to be a career-breaker for any trader who tries to oppose it."
He also discusses current manias, such as the Nikkei, which has yet to return to its start after a manic rise to its all-time high in December 1989, and the Dow, which reversed from its rise in 2000 but made a U-turn in 2002. The starting point for the Dow's mania as shown in the chart included in the article is at the 1000 level.
Kendall, who is also writing a book about financial manias, titled The Mania Chronicles, describes five telltale signs that help an investor to tell the difference between a regular bull market and a mania. It's a mania if:
1. There is no upside resistance, and rising prices seem to be perpetual.
2. Everyone in the market looks like an expert.
3. There is a flight from quality investments to riskier investments.
4. As financial bubbles pop in one area, they bubble up in others.
5. The crash after the peak takes back all the gains the mania made.
No. 5 can be viewed only with hindsight. But the first four signs provide essential clues to what's shaping up in the markets.
"By studying past mania experiences, traders can gain valuable insight into the collective emotions that drive their markets," writes Kendall. "It's possible to make significant money in the advancing stages of a mania with no knowledge of its existence. But there is nothing like recognizing a mania for what it is in real time to help a trader keep those gains and deal with the relentless crash after it peaks."
In the last part of the SFO article, he asks the key question, Are we at the peak yet? Find out his answer by reading the whole article for yourself.
Susan C. Walker writes for Elliott Wave International, a market forecasting and technical analysis company. She has been an associate editor with Inc. magazine, a newspaper writer and editor, an investor relations executive and a speechwriter for the Federal Reserve Bank of Atlanta. Her columns also appear regularly on FoxNews.com.
We are going to forex news ticker back as well. The problem we had with the forex news ticker we had on our site was that it was a java application and it aske
anotherd for permission to be played to each new visitor raising a red flag.
So, the forex events ticker is laid to rest for now and will revived soon.
Another feature that will be added is the 10 minutes chart for forex trading
And yeah. as usual we will update our site with the latest forex events as they happen.
For example you have $1000 in your forex account. Every month your profit is $1000++. Is it possible to do this by trading forex. If anyone of you out there can do it, do post your result here.
Just wanted to see if its possible to do it or to maintain it month after month.
Lots of updates and features added on the site.
- First of all check out our EBook section, tons of ebooks there now
- Another feauture is the current Market news which is at the bottom of the page
- Then we have added the email subscription feature. Now you can stay in tune with whats the latest happening on our blog. We will keep updating you through our newsletter.
- And most apparent of all the updates. The sites look- A totally revamped look.
Do let us know what you feel of the updates!
RiskTotal amount of exposure a bank has with a customer for both spot and forward contracts.
An option which may be exercised at any valid business date through out the life of the option.
Describes a currency strengthening in response to market demand rather than by official action.
A risk-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets.
Used in quoting forward "premium / discount".
Ask is the lowest price acceptable to the buyer.
In the context of foreign exchange is the right to receive from a counterparty an amount of currency either in respect of a balance sheet asset (e.g. a loan) or at a specified future date in respect of an unmatched forward Forward or spot deal.
An instruction given to a dealer to buy or sell at the best rate that is currently available in the market.
At or Better
An order to deal at a specific rate or better.
An option whose strike/exercise price is equal to or near the current market price of the underlying instrument.
At Par Forward Spread
When the forward price is equivalent to the spot price.
At the Price Stop-Loss Order
A stop-loss order that must be executed at the requested level regardless of market conditions.
Sale of an item to the highest bidder. (1) A method commonly used in exchange control regimes for the allocation of foreign exchange. (2) A method for allocating government paper, such as US Treasury Bills. Small investors are given preferential access to the bills. The average issuing price is then computed on the basis of the competitive bids accepted. In some circumstances for government auctions it is the yield rather than the price which is bid.
Average Rate Option
A contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an "Asian option".
B Back Office
Settlement and related processes.
Back to Back
(1) Transaction where all the obligations and liabilities in one transaction are mirrored in a second transaction. (2) Transaction where a loan is made in one currency in one country against a loan in another country in another currency.
Balance of Payments
A systematic record of the economic transactions during a given period for a country.(1) The term is often used to mean either: (i) balance of payments on "current account"; or (ii) the current account plus certain long term capital movements.(2) The combination of the trade balance, current balance, capital account and invisible balance, which together make up the balance of payments total. Prolonged balance of payment deficits tend to lead to restrictions in capital transfers, and or decline in currency values.
Balance of Trade
The value of exports less imports. Invisibles are normally excluded, and is otherwise referred to as mercantile or physical trade. Figures can be quoted on FoB/ FaS , customs cleared, or Fob export, FoB export.
The range in which a currency is permitted to move. A system used in the ERM.
Line of credit granted by a bank to a customer, also known as a " line".
Bank notes are paper issued by the central or issuing bank and are legal tender, but are not usually considered to be part of the FX market. However bank notes can be converted, in some counties, into FX. Bank notes are normally priced at a premium to the current spot rate for a currency.
The rate at which a central bank is prepared to lend money to its domestic banking system.
A family of path dependent options whose pay-off pattern and survival to the expiration date depend not only on the final price of the underlying currency but also on whether or not the underlying currency breaks a predetermined price level at any time during the life of the option. See Down and Out call/put, Down and in call/put, Up and out call/put, Up and in call/put.
The currency in which the operating results of the bank or institution are reported.
A term used in the UK for the rate used by banks to calculate the interest rate to borrowers. Top quality borrowers will pay a small amount over base.
One per cent of one per cent.
The price expressed in terns of yield maturity or annual rate of return.
The process whereby the basis tends towards zero as the contract expiry approaches.
Taking opposite positions in the cash and futures market with the intention of profiting from favorable movements in the basis.
The difference between the cash price and futures price.
A group of currencies normally used to manage the exchange rate of a currency. Sometimes referred to as a unit of account.
A person who believes that prices will decline.
A market in which prices decline sharply against a background of widespread pessimism (opposite of Bull Market).
Bid is the highest price that the seller is offering for the particular currency at the moment; the difference between the ask and the bid price is the spread. Together, the two prices constitute a quotation; the difference between the two is the spread. The bid-ask spread is stated as a percentage cost of transacting in the foreign.
Refers normally to the first three digits of an exchange rate that dealers treat as understood in quoting. For example a quote of "30/40" on dollar mark could indicates a price of 1.5530/40BIS: Bank of International Settlement.
A system used where foreign currency is limited. Payments are usually routed through the central banks, and sometimes require that the trade balance is equaled every year.
A binary "call" (or "step up") is like a standard European call option except that the pay off at expiry is fixed at one unit of the counter currency, if the call expires in the money.
An option pricing formula initially derived by Fisher Black and Myron Scholes for securities options and later refined by Black for options on futures. It is widely used in the currency markets.
The recording of a transaction outside the country where the transaction is itself negotiated.
Slang for Russian trading.
Break Even Point
The price of a financial instrument at which the option buyer recovers the premium, meaning that he makes neither a loss or gain. In the case of a call option, the break even point is the exercise price plus the premium.
In the options market, undoing a conversion or a reversal to restore the option buyer's original position.
The site of the conference which in 1944 led to the establishment of the post war foreign exchange system that remained intact until the early 1970s. The conference resulted in the formation of the IMF. The system fixed currencies in a fixed exchange rate system with 1% fluctuations of the currency to gold or the dollar.
An agent, who executes orders to buy and sell currencies and related instruments either for a commission or on a spread. Brokers are agents working on commission and not principals or agents acting on their own account. In the foreign exchange market brokers tend to act as intermediaries between banks bringing buyers and sellers together for a commission paid by the initiator or by both parties. There are four or five major global brokers operating through subsidiaries affiliates and partners in many countries.
Commission charged by a broker.
Bundesbank, the reserve bank of Germany.
A person who believes that prices will rise.
A market characterized by rising prices.
Sterling bonds issued in the UK by foreign institutions.
Central Bank of Germany.
(1) A futures butterfly spread is a spread trade in which multiple futures months are traded simultaneously at a differential. The trade basically consists of two futures spread transactions with either three or four different futures months at one differential.
(2) An options butterfly spread is a combination of a bear and bull spread trade in which multiple options months and strike prices are traded simultaneously at a differential. The trade basically consists of two options spread transactions with either three or four different options months and strikes at one differential.
C Cable Transfer
Telegraphic transfer of funds from one centre to another. Now synonymous with inter bank electronic fund transfer.
Telegraphic transfer of funds from one centre to another. Now synonymous with inter bank electronic fund transfer.
A term used in the foreign exchange market for the US Dollar/British Pound rate.
A call option confers the right but not the obligation to buy stock, shares or futures at a specified price.
An option that gives the holder the right to buy the underlying instrument at a specified price during a fixed period.
Juxtaposition of the long and short term capital imports and exports of a country.
The interest cost of financing securities or other financial instruments held.
A finance charge associated with the storing of commodities (or foreign exchange contracts) from one delivery date to another.
normally refers to an exchange transaction contracted for settlement on the day the deal is struck. This term is mainly used in the North American markets and those countries which rely for foreign exchange services on these markets because of time zone preference i.e. Latin America. In Europe and Asia, cash transactions are often referred to as value same day deals.
Cash and Carry
The buying of an asset today and selling a future contract on the asset. A reverse cash and carry is possible by selling an asset and buying a future.
A procedure for settling futures contract where the cash difference between the future and the market price is paid instead of physical delivery
Chicago Board Options Exchange.
CBOT or CBT
Chicago Board of Trade.
Certificate of Deposit.
A central bank provides financial and banking services for a country's government and commercial banks. It implements the government's monetary policy, as well, by changing interest rates. Reserve Bank of India is the central bank of India which performs the role of maintaining orderly conditions in the forex market by intervention through various instruments like cash reserve ratio, bank rate, open market operations and moralsuation.
Exchange rates against the ECU adopted for each currency within the EMS.Currencies have limited movement from the central rate according to the relevant band.
Certificate of Deposit (CD)
A negotiable certificate in bearer form issued by a commercial bank as evidence of a deposit with that bank which states the maturity value, maturity rate and interest rate payable.CDs vary in size with maturities ranging from a few weeks to several years. CDs may normally be redeemed before maturity only by sale on the secondary market but may also be redeemed back to issuing bank through payment of a penalty.
The Commodity Futures Trading Commission, the US Federal regulatory agency for futures traded on commodity markets, including financial futures.
Clearing House Automated Payment System.
An individual who studies graphs and charts of historic data to find trends and predict trend reversals which include the observance of certain patterns and characteristics of the charts to derive resistance levels, head and shoulders patterns, and double bottom or double top patterns which are thought to indicate trend reversals.
The New York clearing house clearing system. (Clearing House Interbank Payment System). Most Euro transactions are cleared and settled through this system.
Copenhagen Interbank Rate, the rate at which the banks lend the Danish Krone on an unsecured basis. The rate is calculated daily by the Danmarks Nationalbank (the Danish Central Bank), based on rules set out by the Danish Banker's Association.
A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.
Closing Purchase Transaction
The purchase of an option identical to one already sold to liquidate a position.
Chicago Mercantile ExchangeCock Dates (see broken dates).
An economic indicator that generally moves in line with the general business cycle such as industrial production.
Commodity Exchange of New York.
The fee that a broker may charge clients for dealing on their behalf.
An option on an option, the dates and price of such option being fixed.
A memorandum to the other party describing all the relevant details of the transaction.
Consumer Price Index. Monthly measure of the change in the prices of a defined basket of consumer goods including food, clothing, and transport. Countries vary in their approach to rents and mortgages.
Contract Expiration Date
The date on which a currency must be delivered to fulfill the terms of the contract. For options, the last day on which the option holder can exercise his right to buy or sell the underlying instrument or currency.
The month in which a futures contract matures or becomes deliverable if not liquidated or traded out before the date specified.
An agreement to buy or sell a specified amount of a particular currency or option for a specified month in the future (See Futures contract).
The foreign banks representative who regularly performs services for a bank which has no branch in the relevant centre, e.g. to facilitate the transfer of funds. In the US this often occurs domestically due to inter state banking restrictions.
Cost of Carry
The interest rate parity, where the forward price is determined by the cost of borrowing money in order to hold the position.
Cost of Living Index
Broadly equivalent to Retail Price Index or Consumer price.
The customer or bank with which a foreign exchange deal is executed.
Foreign Currency Inter-bank Exchange (FOREX) instruments are Positions (Buys and/or Sell) between the Client and its Counterparty and, unlike exchange-traded foreign exchange instruments which are, in effect, guaranteed by a clearing organization affiliated with the exchange on which the instruments are traded, are not guaranteed by a clearing organization. Thus, when the Customer purchases an OTC foreign exchange instrument, it relies on the Counterparty from which it has purchased the instrument to fulfill the contract. Failure of a Counterparty to fulfill a Position could result in losses of any prior payment made pursuant to the Positions well as the loss of the expected benefit of the transaction.
Factors that affect currency trading unique to the specific country include political, regulatory, legal and holiday risks.
The annual rate of interest of a bond.
(1) On bearer stocks, the detachable part of the hide behind nominee status. Certificate exchangeable for dividends.
(2) Denotes the rate of interest on a fixed interest security.
(1) To take out a forward foreign exchange contract.
(2) To close out a short position by buying currency or securities which have been sold.
Covered Interest Rate Arbitrage
An arbitrage approach which consists of borrowing currency A, exchanging it for currency B, investing currency B for the duration of the loan, and, after taking off the forward cover on maturity, showing a profit on the entire set of deals. It is based on the theorem of interest rate parity (one of the key theoretical economic relationship) which says that the return on a hedged foreign investment will just equal the domestic interest rate on investments of identical risk. When the covered interest rate differential between the two money market is zero, there is no arbitrage incentive to move funds from one market to another.
Committee on Payment and Settlement Systems.
Crawling Peg (Adjustable Peg)
An exchange rate system where a country's exchange rate is "pegged" (i.e. fixed) in relation to another currency. The official rate may be changed from time to time.
The risk that a debtor will not repay; more specifically the risk that the counterparty does not have the currency promised to be delivered.
A foreign exchange deal entered into involving two currencies, neither of which is the base currency.
A technique using financial futures to hedge different but related cash instruments based on the view that the price movements between the instruments move in concert.
An exchange rate between two currencies, usually constructed from the individual exchange rates of the two currencies, as most currencies are quoted against the dollar.
A cross-trade transaction is a transaction where either the buy broker and the sell broker are the same, or the buy broker and the sell broker belong to the same firm.
The type of money that a country uses. It can be traded for other currencies on the foreign exchange market, so each currency has a value relative to another.
Various weightings of other currencies grouped together in relation to a basket currency(e.g. ECU or SDR). Sometimes used by currencies to fix their rate often on a trade weighted basket.
The net balance of a country's international payment arising from exports and imports together with unilateral transfers such as aid and migrant remittances. It excludes capital flows.
The value of all exports (goods plus services) less all imports of a country over a specific period of time, equal to the sum of trade and invisible balances plus net receipt of interest, profits and dividends from abroad.
The set of expiration dates applicable to different classes of option.
D Day Order
An order that if not executed on the specific day is automatically canceled.
A Day Trading deal is a currency exchange deal which renew automatically every night at 22:00 (GMT time) starting the day the deal was made and until it ends. The deal ends in one of the following events:
1.Termination initiated by you.
2.The day trading rate has reached the Stop-Loss rate you predefined.
3.The deal end date.
As long as the deal is open, it is charged a renewal fee every night at 22:00 (GMT time).
The date on which a transaction is agreed upon.
The primary method of recording the basic information relating to a transaction.
An individual or firm acting as a principal, rather than as an agent, in the purchase and /or sale of securities. Dealers trade for their own account and risk in contrast to the brokers who do trade only on behalf of their clients.
The latest day or time by which the buyer of an option must intimate to the seller his willingness or unwillingness to exercise the option.
Shortfall in the balance of trade, balance of payments, or government budgets.
The settlement of a transaction by receipt or tender of a financial instrument or currency.
The date of maturity of the contract, when the final settlement of transaction is made by exchanging the currencies. This date is more commonly known as the value date.
A term to describe when a counterparty will not be able to complete his side of the deal. This risk is very high in case of over the counter transactions where there is no exchange which can stand as a guarantee to the trade between the two parties to the contract.
The change in the value of the option premium made fully paid by the capitalisation of reserves and given relative to the instantaneous change in the value of the; underlying instrument, expressed as a coefficient.
A method used by option writers to hedge risk exposure of written options by purchase or sale of the underlying instrument in proportion to the delta.
A ratio spread of options established as a neutral position by using the deltas of the options concerned to determine the hedge ratio.
A broad term relating to risk management instruments such as futures, options, swaps, etc.. The contract value moves in relation to the underlying instrument or currency. The issue of derivatives and their control following large losses by banks and corporates has been subject of much debate.
Term referring to a group dealing with a specific currency or currencies.
All the information required to finalize a foreign exchange transaction, i.e. name, rate, dates, and point of delivery.
Deliberate downward adjustment of a currency against its fixed parities or bands which is normally accompanied by formal announcement.
Quoting in fixed units of foreign currency against variable amounts of the domestic currency.
Less than the spot price example: forward discount.
The rate at which a bill is discounted. Specifically it refers to the rate at which a central bank is prepared to discount certain bills for financial institutions as a means of easing their liquidity, and is more accurately referred to as the official discount rate
The interest rates applicable to deposits domiciled in the country of origin. Value and values may vary from Eurodeposits due to taxation and varying market practices.
E Economic Exposure
Reflects the impact of foreign exchange changes on the future competitive position of a company in the sense of the impact it can have on the future cash flows of the company.
A statistics which indicates current economic growth rates and trends such as retail sales and employment.
ECU - European Currency Unit
A basket of the member currencies. As a composite unit, the ECU consists of all the European Community currencies, which are individually weighted. It was created by the European Monetary System with the eventual goal of replacing the individual European member currencies.
Effective Exchange Rate
An attempt to summarize the effects on a country's trade balance of its currency's changes against other currencies.
Electronic Fund Transfer.
Either Way Market
In the Euro Interbank deposit market where both bid and offer rates for a particular period are the same.
European Monetary Union.
European Monetary System.
European Options Exchange.
The change in the price of an option associated with a 1% change in implied volatility (technically the first derivative of the option price with respect to volatility). Also referred to as eta, vega, omega and kappa.
Exchange Rate Mechanism.
A computerized settlement and depository system for safe custody, delivery of, and payment for Eurobonds.
The group formerly known as the European Community.
Exchange Rate Risk
The potential loss that could be incurred from an adverse movement in exchange rates.
Exercise Price (Strike Price)
The price at which an option can be exercised.
A less broadly traded currency.
The last day on which the holder of an option can exercise his right to buy or sell the underlying security.
(1) Options - the last date after which the option can no longer be exercised.
(2) Bonds-the date on which a bond matures.
The month in which an option expires.
The last date on which an option can be bought or sold.
The total amount of money loaned to a borrower or country. Banks set rules to prevent overexposure to any single borrower. In trading operations, it is the potential for running a profit or loss from fluctuations in market prices.
F Fast Market
Rapid movement in a market caused by strong interest by buyers and/or sellers. In such circumstances price levels may be omitted and bid and offer quotations may occur too rapidly to be fully reported.
The United States Federal Reserve. Federal Deposit Insurance Corporation Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.
Cash balances held by banks with their local Federal Reserve Bank. The normal transaction with these fund is an inter bank sale of a Fed fund deposit for one business day. Straight deals are where the funds are traded overnight on a unsecured basis.
Fed Fund Rate
The interest rate on Fed funds. This is a closely watched short term interest rate as it signals the Feds view as to the state of the money supply.
Foreign Exchange Dealers Association of India) is an association of all dealers in foreign exchange which sets the ground rules for fixation of commissions and other charges and also determines the rules and regulation relating to day-to-day transactions in foreign exchange in India. The FEDAI has commonly recognised 38 currencies for dealing.
Federal National Mortgage Association
A privately owned but US government sponsored corporation that trades in residential mortgages. Its activities are funded by the sale of instruments commonly known as Fannie Maes.
Federal Reserve Board
The board of the Federal Reserve System, appointed by the US President for 14 year terms, one of whom is appointed for four years as chairman.
Federal Reserve System
The central banking system of the US comprising 12 Federal Reserve Banks controlling 12 districts under the Federal Reserve Board. Membership of the Fed is compulsory for banks chartered by the Comptroller of Currency and optional for state chartered banks.
Use of taxation as a tool in implementing monetary policy.
Fixed Exchange Rate
Official rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates are allowed to fluctuate between definite upper and lower bands, leading to intervention by the central bank.
A method of determining rates by normally finding a rate that balances buyers to sellers. Such a process occurs either once or twice daily at defined times. Used by some currencies particularly for establishing tourist rates . The system is also used in the London Bullion market.
Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position. example: you bought $500,000 then sold $500,000 = FLAT .
(1) see Floating exchange rate.
(2) Cash in hand or in the course of being transferred between banks
(3) Federal Reserve Float arises from the system where cheques sent to the Federal Reserve Banks are credited sometimes in advance of the depositing bank loosing the reserve.
Floating Exchange Rate
When the value of a currency is decided by the market forces dictating the demand and supply of that particular currency.
(1) An agreement with a counterparty that sets a lower limit to interest rates for the floor buyer for a stated time.
(2) A term for an exchanges trading area (cf. screen based trading), normally the trading area is referred to as a pit in the commodities and futures markets.
Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.
The purchase or sale of a currency against sale or purchase of another.
It means a position under which one party hereto agrees to purchase from or sell to the other party hereto an agreed amount of foreign currency.
An abbreviation of foreign exchange
The purchase or sale of a currency against sale or purchase of another currency. The maximum time for a deal is defined when the deal opens, the deal can be closed at any moment until the expiry date and time. A deal cannot be closed on its first 3 minutes, due to technical reasons.
Sometimes used as synonym for "forward deal" or "future". More specifically for arrangements with the same effect as a forward deal between a bank and a customer.
Forward Cover Taking
forward contracts to protect against movements in the exchange rate.
A deal with a value date greater than the spot value date.
The interest rate differential between two currencies expressed in exchange rate points. The forward points are added to or subtracted from the spot rate to give the forward or outright rate depending on whether the currency is at a forward premium or discount.
The rate at which a foreign exchange contract is struck today for settlement at a specified future date which is decided at the time of entering into the contract. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefor the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate.
Total reserves held by a bank less the reserves required by the authority.
The activities carried out by the dealer , normal trading activities.
Analysis based on economic and political factors
The macro economic factors that are accepted as forming the foundation for the relative value of a currency, these include inflation, growth, trade balance, government deficit, and interest rates.
A term for USD/CAD/FungiblesInstruments that are equivalent, substitutable and interchangeable in law. May apply to certain exchange traded currency contracts offered on a number of exchanges.
A contract traded on a futures exchange which requires the delivery of a specified quality and quantity of a commodity, currency or financial instruments a specified future month, if not liquidated before the contract matures.
Futures Exchange-Traded Contracts
They are firm agreements to deliver (or take delivery of) a standardized amount of something on a certain date at a predetermined price. Futures exist in currencies, money market deposits, bonds, shares and commodities. They are traded on an exchange with the clearing corporation gauranteeing the contract and moreover the trade is done on a mark to market basis.
The Group of Five. The five leading industrial countries, being US, Germany, Japan, France, UK.
The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy.
G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.
The rate at which a delta changes over time or for one unit change in the price of the underlying asset.
Removes inflation from the GNP figure. Usually expressed as a percentage and based on an index figure.
The difference between the actual real GNP and the potential real GNP. If the gap is negative an economy is overheated.
Gross Domestic Product
Total value of a country's output, income or expenditure produced within the country's physical borders.
Gross National Product
Gross domestic product plus " factor income from abroad" - income earned from investment or work abroad.
The original system for supporting the value of currency issued. This system was in vogue before 1973 when the fixed exchange rates were prevalent.
GTC "Good Till Cancelled"
An order left with a dealer to buy or sell at a fixed price. The order remains in place until it is cancelled by the client.
H Hard Currency
A currency whose value is expected to remain stable or increase in terms of other currencies.
Head and Shoulders
A pattern in price trends which chartist consider indicates a price trend reversal. The price has risen for some time, at the peak of the left shoulder, profit taking has caused the price to drop or level. The price then rises steeply again to the head before more profit taking causes the the price to drop to around the same level as the shoulder. A further modest rise or level will indicate a that a further major fall is imminent. The breach of the neckline is the indication to sell.
The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be made at a later date. Usually it involves opposite positions in the cash or futures or options market.
A hedging transaction is one whose main aim is to protect an asset or liability against a fluctuation in the foreign exchange rate rather than profit from the exchange rate fluctuations.
Very high and self sustaining inflation levels. One definition being the period while inflation exceeds 50% until it has drops below that level for 12 months.
International Commodities Clearing House Limited, a clearing house based in London operating world wide for many futures markets.
International Foreign Exchange Master Agreement.
International Monetary Fund, established in 1946 to provide international liquidity on a short and medium term and encourage liberalization of exchange rates. The IMF helps its members to tide over the balance of payments problems with supplying the necessary loans.
International Monetary Market part of the Chicago Mercantile Exchange that lists a number of currency and financial futures Implied volatilityA measurement of the market's expected price range of the underlying currency futures based on the traded option premiums.
The interest rate determined by calculating the difference between spot and forward rates.
A call option is in-the-money if the price of the underlying instrument is higher than the exercise/strike price. A put option is in-the-money if the price of the underlying instrument is below the exercise/strike price.
Currency which cannot be exchanged for other currencies either because it is forbidden by the foreign exchange regulations or the currency witnesses extreme volatility that it is not percieved to be a safe haven for parking the funds.
A market-maker's price which is not firm.
See reciprocal currency.
Industrial Production Index. A coincident indicator measuring physical output of manufacturing, mining and utilities.
Continued rise in the general price level in conjunction with a related drop in purchasing power. Sometimes referred to as an excessive movement in such price levels.
Rate given for information purposes only.
The deposit required by the Broker before a client can trade/transact a deal to have some cushion in the event of default by the party.
The forex rates large international banks quote to other large international banks. Normally the public and other businesses do not have access to these rates.
Interest Rate Risk
The potential for losses arising from changes in interest rates
Interest Rate Swaps
An agreement to exchange interest rate exposures from floating to fixed or vice versa. There is no swap of the principal. The principal amount is notional as at the end of the tenure only cash flows related with the interest payments (whether payment or reciept) are exchanged.
Action by a central bank to effect the value of its currency by entering the market. In India the intervention by Reserve Bank of India is confined to the events of extreme volatility.
Intra Day Limit
Limit set by bank management on the size of each dealer's Intra Day Position.
Intra Day Position
Open positions run by a dealer within the day. Usually squared by the close.
Index and Options Market part of the Chicago Mercantile Exchange.
ISDA (International Securities Dealers Association)
Organization which foreign currency exchange banks have formed to regulate inter-bank markets and exchanges.
J J Curve
A term describing the expected effect of a devaluation on a country's trade balance. It is anticipated that import bills rise before export orders and receipts increase.
Slang for the New Zealand dollar.
A process where a barrier option (European) becomes active as the underlying spot price is in the money.
has a corresponding meaning although the option may permanently cease to exist.
L Lay Off
To carry out a transaction in the market to offset a previous transaction and return to a square position.
Less developed countries, often used with respect to secondary debt market.
Statistic that are considered to precede changes in economic growth rates and total business activity, e.g. factory orders.
Leads and Lags
The effect on foreign trade payments of an anticipated move in the exchange rate, normally a devaluation. The importers speeden up the payment for the imports and exporters delay recieving payment for the exports.
In terms of foreign exchange, the obligation to deliver to a counterparty an amount of currency either in respect of a balance sheet holding at a specified future date or in respect of an un-matured forward or spot transaction.
LIBOR (London Inter Bank Offer Rate)
British Bankers' Association average of interbank offered rates for dollar deposits in the London market based on quotations at 16 major banks. Effective rate for contracts entered into two days from date appearing.
London International Financial Futures Exchange.
Limit Order – Reserved Day Trading Deal
An order to perform a Day Trading deal at a rate pre-defined by the customer, when and if such rate comes up in real market time. The Limit rate is superior to the existing rate at the time of reservation. The reservation order lasts for a period defined by the customer, and is associated by the necessary collaterals to facilitate the potential Day Trading deal, when and if activated, under the pre-defined terms.
When residents of a country are prohibited from buying other currencies even though non-residents may be completely free to buy or sell the national currency and the foreign institutional investors also have the liberty to buy and sell shares on the stock exchange of that country.
Any transaction that offsets or closes out a previously established position.
The ability of a market to accept large transactions without having any major impact on the interest rates.
A market position where the Client has bought a currency he previously did not own. For example: long Dollars.
Cash in circulation . Only used by the UK.
Cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial authorities.
Includes demand deposits time deposits and money market mutual funds excluding large CDs.
In the UK it is M1 plus public and private sector time deposits and sight deposits held by the public sector.
In the US it is M2 plus negotiable CDs.
Make a Market
A dealer is said to make a market when he quotes both the bid and offer prices at which he stands ready to buy and sell.
When the monetary authorities intervene regularly in the market to stabilise the rates or to push the exchange rate in a required direction. It is also called the dirty float which we have in India.
Collateral that the holder of a position in securities, options, Forex or futures contracts, has to deposit to cover the credit risk of his counterparty. Other definitions to MARGIN, used in other areas are:
(1) Difference between the buying and selling rates, also used to indicate the discount or premium between spot or forward.
(2) For options, the sum required as collateral from the writer of an option.
(3) For futures, a deposit made to the clearing house on establishing a futures position account.
(4) The percentage reserve required by the US Federal Reserve to make an initial credit transaction.
A demand for additional funds to cover positions
The that a customer goes bankrupt after entering into a forward contract. In such an event the issuer must close the commitment running the risk of having to pay the marginal movement on the contract.
Mark - To - Market
The profits and/or losses are tallied at the end of the session according to the closing prices of the security and the account is "marked to the market" daily. The party will be called upon to make good the losses if there has been an adverse movement in the prices and it can book the profits in case there has been a favorable movement in the prices.
Market value of a forex position at any time is the amount of the domestic currency that could be purchased at the then market rate in exchange for the amount of foreign currency to be delivered under the forex Contract.
Date for settlement of the transaction which is decided at the time of entering into the contract.
Japanese ministry of International Trade & Industry.
The amount of money in the economy, which can be measured in a number of ways. In India we have four measures of money supply i.e M1, M2, M3, M4.
An open-end investment company. Equivalent to unit trust.
US term for five basis points.
A foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.
Not Held Basis Order
An order whereby the price may trade through or better than the client's desired level, but the principal is not held responsible if the order is not executed.
A financial instrument consisting of a promise to pay rather than an order to pay or a certificate of indebtedness.
The rate at which a dealer is willing to sell the base currency.
Official Settlements Account
A US balance of payments measure based on movement of dollars in foreign official holdings and US reserves. Also referred to as reserve transaction account.
The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.
Old lady of Threadneedle Street, a term for the Bank of England.
One Cancels Other Order
Where the execution of one order automatically cancels a previous order also referred to as OCO or 'One cancels the other'.
Open Market Operations
The central bank operations in the markets to influence exchange and interest rates.
Any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date. It can be termed as a high risk, high return proposition.
All options of the same type - calls or puts -listed on the same underlying instrument.
All options of the same class having the same exercise/strike price and expiration date.
A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.
Over The Counter (OTC)
A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor. These markets have not been very popular because of the risks both the parties face in case the other party fails to honour the contract. They were never part of the Stock Exchange since they were seen as "unofficial".
A put option is out-of-the-money if the exercise/strike price is below the price of the underlying instrument. A call option is out-of-the money if the exercise/strike price is higher than the price of the underlying instrument.
A forward deal that is not part of a swap operation.
Foreign exchange transaction involving either the purchase or the sale of a currency for settlement at a future date.
The forward rate of a foreign exchange deal based on spot price plus forward discount/premium.
Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.
Net long or short position in one or more currencies that a dealer can carry over into the next dealing day. Passing the book to other bank dealing rooms in the next trading time zone reduces the need for dealers to maintain these unmonitored exposures.
P Package Deal
When a number of exchange and /or deposit orders have to be fulfilled simultaneously.
(1) The nominal value of a security or instrument.
(2) The official value of a currency.
The value of one currency in terms of another.
(1) Foreign exchange dealer's slang for your price is the correct market price.
(2) Official rates in terms of SDR or other pegging currency.
It means a foreign currency which is freely convertible i.e a currency which is permitted by the rules and regulations of the country concerned to be converted into major reserve currencies and for which a fairly active and liquid market exists for dealing against the major currencies.
See point. (0.0001 of a unit).
(1) 100th part of a per cent, normally 10,000 of any spot rate. Movement of exchange rates are usually in terms of points.
(2) One percent on an interest rate e.g. from 8-9%.
(3) Minimum fluctuation or smallest increment of price movement.
The potential for losses arising from a change in government policy or due to the risk of expropriation (nationalisation by the government ).
The netted total exposure in a given currency. A position can be either flat or square ( no exposure), long, (more currency bought than sold), or short ( more currency sold than bought).
Producer Price Indices. See wholesale price indices.
(1) The amount by which a forward rate exceeds a spot rate.
(2) The amount by which the market price of a bond exceeds its par value.
(3) Options, the price a put or call buyer must pay to a put or call seller for an option contract.
(4) The margin paid above the normal price level.
(1) The rate from which lending rates by banks are calculated in the US.
(2) The rate of discount of prime bank bills in the UK.
A dealer who buys or sells stock for his/her own account.
The unwinding of a position to realize profits.
Purchasing Power Parity
Model of exchange rate determination stating that the price of a good in one country should equal the price of the same good in another country after adjusting for the changes in the price due to the change in exchange rate. Also known as the law of one price.
Put Call Parity
The equilibrium relationship between premiums of call and put options of the same strike and expiry.
A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period.
An indicative price. The price quoted for information purposes but not to deal.
The difference between the highest and lowest price of a future recorded during a given trading session.
The price of one currency in terms of another. It has the same meaning as the term parities.
A decline in business activity. Often defined as two consecutive quarters with a real fall in GNP.
A currency held by a central bank on a permanent basis as a store of international liquidity, these are normally Dollar , Deutschemark, and sterling.
Funds held against future contingencies, normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.
A price level at which the selling is expected to take place.
Retail Price Index
Measurement of the monthly change in the average level of prices at retail, normally of a defined group of goods.
Increase in the exchange rate of a currency as a result of official action.
A system for screen based trading that has been in operation since the early 1980s now has a matching optional enhancement known as Dealing 2000-2.
The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organisation. With respect to foreign exchange involves among others consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.
Additional sum payable or return to compensate a party for adopting a particular risk.
There are risks associated with any market. It means variance of the returns and the possibility that the actual return might not be in line with the expected returns. The risks associated with trading foreign currencies are: market, exchange, Interest rate, yield curve, volatility, liquidity, forced sale, counter party, credit, and country risk.
The substituting of a far option for a near option of the same underlying stock at the same strike/exercise price.
Where the settlement of a deal is carried forward to another value date based on the interest rate differential of the two currencies example: next day.
S Selling Rate
Rate at which a bank is willing to sell foreign currency.
Actual physical exchange of one currency for another.
It means the business day specified for delivery of the currencies bought and sold under a forex contract.
A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms.
Standard International Trade Classification. A system for reporting trade statistics in a common manner.
Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.
More potential sellers than buyers, which creates an environment where rapid price falls are likely.
(1) The most common foreign exchange transaction.
(2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.
The overnight swap from the spot date to the next business day.
The price at which the currency is currently trading in the spot market.
(1) The difference between the bid and ask price of a currency.
(2) The difference between the price of two related futures contracts.
(3) For options, transactions involving two or more option series on the same underlying currency.
An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.
Standard and Poors (S&P)
A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&&P 500.
British pound, otherwise known as cable.
Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.
Stop Loss Order
Order given to ensure that , should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.
Stop Out Price
US term for the lowest accepted price for Treasury Bills at auction.
The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.
Recession or low growth in conjunction with high inflation rates.
Also called exercise price. The price at which an option holder can buy or sell the underlying instrument.
A combination of two puts and one call.
Unemployment levels inherent in an economic structure.
A price level at which the buying is expected to take place.
The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.
Society for Worldwide Inter-bank Financial Telecommunication is a clearing system for international trading.
Market slang for Swiss Franc.
The study of the price that reflects the supply and demand factors of a currency. Common methods are flags, trend-lines spikes, bottoms, tops, pennants, patterns and gaps.
An adjustment to price not based on market sentiment but technical factors such as volume and charting.
Terms of Trade
The ratio between export and import price indices.
A measure of the sensitivity of the price of an option to a change in its time to expiry.
A market in which trading volume is low and in which consequently bid and ask quotes are wide and the liquidity of the instrument traded is low.
Tokyo Inter-bank Offered Rate.
A minimum change in price, up or down.
Tokio International Financial Futures Exchange.
Tomorrow Next (Tom next)
Simultaneous buying and selling of a currency for delivery the following day and selling for the next day or vice versa.
The date on which a trade occurs.
A portion of, specifically used for borrowings from the IMF.
The buying or selling of securities resulting from the execution of an order.
The date on which a trade occurs.
Potential profit and loss generated by current foreign exchange transactions.
An exchange rate is normally considered to be undervalued when it is below its purchasing power parity.
V Value Date
For exchange contracts it is the day on which the two contracting parties exchange the currencies which are being bought or sold. For complete description see the chapter on trading. For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month If the one month date falls on a non-banking day in one of the centers then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not effect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as maturity date.
Normally settlement for two working days from the date the contract is entered into. Value Today Transaction executed for same day settlement; sometimes also referred to as "cash transaction."
A simple option whose terms and conditions do not include any provisions other than exercise style, expiry and strike. To compare with exotic options which have additional terms.
Funds required to be deposited by a client when a price movement has caused funds to fall below the stipulated percentage of the value of the contract.
Expresses the price change of an option for a one per cent change in the implied volatility.
Velocity of Money
The speed with which money circulates or turnover in the economy. It is calculated as the annual national income: average money stock in the period.
A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes (historic). Can be implied from futures pricing, implied volatility.
A local currency account maintained with a bank by another bank. The term is normally applied to the counterparty's account from which funds may be paid into or withdrawn, as a result of a transaction.
W Wholesale Money
Money borrowed in large amounts from banks and institutions rather than from small investors.
Wholesale Price Index
It measures changes in prices in the manufacturing and distribution sector of the economy and tends to lead the consumer price index by 60 to 90 days. The index is often quoted separately for food and industrial products.
A day on which the banks in a currency's principal financial centre are open for business. For FX transactions, a working day only occurs if the bank in both (all relevant currency centers in the case of a cross are open).
A bank made up of members of the IMF whose aim is to assist in the development of member states by making loans where private capital is not available.
The seller of a position. Also known as the grantor of the trade. "Writing an Currency" is to sell it.
Y Yield Curve
The graph showing changes in yield on instruments depending on time to maturity. A system originally developed in the bond markets is now broadly applied to various financial futures. A positive sloping curve has lower interest rates at the shorter maturities and higher at the longer maturities. A negative sloping curve has higher interest rates at the shorter maturities.
Certificate issued by the Bank of England to "discount houses" in lieu of stock certificates to facilitate their dealing in the short dated gilt edge securities.
Zero Coupon Bond
A bond that pays no interest. The bond is initially offered at a discount to its redemption value.