9.22.2009

Market Expects Low Volatility Today

There is likely to be less volatility in the market today with almost no market moving data on tap from Japan Europe and Unites States. Yet, few fundamental events that are due out later today may indeed create a remarkable wave in the market, especially towards the late afternoon hours.



USD - USD Ups and Downs Result of Market Uncertainty

The US Dollar experienced an exciting trading day on Monday as a rise in risk averse trading helped add an early morning boost, followed by a retracing of Friday's levels. Against the EUR, the greenback climbed to as high as 1.4610 before coming back down and closing the day at 1.4717. Versus the British Pound, the USD gained as much as 90 pips, with a high mark of 1.6134, before coming back up and closing out the trading day at the 1.6250 level.

With a decision regarding the Federal Funds Rate looming, traders are becoming more aware of the potential delay in any increase to short-term interest rates due to the instability of global economies recently. Britain has made similar overtures, as did the Euro-Zone in its recent discussions. However, the question still remains over whether the global economy is indeed recovering as many were expecting. This uncertainty drives many investors back into safe-havens for the short-run until things become clearer.

As far as the North-Western Hemisphere is concerned today, the United States is not due to release much data of concern. Canada, on the other hand, is going to release vital data regarding its retail sales levels, which last week caused a stir among the USD and EUR. Growth in Canadian sales may help return the Loonie back to a bullish posture, but forecasts appear modest at best. This Wednesday's US interest rate decision appears to be this week's primary event for Dollar traders.

EUR - EUR Benefits from USD and GBP Aversion

The EUR continued its rally against most currencies, save the USD, in yesterday's trading; making considerable inroads against the GBP especially. Climbing as high as 0.9076 versus the Pound and upwards of 135.48 against the Japanese Yen, the EUR may indeed be one of the primary beneficiaries of market growth, and the continuing uncertainty.

Investors appear ready to make the shift into riskier assets to return to the heady days of pre-2008 growth, but market concerns make their transition move somewhat sheepishly. Regional retail sales in Europe and the US helped give a boost to consumer optimism, but only offset losses in other sectors such as housing and consumer sentiment. With the Pound under heavy selling pressure following statements from Bank of England governor Mervyn King, the EUR, as stated above, has become one of the primary beneficiaries of recent returns to strength and risk appetite.

Going into today's trading, with little on the economic agenda, the EUR may be poised to benefit from the uncertainty surrounding the US interest rate decisions due on Wednesday. With an announcement similar to those of Britain and Europe recently regarding a delay of an interest rate hike, the EUR could be on the receiving end of further risk appetite and USD-aversion.

JPY - Japanese Bank Holiday Puts Additional Sell Pressure on Yen

The Japanese Yen appears to be returning to a bearish posture against its major currency rivals considering it ended yesterday's trading down somewhat versus all of its major rivals. Hitting the 149.60 level against the GBP, and even dropping to the 135.50 level against the EUR, the island currency is a little worse for wear considering its latest movements.

Many economists point out, however, that the banks in Japan being closed in celebration of the autumnal equinox carries a significant role in this latest downtrend. The thinly traded JPY only appears weak momentarily until the Japanese markets come back online early Wednesday. In other Asian news, the currencies of the south Pacific (Australia and New Zealand) appear to be gaining heavily against all of their currency rivals. Their avoidance of the harshest aspects of the global downturn has made them juicy targets for risk-hungry investors. Traders would be wise to note the upward movement of these pairs and trade accordingly.

Crude Oil - Crude Falls to $70; Prices Rose too Quickly According to Investors

Investors hoping for a growth in oil prices were dismayed by news yesterday that the price for a barrel of Crude Oil may have risen too quickly from last week's market optimism. As yesterday helped traders realize, Crude Oil may indeed be over-valued and its recent strength has come to a temporary halt. After last week's steady yet volatile gains, the beginning of this week has started with a drop of almost $3 a barrel, closing out yesterday's trading just above $70.

Adding to the sell pressure on Crude Oil is the surprising surge in the value of the USD in yesterday's early trading hours, albeit offset somewhat by its retraction later in the day. But market optimism seems to have returned, but energy demand concerns persist. Crude Oil has been on the verge of reemerging as a lead investment and inflationary hedge, yet it has failed to receive the same level of support as Gold and Silver, which suggests that demand for oil is low, and precious metals are being used in its stead as a safety valve. Chances are, so long as market uncertainty remains, Crude Oil will continue to float near its current mark.

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What is Forex?

If you would go out on a dinner with your friends or family and you mentioned that you were trading on the Forex market most of them wouldn’t know what you were talking about. The worst thing is that most of the Forex traders that join the Forex market don’t know what they are doing. Understanding what Forex is, is the first good step to your success at Forex trading.


The foreign exchange market (Currency, Forex, or FX) is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. Forex transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when world over countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.

Today, the Forex market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. Since then, the market has continued to grow. According to Euromoney's annual Forex Poll, volumes grew a further 41% between 2007 and 2008.

Forex Turnover

Forex Turnover
Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.
The purpose of Forex market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, Yen, etc., and the need for trading in such currencies. Since you aren’t buying anything physical this kind of trading can be confusing. When buying a currency think of it as buying a part in that particular country’s economy because the currency rate reflects the economical situation of the country when compared to others.

Currencies

Currencies
List of most popular currencies on the Forex market

Forex used to be a closed market because only the “big boys” because you needed between 10 and 50 million $ to open an account. But today, with the development of internet, online Forex brokers have the possibility to offer their services to “little” traders. All you need to start is a computer, fast internet connection and information which you can find on this page also.

This enormous market is like the dangerous sea where you can meet lots of sharks and dangerous waters but at the same time it is the only one where two weeks of trading can hypothetically bring you $1,000,000 out of $1,000 of initial investment.

This is certainly hypothetically because a lot of newbie traders deal with their trades as gambling, that surely bring them to having nothing in the end. You should always keep the phrase "be careful!" in your mind. This market would give you its profit possibilities only if you learn the basic things hard and make lots of demo trading.

The statistics is that as much as 95% of traders come to losing their money at Forex, 5% have profit and less than 1% of traders make large fortune at Forex. You shouldn't produce, sell or advertise anything trading at Forex. Your assets are your knowledge, experience and a small amount of cash.

This market is a platform for banks, transnational corporations and individual traders to change the currencies they possess into other ones. This is the spot Forex market. At this market you can trade with up to 1:400 leverage which means that you'll get $400 on your account for each dollar invested. So, you can trade with the $400,000 sum having invested $1,000 onto your account.

Forex is unique among other world markets because in any time of day and night, somewhere in the world, a financial centre is open for business, banks and corporations exchange currency all the time, with a little lower frequency during the weekend.

Why to trade on Forex?

1. There is no commission fee for trading at Forex.
2. There is no intermediary, you can trade directly at Forex.
3. Forex is open 24-hours a day.
4. Nobody can influence the market for a longer period.
5. High liquidity.
6. Free demo accounts, analysis and charts.
7. Small accounts that allow everyone to try out his luck.

Hope this has answered a lot of questions you were asking yourself about Forex and that you can now start trading. Also make sure that you check out other articles on this blog which can help you earn your fortune.

Good luck to everyone!