FX Island

Additionally, Forex trading with us is done on a margin system, essentially using a free short-term credit allowance used to purchase an amount of currency that greatly exceeds the traders account value

Understanding the Margin System
Trading currencies on margin lets you increase your buying power. Here’s a simplified example: If you have $2,000 cash in a margin account that allows 1:100 leverage, you could purchase up to $200,000 worth of currency-because you only have to post 1% of the purchase price as collateral. Another way of saying this is that you have $200,000 in buying power.

You are probably wondering how a small investor can trade such large amounts of money. Think of your broker as a bank who basically fronts you $100,000 to buy currencies and all he asks from you is that you give him $1,000 as a good faith deposit, which he will hold you for but not necessarily keep. Sounds too good to be true? Well this is how forex trading using leverage works. more…

A Trading System is a method of trading where buy/sell signal are defined as a result of technical analysis. Every investor has his own market Trading System (Trading Strategy) when it comes to making money in the stock or forex trading market.

Technical analysis is not an exact science, it is more of an art and takes a considerable amount of experience. Not all studies work the same for every instrument traded. One study may give excellent buy and sell signals while another may not work for you at all. It’s up to each individual trader to find those that will fit his or her specific needs. Technical analysis attempts to use past stock or forex market price and volume information to predict future price movements.

A Trading System based on real-time charts is one of the best ways to control risk. It’s not the only way, but it’s one strategy that’s followed by a lot of investors. more…

There is nothing new about offshore to banks, investment funds and other types of financial institution such as forex trading companies and insurance; most of them long ago set up offshore branches in order to service multinational corporations, to facilitate trade, and to provide investment management for high-net-worth individual customers.

Some offshore jurisidictions have developed as centres for particular types of offshore financial service: thus, there are hundreds of banks in the Caymans, and several thousand investment funds in Luxembourg, and British Virgin Islands (BVI).

In recent years, growing financial awareness has created strong demand for offshore financial services among a wider community of customers; this is especially true of offshore investment funds. Even so, offshore financial services have tended to remain the preserve of larger companies or of relatively wealthy and sophisticated individuals – transaction costs are high and information not always easy to come by.
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Those trading in the foreign-exchange market (forex) rely on the same two basic forms of analysis that are used in the stock market: fundamental analysis and technical analysis. The uses of technical analysis in forex are much the same: price is assumed to reflect all news, and the charts are the objects of analysis. But unlike companies, countries have no balance sheets, so how can fundamental analysis be conducted on a currency?

Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation’s currency. Here we look at some of the major fundamental factors that play a role in the movement of a currency. more…

Forex brokers offer their services without charging a fee. Forex brokers get their share of fee from the other trading activities like purchasing, selling, holding foreign currencies, interest accrued on funds deposited and rollover fees. The Forex brokers do not charge anything extra from the investor. An experienced and veteran forex broker has years of rich experience which prove to be useful in understanding the markets and also guiding the investor accordingly.

It is really amazing how the brokers offer their services without charging a fee for it. The services rendered by a forex dealer are very similar to that of a middleman. Let us take for example as bread middleman. This person purchases bread from the wholesale market at a wholesale price, he then sells it to the retailer. The difference he makes is his profit. In case the bakery store needs to replenish further stock of break, they would contact the middleman. The difference which the middleman charges is his brokerage and his profit as well. more…

Saving is sin, and spending is virtue…check out which country rank number 1 and last in current account balance.

Interesting article written by an Indian Economist:

Rank, Country, Current Account Balance (million US$)

1 People’s Republic of China (PRC) 179,100
2 Japan 174,400
3 Germany 134,800
4 Russia 105,300

………who is at number 163.  Find out here.

Japanese save a lot. They do not spend much. Also Japan exports far more than it imports. Has an annual trade surplus of over 100 billions. Yet Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports. Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and trusted to get stronger.

But where from do Americans get money to spend?

They borrow from Japan, China and even India. Virtually others save for the US to spend. Global savings are mostly invested in US, in dollars. more…

LONDON (AP) — The effect of the weak dollar is again pushing oil prices higher in the face of little demand for energy and huge surpluses of crude.

On Friday, the dollar again fell against major currencies.

Since March, the dollar index, which weighs the U.S. currency against a basket of foreign currencies like the euro, the Japanese yen, the pound and the Swiss franc, has fallen nearly 12 percent. In that same period, crude has jumped 81 percent.

The widening gap between the value of a dollar and that of a barrel of oil shows just how much oil-based index funds have come to affect the prices that consumers pay for energy.

Benchmark crude for October delivery rose 81 cents to $73.30 on the New York Mercantile Exchange. Oil prices earlier this week hit $75, a high for the year. more…

If there’s one question that investors have asked themselves over the past year and a half, it’s that one. If only I had acted differently, they say. If only, if only, if only.

Yet here’s the problem: While we know that we made investment mistakes, and vow not to repeat them, most people have only the vaguest sense of what those mistakes were, or, more important, why they made them. Why did we think and feel and behave as we did? Why did we act in a way that today, in hindsight, seems so obviously stupid? Only by understanding the answer to these questions can we begin to improve our financial future.

This is where behavioral finance comes in. Most investors are intelligent people, neither irrational nor insane. But behavioral finance tells us we are also normal, with brains that are often full and emotions that are often overflowing. And that means we are normal smart at times, and normal stupid at others. more…

The forex market, unlike other exchange driven markets, has a unique feature that many market makers use to entice traders to trade. They promise no exchange fees or regulatory fees, no data fees and, best of all, no commissions. To the new trader just wanting to break into the trading business, this sounds too good to be true. Trading without transaction costs is clearly an advantage. However, what might sound like a bargain to inexperienced traders may not be the best deal available – or even a deal at all. Here we’ll show you how to evaluate forex broker fee/commission structures and find the one that will work best for you.

Commission Structures
There are three forms of commission used by brokers in forex. Some firms offer a fixed spread, others offer a variable spread and still others charge a commission based on a percentage of the spread. So which is the best choice? At first glance, it seems that the fixed spread may be the right choice, because then you would know exactly what to expect. However, before you jump in and choose one, there are a few things you need to consider. more…

It’s unclear whether the economy has hit bottom or not. Investment markets are moving up. Jobless rates didn’t get any worse. “Cash for clunkers” has given the auto industry a real boost. And stimulus funds are slowly making their way into the real world. So, at the risk of tempting fate, it’s probably safe to venture outdoors once more. The sky will not be falling. Life as we know it will not be ending. There will be a World Series in the fall, and college stadiums will be jammed with fans.

Before moving on to better times, however, let’s think a bit about how we’ve responded to the big problems that began emerging in 2006 and 2007. What are some of the clear money lessons we’ve learned? Almost by definition, these lessons seem very obvious today. But our children and grandchildren will forget many of them, just as we forgot the hard-knocks lessons of our parents and grandparents. Here’s some starter advice: more…