FX Island

Ask (Offer) – price of the offer, the price you buy for.

Bank Rate – the percentage rate at which central bank of a country lends money to the country’s commercial banks.

Bid – price of the demand, the price you sell for.

Broker – the market participating body which serves as the middleman between retail traders and larger commercial institutions.

Cable – a Forex traders slang word GBP/USD currency pair.

CFD – a Contract for Difference – special trading instrument that allows financial speculation on stocks, commodities and other instruments without actually buying.

Commission – broker commissions for operation handling.

CPI – consumer price index the statistical measure of inflation based upon changes of prices of a specified set of goods.

EA (Expert Advisor) – an automated script which is used by the trading platform software to manage positions and orders automatically without (or with little) manual control.

ECN Broker – a type of Forex brokerage firm that provide its clients direct access to other Forex market participants. ECN brokers don’t discourage scalping, don’t trade against the client, don’t charge spread (low spread is defined by current market prices) but charge commissions for every order.

Fibonacci Retracements – the levels with a high probability of trend break or bounce, calculated as the 23.6%, 32.8%, 50% and 61.8% of the trend range.

Flat (Square) – neutral state when all your positions are closed.

Fundamental Analysis – the analysis based only on news, economic indicators and global events.

GTC (Good Till Cancelled) – order to buy or sell of a currency with a fixed price or worse. The order is alive (good) until execution or cancellation.

Hedging – maintaining a market position which secures the existing open positions in the opposite direction.

Jobber – a slang word for a trader which is aimed toward fast but small and short-term profit from an intra-day trading. Jobber rarely leaves open positions overnight.

Limit Order – order for a broker to buy the lot for fixed or lesser price or sell the lot for fixed or better price. Such price is called limit price.

Liquidity – the measure of markets which describes relationship between the trading volume and the price change.

Long – the position which is in a Buy direction. In Forex, the primary currency when bought is long and another is short.

Loss – the loss from closing long position at lower rate than opening or short position with higher rate than opening, or if the profit from a position closing was lower than broker commission on it.

Lot – definite amount of units or amount of money accepted for operations handling (usually it is a multiple of 100).

Margin – money, the investor needs to keep at broker account to execute trades. It supplies the possible losses which may occur in margin trading.

Margin Account – account which is used to hold investor’s deposited money for FOREX trading.

Margin Call – demand of a broker to deposit more margin money to the margin account when the amount in it falls below certain minimum.

Market Order – order to buy or sell a lot for a current market price.

Market Price – the current price for which the currency is traded for on the market.

Offer (Ask) – price of the offer, the price you buy for.

Open Position (Trade) – position on buying (long) or selling (short) for a currency pair.

Order - order for a broker to buy or sell the currency with a certain rate.

Pivot Point – the primary support/resistance point calculated basing on the previous trend’s High, Low and Close prices.

Pip (Point) – the last digit in the rate (e.g. for EUR/USD 1 point = 0.0001).

Profit (Gain) – positive amount of money gained for closing the position.

Principal Value – the initial amount of money of the invested.

Realized Profit/Loss – gain/loss for already closed positions.

Resistance – price level for which the intensive selling can lead to price increasing (up-trend)

Settled (Closed) Position – closed positions for which all needed transactions has been made.

Slippage - execution of order for a price different than expected (ordered), main reasons for slippage are – “fast” market, low liquidity and low broker’s ability to execute orders.

Spread – difference between ask and bid prices for a currency pair.

Stop-Limit Order – order to sell or buy a lot when the market reaches certain price. Usually is a combination of stop-order and limit-order.

Stop-Loss Order – order to sell or buy a lot for a certain price or worse. It is used to avoid extra losses when market moves in the opposite direction.

Support – price level for which intensive buying can lead to the price decreasing (down-trend).

Technical Analysis – the analysis based only on the technical market data (quotes) with the help of various technical indicators.

Trend – direction of market which has been established with influence of different factors.

Unrealized (Floating) Profit/Loss – a profit/loss for your non-closed positions.

Useable Margin – amount of money in the account that can be used for trading.

Used Margin – amount of money in the account already used to hold open positions open.

Volatility – a statistical measure of the number of price changes for a given currency pair in a given period of time.

Fears of an inflationary wage spiral eased on Wednesday after data showed that average earnings growth slowed by more than expected in the three months to April. The labour market report from the Office for National Statistics showed that average earnings including bonuses climbed by 4 per cent, the weakest growth since September. April’s number was lower than March’s downwardly revised figure of 4.4 per cent and was much softer than analysts expectations. Excluding bonuses, wages rose by 3.6 per cent in the quarter to April, unchanged on the previous month. The earnings news will be welcomed by the Bank of England and may, marginally, reduce the pressure for further interest rate rises to combat inflation.

www.ft.com

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Opening a new online trading account with a Forex broker can be done in three simple steps:

Selecting an account type
Registration
Activating your account

Before trading a dime of your hard earned money, you may want to think about opening demo account. Actually, open up two or three demos – why not? It’s all FREE! Try out several different brokers to get a feel for the right one for you.

Account Types
When you’re ready to open a live account, you have the choice of opening a Forex trading account under your personal name or a business name. Also, you will have to decide whether or not you want to open a “standard” account or a “mini” account (or “micro” account if available). Inexperienced traders or traders with a small amount of capital to trade should always open a mini account. Only experienced traders with lots of money should open a standard account.

Some brokers have a “managed account” option in their applications. If you want the broker to trade your account for you, pick this, but obviously you’re here to learn how to trade the Forex for yourself. Besides, opening a managed account typically requires a pretty big minimum deposit – $25,000 or higher – and the broker also takes a portion of the profits.

Also, make sure you open a Forex spot account and not a “forwards” or “futures” account.

Registration
You will have to submit paperwork in order to open an account and the forms will vary from broker to broker. Some broker may allows you to do it online which no paperwork is necessary.

Account Activation
Once the broker has received all the necessary paperwork, you should receive an email with instructions on completing your account activation. After these steps have been completed, you will receive a final email with your username, password, and instructions on how to fund your account.

So all that’s left is for you to login and start trading. Pretty easy huh?

BEAVERTON, Ore., June 25 /PRNewswire-FirstCall/ — Tektronix, Inc. (NYSE:TEK) announced today that its Board of Directors authorized an incremental $350 million to repurchase shares of common stock in the open market and in privately negotiated transactions under the company’s share repurchase program. Since this share repurchase program was initiated in January 2000, including today’s authorization, the board has authorized $1,600 million for share repurchase — approximately $909 million of which has been used as of May 26, 2007.

“The increase in the share authorization reflects…”

www.advfn.com

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Last day of a Forex trading week brought some good results for EUR/USD currency pairs, moving it past 1.3450 level (but still not breaking the recent downtrend). The main reasons of such behavior of EUR/USD can be seen in slightly better than expected April industrial orders which in year-to-year period changed by +12.2% against +8.7% anticipated by experts. Also, Jean-Claude Trichet, President of ECB, spoke about Eurozone economics marking it mostly in very optimistic epithets, that could give Euro bulls some hope for the faster interest rates increase by ECB.

earnforex.com

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Selecting the online forex broker the right way. Firstly, make sure you have someone reliable and avoid signing up with those hit-and-run online site. Most online forex website offers free and limited online demo. It is good to start exploring before you sign up.

Other factors to be considered when choosing a broker including safety of funds, execution of trades, trading platform, account size, spread, commissions, margin and customer support.

The President of Japan’s Central Bank announced that a rate hike is unlikely, which is good news for currency traders.

“As long as we don’t have any tick up in the global risk aversion, then carry trade will remain the dominant theme for FX markets, and the weak yen,” said Niels Christensen, foreign exchange strategist at Nordea in Copenhagen.

Despite raising global interest rates, business is as usual for currency traders, as they continue to put on carry trades.

The yen was pinned near a 4-1/2-year low against the dollar and 15-year troughs versus sterling on Monday, staying under pressure as investors kept selling the low-yielding currency in carry trades.

Reuters.com

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10. Trade on the news – Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.

11. Exiting Trades – If you place a trade and it’s not working out for you, get out. Don’t compound your mistake by staying in and hoping for a reversal. If you’re in a winning trade, don’t talk yourself out of the position because you’re bored or want to relieve stress; stress is a natural part of trading; get used to it.

12. Don’t trade too short-term – If you are aiming to make less than 20 points profit, don’t undertake the trade. The spread you are trading on will make the odds against you far too high.

13. Don’t be smart – The most successful traders I know keep their trading simple. They don’t analyse all day or research historical trends and track web logs and their results are excellent.

7. No strategy – The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.

8. Trading Off-Peak Hours – Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple – don’t.

9. The only way is up/down – When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That’s it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you’ll be amazed at how hard it is to blame anyone else.

4. Over-cautious trading – Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don’t place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.

5. Independence – If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:

Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);

Seek advice from too many sources – multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome – by yourself, for yourself.

6. Tiny margins – Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.