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…

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…

The central bank has been described as “the lender of last resort”, which means that it is responsible for providing its economy with funds when commercial banks cannot cover a supply shortage. In other words, the central bank prevents the country’s banking system from failing. However, the primary goal of central banks is to provide their countries’ currencies with price stability by controlling inflation. A central bank also acts as the regulatory authority of a country’s monetary policy and is the sole provider and printer of notes and coins in circulation. Time has proven that the central bank can best function in these capacities by remaining independent from government fiscal policy and therefore uninfluenced by the political concerns of any regime. The central bank should also be completely divested of any commercial banking interests. more…

Many of the dollar-denominated majors have developed congestive patterns over the past six to eight weeks. This is no doubt a product largely derived from the US dollar itself; but it is further a situation that is mirrored in most currency pairs that have a tangible link to risk appetite.

7-17-09Range-01-EURUSD

Why Would EURUSD Hold a Range?

• Levels to Watch:

-Range Top:       1.4165 (Trend, Fib, Range High)

-Range Bottom: 1.3750 (Pivot, Fibs)

• Underlying fundamental and scheduled event risk is significant for EURUSD. Like nearly every other currency pair in the market, this most liquid cross will no doubt take its cue from shifts in risk appetite through earnings or any financial implosions should it catalyze fear or greed among speculators. However, aside from this unforeseeable risk, there is still plenty of data on tap; but little of it guarantees volatility. The euro will mark hold the bulk of the risk.

• Similar to patterns seen with a few of the other majors (USDCHF, AUDUSD, NZDUSD), EURUSD has produced a clear and consistent range formation since the beginning of June. This sideways price action follows a medium-term bullish bias, but resistance has a larger trendline as well as a major 50% Fib and a series of daily highs.

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You don’t have to be a daily trader to take advantage of the forex market – every time you travel overseas and exchange your money into a foreign currency, you are participating in the foreign exchange (forex) market. According to the 2007 Triennial Central Bank Survey of Foreign Exchange and Derivative Market Activity conducted by the Bank for International Settlements, the forex market generated $3.2 trillion dollars worth of transactions each day. This makes the forex market the quiet giant of finance, dwarfing over all other capital markets in its world.

Despite this market’s overwhelming size, when it comes to trading currencies, the concepts are simple. Let’s take a look at some of the basic concepts that all forex investors need to understand.

Eight Majors
Unlike the stock market, where investors have thousands of stocks to choose from, in the currency market, you only need to follow eight major economies and then determine which will provide the best undervalued or overvalued opportunities. These following eight countries make up the majority of trade in the currency market:

1. United States
2. Eurozone (the ones to watch are Germany, France, Italy and Spain)
3. Japan
4. United Kingdom
5. Switzerland
6. Canada
7. Australia
8. New Zealand

These economies have the largest and most sophisticated financial markets in the world. By strictly focusing on these eight countries, we can take advantage of earning interest income on the most credit worthy and liquid instruments in the financial markets. more…

Although forex is the largest financial market in the world, it is relatively unfamiliar terrain to retail traders. Until the popularization of internet trading a few years ago, FX was primarily the domain of large financial institutions, multinational corporations and secretive hedge funds. But times have changed, and individual investors are hungry for information on this fascinating market. Whether you are an FX novice or just need a refresher course on the basics of currency trading, read on to find the answers to the most frequently asked questions about the forex market. How does this market differ from other markets? Unlike the trading of stocks, futures or options, currency trading does not take place on a regulated exchange. It is not controlled by any central governing body, there are no clearing houses to guarantee the trades and there is no arbitration panel to adjudicate disputes. All members trade with each other based upon credit agreements. Essentially, business in the largest, most liquid market in the world depends on nothing more than a metaphorical handshake. more…

Being a forex trader is an exhilarating profession where you bounded your daily 24-hour a day life with forex news alert from around the globe five and a half days a week. The forex/currency trading market starts from the East where Tokyo will start trading around 9am Monday their time which is Sunday 7pm in New York and it ends about 4 pm (EST) Friday in New York.

I was once a forex trader expert in the four major currencies operational in a small boutique currency trading company in San Francisco. I still remember the working hours was almost 16 hours per days where you only got few hours of sleep each day. We specialized in private investors’ funds and managing those funds were high in pressure and stress; the reasons are that the private investors will call you anytime to check their forex trading positions and forex account balances. The payout was high but the working hour was dreadful. more…