Wednesday, October 17, 2007

why forex?

The effective utilization of the capital
The principle of the margin trade provides an opportunity to trade in the FOREX market in the volumes considerably exceeding your deposit. Traders have an opportunity of trading for profit on both up, and downturn trends.
Thus, in order to complete a transaction it is not necessity to have the full amount of the transaction. That is, for the conclusion of a transaction you borrow the missing amount, therefore giving some leverage to the initial amount.
Opportunity to operate risks
FOREX is not only fascinating, but does bear certain risks. It is possible to come out of the game as a winner, but there is also a risk of losing money. Fortunately, modern FOREX allows traders to operate risks by means of the fundamental and technical analysis, In addition, the use of "stop loss" and "take profit" orders allows the trader to control profit and losses.
Wide range of trading tools
FOREX Market has a wide spectrum of trading opportunities: the basic currency pairs, cross-country by rates, and even exotic currencies. Traders can trade for just one day or open long-term positions if they can see the benefits and prospects of their positions
Fundamental trading opportunities
The trade in FOREX market is a game based on a macro of both fundamental economic news and trends.
Technical trading opportunities
Trends in FOREX market are usually steadier, than in other markets, and render and are ideally suitable for use with technical trading models.
No commissions
There are no commissions; you pay only a difference between by the seller (ask) and the buyer (bid) price in the bilateral quotation.
Round the clock
The Market works round the clock, transactions are made through the Internet or by a telephone system. Traders can open or close positions at any time.

fundamental analysis:

News about the condition of an economy is the basis of trading. Economic health of the country practically is always reflected in the price of currency.
There are two basic ways of the analysis of a situation in the market - fundamental and technical. In this section we will examine the first one. The fundamental analysis is established from an estimation of a situation from the point of view of political, economic and financial-credit policy. Traders judge economic well-being on certain fundamental indicators.
The most important indicators
1. Unemployment (Non Farm Payrolls - in the US)
Unemployment measures the condition of the market of workplaces. One of the ways by which analysts measure the health of an economy is the quantity of the new workplaces created in non agricultural branches of economy for 1 month. The increase in this parameter characterizes increase in employment and leads to increase of a dollar exchange rate. On supervision, the increase in its value on 200 000 in a month is equated to increase in gross national product at 3.0 %. It is published, as a rule, on the first Friday of each month at 08:30 EST.
2. The decisions under interest rates (FOMC)
The Federal Open Market Committee of Federal reserve system of the USA establishes interest rates during sessions. There are 8 sessions planned per year. Their date is known in advance.
3. The Trade balance
The Trade balance defines a difference between the imported and exported goods and services. When a trading surplus results, the national economy experiences proficiency, at lack - deficiency.
The data on trade balance is published in the middle of the second month after the accounting period.
4. The consumer price index (CPI)
The given parameter reflects the price of the fixed quantity of the goods, therefore is the key indicator of inflation. Higher prices are considered as a negative result for the economy. However the Central Banks often answer inflation by an increase of interest rates, and currencies in turn react positively to messages on growth of the inflation.
CPI leaves monthly about 13-th of each month at 8:30 AM EST.
5. Retail Sales
The Index of retail sales measures the total of the goods sold in retail shops. It is used as a parameter for purchasing activity and defines influence on growth of economic activity. It is published monthly about 11th of each month at 8:30 AM EST.
Influence of fundamental factors on change of a rate of national currency
Data
Change of the data
Change of a rate of the national currency
Trade deficit
Growth
Decrease
Payment deficit
Growth
Decrease
Consumer price index, Producer price index
Growth
Decrease
Official stock-taking rates
Growth
Growth
Gross domestic product GDP
Growth
Growth
Retail sales
Growth
Growth
Housing starts
Growth
Growth
Producer price index
Growth
Decrease
Industrial production
Growth
Growth

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