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make money, money making robot

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Professional marketers spent years in tears of frustration till they got the hang of it and eventually started to see results. And they wanted it bad enough, some probably sacrificed their social lives in the process.

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Raking in thousands of dollars each and every month?
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without: Any knowledge or any skills at all?
without: a stupid template website?

without: the need for long working hours?

Something that you turn on and then it produces money on autopilot?

Get your own money making robot today and laugh heartily about people that work a regular job.

Your own 24/7 money making robotic software that rakes in thousands of dollars each and every day.

Grab this once in a lifetime opportunity now and set it up, then get back being a couch patatoe like me, but with one difference: a wealthy sport car driving couch patatoe

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Popularity: 50% [?]

forex, forex market

The market

The currency trading (FOREX) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover. (click here to read full market background by Easy-Forex™).

Markets are places to trade goods. The same goes with FOREX. The Forex goods (or merchandise) are the currencies of various countries. You buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That’s all.

How does one profit in Forex?

Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.

The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general, Easy-Forex™ offers trading ratios from 1:50 to 1:200). If, for example, the exchange rate of “your” pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.

Moreover, you cannot lose more than your “margin”! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.

You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don’t have to physically possess certain currencies in order to perform “buy” or “sell” with them.

How do I start?

Register (Easy-Forex™ offers the simplest and quickest registration process, no obligation); deposit your first trading “margin” amount (credit cards are welcome, only by Easy-Forex™); start trading.

It can’t be simpler or easier than that. Need help? We’ll provide you with 1-on-1 training and service, as much as necessary (Easy-Forex™ offers real people service, live, in your own language).

How do I trade Forex?

You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the “margin” (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).

Before you finally activate the deal, you can still “freeze” it for a few seconds. That enables you to either change the terms, or accept it as is, or altogether regret the whole idea. The “freeze” feature is a unique service by Easy-Forex™.

When your Forex deal is running (you hold an “open position”), you can monitor its status and check scenarios online, whenever you wish. You may change some terms in the deal, or close it (and cash the profit, if any, or minimize the loss, if any). Moreover, Easy-Forex™ lets you determine a “take-profit” rate, with which the deal will close automatically for you, when and if such rate occurs in the market. Meaning: you do not have to stay near your computer when you hold open positions.

Want to know more? Want to get on-line training? Register here (simple, quick, no obligation), we’ll be glad to guide you, every step of the way.

Good luck!

Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Popularity: 56% [?]

forex hedging, hedge funds

Forex hedging is not for beginners, nor for those without a significant pool of risk capital to invest. In fact, hedge funds - generally speaking - are not wise investments for the average person.

If you are just getting your feet wet in the investment game, you might be tempted towards Forex hedge funds. After all, a properly managed fund can yield returns higher than 500 percent - and even higher if you’re the fund manager. It is easy to see why a beginner could get sucked into this fairy-tale scenario.

My recommendation, however, is that you steer clear of hedging until you have several years of successful trading experience under your belt - not to mention disposable income - and I’m going to explain why right here and now.

First, let’s discuss hedge funds. What are they, exactly?

Hedge funds are private investment partnerships, usually managed by wealthy individuals - e.g. - other investors, business people, commodity pool operators and all-around financial tycoons.

However, the Securities and Exchange Commission does not impose any strict rules on who may start a hedge fund. In fact, if you won the lottery tomorrow, you could start your own hedge fund. This free-market, ‘anyone can play’ philosophy is the first high risk factor that should steer you clear of Forex hedging.

The second factor is the high risk associated with the strategies involved in hedge fund trading. You’ve probably heard about futures contracts, derivatives, ‘put’ options and the like, yes?

If you’ve been doing your homework, then you already know that these ‘investments’ revolve around the highly speculative trading strategy of ’selling short’. Really, this is why we call it ‘hedging’: you’re hedging your bets either for or against the given financial instrument based on short-term market fluctuations.

It is difficult enough for the average investor to predict short-term movements on every day stocks; but, try doing so on the even more volatile foreign exchange market and you’ll understand why Forex hedging is so risky.

It takes years of experience, coupled with a very sophisticated understanding of the world economy, to profit from a Forex-based hedge account, and even more to manage one.

So, if you are investing for your future, your family’s future, your children’s education or any other closely held dream, then I suggest you stick to the time-honored mid and long-range investment strategies like stocks, bonds and IRAs. There are plenty of high-yield options in the latter category, especially.

And if it is wealth you’re looking for, then consider starting your own business. A second income can help you get out of debt, and sock even more money into savings and investments.

Remember: real wealth is built on a foundation of security..and that’s the smartest ‘hedge’ you can make for your financial future!

Popularity: 55% [?]

forex pips

Forex pips and ‘pips values’ represent one of the most misunderstood concepts in Forex trading. Newbies, especially, often have trouble grasping the idea behind pips — but, a solid understanding of pips is crucial to successful Forex investing.

If you’ve had trouble with pips, then today may be your lucky day. I’m going to attempt to clarify things once and for all with a brief pips tutorial.

Hopefully you’re already familiar with the concept of ‘basis points’. One basis point is equal to one one-hundredth of one percent, and represents the smallest increment of change measured for any financial instrument.

Take interest rates as an example. If the interest rate on your credit card rises from 10.12 percent to 10.13 percent, then it has risen by 1 basis point.

Pips are the Forex market’s version of basis points. Let’s say that the exchange rate for the EUR/USD pair move from 1.4465 to 1.4468. This movement represents a shift of 3 Pips, and may be good or bad depending on which currency you are holding.

Here’s the catch, though. Notice that the shift took place on the 4th decimal, which is the ten-thousandths place, or 1/10,000 of a percentage point? You have a shift of one ten-thousandth instead of one one-hundredth.

The reason for this is that most currencies (with the exception of the Yen) are quoted out to four decimal places. This means you get to take advantage of even the most minute shifts as you trade on high volume.

In order to calculate Pips for the common, four decimal currency pairs, you must divide the value of 1 Pip by the exchange rate:

1 Pip = 1/10000th / exchange rate

Now, what happens when you are dealing with the Japanese Yen? In this currency pair, we find an exception to the rule because the Yen is quote out only to the hundreds place, or 1/100.

For the USD/JPY pair (or vice versus), your formula would be:

1 Pip = 1/100th / exchange rate

Now that you know how to calculate Pips for any currency pair, you must look at what an actual Pip is worth to you in real dollar terms. This value is known as “pips value’. In order to do this, we must bring ‘lot size’ into the equation.

If you purchase a standard lot of 100,000 pairs of EUR/USD at 1.4465. , your formula will be as follows:

Pip Value = (0.0001 / 1.4465) x 100,000 = 6.91

So, a pip at this exchange rate is worth 6.91 Euro. Don’t look for exact numbers here. What you need to pay attention to is the fact that ‘6.91′ represents the average gain or loss per change in pips.

In other words, a fluctuation of 2 pip from 1.4465 to 1.4467 isn’t going to raise your profit or loss by a full Euro or more. Try doing the calculation for a 2 pip rise, and you’ll see that your pips value goes up only to 6.192.

I recommend getting comfortable with these basic calculations first, and then moving on to the calculations of actual profit and loss, which will require you to factor in bid price and ask price.

Also, remember that your online broker usually calculates pip and pips values for you, and you don’t have to know how to do the math. It’s just good business to be able to do it yourself.

Popularity: 67% [?]

forex, forex signals

Forex Signals, also known as ‘technical indicators’, are data points used in the prediction of currency movements. This article will examine three of the most popular forex signals in use today.

Signal #1: Relative Strength Index (RSI)

The RSI indicator measures the ratio of upwards to downwards movements on the market, and the result is normalized to a range between 0-100.

When an instrument, such as a currency pair, moves to 70 or greater on the RSI, the instrument is said to be ‘over bought’. Likewise, when a currency pair moves to 30 or below on the RSI, it is said to be ‘over sold’.

So, the Relative Strength Index is essentially a broad measurement of market demand for a given currency. Keep in mind, however, that spikes and drops may occur for any number of reasons, and do not necessarily indicate the development of a trend.

Relative Strength is useful in spot trading and some mid-range strategies, but it is not the only indicator to watch, particularly if you intend to employ long-range holding strategies.

Signal #2: Stochastic Oscillators (SO)

Charts derived from Stochastic oscillations are also used to indicate ‘over bought’ and ‘over sold’ conditions for currencies on the exchange market. These conditions are typically expressed on a percentage scale from 0-100%.

The S.O. scale method was derived from historical observation of market phenomena centered around closing trades. It was observed that - during the period towards closing - both the upwards and downwards trends in conditions tend to congregate towards the extreme ends of the scale.

These Buying and Selling conditions are charted using two lines: %K and %D. A divergence between these lines against the price action of a currency is a strong trading signal.

Signal #3: Moving Average Convergence Divergence (MACD)

This signal plots two lines of movement: the MACD line, and the signal/trigger line.

The MACD line represents the difference between two, exponential moving averages and the signal line — which is the exponential moving average of that difference. This is a tricky concept to grasp, so let’s look at MACD as an equation.

We’ll let each exponential moving average be represented by EMA-0, EMA-1, EMA-2, etc..

The Signal Line, then, is equal to: EMA (EMA0 - EMA-1… + …EMA-2 - EMA-3…+..) and so on.

Basically, the signal line is reflecting the exponential moving average of moving averages over time, such that:

Signal Line = EMA (EMA-0 minus EMA-1), and..

The MACD line = (EMA0-EMA1) - signal line.

The MACD and Signal Lines are charted around a ‘Zero’ line, the extreme limits of which represent ’slow MACD movement’ and ‘fast MACD movement’, respectively. Whenever the MACD and Signal Lines cross, it is an indicator that a change in trend is likely.

This wraps up our look at three of the most popular Forex signals. They are by no means the only ones. Some of the other, more technically complex signals includes indicators derived from Gann numbers and Elliot Wave theory.

The good news is that you don’t have to be a math whiz to make use of these indicators, as there are plenty of commercial software solutions on the market.

Popularity: 70% [?]

exchange market, exchange rates, foreign exchange, forex

Profits are gained and lost on the foreign exchange, or ‘Forex’, market due to fluctuations in the exchange rate. This fact may seem like common knowledge, but one should not take for granted how exchange rates are determined.

There is actually a very rich history behind the concept of the exchange rate, and it is important that you understand why things came to be as they are — as well as how to capitalize on that knowledge.

This quick tutorial on exchange rates will help you do just that.

First, let us look at the simplest definition of an exchange rate. An exchange rate is the value of one currency in relation to another. If one U.S. dollar is worth $1.20 Canadian, then the exchange rate is 1:1.2, or 1.2 for the CAD/USD currency pair.

What does this really mean, though? Why is it that one currency can be worth more than another, and who decides?

If you look back to the earlier part of the 20th Century, you’ll recall that most currencies of the world were back by precious metals, like silver and gold.

It used to be that the United States followed the ‘gold standard’, which ‘pegged’ the Dollar to the price of 1 ounce of gold. All other currencies were then ‘pegged’ to the Dollar and allowed to fluctuate in either direction by a margin of no more than 1 percent.

This type of exchange rate, although it allowed for minor fluctuation, was considered a “fixed exchange rate”.

Now, fast-forward to the latter half of the century, and you find that the ‘gold standard’ has been dropped, along with the fixed rate model of exchange. Instead, the foreign exchange market now operates primarily on a ‘fluctuating exchange rate’.

Fluctuating exchange rates are governed by the market forces of supply and demand. If the demand for a currency exceeds the supply, then the exchange rate (and value) of that currency will rise.

Likewise, if the supply of a currency exceeds market demand, then the value of that currency (and its exchange rate) will drop.

We see this happening today with the U.S. Dollar. In order to keep up with government spending, the federal reserve prints more and more dollars, then sells them to other countries as ‘debt’.

The market forces which previously gave the dollar its strength — such as oil exports and oil transaction denominated in U.S. dollars - have eroded. Thus, we not only find the exchange rate of the dollar weakened, but also the exchange rates of many of our closest trading partners.

The Japanse Yen, for example, has fallen even more than the dollar. Part of this is due an overall crash in the Asian market, but it is also linked to the fact that much of Japan’s economic growth at the end of the last century depended upon exports to the United States.

This is just one example of how market forces affect exchange rates, but it is a useful one for examining some of the factors involved in rate fluctuations.

A Reader’s Toolbox

The insurance companies these days are offering services for each and every type of clientage. Be it travel insurance, holiday insurance or home insurance. The celebrities even get their dental insurance too in case they break their teeth while doing a stunt. Small entrepreneurs can too benefit from the range of services available at insurance houses like small business loans and personal loan. Small business men with no collateral to show can get unsecured loans in which they get the loans but they have to pay a higher price.

Popularity: 70% [?]

currency exchange, currency trading, foreign exchange, forex traders

So, you want to learn how to trade currency on the foreign exchange market? The process of trading currencies appears very straight-forward on the surface; but, there is more to it than meets the eye.

The currency trading tutorial you’re about to receive here will give you a basic idea of how things works. However, you must keep in mind that this tutorial is only scratching the surface. The Forex market is complex, fast-paced and requires serious further study if you wish to trade successfully.

Now that we have that disclaimer out of the way, let’s begin by looking at the fundamental unit involved in every trade: the ‘currency pair’.

What are currency pairs?

Currency pairs are units of 2 currencies involved in a foreign exchange trade. For example, if you want to sell U.S. dollars to buy Euros, you would look at the exchange rate quoted for the EUR/USD currency pair. Or, if you wanted to sell Euros to buy U.S. dollars, you would look at the exchange rate quoted for the USD/EUR currency pair.

You might thinking: “Aren’t they the same thing?” Well, they almost are, but you must look at the correct pair, in the correct order, based on the currency being purchased.

There are two reasons for doing this:

First, it is easier to calculate the results of your exchange in terms of how much of the base currency you can purchase with your ‘quote’ currency. Your base currency is the currency you intend to buy, and the quote currency is the currency you intend to sell in exchange for the base.

When quoting an exchange rate, your broker will list the base currency first in the pair, and the quote currency second.

This means that when you see a pair like EUR/USD, you are seeing the cost of 1 Euro in U.S. Dollars. An exchange rate quote of EUR/USD = 1.4436 means that 1 Euro costs $1.4436 in U.S. Dollars.

Likewise, the USD/EUR pair indicates the cost of 1 U.S. Dollar in terms of Euros. An exchange rate of USD/EUR = 0.6834 would mean that 1 U.S Dollar costs 0.6834 Euro.

The second reason for looking at the correct buy/sell ordered pair is that you’ll want to know the difference between the ‘bid price’ (exchange rate) and the ‘ask price’ (what the market makers want for the currency).

The difference between bid price and ask price make up what is known as ‘the spread’. Forex traders are subject to spreads when opening or closing trades in the buying position.

In other words, you are always subject to a spread when you buy, regardless of whether you are opening or closing the trade.

Open buy -> spread
Close sell -> no spread

Open sell -> no spread
Close buy -> spread

Let’s say that you want to buy the EUR/USD pair. The bid price is 1.4436. The ask price may be something like 1.4440. You must pay the spread of 0.0004 in order to do the trade.

Those are the basics of a currency trade, but there are other factors to take into consideration. In order to make a profit on currency exchanges, you must also know how to calculate the cash value of exchange rate fluctuations in terms of ‘basis points’ - or, in Forex jargon - ‘pips value’.

This currency trading tutorial will not cover pips values, but it is a concept you should investigate further if you want to master the basics of trade on the foreign exchange.

A Reader’s Toolbox

The mastercard is one of the best credit cards available and it is also approved by the amex (American exchange). For getting a mastercard one must sow ones credit report to get accepted for the card. If you have good credit rating and some collateral available at your disposal you can also very easily attain cheap home insurance and health insurance but you should have no bankruptcy records. But have you ever wondered why would one need all these insurances if one has money and collateral.

Popularity: 82% [?]

brokers, forex traders, leverages, mortgages

A crucial aspect of Forex speculation is the ability to trade on extremely high leverages. Leverage is the use of borrowed capital to help invest or borrow. For instance, consider leverage in terms of a mortgage. If the bank requires a down payment of 1/5 the total cost of the home from a home buyer, the buyer is receiving a leverage of 5:1 on his money.

In Forex, clients are offered leverages as high as 200:1. This means that a trader must put down only .5% of his desired market position. For example, a trader with $1000 in his account can hold two lots—a $200,000 position—in the Forex market (Each $100,000 is called a lot). On this $200,000 position each pip is worth $20. On a 3-pip spread, the above trade would cost a client $60 to execute. For traders who execute 20 trades a day, this adds up.

However, this is not the only way brokerages make money.

In reality, over 90% of Forex traders will eventually lose all their money. This is a result of a couple factors.

1. Operating on extremely high leverages is extremely risky.

Example: Take a trader holding a $200,000 position at a .5% margin. This means that if the currency moves against his position by ½ of a percent, he just lost his entire $1000. Now, considering that the market is extremely volatile, and there are sometimes severe short term fluctuations in price, there will eventually be a movement against his position.

2. In Forex, many short term fluctuations are random or unpredictable.

Example: On October 22nd, the EURUSD dropped from 1.4338 to 1.4133 in 2 1/2 hours, a total of 205 pips. Three days later, the pair was up to 1.4346, on its way to reaching 1.44 a day later. Any trader buying EURUSD on a high leverage on the 22nd would have his entire position wiped out—even though his rationale was correct—that the pair would break through the 1.44 boundary again.

3. Most people don’t really know what they are doing

Though it seems simple enough, Forex is an extremely difficult market, requiring discipline, knowledge and experience. Most traders are lacking in discipline, knowledge, experience, or some combination of the three.

4. Overtrading

Example: When trading $200,000 on $1000, the trader has only 16 trades until the commission wipes out his entire account ($60*16=$960). This is assuming, of course, that he makes no profit or takes a loss on his 16 trades.

Not just commission

In theory, a brokerage simply passes an order along to the bank, and the bank matches one traders request to buy at a certain price with another traders request to sell at the same price. However, if a brokerage sees that a particular trader is a consistent loser, instead of passing on the trade to the bank, the brokerage will act like a casino, and take the trade/bet itself.

Instead of earning only $60 on a $200,000 trade in this instance, the brokerage can make up to $1000. Of course, the brokerage can also lose money this way. However, as they say, over the long term, the brokerage always wins.

In cases of a trader consistently earning on his trades, the brokerage will eventually hedge the trader’s positions positively. For example, if the trader sells 5 lots of USDJPY, the brokerage might actually buy 7.5 lots. Hedging a trader who has demonstrated his consistent earning capability is another way to maximize the profits of the brokerage and, in turn, the affiliates.

A Reader’s Toolbox

People are being tempted by the raging fire of mortgages. Banks are running after people to get a mortgage loan to avail the so called happiness of life showing then green pastures from far away. Saying that the loans can get them medical insurance and even the homeowners insurance. Initially convincing clients for lower insurance quotes and later on when the reality dawns upon them, people get drenched in their own sweat. As they awaken suppressed under the pressures of paying of their home and car loans. Banks and financial institution generally after sucking the last drop of their clients blood leave them with 0 credit cards and any empty account with all the facilities withdrawn.

Popularity: 100% [?]

currency exchange, exchange money, forex brokerages, online brokerages, retail market

At one time or another everyone has had to go to a currency exchange and trade one currency for another. For instance, when visiting the US from Europe you must exchange your Euros for US dollars. You will notice that currency exchanges will quote two separate prices for buying and selling the Euro. If you want to buy dollars from the currency exchange, they are more expensive than the price at which the currency exchange is willing to buy dollars from you. Usually, in a currency exchange the difference between these two prices will run about 5 cents per Euro.

When we exchange money, we usually aren’t concerned with how the values of these currencies are going to change in the near future; we are only interested in getting the type of money needed to use in the country we are visiting. However, as we have seen recently, the value of, for example, the dollar compared to the Euro—or to any other currency for that matter—does not stay the same. It sometimes changes dramatically, and very quickly.

About 10 years ago, online brokerages began appearing that allowed retail clients the same real time views of currency prices, technology to allow clients to make trades quickly from their homes, and a relatively small amount of capital necessary to begin trading. These new online brokerages boasted that they were bringing the same benefits previously enjoyed only by the economic elite to the masses. Thus was the current Forex market created. Currency speculators, or traders, attempt to predict changing currency values, and exploit the changes for profit. They utilize online Forex brokers to trade these currencies. Unlike at the currency exchange, however, the difference between the buy and sell price at online Forex brokerages is very small, usually 3/100 of a penny per dollar, or even less. Each hundredth of a penny is called a “pip”, and it is the way that traders measure their profit and loss. At first glance, a pip is a very meaningless amount of money. However, when trading hundreds of thousands—or even millions of dollars per trade—one pip is quite substantial.

A Reader’s Toolbox

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Popularity: 90% [?]

exchange market, financial market, foreign exchange, forex

With approximately $3.2 trillion traded daily, the Foreign exchange is far and away the largest financial market in the world. While once the exclusive realm of banks, multinationals and extremely wealthy speculators, the appearance of online brokerages created a new retail Forex market. For the first time, anyone with an internet connection can take advantage of the Forex market!

While major Forex players, like banks and multinationals, participate in the Forex market as a function of international business (or to hedge base currencies, protecting against devaluation), participants in the retail market attempt to exploit currency movements for profit. Because of the extreme volatility of the market, trading the FOREX is riskier than trading other instruments, but the potential for profit is really unparalleled.

Unlike the stock market, in which trader’s must familiarize themselves with 100s of stocks, in the Forex market it is sufficient to become versed in just a few, the so-called majors: the US dollar (USD), the Eurodollar (EUR), the British Pound (GBP), the Swiss Franc (CHF) and the Japenese Yen (JPY). These currencies are traded in pairs, meaning one currency is bought and the other is sold concurrently. Most brokerages offer the ability to track the price history of these pairs with advanced, up-to-the-second charting features, and instantaneous order execution.

If you would like to give the Foreign Exchange market a shot, check out the brokers we have assembled on our site, picked due to their quality and integrity. Try trading a virtual money account, in which you can trade in real market conditions for free.

Why trade on the Foreign Exchange?

There are numerous reasons to get involved in the FOREX market!!! Here are a few:

-With approximately $3.2 trillion traded daily, unparalleled liquidity guarantees your order will be filled at desired price under most trading conditions.

-24 hour trading! Beginning each day in Australia, and moving across the world as the day begins in each major business center, trader’s benefit from constant liquidity and the ability to react instantly to market altering news, regardless of the time.

-The enormity of the Foreign Exchange ensures that no single actor can substantially alter the market. This means traders need not worry about insider trading. Information impacting the market, such as economic reports, is made available to the entire market at the same time.

-A very small margin is required to open a position on the market. Generally, traders are required to hold only 1% of a position opened on the market. This means that, for $1000, a trader may hold a position of $100,000. While a small margin requirement presents the potential for a truly unparalleled return on investment, it is also quite risky.

- The successful Forex Trader must be familiar only with a few major currencies unlike, for instance, in the stock market, in which trader’s must familiarize themselves with hundreds of instruments.

-The FOREX market is always a bull market, regardless of the strength of any particular market. Whether a particular currency is appreciating or depreciating, trader’s have the opportunity to make the same amount of money.

Whither dollar?

December has brought a strong dollar rally against the other major currencies, gaining close to 400 pips against the Euro, and pushing through the critical 2.00 support level against the GBP. The dollar index, which bundles the dollar against a basket of six major currencies, has gained a full 2% since the beginning of December.

Many factors have led to this strong dollar push. First, the fallout from the subprime crisis seems to be less than the doomsday forecasts, a welcome sign for the US economy. Second, widespread US fear of inflation has given the Federal Reserve second thoughts about further interest rate cuts.

On the European side, the European Central Bank (ECB) has signaled an unwillingness to boost rates, and there have been grumblings that the ECB has been a bit too generous with its credit policies. Meanwhile, the British Pound has taken a sustained beating on the basis of loads of negative fundamental data reports.

On Friday the dollar fell slightly, a result of year-end profit taking by dollar-long traders, as well as slightly troubling news for the US economy, as Merrill Lynch might get a capital infusion bailout to the tune of $5 billion. However, the 1.44 resistance held and the dollar push does not seem to have abated. The question remains; is this just a momentary correction, or are we witnessing a trend reversal?

How did the contemporary Foreign Exchange market evolve?

Until the mid-70’s, industrial economies were governed by the Bretton Woods agreement, which had been reached at the end of World War II. The Bretton Woods agreement fixed major industrial exchange rates on the US dollar, which was itself pegged to gold. It was hoped that this system would prevent the artificial devaluation of national currency in order to boost exports, which was one of the factors that led to the shrinking of the global economy in the 30s, a shrinking that arguably shared responsibility for the outbreak of The Second World War.

In the 70s, shrinking confidence in the dollar led to a floating foreign exchange. In a floating exchange, the relative value of each currency is determined by regular market forces of supply and demand rather than government intervention.

Such a system is thought to be self-correcting—if, for instance, demand for the US dollar drops, domestic US produce will become cheaper, leading to rising exports and, eventually, a rising currency value. The contemporary FOREX market arose from these conditions.

Arbitrageurs attempt to exploit market inefficiencies before the market corrects itself. Now, with the proliferation of numerous online brokerages, retail traders can engage in arbitrage as well.

What is leverage?

Using leverage is essentially borrowing money to invest. In the Forex market, your account deposit is considered as collateral on the borrowed capital.

If you have ever taken out a mortgage you are already an expert on leverage. For example, let’s say you purchase a $200,000 home, putting down $40,000 and taking out a mortgage from the bank for the remaining $140,000. Now, if two years later you sell the place for $240,000, you have in actuality made 100% profit on the house—recouped initial investment plus the 40,000 profit—despite the fact that the house has only appreciated by 20%. If, however, the value of the house depreciates 20%, you have lost 100% of your initial investment.

We have used a leverage of 5:1 in the example above. As anyone interested in the Forex market has seen, there is no shortage of brokers willing to provide very high leverages to the potential investor—sometimes as high as 400:1! Believe it or not, this is not a function of the generosity of the brokerage. The simple fact is that over time, trading on such high leverages will cripple traders.

As we noted above, on a 5:1 leverage, a 20% depreciation in value wipes out the entire investment; on a 400:1 leverage, all it takes is a .25% movement against your position. In Forex, that can happen in 5 minutes. Now, of course, a .25% movement in your position doubles your investment. However, .25% is essentially a random fluctuation; eventually, you will lose your position if you invest with such high leverage.

A Reader’s Toolbox

The banks and financial institutions these days are polishing their businesses by targeting the small business men. Banks are offering them small business loan and college loans for their children who wish to study. They also propose car finance at low interest rates and cheap car insurance facilities. But secured loans with lower interest rates are only provided to ones with securities to show. Big businessmen interest only mortgage as car insurance quotes for their fancy cars is a suitable solution.

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