What is a Market Maker?

Lexical)A Market Maker is the counterparty to the client. The Market Maker does not operate as an intermediate or trustee. A Market Maker performs the hedging of its clients' positions according to its policy, which includes offsetting various clients' positions, hedging via liquidity providers (banks) and its equity capital, at its discretion.
Who are the Market Makers in the Forex industry?Banks, for example, or trading platforms (such as Easy-Forex™), who buy and sell financial instruments at the market. That is contrary to intermediates, which represent clients, basing their income on commission.
Do Market Makers go against a client's position?By definition, a Market Maker is the counterparty to all its clients' positions, and he always offers a two-sided quote (two rates: BUY and SELL). Therefore, there is nothing personal with the trading conduct between the Market Maker and the customer. Market Makers regard the total positions of their clients as a whole, same goes for banks and other market makers in the Forex market. They offset between clients' opposite positions, and hedge their net exposure according to authorities' guidelines and their risk management policies.
Do market makers and clients have a conflict of interest? Market makers are not intermediates, neither portfolio managers, nor advisors who represent customers (while earning commission), but rather they buy and sell goods to the customer. By definition, the Market Maker always provides a two-sided quote (the sell and the buy price), hence maintains neutrality as for the client. Banks do that, same with merchants in the markets, who buy goods and sell it to customers. The relationship between the trader (the customer) and the Market Maker (the bank; the trading platform; Easy-Forex™; etc.) is simply based on fundamental market forces: supply and demand.
Can a Market Maker influence market prices against clients' position? Definitely not, because the Forex market is the nearest to being a "perfect market" (as defined by economics theory). This is the biggest market today, reaching a daily volume of 3 trillion dollars throughout the globe. That means that there is no single participant in the market, banks and governments included, who can consistently push the price in a certain direction.
What is the main source of earnings to Easy-Forex™?Being a Market Maker, the major source to earnings is the spread between the bid and the ask prices. Accordingly, Easy-Forex™ maintains neutrality (as for the direction of any or all deals made by its traders), since the leading source for its income is the spread it earns.
How do Market Makers manage their exposure? The way most Market Makers hedge their exposure is to hedge on bulk. They aggregate all clients' positions and pass some, or all, of their net risk to their liquidity providers. Easy-Forex™ hedges its exposure in a similar fashion, in accordance to authorities' instructions and its risk management policy. As for liquidity providers, Easy-Forex™ works in cooperation with world's leading banks which provide liquidity to the Forex industry: UBS (Switzerland) and RBS (Royal Bank of Scotland).

Who trades currencies, and why?

Daily turnover in the world's currencies comes from two sources: Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.
Speculation for profit (95%). Most traders focus on the biggest, most liquid currency pairs. "The Majors" include US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. In fact, more than 85% of daily forex trading happens in the major currency pairs.


The world's biggest market, trading 24 hours a day

With average daily turnover of US$3.2 trillion, forex is the largest market in the world.
A true 24-hour market from Sunday 5 PM ET to Friday 5 PM ET, forex trading begins in Sydney, and moves around the globe as the business day begins, first to Tokyo, London, and New York.
Unlike any other market, investors can respond immediately to currency fluctuations, whenever they occur - day or night.

Trading Strategy

Making trading decisions and developing a sound and effective trading strategy is an important foundation of trading. Before developing a trading strategy, a trader should have a working knowledge of technical analysis as well as knowledge of some of the more popular technical studies. Please visit these pages for detailed information.


Sample Strategy 1 - Simple Moving Average

Successful trading is often described as optimizing your risk with respect to your reward, or upside. Any trading strategy should have a disciplined method of limiting risk while making the most out of favorable market moves. We will illustrate one decision making model which uses a Simple Moving Average ("SMA") technical study, based on a 12-period SMA, where each period is 15 minutes. This is one example of a trading decision making strategy, and we encourage any trader to research other strategies as thoroughly as possible.

We will use a simple algorithm: when the price of the currency crosses above the 12-period SMA, it will be taken as a signal to buy at the market. When the currency price crosses below the 12-period SMA, it will be a signal to "Stop and Reverse" ("SAR"). In other words, a long position will be liquidated and a short position will be established, both with market orders. Thus this system will keep the traders "always in" the market - he will always have either a long or short position after the first signal. In the chart below, the white line represents the price of USDJPY, the purple line represents the 12-period SMA of USDJPY, and the red line indicates where USDJPY crosses above the SMA, generating a buy signal at approximately 129.90:

This is a simple example of technical analysis applied to trading. Many strategies used by professional traders make use of moving averages along with other indicators or "filters". Note that the moving average method has an element of risk control built in: a long position will be stopped out fairly quickly in a falling market because the price will drop below the SMA, generating a stop-and-reverse signal. The same holds true for a sell signal in a rising market. Note that the SMA is generated automatically by GCI's integrated charting application.



Sample Strategy 2 - Support and Resistance Levels

One use of technical analysis, apart from technical studies, is in deriving "support" and "resistance" levels. The concept here is that the market will tend to trade above its support levels and trade below its resistance levels. If a support or resistance level is broken, the market is then expected to follow through in that direction. These levels are determined by analyzing the chart and assessing where the market has encountered unbroken support or resistance in the past.

For example, in chart below EURUSD has established a resistance level at approximately .9015. In other words, EURUSD has risen up to .9015 repeatedly, but has been unable to move beyond that point:

The trading strategy would then be to sell EURUSD the next time it gets close to .9015, with a stop placed just above .9015, say at .9025. This would have indeed been a good trade as EURUSD proceeded to fall sharply, without breaking the .9015 resistance. Hence a substantial upside can be achieved while only risking 10 or 15 pips (.0010 or .0015 in EURUSD).





Spot Forex versus Currency Futures

Many traders have made the switch from currency futures to spot foreign exchange ("forex") trading. Spot foreign exchange offers better liquidity and generally a lower cost of trading than currency futures. Banks and brokers in spot foreign exchange can quote markets 24 hours a day. Furthermore, the spot foreign exchange market is not burdened by exchange and NFA ("National Futures Association") fees, which are generally passed on to the customer in the form of higher commissions. For these reasons, virtually all professional traders and institutions conduct most of their foreign exchange dealing in the spot forex market, not in currency futures.

The mechanics of trading spot forex are similar to those of currency futures. The most important initial difference is the way in which currency pairs are quoted. Currency futures are always quoted as the currency versus the US dollar. In Spot forex, some currencies are quoted this way, while others are quoted as the US dollar versus the currency. For example, in spot forex, EURUSD is quoted the same way as Euro futures. In other words, if the Euro is strengthening, EURUSD will rise just as Euro futures will rise. On the other hand, USDCHF is quoted as US dollars with respect to Swiss Francs, the opposite of Swiss Franc futures. So if the Swiss Franc strengthens with respect to the US dollar, USDCHF will fall, while Swiss Franc futures will rise. The rule in spot forex is that the first currency shown is the currency that is being quoted in terms of direction. For example, "EUR" in EURUSD and "USD" in USDCHF is the currency that is being quoted.

The table below illustrates which spot currencies move parallel to the futures contract and which move inversely (opposite):
Forex
Symbol Currency Pair Futures
Symbol Directional
Relationship
GBPUSD British Pound / US Dollar BP Parallel
EURUSD Euro / US Dollar EU Parallel
USDJPY US Dollar / Japanese Yen JY Inverse
USDCHF US Dollar / Swiss Franc SF Inverse
USDCAD US Dollar / Canadian Dollar CD Inverse
AUDUSD Australian Dollar / US Dollar AD Parallel
NZDUSD New Zealand Dollar / US Dollar ND Parallel

Forex Market Summary

U.S. Dollar Trading (USD) was mixed versus a number of majors, holding firm on positive Retail Sales out of the U.S. for the month of January coming above expectations, as Core figures were released at 0.3% (F: 0.2%; P: -0.3%R), whilst Headline figures came in at 0.3% (F: -0.2%; P: -0.4%). In U.S. share markets the NASDAQ was up by 108.13 points (+1.21%) whilst the Dow Jones was also higher by 178.45 points (+1.45%). Crude oil was higher by US$0.36 a barrel to US$93.14 after Venezuela said it would stop supplying oil to EXXON Mobil. Thursday sees the weekly release of Initial Jobless claims, whilst Ben Bernanke, and Henry Paulson are scheduled to testify in front of the Senate Banking Committee
The Euro (EUR) held firm, despite US retail sales unexpectedly rising for the month of January. In Eurozone specific news, Industrial Production declined by -0.2% for the month of December, well short of the forecasted figures of 0.6%, and inline with recent rhetoric surrounding slowing growth in the Eurozone. Overall the EURUSD traded with a low of 1.4530 and a high of 1.4600 before closing the day at 1.4579 in the New York session. Looking ahead, key growth data in the form of GDP for the fourth quarter 0.3% (Forecast: 0.4%; Previous: 0.8%)
The Japanese Yen (JPY) fell to a one-month low against the dollar after U.S. retail sales unexpectedly rose last month, allaying concern that the world's biggest economy will slide into a recession and hurt global growth. The currency dropped against 14 of the 16 most-active currencies as U.S. stocks rose, signaling traders are more confident to bet on higher-yielding assets funded by loans in Japan. Overall the USDJPY traded with a low 107.00 and a high of 108.37 before closing the day 108.22 in the New York session. Japanese GDP data released on Thursday morning was released at 0.9% (Forecast: 0.4%; Prior: 0.4%) for the fourth quarter.
The Sterling (GBP) rallied to a two week high against the Euro after the Bank of England raised its inflation forecast, prompting traders to pare bets on interest-rate cuts from the UK. The Sterling Pound also traded at week highs versus the dollar as the central bank forecast in its quarterly inflation report on Wednesday that price growth will overshoot its 2 percent goal in two years even as 'downside' risks to the economy remain. The pound also gained as a government report showed unemployment fell to a three-decade low in January. Overall the GBPUSD traded with a low of 1.9552 and a high of 1.9654 before closing the day at 1.9650 in the New York session.
The Australian Dollar (AUD) paired its weekly gains on positive retail sales figures from the US. The AUDUSD traded with a low of 0.8924 and high of 0.9046 before closing the day at 0.8951 in the New York session. Unemployment Rate for the Aussie is out on Thursday morning with forecast expected to be at 4.3%, same as the previous. UPDATE: Unemployment rate at 4.1%.
Gold (XAU) little changed in New York, may fall on speculation a rally in equities will reduce the appeal of the precious metals as alternative investments. XAU traded with a low of 896.00 and a high of 910.00.

Data Supports EUR, GBP

The greenback was mixed in Tuesday trading, falling against the euro and sterling while rallying versus the yen. Economic data from the Eurozone and UK helped support their respective currencies while the US had a dearth of reports in the session. Separately, US equity bourses benefited from Warren Buffett’s announcement to offer support for bond insurers, providing up to $800 billion in municipal bonds. The yen slumped across the board, falling to 107.52 against the dollar and 157 versus the euro as the Dow Jones rallied by over 1.3%.On Wednesday, the US economic calendar picks up with the release of retail sales and Fed Chairman Bernanke’s Congressional testimony. Retail sales are estimated to fall by 0.2% in January extending December’s 0.4% decline. The excluding-autos retail sales are seen edging up by 0.2% from a 0.4% drop a month earlier. Fed Chairman Bernanke will testify before Congress and is expected to reiterate the FOMC’s readiness to support the economy and ease rates further in the face of additional weak US economic data.

Risk Warning

Before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. More over, the leveraged nature of forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. To manage exposure, employ risk-reducing strategies such as 'stop-loss' or 'limit' orders. There are risks associated with utilizing an Internet-based trading system including, but not limited to, the failure of hardware, software, and Internet connection. FOREX.com is not responsible for communication failures or delays when trading via the Internet. FOREX.com employs back up systems and contingency plans to minimize the possibility of system failure, and trading via telephone is always available. Any opinions, news, research, analyses, prices, or other information contained on this website are provided as general market commentary, and do not constitute investment advice. FOREX.com is not liable for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. FOREX.com has taken reasonable measures to ensure the accuracy of the information on the website. The content on this website is subject to change at any time without notice.

Investors urged to look beyond ratings

NEW YORK (AP) - For the big three credit rating agencies, growing criticism this past week that their ratings systems are flawed must have sounded like a familiar refrain.
Standard & Poor's, Moody's Investors Service, and Fitch Ratings are being criticized by government officials and some investor groups for not identifying weakness in subprime mortgage-backed securities before they went sour and contributed to massive loss in financial firms and, in turn, the stock market. They're also criticized for having too cozy a relationship with the debt issuers that pay them for their ratings.
This isn't the first time the rating agencies have found themselves under pressure. The beleaguered industry got similar complaints after the collapse of Enron Corp. in 2001, and before that the bankruptcy of Orange County, Calif., in 1994.
In all three situations, ratings assigned to these issuers went from near-stellar to junk almost overnight. As the agencies begin to think about changing the way they do business, analysts say investors must become more vigilant about what debt securities they sink money into -- and not rely solely on what the rating agencies say.
"This happens every other year or so when something shakes up the ratings industry and ends up on the Op-Ed pages," said Martin
Fridson, the former head of Merrill Lynch high-yield research and now proprietor of the specialist firm FridsonVision. "You have to do extra homework, you have to be wary about the way securities are being marketed, and use the ratings that are out there as just a tool."
Investors are plowing more money than ever into fixed-income products, from municipal bonds to exchange traded funds. According to The Securities Industry and Financial Markets Association, a New York-based trade group, outstanding public and private debt underwritten by bonds was valued at about $25 trillion.
Some 10 percent of corporate bonds are held directly by individual investors, while institutions like pension funds hold the rest, according to the group. These securities -- which are more conservative than stocks -- are an integral part of retirement planning and diversifying portfolios during rocky times in the equities market.
Fridson and others say most investors don't hold the kind of opaque asset-backed securities that caused global banks to lose about $130 billion since last year. However, there are certain tip-offs investors should watch for when investing in the fixed-income markets -- no matter what ratings the securities hold.
For instance, he said "one sure guide is to be skeptical if you see something yielding much more than comparably rated bonds." Investors might also obtain fixed-income holdings through investment managers -- like Vanguard or PIMCO -- where analysts scrutinize debt issues beyond just the ratings.
"Over the last six months, a lot of people have learned the hard way that this risk exists -- and that the rating agencies aren't fool proof," said John Flahive, director of fixed income at BNY Mellon Wealth Management. "We've been reminding clients for a long while of the risk, which is why you hire a professional manager that you can use as a safeguard."
Rating agencies, which are regulated by the Securities and Exchange Commission, have been pressured to sell subscriptions to investors for their ratings instead of taking payment right from debt issuers; that, many observers believe, will avoid potential conflicts of interest. Debt issuers seek out higher ratings because that makes it easier to raise money in the capital markets.
And, aside from that, the agencies have already taken some preliminary steps to deflect such criticism and ease mounting regulatory and government concerns.
This past week, S&P said it is aiming to improve governance through measures ranging from establishing an ombudsman's office to address complaints to hiring an external firm for better oversight. Moody's also said it was considering changes in how it rates mortgage-related securities.
But, it has left many on Wall Street asking if this will be enough -- and wonder if the industry itself will begin to shift to other rating models.
"There are people out there right now trying to figure out how to build a better mousetrap," Flahive said. "If I was John Q. Public, I wouldn't feel overly better -- it is going to take more than a few alterations to how the rating agencies are doing things."

Forex risk management strategies

Learn about the basic strategies for controlling risks while trading Forex
The Forex market behaves differently from other markets! The speed, volatility, and enormous size of the Forex market are unlike anything else in the financial world. Beware: the Forex market is uncontrollable - no single event, individual, or factor rules it. Enjoy trading in the perfect market! Just like any other speculative business, increased risk entails chances for a higher profit/loss.
Currency markets are highly speculative and volatile in nature. Any currency can become very expensive or very cheap in relation to any or all other currencies in a matter of days, hours, or sometimes, in minutes. This unpredictable nature of the currencies is what attracts an investor to trade and invest in the currency market.
But ask yourself, "How much am I ready to lose?" When you terminated, closed or exited your position, had you had understood the risks and taken steps to avoid them? Let's look at some foreign exchange risk management issues that may come up in your day-to-day foreign exchange transactions.
Unexpected corrections in currency exchange rates
Wild variations in foreign exchange rates
Volatile markets offering profit opportunities
Lost payments
Delayed confirmation of payments and receivables
Divergence between bank drafts received and the contract price
There are areas that every trader should cover both BEFORE and DURING a trade.Exit the Forex market at profit targets
Limit orders, also known as profit take orders, allow Forex traders to exit the Forex market at pre-determined profit targets. If you are short (sold) a currency pair, the system will only allow you to place a limit order below the current market price because this is the profit zone. Similarly, if you are long (bought) the currency pair, the system will only allow you to place a limit order above the current market price. Limit orders help create a disciplined trading methodology and make it possible for traders to walk away from the computer without continuously monitoring the market.Control risk by capping losses
Stop/loss orders allow traders to set an exit point for a losing trade. If you are short a currency pair, the stop/loss order should be placed above the current market price. If you are long the currency pair, the stop/loss order should be placed below the current market price. Stop/loss orders help traders control risk by capping losses. Stop/loss orders are counter-intuitive because you do not want them to be hit; however, you will be happy that you placed them! When logic dictates, you can control greed.Where should I place my stop and limit orders?
As a general rule of thumb, traders should set stop/loss orders closer to the opening price than limit orders. If this rule is followed, a trader needs to be right less than 50% of the time to be profitable. For example, a trader that uses a 30 pip stop/loss and 100-pip limit orders, needs only to be right 1/3 of the time to make a profit. Where the trader places the stop and limit will depend on how risk-adverse he is. Stop/loss orders should not be so tight that normal market volatility triggers the order. Similarly, limit orders should reflect a realistic expectation of gains based on the market's trading activity and the length of time one wants to hold the position. In initially setting up and establishing the trade, the trader should look to change the stop loss and set it at a rate in the 'middle ground' where they are not overexposed to the trade, and at the same time, not too close to the market.
Trading foreign currencies is a demanding and potentially profitable opportunity for trained and experienced investors. However, before deciding to participate in the Forex market, you should soberly reflect on the desired result of your investment and your level of experience. Warning! Do not invest money you cannot afford to lose.
So, there is significant risk in any foreign exchange deal. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions, that may substantially affect the price or liquidity of a currency.
Moreover, the leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of your initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin call within the time prescribed, your position will be liquidated and you will be responsible for any resulting losses. 'Stop-loss' or 'limit' order strategies may lower an investor's exposure to risk.
Easy-Forex foreign exchange technology links around-the-clock to the world's foreign currency exchange trading floors to get the lowest foreign currency rates and to take every opportunity to make or settle a transaction.Avoiding/lowering risk when trading Forex:
Trade like a technical analyst. Understanding the fundamentals behind an investment also requires understanding the technical analysis method. When your fundamental and technical signals point to the same direction, you have a good chance to have a successful trade, especially with good money management skills. Use simple support and resistance technical analysis, Fibonacci Retracement and reversal days. Be disciplined. Create a position and understand your reasons for having that position, and establish stop loss and profit taking levels. Discipline includes hitting your stops and not following the temptation to stay with a losing position that has gone through your stop/loss level. When you buy, buy high. When you sell, sell higher. Similarly, when you sell, sell low. When you buy, buy lower. Rule of thumb: In a bull market, be long or neutral - in a bear market, be short or neutral. If you forget this rule and trade against the trend, you will usually cause yourself to suffer psychological worries, and frequently, losses. And never add to a losing position. On Easy-Forex the trader can change their trade orders as many times as they wish free of charge, either as a stop loss or as a take profit. The trader can also close the trade manually without a stop loss or profit take order being hit. Many successful traders set their stop loss price beyond the rate at which they made the trade so that the worst that can happen is that they get stopped out and make a profit.

Why Forex?: A World Of Opportunities

The foreign exchange market is the world’s largest financial market, but it wasn’t always accessible to any interested trader. Remember, forex trading is not conducted on a regulated exchange and as a result, there are additional risks associated with forex trading. In the past, access to foreign exchange of currencies was limited to banks, hedge funds, major currency dealers and the occasional high net-worth individual. But smaller financial institutions wanted to take advantage of the many benefits forex offered over other markets, including its tremendous liquidity, 24-hour access 5.5 days of the week and the strong trending nature of currency exchange rates.
It was this entrepreneurial vision of the smaller financial institutions and the evolution of the Internet that made forex accessible at a retail level. These institutions, including GFT, combined the accessibility of the Internet and fast and efficient proprietary software with accurate pricing, charting abilities, technical indicators and news feeds, which allowed any interested speculator open access to trade currencies. From 2002 to 2005 the practice of trading forex has grown threefold and this growth curve continues still. So read more about the benefits of using GFT and our access the world’s largest, fastest, most exhilarating market.
What is Forex?
You may already be aware of some of the benefits offered by the currency market. It is the fastest, largest and most liquid market in the world, but that is only the beginning of its advantages. As a very basic explanation, forex is the simultaneous buying of one currency and selling of another in order to seek gaining a profit (or accruing a loss).
Today, almost anyone with the appropriate appetite for risk and an understanding of market trends and analysis can trade currencies online with GFT. There are many benefits of trading forex versus other types of financial markets, many benefits to choosing GFT as your forex dealer and much to learn if you’re new to currency trading. Just click a link below to start improving your knowledge, and you’ll be well on your way to reaching your full potential in the foreign exchange market.

Affinity Investment Fraud

Affinity investment fraud refers to investment scams that prey upon members of identifiable groups, such as i.e. religious or ethnic communities, the elderly or professional groups.

The fraudsters who promote affinity scams frequently are - or pretend to be - members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile.

Many times, those leaders themselves become unwitting victims of the fraudster's ruse.

These scams exploit the trust and friendship that exist in groups of people who have something in common.

Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies, and instead try to work things out within their own group.

This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.

Many affinity scams involve various pyramid schemes, where new investor money is used to make payments to earlier investors to give the false illusion that the investment is successful.

This ploy is used to trick new investors to invest in the scheme and to lull existing investors into believing their investments are safe and secure.

In reality, the fraudster almost always steals investor money for personal use.

Those schemes always depend on an unending supply of new investors - when the inevitable occurs, and the supply of investors dries up, the whole scheme collapses and investors discover that most or all of their money is gone.

How to Avoid Affinity Fraud

Investing always involves some degree of risk. You can minimize your risk of investing unwisely by asking questions and getting the facts about any investment before you buy.

To avoid affinity and other scams, you should:

Check out everything:

No matter how trustworthy the person seems who brings the investment opportunity to your attention. Never make an investment based solely on the recommendation of a member of an organization or religious or ethnic group to which you belong.

Investigate the investment thoroughly and check the truth of every statement you are told about the investment. Be aware that the person telling you about the investment may have been fooled into believing that the investment is legitimate when it is not.

Do not fall for investments that promise spectacular profits or "guaranteed" returns:

If an investment seems too good to be true, then it probably is.

Similarly, be extremely leery of any investment that is said to have no risks; very few investments are risk-free.

The greater the potential return from an investment, the greater your risk of losing money. Promises of fast and high profits, with little or no risk, are classic warning signs of fraud.

Be skeptical of any investment opportunity that is not in writing:

Fraudsters often avoid putting things in writing, but legitimate investments are usually in writing.

Avoid an investment if you are told they do "not have the time to reduce to writing" the particulars about the investment.

You should also be suspicious if you are told to keep the investment opportunity confidential.

Don't be pressured or rushed into buying an investment before you have a chance to think about - or investigate - the "opportunity":

Just because someone you know made money, or claims to have made money, doesn't mean you will too.

Be especially skeptical of investments that are pitched as "once-in-a-lifetime" opportunities, particularly when the promoter bases the recommendation on "inside" or confidential information.

Fraudsters are increasingly using the Internet to target particular groups through e-mail spasm:

If you receive an unsolicited e-mail from someone you don't know, containing a "can't miss" investment, your best move is to pass up the "opportunity!"

What are Pivot Points in Forex

Pivot Point defined: A technical indicator derived by calculating the numerical average of a particular stock's high, low and closing prices. A technical indicator derived by calculating the numerical average of a particular stock's high, low and closing prices.

The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

You may hear that one of the handier tools in a forex trader’s toolbox is a pivot point calculator. Pivot points are one of the commonly used triggers for trading systems. If you’re new to the forex market, though, you may be foggy on exactly what pivot points are and what they can mean to your trading.

In a nutshell, pivot points are exactly what they sound like – the point at which the market is expected to turn – if it’s been going down, a pivot point is the value at which it will reverse the trend and begin to climb. If it’s been rising, then the pivot point is where the sentiment of the traders will turn and begin a downward trend. Obviously, being able to predict major movements in the money market is a valuable skill, since it hints at the where the market is moving and whether or not this is the time to trade or stick.

Pivot point trading is an especially popular method of mapping out a trading strategy. It was originally used by floor traders in the stock market who liked it because it allowed them to gauge where the market was heading with just a few simple bits of information and calculations. By knowing the high, low, opening and closing points from the previous day, they could calculate a point at which the market had ‘turned’ to head upward or downward. Pivot points can help predict where the market is going – and coupled with the resistance and support points, give you an idea how far in that direction it will go.

There are a number of ways to calculate the pivot points for the day, but the most common – and easiest – is to average the opening, closing and high points for the last day’s trading. There are other pivot points that can be calculated from those numbers as well. Before we talk about how to calculate them and what they mean, let’s define a few terms:

Resistance – A high point in a market chart that recurs regularly. Generally, it’s the point where the market (or currency) will begin a downturn

Support – A low point in the market chart that recurs regularly. Generally, it’s the point where the market (or currency) will begin to climb back up.

Traditionally, support and resistance points are difficult to break through. Most of the time as the numbers approach that level; there will be a slight rebound in the other direction. An interesting phenomenon is that once a resistance or support point is broken, it tends to switch sides – a broken resistance will often become a support for prices on the other side of the line.

The most common calculation for arriving at a pivot point is:

Pivot: (High + Close + Low)/3

Resistance: 2 * Pivot – Low

Support : 2 * Pivot – High

USD/EUR Date:02/03/06 14:40 O=0.83174 H=0.83188 L=0.83167 C=0.83188

Given this data for Feb 3, 2006, the pivot points for Feb 4, 2006 would look like this:

Pivot: 0.83180

Resistance: 0.83193

Support: 0.83172

Those numbers give me some points on which to base my strategy for the day. If the market opens above the pivot point, it’s a bull market, and most advisors would go for long trades, since the direction of the market is up. If it opens below pivot, it’s time to favor short trades and quick sales.

There are two common sales strategies using pivot, resistance and support points.

Breakout Trade: When a currency pair breaks through a resistance or support point, there’s usually a surge of activity around it. Buy if the charts show a break through a resistance, sell if the rate drops below a support point.

Pullback Trade: When the exchange rate drops back from a high, most traders will buy, based on other information that’s available. It’s a tricky move, though, since the pullback could just be a temporary pause in the upward momentum, or the beginning of a downward rebound.

Using pivot points to inform your strategy in day trading is a complex subject. You’ll find a great deal written about it by various gurus and experts. These basics can help you understand what you’re reading from them.

Diversifying Forex Trading Strategies

The critical difference between who will win and who will lose in the business of Forex market trading is learning how to manage your money. For example, if 100 Forex traders begin trading by using a system with 60% of winning odds, only about 5 of those traders would see a profit by the end of the year. Despite those 60% winning odds, only 95% of those Forex traders will lose because of poor money management skills. When entering a trading system one must have great money management skills in order to succeed. Traders enter the Forex system to make a profit, after all, not to lose money.

The amount of money you will put on a trade and the risks you are willing to accept for that trade is money management. It is very important to understand the concept of managing money and to understand the difference between managing money and trading decisions, in order to diversify your Forex trading strategies. There are a number of different strategies that can be employed that will aspire to preserve your balance from any high-risk liabilities.

To begin with an understanding of the “core equity” is a necessity. Basically the core equity illustrates the starting balance of the account and what amounts are in the open positions. Your money management will greatly depend on this equity so it’s very important to understand the meaning of core equity. For instance, if you have an open account with a balance of $5,000 and you enter a trade with $1,000 your core equity will be $4,000. If you enter another trade for another $1,000 then your core equity would be $3,000.

From the outset, it’s best to diversify trades by using several different currencies. By only trading one currency pair, you will generate very few entry signals. For example, if you have an account balance of $100,000 and have an open position for $10,000 then that makes your core equity $90,000. If you choose to enter on a second position, then calculate the 1% risk from your core equity, but not your starting account balance. This would mean that the second trade would not exceed $900. Then if you decide to enter a third position, with a core equity of $80,000 then the risk from that trade should not surpass $800. The key is to diversify the lots between all currencies that have a low correlation.

For example, if you want to trade EUR/USD and GBP/USD with a $10,000 (1% risk) standard position size in money management, then it would be safe to trade $5,000 in each EUR/USD and GBP/USD. This way, you will only be risking 0.5% on each position.

When trying to diversify your Forex trading strategies, it’s very important to understand the strategies of the Martingale and the Anti-Martingale. The Martingale rule means: increasing your risks when you’re losing. Gamblers worldwide who claim that one should increase the size of a trade even when one is losing have adopted this strategy. Basically, gamblers use the rule in the following way: bet $20, if you lose bet $40, if you loose bet $80, if you lose bet $160, if you lose bet $320, etc.

The strategy is to assume that if you lose more than four times, then the chances to win become bigger and as you add more money, you will be able to recover from your loss. Although there are many people who choose to use this strategy, the truth is, the odds are still the same 50/50 regardless of the previous losses. Even if you lose five times in a row, the odds for your sixth bet, and even for those there after, are still 50/50. This is a common mistake made by those who are new to the trading business. For instance, if a trader started with a $10,000 balance and lost four trades of $1,000 a piece for a total of $4,000 then the traders remaining balance would be $6,000. If the trader thinks there is a higher chance of winning the fifth trade and increases the size of the position four times, enough to recover from the loss, then if the fifth trade loses the trader will be down to $2,000. A loss like this can never be recovered back to the $10,000 starting balance. No experienced trader would use such a risky gambling tactic as the result is negative - losing all the money in a short period of time.

Forex Market Trading and The Mind Games

First, what is Forex: The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

Mind Games defined: Mind Games are a kind of social interaction where participants try to screw with one anothers' heads. The concept is most often used colloquially to refer to deceitful, confusing or Machiavellian situations. However some mind games are described by the psychology of transactional analysis.

When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader who’s been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind – and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesn’t take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others – including the mass psychology of the people that use the currency on a daily basis – but neglect to know what moves you, you’re going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying ‘Huh?” about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged.
All right. You’ve heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and you’ll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info – if it’s math, there’s only one right answer, right?

The answer lies in interpretation. The numbers don’t lie, but your mind does. Your hopes and fears can make you see things that just aren’t there. When you invest in a currency, you’re investing more than just money – you make an emotional investment. Being ‘right’ becomes important. Being ‘wrong’ doesn’t just cost you money when you let yourself be ruled by your emotions – it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? It’s that little thing inside your head that says, “I KNOW I’m right on this, dammit!”

To most people, being right is more important than making money.
Here’s the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. You’ve got to accept that picking a loser is NOT an indication of your self-worth, it’s not a reflection on who you are. It’s simply a loss, and the best way to deal with it is to stop losing money by moving on – and really move on. Moving on means you don’t keep a running total of how many losses you’ve had – that’s the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning.
Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 light bulbs that didn’t work. But he didn’t give up – because he knew that creating a source of light from electricity was possible. He believed in his overall theory – so when one design didn’t work, he simply knew that he’d eliminated one possibility. Keep eliminating possibilities long enough, and you’ll eventually find the possibility that works.

Winning traders see loss in the same way. They haven’t failed – they’ve learned something new about the way that they and the market work.
Winning traders can look at the big picture while playing in the small arena.

Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. I’m wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades – but I made $250,000, making my overall profit $175,000. It’s a pretty clear numbers game – but how do you keep on trading when you’re losing in trade after trade? Simple – just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that you’ve set up – but define yourself by what really matters – the overall record.

Bottom line: You can’t keep emotions out of the picture, but you can learn not to let them control your decisions. Keep it all in perspective and realise that there are a lot of big boys playing this game and playing it to win...

Forex Market Trading Rules

First what is Forex: The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

The Forex, or foreign currency exchange, is all about money. Money from all over the world is bought, sold and traded. On the Forex, anyone can buy and sell currency and with possibly come out ahead in the end. When dealing with the foreign currency exchange, it is possible to buy the currency of one country, sell it and make a profit. For example, a broker might buy a Japanese yen when the yen to dollar ratio increases, then sell the yens and buy back American dollars for a profit.

Those new to trading in the Forex market can find it a little bit intimidating and overwhelming at times. The rules and strategies for a beginner can seem like too much to learn. There are rules that you will learn along the way, for example price limits, but there are a few steadfast rules you should know before you make your first move in the Forex market. Using the three rules listed below will help you get started and successfully maneuver your way through the foreign exchange market.

Leveraging Your Portfolio

It can be easy to get caught up in the leverage of the market when just starting out in the Forex. The great thing about leverage is that someone who is not investing as much as other larger traders can play with the big guns and potentially make a good profit. In most cases, an investor can expect to only to back their investment up to 4%. This can get some people in trouble, however, and when you choose to abuse the system you can end up with a lot of debt. Never over leverage your portfolio. Be responsible when trading and remember that you are trading larger amounts than you probably have in your portfolio. The way to make sure you use the Forex market to your best potential is to keep yourself grounded.

Knowing when to quit is another rule for trading in the Forex market. It may sound simplistic but it is a great rule to never forget. On the other hand, knowing when to let things stay as they are is also a rule to remember. There is no way around occasional trades that have a negative impact on your finances. Not every trade you make will be a success. In the ever changing foreign exchange market there is no way to guarantee that every trade will reap rewards. Even the most seasoned foreign exchange market traders have bad trades. Your ultimate goal in trading on the Forex should be to try to come out with more wins than losses.

You should always know when to fold on a deal, thereby making it easier to come out ahead at the end of the day. Be sure to always get out losing the least amount of money as possible. This is a strategy every great trader uses. Watch your trades closely and get out when you should. If you have researched the trade before, you will know what the breaking points likely are and be able to make this decision easily. Knowing when to leave well enough alone is another skill one must learn. Learn to be patient with your trades, especially if they are not in a negative position.

Research Trades

Researching trades beforehand may seem monotonous, however, you should never make an order in the Forex market without knowing exactly what you expect to happen. Look at trends and history in order to get a better idea of what to expect. If you simply go out into the market with no background on the issues, you could lose a lot of money. So, take the time to do a little research before you begin.

Place Stop Loss Orders

You should always be familiar with a stop loss order before you begin trading in the Forex market. The stop loss order should be placed right along with your entry order. This type of order protects you from a potential loss getting out of hand. If the market takes a dive, you will be protected with the stop loss order. You must figure out however, before placing the order, at what point you would want to cut your losses. You should always do this before placing an order. Although you may find that many traders do not utilize the stop loss order process, you will find that the more successful traders use it often.

Three simple rules to follow to ensure that you get the most from trading on the Forex market.

Is There Such A Thing As Hedging in the Forex Market

Just like hedging your bet at the horse track you can hedge your trading in the Forex Market.

What is the Forex Market: The Forex and the stock market have some similarities, in that it involves buying and selling to make a profit, but there are some differences. Unlike the stock market, the Forex has a higher liquidity. This means, a lot more money is changing hands everyday. Another key difference when comparing the Forex to the stock market is that the Forex has no place where it is exchanged and it never closes. The Forex involved trading between banks and brokers all over the world and provides twenty-four hour access during the business week.

For those who are not familiar with the Forex market, the word “hedging” could mean absolutely nothing. However, those who are regular traders know that there are many ways to use this term in trading. Most of the time when you hear this phrase it means that you are trying to reduce your risk in trading. It is something that everyone who plans to invest should know about. It is a technique that can protect your investments to some degree.


While hedging is a popular trading term, it is also one that seems a little mysterious. It is much like an insurance plan. When you hedge, you insure yourself in case a negative event may occur. This does not mean that when a negative event occurs you will come out of it completely unaffected. It only means that if you properly hedge yourself, you won’t experience a huge impact. Think of it like your auto insurance. You purchase it in case something bad happens. It does not prevent bad things from happening, but if they do, you are able to recover a lot better than if you were uninsured.

Anyone who is involved in trading can learn to hedge. From huge corporations to small individual investors, hedging is something that is widely practiced. The manner in which they do this involves using market instruments to offset the risk of any negative movement in price. The easiest way to do this is to hedge an investment with another investment. For example, the way most people would deal with this is to invest in two different things with negative correlations. This is still costly to some people; however, the protection you get from doing this is well worth the cost most of the time. When you begin learning more about hedging, you start to understand why not many people completely know what it is all about. The techniques used to hedge are done by using derivatives. These are complicated instruments of finance and most often only used by seasoned investors.

When you decide to hedge, you must remember that it comes with a cost. You should always be sure that the benefits you get from a hedge should be more than enough to make it worth your while. You should make sure the expense is justified. If it is not, then you should not hedge. The goal of hedging is not to make money. You will not make large gains by hedging yourself. You have to take some risks in order to gain. Hedging is intended to be used to protect your losses. The loss cannot be avoided, but the hedge can offer a little comfort. However, even if nothing negative happens, you will still have to pay for the hedge. Unlike insurance, you are never compensated for your hedge. Things can go wrong with hedging and it may not always protect you as you think it will.

Keep in mind that most investors never hedge in their entire trading careers. Short-term fluctuation is something that the majority of investors do not worry with. Therefore, hedging can be pointless. Even if you choose not to hedge however, learning about the technique is a great way to understand the market a bit more. You will see large corporations and other large traders use this and may be confused at why they are acting this way. When you know more about hedging you can fully understand their strategies.

Stock Market Investments - The Decision Is ONLY Yours!

"An investment in knowledge pays the best interest!"
Benjamin Franklin (1706 - 1790)

Investing is a very complicated science, so your success can ultimately come only through further careful study of market principles.

Try to develop your investing savvy so you don't have to rely too much on the advice of others, who may or may not have your best interests at heart!

As you know, you don't have to be an expert in order to invest profitably ...

You don't even have to really love money ...

But, you will pay a high price for neglecting your finances!

During my years as a stockbroker I've seen many losers and winners. The difference was knowing the rules of "The Game" and adopting the right strategies to suit individual circumstances.

There are plenty of people ready to give you advice:

Bank managers, accountants, financial advisers and etc. Listen to them by all means, and read what this site has to offer.

But, at the end of the day ...

The final decision and the money will always be only yours!

Investors and the Circle of Competence

Investment procedures apply equally to all investors because they are based on unchanging principles.

In contrast, the selection process differs for each individual investor because it reflects the circle of competence, or circle of interest which becomes a circle of increasing competence with the accumulation of experience by the individual investor.

The circle of competence is a specific application of the general principle of differential knowledge.

The economist Friedrich A. Hayek (1899 - 1992) noted that "practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made."

The circle of competence of each investor reflects his or her personal qualities including risk tolerance, temperament, interests, knowledge, intelligence, and judgmental ability.

Therefore, each step in the selection process will uniquely conform to the particular individual investor.

In addition, the circle of competence of each investor represents an arena where he or she has no competition from other market participants.

This arena is a confidential monopoly created by the investor. This secret monopoly position is a proprietary interest in intellectual property. With confidentiality, there is no second guessing of an investor's judgments by others.

The investor uses the tools and techniques of security analysis, but the investor's job is not the same as the security analyst's job.

Where a security analyst must be prepared to appraise the value of every common stock or other security traded in the market, the investor only needs to appraise those stocks in his circle of competence.

What's Forex

FOREX (Foreign Exchange Market) - The global currency market of an exchange of certain currency of one country to currency of another country at the coordinated rate for the certain date. FOREX does not have any certain location of trade. It is a huge network where the currency dealers connected among themselves by the means of telecommunications concentrated on all World Financial Centers are working round the clock as a uniform mechanism. The basic participants of the currency market are: commercial banks, currency stock exchanges, the central banks, the firms which are carrying out the foreign trade operations, investment funds, the broker companies, private persons.
The main currencies which are shared on the basic volume of all operations in the FOREX market today are: the euro (EUR), the Japanese yen (JPY), the Swiss franc (CHF) and English pound of sterling (GBP) and US dollar (USD). The daily volume of conversion operations in the world makes about 2 billion US dollars. The turnover for the London market was about 30% of, for the market of the USA - 20%, Germany - 10%. Operations with US dollar make 70 %. About 15 % of turnover at FOREX market today is on a share of electronic brokers. The day time volume of operations of the largest international banks (Deutsche Bank, Barclays Bank, Union Bank of Switzerland, City Bank, Chase Manhattan Bank, Standard Chartered Bank) reaches billions of dollars. The operations of (spot) type or current conversion operations are transactions of sale and purchase of currency. Actual execution (value) of fallowing is carried out for the second working day after the day of the conclusion of transaction. Typical volumes of transactions in interbank trade make 10 million dollars, but due to the system of margin trade. The output in the market is also accessible to the persons having small capital. The brokers, rendering services of margin trade, demand entering of the mortgaging deposit and enable the client to make operations of currency sale and purchase for the sums, of 100 times bigger than the brought deposit. The risk of losses is assigned to the client. The deposit serves as the insurance for the broker. The international currency market has deep centuries-old roots. It has originated more than thousand years B.C. when the first metal money has appeared in Egypt . Money market operations in their present understanding have started to develop in middle Ages. It has been associated with development of international trade and navigation. Italian shroffs were considered as the first speculators with foreign currency. They earned on the currency exchange of the different states.
The currency exchange market has changed at the interstate attitudes development, getting more and more precise outlined. The most significant changes have been brought in the currency market development in XX century. Finding of modern features by the market began in 70th years of 20 centuries when the system of the fixed rates of one currency into another has been removed. After removal of restrictions on fluctuations of currencies the new kind of business based on profit extraction according to conditions of free system of the exchange rates changing. And change of a rate is caused by all possible market conditions and adjusted only by a supply and demand.
The basic stages of the world financial market development in 30th years of XX century. World financial crisis. Economical trading contacts are broken. Times of golden coin standard have gone to the past. In the middle of 30's London becomes the World Financial Center . Great British Pound becomes the base currency for trading operations and forming of currency reserves. And then pound had a slang name "cable" already. That was associated with the factor that transactions were conducted on the telegraph and the information was transferred by cable.
In 1930 in the Swiss city named Basel the Bank of the International payments has been created. The purpose of creation was financial support of the young independent states and the states temporarily testing deficiency of the payment balance.
1944
Bratton Wood conference has been conducted in the USA . It has been counted as the termination of the American-British rivalry. There were two largest figures at conference: John Maynard Keynes ( England ) and Harry Deckster Whyte ( USA ). They manage to create and accept the new order of world financial system development in current conditions.
Main notice of Bratton - Wood conference.
" The international currency fund becomes the major institute supervising the international financial and economic attitudes; " The currencies playing a role of the international reserves (dollar and de facto pound sterling) are proclaimed; The adjustable parities of currencies adhered to US dollar (the deviation 1 % is possible) established; the dollar is adhered to gold (ounce of gold - $35); " Members of IMF have the right to change parities only with the consent of IMF; " On transitional end all currencies should become convertible; for observance of this principle all governments undertake to store the international reserves, and if necessary - to make interventions on currency markets. " Members of IMF do a payment by currency and gold.
1947
The program of restoration of the European economy has been accepted in the USA for the suspension of communism approach. The USA state secretary Marshall depicts the plan in his report. According to following plan the economy of Europe will be improved up to that level when it can independently support the military potential. One of the problems was satisfying of "dollar famine". If in 1949 dollar obligations of the USA to Europe made 3.1 billion they have reached 10.1 billion dollars.
1958
The majority of the European countries declare free convertibility of the currencies.
1964
Japan has declared convertibility of its own currency. After the announcement of convertibility of the basic currencies it became clear, that the USA cannot stay able to support the price of $35 for ounce of gold anymore. Dollar inflation has made threat for the USA . Kennedy administration had been accepted a number of incorrect actions - the tax to the percentage differential raising costs of foreign borrowers, and the program of voluntary restriction of foreign credits is entered. The tax and restrictions were an incitement to occurrence of the new market - the market of Eurodollars.
1967
There was a devaluation of English pound that has stroked last blow on illusory stability of Bretton Wood system. In 60-s deficiency of the balance of payments in the USA leads to reduction of gold reserves with 18 up to 11 billion dollars. There is an increase of external duties of the USA simultaneously to it.
1970
Interest rates in the USA that generate the strongest crisis of dollar are sharply reduced. There was a massive capital outflow from the USA to Europe where the level of interest rates was higher.
May 1971
Germany and Holland declare temporary free fluctuations of the currency rates.
August 1971
Growth of deficiency of the paymen balance of the USA has compelled the president Richard Nickson to suspend convertibility of dollars in gold.
December 1971
The last attempt to keep Bretton - Wood system has been undertaken at the meeting in Smithsonian institute in Washington . The interval of deviations of exchange rates from parities has been increased up to 4.5 %.
To keep borders of an interval it was very uneasy. And later Bundes Bank has lead intervention for the sum of 5 billion dollars. It was the enormous sum at that time, but it has not brought the success. Currency stock exchanges in Europe and in Japan should be closed temporarily and the USA have declared devaluation of dollar on 10 %. The developed countries have stopped to support the fixed parities and were started up in currency navigation.
1973-1974
The USA had cancelled stage by stage with the tax to percentage differential and the program of voluntary restriction of foreign credits.
The Bratton-Wood system had stopped its existence.
Last years of Bretton - Wood system existence currency traders extracted big speculative profit during the periods following the termination of interventions of the central banks. After the refusal of the rates the opportunity of such profit extraction became strongly limited. Many banks have incurred large losses, and two known as "Bankhaus Hershtadt " in Colon and " Franklyn National " in New York - even have gone bankrupt because of unsuccessful speculative operations.
1976
The Jamaican conference ( Kingston ) has taken place. The representatives of major world states have generated new principles of World currency system formation. The states have refused use of gold as means of a covering of deficiency at the international payments.
The interstate organizations regulating currency attitudes, convertibility of currencies act as basic elements of new system. National currencies of the states act as payment means. Commercial banks act as the main mechanism by means of which the international currency transactions are carried out.
1978
European Voluntary System (EVS) is created. Core of EVS is the grid of cross-countries - exchange rates with the central and boundary values of exchange rates. Basically EVS reminds Bretton Woods. If the cross-country-rate comes nearer to the border, both parties are obliged to carry the intervention out. Deutch Mark is a key currency of EVS.
1985
Gradually ecu becomes not accounting, but the physical tool. Traveler's cheques denominated in ecu and credit cards are issued, banks open deposits in ecu.
January 1999
There was a new European currency called Euro which replaced ECU by its self. 11 European states have fixed exchange rates in relation to Euro. The European central bank started to operate a currency policy of the European currency union (EMU). The fixed exchange rates of participants of the European currency union to Euro:
EUR/LUF 40.3399 Luxembourg franc EUR/BEF 40.3399 The Belgian franc EUR/IEP 0.787564 Irish pound EUR/FIM 5.94573 The Finnish mark EUR/PTE 200.482 The Portuguese escudo EUR/ESP 166.386 Spanish peseta EUR/ITL 1936.27 Italian lira EUR/FRF 6.55957 The French franc EUR/DEM 1.95583 Deutch mark EUR/NLG 2.20371 The Dutch gulden EUR/ATS 13.7603 The Austrian shilling
As against other financial markets currency market is characterized by a great volume of the tenders, the lowest cost of spent transactions, and the fastest movement of money resources. It is the unique world market working 24 hours a day. Its liquidity has increased up to 1 billion US dollars a day. Now operations at the currency market are the basic source of incomes of world conducting banks, such as: Chase Manhattan Bank, Barclays Bank, Swiss Bank Corporation and so on. Soros's gamble on sale of English pound against DM which has brought billion dollars of net profit within 2 weeks became classical, having made Soros famous and having his charities begun. The opportunity of work in the financial markets of Asia, Europe and America became accessible, due to their association in one global communication network. 24 hour access on the currency market allows to open and close positions during optimum time and under the best price. Big profit can be extracted at rather small deposit during a short time interval. One phone call or simple pressing a key of "mouse" (at carrying out of operations with the help of our information-trading system) is enough to open position.