Thursday, July 23, 2009

Forex Foresee

The Market Oracle, an online financial publication, has done even better, preparing a one-year forecast for all of the major currencies along with a detailed analysis of the major factors driving each currency in the month of February. The Dollar and Yen are projected to be the strongest performers in this time frame, benefiting from a trend towards risk aversion. It should be noted that this prediction is consistent with news reported by the Forex Blog earlier this week. On the other hand, currencies that have been propped up by the Yen carry trade, namely those of Australia, New Zealand, Canada and South Africa, will face selling pressure. The British Pound is projected to underperform slightly, due to an easing of British monetary policy, which will narrow the interest rate advantage claimed over the US.
Finally, the Euro is something of a wildcard. On the one hand, the EU economy is stagnating, and the ECB has hinted that rate cuts are a possibility. On the other hand, the Euro theoretically stands to inherit a significant amount of risk-averse capital, especially from foreign investors looking for a stable alternative to the Dollar. Accordingly, the Market Oracle forecasts a short-term decline in the value of the Euro but a long-term appreciation.

Forex Capital Markets - Fractional Pip Pricing

Forex Capital Markets LLC, the largest Forex Dealer Member, recently announced that it would begin offering so-called “Fractional Pip Pricing” in an effort to reduce the bid-ask spreads it offers customers. Previously, most, if not all forex brokers that cater to retail forex investors, quoted forex rates out to four decimal places (i.e. 1.4101 USD/Euro). However, due to its strong liquidity relationships with banks that facilitate forex trading, FXCM has negotiated tighter bid-ask spreads for its customers, which will enable it to quote exchange rates to five decimal places (i.e. 1.41007 USD/Euro. While FXCM expects to narrow spreads further in the future, it remains to be seen whether the competition will follow suit.

Forex transactions

Forex transactions are carried out by Forex brokerage companies, also known as major banks dealers. Forex market is worldwide and your European colleagues may make a transaction with Japanese traders when it's time for you to sleep in the North America. There are 3 shifts for the major institutions to work in due to 24-hours a day activity of the Forex market. It's possible to ask for overnight execution for take-profit and stop-loss orders of the client.
Prices in the Forex market fluctuate without any dramatic changes unlike stock market where considerable gaps are likely to be seen. There isn't any problems entering and exit the market due to its daily turnover of about $1.2 trillion. Forex market can not ever be forced to stop. The transactions were carried out even in 2001, on September, 11th.

Beginners Guide to Forex

What is Foreign Exchange?

The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

Where is the central location of the FX Market?

FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) or 'Interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.
Who are the participants in the FX Market?
The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.
When is the FX market open for trading?
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

Forex trading begins each day in Sydney

Investors and financial backers from Japanese retail companies are now jumping into the forex market even though there was a recent major surge of the yen when compared to the U.S. dollar.For most forex traders, this change in the value of the yen against the dollar has been a wake up call. There is a large amount of traders who have their life savings invested in the market and the thought of losing it all in a heartbeat can be very nerve-racking.Research data from Yano Research Institute has recently shown that the amount of forex trading accounts nearly doubled in 2006 with a total of 644,802. Data from Yano also mentioned that this number is supposed to increase another sixty-two percent by March of 2008.Surprisingly, the jump for the Yen has not scared away most traders because they are playing the market to get long-term results. Junichi Katsuno, who represents Himawari Shoken in its financial markets division, mentioned that, "There are many people who take a long-term view and are waiting to buy [dollars]." He also added, "There aren't that many people who expect the yen to strengthen that much more."CONGRATULATIONS & HALLELUJAH - The answer to a trader's prayer! This is without a doubt the most powerful system in the world for reducing the amount of risk associated with Forex Trading.The hottest new investment concept of the decade has arrived!-Simple, easy affordable web-based software.-No trading experience necessary - has novices trading within hours.- No charts/graphs/research/guesswork, etc...- Outstanding company/member supportLearn about making easy money from home with currency exchange using FOREX INVESTING.

Description of the Forex | sigma forex

The Forex market, established in 1971, was created when floating exchange rates began to materialize. The Forex market is not centralized, like in currency futures or stock markets. Trading occurs over computers and telephones at thousands of locations worldwide.
The Foreign Exchange market, commonly referred as FOREX, is where banks, investors and speculators exchange one currency to another. The largest foreign exchange activity retains the spot exchange (i.e.., immediate) between five major currencies: US Dollar, British Pound, Japanese Yen, Eurodollar and the Swiss Franc. It is also the largest financial market in the world. In comparison, the US stock market may trade $10 billion in one day, whereas the Forex market will trade up to $2 trillion in one single day. The Forex market is an opened 24 hours a day market where the primary market for currencies is the 24-hour Interbank market. This market follows the sun around the world, moving from the major banking centres of the United States to Australia and New Zealand to the Far East, to Europe and finally back to the Unites States.
Until now, professional traders from major international commercial and investment banks have dominated the FX market. Other market participants range from large multinational corporations, global money managers, registered dealers, international money brokers, and futures and options traders, to private speculators.
There are three main reasons to participate in the FX market. One is to facilitate an actual transaction, whereby international corporations convert profits made in foreign currencies into their domestic currency. Corporate treasurers and money managers also enter the FX market in order to hedge against unwanted exposure to future price movements in the currency market. The third and more popular reason is speculation for profit. In fact, today it is estimated that less than 5% of all trading on the FX market is actually facilitating a true commercial transaction.The FX market is considered an Over The Counter (OTC) or ‘Interbank’ market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets. A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

Forex Gold Special

Now I,m telling to you about Forex Gold Information
The market action this week provided a great demonstration of why I mentioned in my last post that options on gold futures contracts were my favorite way to play the ongoing bull market in gold. As gold continues a profit-taking pullback prior to advancing to all-time highs, my margined gold futures contracts and FOREX gold and silver positions were all stopped out, preserving some of my profits, but also meaning that if the market had turned on a dime and shot back the other way, I would have missed out on some of the move up while I was still trying to decide where and when to get back into the market. Because the vast majority of my positions in silver and gold are in options on December 2008 futures contracts, those positions are temporarily down in value, but still in play to benefit from the inevitable turnaround.
This example shows in a nutshell why options are a great choice for investing in commodities that you are sure will move either much higher or much lower in the future, but can't be sure exactly when the big move or moves will occur. As discussed in previous posts, since you pay for an option in full up front, your loss is limited to your initial investment if it expires worthless, and that can only happen if you fail to roll it over prior to its expiration date. On the other hand, since futures contracts and FOREX positions are heavily margined, investors have to close them out quickly when the market starts moving against their positions, as happened to my margined positions this week. Futures and FOREX traders who do not do so quickly become former traders. So why does anyone trade margined positions then? Why doesn't everyone just trade options? The answer is that since you pay the full value of the option at the time you establish a position, you can't control as large of a total position size as you could in the futures, since you only have to make a small "deposit" when you establish a position in a futures contract, as discussed in more detail in previous posts. Like everywhere else in the market, taking greater risk creates the possibility of greater returns.
Options on stocks and Exchange Traded Funds (ETF's) were discussed in detail in my November 8, 2007 post. The main difference between options on stocks and options on futures is that a futures option gives you the right to buy or sell one futures contract at a set price at a set future date, instead of 100 shares of an underlying stock. Other than that difference, the underlying concept is basically the same. A speculator looking for the maximum leverage would purchase a futures contract on a given commodity, and would consequently assume the risk of greater losses than his or her initial investment if their margined position moved against them far enough before they closed it out. A speculator looking for high leverage, but also looking to avoid margin calls, would instead purchase options on a futures contract.
Let's look specifically at some examples for each method. As of this writing, with gold trading at $787 per troy ounce, a speculator with $10,000 could choose to control two full size 100 troy ounce gold futures contracts (leaving a $1,900 cash cushion), or 10 e-mini 33.2 troy ounce gold futures contracts (leaving a $2,300 cash cushion). The speculator could also choose to buy two call options that would give him or her the right to purchase two full size 100 troy ounce gold futures contracts at a price of $800 per troy ounce on November 20, 2008 (leaving a $180 cash balance). If the price of gold moved from $787 to $887 per troy ounce sometime in that period and the speculator decided to take profits at that point, the respective profits would be $20,000 for the two full size contract choice, $33,200 for the 10 e-mini contract choice, and $12,700 for the two call options.
The $12,700 profit on the call options represents a gain of just under 160%, but was achieved without having to worry about margin calls or getting stopped out of the position at a loss. True to the concept of greater risk taking opening up the possibility of greater gains, the margined futures contract positions were up 247% and 431%, respectively, but if at any time following the opening of the position the price of gold had gone down by just $4 to $783, the futures contract holders would have received margin calls asking them to deposit more money, at which point most futures traders would have closed out their positions. There is also the ongoing mental stress associated with holding heavily margined positions to consider.
Options on futures should only be considered by a speculator who has a very firm view of the future direction of a particular commodities market, as options can expire worthless if they are not rolled over. So the obvious question at this point in time is whether or not gold is certain to move significantly higher in the next few years. Since nothing is certain in this world except for death and taxes, a better question is what it would take for gold NOT to move significantly higher. The only scenario that derails the ongoing gold bull market is one in which: (1) the Fed embarks on an aggresive campaign to raise interest rates to protect the dollar, thereby throwing millions more homeowners out on the street than are headed out on the street already; and (2) the politicians in Washington embark on an aggressive campaign to cut federal spending on defense, Social Security, Medicare, etc. enough to generate huge annual budget surpluses for at least the next generation. Each speculator or investor will have to make up their own mind as to whether or not they see the above scenario coming to fruition anytime soon.

Forex Software Tool That Can Help Prevent Errors

Recently, good news was made public for traders about a new tool that can help with online investing. A company by the name of My Forex Edge, LLC, which develops and distributes various forex software programs and foreign exchange trading techniques, unveiled its new Forex Position Allotment Calculator. This tool gives investors a foreign exchange trading platform that helps avoid over leveraging and does away with the fear and greed that comes with online forex trading.
The Forex Position Allotment Calculator uses a special "set it and forget it" feature, which lets forex traders set the buy and sell prices, the stop price and limits without forcing the investor to constantly manage trades. Foreign exchange daytime traders, position traders, and swing traders are currently making use of the new Forex Position Allotment Calculator. According to Milan Stevanovich, the director of My Forex Edge, LLC, mentions that these traders have boosted forex currency trading profits by twenty five percent.
With this new forex software, traders no longer have to handwrite and enter in risk percentages, which means that there is less potential for error. Stevanovich also mentions that, "using the Forex Position Allotment Calculator could save you ten times the amount of an error."
He also claims that the new calculator has a smaller price tag than other forex trading computer programs, costing traders only 97 dollars for the complete software kit.
CONGRATULATIONS & HALLELUJAH - The answer to a trader's prayer! This is without a doubt the most powerful system in the world for reducing the amount of risk associated with Forex Trading.
The hottest new investment concept of the decade has arrived!
-Simple, easy affordable web-based software.
-No trading experience necessary - has novices trading within hours.
- No charts/graphs/research/guesswork, etc...
- Outstanding company/member support
Learn about making easy money from home with currency exchange using forex investing

U.S. Currency & Euro Face to Face in Forex Market

The U.S. dollar is still holding ground next to the euro recently, with investors keeping substantial distance ahead of major non-farm payroll statistics.
General predictions are saying that the United States economy will create roughly one hundred thousand new jobs, but many researchers have been improving their predictions upon seeing the major employment components from this week's Institute of Supply Management surveys.
As a result, the U.S. dollar experienced a slight increase overnight, but other currencies have remained the same during early London trade, with all eyes being stuck on the recent activity of U.S. currency.
A trader from, Mic Mills, mentioned that, "Everything is on hold until non-farm payrolls."
Mills also mentioned that the Forex market is one step ahead in terms of virtually pricing as a result of further interest rate drops from the Federal Reserve, allowing the U.S. dollar to boost in the event of more concrete information.
Even though the basics for the U.S. dollar are not too strong, it is generally viewed as oversold and now will be corrected after recently shooting to an all time low when put next to the euro.

Important Tips For Finding a Forex Broker

important rules to remember when looking for a forex broker is to ALWAYS read the fine print and make sure that you are fully aware of the broker's terms before agreeing to use his or her services. Being critical about who you choose is crucial, and it is not always wise to just pick the first one that you speak with.When looking for an online forex broker, here are a few things to keep in mind:First of all, stay close to low spreads. In the world of Forex trading, spread determines the monetary difference between the buy and sell prices of 2 different currencies. Therefore, lower spreads will save you some cash in the end.Second, look for account openings that have a low minimum. For example, if you are able to open a new account with as little as 250 dollars, then you are in a good position. Not everyone has millions of dollars to trade in this competitive market.Third, look for instant execution of orders with your new account. You do not want to do business with a broker that is going to give you a different quote when you click on a particular price, especially when you are dealing with small profits. Make sure that you have a broker that will quote the price that you physically see when you click on it.Always remember to do sufficient research before choosing a broker, because some of them might have certain terms that are not clearly stated and you do not want to be kicking yourself in the end. There are plenty of honest brokers out there that want to help you make a profit, and then there are some who only care about a paycheck.

Forex News: U.S. Dollar and U.S. Housing Both Drop

Just days ago the U.S. dollar dropped greatly after a report was released that showed United States housing decreasing to its lowest level in fourteen years as of last month. This is also one more concern for the U.S. economy, considering that the drop in housing can have a great effect on how quickly it progresses.If the housing market is not strong and the U.S. economy continues to move slowly, Federal Reserve policy-makers may have to be informed in order to reduce benchmark interest rates once again. The current rate is 4 & 3/4 percent, and the Federal officials will meet at the end of this month to discuss the changes."The U.S. housing market is going to continue to be a significant drag on the overall U.S. economy, and the U.S. dollar is going to weaken as a result," mentioned Firas Askari. Askari is the top forex trader at BMO Capital Markets of Toronto."The Federal Reserve is more likely to be easing rates, maybe not on Oct. 31, but definitely within the next three to six months," Askari said.Late this morning, forex trading in New York showed the euro increasing to 0.4% higher than before with a value of 1.4215 U.S. dollars. The dollar index, unfortunately, dropped 0.35% to 78.057. Stay posted for more upcoming Forex news in relation to the value of the U.S. dollar.

Forex Broker Information

What is a forex broker?

A forex broker is an institution, often a bank or a big financial company, that allows you to trade currencies in the forex market.
What is important to check when choosing a forex broker?

1. Spreads - make sure the company is giving tight spreads. A spread is the difference between the buying price and selling price at a certain time, and the lower it is, the easier it is for you to profit.
2. Supported currencies - all forex brokers support "the majors" - the currencies with the highest trading volume: the US Dollar (USD), the Euro (EUR), the British Pound (GBP), the Japanese Yen (JPY), and the Swiss Franc (CHF). Most brokers also support additional currencies, even exotic ones (such as Polish Zloty, PLN, and Israeli Shekel, ILS). However, when trading currencies other than the majors, it's important to check the spreads, since they are often much higher than the spreads on the majors.
3. Required invetment - some brokers, such as easy forex allow you to open an account with as little as $25. It is NOT recommended to start with such small capital, but if you do not have much to invest in a forex account, see what is the minimum deposit before opening an account.
4. Technical support - all forex traders, beginners and experts, run into trouble. It's very important to check whether a forex broker offers a good technical support, especially if you are a beginner.

Forex Special Post

Forex Market Properities

Forex Swap

Forex Swap
In finance, a forex swap (or FX swap) is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates (normally spot to forward).
A forex swap consists of two legs: a spot foreign exchange transaction, and a forward foreign exchange transaction. These two legs are executed [...]

Forex Market Properities

Foreign Exchange Option

Foreign Exchange Option
In finance, a foreign exchange option (commonly shortened to just FX option or currency option) is a derivative financial instrument where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.
The FX options market [...]

Forex Market Properities

Retail Forex

Retail Forex
In financial markets, the retail forex (retail off-exchange currency trading or retail FX) market is a subset of the larger foreign exchange market. This “market has long been plagued by swindlers preying on the gullible,” according to The New York Times[1]. Whilst there may be a number of fully regulated, reputable international companies [...]

Forex News

Forex News : US Dollar Facing 1Q GDP, FOMC, Earnings and G20 forecasts

Forex News : US Dollar Facing 1Q GDP, FOMC, Earnings and G20 forecasts
Fundamental Outlook for US Dollar: Bullish
- First quarter earnings may have been a positive factor so far, but the outlook is still far from encouraging
- Fed says recession ‘substantially reduced’ some banks’ capital though most are still well-capitalized
- Do technicals support a [...]

Forex News

Forex News : Euro at Critical Crossroads versus US Dollar

Forex News : Euro at Critical Crossroads versus US Dollar
Fundamental Outlook for Euro This Week: Bearish
- Euro gains as PMI shows signs of “Second Derivative” Growth Improvement
- German IFO Business Confidence survey improves – Euro rallies
- Euro Bear Trend may nonetheless be in its infancy
The Euro finished the week marginally higher against the US [...]

Forex News

Forex News : Japanese Yen Trades Must Gauge Risk and the Currency’s Relation to It

Forex News : Japanese Yen Trades Must Gauge Risk and the Currency’s Relation to It
Fundamental Outlook: Bearish
- G7 forecasts a ‘weak’ rebound later this year; though banks’ toxic assets still a serious problem
- Japanese trade balance marks it worst annualized deficit in 29 years
- Bank of Japan Governor Masaaki Shirakawa tells economists not to [...]

Forex News

Forex News : British Pound to Follow Stock Prices Lower if Risk Appetite Abates

Forex News : British Pound to Follow Stock Prices Lower if Risk Appetite Abates
Fundamental Forecast for British Pound: Bearish
- UK House Prices Rose for Third Straight Month in April, Says Rightmove
- Retail Prices Turned Negative for the First Time Since 1960 in March
- Unemployment Rate Rises to Highest in Over a Decade
- UK Budget [...]

Forex News

Forex News : Swiss Franc Recent Strength Puts It At Risk For Verbal Intervention

Forex News : Swiss Franc Recent Strength Puts It At Risk For Verbal Intervention
Fundamental Outlook for Swiss Franc: Bearish
- Swiss ZEW Survey improved from -57.1 from -27.7, as investor confidence rose for a sixth month.
- Swiss Trade Balance surplus shrunk to 0.12 from 0.72 billion, as exports fell by 5.0%
The Swiss Franc rallied nearly [...]

Forex News

Forex News : Canadian Dollar – Crude Oil Correlation Hits 20+ Year Highs

Forex News : Canadian Dollar – Crude Oil Correlation Hits 20+ Year Highs
Fundamental Outlook for Canadian Dollar: Bearish
- Canadian dollar surges as Bank of Canada fails to announce immediate Quantitative Easing
- Surprise BoC interest rate cut nonetheless forces Loonie sell-off
- Check out our USD/CAD outlook from a technical and fundamental perspective.
The Canadian dollar finished [...]

Forex News

Forex News : Australian Dollar Outlook Hinges on Trend in Risky Assets

Forex News : Australian Dollar Outlook Hinges on Trend in Risky Assets
Fundamental Forecast for Australian Dollar: Bearish
- Producer Prices Unexpectedly Fell in the First Quarter
- RBA Governor Stevens Says Australia is in Recession
- Inflation Falls to Slowest in 18 Months as Downturn Deepens
The Australian Dollar looks likely to succumb to heavy selling pressure if [...]

Forex Worldwide Markets

Forex is a buying and selling system also referred to as FX or foreign market exchange. Those concerned in the foreign exchange markets are some of the largest businesses and financial institutions from around the world. They deal in multiple currencies from many nations to produce a balance as some are going to gain money and those who fall down. The basics of forex are similar to the form of dealing found in any country, only much bigger and complex. Forex buying and selling involves individuals, currencies and trades from around the world, between every last country.

Different currency rates happen and change every day so the measure of the dollar on one particular day of trading might be different on the next trading day. Forex trading can be hard to keep track of so you must dedicate yourself to keep an eye out on your funds, especially if you have invested a great amount of them, there is a chance you could lose it all. Primarily, trading in the forex exchange occurs in Tokyo in New Your and in London as well as several other spots around the globe.
The types of currency that are commonly traded are the Swiss franc, the Australian dollar, the British pound, the Japanese yen, the Eurozone euro, and the United States dollar. You can cross-trade currencies and you can intermingle one currency trade to another in order to attain supplemental interest and monetary gains.
The regions included where forex trading will start at one hour then shut down as other markets start to open shop. This is seen also in the stock exchanges from around the world, as different time zones are processing orders while making other transactions during various times. What happens in forex trading in a certain country might create various results in another forex exchange as time zones dictate the opening and closing of forex markets. The exchange rates will be varied between forex exchanges, and brokers and day traders alike will want to know the rate changes for each new day before committing money.
The stock exchange is primarily measured on products, prices, and other factors within businesses that could alter the cost of shares. If someone knows what is going to happen before the general public, it is often known as inside trading, using business secrets to purchase or sell stocks on that information — which is punishable by law. There is very little, if any at all inside information in the markets of forex. The monetary trades, buys and sells are all a part of the forex market but very little is based on business secrets, but much more dependent on the status of the currency, economy of any given country.
Code are given to each type of currency on the forex market exchange so no confusion exists when knowing which currency one is investing with at the time. EUR is the symbol for the euro and the US dollar is known as the USD. The GBP is the British pound and the Japanese yen is known as the JPY. If you want to get involved in the forex market and want to contact a brokerage then you should have no problems finding and online brokerage where you can investigate the type of exchanges and profile ahead of throwing your money down the drain.

Forex Currency Trading Useful Information

When you trade in the forex exchange, you’re engaged with foreign stocks, currency and similar varieties of products. The money of one country can be likened to another currency from a different nation to figure the monetary value. The value of that foreign currency is taken into review on every last trade made in the forex stock markets. Many international markets will have control over the altered monetary value their nation brings affecting the money, or currency. People who’re investing their money into the FX market exchange includes many large business organizations, banks foreign administrations and finance businesses.

What are the things that make the forex exchange so different from the US stock market? A trade on the forex market is one that involves at least two countries, and it can take place worldwide. The two countries must be 1, the investor’s country and 2, the place receiving the investment. Most all of the transactions that take place in the forex markets will be qualified through an experienced broker such as a bank.
What are the ingredients of trading in the forex market? The overseas market is comprised of a mixture of financial exchanges amongst nations. Investors in the forex stock market are trading in large volumes and huge amounts of money. Those deeply imbedded in the forex exchange are likely to have companies who are cash businesses or are in businesses where assets are bought and sold quickly. The US market is massive but it is correct to imagine the forex stock market as even more immense than any given single stock market. Forex traders daily twenty-four hours a day and sometimes trading is completed on the weekend, but not all weekends.
You might be surprised at the great number of investors that are involved in forex trading. In 2004 alone, as much as two trillion dollars was the median forex exchange trading volume. This number is massive in trade volume with regards to the amount of daily transactions to take place. Think about how much a trillion dollars really is then double that, and this amount is the average that is traded on any given day on the forex exchange!
The forex market is not something new, as it has been used for over thirty years but with the introduction of computers, and the global web, the forex exchange is growing exponentially as growing numbers of investors become aware of the availability of this trading market. Forex only accounts for about ten percent of the total trades between countries but as the popularity in this market continues to grow so could that number.

Friday, July 17, 2009

Commentary: Anatomy of a Currency Trader

In the context of fundamental currency analysis, we usually talk about inflation, interest rates, economic growth, politics, etc. But perhaps these variables mask some deeper "truth" in forex, specifically that there is some ultimate "force" guiding the decision-making processes of forex traders. What we are really talking about here is comfort with risk. Especially in the medium-term (the short-term consisting of hours and defined by randomness and the long-term consisting of years and defined by relative changes in the money supply), investors are constantly re-evaluating the level of risk that they want to assume.
To make this idea more concrete, let’s look at how the credit crisis has impacted forex markets. In general, it has favored major currencies, such as the Dollar and the Euro, although sometimes one more than the other. This is to be expected since the capital markets of the US and the EU are the most stable and in times of uncertainty, investors seek out stability. Likewise, the Japanese Yen has fared well. Despite a continuation of its easy money policy, investors have unwound their Yen carry trade positions, ever-fearful that a spike in volatility could cost them dearly. On the other end of the equation are emerging market currencies and beneficiaries of the carry trade, which have faltered as investors pare their exposure to risk. The underlying narrative is the same; only now, investors are willing to accept lower returns in exchange for proportionately lower risk.

Vietnam Nears Crisis

In what some analysts have termed ‘an act of desperation,’ Vietnam has devalued its currency, the Dong, by .5%. Negative pressure had been building above the Dong for months, due to a burgeoning trade deficit, sagging stock market, and a stratospheric inflation rate, most recently clocked at 23%. Unfortunately for Vietnam’s economic planners, the black market exchange rate remains nearly 5% below the official rate. In addition, futures prices reflect the expectation that the Dong will lose 30% of its value over the next twelve months. At this point, Vietnam is simply trying to forestall a full-scale economic crisis. This will probably involve further devaluations of the Dong. The Times Online reports-
Analysts said that the rising risk of a sudden and crippling depreciationcomes as the cracks in Vietnam’s vaunted “economic miracle” have grown toolarge to ignore.

Inflation or Economic Growth?

Global capital markets remain caught in a tug of war between inflation and economic growth. For most of 2008, the economic growth story prevailed as the Federal Reserve Bank cut interest rates aggressively to cushion the blow from the housing crisis. However, the pendulum soon swung to inflation and the Fed began to worry that perhaps it had lowered rates too far and may in fact need to hike them in response to surging food and fuel prices. In fact, the European Central Bank recently hiked its benchmark interest rates. Now, a slew of negative economic data threatens to shift the rhetoric back to the other corner. Securities and currencies have fluctuated wildly over this period, and investors remain unsure about which side the world’s Central Banks will err on. Currency traders need to look no further than credit markets for a snapshot of the current consensus, which often presages changes in currency valuations. A quick and dirty analysis would place American and Euro-zone short-term bonds side by side and compare the yields (or prices), as a proxy for the EUR/USD exchange rate. The Wall Street Journal reports:
Two-year yields in all three markets have been on a wild ride in June, driven up by tough inflation rhetoric from central banks, then down again by renewed worries about the credit crisis and the state of financial markets.

Fed Increases Liquidity

In a bid designed to placate skittish investors, America’s Federal Reserve Bank announced that it will extend the duration of its liquidity facilities at least through 2008 and possible into 2009. It is hoped that the continued enabling (which began several months ago) of certain Wall Street firms to borrow on especially favorable terms will prop up faltering credit markets. Given that both credit conditions and the economy at large continue to flounder, this move seems more symbolic than anything. Analysts are divided about whether this increased liquidity will serve as a complement or a substitute for a near-term interest rate hike. Futures prices had previously reflected a 65% chance that the Fed would hike rates in September, but the bet is now closer to even money. Reuters reports:
Others…think liquidity problems and inflation concerns are two separate issues. [One analyst] believes that the Fed is still on track to raise rates inSeptember.

UK Housing Crisis Could Affect Pound

When one hears the phrase "housing crisis" uttered, the US immediately comes to mind. Not without reason, of course, since the US housing market is the largest in the world, and the scope of any US housing crisis is sure to dwarf a comparable crisis in any other country, in absolute terms. At the same time, let’s not forget that prices in the UK, for example, began to decline earlier than in the US. In addition, as one columnist points out, the impact of the UK housing crisis may be relatively greater on the UK economy. While some of the statistics he quotes are dubious, housing and consumer debt (on a per capita basis) may in fact be larger in the UK than in the US. As a result, the ongoing correction in housing prices would be expected to punish the UK more than the US. The story could be the same for the Pound, vis-a-vis the US Dollar. Money & Markets reports:
[One analyst] is…a long-term bear on the British pound and believes any rallies in the currency represent an opportunity to enter short at a better price. Selling the pound against the dollar with a 10-12 month time frame may present one of the best opportunities in the currency markets today.

Emerging Markets: To Hedge or Not to Hedge?

2008 has witnessed an explosion of volatility in emerging markets, affecting both debt and equity securities. Fluctuations have been especially dramatic in the forex markets, compounding the turmoil and skewing returns for foreign investors. The South African Rand and Brazilian Real, for example, have moved so violently that for both countries, a 10% gap distinguishes the returns earned by local and foreign investors. As a result, some institutional investors are re-examining their hedging strategies with regard to emerging markets. According to experts, currency hedging among equity investors is still rare because it is expensive and often complex. If hedging is undertaken at all, it is usually outsourced to a third-party. Some investors are quite dogmatic in their insistence that hedging is a complete waste of money, and argue instead that diversification (into different countries/currencies) represents a "natural" hedge. Since, the net change in exchange rates must ultimately be zero, a diversified, long-term approach to investing in emerging markets may automatically mitigate against currency risk. The Guardian reports:
"Currency movements tend to be noisy but over the long term they are just reflective of the economy and not the driver of economic performance."

Geopolitics Affect Dollar

The narrative in forex markets had recently become so cut-and-dried, that investors may have forgotten that in the long-term, a variety of factors weigh on currencies. Last week, they were sternly reminded of this fact when tensions in the Middle East boiled over and sent the Dollar racing downwards. An Iranian missile launch sparked the initial uproar, but was quickly followed by unrelated violence in Turkey and Iraq. First, the price of oil skyrocketed, and then the Dollar fell, consistent with the inverse correlation which has been observed between the two commodities. It is unlikely that geopolitical tensions will supercede the macroeconomic situation; investors continue to monitor the credit crisis and interest rate differentials with vigilance. Nonetheless, the events in the Mid East served as a warning against tunnel visions when trading forex. Reuters reports:
Analysts said geopolitics could soon take a back seat again once macroeconomic newsflow picks up after a lack of first tier economic releases from U.S. or euro zone.

G8 Ignores Currencies

Leading up to last week’s G8 summit in Japan, it was rumored that "volatility" in forex markets would be a hot topic of discussion. Thus, it came as quite a shock to analysts and investors that the final declaration failed to name any specific currencies. Politicians, especially those representing EU member states, seemed equally surprised. Many of them had hoped to at least come to a rhetorical consensus that the Euro was overvalued relative to the Dollar and Chinese Yuan, and perhaps also the Pound. Given that currencies are evidently not as much of a concern outside the EU, it seems unlikely that any kind of coordinated forex intervention will take place in the near-term. Bloomberg News reports:
Exporters in Germany, Europe’s biggest economy, are grappling with the euro’s 15 percent appreciation against the dollar and an 18 percent gain against the pound in the past year. That’s eroding competitiveness just as a U.S.-led global slowdown and record oil prices cool the world economy.

Chinese Yuan Appreciation to Slow

In the year-to-date, the Chinese Yuan has already appreciated 6.5% against the USD, the fastest pace since the currency was famously revalued three years ago. This upward pressure has been built largely on the continuing inflow of speculative "hot money," which was itself built on the expectation of further interest rate hikes, ostensibly needed to tame inflation. However, the Central Bank of China recently indicated a slight shift in its monetary policy, backing away from fighting inflation in favor of promoting economic growth. At least until after the Olympic Games conclude, China will henceforth ignore inflation, so as not to precipitate a slowdown that could jeopardize the Games. The Futures markets have been quick to react, and the consensus expectation for 1-year RMB appreciation has fallen from 10% to 5.4%. Bloomberg News reports:
Once the Olympics are out of the way, the vigil on inflation may have to resume. But unless China gets flooded by speculative flows, a one-shot revaluation will remain off the table.

Credit Crisis is “Ongoing”

Who’s familiar with the "song that never ends?" How about the credit crisis that never ends? Only a few months ago, the talking heads were trying to convince us that the worst of the credit crunch had already passed, and that analysts had overestimated the amount of the debt that would ultimately need to be written down. Congress was congratulating itself for its economic stimulus plan, and the Federal Reserve was patting itself on the back for engineering an increase in liquidity to the financial markets. Then, without warning, round two (or three, depending on how you count) was ignited as FANNIE MAE and FREDDIE MAC- which together anchor America’s sprawling mortgage sector- announced financing problems. Commentators are already talking about the possibility of a government bailout. Buckle your seatbelts; it’s going to be a bumpy ride. The International Business Times reports:
Continue to monitor this situation, paying particular attention to whether the bigger investment banks are still lending to customers. Any shutdown in the system would be extremely bearish for the Dollar across the board.

Forex is Risky

Without exception, every time there is a period of sustained volatility in forex markets, a flood of new forex accounts are opened as new traders try to capitalize on the action. Also, without fail, a concerned journalist inevitably takes it upon himself to warn these would-be profiteers that trading forex is risky, as if that were not abundantly obvious. This past week is a perfect example, as the Dollar touched a record low against the Euro on the basis of credit concerns. One columnist pointed out the significant upside potential of purchasing a CD denominated in foreign currency, but also implored investors to hedge their exposure and limit leverage. His advice: diversify by buying multiple currencies and/or equities for foreign companies and/or exchange traded funds based on hard-to-mimic strategies. Marketwatch reports:
[He] recommends…hedging your bets in you think the dollar will continue to weaken…[through] specialized mutual funds or exchange-traded funds that move inversely to the dollar. He holds the Pro Funds Falling U.S. Dollar Fund

Canada to Hold Rates

The economic picture in Canada is increasingly resembling that of the rest of the world: slowing growth and rising inflation. Likewise, the dilemma faced by the Bank of Canada mirrors that of the ECB and Fed. Even though Canadian inflation is only 2.2%, the Bank of Canada will probably err on the side of caution, by hiking rates rather than lowering them. Then again, analysts don’t expect the Central Bank to take any action for another six to twelve months, based on the expectation that a cooling economy will naturally bring down inflation. That makes this whole debate seem moot, given how much could happen in such a long time frame. reports:
Canadians will get a better idea of the central bank’s thinking when it releases its monetary policy update and governor Mark Carney opens himself up to public questioning at a news conference later on its rate-setting decision…

AUD: Closer to Parity

After a brief hiatus, the Australian Dollar has resumed its upward march against the Dollar; its next milestone will be a 25-year high against the Greenback. Of course, its continued strength is due to a combination of high domestic interest rates and high commodity prices. In fact, its performance seems to mirror the price of gold, which is no coincidence since gold may be Australia’s most valuable export. In addition, gold has value as a monetary instrument, which means an appreciation in gold can give the Australian Dollar a double-boost by lifting it while simultaneously punishing the US Dollar. With regard its domestic monetary policy, Australian inflation recently passed the 4% mark, which means interest rates (already at 7.25%) are likely to stay high for a while. The countdown to parity continues, reports Bloomberg News:
The local dollar rose to its highest since 2000 against the New Zealand currency before an inflation report tomorrow that may support the case for the Reserve Bank of Australia keeping interest rates at a 12-year high.

Dollar Intervention Loses Support

Some analysts are surprised by the evident unwillingness of Central Bankers to intervene on behalf of the Dollar, especially considering how common such "rescue plans" are becoming in other corners of the financial markets. Over the last couple months, all of the momentum that was previously behind intervention has gradually evaporated, such that at the recent G8 Summit, currencies were hardly even discussed. This is somewhat ironic considering the Dollar has resumed its downward trend, and even touched an all-time low against the Euro. Treasury Secretary Henry Paulson and Fed Chief Ben Bernanke aren’t willing to completely write off intervention, however. Both have commented explicitly that it is still being mooted as an option. Nonetheless, the current consensus among analysts is that unless the Dollar completely collapses, it’s not likely. The Associated Press reports:
"It would take a rare set of circumstances to get the U.S. right now to intervene," said David Gilmore, a managing partner in Foreign Exchange Analytics in Essex, Conn.

Dollar Rangebound, but for How Long?

Over the last few months, the Dollar has bounced up and down against the Euro, but never breaking out of a range defined by $1.53 and $1.60. Analysts remain divided not only over if the Dollar will soon break-out, but also over whether its next major move will be upwards or downwards. The recent Dollar upswing has led some to speculate that more permanent strength is inevitable, but naysayers note that this rebound was a product of lowered oil prices, caused by global economic weakness, which is actually Dollar-negative. According to a recent poll, though, the bulls outnumber the bears; the consensus forecast for the Dollar 12 months from now is $1.50. The Wall Street Journal reports:
A Dow Jones Newswires survey last week of 23 analysts forecast the dollar wouldbegin to recover on longer-term basis.

Options Portend Currency Moves

Typically, only the savviest (or the most foolish) of forex traders dabble in currency options. Leverage is already so high (often exceeding 100:1) when trading forex directly, that the additional leverage gained from trading options can seem unnecessary. However, even if not trading options, you would be wise to at least pay heed to options prices. The reason is that movements in the options market often precedes movements in the forex markets.
To explain further, the premiums built into options contracts serve as a proxy for demand for those particular currencies. When premiums on call contracts, which give the holder the right to buy a particular currency at a fixed price, are unusually high, it signals a "risk reversal;" the currency may be overbought. To offer a practical example, call premiums on EUR/USD contracts are approaching a one-year high, which has led some analyst to speculate that a Dollar rally is just around the corner. MarketWatch reports:
"Whenever risk reversals hit critical levels, it indicates that everyone who wants to be long euros are already long and as a result, sentiment has hit an extreme." The last time euro/dollar risk reversals were that high….a U.S. dollar "relief rally" followed.
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FX Intervention: Still Possible

Earlier in the week, the Forex Blog reported that the potential for intervention in the forex markets seemed to have declined, due to a brief Dollar rally and toned-down rhetoric at the most recent G8 conference. However, we would be remiss if we didn’t point out that the intellectual justification for intervention remains. While statistics have not been forthcoming, it appears that Sovereign Wealth Funds and Central Banks are paring their exposure to Dollar assets, which is both a cause and effect of Dollar weakness. In addition, the falling Dollar and rising oil prices have reinforced each other, and contributed to surging inflation around the world. Investment Banks are advising clients now would be a perfect time for the world’s economic policymakers to take coordinated action. reports:
In his testimony yesterday, Ben Bernanke, stated that “dollar Intervention should be done rarely” but that it “may be justified in disorderly times.”[In addition,] Treasury Secretary Paulson said last month that he would never rule out currency intervention as a potential policy tool.

China May Dip Into Reserves

Yesterday, the Forex Blog reported that Central Banks and Sovereign Wealth Funds appear to be losing confidence in the Dollar. To follow up with a specific example, a high-ranking Chinese policymaker recently suggested that China should move spend some of its reserves since they are rapidly losing value in RMB terms. The official offered that a portion be used to purchase foreign energy assets, in order to mitigate against both the falling Dollar and rising oil. There is clearly a trend among institutional holders of Dollars to use the currency to purchase US assets. Witness the recent (separate) sales of the Chrysler and GM Buildings to Middle Eastern buyers. With nearly $2 Trillion in foreign exchange reserves, however, China is in a class by itself, and any indication of its frustration with the Dollar should be taken very seriously.

Fed Losing Control Over Monetary Policy

At the Fed’s most recent monetary policy meeting, two Governors disagreed with the decision to hold rates constant, voting instead to hike rates by .25%. The most noteworthy aspect of the meeting was not the presence of dissent, but rather its irrelevance; it underscored that the Fed has been reduced to playing a largely symbolic role in the determination of American monetary policy. As the Fed cut rates aggressively over the last year, credit markets simultaneously witnessed a tightening of credit conditions. In other words, investors deliberately ignored the actions of the Fed, and market-clearing interest rates remained well above the rates "suggested" by the Fed. Some commentators have connected this to the recent rally in the Dollar, which would have been expected to plummet given such low interest rates. Barron’s reports:
The credit cycle will progress with or without central bankers. If their rhetoric convinces investors of the Fed’s probity, it’s all to the good. But market forces are far stronger, and they’re what should be watched.

Credit Crisis Could Lift Yen, Franc

As the credit crisis has unfolded, the Dollar has remained (relatively) strong, especially considering the deteriorating state of its economy. The reason for this, of course, is that in times of crisis, investors flock to perceived safe havens, such as the US and EU. However, an especially pessimistic series of economic developments has called into question the wiseness of this strategy. A handful of American banks and mortgage institutions have already collapsed, and bankruptcies in all sectors of the economy will surely become more common. The picture in Europe is equally bleak. Several economic indicators have fallen to multi-year lows, and the ECB’s decision to hike rates looks increasingly misguided. Given these circumstances, where can investors turn? Perhaps, to Japan and Switzerland, reports The Market Oracle:
The Swiss franc and the Japanese yen…were the great beneficiaries during the Crash of ‘87, the Debt Crisis of 1998 and again during the current credit crisis, enjoying sweeping and massive upward moves.

Friday, July 10, 2009

Open market

Open Market Inc., the largest and most reliable mobile transaction hub in the United States, today announced Nick Macilveen's re-election to the Mobile Marketing Association (MMA) 2009 North America Board of Directors. This is Macilveen's third MMA Board of Directors term since 2007. The MMA is a global non-profit association that strives to stimulate the growth of mobile marketing and its associated technologies.

“The MMA is pleased to have added Nick Macilveen to the North America Board of Directors for 2009,” said Mike Wehrs, president and CEO of the MMA. “The goal of the MMA is to advance the mobile marketing industry worldwide, and Nick Macilveen and OpenMarket have been key to driving the success of the MMA in North America. I would like to personally thank Nick for his commitment to driving mobile marketing initiatives, and welcome him to the Board of Directors.”

Macilveen is the Senior Director of Strategic Corporate Development and Industry Relations for OpenMarket, a business unit of Amdocs Interactive, and brings more than a decade of wireless industry and mobile channel experience to the MMA. He has extensive relationships with major mobile operators, media companies and content providers globally, many of whom belong to the MMA. Macilveen is an active member of the mobile community. He is a member of the MMA's Consumer Best Practices Committee, Mobile Commerce Committee and Mobile Advertising Committee, as well as the CTIA's Wireless Internet Caucus.

“I am honored to continue serving member companies on the MMA Board of Directors and committee teams,” said Macilveen. “Now more than ever the mobile marketing and off-portal industries need honest dialogue, strong leadership, and decisive action. The MMA can provide a forum that represents many parties in the value chain, which makes our work even more important this year.”

About OpenMarket

OpenMarket is the largest and most reliable mobile transaction hub in the United States. We provide a comprehensive set of messaging, payment and emerging services to meet mobile business needs. From the largest consumer brands to the smallest new ventures, OpenMarket empowers businesses to expand their marketing initiatives and strengthen customer relationships by leveraging the off-portal mobile channel. OpenMarket provides the most direct mobile operator connections in the U.S. market today. OpenMarket is a business of Amdocs. For more information, please visit

About Amdocs

Amdocs is the market leader in customer experience systems innovation, enabling world-leading service providers to deliver an integrated, innovative and intentional customer experienceTM at every point of service. Amdocs provides solutions that deliver customer experience excellence, combining the software, services and expertise to help its customers execute their strategies and achieve service, operational and financial excellence. A global company with revenue of $3.16 billion in fiscal 2008, Amdocs has more than 17,000 employees and serves customers in more than 50 countries around the world. For more information, visit Amdocs at

Amdocs Forward-Looking Statement

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs' growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs' ability to grow in the business segments it serves, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future, however the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2008, filed on December 8, 2008, and in our quarterly 6-K furnished on February 9 and May 12, 2009.

Forex trading system

Forex trading system: Forex market is an international exchange market where some currencies are bought and the others are sold accordingly. Trading in Forex market goes in currency pairs like EUR/USD for Euro/US Dollar of USD/JPY for US Dollar/Japanese Yen and it is unlikely to have any external controls.

The transactions between the counterparts of Forex market are carried out via electronic network or over the phone. That's why Forex market is known as an "interbank" market. There is not any trading center for FX market unlike futures and stock markets.

The borrowed capital is often used for trading in Forex. In this case currency speculations are carried out through getting a credit line and called marginal trading. This fact confirms that you can trade in Forex without being supplied by any real money. So, the trader may deal with large transactions at a high speed and low fee without having a considerable initial capital.

Forex has two fundamental trading strategies: Fundamental and Technical Analysis. The sense of technical analysis is to invest money after studying past data with hope that the history would behave cyclically. Fundamental analysis deals with analyzing various different fundamental factors within the country, like economical and political situation hoping that they will affect exchange rates.
Start Forex trading

Only national banks, multi-national corporations and other large players used to have an unlimited access to foreign exchange recently. 1980's gave birth to new rules that have established margin accounts making participation possible even for small investors. Forex has gained its popularity thanks to margin accounts. Having a $1,000 investment and 100:1 margin accounts you get an access to $100,000 funds.

A reputable broker is usually required for Forex traders to carry out their transactions. CFTC (the Commodity Futures Trading Commission) registers such reputable broker as FCM (a Futures Commission Merchant). Lots of beginner traders often make 2 following mistakes: starting their trading without having a strategy and trading lead by emotions. It happens when you, having just bought and watching the rate decline, start panic and rapidly sell just to see the following market growth. Be sure to lose your money trading like this. Profitable Forex trader has an adequate strategy and doesn't let his emotions deal with trading.

Forex trader requires good education concerning movements of the market as well as different kinds of orders to carry out his trade with maximum profit and minimum risk.

Understanding the market along with the forces affecting it is the first step to becoming a successful trader. You can base trading strategies on this knowledge for successful usage in your trading.

Forex has 5 most important groups participating in the trades: Banks, Governments, Corporations, Investment Funds, and traders. Traders are the only group that doesn't have an external control having only themselves to report to. A margin agreement, conducted during establishing Forex account includes the statement that any trades which the broker considers too risky may be interfered by him. You may start your trading after establishing your Forex account.

There are various kinds of accounts offered by brokers. Standard deposit depends on the broker but is generally from $1000 to $2000 however there are mini accounts that let you in having only $200. Leverage can also be different. You get an access to higher amount of money with higher leverage possessing the same investment.

You can find out how various software tools and the system in general work by using demo accounts. They are strongly recommended to be used for every newbie Forex investor.

There are some tools that are common to all brokers despite each broker has its own software. These common tools that you can expect to see practically in any broker's software are: news feeds, real time quotes, technical analyses and charts, analyses of profit and loss.

forex banks

There are no central exchange headquarter for foreign exchange because it is an open market where dealers negotiate their own price feeds through proprietary platforms. The main geographic trading center however, is in London, followed by New York, Tokyo, Hong Kong and Singapore.

Foreign exchange banks throughout the world participate and play a big role in forex, although their roles have been greatly reduced from yesteryear. John Atkin points out in his book The Foreign Exchange Market Of London that "The Bank had long used a mixture of nods, winks and arm twisting to influence the behavior of participants in the domestic money and banking markets." It is no secret that Foreign exchange banks dominate the top level of access for the best Forex spread. Using their big pool of clients along with their own accounts, inter-bank market made up more than half of all Forex transactions.

In the late 1930's banks were the market maker for specified currencies. According to Atkin, "In the case of the US dollar / sterling rate, the Bank announced - when the market re-opened on 5 September 1939 - that its buying rate for dollars would be $4.06, and that its selling would be $4.02. This spread of 4 US cents or 400 points, compared with a normal peacetime inter-bank spread of 13 points, or less." His observation serve to highlight the profitable spread enjoyed by banks in that era. This trend continued until after World War II, when a normal foreign market exchange market slowly became apparent.

Banks do not have total control over foreign exchange rates as they fluctuate according to as actual monetary flow, budget, trade deficits, changes in GDP growth and interest rates and other economic conditions. In foreign exchange platforms, virtually everyone get access to major news at the same time, and banks are no different. Nevertheless, banks still gain the upper hand from monitoring the trend of their customers' order flow.

Apart from normal banks, central banks also participate in the foreign exchange market to regulate currencies in protection of their economy.Central banks or and national banks serve a dominant role in controlling inflation, interest rates and money supply. Since a country's currency rates have direct implications on it's economy through the trade balance, almost all central banks tend to intervene to influence the value of their currencies. This is known as managed float.

Central banks can determine foreign exchange rates to a certain extend, as they have huge foreign exchange reserves in hand to stabilize the market. Again, this does not always work as the combined resources in the actual market usually have a bigger say. As highlighted by William P. Osterberg in his article 'Why Intervention Rarely Works' in year 2000, "foreign-exchange-market intervention is generally ineffective when undertaken independent of monetary policy." An example of central banks' limitations are evident in the 1997 Southeast Asia economic crisis when the International Monetary Fund (IMF) failed to prevent currency depreciation.