Curent Traders

Many of the same strategies that you use to trade futures, equities, and all other markets can be applied to the FX market, but there are differences. The FX Power Course teaches you these differences including the characteristics of the major currencies, what technical tools and money management strategies work best in the FX market, and other market insight to help ensure a successful transition to trading FX.

Why Equities and Futures Traders Make Great FX Traders

The foreign exchange market offers several key advantages over the equities market including 24-hour market liquidity, equal ability to profit in up and down markets, low transaction costs, and strong trending characteristics.

24-Hour Market Liquidity

The daily volume of the FX market exceeds $1.4 trillion per day, roughly 30 times the volume of all U.S stock markets. The consistent liquidity of this market provides currency traders with the ability to enter and exit trades regardless of the size of the transaction or time of day.

Ability to Profit in Up or Down Markets

Unlike the equity market, there is no restriction on short selling. Profit potential exists in the currency market regardless of whether a trader is long or short, or which way the market is moving. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means a trader has an equal potential to profit in a rising or falling market.

Low Transaction Costs

The over-the counter structure of the currency market eliminates exchange and clearing fees which, in turn, lowers your transaction costs. Costs are further reduced by the efficiencies created by a purely electronic market place that allows clients to deal directly with the market maker, eliminating both ticket costs and middlemen.

Trending Market

Currencies rarely spend much time in tight trading ranges and have a tendency to develop strong trends. Over 80% of volume is speculative in nature; as a result, the market frequently overshoots and then corrects itself. The FX Power Course teaches you to identify new trends and breakouts, which provide multiple opportunities to enter and exit positions.

Secured Loan and Its Repayment

A secured loan is a loan that is given against a property. Secured loans are the most popular loans among lenders. A secured loan reduces the lender’s risk since it is backed by a security. If the borrower defaults on repayment of loan, the lender will get a legal right to repossess the property. He may then sell off the property to recover his money. The amount of loan that can be obtained depends on the equity in your property. The rate of interest depends on your ability to repay the loan and your financial position.

Borrowers with a clean credit score are charged a low rate of interest. Lenders charge high interest rates on bad credit secured loans. A credit check is done before offering a secured loan. All your previous credit transactions will be checked, such as credit card bills payments and loan repayments. Any default or late payment will go against you when it comes to determining the rate of interest.

There is a heavy penalty on making a default on the repayment of a secured loan. As mentioned earlier, you may lose your property if you fail to repay the loan. Default is not always intentional. Sometimes, unavoidable circumstances such as death, accident, sickness or involuntary job loss may lead to non-repayment of a loan. To avoid this, you must take out a Payment Protection Insurance which covers your repayments in the event of death, accident, sickness or involuntary job loss.

There is one big drawback of Payment Protection Insurance. The amount of Payment Protection Insurance is added to the original loan amount and then the interest is charged on the entire loan amount. This doubles the actual cost of the loan. There are alternatives available to Payment Protection Insurance that include income protection policy and short term income protection. In case of income protection policy, you are paid a percentage of your income if you lose your job due to accident or sickness. In case of short term income protection, you will be paid for a year in case of accident, sickness or job loss.

INTRODUCTION TO FOREX

Forex Market

Forex (Foreign Exchange) is the name given to the "direct access" trading of foreign currencies. With an average daily volume of $1.4 trillion, forex is 46 times larger than all the futures markets combined and, for that reason, is the world's most liquid market. In the past, forex trading was limited largely to enormous money center banks and other institutional traders. But in just the past few years, technological innovations and the development of online trading platforms allow small traders to take advantage of the significant benefits of trading foreign currencies with forex.

In contrast to the world's stock markets, foreign exchange is traded without the constraints of a central physical exchange. Transactions are instead conducted via telephone or online. With this transaction structure as its foundation, the Foreign Exchange Market has become by far the largest marketplace in the world.

Buying and Selling

In the forex market, currencies are always priced and traded in pairs. You simultaneously buy one currency and sell another, but you can determine which pair of currencies you wish to trade. For example, if you believe the value of the euro is going to increase vis-á-vis the U.S. Dollar, then you would go long on EUR/USD instrument (currency pair). Obviously, the objective of forex currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, then you must sell the currency back in order to lock in the profit. An open trade or position is one in which a trader has either bought / sold one currency pair and has not sold / bought back the equivalent amount to effectively close the position.

Market Conventions

Market conventions are rules and standards imposed by a governing body. In case of decentralized forex market these conventions might differ due to many national regulators (FSA, FSC, CFTC, NFA, BCSC, etc.). Since there is no central governing body that sets forex market rules and standards, we will reference only these that are universal.

Quoting Conventions

The first currency in the pair is referred to as the base currency, and the second currency is the counter or quote currency. The U.S Dollar is usually the base currency for quotes, and includes USD/JPY, USD/CHF, and USD/CAD. The exceptions are the Euro (EUR), Great Britain Pound (GBP), and Australian Dollar (AUD). As with all financial products, forex quotes include a "bid" and "ask", which is more often called "offer" in the forex market. The bid is the price at which a forex market maker is willing to buy (and you can sell) the base currency in exchange for the counter currency. The offer is the price at which a forex market maker will sell (and you can buy) the base currency in exchange for the counter currency. The difference between the bid and the offer price is referred to as the spread.

Orders and Positions

When you want to open a position you need to place an "entry" order. If and when the entry order executes, the position becomes "open" and starts its life on the market. At one point in time, you will place an "exit" order to "close" the position. A position can be "long" (entry order is to buy and exit order is to sell an instrument) or "short" (entry order is to sell and exit order is to buy an instrument).

At the point when you place your entry order, you need to define price level at which you want to buy or sell certain instrument. You also need to specify type of the order and quantity of the instrument you want to trade. There are 3 order types:

Market Order

Placing a market order means that you will buy at your broker's current "ask" (or "offer") price, or sell at your broker's current "bid" price, whatever that price currently is. For example, suppose you are buying EUR/USD. The current market, as quoted by your broker is 1.2934 / 1.2938. This means that your broker is willing to buy EUR/USD from you at 1.2934, and sell it to you at 1.2938.

Stop Order

Initiating a trade with a stop order means that you will only open a position if the market moves in the direction you are anticipating. For example, if USD/JPY is currently 108.72 and you believe it will move higher, you could place a stop order to buy at 108.82. This means that the order will only be executed if the market moves up to 108.82. The advantage is that if you are wrong and the market moves straight down, you will not have bought (because 108.82 will never have been reached). The disadvantage is that 108.82 is clearly a less attractive rate at which to buy than 108.72. Opening a position with a stop order is usually appropriate if you wish to trade only with strong market momentum in a particular direction.

Limit Order

A limit order is an order to buy below the current price, or sell above the current price. For example, if EUR/USD is trading at 1.2952 / 56 and you believe the market will rise, you could place a limit order to buy at 1.2945. If executed, this will give you a long position in EUR/USD at 1.2945, which is 11 pips better than if you had just bought EUR/USD with a market order. The disadvantage of the limit order is that if EUR/USD moves straight up from 1.2952 / 56, your limit at 1.2945 will never be filled and you will miss out on the profit opportunity even though your view on the direction of EUR/USD was correct. Opening a position with a limit order is usually appropriate if you believe that the market will remain in a range before moving in your anticipated direction, allowing the order to be filled first.

For both entry and exits orders you can specify price levels at which you want them to be executed. You have to specify entry levels when you place you entry order, while most brokers would allow you to specify exit levels at any time.

Calculating Profit

The objective of forex currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, then you must sell the currency back in order to lock in the profit.

Let us assume that you open a long position by buying USD/JPY for 107.58 (quantity of 100000) and few hours after that, you close the position by selling USD/JPY for 107.74 (quantity of 100000). These two trades would bring you profit of (107.74 - 107.58) * 100000 = JPY 16000 (JPY is the counter or quote currency in the USD/JPY pair). You can than convert the profit to a currency you like, for example JPY 16000 = 16000 / 107.74 = USD 148.51.

We can also say that these two trades would bring you 16 "pips" profit. A "pip" is the smallest increment in any instrument. For asset types other than forex, the smallest increment is often called "tick". In EUR/USD one pip is 0.0001, in USD/JPY one pip is 0.01. Expressing position profits in pips is often very useful for quick calculations and estimates.

One pip, from the example above, would bring you 0.01 * 100000 = JPY 1000 profit, or JPY 1000 = 1000 / 107.74 = USD 9.28.

Debt Consolidation Loan

A Life Saver in the Sea of Debt
By : Vipul Jain

Debt problem has become a serious problem in the UK. People are taking out all kinds of loans – secured loans, unsecured loans, personal loans, car loans, home improvement loans, etc. People are using their credit cards recklessly. Personal loans and credit cards charge a very high rate of interest. More and more people are now filing for bankruptcy. Personal as well as corporate insolvencies are on the rise. If you are also suffering from a severe debt problem, then you must start thinking about debt consolidation.

Debt consolidation is required when you are no longer in a position to repay your loans and credit card dues. The rate of interest is very high and the interest keeps on accumulating. The original loan amount is not such a big problem but the interest burden becomes too much to bear. In this situation, you need to take out a debt consolidation loan. It helps you to avoid bankruptcy.

The biggest benefit of a debt consolidation loan is that it reduces your interest burden. The rate of interest on a debt consolidation loan is lower than the rate on unsecured loans. This allows you to pay small monthly installments. A debt consolidation loan can help you manage your debt more easily as you will have only one creditor to repay the loan to.

Apart from benefits, debt consolidation loans also have some disadvantages. If a debt consolidation loan is secured against your property, the lender may repossess your property if you fail to repay the loan. If you take out a long term debt consolidation loan, you will end up paying a large amount of interest. When you consolidate your debt, you repay your existing loans before the expiry of their loan period. Some lenders charge early repayment penalty.

Debt consolidation loans are secured and unsecured. Secured debt consolidation loans are secured against a property. If you are a homeowner, you can use your house to obtain a debt consolidation loan. You can also get a personal loan, which is usually unsecured, to consolidate your debt. The rate of interest on secured loans is lower than the rate on unsecured loans.

Personal Finance:

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The other side of Debt Consolidation Loans

By : Vipul Jain

“Consolidate all your debts with a low-cost Debt Consolidation Loan”. Recently, you will see this type of advertisement in all forms of media. It sounds alluring to consumers who are in debt. Most of the borrowers keep on pondering about the credibility of these types of advertisements.

The idea of taking out a Debt Consolidation Loan to consolidate various balances into one, easier-to-handle and less-costly monthly payment single loan seems irresistible for most of the borrowers. However, you need to hold yourself to the temptation as what might seem to be the ideal way of getting out of debt might be just an advertising gimmick.

You need to understand the fact that, probably you won't qualify for the very low interest rates you see advertised if you've taken on so much debt that you're looking for more as a solution. It has been observed by experts that many people who opt for Debt Consolidation Loan under the impression that it will help them to clear off all their debts actually end up further in debt. Many end up taking a second Debt Consolidation Loan within 12 months which is a sign of major financial threat.

The advertised interest rate usually seems lower to the borrower, while in reality you end up paying more at the end of the term as the interest rate offered is spread over a longer period of time. That’s the reason financial experts urge the borrowers to assess and analyze the interest rate of the Debt Consolidation Loan over the whole term before applying for it.

Though, Debt Consolidation Loan is the not best option available for consolidating outstanding debts, however if properly researched and analyzed it has its own share of benefits.

Let’s check out some of them:

• Debt Consolidation Loans help you to focus your attention on a single loan, instead of many.
• It prevents further action from the creditors if the debts are paid off.
• It leaves you with one manageable monthly payment.
• It is highly flexible in nature.
• It is open to both home owners as well as tenants.
• It can be used for various purposes.

However, you should not opt for a Debt consolidation Loan without doing proper budget of your monthly incomings and outgoings. This will help you to find out what money is left for your debts. In general, a proper groundwork must precede any decision on Debt Consolidations.