A study of what sparked the strength and stability that forex brokers proved during the CHF cap removal10.02.2015
The 15th of January saw the SNB (Swiss National Bank) remove the floor on the EUR/CHF rate leaving it to freely float in the market. Immediately, the Swiss Franc quickly increased in value by nearly 20%. This caught most forex traders and market participants by surprise both on the degree of the business reactions and timing. Throughout the following days, it became evident that numerous forex exchange operators, with exceedingly leveraged positions trading on margin, had significant losing positions most of them having been caught unawares with this news. The unique arrangement of the online leverage FX business model hurls some interesting insights. The question is—why did most brokers still prove strong and stable during this period? The stun move from the Swiss National Bank essentially affected foreign exchange trade as well as foreign exchange brokers. At the end of the day, such events are tests for broker strength and stability. Here is how brokers’ reactions rou...
click for moreAn Overview of Forex Regulators25.02.2015
Essentially, the regulation of foreign exchange markets was virtually non-existent in early years. Fast developments in foreign trading among retail financial traders sparked increased scrutiny and the emergency of Forex regulators or bodies. So what does this means for retail Forex trader? Does it really mean a big risk that goes hand in hand with non-regulation? Is that of outright fraud or illegal activity? Let’s first define fraudulent activities. These include unusual commissions brought about by individuals that “churn” their customers’ accounts using, call them high-pressure “boiler rooms” tactics, misrepresentation and Ponzi schemes. It is a fact that about 26,000 individuals in the U.S. alone lost approximately $450 million in Forex related swindles between 2001 and 2010. Is that a thing of the past? You cannot rule out the existence of opportunistic brokers posing to take advantage of unsuspecting individuals bearing in mind the fact that ...
click for moreContract for Difference Trading 28.02.2015
Contracts for Difference were developed in the early 90s in London. The invention of CFD belongs to the financiers Brian Keelan and Jonathan Wood. The Contracts for Difference were first used in hedge funds with institutional trading. It was a cost effective way to hedge the positions of your shares on the London Stock Exchange. The effectiveness of CFD is high due to the low margins and lack of need for the payment of tax collection, and at the same time, the physical shares don’t migrate in other hands. The CFDs are a flexible method to trade on the price movements of products and instruments such as indices, shares, commodities, currencies or treasuries. In comparison to purchasing shares, when you trade CFDs, you don’t actually, or more precisely said, physically own the product, so you don’t have to pay the relevant fees of ownership like management fees and stamp duty. You can also sell the product and buy it back at a later stage. For instance, there is an im...
click for moreThe Currencies That Are Getting Popular in the FOREX market10.03.2015
The interest of traders and the trading volume on forex has increased in the recent years, which is not surprising. But there are few currencies that can boast with rapid growth. So what tools have made a significant breakthrough in liquidity and which ones look poor? In the immense chaotic space of the foreign exchange market you can notice seven currencies that are the most popular and confidently occupy the leading positions in trade. And even if sometimes there are some storms that come very close to the leading currencies, these are some calm winds in comparison with the hurricane that is looming in the forex market. In recent years, several second-tier currencies have significantly increased their importance in the global market, and that is a threat to the present hierarchy. While some of the seven second-tier currencies are obvious, the others are less visible, and at first sight, it is a little bit difficult to determine these. But before clarifying the situation, let’s...
click for moreChina's Affect On The Global Economy And Its Forex Effects15.03.2015
The Forex market is currently filled with news regarding China and its economy as well as the effect of China on the global economy. Such a large country with 1.3 billion population is certainly enough of a powerhouse to affect the global situation including the Forex markets. In order to understand how the Forex market is being affected one must first look at the moves China has tried to make in recent months. Global Economy as a Whole Last year the Forex market was alight with news that the economy would return to normal. The US and UK would increase interest rates to help stabilize the economy. Quantitative easing would occur as a means of helping increase inflation in Japan. Banks restoration of confidence would help with a credit recovery in the Euro Zone. Now a year later normality for the global economy is not where it should be. It is actually seemingly distance. The main cause—China. China has enough power to affect the 'headwinds' of normalcy for the global e...
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