May 2nd, 2008 | Posted in Investment | No Comments
Based on my conversation with my newbie friends, I guess most of newbie traders are not enough knowledge about Forex basic such as who contributes in Forex Market.
Though the knowledge is important for long term trading and it can be an analyzer in using fundamental analysis. And the following is the main players in Forex Market.
Central Banks and Governments
Policies that are implemented by governments and central banks can play a major role in the FX market. Central banks can play an important part in controlling the country’s money supply to insure financial stability.
Banks
A large part of FX turnover is from banks. Large banks can literally trade billions of dollars daily. This can take the form of a service to their customers or they themselves speculate on the FX market.
Hedge Funds
As we know, the FX market can be extremely liquid which is why it can be desirable to trade. Hedge Funds have increasingly allocated portions of their portfolios to speculate on the FX market. Another advantage Hedge Funds can utilize is a much higher degree of leverage than would typically be found in the equity markets.
Corporate Businesses
The FX market mainstay is that of international trade. Many companies have to import or exports goods to different countries all around the world. Payment for these goods and services may be made and received in different currencies. Many billions of dollars are exchanged daily to facilitate trade. The timing of those transactions can dramatically affect a company’s balance sheet.
The Man In The Street
The man in the street also plays a part in toady’s FX world. Every time he goes on holiday overseas he normally need to purchase that country’s currency and again change it back into his own currency once he returns. Unwittingly, he is in fact trading currencies. He may also purchase goods and services while overseas and his credit card company has to convert those sales back into his base currency in order to charge him.
Speculators and Investors
We shall differentiate speculator from investors here with the definition that an investor has a much longer time horizon in which he expects his investment to yield a profit. Regardless of the difference both speculators and investors will approach the FX market.
Popularity: 34% [?]
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March 26th, 2008 | Posted in Forex Articles, Forex Terms | No Comments
Momentum oscillators, such as RSI, stochastics, or MACD, are a favorite indicator of many traders and their utility is best applied to non-trending or sideways markets. The primary use of momentum indicators is to gauge whether a market is overbought or oversold relative to prior periods, potentially highlighting a price reversal before it actually occurs.
However, this application fails in the case of a trending market, as the price momentum can remain overbought/oversold for many periods while the price continues to move persistently higher/lower in line with the underlying trend. The practical result is that traders who rely solely on a momentum indicator might exit a profitable position too soon based on momentum having reached an extreme level, just as a larger trend movement is developing. Even worse, some might use overbought/oversold levels to initiate positions in the opposite direction, seeking to anticipate a price reversal based on extreme momentum levels.
The second use of momentum oscillators is to spot divergences between price and momentum. The rationale with divergences is that sustained price movements should be mirrored by the underlying momentum. For example, a new high in price should be matched by a new high in momentum if the price action is to be considered valid. If a new price high occurs without momentum reaching new highs, a divergence (in this case, a bearish divergence) is said to exist. Divergences frequently play out with the price action failing to sustain its direction and reversing course in line with the momentum.
In real life, though, divergences frequently appear in trending markets as momentum wanes (the rate of change of prices slows) but prices fail to reverse significantly, maintaining the trend. The practical result is that counter-trend trades are frequently initiated based on price/momentum divergences. If the market is trending, prices will maintain their direction, though their rate of change is slower. Eventually, prices will accelerate in line with the trend and momentum will reverse again in the direction of the trend, nullifying the observed divergence in the process. As such, divergences can create many false signals that mislead traders who fail to recognize when a trend is in place.
Popularity: 35% [?]
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March 19th, 2008 | Posted in Technical Analysis | No Comments
DailyForex.com is your gateway to the Forex Market. DailyForex.com holds valuable information about the Forex Market for new and experienced Forex traders.
DailyForex.com reviews Forex Brokers and the platforms they offer to trade Forex, as well as supportive services to the Forex market such as introduction courses to the Forex market, books discussing Forex, and Signal Providers who try to help traders maximize their profits.
DailyForex.com readers can read the elaborate Forex Reviews on the site, to understand more about the features and business terms offered by each of the service providers.
DailyForex.com also offers an easy to use comparison table, comparing key factors needed to decide which are the best Forex brokers or Forex courses.
Dailyforex.com readers will occasionally receive exclusive offers to register with some of the Forex service providers reviewed on the site, which are not even offered by the Forex providers themselves.
Currently there are three languages option available; English, Arabic and Spanish. I think this is really informative site for new and experienced Forex traders.
Popularity: 50% [?]
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March 7th, 2008 | Posted in Forex Reviews | 1 Comment
November 21st, 2007 | Posted in Messages | 2 Comments
