Spot and forward trading

When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security. If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.

Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.

What are the most powerful figures that move Forex market?

Interest rate
Traditionally, if a country raises its interest rates, its currency will strengthen because investors will shift their assets to that country to gain higher returns.
Employment situation
Decreases in the payroll employment are considered as signs of a weak economic activity that could eventually lead to lower interest rates, which has negative impact on the currency.
Trade balance, budget and treasury budget
A country that has a significant Trade Balance deficit will generally have a weak currency as there will be continuous commercial sellings of its currency.
Gross Domestic Product (GDP)
GDP is reported quarterly and is followed very closely as it is a primary indicator of the strength of economic activity.
A high GDP figure is usually followed by expectations of higher interest rates, which is mostly positive for the currency.

Combining Mutual Funds With Forex Trading

In every financial market, the forex market included, there are certain gaps that can lead to decreased profits and decreased opportunities for profitable trading. Investing and trading in mutual funds can be a good way to earn money from both a short-term and a long-term perspective, but there are still certain gaps in this market where the inadequacies of trading opportunities become apparent.

While investing and trading in mutual funds can be an excellent way to profit from the stock market, one of the biggest problems with trading in mutual funds is that you typically cannot open or close positions until the market closes for the day and reopens.

Foreign Exchange Trading Intermarket Analysis

In our global financial system all of the major world financial markets are interconnected, yet the most popular form of forex market analysis, technical analysis, concentrates only on one market at a time. Most traders that implement technical analysis-based trading strategies may use tools such as candlestick formations or moving averages, but they will only focus on one chart or one market at a time.

Technical analysis can still be very useful to a forex trader. After all, the vast majority of all daily forex trading volume is speculative in nature, and all of those masses of traders working at their computers are likely following the same handful of indicators and oscillators, as well as focusing on the same levels of support and resistance. If enough traders are following a 14-day Relative Strength Index indicatorthen making successful trades based on that indicator becomes self-fulfilling in nature.

In fact, it is possible for you to completely ignore all other financial markets and only focus on one currency pair's chart, and you could still have a profitable trading strategy. However, the stock and commodity markets (with oil and precious metals playing a large role) of a given country will inevitably affect the value of that country's currency, so it would be wise for any astute currency trader to stay aware of the goings-on of other related financial markets.

An interesting development that comes with the widespread proliferation of forex trading is that there is a relative lack of intermarket analysis compared to most stock or equity markets. If you have even a brief knowledge of stock-picking strategies, then you should be familiar with the concept of diversification (spreading your stock picks across different sectors) as well as using a general index of stocks to rank a specific sector's performance.

Forex Trading Philosophy

Many beginning FOREX traders are captivated by the allure of easy money. FOREX websites offer 'risk-free' trading, 'high returns' 'low investment' – these claims have a grain of truth in them, but the reality of FOREX is a bit more complex.

There are two common mistakes that many beginner traders make – trading without a strategy and letting emotions rule their decisions. After opening a FOREX account it may be tempting to dive right in and start trading. Watching the movements of EUR/USD for example, you may feel that you are letting an opportunity pass you by if you don't enter the market immediately. You buy and watch the market move against you. You panic and sell, only to see the market recover.

This kind of undisciplined approach to FOREX is guaranteed to lose you money. FOREX traders need to have a rational trading strategy and not allow emotions to rule their trading decisions.

To make rational trading decisions the FOREX trader must be well-educated in market movements. He must be able to apply technical studies to charts and plot out entry and exit points. He must take advantage of the various types of orders to minimize his risk and maximize his profit.

The first step in becoming a successful FOREX trader is to understand the market and the forces behind it. Who trades FOREX and why? Who is successful and why are they successful? This knowledge will allow you to identify successful trading strategies and use them as models for your own.

There are 5 major groups of investors who participate in FOREX – Governments, Banks, Corporations, Investment Funds, and traders. Each group has varying objectives, but the one thing that all the groups (except traders) have in common is external control. Every organization has rules and guidelines for trading currencies and can be held accountable for their trading decisions. Individual traders, on the other hand, are accountable only to themselves.

This means that the trader who lacks rules and guidelines is playing a losing game. Large organizations and educated traders approach the FOREX with strategies, and if you hope to succeed as a FOREX trader you must play by the same rules.

Euro depreciated in Asia Session

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3090 level and was capped around the US$ 1.3250 level. The common currency came off as traders moved out of higher-yielding currencies and into safe haven plays on account of a swine influenza outbreak that has already claimed more than 100 lives in Mexico. Data released in the eurozone tosay saw the German May GfK consumer sentiment index remain steady at 2.5. “Also, the German March import price index was off 0.4% m/m while the eurozone composite index of leading indicators climbed 0.2% to 92.4 in March,” said GCI Financial Team.

US Small Businesses Dig In Heels As Recession Bite

Vanessa Baug knows as well as anyone how the recession has ushered in a new era of frugality for Americans. Sales at her once-thriving jewelry store have plummeted. Some days she sells nothing.

"When times were good we were seeing 50 percent more traffic than we are seeing now" at Baug's Vanessa Fine Jewelry in Lakewood Ranch, Florida, she said. She will fight to the bitter end to keep her store open, she said, and is taking on more jewelry repair orders to keep cash coming in.
Margaret Van Voast, who runs a construction management outfit in Falls Church, Virginia, has also seen a decline in contracts. She has downsized her staff to one from four and has enough work to last until the end of the year.

Fairbrother said that while the mortality rate of small businesses was likely to increase, most entrepreneurs who had been squeezed out nearly always started another business venture.
And the recession has not deterred newly laid off workers from venturing into self-employment. Both the Chamber of Commerce and the National Association for the Self-Employed reported an increase in the number of people seeking information about starting their own business.
Most of these people are starting ventures related to their previous employment and are using severance packages and savings to fund their businesses.
"The demand may not be there, but people will still find little niches where they can survive. It is not as easy as it was three or four years ago," said Giovanni Coratolo, vice president of small business policy at the Chamber of Commerce.
For Arnie Brown, the constant effort to keep his fast-food business afloat amid the rising tide of bills proved too much. He closed his Caribbean eatery in July.
But for small business owners, hope springs eternal. Brown said he hopes the federal government's $787 billion stimulus package revives the economy so he could open another fast food joint.