FOREX TRADE

European stocks opened lower Wednesday, as investors take their lead from overnight losses on Wall Street amid concerns about the strength of the global economic recovery.

The pan-European Dow Jones Stoxx 600 shed 0.3%. The U.K. FTSE 100 also lost 0.3%, while the French CAC-40 declined 0.6% and Germany's DAX slipped 0.1%.

"Equity markets could be set for another grueling session after the Dow Jones Industrial Average posted a triple-digit loss last night and Asian markets have followed suit," said Matt Buckland, a dealer at CMC Markets.

On Tuesday, the Dow Jones Industrial Average fell 161.27 points, or 1.9%, to 8163.60. The Standard & Poor's 500-stock index lost 17.69, or 2.0%, to 881.03. The Nasdaq Composite Index lost 41.23, or 2.3%, to 1746.17.

"Commodity prices remain under pressure, which is clearly weighing on the resource stocks, whilst the downbeat economic outlook is hardly doing anything to impress the banks either," Mr. Buckland added.

Attention will turn to the start of the second-quarter corporate earnings season in the U.S., with numbers from Alcoa leading things off.

Elsewhere, Asian stock markets were lower Wednesday, dragged down by ongoing weakness in oil and metal prices.

"The market's in a holding pattern," said Macquarie Equities broker Brad Gordon in Auckland. "There's all the talk of green shoots yet there are also lagging indicators of job losses."

NetResearch Asia chairman Kevin Scully warned the risk of further correction was high if the upcoming earnings season were to disappoint. "We might see some of the quick recovery premiums being given back, especially if and when the reporting season delivers or gives guidance that is lower than the forecasts."

Japan's Nikkei 225 closed down 2.4% at 9420.75, closing below 9500 for the first time since May 28. South Korea's Kospi Composite closed 0.2% lower, while Hong Kong's Hang Seng Index was last seen down 1.4%.

In the currency markets, the dollar gained against the euro Tuesday as risk appetite eroded with falling U.S. stocks ahead of the earnings season.

The dollar also found some favor after world leaders dismissed previous reports that a new world reserve currency to replace the dollar would be on the Group of Eight leading nations' meeting agenda. The gathering of heads of state begins Wednesday in L'Aquila, Italy.

The yen, which benefits from safe-haven flows as well, advanced against both the euro and dollar. The euro recently traded at $1.3872, and the dollar at 94.20 yen.

"A disappointing earnings season could push equities lower, and we expect further negative surprises to push the euro to test the downside of its recent $1.3750-$1.4350 summer range," said Ashley Davies at UBS.

Crude-oil futures have continued to weaken as doubts over the prospect of an economic revival continue to plague the market.

The August crude contract on Globex stood at $62.04 per barrel, down 89 cents, having settled Tuesday at $62.93 per barrel on the New York Mercantile Exchange.

European government bond markets opened firmer, benefiting from a flight to quality as money leaves the equity markets. The September bund contract stood at 122.18, 0.43 higher.

July 7 (Bloomberg) -- Alpha Trading Systems, an equity platform owned by Canada’s biggest banks, aims to have as much as 40 percent of the Canadian market for stock trading “in a couple of years,” Chief Executive Officer Jos Schmitt said.

Alpha has gained market share from TMX Group Inc.’s Toronto Stock Exchange and TSX Venture Exchange since it started eight months ago. The firm captured 2.9 percent of equities trading in the first quarter, according to the Investment Industry Regulatory Organization of Canada. Schmitt has forecast that his Toronto-based company would have a 20 percent share within the first year.

“We are developing a clear roadmap to further growing that towards what I think should be 30 to 40 percent,” Schmitt said in an interview today.

TMX Group’s share of Canadian stock trading slipped below 90 percent in May after Alpha and rivals including Pure Trading, Chi-X Canada and Omega ATS gained, according to Kevan Cowan, head of equities at Toronto-based TMX Group.

“The market is going to be spread between a number of venues and I don’t think anyone will be above 50 percent, and the largest ones will be probably be around 40 percent,” Schmitt said. “That is where we’d love to be in a couple of years.”

Alpha said yesterday it will offer free trades at the market open and will also remove a premium for odd-lot trades on TSX Venture Exchange, starting Aug. 1. The company will also cut fees by 29 percent for stocks trading under C$1 ($0.86) and boost rebates by 7 percent for putting shares worth at least C$1 onto Alpha.

“This was very focused on trading fees, where I think the costs are indeed getting out of control,” Schmitt, 46, said.

Alpha may drop fees further in the future, Schmitt said.

“When we clearly see that activity continues to grow and rise at Alpha, we will continue to look at ways to make the market more attractive,” he said.

Huang Xinyuan, who sells mining equipment and pesticides to customers across China’s border with Vietnam, says he no longer wants payment in U.S. dollars and prefers the yuan.

July 8 (Bloomberg) -- Crude oil fell, poised for the longest losing streak since December, as equities slumped and an industry report showed an increase in U.S. fuel inventories.

Oil declined for a sixth day after the American Petroleum Institute said gasoline supplies rose 767,000 barrels to 212.4 million last week. European and U.S. stock futures retreated and Asian shares tumbled on concern that second-quarter earnings reports will show the first global recession since World War II is far from over.

“The drop in equities is showing that people were over- optimistic on the economy,” said Clarence Chu, a trader with options dealers Hudson Energy Capital in Singapore. “Usually for this time of year we should be getting a draw in gasoline so if it’s building that’s a bad sign.”

Crude oil for August delivery fell as much as $1.06, or 1.7 percent, to $61.87 a barrel on the New York Mercantile Exchange, the lowest intraday price since May 26. Oil was at $62.19 a barrel at 2:51 p.m. Singapore time.

Oil in New York has declined 15 percent from an eight-month intraday high of $73.38 reached June 30 as higher U.S. unemployment raised concern that the economy of the world’s biggest energy-consuming country will be slow to recover.

“Given the data from the U.S., the market has become cautious on the outlook for an economic recovery and that’s tempered the oil price,” David Moore, a commodity strategist with Commonwealth Bank of Australia Ltd., said in an interview with Bloomberg Television.

Stocks Decline

The MSCI Asia-Pacific Index dropped 1.5 percent, falling for a sixth day. Futures on the Dow Jones Euro Stoxx 50 Index slipped 0.6 percent to 2,297 at 7:10 a.m. in London. The U.K.’s FTSE 100 Index may open 21 points lower, according to CMC Markets.

“A negative earnings outlook for the second quarter swept over the equities markets, helping to push oil lower,” said Mike Sander, an investment adviser with Sander Capital in Seattle. “The market is experiencing a push to go lower with a combination of over supply and negative economic sentiment.”

Machinery orders in Japan, the world’s third-largest oil consumer, fell unexpectedly for a third month in May, dropping 3 percent from April, the Cabinet Office said today. The decline is adding to signs that the recession isn’t moderating for the second-largest economy.

Crude oil inventories dropped 1.4 million barrels to 348.3 million, according to the API report. Stockpiles of distillate fuel, a category that includes heating oil and diesel, climbed 3.42 million barrels to 158 million, the highest since 1985.

Gasoline Supplies

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Gasoline inventories probably rose 900,000 barrels last week, according to a Bloomberg News survey conducted before today’s Energy Department report. The department is scheduled to release its weekly report at 10:30 a.m. in Washington.

“If it is the middle of July and the U.S. consumer has excess supply of gasoline, then expect prices to start heading lower,” Sander said.

Gasoline for August delivery declined as much as 2.78 cents, or 1.6 percent, to $1.7050 a gallon. Yesterday, it fell 0.76 cent, or 0.4 percent, to end the session at $1.7328.

Oil also fell as the dollar advanced against the euro, reducing the appeal of commodities as an inflation hedge. The euro traded at $1.3892 to the U.S. currency at 2:50 p.m. Singapore time from $1.3924 yesterday and $1.4142 on July 1.

Brent crude for August settlement declined as much as 93 cents, or 1.5 percent, to $62.30 a barrel on London’s ICE Futures Europe exchange. It was at $62.57 a barrel at 2:50 p.m. Singapore time. Yesterday, the contract fell 1.3 percent to $63.23, the lowest settlement price since May 27.

July 8 (Bloomberg) -- Stocks in Europe and Asia declined, sending the MSCI World Index lower for a fifth straight day, on concern that second-quarter earnings reports will show the first global recession since World War II is far from over.

Holcim Ltd. slipped 2 percent after the world’s second- biggest cement maker said it expects a “difficult” 2009. Amada Co. fell to a three-month low in Tokyo after an unexpected drop in Japanese machinery orders.

The MSCI World Index decreased 0.5 percent to 925.04 at 8:05 a.m. in London, the lowest level since May 15. Alcoa Inc. will kick off the earnings season today as the first company in the Dow Jones Industrial Average to report results. Analysts estimate profits fell an average 34 percent at Standard & Poor’s 500 Index companies in the second quarter, according to data compiled by Bloomberg.

“I am a bit concerned about the earnings season,” said Andreas Utermann, chief investment officer at Allianz Global Investor’s RCM unit. “I think the market is going to be disappointed somewhat. I am not certain we are not going to see further softness.”

S&P 500 futures added 0.2 percent after the gauge slid to the lowest level since May 1 yesterday. Europe’s Dow Jones Stoxx 600 Index sank 0.3 percent today, while the MSCI Asia Pacific Index declined 1.3 percent, falling for a sixth day.

France’s Correction

The Stoxx 600 has decreased 7.1 percent since June 11 on speculation share prices have outpaced the outlook for the economy after a three-month rally pushed valuations to the highest level since 2004. France’s CAC 40 Index today extended its drop from its June 1 high to 10 percent, the common definition of a “correction.”

Holcim slumped 2 percent to 57.3 Swiss francs. The company said it expects a “difficult” 2009 as the underlying economic developments haven’t shown an improvement through May.

The cement maker is also offering shareholders 50.3 million new shares at 42 Swiss francs apiece in a rights offer aimed at raising 2.1 billion francs ($1.9 billion) to finance the takeover of Cemex Australia.

Alcoa added 3 cents to $9.44 in Germany. The largest U.S. aluminum producer may report its third consecutive quarterly loss as lower demand from automakers and the construction industry keeps the metal at about half of last year’s prices.

Amada, a maker of metalworking machinery, retreated 4.1 percent to 556 yen in Tokyo as Japanese machinery orders unexpectedly fell 3 percent in May.

Honda Motor Co., which makes almost half its sales in North America, lost 4 percent to 2,390 yen after the Japanese currency strengthened against the dollar to a six-week high.

A stronger yen reduces income when overseas revenue is converted into local currency.

Infineon Technologies AG rose 7.3 percent to 2.64 euros. Europe’s second-largest chipmaker agreed to sell its Wireline Communications business to an affiliate of Golden Gate Capital Corp. for 250 million euros ($347 million).

July 8 (Bloomberg) -- Japanese stocks slumped for a sixth day as the yen strengthened, bank lending slowed and weaker- than-expected machinery orders fanned concern that recent gains have outpaced profit prospects.

Honda Motor Co., which makes almost half its sales in North America, lost 5.5 percent after Japan’s currency climbed to a six-week high versus the dollar. Mitsubishi UFJ Financial Group Inc., the country’s biggest bank by value, slid 3.4 percent as the nation’s bank lending growth slowed for a sixth month. Amada Co., a maker of metalworking equipment, tumbled 4.1 percent, as machinery orders unexpectedly fell 3 percent in May.

“The market is finally returning its focus to the present, rather than looking for an eventual recovery,” said Masaru Hamasaki, a Tokyo-based senior strategist at Toyota Asset Management Co., which oversees $14 billion. “The economic rebound won’t be rapid. It will take time, and share prices are beginning to reflect that.”

The Nikkei 225 Stock Average lost 227.04, or 2.4 percent, to 9,420.75 in Tokyo, the lowest close since May 26. The broader Topix index slumped 2.3 percent, the steepest fall in three weeks, to 888.54.

In New York, the Standard & Poor’s 500 Index dropped 2 percent to the lowest level since May 1, led by energy and technology companies.

The Topix soared as much as 36 percent from a quarter- century low reached in March on rising confidence government stimulus steps would succeed in reviving growth. Worse-than- expected U.S. unemployment data on July 2 fanned concern the recovery won’t materialize and has helped send the gauge lower for six straight days, its longest losing streak since July 2008.

Loans, Machinery Orders

Honda lost 5.5 percent to 2,390 yen after the yen climbed to as much as 94.14 against the dollar, a level not seen since May 22. Toshiba Corp., the world’s second-biggest maker of flash memory chips, lost 3.2 percent to 329 yen. A stronger yen reduces income when overseas revenue is converted into local currency.

Mitsubishi UFJ retreated 3.4 percent to 569 yen. Bank of Yokohama Ltd., one of the country’s biggest regional lenders, slumped 5.3 percent to 503 yen.

Lending at the nation’s non-trust banks rose 2.5 percent in June from the previous year, the Bank of Japan said today, compared with a 3.3 percent increase the previous month. It was the sixth consecutive month of slowing expansion.

Amada tumbled 4.1 percent to 556 yen. Makita Corp., the nation’s largest maker of power tools, fell 3 percent to 2,165 yen. Sojitz Corp., a trading house that derives almost half its profit from machinery dealing, lost 5 percent to 189 yen.

Semiconductor Equipment

Bookings for machinery, an indicator of capital investment intentions, dropped 3 percent in May from the previous month, the Cabinet Office said today. Economists had forecast a 2 percent increase. The data followed reports from the U.S. last week showing the unemployment rate rose to 9.5 percent in June and employers cut more jobs than forecast.

“The June employment data threw some very cold water on the overheated market,” said Yuuki Sakurai, president of Fukoku Capital Management Inc., which oversees about $10 billion in Tokyo. “The Japanese economy is going to revive through the comeback of the world economy, not just China or India, and we know that’s going to take some time.”

Additionally, Credit Suisse Group AG lowered its stance on Japan’s semiconductor production equipment industry to “market weight” from “overweight,” citing a weaker outlook for capital spending.

Aeon, Mixi

Dainippon Screen Manufacturing Co., a chip-equipment maker that was cut to “underperform” by the brokerage, plunged 8.7 percent to 263 yen. Tokyo Electron Ltd., which was also lowered to “underperform,” fell 5.2 percent to 4,340 yen.

Aeon Co. slumped 3.6 percent to 846 yen. Japan’s second- largest retailer posted a 2.49 billion yen ($26.1 million) loss for the latest quarter, its fourth deficit in the last five quarters.

Mixi Inc., operator of Japan’s largest social networking site, soared 17 percent to 687,000 yen, the biggest rally since October, after Morgan Stanley lifted the shares to “overweight” because the company should benefit from growing use of its services on mobile devices.

TOKYO (Dow Jones)--The dollar and euro fell to seven-week lows against the yen in Asia Wednesday as regional share markets slid, prompting players to take refuge in the safe-haven Japanese unit.

Short-term investors also got on board to sell other higher-yielding currencies such as the Australian dollar and British pound, which they consider riskier assets, for the yen, dealers said.

The selling of these currencies also pressured down the dollar against the yen, with the U.S. unit dropping to Y94.15, its lowest level since May 22. The euro also dropped to its lowest level since that day, falling to Y130.96.

Dealers said the falls were tracking drops in Asian share markets, led by Japan's benchmark Nikkei 225 Stock Average, which was down 2.4% in early afternoon trade.

"This is stock driven," said Yuji Saito, head of the foreign exchange group at Societe Generale. If share markets continue sliding, the dollar could later in the day fall to Y93.85, while the euro could drop to Y130.00, "after it already fell through earlier support at 131.20," Saito said.

Further falls in oil, with Nymex crude futures dropping to $62.31 a barrel, were also hurting higher-yielding, commodity-linked units like the Australian dollar against the yen, dealers said. The Aussie fell to Y73.94, its lowest since May 28.

"This is not just oil, but commodities like metals that are also falling," prompting more skepticism over a near-term global economic recovery, said Satoshi Tate, senior vice president of foreign exchange at Mizuho Corporate Bank.

Whether the yen continues to gain at other currencies expense in the coming weeks depends on how long it takes to close "the gap between recent excessive (global economic) optimism and reality," said Mizuho's Tate.

Meanwhile, the news that Chinese President Hu Jintao had scrapped his plan to attend the summit of the Group of Eight industrial nations and emerging economies and was returning early from Italy due to continued unrest in China's Xinjiang Uighur Autonomous Region had no direct effect on the currency markets, dealers said.

Most players already expected that the G8 will not formally take up proposals, some of which have come from China, for debate on creation of a new global reserve currency to replace the dollar, they said.

But the worsening situation in western China, highlighted by Hu's sudden cancellation, "was a negative factor for the Chinese share markets earlier," said Mizuho's Tate. If the unrest gets worse, dragging Chinese share prices lower, that could exacerbate the growing pessimism over the global economy, which may bolster yen strength, he added.

Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates 2150 GMT High Low 12/31
USD/JPY Yen 94.20-25 94.81-86 -0.64 94.86 94.17 +3.97
EUR/USD Euro 1.3917-18 1.3926-30 -0.06 1.3921 1.3882 -0.44
GBP/USD Sterling 1.6093-97 1.6141-45 -0.30 1.6132 1.6062 +10.03
USD/CHF Swiss Franc 1.0888-94 1.0882-88 +0.06 1.0914 1.0887 +2.05
USD/CAD Canadian Dlr 1.1627-31 1.1654-59 -0.23 1.1682 1.1629 -4.42
AUD/USD Australian Dlr 0.7863-65 0.7894-99 -0.39 0.7897 0.7853 +11.17
NZD/USD New Zealand Dlr 0.6274-84 0.6291-98 -0.27 0.6300 0.6269 +7.52
EUR/JPY Yen 131.11-15 132.04-09 -0.70 132.01 130.97 +3.53

Fundamental Forecast for Canadian Dollar: Bearish

- Canadian GDP Contracts in April, Factory Prices Tumble Lower in May
- USD/CAD Sentiment Mixed

The Canadian dollar weakened against the greenback following the drop in risk appetite, and the loonie may continue to face increased selling pressures over the following week as the economic calendar foreshadows a weakening outlook for the world’s eighth largest economy. As a result, fears of a protracted recession could lead the Bank of Canada to take additional steps this month in an effort to stem the downside risks for growth and inflation, and speculation for further easing could weigh on the exchange rate over the near-term.

At the same time, the BoC saw a risk for a prolonged recession, stating that the appreciation in the USD/CAD could ‘fully offset’ the recent improvements in the real economy, and the board is likely to hold a dovish policy stance over the medium-term as they pledge to hold the benchmark interest rate at the record-low into the following year. However, as researchers at the central bank see high uncertainties tied to ‘quantitative easing,’ the board may continue to hold a neutral policy stance going forward, and long-term expectations for higher interest rates could drive the Canadian dollar higher throughout the second half of the year.

The economic docket for the week ahead is expected to show a rise in business spending, with economists forecasting the Ivey purchasing managers index to increase to 50.3 from 48.4 in May, while housing starts are projected to increase for the third consecutive month in June. A rise in business activity paired with a rebound in home construction could raise the outlook for the region as the government takes unprecedented steps to stimulate the ailing economy, and speculation for a global recovery could drive the Canadian dollar higher as market sentiment improved. Nevertheless, the labor market is widely expected to weaken further in June, with market participants expecting the annual rate of unemployment to reach an 11-year high of 8.7%, while the trade deficit is projected to widen in May on the back of falling exports. As firms face fading demands from home and abroad, businesses may continue to scale back on production and employment, and the data is likely to encourage a weakening outlook for the economy as central bank forecasts economic activity to contract at an annual pace of 3.0% this year, which would be the biggest decline since 1933. - DS

Fundamental Outlook for Japanese Yen: Bullish

- Japanese Consumer Price Tumble Lower in May, Raising Risks for Deflation
- Manufacturing Confidence Rebounds From Record Low
- Japanese Trade Surplus Widens as Imports Falter


The Japanese Yen may continue to strengthen against its major counterparts over the following week as market participants curb their appetite for higher risk/reward investments, and the low-yielding currency should benefit from safe-haven flows as investors weigh the outlook for a global recovery. The World Bank lowered its growth forecast from March and projects the world economy to contract at an annual pace of 2.9% this year amid an initial forecast for a 1.7% drop in global growth, and the dour outlook held by the bank suggests rising energy costs paired with deteriorating trade conditions are likely to hamper the prospects for future growth. At the same time, the Organization for Economic Cooperation and Development predicts the global recovery to be ‘slow and fragile,’ with the economic downturn expected to have a lasting impact on the world economy as the group anticipates a permanent increase in the cost of capital. The comments foreshadow a weakening outlook for future growth as businesses face rising input costs paired with fading demands from home and abroad, and fears of a protracted recession could lead the Yen higher as investors turn risk adverse.

As a result, the USD/JPY may continue to trend lower as risk trends continue to drive price action in the foreign exchange market, and the pair may make an attempt to test the May lows in the week ahead as pair continues to retrace the advance from earlier this month. On the other hand, the economic calendar is expected reinforce an improved outlook for future growth as economists forecast industrial outputs to jump 7.0% in May, which would be the biggest rise in over half a century, while manufacturing activity is anticipated to fall at a slower pace in the second quarter. Market participants project the Tankan manufacturing index to rebound from a record-low of -51 to -43 in the second quarter, while the gauge for business expectations is anticipated to increase to -34 from -51, and the data could encourage an improved outlook for global growth as the Bank of Japan forecasts economic activity in the world’s second-largest economy to recover in the second half of the year. Meanwhile, retail spending is expected to contract for the ninth consecutive month in May, with the unemployment rate projected to increase to 5.2% during the same period, which would be the highest since 2003, and the data could foster a weakening outlook for the world economy as the downside risks for growth and inflation intensify. - DS

Fundamental Forecast for Euro: Bearish

- European Central Bank leaves rates unchanged despite high unemployment
- German Retail Sales report boosts optimism on domestic consumption
- Yet Euro Zone Industrial data points to weakness in demand

A busy week of economic event risk left the Euro almost exactly unchanged against the US Dollar, and it seems markets remain incapable of breaking the EURUSD from its multi-month range. Forex options markets showed that volatility expectations remained high ahead of the European Central Bank interest rate decision and the US Nonfarm Payrolls report, but sharp post-NFP moves were incapable of pushing the EURUSD below the key 1.4000 mark. Illiquid late-week trading invited a brief foray below the psychologically significant 4000 level, but a quick bounce signaled that few were willing to force a larger breakdown in the key currency pair. If the combination of an ECB rate decision and a US NFP release were not enough to break the Euro from its range, we see relatively little scope for big moves in the week ahead. Indeed, short-term volatility expectations have fallen substantially ahead of what may be yet another week of range trading.

Euro Zone economic event risk will likely take a backseat to broader financial market flows as the Euro/US Dollar pair remains tightly correlated to key risky asset classes. The rolling correlation between the EURUSD and Reuters CRB commodity index is once again near record-highs. It is subsequently unsurprising to note that Gold, Oil, and the US S&P 500 remain in similarly choppy price ranges prices through the past month of trading. The end-of-week tumble in the S&P index leaves it at risk for continued declines, but we will have to see a noteworthy break before calling for similar moves in the EURUSD.

Traders should keep an eye out for financial market reactions to the US ISM Services report and surprises from final revisions to Euro Zone Q1 GDP results. The former will shed light on the all-important US Services sector and has historically produced big moves in the S&P 500 and US Dollar. Markets remain on edge following a worse-than-expected NFP result, and we will need to see promising signs for US economic conditions to bolster investor confidence. A sharp drop in domestic equities could easily lead to similar moves in the US Dollar—potentially sending the EURUSD below key support. Later-week GDP figures could likewise provide impetus for Euro volatility. Recent revisions to Q1 UK GDP results sent the British Pound substantially lower against major counterparts. Although admittedly unlikely, similar changes to Eurostat’s estimates for domestic economic growth could send the Euro lower versus major counterparts.

EURUSD volatility expectations remain muted, but we cannot rule out flare-ups in financial market tensions. It will be critical to watch whether many many key asset classes can break out of their month-long trading ranges—potentially sending the EURUSD beyond range-lows at 1.4000 or highs near the 1.4200 mark. – DR

Fundamental Outlook for US Dollar: Neutral

- US consumer confidence unexpectedly fell during June as signs of growth fail to materialize
- ISM manufacturing rose in June, but held below 50, signaling contraction for the 17th straight month
- US non-farm payrolls were disappointing, indicating that the pace of job losses accelerated in June

The US dollar ended the past week as the strongest of the majors, but it certainly wasn’t due to fundamental reasons. Instead, risk aversion reared its head once again following disappointing US news, triggering sharp declines in the US stock markets and FX carry trades, as well as increased demand for low-yielding currencies like the US dollar and Japanese yen. Using the DJIA as a barometer, there is potential for “risky” assets to fall again in the near term as the daily charts reflect a maturing head and shoulders pattern.

The data the recent moves came from the US non-farm payrolls report, which showed that the pace of job losses had accelerated, rather than slowed, during June at a rate of 467,000. Meanwhile, the unemployment rate rose to 9.5 percent from 9.4 percent and average hourly earnings growth stagnated during the month, bringing the annual rate down to a nearly 4-year low of 2.7 percent from 3.0 percent. All told, the continued deterioration in the labor markets that has led to more job losses and falling wages does not bode well for consumption growth, which composes roughly 70 percent of US GDP, through the rest of the year.

Looking ahead to Monday, data may show that conditions in US non-manufacturing sector - which accounts for approximately 70 percent of total economic activity in the country and includes retail, services, and finance - improved somewhat in June as the Institute for Supply Management index is estimated to rise to 46.0 from 44.0. However, consumer confidence has shown emerging pessimism, primarily on the economic outlook, as the Conference Board’s measure surprisingly fell to 49.3 in June from 54.8. Since risk trends have proven to be the greater driver of price action in the forex markets, a weaker than expected result could trigger flight-to-quality and thus, gains for the US dollar.

On Thursday, wholesale inventories are expected to fall negative for the ninth straight month and could register a 1 percent drop for the month of May. That said, this is a very lagging indicator and may simply continue to signal that businesses are cutting back on supplies in anticipation of weaker demand down the road. On Friday, the trade deficit may widen for the third straight month in May to $30 billion as exports continue to dive. Finally, the preliminary reading of the University of Michigan’s consumer confidence index for July is projected to fall very slightly to 70.6 from 70.8. However, there is downside potential in light of the sharp drop we saw in the Conference Board’s surprise drop in consumer confidence during June.

For more timely FX market analysis, visit our newly-launched Forex Stream Service.

The US Dollar has been consolidating in narrow ranges against the major currencies, but positioning is favoring a stronger greenback as the breakout materializes. We maintain our short exposure against the Euro, British Pound and Australian Dollar, adding a new trade selling the New Zealand Dollar against its US counterpart.

This online guide aims at creating a coherent understanding of the foreign exchange market, by tying in real life market scenarios with the relevant theories of international finance and the classic schools of technical and quantitative analysis. Although there is a vast amount of literature on international finance, technical analysis and chartism, there is a scarcity of instructional materials incorporating actual market events such as interest rate decisions, interventions and geopolitical events.

Another area largely overlooked by currency guides is the integration of fundamental and technical analysis for making decisions. The distinctiveness between the two types of approaches dissuades many from factoring them together. But knowing how to combine them can be highly advantageous in unraveling the trend and timing of currency moves.

This material focuses on teaching how to think for yourself in understanding global currency markets, rather than depending on a pre-set trading system which recommends decisions without providing input on the whys of making right and wrong decisions. Rather than rehashing the classic theories driving currency analysis, this guide will offer investors, researchers and students an innovative approach, paramount in grasping and anticipating the moves in the major currency pairs.

Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?

This two-part report clearly and simply details essential tips on how to avoid typical pitfalls and start making more money in your forex trading.

1. Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
   
2. Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.
   The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.
   
3. Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.
   
4. Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.
   
5. Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:
   Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);
   Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself.
   
6. Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.
   
7. No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.
   
8. Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.
   
9. The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.
   
10. Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.
    
11. Exiting Trades - If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.
    
12. Don't trade too short-term - If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.
    
13. Don't be smart - The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.
    
14. Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.
    
15. Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.
    
16. Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.
    
17. Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.

The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.

1. Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.
   
2. Focus - Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.
   
3. Don't trust demos - Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.
   
4. Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.
   
5. Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.
   
6. The clues are in the details - The bottom line on your account balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.
   
7. Simulated Results - Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results - historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.
   
8. Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.
9. Risk Reward - If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.
   
10. Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.
    
11. Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.
    
12. Determination - Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.
    
13. Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.
    
14. Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).
    
15. One cross is all that counts - EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.
    
16. Wrong Broker - A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.
    
17. Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.
    
18. Interpret forex news yourself - Learn to read the source documents of forex news and events - don't rely on the interpretations of news media or others.
    

There are thousands of successful Forex traders making money trading foreign currency, but did you know that 90% of new traders lose money doing this? In order to be successful, there are a few things you absolutely must know. The following are some of the more important forex trading tips to understand if you plan earn money trading currency.

Learn In Pairs - Know Both Sides Of The Currency

It is absolutely impairitive that you understand the relationship that both currencies you’re trading have with each other. Understand how swings on one currency affects the other, and their cyclinicals. Failure to have the basic understanding of learning what you’re trading will likely end up cost you alot of money.

Watch Global Influencers - News and Events

One of the largest contributers in currency fluctuation is events happening around the world. News good or bad, especially in the financial sector, will cause a swing in global currency values. Instability in one market will likely lead to upturns in another - make sure you know your pairs! Remember, instability and volatility is where you make your money.

Tiny Margins and Over-Cautious Trading

We’ve all heard the old addage “slow and steady wins the race.” Well, it’s this trader’s opinion that those types of investments will lose the race. This is a player’s game, if you don’t give your position a chance to demostrate it’s value you’ll end up undercutting yourself in trading fees. Making big trades is where the money is, then again you must know and be confident in your position.

Have A Strategy But Stay On Your Toes

Would you start a business without a business plan? If so, Forex trading isn’t right for you. You must have a plan that details the approach to take, the currencies to trade and how to manage the risk your taking. But with that said, always be aware of your market and don’t be afraid to call an audible if you see indicators suggesting a change of plans Remember the global influencers?

Emotional Trading and Confidence

This goes back to having a strategy. If you’re emotional then you’re not thinking with your head, much like a poker player who goes on tilt. Keep cool stay confident and stick to your plan. Learn to manage stress and understand that as long as you play a winning strategy, they’ll be ups and downs but in the end you’ll be successful as long as you keep your cool.

Forex is a big market to participate in and surprisingly only the top 5% are making money. That means the remaining 95% of traders are either breaking even or losing money. The small minority at the top in this business have their own hidden techniques and strategies that they use to profit. I hope to give you a glimpse into what they do.

The expert trader also knows when it is appropriate to drop the training wheels, which happen to be the demo platforms. I’m not saying demos are bad because they are excellent tools for people relatively new, but there is a point where they can no longer help you and can be detrimental to your success. You have to learn to recognize this point and stop using it.

The costs of trading depend on several factors, including the instrument and market you are trading. Most of the costs you pay are to your brokerage firm. They need to make a living in exchange for the services they provide.

• Commissions
• Slippage
• Spread
• Platform Fees
• Expenses

However, if you want to look at trading as a business, you may have to minimize them and make sure you are getting the most for every dollar you spend to ensure your long-term survival.

Choosing the right time to trade can make a differences between successful and hopeless forex trading.

It’s proved and highly recommended not to trade on Weekday, Mondays, when the Forex market has recently opened and is making first steps to form a new trend and on Friday’s afternoon, during the big volume of closing trades. The best days to trade are Tuesday’s, Wednesday’s and Thursday’s, So Basically trade between Weekdays.

Happy Forex Trading.

Forex Trading Strategy - Three Steps of Development

The three steps of development are:-

1. Emotions
2. Complexity
3. Testing

Emotions and intuition cannot be calculated mathematically. Mathematics is the only thing a trading system has to work with. So the first and most fundamental principal of trading system development is that every rule to enter or exit the market must be mathematically justified.

Trading systems grow into more and more complex ones by including rules that take into account more and more parameters. I believe that excessive amount of rules can ruin the successful trading system.

Testing is the absolutely necessary step. You need to have historical price data to test your system.

We cannot say that it is very easy to make money in forex trading, but it isn’t really difficult also. It is the smart work that matters than hard work in trading currency market. Following are the essential tips on how to avoid usual pitfalls and start making more money in forex trading.

Trade in pairs not in currency- Like any relationship; you need to know both the sides. Success or failure in forex currency trading relies upon being right about both foreign currencies and how they contact each other, not just one.

Understand the basics - When you start to trading currency online, it is indispensable that you understand the basics of this particular market if you desire to make the most of your investments. The chief forex influencer is worldwide news and other related events. Most newcomers respond aggressively to news like this and close their positions and next miss out on some of the most excellent trading chances by waiting until the market goes down. The latent in the forex market is in the instability, not when it is clam.

Self-government - If in case you are fresher to forex, you would either choose to trade your own money or to have a forex broker trading it for you. It is good but your risk of losing augments tremendously if you either of these two things: you also need to interfere with what your forex broker do on your behalf; seek counsel from too many other sources - many input would only result in multiple losses. Take a location, ride with it and then analyze the result - by yourself, for yourself.

Small margins – Small margin trading is one of the leading benefits in trading forex as it permits you to do trading in the amounts far bigger than the total of your deposits. However, it could as well be risky to beginner traders as it could demand to the voracity factor, which wipes out many forex traders. The best guideline is to boost your leverage in line with your skill and success.

Trade during Off-Peak Hours - Professional FX traders, option traders, and other hedge funds mobs a wide benefit over small retail traders in off-peak hours (usually between 2200 CET and 1000 CET) as they could hedge their place and move them around when there is far tiny trade volume is going through (that simply means that their risk is smaller).

Trade on the news - Most of the actually big trade market moves arise around news time. Trading volume is lofty and the moves are very important; this means there is no superior time to trade than when news is actually released. This is when the big players alter their places and prices alter resulting in a somber currency flow.

Confidence - Confidence comes from winning forex trading. If you lose money early in your trading career it's extremely hard to gain it back; the ploy is not to go off half-cocked; study the forex business before you start to trade. Keep in mind, knowledge is power.

Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world financial centes New York, London, Tokyo, Frankfurt and Zurich. Historically, the only way to participate was from the trading floor of one of these bourses, but today, people can trade forex from anywhere through a secure internet connection and a PC.

Today traders operate in a global network, taking positions in the market and making investment decisions based on either relative value between two currencies, or a particular currency actual price. Currency value fluctuations are constantly renegotiated through trading activity, and this activity, and the corresponding currency values are also indicators of the levels of currency supply.

An example of market behaviour greater demand for the Euro might indicate a weakening supply. Low supply and increased demand will drive the price of the Euro up against other currencies like the dollar, until the price better reflects what traders are prepared to pay when short supply exists. Another way to look at this situation is this higher demand means it will cost more dollars to buy the Euro, which equates to a weakening of the dollar in comparison. Analysis of situations such as in this example forms the basis for a trader investment decisions, and they will purchase or sell currency accordingly.

This should be remembered, as while many see the foreign exchange market as the vehicle for converting their home currency while travelling abroad, many others choose to use the market to advance their financial position and secure their future.

Forex, or Foreign Exchange, trading can be a very rewarding. In fact, it can be one of todays best wealth generating opportunities. Regular people like you and me are consistently making $500, $600 and more per day from the comfort of their home trading forex. Many do not know this, but the forex market is by far the largest market in the world. It is estimated that around $1.5 TRILLION is traded every single day. By far more then all the stock, bond and futures markets of all the world combined!

But what does a forex trader do? Simple, buy a currency at a low value and sell it at a higher value, and in the process profit from it! For example, buy Great British Pounds with US Dollars, wait for the Pound rate to go up and make money! This can be done several times a day if the forex trader is a day trader or several time a week or month if the trader is a forex swing trader.

Lets look at the exclusive benefits forex trading offers:

1. The forex trader can start trading with as low as $300. Yes, today most on-line brokers will allow you to open an account with such a low sum making forex trading accessible for virtually everyone.

2. The forex trader does not have to own the money he or she is using to trade currencies. Through a concept called leverage, the traders broker will allow him or her to buy up to 400 times the value of the traders account. For example, if the trader has US $100 in his brokerage account he can buy/trade $4,000! If he has $1,000 he can buy/trade $40,000. That is how traders actually make $500, $600, or $700 per day trading forex, using the brokers money!

3. Many currency pairs are very volatile. Volatility means that they move a lot during the day, from side to side. This allows the forex trader to capture several price swings that this volatility causes. In fact, there are currency pairs that offer up to six daily swing opportunities, each one potentially allowing the trader to capture impressive profits.

4. With the right system the forex trader can trade with just following simple rules. If A happens and B happens then do C. This is called mechanical trading. It requires absolutely no discretion, interpretation or thinking from the trader.

5. The forex market is a 24 hour market. Never stops. This means that as a forex trader you can chose exactly when to trade. Some people have day jobs and do not have the necessary time to trade during the day so they can trade at night. People who make their living as forex traders can chose to trade any time of the day or night. The point being, a 24 hour market allows the trader a lot of flexibility.

6. An incredible benefit of the forex industry is that today all forex brokers allow traders to open free demo accounts. This means that the trader can test his strategies without risking a single dollar! In fact, I always test my trading strategies before going live. I make sure they work before risking real money. I know of no other business opportunity that allows you to see if it works before you spend money!

7. Making a living as a forex trader allows you to be truly free! No office, no workers, no inventory, no marketing worries, no advertising, no selling. For me this is one of the greatest advantages of being a forex trader. No headaches!

In conclusion, the forex market provides a lot of opportunities that many markets and industries do not provide. Many people hear the term forex and get a bit scared, they are afraid of the unknown. Do not be, forex trading is something that people have been using to generate wealth for many years. The reason many people have not heard of this opportunity until recently is that until not long ago trading currencies was reserved to the big dogs (banks, institutions, companies etc). Today with the help of the internet anyone can take advantage of on-line currency trading that was once reserved to an exclusive group.

Wish you well and I hope you found this article useful.

Everyone is talking about it. It's the newest get rich quick scheme on the block and you want a piece of the action. Who wouldn't? But before you go any further, it's good to spend some time to familiarize yourself with some of the basics. What is forex? Forex stands for foreign exchange, i.e. the currency of any country anywhere in the world, such as the US Dollar, the Chinese Yuan, the British Pound and so on. The concept of forex trading implies that one currency is exchanged for another; hence it is also called currency trading. There exists a huge international forex market where currencies are bought, sold and traded.

The forex market is one of largest financial markets in the world. And the amazing thing is that Sunday to Friday, it is a 24 hour market, it does not close daily like the stock market. Further, it is an international market, so it is bigger than almost any domestic stock market could ever be. Speculators on the forex market make money depending on the movements of the market and many have their own forex trading strategy. The most widely traded currencies are the US Dollar, the Euro, the British Pound, and the Japanese Yen. As you can see, these are the world's most powerful economies, implying that due to the amount of trade going on in these countries, businesses in these countries need plenty of foreign exchange.

As a speculator or forex trader, one would take a position on a country, depending on what one believes are the future prospects for that country and then either buy or sell its currency. For instance, if you believe that the US dollar will depreciate against the Euro, as a forex trader, you would sell US dollars right now at a higher price with the expectation of buying them from the market at a lower price when the US dollar depreciates. You will make the differential between the higher price and the lower price per dollar that you sold. Since you did not actually have stock of US dollars at the time you sold, this is called a short position.

The opposite of this is a long position, meaning that you believe the US dollar will appreciate and as a forex trader, you buy US dollars in hopes of selling them at a higher price when the market for them goes up. This is a simple long trade. There are plenty of forex currency trading systems to help you maximize your profitability.

An understanding of factors that go into successful forex currency trading is essential when you decide to become a forex trader, or maybe eventually a broker. The main factors that interact to form the basis for the trade are time, currency, interest rates and exchange rates. A solid understanding of these elements and their interplay is what makes a good forex trader.

The internet is a big driving force in the increased popularity of forex currency trading. With the introduction of the internet into every home, the average person now has gained access to the huge forex market. Earlier a playground for rich individual investors or huge institutions like financial companies and banks, the international forex market is now open to you and millions of others. And people are already tapping it to make their private fortunes.

Forex, is an exchange that allows investors to trade national currencies through the foreign exchange. This is the worlds largest market for currency, based on the Dollar, anywhere between 1 – 2 TRILLION dollars are traded upon this market on a daily basis. This type of trade is typically performed online or on the telephone. By taking advantage of the world wide web, you are enabling yourself to make your investments in a reliable, easy, safe and fast way.

Some investors are able to enjoy returns of around thirty percent on a monthly basis, this takes a great deal of experience to gain this type of enormous return on your investment. The Forex market does not have one specific place of trade like many of the other markets do, for this reason alone is why most of the trade is performed by internet, fax, or telephone. In the beginning for currency trade was not all that popular, they were bringing in only about seventy billion dollars on a daily basis, with the invention of Forex, that number grew massively.

Of course, the currencies do not only deal with the American dollar, these currencies can be translated to over 5,000 currency institutions world wide, which include, commercial companies, large brokers, international banks, and government banks. Many major countries have forex trading centers such as, Frankfurt, London, New York, Paris, Hong Kong, Tokyo, and Bombay to name a few.

When trading online there are many benefits such as, the ability to trade or track your investments at anytime day or night, from anywhere within the world that offers an internet connection. Another added benefit, is that some online exchange sites allow you to start with a small investment, known as a mini account, some with as little as two-hundred dollars. With online trading, the trade is instant. When you trade offline you have to deal with paperwork, with online trading there is no paper work involved.

The world of the internet, has allow us to do many things with just a click of a button, where else can you bank, trade, talk to your family and friends, research your investments and earn money all at the same time? Make the internet work in your best interest by implementing online trading into your portfolio. There’s a whole world of money waiting for you to earn with your online investments, and it’s all available at the click of your mouse button.

The foreign exchange market (currency, forex, or FX) is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. ^[1]FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixedas per the Bretton Woods system till 1971.

Presently, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and otherfinancial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by theBank for International Settlements.^[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.^[3]

The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollars, Euros, Japanese yen, Pounds Sterling, etc., and the need for trading in such currencies.

The foreign exchange market is unique because of

• its trading volumes,
• the extreme liquidity of the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
• the variety of factors that affect exchange rates.
• the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
• the use of leverage

As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank for International Settlements,^[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:

• $1.005 trillion in spot transactions
• $362 billion in outright forwards
• $1.714 trillion in foreign exchange swaps
• $129 billion estimated gaps in reporting

Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%.^[4] In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.

Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.

Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.

FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to TheWall Street Journal Europe (5/5/06, p. 20).

Top 10 currency traders ^[5]
% of overall volume, May 2008

Rank	Name	Volume
1	Deutsche Bank	21.70%
2	UBS AG	15.80%
3	Barclays Capital	9.12%
4	Citi	7.49%
5	Royal Bank of Scotland	7.30%
6	JPMorgan	4.19%
7	HSBC	4.10%
8	Lehman Brothers	3.58%
9	Goldman Sachs	3.47%
10	Morgan Stanley	2.86%

Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over US$50-60 billion (see retail trading platforms).^[6] Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey.^[3] These large international banks continually provide the market with both bid (buy) and ask (sell) prices. Thebid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually 0–3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100/1.2300 for transfers, or say 1.2000/1.2400 for banknotes or travelers' checks. Spot prices at market makers vary, but on EUR/USD are usually no more than 3 pips wide (i.e., 0.0003). Competition is greatly increased with larger transactions, and pip spreads shrink on the major pairs to as little as 1 to 2 pips.