Currency Profile Of British Pound (Part I)

By Ahmad Hassam

British Pound is also known as the Cable. The name most probably struck in the late nineteenth century and the early twentieth century. United Kingdom (UK) is the fourth largest economy in the world. UK has a service oriented economy with manufacturing representing a small part of GDP. Manufacturing is only equivalent to one fifth of GDP.

London is still the forex center of the world. London Stock Exchange is still the second most important stock exchange in the world after the New York Stock Exchange. The British capital market systems are one of the most developed in the world and as a result finance and banking has become a strong contributor to the GDP.

The energy production industry accounts for 10% of GDP which is one of the highest shares of any industrialized nation. Although majority of UK GDP is from services, UK is the largest producer and exporter of natural gas to EU.

Increases in energy prices such as oil will significantly benefit the large number of UK oil exporters. This is important for forex traders as energy prices are positively correlated with GBP. Overall, UK is a net importer of goods with a consistent trade deficit.

The two main trading partners for UK are the EU and the US. The United States on an individual basis still remains UKs largest trading partner. However, the largest trading partner of UK is the EU. Trade between UK and EU accounts for almost 50% of UK imports and exports activities!

The leading exports markets for UK exporters are the United States, France, Germany, Ireland and the Netherlands. The leading import sources for UK are Germany, France, United States, Belgium and the Netherlands.

The possibility of Euro adoption will still be in the backs of minds of pound traders for many years to come. UK had rejected adopting Euro as its currency in June 2003. Now, if UK decides to join EMU, it will have significant ramifications for its economy.

One of the primary arguments used against adopting the Euro is that UK has sound macroeconomic policies that have worked very well for the country. The most important of these ramifications is the adjustment of UK interest rate with the Eurozone interest rate in case UK decides to join EMU.

Right now Brits are not in favor of a Euro entry. There are many arguments in favor of Euro entry and many against.UK is a highly political country with government officials highly concerned about the voter approval ratings. The voter opinion can change overtime. However, the likelihood of EMU entry will decline if the voters do not support Euro entry.

Bank of England: The monetary policy of UK is under the control of The Bank of England (BOE). BOE is the UKs central bank. BOE is one of the oldest central banks in the world. The Monetary Policy Committee is the nine member committee that sets the monetary policy for UK. The committee was granted operational independence in 1997. It consists of a governor, two deputy governor, two executive directors of the central bank and four outside experts. - 23210

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Understanding Forex Trading Sessions

By Ahmad Hassam

The currency pairs that are heavily traded during the Asia Pacific session are USD/JPY, EUR/JPY and AUD/JPY. The financial centers active during the Asia Pacific session are Wellington, Sydney, Tokyo, Hong Kong and Singapore. Currency trading volumes in the Asia Pacific session account for about 21% of the total daily global volume. Most of the transaction involves JPY as Japanese companies are trying to convert Japanese Yen into other currencies in order to do business with the rest of the world.

News and data reports from Australia, New Zealand and Japan are going to be hitting the market during the session. In terms of the move actively traded currency pairs during the Asia Pacific trading session this news and data affects their price action.

Much of the action during this session is focused on the Japanese Yen currency pairs because of the size of the Japanese market and the importance of Japanese data to the market. The Japanese financial centers are most active during this session so you can get a sense of what the Japanese market is doing based on price movements.

European trading session is very important for currency traders. European financial centers and London represent over 50% of the total global trading volume. European financial centers begin to open up and the market gets to its full swing about midway through the Asian trading day.

The forex market interest and liquidity is at its peak during the European session The European session overlaps with half of the Asian trading day and half of the North American trading day.

London is the global forex center with the highest volume of foreign exchange transactions. As a result some of the biggest moves and the most active trading takes place in the European currencies (EUR, GBP and CHF) and the euro cross currency pairs (EUR/CHF and EUR/GBP).

Because of the overlap between the North American and European trading sessions, the trading volumes are much bigger. Some of the biggest and most meaningful directional price movements take place during this crossover period.

The North American Session basically comprises New York and Chicago as financial centers. The North American trading session accounts for roughly the same share of the global trading volume as the Asia Pacific market, or about 22% of the daily global trading volume.

Most US data reports are released around 8:30 AM EST with others coming out later at around 9 AM and 10:00 AM EST. The North American morning is when US key economic data are released and the forex market makes many of its significant decisions on the value of USD.

There are some US economic reports that come out at noon or at 2:00 PM EST livening up the New York afternoon market. Canadian economic data reports are also released between 7 and 9 AM EST.

The London or European close can bring volatile flurries of activity. London and European financial centers begin to wind down their daily trading operations around noon eastern time each day.

Market liquidity and interest falls off significantly in the New York afternoon on most trading days. This is the best time for scalping as the market is moving sideways. Scalping is done when a trader enters and exits a trade within a few minutes in order to make just a few pips per trade. The ideal time for scalping is when the markets are moving sidways with very low volatility. On quiet days, the generally lower market interest typically leads to stagnating price action. This can make for challenging trading conditions but not for the scalpers. - 23210

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

What is Forex Leverage?

By Ahmad Hassam

Whats so special about Forex Leverage? Another feature of forex markets that differentiates it from other financial markets is the astronomical level of leverage that is commonplace in the forex world.

Some Forex brokers can offer up to 400:1 leverage on the average retail trading account. The usual level of leverage is 100:1. The implications of this are mind boggling. This means that $1 in a traders forex account can control up to $400 in a currency trade. No other financial market offers even close to this level of leverage.

Forex leverage can both be a very positive feature as well as a very negative one. Leverage is type of financial magnification by definition. Forex leverage is a double edged sword. While it is true that high leverage magnifies profits, it also magnifies losses equally.

High leverage of the magnitude found in forex trading can offer tremendous possibilities to the upside as well as the downside. However, you need to use it with a great deal of caution. This high level of leverage summarily wipes out otherwise healthy trading accounts often.

Stock brokers only offer leverage ratio of 2:1 on margin account. FCMs offer leverage of 10:1 to futures traders. But in case of forex trading, common leverage ratios offered by forex brokers range from 50:1 on the low side all the way up to 400:1 on the high side. The sheer magnitude of this leverage, even on the lows side, far eclipses, the amount of leverage available in other financial markets.

400:1 leverage is too much. Some forex brokers use it to entice new people who have never traded before. Never use this high leverage even if someone offers it to you on a silver platter. Suppose that 400:1 leverage is utilized by you. In practical terms, what this means to you as a forex trader is that a standard lot of $100,000 for example can be traded in EUR/USD currency pair with only $250 in trading account margin.

You must have seen many ads by forex brokers that say that you can start trading with as little as $250. You will be surprise that you only need $250 in your account to start trading. $250 in your forex trading account can control a trade of $100,000 using 400:1 leverage in this particular example. For every $1, you as a forex trader are in fact controlling a whopping $400 in other words.

The fact that a small amount of money can control a large amount of money in forex trading can certainly serve to magnify potential profits. But on the flip side of the coin, the amount of risk involved in using this high level of leverage is also equally magnified.

Leverage is required by aggressive traders who are willing to take risk. But most of the traders like you and me need to be balanced in their risk taking behavior. Highly leverage trading is aggressive trading that is both characterized by high risk and high reward potential. Therefore, it is advisable to use caution when trading with the substantial leverage common in forex trading.

Why too much leverage is dangerous? When the market moves in your favor, even a small movement in the market can be magnified many times by using leverage making large profits for you. But the dark side of using too much leverage is that when the market moves even a small amount against your position, your whole trading account can get wiped out.

What is the safe level of leverage that you can use in your trading? In the beginning, dont use more than 5:1 leverage in your trading. With experience, you can increase that level to 10:1 or 20:1 but this much leverage would always be sufficient for you. - 23210

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try 1500 Pips a day Forex Signals. Discover a revolutionary Forex Robot Trading System!

Currency Profile Of GBP (Part I)

By Ahmad Hassam

British Pound is also known as the Cable. The name most probably struck in the late nineteenth century and the early twentieth century. United Kingdom (UK) is the fourth largest economy in the world. UK has a service oriented economy with manufacturing representing a small part of GDP. Manufacturing is only equivalent to one fifth of GDP.

London is still the forex center of the world. New York comes after London in the daily market turnover in forex. The main reasons that London has a higher percentage of trade is that it has always been a financial center and also because of time zones. The London market starts between 7am and 8am, which is the end of the trading day for Asia. Just as the Banks in London are beginning to open at 8am they can deal with other traders in Tokyo, Hong Kong or Singapore whose trading day is just coming to a close. During the later part of the trading day in London, the US market opens up and so catches a healthy portion of that market as well. London Stock Exchange is still the second most important stock exchange in the world after the New York Stock Exchange. The British capital market systems are one of the most developed in the world and as a result finance and banking has become a strong contributor to the GDP.

The energy production industry accounts for 10% of GDP which is one of the highest shares of any industrialized nation. Although majority of UK GDP is from services, UK is the largest producer and exporter of natural gas to EU.

Trade deficit is an important economic indicator for determining the strength or weakness of a currency. Overall, UK is a net importer of goods with a consistent trade deficit. Increases in energy prices such as oil will significantly benefit the large number of UK oil exporters. This is important for forex traders as energy prices are positively correlated with GBP.

The two main trading partners for UK are the EU and the US. The United States on an individual basis still remains UKs largest trading partner. However, the largest trading partner of UK is the EU. Trade between UK and EU accounts for almost 50% of UK imports and exports activities!

The leading import sources for UK are Germany, France, United States, Belgium and the Netherlands. The leading exports markets for UK exporters are the United States, France, Germany, Ireland and the Netherlands.

The possibility of Euro adoption will still be in the backs of minds of pound traders for many years to come. UK had rejected adopting Euro as its currency in June 2003. Now, if UK decides to join EMU, it will have significant ramifications for its economy.

In case UK decides to join EMU, the most important of these ramifications is the adjustment of UK interest rate with the Eurozone interest rate. One of the primary arguments used against adopting the Euro is that UK has sound macroeconomic policies that have worked very well for the country.

UK is a highly political country with government officials highly concerned about the voter approval ratings. There are many arguments in favor of Euro entry and many against. However, if the voters do not support Euro entry, the likelihood of EMU entry will decline. Right now Brits are not in favor of a Euro entry. The voter opinion can change overtime.

Bank of England: The Bank of England (BOE) is the UKs central bank. The Monetary Policy Committee is the nine member committee that sets the monetary policy for UK. It consists of a governor, two deputy governor, two executive directors of the central bank and four outside experts. The committee was granted operational independence in 1997. - 23210

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Helpful Tips On How To Invest For Retirement

By Dana F. Gallagher

When you understand how to invest for retirement, you are well on the way to securing your financial security after your working days have finished. Feel secure in the knowledge that you have provided well for your retirement through careful and strategic financial planning while you were working.

The secret to knowing that you will be financially secure in retirement is vigilance; regularly checking that you have your money invested in the wisest and most productive way. Strategies need to change in line with your stage of life, so you need to keep up to date with what is available to suit your particular needs. A registered financial adviser is the person best equipped to help you continuously assess and tweak your investments.

There are numerous options for retirement investment, and in this short article it is impossible to mention them all. These tips will provide you with some basic information that you can then build on, to find the best financial vehicles to fund your retirement.

The most important aspect of investing for your retirement is to start; get started in some financial plan as early as you can. This will give you the best possible nest egg, as long as you continue to monitor the investment vehicle. The most common investment for people new to the workforce is a voluntary regular deposit into a retirement fund, which may also be contributed to by the employer. These employer matching programs, called 401K or 403B, are a great first step. The next step would be a Roth IRA because they offer tax-free investment and growth of assets.

Life insurance can be a useful investment tool to add to your financial plan, after the deferred tax options. Whole life insurance is an important investment when you have a growing family, but you may find that you don't need it when you get older. It then becomes a useful source of cash during your retirement; it is actually a good idea to have several cash sources during retirement.

Retirement investment strategies differ for a young member of the workforce and someone closer to retirement age. It makes more sense for an older worker to practise safe, or conservative, investing. These may include money markets, government or corporate bonds and fixed income investments. The main advantage in safe investments is the relative protection of your principal and the reduced risk to the value of your portfolio. The disadvantage is less return on your investment and a higher inflation risk.

Some of the other recognized retirement investments are mutual funds which invest your money, with that of other investors, in stocks and/or bonds; stocks which provide a great inflation-beating investment; cash which is one of the safest options but it can be eroded by inflationary trends; and ETF, an exchange traded fund, which, though similar to mutual funds, are usually cheaper. - 23210

About the Author:

Are you new to the stock market? You should really check out BeforeYouInvest.com. Before You Invest has advice on investing on topics from everything from investing your money online to retirement strategies for tough times.