Metal trading

January 25th, 2012

Forex is the international currency market. However, besides currencies there are other financial instruments traded on Forex. They are metals: gold, silver, platinum, etc.

The international market includes different types of metal operations: spot, swap, and forward deals, operations with derivatives (futures, options). If we are talking about Forex, we mean spot market as assets are not delivered to the purchaser. Metal trading is conducted using trading or web platform, so it does not differ from trading other financial instruments. Prices on the spot market depend on demand and supply, and buyer possesses proprietary rights as soon as he buys an asset.

goldsilverPrecious metals have dual character: they are both valuable industrial commodity and reliable investment instrument. Precious metals are considered by private and institutional investors to be instrument of speculation, hedging, and risk diversification.

The largest centers of metal trading are London, New York, and Zurich. The gold price is daily influenced by the fixing – estimation of equilibrium price based on the current demand and supply.

Compared to currencies, metals are also traded 24 hours a day, but one of the symbols in the pair is precious metal. Here are examples: XAU/USD for the gold/US dollar pair, XAG/USD for the silver/US dollar pair. Traditionally metal prices are quoted in the US dollars for troy ounce (31.1035 gram) and traded in lots. If the rate rises, it means that an ounce becomes more expensive and costs more US dollars. If the rate falls, the metal becomes cheaper against the US dollar.

The first place by trading volume is taken by gold. It is the safe haven for investors to wait out an economic turmoil.

The second place is taken by silver. It is cheaper but it can save its value. Sometimes silver price grows faster than the gold one.

As metal trading technique has small difference from the currency one, it does not require separate strategy. Methods of fundamental analysis and various technical indicators can be applied to metal trading. However, price of any financial instrument has its own dynamics. Precious metal market also has its ups and downs: metal prices are interrelated with the economical and political factors as well as the major currency rates. For example, Eurozone debt crisis has influenced the gold price: the precious metal price declined amid the euro rate plunge down. The gold price and the US dollar prices have invert correlation: growing concerns about the reserve currency force the gold price to rise, and when the US dollar strengthens, the gold price moves down. High volatility on the currency market can cause sharp movements on the metal market.

Nevertheless, investments in the precious metals are rather safe. During the crisis investors often choose gold or silver to keep their money safe.

Added by Svetlana Degtyareva,
InstaForex Clients’ relationship manager

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InstaForex Company Will Take Part in the ShowFx Asia Singapore Finance and Investment EXPO 2012

January 23rd, 2012

InstaForex international broker invites you to visit its stand at a Forex exhibition under the ShowFx Asia international exhibition brand. The event will be held in the luxury Suntec City exhibition center in Singapore on February 10-11, 2012.

Major brokers as well as banks, investment companies, dealing centers, software developers and education centers will take part in the Singapore Finance and Investment EXPO. Representatives of the Forex community will tell you about current intramarket trends, introduce innovative developments of Forex trading and present thematic books, etc. All guests of the Singapore Finance and Investment EXPO will be able to visit thematic seminars as well as held interesting conversations with other traders and Forex experts and take part in entertainments.Moreover, the company prepared a gift for every visitor of its booth in amount of $50 credited to the trading account. The lucky guests will get even more money to manage on the trading account! Do not miss the chance to receive InstaForex brand products and souvenirs prepared for all the present and potential customers.

InstaForex international broker is the primary sponsor of the Singapore Finance and Investment EXPO. At the exhibition the company will introduce you to its new services and present numerous advantages of trading with InstaForex. You will have a chance to meet young and welcoming InstaForex representatives and held informal conversations with them.

We look forward to meeting you at the ShowFx Asia exhibition in Singapore on 10–11 February!

Added by Kseniya Vedenko,
InstaForex PR-manager

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Is teamwork possible on Forex?

January 14th, 2012

Speaking about Forex trading efficiency, people often mention teamwork. Who is more efficient on Forex: individual trader or a team of traders working in a synch? Traditionally, every private investor is for himself on Forex. However, teamwork may vary a bit, being formal or informal. Traders have not agreed on teamwork efficiency though. Some say that a team is totally unsuitable on Forex while others find good reasons in defense of a collective mind. We will consider pros and cons as well.

Physiological aspects of team and individual trading are considered as the most controversial issues. Trading alone, you are alone responsible for your decisions which you do not need to coordinate with other traders. You spend on market analysis as much time as you deem necessary to make a trade. Still a possibility that you make a wrong decision is high. A man has limited capabilities, and provided that you are not enough skilled, a risk to lose is much higher.

komandaIn a team, responsibility is shared by its members both psychologically and econominally. A team collectively discusses a problem and elaborates a decision that will satisfy all its members. It does not annul risks though. Collective decisions may be even more risky than individual. It is again associated with psychology of teamwork: a team may overestimate the value of a profitable trade and underestimate the risk of losing. Working as a team, people normally tend towards positive risks. Moreover, members may confide decision-making in their experienced co-member or leader thus decreasing efficiency of collective work.

Fortunately, a team may incorporate different people with different skills who can provide together a comprehensive evaluation of challenges. In addition, a total capital of a team is generally more that a capital of an individual trader.

A sort of hierarchy is recommended even for informal teams. Members should share coordinated purposes rather than seek personal profits. The main challenge is time which is required more to make a collective decision, especially when members disagree. But a team may have a formal or informal leader with a decisive vote. Team members can also set certain limits and divide scope of activity.

There is no categorical answer on whether it is better to trade on Forex alone or in a team. Nevertheless, most traders agree that if you work in a team, you should better make sure that your team consists of professions only who know their business and can follow rules.

Added by Kristina Leshkevich,
InstaForex Clients’ relationship manager

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