Forex and State Regulation

January 9th, 2013
Forex is based on free currency conversion; it presupposes a state does not interfere in foreign exchange transactions. Nowadays, there is no fixed exchange rate as there are no restrictions on volume of transactions.

However, some countries establish special rules for brokerage firms. First of all, these rules apply to relationships between brokers and clients.

Financial Services Authority (FSA) exercises control over financial markets in the United Kingdom.

Commodity Futures Trading Commission (CFTC) regulates futures and option markets in the United States. National Futures Association (NFA) is an independent self-regulatory organization and watchdog of the commodities and futures industry in the United States. The NFA elaborates trading rules, conditions for brokerage service, and also provides mediation and arbitration for resolving consumer complaints. Besides, the association collects and analyses reports obligatory provided by brokers and its members.

The Central Bank of the Russian Federation exercises control over the exchange transactions in Russia. However, Russian legislation does not make provisions for free unlimited currency conversions.

Rejuvenating the Economy – Quantitative Easing (QE)

December 28th, 2012

Fundamental and Technical analyst alike are employing news to guide their trading decisions. Though their degree of usage may vary, it’s better for beginner traders to familiarize themselves with terms that are usually found within the news. Quantitative Easing for one.

Quantitative Easing is an unconventional monetary policy used by central banks to induce support on an economy. It is a stimulant aimed to assist an economy if in case it is in an unfavorable state. The concept behind it is that additional money will flood the market which will give the economy a push by by promoting an increase in lending and liquidity.

It is often carried out by buying financial assets from commercial banks and other private institutions with the newly created money to induce a specific amount of money in the economy.

At present, the world has already witnessed the said boost for three times already. First was during the time of George Bush back in 2008 wherein $500 billion was initially spent on mortgage backed securities. An additional $750 billion was made during the time of Barack Obama’s first term. By June of 2010, $2.1 trillion worth of assets was already bought by the bank.

The second round was demonstrated in 2010 when Federal Reserve provided $600 billion for long-term government bonds. Some claim that this effort was put in vain because the money just ended up in EU’s foreign reserves.

The third was the most recent. The buzz started when Ben Bernanke, chairman of the Federal Reserve in America, had announced last September 14,2012 that the third round of the quantitative easing will be given for the $40 billion a month bond purchasing program and also to continue the very low rates policy.

Though the unconventional way boosted the economy at first, its effect is dwindling as years passes by. Doubts and debates regarding its effectiveness arose from every corner and some became pessimistic about it. The previous rounds taught traders that they should perceive the possible chain reactions that the third easing will produce rather than just the short term effect.

Stephen Stevenson

Dr. Alexander Elder: psychiatrist in trading

December 19th, 2012
Alexander Elder, one of the greatest specialists in the field of finance, was born in USSR. He graduated from the medical university and when he was 23 in 1974 he emigrated to the U.S., where he lives to this day. Today, Dr. Elder is professional trader and a recognized expert in stock trading, who wrote numerous articles on the subject. He worked as a psychiatrist and taught at Columbia University. In addition, Alexander is an author of several books about stock trading, which received a lot of good appraisals. From there he made his name as one of the most reputable experts in stock trading. It all started with a KinderCare share which he bought at the beginning of his trader’s path.

As a psychiatrist, Dr. Elder is well versed in the intricacies of the human mind, so it could not but influence his understanding of trading. He sees not only the deal details, but the personal attitude of traders before, during, and after the deal. It is of key importance that he successfully applies his knowledge to explain market behaviour.
According to Alexander Elder, there are three types of traders:
  1. The trader who is technically literate but has no skills on analyzing the motives of behaviour.
  2. The trader who realises that technical knowledge is not a guarantee of success. Elder calls this the awakening of a psychological understanding with respect to stock trades.
  3. The trader who understands that successful trading requires control and money management. Rather than letting statistics move him, it is money management and control that causes him to anticipate future positions.

Bright personality and wide experience enabled professor Elder to write a range of best-selling books that won the world’s hearts and minds. Elder’s books “Trading for a Living” and “Come into My Trading Room – A Complete Guide to Trading” are the classical trading tutorials. In 1993 “Trading for a Living” became an international business bestseller which was translated into 9 languages, including Chinese, Dutch, French, German, Japanese, Korean, Russian, and Polish. Elder’s “Trading for a Living” won Barron’s Best Book award in 2002. Dr. Elder takes an active part in free educational projects, which he initiates himself, and also trains the younger generation through his webinars available on the Internet.

In conclusion, Alexander Elder said:

The fear – the main problem for the trader. If you have everything you need – the system of the game, the rules of capital controls, the psychological rules prevent loss, it means it’s time to play the market”.

Why Do We Need Forex Economic Calendar?

December 12th, 2012

The stage of your professional development does not play a significant role. If you are engaged in the work on the international currency market the economic calendar will be an irreplaceable tool for trading. There is no doubt that it is used by different traders to a greater or lesser extent. However, those who take into account fundamental analysis cannot manage without Forex economic calendar.

Firstly, the calendar contains detailed timetable of the macroeconomic data. As a rule, it provides information pertaining to the previous, expected, and current figures of the indices. Economic data has considerable influence on price fluctuations. That is why information presented in the calendar may help to elaborate the most profitable trading strategies. Due to the calendar you can change your trading strategy. Moreover, market data updates in real-time.

Thus, using Forex economic calendar you get the possibility to react timely and immediately to major affecting the international currency market.