Posts Tagged ‘Trading’
Five years ago, InstaForex team created online InstaForex TV, a large-scale information resource devoted to the forex market. Thanks to InsatForex TV, thousands of traders around the world become aware of newsworthy economic events.
For the five years, journalists of InstaForex TV have presented a great number of news bulletins and analytical surveys, visited the largest global financial hubs, and interviewed noted traders and forex experts in Europe and Asia. InstaForex TV provides only fresh and reliable information on the forex community. Every day, the team of professional analysts works at surveys and forecasts to help you recognize the right trend. So, tune in InstaForex TV and you will be always well-informed on important events of the financial world.
Before assessing risks on the oil market in connection with the possible hostility escalation in Syria, it is important to understand the extent of influence that Syria has on the worldscale crude market. So, Syria yields a rather modest oil output; this Middle Eastern country accounts for just 0.2% of the world oil production. Since the local armed conflict started between the ruling authorities and opposition, the Syrian oil supplies to the world market have come to a full stop. Therefore, if the local hostility does not swell over the whole Middle Eastern area (however, it could take place only in case a third party, such as the NATO, the US, Russia interferes into the civil war) the world market will take no notice of the missing tiny 0.2% out of the total supplied volume. However, everyone is wondering what will happen to oil prices in case the situation takes a turn for the worse and the conflict spreads over the Middle East. In fact, all Middle Eastern
countries accommodate the sound one third of the total world oil market but not a futile 0.2%. A vast majority of analysts, economists, and market players expect the world oil prices to climb inevitably in case of the armed conflict escalation, but this increase will not be so huge to shake the market. The first thing, oil prices are not supposed to surge as they have already been expensive. Oil prices are expected to rise a bit, but not to rocket. Moreover, market participants consider that the valuation of crude oil at about 150 USD per barrel is hardly feasible even in case of the worst scenario in Syria and around the Middle East. What comes next? If the US decide to enter into the clashes, that slight oil prices
increase will not last for long and then the world oil prices will reverse to pre-conflict period again. It is worth recalling the oil market experience during the allied combat operations in Iraq, Libya, and Egypt when the hostilities just started, oil prices were displaying an upward trend but in the course of the combat operations oil prices reverted to the previous level gaining just a minor growth in the range from $3 to $7 per barrel. The reason of such oil prices “tranquility” is caused by the situation that nowadays the world oil market has enough reserves for an offset against any losses during supplies. The OPEC officials have announced that if oil prices start growing the OPEC countries will get involved promptly in the market regulation by means of enhancing supplies. According to the top OPEC management, at the present day high oil prices are not to the advantage of anyone. The USA hinted that no one should expect oil prices surge in case it enters the war against Syria. The US President’s administration worked out a plan according to which when oil prices exceeds the threshold of $120 per barrel, the US will release the national petroleum reserves that will calm down the market immediately. One more thing. The International Energy Agency (EIA) has already made a step-by-step plan of monitoring the oil discharge by the western countries from their stocks.To sum up, it is certain that the world oil market is ready to any course of events. The strategic oil inventories of western countries and the OPEC countries are capable to replenish any oil delivery interruption on the market. But the most essential is that nowadays oil prices growth is not to the advantage of anyone. If, for example, oil prices growth played into the hands of the USA, the oil bull rally would be much more exciting. However currently, all market participants including Russia are not planning any bull deals playing on rising oil prices.
Before answering this question, it is necessary to give definitions of the terms. Stock trading means buying and selling securities on stock exchanges. One of the purposes of the trades is gaining speculative profit. Today most of online trading on global stock markets is conducted by retail traders.
In order to trade stocks, a trader opens and replenishes his trading account with a brokerage company, which provides access to markets. A broker holds agreed commission from his client’s trading account for its services.
Depending on the size of the deposit, the expected schedule, and personality traits, a trade chooses and then tests his trading strategy on a demo account. It involves transactions of a given size on a particular stock market, with certain trading instruments and conditions of closing positions.
- Trades on stocks are carried out on special software – trading platform, which sends the order to a broker to buy or sell an asset. A trading platform has all the necessary functions for trading. In addition, it enables you to track stock quotes and analyze the current market situation through various software applications (indicators, oscillators).
For successful stock trading you should understand the way financial markets function, have the skills of technical and fundamental analysis, as well as experience in demo account trading. Trading requires constant self-monitoring and self-improvement, but finally can result in a job satisfaction and a significant income.
Each trader has his personal approach to the situation on currency market and his own trading methods and trading system. Each one chooses the strategy that to his mind is the most effective. As a rule, the opinions of traders on that subject are different.
But today we will focus on the most popular strategy appreciated by traders all over the world.
Carry trade is the trading method based on the difference between low-yielding and high-yielding national currencies. The main principle of the strategy is to purchase a currency yielding a lower interest rate and sell it at higher interest rate. In other words, you open a position with a large swap point trying not to close it as long as possible in order to get a maximum profit with the help of swap points.
The bigger the difference between the interest rates of currencies in your pair is, the bigger is the size of swap points. Therefore, you should choose currencies with the biggest difference in interest rates. The most popular currency pairs are AUD/JPY, NZD/JPY, and GBP/CHF.
You can get the necessary information on exchange rates any time. The detailed information can be easily found on the websites of central banks and Forex-brokers.
As any other trading strategy, Carry trade has its own peculiarities. Firstly, in order to gain profit you should use the large initial deposit and keep a position open as long as possible. Secondly, the interest rates are subject to fluctuations. They can change sharply which is quite risky.
Thus, in order to use the strategy Carry trade successfully, it is crucial to follow the changes of exchange rates and focus on long-term trade. In this case patience is the key to successful trade.
Added by Andrey Misyuk,
InstaForex Clients’ relationship manager