Corporate Profits Buoyed by Forex Gains

While the American economy is sputtering, US corporations are earnings record profits and stock market capitalization is soaring. These seemingly contradictory trends are being driven by the decline in the USD. Multinational corporations, especially those based in the US, are conducting a growing portion of their business abroad and subsequently, their foreign sales are booming. When corporations convert these profits from the currencies they are booked in back to USD, on which their financial statements are based, they are realizing the equivalent of a 5-10% bump from foreign exchange gains. Many of these companies are web-based, such as Yahoo, Amazon and eBay. Ironically, as the economy sags, betting on these types of companies may be akin to a bet against the USD.

Warren Buffet Returns to Forex

Two years ago, Warren Buffet made headlines when he entrenched a $20 Billion dollar bet that the USD would decline in the near term. Unfortunately for Mr. Buffet, who happens to be one of the world’s most respected investors, the Dollar had a great year, and Buffet lost almost $1 Billion. [However, over the course of the bet, which actually began three years prior, his company, Berkshire Hathaway, reputedly pocketed over $2 Billion]. Now, after a long hiatus, Buffet is returning to forex markets, though with much coyness; he has not announced explicitly which currency he is betting on. Analysts have varying opinions, with some speculating that he is shoring up his bet against the USD, while others anticipate a bet against the Yen, which is vastly undervalued, from a fundamental economic standpoint. Regardless, the markets are sure to take notice of someone of Buffet’s stature. The Financial Times reports:

Perhaps the most surprising call for him would be to reverse his stance on the dollar. Paul Mackel, currency strategist at HSBC, says it is possible that Mr Buffett thinks that US economic growth could accelerate, and has bought the currency.

Saudi Forex Reserves Reach $250 Billion

By some measures, Saudi Arabia’s reserves are the fastest growing in the world. The country’s reserves recently crossed the $250 Billion threshold, and are now growing at a pace equivalent to nearly 40% per year. The source of the reserves should be a mystery to no one: oil. Oil prices have surged over the last five years, bestowing a windfall of profits to the entire Middle East region. Plus, as summer gets underway, oil prices are sure to climb further, which will ensure continued growth in Saudi forex reserves. Fortunately for the US, the majority of the world’s oil contracts are settled in USD, which means the boom in oil prices has actually stabilized the USD, despite its contribution to the US trade deficit. In addition, Saudi Arabia is one of the world’s most reliable investors in US capital markets, which means Dollar bulls can breathe a cautious sigh of relief that reserve “diversification” will probably be given short shrift by the Sauds.

Asian Nations Form Forex Bloc

The leaders of 13 Asian nations recently agreed to pool part of their combined $2.7 Trillion in forex reserves to create a safety net of sorts, which would protect any and all of the member countries in the event of a currency crisis. The move stems from the 1997 Southeast Asian economic crisis, in which several Asian economies summarily devalued their currencies and were forced to enter into burdensome agreements with the International Monetary Fund. The bloc also announced that it would continue preliminary discussions over the possibility of a common Asian currency. However, this is probably still at least a decade from coming to fruition. Xinhua reports:

“A relatively modest proposal for a currency index comprising a weighted basket of regional currencies has been bogged down in wrangling.” Officials from the ADB now agree the proposal of a single currency is "many decades from being viable."

On Forex PIPs and Brokers

PIP is simply Price Interest Points. In the Forex market, currencies are always priced in pairs. The quoted price is the level where we, acting as the market maker, are willing to buy/sell the currency pair. In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one /10,000th of an exchange rate (in USD/JPY, it is one /100th, likewise you can find for others).

Let’s see some more information about Spread. As with all financial products, Forex quotes include terms like 'bid' and 'ask”'. The 'bid', in its simplest terms is the price at which a dealer is willing to buy (and clients can sell) the base currency in exchange for the counter currency. The 'ask' is the price at which dealer will sell (and clients can buy) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread. The spread defines the trader’s cost, which can be recovered with a favorable currency move in the market. The value of a pip is determined by the pair of currencies being traded, the rate at which the currency pair is trading and the size of the position being traded.

There are many great Forex brokers, and most of them maintain tight, competitive spreads in the four major currencies against the Dollar, and a total of 17 currency pairs including USD/CAD and AUD/USD. Some of the major features almost all brokers are:

• Real-time streaming prices
• Price certainty on market orders
• Competitive pricing
• Fixed 3-5 pip spreads

Sending signals for trading in forex

Forex signals are sent by a certain firm to their subscribers in order to buy and sell currencies. These signals are called entry and exit signals for the dealers. The firms, which send this signal, do so after deep and thorough research and analysis about the currencies that their dealers are trading in. If for example a firm sends the entry and exit signals at designated time frames in real time - These will remain valid for a short period only and after which they are going to be different.

Let's say that there is a forex trading company who send entry and exit signals to their clients in the following way:

The first signal is provided to the trader at 08:30, and this signal is going to remain actual till 12.30. The trader will receive the second signal at 12.30, which would remain actual till 16.30.
The last signal would be sent to the trader at 16.30.
The transactions are given according to GMT. Please adjust for local time changes. The transaction shall be calculated till the signal is actual. The charges would be $300 per month per trader.

Forex dealers and experts provide trading information and data to both institutional clients and individual investors and provide these signals. Investors like to subscribe to credit worthy dealers/companies since their information and data would be genuine and more accurate. In fact many dealers would kill to get information before the rest of the market gets the same information. As dealing is a very competitive business.

Forex tips: OPEC raises the bar up to $60.47 per Oil barrel

Here are some hot forex tips and recent news: The past week people all over the world were with their hand on the pulse waiting for a formal decision from the Organization of Petroleum Exporting Countries.

While the Oil prices where volatile due to the new OPEC cartel’s output policy,

Contradicting Algerie Presse Service last weekend rumors about OPEC reducing output approximately 4 percent with possibility to rise up to 24 percent decline.

After optimistic quote by Mike Fitzpatrick at Fimat, USA saying "may be enough to discourage aggressive near-term selling”, this November crude delivery stands on $60.47 per barrel in electronic trading on the New York Mercantile Exchange - a 71 cents rise.

However, and here are some important forex tips, for the long-term view, apparently before the end of the year, the OPEC would trim their outputs as global inventories rise and economic growth slows,

Already now majority of OPEC states support a voluntary decline in mid-December at an assembly in the Nigerian capital of Abuja after Nigeria and Venezuela willingly began reducing their oil production by a combined 170,000 barrels per day.

Joseph Capurso, an analyst with Commonwealth Bank of Australia in Sydney said "The market's been toying for a while with whether OPEC will or will not cut production but whether or not it happens, the world economy is strong, so that will put a floor under prices -- there isn't a concern that U.S. oil consumption is going to fall into a hole."

The impact of News on FOREX

News are the foundation stone of the fundamental analysis. Any market is influenced, in one way or another, by news and other economic indicators. The forex is the most allergic to news, especially for short term movements, due to the fact it is open almost 24 hours a day (from 5pm EST on Sunday until 4pm EST Friday). Traders should pay attention to news from all over the globe (the market responds not only to US news). With no less than eight major currencies and approximately 17 derivatives, there is always a news release in any given time, which can be used to predict a certain movements in a specific currency. Each day there are at least seven important information releases that affect the eight major currencies (USD, EUR, GBP, JPY, CHF, CAD, AUC and NZD) and all the currency combinations you can assemble with them, a fact which creates a lot of opportunities for the forex news-trader.

It is important for any fundamental trader to know which of the news releases are the most significant to the forex user and the timing of their release (time is a huge factor in trading). The currency combinations are so wide that they cover the entire globe; a trader can choose his investment and pay attention to that particular currency economic news. Take my advice and always pay attention to the US economic - 90% of forex trades involve the USD.

For conclusion, after choosing the pairs you’re about to trade, make sure to find out which news and economic reports has an impact on your investment. Trading news is not as simple as it may sound; the forex market reacts to other factors as well and in some cases they can overcome the news' influence.

Forex tips: smart money management

The foundation stone for success in forex trading is smart money management. Realizing and knowing how to do that is what spread the kids from the big boys. The wise way to make a huge profit is by managing you trades in a way that you’ll invest only around 1-2 percent from your main capital. It will take time but in the end you’ll see that all your small profits sum up to be twice or even three times the size of the amount you started with. Novice traders usually think that the forex

market is a magic-market where you invest a lot of money in one trade and made a fortune in a few days or even hours. Yes, you can do that, and maybe you’ll even profit in the first time, but in less of a week you’ll loss all of your main capital. When dividing your funds into a couple of trades it is very important to use stop-loss and limit-orders to look after and observe your investments.

Expert FOREX trader always use the stop loss

All forex traders or at least most of them, in my opinion, have some minor ego issues. Each trader will enter a trade without blinking twice, but when it comes to determining when he should execute the deal for profit or in purpose to cut loses, they’re having a problem. Every trader should know when to place their “stop loss” without hesitations. There are a few common methods of choosing where to place the stop loss order such as Fibonacci and Support and resistance

If you choose to define your stop loss level by using the support or resistance system, you should first decide to go long or short. If you choose long you should place your stop beneath the closer support point. If you decide to go short you should place you order higher than the closet resistance level.

Forex traders who prefer the Fibonacci system for placing the stop-loss need to initially calculate the move. For example if the EUR/USD moved from 116.84 to 118.51, meaning we have three retracing levels at 117.87 (38.2%), 117.67 (50%) and 117.48 (61.8%). According to this example you have entered the trade at 117.80 and your stop loss should be at 118.45.

There are many more methods that can help you decide where to place your stop-loss, but these are the two of the most common. While trading the forex you can use more than one system for placing the stop-loss order. Only by testing all the different systems in different situations you’ll know which one fits and when. I recommended testing those methods in a demo account first, tolerance is worth money.