My inbox is full with emails of investors asking about Forex trading, its working, its strategies; in short, the basics. Hence, I decided to post few articles that can be quite informative and helpful for beginners. Initially, when investors know about Forex market, they are quite excited to trade in. However, it’s important to realize that this market is very intricate and can take away your shirt. Hence, learning is most significant aspect before investing even a penny in Foreign Exchange market. You will have to hire a broking service to invest money in Forex. But don’t fret because there are numerous brokers waiting for you to approach them. However, you need to conduct some research before selecting any of them. Spreads The commission a broker gets is based on spreads. Alright, let’s first learn what spread is. The difference between buying and selling price of any currency  [...]

With technology advancement, almost any can now start earning – or losing – through forex trading. If you need one, there are thousands of forex trading tips given by experts on blogs, internet, television news, and newspapers daily. This shows the popularity and craving of forex trading among world population. In short, a privilege once enjoyed by bankers and high net worth individuals is not accessible to everyone. However, are you among those who are still searching a reason to start forex trading? Okay, may be something kept you away from it. However, here are few reasons that are more than enough for any one to start foreign exchange or Forex or FX trading. You will be a part of world’s biggest financial market FX is nothing but trading in currency. A person X, for instance, will buy some dollars by paying some pounds. However, unlike stock markets, FX market is not limited  [...]

On Monday dollar declined on the back of St. Louis Fed president James Bullard’s comment that strengthened the expectation that US interest rate are likely to remain low for some time in future. James Bullard commented that the Fed should continue with its mortgage-related assets purchase program to stimulate the economy which investors took as an cue that the easy monetary policy will continue. Low US interest rates reduces returns on U.S. investments prompting investors to branch out of the dollar and hold other riskier currencies and assets with higher yields. Also gains in stock market and increase in gold and oil prices also undermined the position of dollar. With investors looking for an alternative investment to a declining dollar, gold prices increased to a record high of $1,174 an ounce. Gold is considered to be a hedge against the dollar because of its property of being a stable  [...]

On Friday dollar again increased as investors showed preference for dollar against riskier assets like  stocks. The dollar index which measures dollar against a basket of currencies increased by 0.6% on Friday to 75.720. The euro declined by 0.5% to $1.4838 after reaching a two-week low of $1.4800. Against the yen the dollar was unchanged at ¥89.08. The sterling declined by 1% to $1.6483 and the Australian dollar declined by 0.9% to $0.9111. Against the Swiss franc dollar increased to 1.0182 Swiss francs from 1.0133 francs and against the Canadian dollar increased to 1.0714 Canadian dollars from 1.0626. The dollar has been helped in the entire week by weak economic data. Last week government released data showing that the jobless claims continues to be high and foreclosures are increasing. Weak economic data helped dollar as investors reduced their holdings of risky assets like stocks  [...]

Maybe just a small blip in dollar’s downward slide but definitely worth noticing. The dollar on Tuesday  rebounded from its 15 month low on Monday. Looks like Federal Reserve Chairman Ben Bernanke comment in favour of strong dollar helped the currency as traders trimmed longer-term bets against the currency. On Monday Bernanke commented that the Fed is very much looking into the implications of changes in the value of dollar as US interest rates reach rock bottom levels. This was interpreted by traders as an indication that the Fed is worried about the current depreciation which can increase inflation in the economy. European Central Bank President Jean-Claude also came in support of the dollar. He clearly mentioned that a strong dollar is in the U.S. interest and that there are no plans for euro to act as a reserve currency in the near future. The impact of this interpretation was  [...]

Lot of factors were responsible for dollar’s downward slide on Monday. Like before Fed Chairman Ben Bernanke’s comment that interest rates will continue to be low as the economy shows some signs of recovery was the most important factor in pulling the dollar down. Also lack of agreement between Asian and US leaders on currencies was taken as a signal by traders to sell the dollar. The United States and China leaders had met at the Asia Pacific Economic Cooperation (APEC) forum in Singapore to discuss currencies. However they failed to come to an agreement which was taken by traders as an indication that the dollar’s downward trend will continue and that the US interest rates will continue to be low while interest rates in other countries may eventually increase. In search of better return investors normally transfer funds to an economy with higher interest rates. Other economies  [...]

Wednesday was a day full of action with lot of economic announcements being made. Obviously it turned out to be a mixed day for super sensitive dollar with dollar initially losing ground and falling to 15 month low and then gaining. Dollar index which measures the value of dollar against a basket of currencies first fell to a 15 month low of 74.775 and later in the trading day increased to 75.130.The dollar increased by 0.2% against the Euro to $1.4961 later in the trading day after hitting a low of $1.5048. The dollar gained against yen to 89.84 Japanese yen from 89.77 yen. Against Swiss Francs dollar increased to 1.0086 Swiss francs from 1.0081 Swiss francs but declined against Canadian dollar to 1.0463 Canadian dollars. There were lot of factors responsible for dollar’s dilly dally run on Wednesday. First of all Chinese government in a report  announced that its factory output has  [...]

Finally some good news for US dollar. After hitting 25-month low on Monday the dollar rebounded on Tuesday and registered an increase against major currencies. However the currency still remains weak as investors expect interest rates to remain low. The dollar index which measures dollar’s performance against six major currencies increased by 0.2% to 75.18 midway through the trading day. On Monday the index had fallen to a low of 74.93 which was also its weakest level since August 2008. Tuesday’s gain in dollar was expected as investors felt that the Monday’s fall in the currency was too much and too fast without any fundamental reason. Analysts also are of the opinion that the investors don’t have any reason to sell dollar any further after its recent falls. Dollar gained maximum against Sterling on Tuesday. Sterling lost ground on Tuesday after Fitch commented that among the  [...]

The recent decline in the value of dollar has again put the dollar in the line of fire as a reserve currency. Currently the United States Dollar is the most widely held reserve currency in the world. What is a reserve currency? A reserve currency or anchor currency is a currency which is held in significant quantities by many countries in their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market such as oil and gold. Holding the reserve currency permits the holding country to purchase the commodities at a marginally lower rate than other nations, who must exchange their currency with each purchase and pay a transaction cost. It also permits the government holding the currency to borrow money at a better rate, as there will always be a larger market for that currency than others. Currently with an average of two thirds  [...]