Foreign Exchange Trading
Foreign Exchange Trading or FX Trading, clients are able to hedge against, or speculate upon, changes in the exchange rate of two currencies. For example, a speculator can long EUR/USD in foreign exchange market in order to profit from capturing the appreciation of Euro against the U.S. Dollar. Foreign exchange services provide an opportunity for clients to trade FX. Foreign Exchange Trading is done on the foreign exchange market.
Foreign Exchange Spot Trading
Foreign exchange spot trading is buying one currency with a different currency for immediate delivery, rather than for future delivery.
The standard settlement timeframe for Foreign Exchange Spot trades is T+2 days; i.e., 2 days from the date of trade execution. A notable exception is the USD/CAD currency pair which settles T+1.
Foreign Exchange Reserves
(also called Forex reserves) in a strict sense are only the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve positions. This broader figure is more readily available, but it is more accurately termed official international reserves or international reserves. These are assets of the central bank held in different reserve currencies, such as the dollar, euro and yen, and used to back its liabilities, e.g. the local currency issued, and the various bank reserves deposited with the central bank, by the government or financial institutions.
Foreign Exchange Option
In finance, a foreign exchange option (commonly shortened to just FX option or currency option) is a derivative financial instrument where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.
The FX options market is the deepest, largest and most liquid market for options of any kind in the world. Most of the FX option volume is traded OTC and is lightly regulated, but a fraction is traded on exchanges like the International Securities Exchange, Philadelphia Stock Exchange, or the Chicago Mercantile Exchange for options on futures contracts. The global market for exchange-traded currency options was notionally valued by the Bank for International Settlements at $158,300 billion in 2005.
Foreign Currency Control
Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.
Common foreign exchange controls include:
a. Banning the use of foreign currency within the country
b. Banning locals from possessing foreign currency
c. Restricting currency exchange to government-approved exchangers
d. Fixed exchange rates
e. Restrictions on the amount of currency that may be imported or exported
Countries with foreign exchange controls are also known as "Article 14 countries," after the provision in the International Monetary Fund agreement allowing exchange controls for transitional economies. Such controls used to be common in most countries, particularly poorer ones, until the 1990s when free trade and globalization started a trend towards economic liberalization. Today, countries which still impose exchange controls are the exception rather than the rule.
Foreign Exchange Committee
Founded in 1978 the Foreign Exchange Committee is an industry group that provides guidance and leadership to the global foreign exchange market. The FXC includes representatives of major financial institutions engaged in foreign currency trading in the United States and is sponsored by the Federal Reserve Bank of New York.
Past Committee members include:
John Spurdle of JP Morgan,
Jeff Feig of Citigroup,
Lloyd Blankfein of Goldman Sachs,
Paul Kimball of Morgan Stanley,
Michael deSa of Deutsche Bank,
Robert Savage of American Express,
Mark De Gennaro of Lehman, and John Key,
The incoming prime minister of New Zealand.
source: wikipedia
February 06, 2009
Know the Forward Exchange Market
The forward exchange market is a market for contracts that ensure the future delivery of a foreign currency at a specified exchange rate. The price of a forward contract is known as the forward rate.
Forward Rates
Forward rates are usually negotiated for delivery one month, three months, or one year after the date of the contract's creation. They usually differ from the spot rate and from each other.
What determines the forward rate?
If there is no government intervention on the value of a currency, the forward market will be governed by supply and demand.
In such a case it is possible that the forward rate provides information on the future spot rate, but ultimately uncertain. What is certain is that the forward rates reflect the expectations forward market participants have on the changes of the spot rate during the specified interval. If the forward rate and the spot rate are the same, forward market participants do not expect much change in the price of a currency over the given period of time.
Forward contracts can be used to hedge or cover exposure to foreign exchange risk.
Forward Rates
Forward rates are usually negotiated for delivery one month, three months, or one year after the date of the contract's creation. They usually differ from the spot rate and from each other.
What determines the forward rate?
If there is no government intervention on the value of a currency, the forward market will be governed by supply and demand.
In such a case it is possible that the forward rate provides information on the future spot rate, but ultimately uncertain. What is certain is that the forward rates reflect the expectations forward market participants have on the changes of the spot rate during the specified interval. If the forward rate and the spot rate are the same, forward market participants do not expect much change in the price of a currency over the given period of time.
Forward contracts can be used to hedge or cover exposure to foreign exchange risk.
Shares of Bankrupt Firms?
Buying the shares of a bankrupt firms
Business failures have been running at high rates, and that's a shame. But many investors are finding bargains in bankrupt firms.
They buy up the stocks and bonds of big, bankrupt corporations at distress prices. These speculators hope that the companies will come out of their court-directed reorganizations slimmed down and comparatively dept-free, and that the increased value of their securities will amply reward investors for the steep risks they are taking. Investors' eye glisten at memories of the huge fortunes that were made on such bankrupt companies of the past. Of course, there are investors in bankrupt firms have lost considerable money.
So, bankruptcy investors tend to stick with secured dept. At times they will venture further down the pecking order to buy preferred or common stock. But usually they will do that only after a company has just come out of reorganization, shining with such virtues a clean balance sheet, an accumulation of tax losses that can be carried forward to offset future earnings and a talented management with definite ideas about where it's heading.
Investing in bankrupts is not for the faint of heart or short of pocket. Even situations that look promising often do not pan out. Since the bankruptcy investment game is dominated by the professionals, it would be foolhardy to sit in without coaching from the experts at a brokerage house.
Example:
David Howard Murdock
(born April 10, 1923)
Is an American businessman. Forbes estimates he is the 214th richest person in the world, with a net worth of 4.7 billion US Dollars. A high-school dropout, Murdock was drafted by the U.S. Army in 1943.
In 1985 he took over the nearly bankrupt Hawaiian firm Castle & Cooke, which owned pineapple producer Dole Food Company. He developed Castle & Cooke's real estate portfolio into residential and commercial properties and turned Dole into the world's largest producer of fruits and vegetables.
Dole has generated "negative free cash flow (defined as cash flow from operations less dividends and capital expenditures) annually since 2005, the company remained free cash flow negative during the first half of fiscal 2008"
(Fitch Ratings, July 30th 2008).
source: wikipedia
Business failures have been running at high rates, and that's a shame. But many investors are finding bargains in bankrupt firms.
They buy up the stocks and bonds of big, bankrupt corporations at distress prices. These speculators hope that the companies will come out of their court-directed reorganizations slimmed down and comparatively dept-free, and that the increased value of their securities will amply reward investors for the steep risks they are taking. Investors' eye glisten at memories of the huge fortunes that were made on such bankrupt companies of the past. Of course, there are investors in bankrupt firms have lost considerable money.
So, bankruptcy investors tend to stick with secured dept. At times they will venture further down the pecking order to buy preferred or common stock. But usually they will do that only after a company has just come out of reorganization, shining with such virtues a clean balance sheet, an accumulation of tax losses that can be carried forward to offset future earnings and a talented management with definite ideas about where it's heading.
Investing in bankrupts is not for the faint of heart or short of pocket. Even situations that look promising often do not pan out. Since the bankruptcy investment game is dominated by the professionals, it would be foolhardy to sit in without coaching from the experts at a brokerage house.
Example:
David Howard Murdock
(born April 10, 1923)
Is an American businessman. Forbes estimates he is the 214th richest person in the world, with a net worth of 4.7 billion US Dollars. A high-school dropout, Murdock was drafted by the U.S. Army in 1943.
In 1985 he took over the nearly bankrupt Hawaiian firm Castle & Cooke, which owned pineapple producer Dole Food Company. He developed Castle & Cooke's real estate portfolio into residential and commercial properties and turned Dole into the world's largest producer of fruits and vegetables.
Dole has generated "negative free cash flow (defined as cash flow from operations less dividends and capital expenditures) annually since 2005, the company remained free cash flow negative during the first half of fiscal 2008"
(Fitch Ratings, July 30th 2008).
source: wikipedia
Stock Market Tips
Do you want an Inside Tips on the Stock Market?
Tips are most likely the trend others need before starting of any kind of business, most likely on stocks. Well then, watch for those times when high executives buy or sell shares in the company they work for. Information on such insider trading is easy to find and simple to use.
When officers of the company trade its stock, they often know something you don't know, and their deals have to be reported to the Securities and Exchange Commission. When they buy a lot of their own stock, it usually does much better than the market averages.
When insider sell, watch out. Heavy sales by insiders preceded many of the market's disaster. at the end of that year, insiders were selling four times as many stocks as they bought. Sure enough, despite many predictions.
Thus, when you see heavy significant insider selling of a stock, consider cashing in your own shares in the company. the situation is particularly dangerous when insider selling suddenly increases after a stock has started to decline. You can protect yourself by leaving a standing order with your broker to sell your stock if and when it declines a few points. That way, if disaster does strike, you can scape with limited damage. That doesn't mean you have to stay out of the market. It's a good time to look at the stocks those knowing insiders have been buying.
You can follow the trading of high company officers by subscribing to news letters that follow the subject.
related articles:
Real-Time Stock Symbol Tweets
Real-Time Stock Market Tweets
Real-Time Stock Symbol News
Crude Oil
Commodities and Futures
World Market Watch
Tips are most likely the trend others need before starting of any kind of business, most likely on stocks. Well then, watch for those times when high executives buy or sell shares in the company they work for. Information on such insider trading is easy to find and simple to use.
When officers of the company trade its stock, they often know something you don't know, and their deals have to be reported to the Securities and Exchange Commission. When they buy a lot of their own stock, it usually does much better than the market averages.
When insider sell, watch out. Heavy sales by insiders preceded many of the market's disaster. at the end of that year, insiders were selling four times as many stocks as they bought. Sure enough, despite many predictions.
Thus, when you see heavy significant insider selling of a stock, consider cashing in your own shares in the company. the situation is particularly dangerous when insider selling suddenly increases after a stock has started to decline. You can protect yourself by leaving a standing order with your broker to sell your stock if and when it declines a few points. That way, if disaster does strike, you can scape with limited damage. That doesn't mean you have to stay out of the market. It's a good time to look at the stocks those knowing insiders have been buying.
You can follow the trading of high company officers by subscribing to news letters that follow the subject.
related articles:
Real-Time Stock Symbol Tweets
Real-Time Stock Market Tweets
Real-Time Stock Symbol News
Crude Oil
Commodities and Futures
World Market Watch
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