Russia & China Buck Pressures with End of Year Currency Swap

Money and CoinThe Russian economy took an unprecedented beating in 2014, largely due to its adventurism into the Ukraine and its annexation of the Crimean peninsula. Western sanctions, spearheaded by US and European efforts, were swiftly imposed upon Russia as punishment for its aggressive posturing. Massive capital flight and a rapid devaluation of the rouble sent shockwaves through the Russian finance sector, prompting the Russian central bank to intervene in the currency markets. In tandem with monetary policy intervention, the Russians signed an important agreement with the Chinese (August 2014) to halt the further depreciation of the rouble on the international currency markets. The Russians are shifting away from their reliance on Western countries, in favour of trade with Bric countries (Brazil, China, India & South Africa).

The Russian/Chinese Currency Swap Deal

With Russia effectively removed from the global credit markets, it turned to its staunchest ally – China. The forex currency swap was expressly designed to stabilize the rouble and improve liquidity in Russia’s finance sector. The 3-year yuan/rouble swap is estimated at over $24 billion, and both countries will be able to purchase one another’s currencies amongst themselves – without going to international markets to trade forex. Leaders from Russia and China (Medvedev and Li Keqiang) ratified the deal and agreed on further measures such as energy sharing and financial cooperation. But the underlying motivation for the currency-swap deal is to dramatically reduce reliance on the US dollar for international trading purposes.

Strong Forex Support from China

Russian Prime Minister Medvedev stressed the importance of expanding the usage of national currencies for trading purposes. Presently, these types of trades account for just 7% of turnover. The use of local currencies is likely to expedite trade between the countries, with a target of $100 billion by 2015 and $200 billion by 2020. The Chinese Import Export Bank has agreed to assist deeply indebted Russian banks with easier access to capital. The Exim bank has already established a credit line valued at $2 billion for the Russian state bank VTB. Various other agreements have been signed with the Russian Agricultural Bank and the Vnesheconombank. The agreements allow Russia to import all manner of products from China, including agricultural produce and equipment. Additionally, the Russians will be cooperating with the Chinese to expand the construction of pipelines into mainland China.

Far Reaching Consequences for the Russian Rouble and Chinese Yuan

There are multiple similar currency agreements in the works between Russia, China and other countries too. The FETS (Foreign Exchange Trade System) will be cooperating with New Zealand (NZD) and Malaysia (ringgit) to initiate similar currency swaps. For its part, China has been working hard on establishing bilateral currency swaps for over 5 years. Among the many countries it currently has agreements with are South Korea, Hong Kong, Indonesia, Brazil and Switzerland. Both Russia and China have been seeking ways of reducing their reliance on the greenback in international transactions. China presently holds an estimated $4 trillion (32%) of its forex reserves in US bonds. This makes China particularly vulnerable to exchange-rate fluctuations. According to information gleaned from the International Reserves of the Russian Federation, Russia is holding $373,658 million in foreign exchange reserves (30/11/2014). This is substantially lower than $474,950 million one year ago (30/11/2013). These funds are highly liquid and readily available to the Russian Federation and the Bank of Russia.

About the author: Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes informative essays for the globally renowned spread betting and CFD trading provider, InterTrader.com

4 Surefire Rules to Follow not to Dump Your First Forex Deposit

What does it mean to lose money?Choose a Forex broker

If your initial Forex deposit gets down for more than 90%, it means that you lost it.

The web is full with trading systems and assistants promising that you would gain huge profit within the shortest time. Can you trust such promises?

First of all, we would like to ask why someone offers you to earn on Forex and why so many people lose their deposits?

How does a broker earn?

To answer the above questions, you need to understand what makes a broker’s earning. In this light, it will be easier for you to get the point of promises in the web.

An honest broker earns on spread (the difference between bid and ask). In other words, it is broker’s commission for your transaction in trading terminal. Normally, the more and longer you trade, the better earning of a broker is. But it is related only to honest brokers.

Here we are coming to the:

First rule: choose a fair Forex broker

How shall I trade Forex in this case, you would ask. Is it really impossible to earn on the Forex market? You can make money, though probability of your success is not as high as promised by all kinds of commercials . But an unfair broker will heavily limit you. In such companies human failures are smartly turned into profit.

Thus, making a deposit without making a thorough  research about your broker is risky. The conclusion is obvious: choose your broker carefully! Check its regulation,  find reviews of other clients on all relevant websites. Regular reports about disputes between a broker and its clients should be a warning note for you.

Second rule: control your greed

Cope with your greed. A miser pays twice and this proverb is absolutely true for currency market.

Let’s imagine the situation: you’ve put 100$ to your account and intend to make 1000$ for as soon as two hours. You are lucky if you manage to earn so, but it is only fortune. Your second trade will hardly bring the same result.

Third rule: be active

Get over your laziness. Education can’t take a couple of days (as wrongly represented by many companies). To become more or less competent in the Forex trading,  you need at least 2-3 months. Besides, such training can in no way be free of charge.

Fourth rule: each trading system has its limits

Fourth rule is when you perform your trading without any system. As a rule, traders surf the web to find trading system and start to employ it without taking a demo trial or figuring out. But each person is individual and shall adjust trading system to their personal style. Set parameters the way you like: time of trading, terms and watch first results. But remember that earlier or later its potential will be exhausted and you will need to switch to a new system.

Reasons why you lose money

  • Wrong calculation of volumes in relation to the amount of capital
  • A big amount of trades opened in one direction, which cannot be closed on time under a quick market.
  • Lose of control over opened positions due to a technical failure (PC goes down, no connection etc)
  • Not submitting Stop Loss order for the time when you are not able to control the situation.
  • A wrong expectation that price will move in the opposite direction is one of the main reasons of loss of all funds.

Conclusion

What do we have as a result? Loss of deposit on the Forex is, first of all, your error and unfair Forex brokers just take advantage  of it. To prevent your damage, follow the above recommendations. Good luck!

Alexander Goryachev is a Forex analyst with 7 years of trading experience, who advises beginners in the Forex market how to trade effectively. He works for FreshForex

Why Forex Trading is an Ideal Home Business?

The value of each nation’s currency is constantly fluctuating in relationship to other currencies, because of the operation of comparative advantages and the concept of foreign exchange which developed as healthy measure for all nations to be economically connected back in the Bretton Woods Conference of 1945. People may not realise it, but foreign exchange trading is very much like stocks. The values fluctuate and you need to be either very well-versed with the on goings or plain lucky to master this trade.

Forex

image by allan

Now, foreign exchange is often seen as a business venture or a line of business in a stock-trading firm and not necessarily an industry of its own. It is a niche but one can find very few home businesses running on forex trading. That is where a majority of the crowd seems to be losing out. Having forex trading as a home business is one of the safest ventures you can find in the current economic scenario and here are a few reasons for it:

  1. You can run a business just by selling Swiss Chocolate

What you must realise is that forex is an inherent part of this globalised market and is part and parcel of our existence. Whenever we purchase a product from another country or export our goods to other countries, we are contributing towards the forex market and this in itself can be converted into a business. Hence by understanding the length and breadth and reach of forex anyone can start trading or making money out of forex trading. It need not necessarily have to be in currencies pitted against one another but just a simple purchase of a foreign product can make all the difference.

  1. You should venture into the unknown with caution

There is a wholly credible reason as to why forex trading is considered as a hard market to tap into and make money from. That has got to do with the amount of time and money that has to be placed into this market. A home-run business can be best suited in these circumstances. When the time and money is totally invested and looked after on a regular basis by the home business, then the reaping of profits and controlled approach towards investing further funds and not being too greedy, all add up to make it a potentially good serving market for constant funds.

  1. You can make your own time, anytime of the day

As said earlier, forex trading requires a lot of time. But, it does not have any time frame as such. It is open 24 hours a day 5 days a week and can be operated at any given point of time. This acts as a major boost for home run businesses to make sure that they can reap the best profits either at the right time or at any given point of time that they wish to. The time factor also plays a pivotal role in looking after the risks of the traders or the brokers who may want to wait it out, avail better news resources and only then make the dip.

  1. You can use a market that is humongous

This is fact that has not been discussed very often but with a volume of 4 trillion dollars being traded in the market, forex trading has inadvertently become the largest marketplace in the entire world and will continue to be the largest market for decades to come. The sheer size of the market can be estimated to the capacity and gross domestic product of many other countries put together. However, because of the size of the market, the physical nature of marketplaces has been replaced with the presence of a screen and this has been a god gift for many traders. They can now sit at home and either broker deals or trade on their own accounts and make huge profits. The marketplace is now available from anywhere and hence making forex trading an ideal home business.

  1. You can enter and leave as and when you like

There are some markets and traders out there who hate competition and hence try their best to monopolise the market and set entry barriers to other, thus become the sole sellers and absorbing the supernormal profits of the trade. However, this is not applicable in the case of forex trading primarily because of the multiplicity of participants and the global reach of the market, which allows everyone and anyone to trade in the forex. When a home business also opens its ventures for forex trading, they can expect no trade or entry barriers as such and will only have to get registered while collecting money. This makes things extremely simple for all in the market and for the traders working from home and for the currency experts and economists in the various countries to just adapt and tweak monetary and fiscal policies to bring in changes to the forex trade market.

By now, you must already have decided that forex trading is an ideal home business idea which can make all the difference to a smart housewife or a handicapped graduate. However, it is equally important to note that the risk of running a business from home can also be a problem for the firm as well as the person working there. Time becomes a major deficiency and that has to be dealt with effectively. If that is done, you are all set to enter the forex market and start trading. And you can do so from the comfort of your hall, bedroom, kitchen or even the bathroom!

Author Bio:

Luke likes to read news on stock and share market. He has been learning & trading forex for and uses CFDs to check prices on various forex products. He has also written several articles on forex-trading & business start-ups.

What Can You Learn From Sport Athletes About Forex Trading?

To become a professional in any field, one requires tremendous levels of hard work and focus. Be it sports or business, one always need to stay at the top of the game in order to earn a living through their skills be it physical or mental. Although at first glance, sports and foreign exchange trading might appear distant and totally non-related to each other. It might sound surprising to many but there are a lot of valuable lessons that a forex trader can learn from a professional athlete.

Running - Sport Athletes

Image Credits @ U.S Army

  1. Fearlessness

Most inexperienced traders face difficulty during fluctuating forex markets and often act out their fear of failure. The first thing that they teach most athletes is to accept their failures as learning and keep pushing forward. More than 90% of all foreign exchange trades result in a failure, so there is literally no use of trading with a conservative mentality. Losing is not the end of the world but is an unavoidable part of life. Being result oriented and fearing losses in the forex trade will never allow you to become a successful trader. Business is about taking risks and your fears only limit your ability to make profits in a long run.

  1. Avoiding Short Term Temptations

It is common for most new traders to jump into as many trades as possible due to their need to make quick money. Most successful professional athletes focus on the bigger picture rather than focusing on the short term gains. The stories of most successful professional athletes start with an initial rejection due to them being physically unfit for a particular sport and they still proved the experts wrong with their top performance. This can only happen once you part ways with greed and temptations and focus on the long term gains. Taking time off the market is necessary in forex trading to maintain proper mental equilibrium.

  1. You Are Your Worst Enemy

Professional athletes often push themselves to their peak physical performances due to the fact that they want to push their own physical limits to the extreme. In a similar manner, forex traders must also know that self discipline and determination are the only ways to become a successful trading professional. Thinking too much about the market and trying to control it will only further shatter your morale and end you up in a losing streak. You must always keep in mind to not overtrade and over analyze the charts to avoid the emotions of fear and temptation to take control of your decision making.

  1. Being At The Top Of The Game

It often takes more than mere skills and talent to make it to the top. Most athletes who make it to the pros always focus on becoming ‘experts’ at the particular sport. It takes countless hours of rigorous training and practice to outperform thousands of other athletes from across the globe. For success in trading you need to focus on becoming a ‘master’ of the art of trading before you can think about the rewards that lie ahead. Discipline and keeping a calm attitude is a must if you want to ensure long time success in foreign exchange trading.

  1. Believing In Yourself

While some people have a natural talent for a particular sport, it often takes a firm decision to make it to the pros. Forex trading is not something that you can take up as a profession just because you made some initial gains out of sheer luck. One must believe in his abilities to take proper decisions whether or not to make forex trading a profession. A minor lack of confidence can prove disastrous in both sports and foreign exchange trading; hence one must train his skills to the max and believe in them for regular success.

An athlete must train for countless hours to achieve a peak physical condition and become a ‘fine tuned athletic machine’, while a forex trader simply sits in front of a computer screen for a few hours and makes assumptions and trades. The above tips can definitely relate to any athlete or a foreign exchange trader who is trying to make it to the pros and must be followed for continuous success be it trade or sports.

Author Bio:

Luke Peters is an avid reader of books and other materials related to trading, finance, stock and marketing. He is also an active forex trader on several online forex trading platforms like cornertrader.ch and has written several articles related to trading, foreign exchange and finance.

Trading Tip: Stick to your strategy

When May Sarton said, “We have to dare to be ourselves, however frightening or strange that self may prove to be”, she was definitely not Forex Strategyreferring to traders who constantly keep changing their strategy as soon as they record a loss, but her wise words can help them keep off this self defeating habit. It is human nature to point a finger at something or someone when things go wrong, but in Forex, constantly changing your strategy can run your pockets dry.

Guest post by Orbex

Forex trading is basically a skill which can be improved over time. Like every skill, the ‘’10,000 hour’’ rule also applies to Forex. In simple terms, the rule stipulates that for one to achieve competence in any skill, he should be able to practice a particular skill for a minimum of 10,000 hours. To be honest, no particular Forex trading strategy is wrong. What is wrong with most strategies is, well, the owner of that strategy. To most people, a strategy is as good as its last trade. However, this view is fundamentally wrong, unless, of course, you are looking for the Holy Grail. We all know there is no Holy Grail in the Forex market, so when you have settled on a particular strategy, you should be able to learn all its strengths and weaknesses. Learn when it works, and when it does not. This is where the 10,000 rule comes in. Put in the necessary hours and effort in learning the ins and outs of your strategy. Changing your strategy every few trades effectively distorts this learning curve. You immediately abandon the hours you have put in learning a particular strategy and start on a new 10,000 hour skill journey. You are now a newbie all over again. And guess what the market has in store for newbies? Not much, of course. By changing your strategy all the time, you expose your capital to the same pitfalls of a whole new strategy and unless you have unlimited capital, you will receive the dreaded margin call from your broker.

This is not to say that you should not tweak a few aspects of your strategy. By all means, tweak your strategy, but do so very sparingly. The most important thing is to learn from your strategy each time it generates a trade signal, and not to engage in a never-ending search for the ultimate Holy Grail. When you first develop a trading strategy, do not be in a hurry to ‘fine-tune’ it after losing, or even winning, a trade. Follow it religiously; know the ins and outs of the strategy, why it works, and why it does not. Determine when it gives you the best edge in the market (the specific trading session) and which currency pair(s) suit your strategy. If you stick to your strategy, for say 2 months, you will begin to see the bigger picture. You will have experienced how your strategy performs via different market conditions. You will know precisely what to tweak in your strategy and avoid the trap of over-optimization. You will be honest to yourself in determining whether your strategy has the potential to help you successfully trade the market, and if you cannot be honest to yourself, you can always check your equity balance. The goal should be to develop your own unique strategy that ultimately suits your personality.

Be persistent in applying your strategy and you will ultimately reach your destination. We started with Sarton and it is only befitting to conclude with her. If you stick to your strategy and learn from it, just like Sarton, you will eventually proudly say “Now I become myself. It’s taken time, many years and places.

Dealing With Anger And Emotion After a Losing Trade

Anger After a Losing TradeToday’s lesson will be on ways to deal with the emotion you feel after losing a trade. As I’ve said many times before, it is impossible to win every trade you make in the Forex market, trading is a game of odds and we must strive to keep the odds on our side as much as we can to be successful. Accepting that there will be some losing trades is the first step to success as a trader – though it comes with some more than undesirable consequences. Losing a trade is never a pleasant experience, even for the most experienced traders. It is a difficult thing to come to terms with, especially when you are new to the Forex market. You need to learn how to deal with the emotions you feel when you lose a trade and have a decent plan to help you keep things under control and remain focused on your predefined trading plan. Contrary to the title of this trading lesson, not everyone feels the same emotions when they lose a trade. I personally feel anger, but others may feel sad, disappointed or even embarrassed. In this lesson I want to give you some advise about how to deal with the vast array of emotions you might feel when you lose a trade and I want to teach you how you should feel and how you can adapt your trading style to ensure you maintain the right emotional balance in the unfortunate event that you lose a trade in the market.[Read more]

The components of a trading plan

A trading plan can be relatively simple or it can be complex. In forex, a trading plan is essential to traders as it brings routine and calm to the trading process. Using a trading plan, a trader can make better decisions, trade in a more relaxed way, and therefore be more prepared to overcome any unforeseen hurdles.

Trading Plan[Read more]

Rules for the Commodity Channel Index

The Commodity Channel Index is a technical indicator invented in 1980 by Douglas Lambert. The indicator itself was initially designed to help with engineering problems that dealt with erroneous signals. However, it’s been applied to many other things, including financial markets, and despite its name, the indicator works just as well on Forex as commodities.

Price oscillator

The CCI is a useful price oscillator and it’s fundamental use is to calculate where the price of a currency is in relation to its statistical average. The oscillator is unbound with values able to exceed +100 and -100 on both sides. As such, values over +100 are considered to indicate a highly overbought condition while values under -100 indicate an oversold condition.

It’s therefore a flexible indicator that can be utilized in momentum and mean reversion strategies. The most common method is to buy the market when CCI is below -100 and sell when the indicator is above +100. It’s also possible to use the CCI in connection with other indicators such as volume, ATR or with moving averages to smooth the oscillator and identify divergence.

While overbought and oversold levels offer good points to buy and sell, it can often pay to treat the signals differently. A market where the CCI goes through the levels gradually is more likely to continue on its way, while a market where the CCI spikes up or down through the levels quickly is more prone to reversal. These are important characteristics for mean reversion traders.[Read more]

The rhythm of forex markets

There are many ways to approach Forex trading and several rely on subjective interpretations of price patterns or computed rhythm of forex marketsindicators.

Many indicators, however, look at markets in exactly the same way. They look at Forex prices as moving largely independent of time and market signals often occur from similar price movements.

Some traders, particularly short term traders, and particularly those that have been trading for a while, take a more instinctive approach to the markets. Often, they have tried numerous technical indicators and now use only one or two favorites.

More importantly, a lot of their decisions in the market are based on gut instinct and intuition. Many claim they are able to ‘feel’ the market and move in sync with the market’s rhythms.

Two types of market rhythm

Being able to feel the rhythm in the Forex market is an important skill and it is not one that is easily picked up with technical indicators.[Read more]

3 tips for surviving in the markets

Financial markets are always interesting, never dull, but it could be said that the last few years have been more interesting than Forex Investorusual. The global financial crisis and the response from world central banks has led to financial events making the front pages of world news, when previously, this would not have been the case.

There is a good reason for this – the world of finance is more perilous than it has been in recent times. Stock markets can no longer be relied on to produce stable, solid returns and Forex markets are increasingly fought over by governments who all want to devalue their own currencies. As a result, there has never been a better time to learn how to survive in the markets.

Preserve capital

The key to surviving in any market, not just Forex, is the preservation of capital. Only once capital has been preserved can a trader even think about growing wealth. Because growing wealth without thinking about capital preservation means taking on unwanted levels of risk.[Read more]

How to Trade Forex Like a Sniper

fx-sniper-hiTo succeed in the Forex markets, traders need to find the strategy that fits their personality. As well, they need to be nimble and aggressive, picking the trades that offer the most profit potential whilst making sure to minimize the risk of loss.

If you look at a number of the Forex systems on the market today, many of them have ‘war’ type names, such as ‘stealth’, ‘crosshair’ or ‘pip-hawk’. In the same way, some traders attempt to trade Forex like a ‘ninja’ or a ‘sniper’.

It’s interesting that such names have become associated with Forex trading. The reason must be to do with the fact that Forex trading is a battle. A seemingly endless daily battle between profit and loss that can cause havoc emotionally and sometimes physically.[Read more]

Exotic Options for Diversified Investments

Investment experts concur that portfolio diversification is financially beneficial. The options market covers a wide array of Corn Commodity Price Risetrading formats that are used by millions of investors seeking to diversify. A large number of the accessible options are referred to as “exotic”.  These include binary options, quantity-adjusting options and Bermuda options, among others.

Binary Trading

Investors consider the options market to be simple, cost-efficient and quick.  With a few clicks on an online trading platform, the world of market investing is up and running.  Take a look at the trends; choose your asset; choose your timeframe be it minutes or hours; find your strike price; choose your investment amount; and place your put if the trend is downward, or your call if the trend is up.

The payout on each binary options trade is clearly defined.  If you have placed a call on Asset A, and at the expiry time Asset A is [Read more]

Exchange Traded Binary Options in Perspective

Novices to the online trading arena have most certainly come across the term binary options. For some, it evokes negative Profit, loss and risk crosswordconnotations, and for others it is a jackpot waiting to be hit. Some investors are nonplussed by the concept, but everyone recognizes that binary options trading is real, and the profit potential is substantial. To gain a better understanding of precisely what binary options trading is all about, it’s imperative to separate fact from fiction. Equally important is the issue of regulated binary options brokers and a functional binary options trading platform.

Introducing Exchange Traded Binary Options

Many investors group all binary options together in the same basket of traded possibilities. However, there are unique elements to different types of binary options. For the most part, all binary options share one commonality: you’re either in the money or you’re out of the money. These all or nothing options are the common denominator with binary options, but the unique characteristics of individual binary options set them apart from one [Read more]

Currency Pairs and Spread Betting in Forex

European stocks and the Euro are showing strength against the U.S. dollar as German business provided a much needed cushionhttp://www.dreamstime.com/stock-photo-currency-eggs-image8184950 for the Euro, which has risen from its funk. Originally down because of Chinese credit restrictions, the Euro jumped to $1.3769 and later traded flat at $1.3726.

The daily outlook for the Euro and Pound has extended to a higher level at 0.8286 from its rebound of 0.8157. The resistance level is on the upside at 0.8439. Retail sales were weak in the United Kingdom, prompting the currency pair’s strength. Chances for reversal are high, depending on the release of data, inflation and price pressure. The EUR/GBP currency pair is a cross between the two largest economies in Europe. The pair is sensitive to monetary policy between the European Central bank and Bank of England.[Read more]

Forex Insights: spread vs. commission

Forex markets are quickly gaining popularity not only within experienced investors, but also within new and individual investors. Forex marketsMany of those enter the forex markets to diversify their portfolio, and also to take advantage of no commissions charged and low trading costs offed by forex brokers. Even though forex markets provide lower trading costs than other investment markets, it is important to analyse the details of those costs involved.

Investors who are involved in stock trading most of the times have a trading account with a broker, and they have funds deposited in their account. Once he identifies a stock investment opportunity, an investor will send a trading order to the broker and the broker will go ahead and execute that order on behalf of the client. For the service of reception and transmission of the order by the client, the broker will be compensated by charging a commission to the client. With stock trading, the commission charged by the broker can be a fixed dollar amount for each trade, or a dollar amount for each share traded, or it will be linked on the size of the trade. For any of these cases, the commission will be charged on both sides of the transaction. This means that the commission will be applied on the purchase of stocks and also on the subsequent sell of those stocks at a later stage.[Read more]