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hn88's Blog

March 13, 2008

Do you see the profit potential in trading currencies, but learning to trade just seems too daunting? Have you watched with excitement the recent crashing of the value of the USD, but simply don’t know how to get started trading?

While it is simple to begin trading Forex online, maintaining profitability in the long term is no easy task. You have probably heard that 90% of Forex traders lose their money in the long term. If indeed this is true, it is the result of a couple of different factors.

  1. Overtrading: Each trade costs you a couple of pips—Consider your trades well before you make them. Each faulty trade, even if exited quickly, drains equity.
  2. Bad money management: One bad trade can wipe out a year of patient, smart trading. Manage your risk using stop loss orders, so that you never risk too high a percentage of your equity on any one single trade.
  3. Lack of knowledge: If you have never traded Forex before, educate yourself! Successful traders are not born that way. The difference between success and failure in the Forex market depends in no small part on the knowledge and education of a trader. For the beginning trader, a proper education is essential before investing in the Foreign Exchange. Find a program you are comfortable with, and begin practicing on a demo account.

Trading on the foreign exchange offers unparalleled opportunities for profit, but it is also extremely risky. Make sure you know what you are getting into before you start trading, and start trading only when you are comfortable in your knowledge and ability.

http://huynhnam.blog.dada.net

sb
March 13, 2008

Strong U.S. consumer price data led to a lower than expected federal reserve interest rate cut, causing the strongest one-day dollar rally against the Euro since May, 2005. By the end of the day Friday the 14th, the Euro fell 1.5 percent to 1.4412, the lowest it has been since October. This is the third week in a row that the dollar has rallied against major currencies.


Strong consumer spending reports have served to partially abate worries that the mortgage crisis would force the US economy into a recession, and widespread inflationary concerns would seem to point to a continued conservative approach to interest rate cuts by the feds, which is more good news for the greenback.


Many analysts are now predicting the dollar rally will continue in the short term, fingering 1.43—or even 1.40—as reasonable support levels. Moreover, there has been a rising chorus of voices saying that the dollar will rebound in 2008, due to shrinking budget and trade deficits. If we are correct in assuming that the Fed will be conservative in cutting interest rates, this will lead to an increased international appetite for investment in the US market, creating greater demand for the dollar.


On the other hand, we are wary that the dollar rally is simply a correction, rather than a trend reversal. Furthermore, we would not be surprised to see another test of the $1.50 level in the short term, even if prospects for the dollar are good in 2008.

 http://huynhnam.blog.dada.net

sb
March 13, 2008

The Foreign Exchange is the largest financial market in the world, with trillions of dollars traded each and every day. Initially utilized just by large banks, multinational corporations and extremely wealthy currency speculators, the influx of online brokerages tailored to the retail market has created a vibrant retail foreign exchange market! Now, with a relatively small initial investment, anyone with an internet connection can take advantage of the online Forex market.
While banks and large multinational corporations generally execute foreign exchange transactions simply as a function of doing international business or to hedge their base currency to protect against devaluation, currency speculators exploit fluctuations in the foreign exchange market exclusively for profit. While trading currencies is a bit riskier than trading other instruments, like stocks and commodities, the potential for profit is unparalleled. For example George Soros, perhaps the most successful Forex trader, made $1 billion in a single day when he sold the pound against the dollar in 1992.


The major currencies traded on the foreign exchange are the US dollar, the Eurodollar, the Japanese Yen, the Swiss Franc, and the British Pound. These different currencies are expressed as pairs. When these pairs are traded, one of the currencies is bought and the other currency is sold concurrently. Today, anyone with an internet connection can trade these pairs under the same conditions once reserved for high value individuals and corporations. Most retail brokerages offer real time currency prices, instant execution, advanced charting features and extensive real time news and analysis feeds.


If you are interested in trying out the foreign exchange, we have assembled a list of quality brokerages that offer free “fake money” accounts where one may trade in real market conditions. Not only is their immense profit potential in the Foreign Exchange market, it is quite exhilarating as well. Why not give it a shot?

http://huynhnam.blog.dada.net

sb
March 13, 2008

The carry trade is a popular online Forex strategy which takes advantage of the different interest rates between two currencies. If one currency has a relatively low interest rate it can be sold against a currency with a high interest rate and the trader may pocket the interest rate differential. Speculators are guaranteed rollover interest deposits in their account at the end of each trading day. This can provide a significant boost to trader’s profit. If, for instance, an investor buys the NZD against the JPY, which have interest rates of 7.25 and .25 respectively, the trader can make a profit of 7% provided the market doesn’t move.


However, even when exploiting interest rate differentials, there are still significant risks to a trader. Obviously, the market can still move against the trader’s position, though the rollover interest adjustments do help mitigate potential losses. Considering that most carryover traders use exceptionally high leverages to exploit interest rate differentials, even a small move against a position can lead to very high losses.

http://huynhnam.blog.dada.net

sb
March 11, 2008
As forecast, the dollar price dropped to VND15,865/US$1 on March 10, the first day the exchange rate trading band of +/-1% was applied instead of the previous level of +/-0.75%.

VND15,865/US$1 was the rate offered by Vietcombank HCM City and Eximbank on March 10. As such, the dollar price has decreased by VND45/US$1 compared to late last week.

The dollar price was lower on the black market the same day, trading at VND15,560-15,590/US$1, down by VND90/US$1 compared to late last week.

Meanwhile, the interbank exchange rate announced by the State Bank of Vietnam on March 10 was VND16,025/US$1. With the 1% trading band, commercial banks can set the trading exchange rates at between VND15,865/US$1 and VND16,185/US$1. However, all commercial banks are applying the ‘floor prices’ as the dollar is now in excess.

The dollar price dropped sharply on March 10 because banks could purchase and sell dollars at low prices. In previous days, they could not do that, though they wanted to.

Commercial banks still buy dollars from businesses, though they have a lot of dollars already. Though the exchange rate quoted by banks is VND15,865/US$1, businesses pocket VND15,600/US$1 only. Commercial banks have been trying to buy dollars at low prices by charging fees for buying dollars, or paying prices lower than the quoted levels.

In fact, banks are not allowed to buy dollars at prices lower than the quoted prices, but they try to dodge regulations by asking clients to convert dollars into other foreign currencies, the Euro, for example, and then sell Euro to banks (no trading band is set up for non-dollar currencies trading).

Businesses have to bargain dollars away because they need VND for their business. Meanwhile, commercial banks are still purchasing dollars in dribs and drabs, because they say the State Bank of Vietnam only purchases a small volume of dollars from commercial banks, which cannot help resolve the dollar excess.

Bankers say that the sharp devaluation of the dollar will prompt people to keep VND instead of dollars. They say that the number of dollar depositors is decreasing.

In related news, the gold price on March 10 was VND18.88mil/tael, down by VND5-6,000/tael from the previous day.

The sharp devaluation of the dollar has made gold cheaper. If importing gold late last week at $972.5/oz, buyers had to pay VND18.71mil/tael (the exchange rate was VND15,910/US$1). Meanwhile, buyers had to pay VND18.6mil/tael only on March 10, as the exchange rate dropped to VND15,865/US$1. As such, every tael of gold has become VND50,000 cheaper thanks to the dollar devaluation.

However, gold traders still have not lowered the sale price of gold, because they imported gold when dollar prices were higher. They say that they will consider lowering the sale prices for the consignments of gold imported later.

http://xnvn.blogspot.com
sb
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