Calculating Pip Values

Perhaps the first question we need to ask is what does pip mean in forex trading? A pip is the smallest movement that is possible in the price of one currency against another and it is vital to be able to calculate pip values quickly and easily as it is the movement in prices which results in your profit or loss when trading.

A pip is normally, but not always, 0.0001 or 0.01%. In other words, if a currency moves from a price of 1.7650 to 1.7655 it is said to move 5 pips.

The easiest way to understand how to calculate pip values is to start by considering currency pairs which involve the US Dollar and we start by considering the situation when the US Dollar is the quote currency as in the case of JPY/USD, GBP/USD or CHF/USD.

Here calculating a pip value is very easy as a pip will always have a value of $10. So, if while trading JPY/USD the market moves in your favor by 10 pips you will make a profit of $100. Let's see how this works.

Consider a quote of GBP/USD is 1.9730. This means that 1 UK Pound is worth 1.9730 US Dollars. A standard InterBank lot size is 100,000 and which means that 100,000 UK Pounds are worth 197,300 US Dollars. If the market moves 1 pip so that GBP/USD is 1.9731 then 100,000 UK Pounds will now be worth 197,310 US Dollars - a rise of $10.

Now let's turn our attention to what happens when the US Dollar is the base currency and consider a quote of USD/GBP = 0.6439. Here 1 US Dollar is worth 0.6439 UK Pounds and 100,000 US Dollars are worth 64,390 UK Pounds.

If the price moves up 1 pip then USD/GBP = 0.6440 and 1 US Dollar is worth 0.6440 UK Pounds and 100,000 US Dollars is worth 64,400 UK Pounds.

In this case a movement of 1 pip represents a value of 10 UK Pounds which, in US Dollars, gives a pip value of 15.53 US Dollars (10 ÷ 0.6440).

For a standard trading lot with the US Dollar as the quote or counter currency a pip has a value of $10 but, when the US Dollar is the base currency, the pip value will vary with the market price.

5 Reasons For Becoming A World Currency Trader

The foreign currency exchange market offers today's investor many advantages and here are just reasons why you might want to become a world currency trader.

A Market Which Never Closes

Many of the trading markets around the world are situated in fixed locations and operate within strict trading hours, often limited to just five or six hours a day between Monday and Friday. The Forex market however is open 24 hours a day.

This means that traders can not only take advantage of international events and react literally as they happen, but they also have the ability set their own trading hours. If you prefer to work in the mornings then that's fine but, if this doesn't suit you, then you can choose to trade during the afternoon, late evening or even in the middle of the night if you want to.

Low Trading Costs

In many markets, like the equity market, traders not only have to pay a spread (the difference in price between buying and selling a stock) but also have to pay a commission to the broker. On small trades this commission can typically be about $20 and this can rise rapidly to over $100 for larger trades.

Because the foreign currency exchange market is a wholly electronic market many of the traditional trading costs are eliminated and you are in affect reduced to paying nothing more than the spread. In addition, the extremely liquid nature of the global currency exchange market means that spreads are normally much tighter than those seen in other markets.

The Ability To Trade On High Leverage

In most markets where a trader has an opportunity to trade on leverage the leverage offered is often quite low. In the case of equity markets, for example, professional equity day traders will normally operate on a leverage of about ten times their capital. In the Forex market by contrast it is quite common to find that traders are permitted to trade at one hundred to two hundred times their capital.

A downside of high leverage is that it can of course lead to high losses as well as high gains. However, within the foreign currency market, risk management is extremely tightly controlled.

Limited Slippage

In currency trading trades are executed immediately using real-time prices at which firms will buy or sell the currencies quoted. In almost all cases this means that the price you see and the price you pay are the same.

This is not often the case in other markets where there can be often considerable delays between placing an order and that order being executed during which time the price will often move against you.

The Chance To Profit In Both Rising And Falling Markets.

Equity markets follow rising and falling trends (cycling between Bull and Bear markets), but the Forex market does not suffer this cycling which comes from structural bias in the market.

World currency trading always involves two currencies so that if you are down on one currency then you are up on the other. There is therefore always the potential for making a profit whether the market is rising or falling.

Forex Dictionary

Base currency
This is the first currency of a currency pair. Example : EUR/USD. The Euro is the base currency. For every trade, you always buy or sell the base currency.

Broker
This is the company that will provide you the forex trading service. You open and fund an account and start to trade. Each broker has its own prices, spreads, minimum requirements (amount of money to start trading). Brokers generally offer a demo account and also have some training programs. See a list of Forex Brokers we recommend.

Exchange rate
The exchange rate tells how much a currency is worth in terms of another currency. Example In the pair EUR/USD, the exchange rate is 1.30. This means 1 euro (base currency) is worth $1.30. SO you can buy $1 .30 dollar with 1 euro, or sell 1 euro for $1.30.

Leverage
This is what allow small investors to trade big lots. Forex brokers have leverage of 100:1 or 200:1. This means you can use $100 to trade $10,000 (100x100) or $20,000 (100x200). The leverage depends of the broker.

Lot
Forex is traded in lots, because a pip is a too small amount of money if you could only trade with $1. You can't trade forex with only $1. The standard lot size is $100,000, the mini lot size is $10,000. Brokers now also let you trade smaller lots. To understand pips and lots see our article : Forex profits - pips and lots.

Quote currency
This is the second currency in a currency pair. In the EUR/USD pair, the US Dollar is the quote currency. Quote currency is also called counter currency.

Pip
Pip stands for percentage in points. This is the last decimal point and minimum increment you can see on a quote. Example : 1.1230. Here 0 is the last decimal point, if the price increases to 1.1235, this is 5 pips more. You will look at the pips to know if you are earning or losing money. To understand pips and lots see our article : Forex profits - pips and lots.

Position
A position can be "long" or "short". Long specifies a trade where you buy and hope the price goes up. Short specifies a trade where you sell and expect the price go down.

Signal
Signals are alerts that help traders. Signals are sent by signals providers or your broker. Signals are sent by email, sms or directly to your trading platform (software). Signals generally include the entry and exit points for a pair at a specific time of the day.

Spread
The Ask/Bid spread is the different between the ask (buy) and bid (sell) price. The spread is given in pips.

Binary Equation Strategy in Forex Trading

Binary equation trading is actually a kind of trading strategy that employs the use of a certain mathematical procedure to edge out profitability.With a simple to understand mathematical scheme, a trader can be on his way to increased probability of profit acquisition.

The binary equation was formulated by an 18th century mathematician Jean le Rond d'Alembert, and was more recently found to be a useful component in Forex trading.

A Forex trader should always keep in mind that the volatility of the trading platform is his number one concern. He should be able to comprehend the regular patterns that lead to the upward or downward motion of profit values. In such a case, binary equation trading may provide a good opportunity for the trader to keep the highest amount of potential earnings he can possibly have.

A person is not required to have a master's degree in mathematics or be a math genius to use this technique. The binary equation trading lets a trader have a significant overview towards a wide scope of direction expected for a particular exchange rate currency partner. All the trader has to do is to rely on the position recommended as projected by the binary equation formulation.

He can easily purchase a lower valued exchange rate and wait for a particular time frame to expect the exchange currency to increase. With a binary equation, he can easily predict when to sell his acquired foreign exchange currency. This will give him a definite residual advantage which serves as profit.

The binary equation trading is perceived to be a form of confidence tool among Forex traders. The most important attribute of this kind of trading concept is its ability to provide decision making rules for a particular trader.

Most of the technical systems that use binary equation trading have already acquired profits in real trading which is in contrast to a hypothetical approach brought by other trading parameters. The mode of trading can be optimized in such a way that it can be useful to almost any other trading platforms, not just for Forex.

If a trader uses a trading platform that heavily relies on the binary equation strategy, chances are, his profits are somehow guaranteed to take a positive course. Since most platforms conduct trading schemes in real time and instantly, a significant amount of stable profit is assured. Even though it only uses a single modular approach in trading, it can be used to conduct a system wide variety of trade exchanges.

With binary equation trading, the total management of trades can be simplified. Shorter forms of calculations may be done to conduct real time trading strategy. Results can be acquired within seconds of pre-calculation of profit generation prediction. A trader may simply opt to choose which results he may want to use for actual trading.

Even though the binary equation promotes a rather instant access to high end profit sources, the long term effect is not sacrificed.

A trader can rely on the effects of the calculation for future referencing of trades. He can conduct multiple trading strategies for a wide spectrum of platforms in future money manipulations.

Are You Winning? Calculating FOREX Profits and Losses

When trading currency you deal with much smaller divisions than when dealing with actual cash. For example the smallest denomination of US is currency is the penny ($0.01) but on the FOREX market it can be traded down to $0.0001. The smallest division that a currency can be traded at is known as a pip. A pip is short for Price Interest Point; this is sometimes also referred to as points. Currencies are traded in very large lots so even a small change in the value can create a significant profit or loss. If you are trading $100,000 in US dollars a single pip is worth $10 so a change of 60 pips or 6/10 of one cent will generate a profit or loss of $600 depending on the direction of the move.

When trading currencies various lot sizes are not unusual but 100,000 units are considered a standard lot. A single unit is what ever the name of that particular currency is for example when trading Japanese currency a single unit is the Yen. Some trades are done in lots of 10,000 these are commonly referred to as mini lots. Even though lots of various sizes are possible the majority of trades involve standard lots of 100,000 units.

The size of the pip is based on the currency type; different types of currencies have different pip sizes. For example the Yen pip is 0.01 where as the US dollar has a pip of 0.0001. Both the type of currency as well as the size of the lot determines the actual value of the pip. Using the US dollar as the quote currency (second currency) such as CAD/USD then the pip always equals $10 for a standard lot and $1 for a mini lot. For other currencies it is easiest to use a pip value calculator to determine the pip value.

In the FOREX market there are a variety of order types available for making trades. You need to have a solid working knowledge of the different order types to be a successful FOREX trader.

Market Orders - This is simply an order to buy or sell at the current market price. Market orders can be used to enter or exit a position. Market orders can be dangerous during times of high market volatility. The price can change significantly between the time that you enter your order and the time when it is actually recorded or executed. The amount that the market changes between the time that an order is placed and when it is executed is known as slippage. Depending on market conditions slippage can result in the gain or loss over several pips.

Limit Order - This is an order to buy or sell at a specific price. These are used to help you control your trades without having to constantly monitor the market. If you have a sell limit in place for a price higher than the current rate your order will be executed as soon as the market rate rises to match your limit. If you have a buy order in place to purchase a currency at below the current market price your order will not execute until the current rate drops to match your limit.

Stop Order - These are used to limit your losses if the market moves in the opposite direction of what you are expecting. This will cause your currency to be sold at below the market price or purchased above the current price. A stop loss is executed when the market crosses the threshold set by the trader when placing the order.

To be successful on the FOREX market it is essential that you learn to figure profit and losses and to use the various order types to their fullest potential.

A Brief Look at Forex Trading

Forex is the currency trading market which is the biggest and most quickly evolving markets in the world. Currently it has a daily turn over of of 2.5 trillion dollars which is actually one hundred times larger then the NASDAQ. Different markets are great ways to diversify your investments and trade different goods and services. The same is true with the Forex market in which the "goods" are actually currencies from around the world. Here you can buy Euros with American Dollars and sell Japanese yen for Swiss Francs. The profit is make in the difference between currencies values.

To make a profit on the Forex market investors only need one rule - buy cheap and sell high. The profit comes from the fluctuations within the exchange market for currency. The great thing about the Forex market is that it has regular daily changes and a fluctuations of 1% is actually multiplied by 100. For example if the exchange rate of your pair of currencies increases by 0.7% in 5 hours, the profit you make will be 70% of your initial investment. This can happen within a single day or a single hour. Trading the Forex market is extremely secure because you can never lose more than your initial investment. This is low risk when compared to the unlimited profit you could potentially gain.

You can choose your pair of currencies and your volume whether the market is moving up or moving down - and still make a profit. You can decide to buy Euro and sell dollar or buy dollar and sell Euro. Additionally you do not have to physically have the currency you choose to buy and sell. The easiest way to get started in the Fored market is to find a Forex market site, open an account, deposit your money, and begin trading. Most companies provide you with training, support, and advice.

Once you have all the necessary research in hand you are ready to make your first trade. You need to first select the pair of currencies that you wish to trade. Then you select the volume or the amount of money you want trade. Then you must deposition the collateral needed for the whole deal, usually about 1%. Most companies allow for a brief freeze period in which the consumer can adjust or cancel their deal. While the deal is running you can monitor the status and check for additional trading tips online. You still have the ability to change the terms, or cash out the profit to minimize loss. Forex trading companies allow an automatic take profit option which allows the investor to preset the rate at which you want to see and it will do it for you. That way you do not have to stay constantly online to monitors your trade.

Forex is a great trading market for new investors. The specifics of the currency trade are fairly straight forward and easily accessible to the general public. There is a low initial investment that way new investors can begin small and as they feel comfortable and work their way up to larger trades.

8 Tips To Improve Your Forex Trading By 100% Now

Most traders don't take a rational approach to trading and have unrealistic goals. A return of 200% on your account is possible but it is not possible every month, a return of 10-15% every month is more realistic and possible.

Here are 10 tips that will improve your trading by 100% and help you reach that level of consistence you are looking for.

1. Do not trade on anything lower than 4H charts.
If you are new to trading or loosing consistently you must follow this rule, it will keep your trading account alive and growing. The higher the time frame the easier it is to make money, you can easily grow your account by 10-15% each month only taking 2-4 trades a month.

2. Only take the A trades.
Be Patient, the markets will be around longer than you, plan your trades and wait for the perfect setups then pull the trigger with out hesitation.

3. Never risk more than 3% of you account.
No mater if your stop is 150 pips or 30 pips your risk should be exactly the same, most brokers allow micro lots (.10c) which make it easy to get the correct position size.

4. Keep your system very simple.
My core system's are very simple and and very profitable! You do not need to have 10 indicators pointing in the same direction to take a trade.

5. Back test your system.
Candle by candle back testing your system will give you great feeling of confidence in you trading.

6. Use price action.
Although there is nothing wrong with indicators try to keep them to a minimum, start learning how to read price action, it will reward you greatly.

7. Don't over trade.
This is the most common problem with traders, 95% of traders would be more profitable if they just took 1 trade a month and no more, this would force them to plan that trade with immense forethought and more often than not it would be profitable.

8. Cut your losses short and add to your winners.
This has been said time and time again, but how many of you actually do this? Your wins should be at least twice the size of you losses, preferably three times the size. Start trying to build on profitable positions instead of taking profit as soon as it appears.

If you are a newbie looking to get into the forex market or even a trader who just cant seem to stay consistently profitable. Following these rules will get you on the right track, stay with the higher time frames and you will find your trading more profitable and less stress.
Control Your Emotions to Achieve Success in the Foreign Exchange Market

Emotional forex traders will be tempted to chase bad money with good, and subject themselves to even greater losses.

Get a Grip

“The sign of an intelligent people is their ability to control their emotions by the application of reason” ~Marya Mannes

forex trading is not for the faint of heart, nor is it for those who are controlled by emotion. Certainly, it is an emotional thing to engage in an activity of risk and reward with your money. Human nature dictates that when you put your heart into something as vital as your financial portfolio. However, a Foreign Exchange trader cannot afford to wear his heart on his sleeve.

This isn’t a heart matter; it’s a head thing. Let your heart rule in romantic affairs, but use your head when you are trading currencies. If you do not use your head, you may well lose your behind!

Every successful Forex trader develops, or borrows, or borrows and modifies a system. That system is based on facts, observed trends, and expected market behaviors. Your system will guide you, informing you when to get into a trade, and when to get out.

Fear and Greed: Extremes that kill

When you lose on a trade – and if you trade, you will lose on occasion –, it takes a great deal of self-discipline to get out while the getting is good. Emotional traders will be tempted to chase bad money with good, and subject themselves to even greater losses. Greed often compels the emotional trader to try to recoup every lost dime.

The other side of the Forex coin is the need to stick with a good trade and riding it to its full potential. Fear will cause the emotional trader to bail on a deal prematurely. You have to be guided instead by your system. Know how many pips you are risking and how many you stand to gain. Keep your risk and reward in balance.

Greed and fear are two very different motivators, but they each have the same result: they wreak havoc on the Forex market.

Mind over matter


Norman Vincent Peale, Robert Schuller and others have written volumes on the power of positive thinking. Every single champion who has ever perched atop the pinnacle of his profession first visualized himself/herself doing so. Visualize success.

A good trading system is vital, but you have to believe in it – and in yourself – in order for it to bring you the success you desire. Confident traders are successful traders.

Here are some steps to take to avoid the traps of emotional trading and establish yourself as a successful Forex trader:

1. Educate yourself. Someone has said, “The woodsman never wastes his time sharpening his axe.” Read that statement carefully, for it is not saying a smart woodsman just grabs an axe and runs to the nearest tree. Instead, it is declaring that the time spent sharpening the axe, is time well spent. Never stop learning from those who have proven themselves successful trading currencies.

2. Establish your system. Take the time to develop the system that works for you. Test it, prove it, refine it…and use it.

3. Embrace your losses. That’s right! Every experience is a good experience when you keep it in perspective.

4. Eliminate emotions. Keep greed and fear out of the mix.

5. Envision success. See yourself as a successful Forex trader.

There are plenty of times in life that call for an emotional response: a marriage proposal, for instance. Or the funeral of a loved one. Or when your favorite team wins the championship. Those are all fine times to let your emotions take the wheel. The Forex Market, however, is not a good place to do it. Once you have managed to control your emotions and make informed, intelligent trades, you will have plenty of reason to celebrate later.

Happy trading!

Rate of inflation

Consumers try to avoid the eroding effect inflation has on their purchasing power. Consequently, goods from countries with a low inflation rate become more attractive than the goods from countries with higher inflation. In turn, the currency from the lower inflation country rises in value, while the currency from the higher inflation country falls in value. Both the inflation factor and the purchasing power of the currencies directly impact currency exchange rates. For example, if the United States is experiencing lower inflation than its trading partner Germany, the DM/USD ratio would rise to reflect the growing price level in Germany relative to the United States. This factor is rooted in the concept of purchasing power parity. It holds that, over the long run, a currency exchange rate adjusts to reflect the difference in price levels between countries.

Yield differentials and their affect on currency values.

Yield differentials is the difference between interest rates in various countries and how it affects currency values. As an example, let's use German and American securities to illustrate how interest rates affect exchange rates.

All else being equal it stands to reason that a higher yield on German securities (compared to American securities) would make German securities more attractive. What's more, an increase in German yields would raise the flow of U.S. dollars into German securities, and decrease the outflow of Deutsche marks to American securities. This increased flow of funds into Germany would lower the value of the U.S. dollar and increase the value of the Deutsche mark. Hence, the Deutsche mark to U.S. dollar ratio, as it is represented in the foreign exchange market, would potentially decrease.

Fundamental and Technical Analysis

Fundamental Analysis tries to understand price moves in the market by analyzing the economic factors that can affect the price of a particular financial instrument, in this case, currencies. Importance is placed on interest rates, trade balance, government policies, market supply and demand, and a myriad of other factors that can affect the intrinsic value of a currency against another currency.

Technical Analysis, on the other hand, states that all the factors whether it be economic, political, or even the effect of weather on the value (or price) of a currency is all factored into the 'market price' of a currency. It is therefore only necessary to study the technical charts, which show all the effects, and all the causes that a "fundamentalist" would study. Thus the study of price movement is of primary importance to a "Technician" to determine where the markets are going.

In reality, both factors are important in determining the value of buying and selling currencies. Whichever school of thought you adhere to, the fact remains that when the perceived value of a currency is over-priced it will be sold, if the perceived value is under-priced it will be bought. If there are more 'sellers' in the marketplace, the price will go down. If there are more 'buyers' than 'sellers' the price will go up.

Glossary of Foreign Exchange Terms

ABA - a digital code used by the American Bankers Association to define a bank.

Base Currency
The currency which other currencies are quoted against.

Basis Point - One hundredth of one percentage point. A change from 5.25% to 5.75% is said to be a 50 basis point move. See 'Point' for currency moves.

Bid - The price that a buyer is willing to pay to purchase a given currency and sell another at a particular time.

Central Bank - A Government institution in control of the nation's monetary policy and the printing of that nation's currency.

Consumer Price Index (CPI)
A measure of the average amount (price) paid for a market basket of goods and services by a typical U.S. consumer in comparison to the average paid for the same basket in an earlier base year.

Cross Rates
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency. Foreign exchange rate between two currencies other than the U.S. dollar, the currency in which most exchanges are usually quoted.

Currency - means money denominated in the lawful currency of a country.

Current Account
A category in the balance of payments account that includes all transactions that either contribute to national income or involve the spending of national income.

Day Trading - refers to opening and closing the same position(s) before the close of that day's trading. Associated with speculative trading.

Deficit Spending
A term which refers to the situation wherein he government spends more than it receives in taxes.

Discount Rate
The interest a private bank pays for a loan from the US Federal Reserve System.

Draft - click here

EMS - European Monetary System

Euro - The currency of the European Monetary Union (EMU). This is the amalgamation of the following currencies, after Jan. 1, 2002 these currencies will be considered legacy currencies. Germany Deutsche Marks, Italy Lira, Austria Schillings, France Franc, Belgium Francs, Netherlands (Dutch) Guilders, Finland Markka, Portugal Escudo, Greece Drachmas, Ireland Punt, Luxembourg Francs, Spanish Pesetas.

Federal Debt
The current dollar sum of obligations equal to the accumulated past deficits minus surpluses of the United States government.

Federal Open Market Committee (FOMC)
The body that is responsible for setting the interest rates and credit policies of the Federal Reserve System. A 12-member committee consisting of the seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank presidents. The Committee sets objectives for the growth of money and credit. These objectives are implemented through purchases and sales of U.S. government securities in the open market. The FOMC also establishes policy relating to System operations in the foreign exchange markets.

Federal Reserve System - The central bank of the United States, with responsibility for implementing the country's monetary policy and regulating member banks of the System. The Fed was created in 1913 and is composed of 12 regional Federal Reserve Banks and a national Board of Governors.

Fiscal Policy
Government policy regarding taxation and spending. Fiscal policy is made by Congress and the Administration.

Fixed Exchange Rate
Official rate set by monetary authorities for one or more currencies

Floating Exchange Rates
Floating exchange rates refer to the value of a currency as decided by supply and demand.

Foreign Exchange - The exchange of foreign currency. On the foreign exchange market, foreign currency is bought and sold for immediate (spot) or forward delivery

Forex - Industry term - Same as Foreign Exchange

Forward Contract - A forward contract fixes the exchange rate for future delivery at a date to be agreed by both participants. A deposit (or a minimum margin) is usually required in forward transactions. For example, if I want to lock in today's rate to buy $10,000 USD at 1.5820 Canadian for the next 4 months, I will have the ability to purchase up to $10,000 USD at this rate.

Fundamental Analysis - focuses on the economic forces of supply and demand that causes price movement. The Fundamentalist studies the causes of market movement, whereas the Technician studies the effects.

FX - an abbreviation of Foreign Exchange

Hedging - A hedging transaction is a purchase or sale of a financial product, having as its purpose the elimination of loss arising from price fluctuations. With regards to currency transactions it would protect one against fluctuations in the foreign exchange rate. (see Forward Contract)

Initial Claims
Initial jobless claims measure the number of filings for state jobless benefits. This report provides a timely, but often misleading, indicator of the direction of the economy, with increases (decreases) in claims potential signalling slowing (accelerating) job growth. On a week-to-week basis, claims are quite volatile, and many analysts therefore track a four week moving average to get a better sense of the underlying trend. It typically takes a sustained move of at least 30K in claims to signal a meaningful change in job growth.

Interbank Rates - The Foreign Exchange rates at which large international banks quote other large international banks.

Margin - a cash deposit provided by a client as collateral to cover a forward position.

Monetarists
Followers of Milton Friedman who focus on the effect of money and monetary policy on changing price and employment levels.

Monetary Policy
The federal governments attempt to change aggregate demand through money supply changes.

Money Markets - Refers to financial investments that are generally under one year in duration and generally only open to banks and other financial institutions

Offer - The price, or rate, that a willing seller is prepared to sell at.

Point (or Pip) the term used in currency market to represent the smallest incremental move an exchange rate can make. It is one one-hundredth of a percent
For example, when a currency moves from 1.5720 to 1.5725 it has moved 5 points.

Repurchase Agreements
When the Federal Reserve makes a repurchase agreement with a government securities dealer, it buys a security for immediate delivery with an agreement to sell the security back at the same price by a specific date (usually within 15 days) and receives interest at a specific rate. This arrangement allows the Federal Reserve to inject reserves into the banking system on a temporary basis to meet a temporary need and to withdraw these reserves as soon as that need has passed.

Settlement - (1) The final stage of a transaction, actual physical exchange of one currency for another (2) is the process by which available funds have been instructed by a client of Cambridge for transfer via wire, draft or deposit to a multi-currency account and a designated receiver of such funds.

Spot - Generally describes a transaction which will come to settlement in two days.

Spot Price - The current market price for a spot transaction.

Spot Rate - The current rate for a spot transaction.

Spread - The difference between the bid and offer prices. This is usually used for Interbank trade of currencies.

Swift - Society of Worldwide Interbank Financial Telecommunications. It is a dedicated computer network that is set up to support fund transfer messages between member banks worldwide.

Technical Analysis - is analysis based on market action through chart study, volume, trends, moving averages, patterns, formations and many other technical indicators.

Treasury Bill - Short-term U.S. government obligations sold at a discount from face value. Treasury bills generally are issued with 13-, 26- or 52-week maturities.

Treasury Bond - Obligations of the U.S. government that mature in 15 or more years and pay a specified coupon.

Treasury Note - Obligations of the U.S. government that mature in 2 to 10 years and pay a specified coupon

Trend - simply the direction of the market, usually broken down to three categories….major, intermediate and short-term trends. Three directions are also associated with a trend; that is, uptrend, downtrend, and a sideways trend.

US Prime Rate
The rate at which US banks will lend to their prime corporate customers

Value Date - The date that both parties of a transaction agree to exchange payments.

Volatility - A measure of price fluctuations. The standard deviation of a price series is commonly used to measure price volatility.

Volume - represents the total amount of trading activity in a particular stock, commodity or index for that day. It is the total number of contracts traded during the day.

CGTIM — Another Jordanian MT4 Forex Broker

CGTIM (or Commercial Group for Trading in International Markets) is a MetaTrader 4 Forex broker based in Jordan. As the other Jordanian brokers it offers Muslim-friendly trading accounts — with no overnight interest or swaps. Trading with this broker can be started with $1,000 for mini-Forex accounts. The deposit/withdrawal methods are limited to wire transfer, check and credit cards. Apart from Forex it offers CFD and some futures and indexes to trade on. Although, it’s presented on-line only since 2004, it already looks like it’s dying from an age — the website works with problems and opening a demo account via MT4 platform alone isn’t possible. In addition, the spreads offered by CGTIM look ridiculous nowadays — 4 pips on EUR/USD currency pair is simply too much. In my opinion, this broker can only be useful to the Islamic traders — and even not all of them, but those who live in Jordan and can confirm the legitimacy of CGTIM and quickly solve any problems with this broker. Because I don’t know for what someone would pay 4 pips per trade.

EUR/USD Posts Biggest Daily Gain This Year

Today EUR/USD rose at a fastest pace since December 17. As the fundamental data reports were very positive in the United States, traders thought that it might be a good chance to bet against the dollar in the favor of the more risky and high-yielding currencies. EUR/USD rose from 1.2916 to 1.3141 as of now.

Existing home sales rose by 6.5% from the annual rate of 4.45 million to 4.74 million in December. The market analysts expected a decline to 4.4 million. That can bring a much needed positive wave into the realty market — the one that damaged most by the ongoing financial crisis.

Leading indicators of the U.S. economy advanced by 0.3% in December after falling by 0.4% in November. According to the forecasts it was expected to decline by 0.3% in December. Although this indicator is quite weak in its influence on the financial markets it can signal the beginning of the economic revival in the United States.

TeleTRADE — Russian Forex and CFD Broker

TeleTRADE is a very old Forex broker company. It’s quite popular in the ex-USSR territories due to the large amount of the off-line offices and the free trading seminars they are offering from time to time. The company was created back in 1994, but the on-line services were presented in 2001. Actually, the company’s age is probably its only advantage. The trading is done via MetaTrader 4 platform. Apart from Forex, CFD and gold trading is also available. The trading account can be opened with $2,000 and there is no mini-trading available — the minimum position size is 1 lot. TeleTRADE offers probably the highest spreads in the industry — 5 pips on EUR/USD. I don’t know why would anyone even bother trading with such a high spread. Another disadvantage of this broker is the numerous accounts of traders complaining about their brokerage ethics and services (including training).

EUR/USD Tumbles after FOMC Meeting

EUR/USD showed some really promising growth earlier today. The optimistic mood at the financial markets was based on the FOMC meeting’s expectations and the expectations that the «bad bank» plan will be approved soon. The Federal Reserve meeting showed that the committee is still sees the U.S. economic conditions as deteriorating. EUR/USD is currently down to 1.3125 — down from 1.3225 level. where it traded right before the FOMC statement release.

U.S. commercial crude oil inventories advanced by 6.2 million barrels last week. Considering 1.2 million barrels growth during the previous week, the oil inventories now show that the supply is significantly greater than the demand for this energy resource.

Federal Open Market Committee at its scheduled meeting, which ended today, decided to leave the interest rate unchanged in the range between 0% and 0.25%. The released statement says that the economy declined further since their last meeting in December and that they will need to expand the purchases of the troubled assets and the long-term Treasury securities as well:

The Federal Open Market Committee decided today to keep its target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

EUR/USD Falls Steadily as Economic Conditions Worsen in U.S.

EUR/USD posted a rather deep decline today after showing some weak drops during the previous two days. The U. S. macroeconomic reports from the employment, industrial and housing sectors were all negative today. EUR/USD is now trading near 1.2976 after opening at 1.3150.

Durable goods orders decreased by 2.6%, while the consensus forecast for the decline was at 2%. More than that, the last month decline was revised more than twice from 1.5% to 3.7%.

Initial jobless claims grew from 585k (revised down from 589k) to 588k last week. The market participants expected them to decline to about 575k.

The new home sales declined to the annual rate of 331k in U.S. in December. They fell from 388k reported for November (revised down from 407k) and are below the 400k estimate.

Dollar Continues to Gain as GDP Falls in 4th Quarter

EUR/USD continued to fall today for the fourth straight day as the advance GDP report for the fourth quarter showed a considerable decline of the economic output in U.S. The currency pair is currently trading near 1.2795.

GDP (advance) in the Q4 of 2008 decreased at an annual rate of 3.8%. The decline followed 0.5% contraction in the third quarter, but was significantly below the estimated 5.4% drop.

Chicago PMI declined from 35.1 to 33.3 in January, while a drop only to 34.9 was expected by the market participants.

Michigan Sentiment Index rose above the previous month’s value of 60.1 (which was revised down from 61.9) in January and was reported at 61.2. The average forecast for this index was at 61.9 for January.