Wednesday, July 29, 2009

Trading Strategy

Making trading decisions and developing a sound and effective trading strategy is an important foundation of trading. Before developing a trading strategy, a trader should have a working knowledge of technical analysis as well as knowledge of some of the more popular technical studies. Please visit these pages for detailed information.

Sample Strategy 1 - Simple Moving Average

Successful trading is often described as optimizing your risk with respect to your reward, or upside. Any trading strategy should have a disciplined method of limiting risk while making the most out of favorable market moves. We will illustrate one decision making model which uses a Simple Moving Average ("SMA") technical study, based on a 12-period SMA, where each period is 15 minutes. This is one example of a trading decision making strategy, and we encourage any trader to research other strategies as thoroughly as possible.

We will use a simple algorithm: when the price of the currency crosses above the 12-period SMA, it will be taken as a signal to buy at the market. When the currency price crosses below the 12-period SMA, it will be a signal to "Stop and Reverse" ("SAR"). In other words, a long position will be liquidated and a short position will be established, both with market orders. Thus this system will keep the traders "always in" the market - he will always have either a long or short position after the first signal. In the chart below, the white line represents the price of EURUSD, the purple line represents the 12-period SMA of EURUSD, and the red line indicates where EURUSD crosses above the SMA, generating a buy signal at approximately 1.2780:

This is a simple example of technical analysis applied to trading. Many strategies used by professional traders make use of moving averages along with other indicators or "filters". Note that the moving average method has an element of risk control built in: a long position will be stopped out fairly quickly in a falling market because the price will drop below the SMA, generating a stop-and-reverse signal. The same holds true for a sell signal in a rising market. Note that the SMA is generated automatically by GCI's integrated charting application.

Sample Strategy 2 - Support and Resistance Levels

One use of technical analysis, apart from technical studies, is in deriving "support" and "resistance" levels. The concept here is that the market will tend to trade above its support levels and trade below its resistance levels. If a support or resistance level is broken, the market is then expected to follow through in that direction. These levels are determined by analyzing the chart and assessing where the market has encountered unbroken support or resistance in the past.

For example, in chart below EURUSD has established a resistance level at approximately 1.3970. In other words, EURUSD has risen up to 1.3970 repeatedly, but has been unable to move beyond that point:

The trading strategy would then be to sell EURUSD the next time it gets close to 1.3970, with a stop placed just above 1.3970, say at 1.3985. This would have indeed been a good trade as EURUSD proceeded to fall sharply, without breaking the 1.3970 resistance. Hence a substantial upside can be achieved while only risking 10 or 15 pips (.0010 or .0015 in EURUSD).

Removed account

Well it has been a very busy time since my last post. I was a bit annoyed as my InterbankFX demo account was deleted I have since contacted them about this issue to no avail. I have since switched to StratergyBuilderFX version of MetaTrader as they are much more reliable. They also have the spot Gold prices. Below was the last statement I saved from my since deleted account.

Here is the equity curve

Here is the P/L details:

Gross Profit: 3 050.00
Gross Loss: 921.90
Total Net Profit: 2 128.10
Profit Factor: 3.31
Expected Payoff: 106.41
Absolute Drawdown: 0.00
Maximal Drawdown (%): 460.00 (7.0%)
Total Trades: 20
Short Positions (won %): 11 (54.55%)
Long Positions (won %): 9 (100.00%)
Profit Trades (% of total): 15 (75.00%)
Loss trades (% of total): 5 (25.00%)
Largest profit trade: 680.00 loss trade: -260.00
Average profit trade: 203.33 loss trade: -184.38
consecutive wins ($): 7 (1 530.00)
consecutive losses ($): 2 (-460.00)
Maximal consecutive profit (count): 1 530.00 (7)
consecutive loss (count): -460.00 (2)
consecutive wins: 4 consecutive losses: 2

Fairly average returns but it is a learning process.

AUD Long Past Trades

As I said in my previous posts My old account was deleted. This is my new demo account using SBFX. My First trade was on the Australian dollar I went long at 0.7654. Once my trade started to go into profit I moved my stop loss to 0.7680. Below is the chart:

My Take profit was 0.7690. As you can see from the chart above my stoploss was hit by volatility. I had 3.5 lots invested therefore I made a profit of $910. From this trade I learnt that at certain times tight stop losses will be hit by volatility.

Lack of Discipline on AUDUSD Short

My Second Trade was a 3.5 lot short on the AUD/USD. I sold at 0.7728 set my stoploss at 0.7755 and my take profit at 0.7715. During this trade I decided to take a small profit early instead of risking the trade turning around on me. The chart is shown below:

As you can see from the chart above if I had the discipline to see this trade out it would have hit my take profit. This trade ended in a profit of USD$140. My running total of profit USD$1050.

My First Trade on the EUR/USD

Well what can I say about this trade. I should have never entered it to start with. I sold 3.5 lots 1.2780 with my stoploss at 1.2790 with my take profit at 1.2770 and once again as in my previous post I lot my fear and emotion take over I exited the trade once it came into a small 3 pip gain. This is something that I need to work on. Below is my chart of this trade:

As you can see my take profit would have been hit if only I didn't intervene in the trade. I exited with a profit of USD$105.

Short AUD/USD Sticking to the plan(At any cost)

If you have read any of my past trades you would see that I have lacked discipline and have acted with fear. This trade I was detrimened to let run NO MATTER WHAT. I sold 3.5 lots at 0.7699. My stop loss was set 0.7710 and my take profit at 0.7694. I thought this would be a quick little scalp. The chart shown below:

As you can see from the chart above my quick little scalp turned into a USD$385 dollar loss. However despite this loss I am happy as I did not intervene with fear. I let the trade run it's course and even though I took a loss I stuck to my plan.

Learning to trade the EUR/USD

The next six trades I will summarize as one as the are all related. I entered into an initial long position the EUR/USD of 5 lots at 1.2733 20 minutes latter I bought another 5 lots for 1.2736 then three minutes latter I bought two lots at 1.2723 then a minute latter I bought 1 more lot this time for 1.2720 finally ten minutes latter I bought three more lots at 1.2706. Now I have the sum total of 16 lots invested or 1.6 Million USD. Why so many lots you ask? I had extremely strong buy signals backed up by fundamentals. Below shows you the chart:

I scaled out of my positions at the following levels:

10 lots at 1.2745 or 21 pips
3 lots at 1.2739 or 51 pips
3 lots at 1.2730 or 24 pips

This trade ended well with a profit of USD $2280. Looking back at this trade now I think that my risk level was fairly large. My money management is something I need to think about.

The Short EUR/USD
I have included this next trade as it is related to my block of trades above. After exiting my long positions on the EUR/USD I shorted 10 lots at 1.2759 with a take profit 1.2745. This was a short time scalp taking advantage of the volatility. As can be seen in the chart below:

This trade made a quick 14 pips or USD$1400. The EUR/USD is a very volatile pair. I think I will stick to the AUD/USD for a while longer. So far my current P/L is at USD$4350.

Daily Commentary

Thursday, 30 July 2009 - Market Commentary

:: Australian Dollar: After attempting to retest the 83 cent handle in early Asian trade yesterday the Aussie dollar ran into some resistance, peeling back to settle around 0.8250 during the afternoon. Early European investors however sold the high yielder after concerns about the Japanese economy following the country’s poor Retail Trade data, a much lower than expected German CPI reading and sharp declines in commodity prices. With Euro retreating and risk aversion intensifying in U.S trade the AUD hit an overnight low around 0.8125 before bouncing slightly to open this morning back at 0.8165. Today’s volatile readings on Building Approvals and New Home Sales for the month of June will give economists some insight into the state of the housing market with some upside expected to eventuate following the announcements. It does appear however that for the very near term at least the AUD will struggle to regain a strong footing above 0.8220 with 81 cents a likely target from here.

- We expect a range today in the AUD/USD rate of 0.8100 to 0.8200

:: Great Britain Pound: Despite lower than expected Mortgage Approvals and Consumer Credit readings for the month of June the Pound Sterling managed to hold on to its early London lows of 1.6345 against the Greenback. Of particular concern to economists was the lowest increase in consumer lending since records began on this indicator 16 years ago. The GBP did however manage to briefly spike back above 1.6400 only to open this morning back at 1.6360. The GBP/AUD cross rate found some relief following a large fall in the Aussie dollar, bouncing back from recent lows at 1.9825 to trade above the magical 2 mark and opens this morning at 2.0045.

- We expect a range today in the GBP/AUD rate of 1.9950 to 2.0100

:: New Zealand Dollar: The Kiwi dollar traded sideways over the last 24 hours seemingly in a holding pattern between 0.6530 and 0.6590 ahead of this morning’s RBNZ meeting. At the time of writing the Reserve Bank had announced no change to the Official Cash Rate or OCR as its referred to. However the markets reacted savagely to the accompanying statement punishing the Kiwi lower from 0.6565 to 0.6500 immediately after the release. In what was an extremely dovish assessment of the local economy and the banks stance on Monetary Policy Governor Bollard said “We consider it appropriate to continue to provide substantial monetary policy stimulus to the economy. The OCR could still move modestly lower over the coming quarters. We continue to expect to keep the OCR at or below the current level through until the latter part of 2010” and that “New Zealand has not benefited to any significant extent from the rebound that has occurred recently in global hard commodity prices.” He went on to add that “...the level of the New Zealand dollar and wholesale interest rates are higher than assumed in our forecasts. The level of the dollar in particular, is not helping the sustainability of future growth, and brings with it additional economic risks.” Given the statement we expect the Kiwi to continue lower today.

- We expect a range today in the NZD/USD rate of 0.6420 to 0.6520

:: Majors: The Euro continued to decline in overnight trade dropping after lower than expected German inflation data. Economists had forecast a decline in the CPI figure in July however preliminary readings suggest a larger than expected 0.6% decline on an annualised basis, the largest yearly decline in over 22 years. The news started the selloff in EUR/USD to test the 1.4 handle for the first time in over two weeks with added selling pressure coming after the release of U.S Durable Goods data. Demand for big ticket items such as cars and planes declined 2.5% in June, a much larger than predicted fall sending investors back into safer assets. The Greenback also surged against the Yen, jumping from 94.00 to an overnight high of 95.35 with yesterday’s poor Japanese Retail Trade data adding to the weakness in the JPY. In what was a beacon of hope for the U.S economy the Federal Reserve Banks Beige Book revealed that there had been some moderation in the pace of the economic decline, with Friday’s U.S GDP data to determine how severe the real situation was in Q2 this year.

Strategy Testing in MetaTrader 4

I am sure anyone who is reading this document knows MetaTrader has a feature which allows you to back test your strategies. This is called the Strategy Tester, it can be accessed via the view menu or by the keyboard shortcut CTRL+R. Below is a screenshot showing the Strategy Tester interface:

This article is focused on improving the reliability of this tool. It does not however go into any detail about optimization. Firstly we will run a back test using a simple Expert Advisor with the standard default settings in MetaTrader the data centre being used is the InterBankFX data server. We will then import Alpari data and compare the results.

Standard Data

For the first test we set up with the Currency to be tested the AUD/USD. The period we use is daily and the model we use is every tick (based on all available least timeframes with fractal interpolation of every tick). The time period we will be testing is from 15/06/2004 to 28/05/2006. We use the simple MACD Expert adviser. The following summarizes the results obtained with the demo data:

Strategy Tester Report MACD Sample

Bars in test	559	Ticks modelled	4263759	Modelling quality	42.15%
Initial deposit	1000.00
Total net profit	470.00	Gross profit	635.00	Gross loss	-165.00
Profit factor	3.85	Expected payoff	26.11
Absolute drawdown	0.00	Maximal drawdown (%)	165.00 (11.1%)
Total trades	18	Short positions (won %)	12 (100.00%)	Long positions (won %)	6 (83.33%)
		Profit trades (% of total)	17 (94.44%)	Loss trades (% of total)	1 (5.56%)
Largest		profit trade	50.00	loss trade	-165.00
Average		profit trade	37.35	loss trade	-165.00
Maximum		consecutive wins (profit in money)	13 (481.00)	consecutive losses (loss in money)	1 (-165.00)
Maximal		consecutive profit (count of wins)	481.00 (13)	consecutive loss (count of losses)	-165.00 (1)
Average		consecutive wins	9	consecutive losses	1

Improving Modeling Quality

As we can see from our test the modeling quality was 42.15%. I for one would want to have a much better modeling quality then 42.15%. The one minute data we have from our demo feed has several gaps in it for one reason or another. These gaps reduce the quality of our modeling as the strategy tester will interpolate the areas between these gaps which may or may not trigger invalid buy or sell signals.

Gap filling (the free way)

If you want to improve modeling quality without spending vast sums of money you have come to the right place. A great free source of 1minute data for MetaTrader is alpari’s databank. Most currencies are available as well as Gold and various CFD’s.

Step By Step Setup Guide

Step One

The first step is to download the 1M currency data for the desired currency pair. You can access this data at http://www.alpari-idc.com/en/dc/databank.php. Or via the direct links below:

These files will be in a zip format. The first thing you will need to do is un-zip the file. You should now have a .hst file.

Step Two
We now need to prepare MetaTrader for this new data. We change the default max bars in history, in order for our modeling to be more reliable. To do this we go to the tools menu then options or use the keyboard shortcut CTRL+O. The following toolbox should popup:

Click charts tab, now in the charts tab in a field called Max bars in history change that field to 2147483647. (This is the maximum value MetaTrader will accept).

Step Three

Now we are ready to import our data. To do this we go to History Centre. This is in the tools menu or can be accessed via the keyboard shortcut F2, the History Centre screen will pop up as shown below:

Double click on the Forex button shown above this will cause the currency symbols to dropdown. The next step is to double click on the currency you have downloaded the data for. This will open a drop down menu with the different timeframes. Double click on the 1 minute timeframe. Then click on import button and then browse button to locate your .hst file then click OK (Note: If you don’t see your .hst files you need to click the file types dropdown menu in the open dialog box and select MetaQuotes files(*.hst) ). You can now close the History Centre window.

Step Four
Now we have our data imported we need to open it as an offline chart. To do this we go to the file menu and click open offline. This will open a new window click on the one minute timeframe for the currency and then click open. This will then open a new chart as shown below.

Step Five
The next step is to convert the period using period converter script. To do this with the offline chart shown above, Double click on the period converter script. This will bring up a new window like the one shown below:

You need to click the inputs tab shown above and then in the values field insert the number of minutes you wish to convert the data to, and then click Ok. Do this for the following values 5, 15, 30, 240 and 1440.

Note: There will be no visible change to chart window, however in the log file of the terminal window you can confirm that the records have been successfully written. When you run the period converter script for the second and subsequent times a dialog box will appear asking if you want to replace the current period converter script you need to click yes to convert the next timeframe, make sure the previous period converter script has already finished.

Step Six

Congratulations you got this far preferably without tearing your hair out. Now we have reached our final step testing our new data. We rerun Strategy Tester with our original settings (Make sure the recalculate textbox is highlighted or you will just be using old data). Now sit back with your beverage of choice as Strategy Tester go to work. Remember to always make sure the model you use is every tick (based on all available least timeframes with fractal interpolation of every tick).

Step Seven
Repeat steps 1 to 6 for every currency you wish to test.

Conclusions

As a point of comparison I ran strategy tester with exactly the same settings with Demo data as shown page 2 and the Alpri data shown on the following page. As you can see there is a 30% increase in modeling quality with the Alpri data, this is still only 72.4% modeling quality. This of course is not optimal however it is better then the alternative. In dollar terms using the Alpari data a historical profit of USD$385 was recorded. In contrast using the demo data a profit of USD$470 was recorded. This may seem like a small amount however if the tests were extended to longer timeframes it would be much more significant. A final note back testing is better then no testing however it should be used with caution even with 99.999% model quality and a profitable EA it is no guarantee that your strategy will perform well LIVE. It is always a good idea to forward test with a mini account.

Strategy Tester Report MACD Sample (Alpari)

Bars in test	511	Ticks modelled	994306	Modelling quality	72.41%

Initial deposit	1000.00
Total net profit	387.00	Gross profit	583.00	Gross loss	-196.00
Profit factor	2.97	Expected payoff	21.50
Absolute drawdown	0.00	Maximal drawdown (%)	196.00 (13.5%)

Total trades	18	Short positions (won %)	10 (100.00%)	Long positions (won %)	8 (87.50%)
		Profit trades (% of total)	17 (94.44%)	Loss trades (% of total)	1 (5.56%)
Largest		profit trade	50.00	loss trade	-196.00
Average		profit trade	34.29	loss trade	-196.00
Maximum		consecutive wins (profit in money)	13 (452.00)	consecutive losses (loss in money)	1 (-196.00)
Maximal		consecutive profit (count of wins)	452.00 (13)	consecutive loss (count of losses)	-196.00 (1)
Average		consecutive wins	9	consecutive losses	1

Disclaimer: Forex trading is risky. The high degree of volatility within the Forex market largely within the intraday market, coupled with ability to leverage your positions means that losses can be greater then your initial investment. This article is for educational purposes only and does not constitute financial advice.

Why trade Foreign Currencies?

There are many benefits and advantages to trading Forex. Here are just a few reasons why so many people are choosing this market:

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No commissions
No clearing fees, no exchange fees, no government fees, no brokerage fees. Brokers are compensated for their services through something called the bid-ask spread.
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No middlemen
Spot currency trading allows you to trade directly with the market responsible for the pricing on a particular currency pair. As an IB in forex we are paid by the broker. It does not cost you a penny more.
*

No fixed lot size
In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot Forex, you determine your own lot size. This allows traders to participate with accounts as small as $250 (although we explain later why a $250 account is a bad idea).
*

Low transaction costs
The retail transaction cost (the bid/ask spread) is typically less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. Of course this depends on your leverage and all will be explained later.
*

A 24-hour market
There is no waiting for the opening bell - from Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade--morning, noon or night.
*

No one can corner the market
The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time.
*

Leverage
In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
*

High liquidity
Because the Forex Market is so enormous, it is also extremely liquid. This means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will. You are never "stuck" in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (a limit order), and/or close a trade if a trade is going against you (a stop loss order). Disclaimer:Placing Contingent Orders may not limit your losses to the intended amounts.
*

Free “Demo” accounts, charts, news, and analysis
Most online Forex brokers offer 'demo' accounts to practice trading, along with breaking Forex news and charting services. All free! These are very valuable resources for “poor” and SMART traders who would like to hone their trading skills with 'play' money before opening a live trading account and risking real money.
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“Mini” and “Micro” trading
You would think that getting started as a currency trader would cost a ton of money. The fact is, compared to trading stocks, options or futures, it doesn't. Online Forex brokers offer "mini" and “micro” trading accounts, some with a minimum account deposit of $300 or less. Now we're not saying you should open an account with the bare minimum but it does makes Forex much more accessible to the average (poorer) individual who doesn't have a lot of start-up trading capital.

What is traded on the Foreign Exchange market?

The simple answer is money. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the euro and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).

Because you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy. This is because the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country’s economy, compared to the economies of other countries.

Unlike other financial markets such as the New York Stock Exchange, the Forex spot market has neither a physical location nor a central exchange. The Forex market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Until the late 1990's, only the "big guys" could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start with! Forex was originally intended to be used by bankers and large institutions - not by us "little guys". However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to 'retail' traders like us.

All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site.

Currency College was created to introduce novice or beginner traders to all the essential aspects of foreign exchange, in a fun and easy-to-understand manner.

What is FOREX (Foreign Exchange)?

The simple sense of Forex (Forex currency exchange, Foreign Exchange) is simultaneous purchase and sale of the currency or the exchange of one country's currency for the one of another country. The world currencies do not have a fixed exchange rate and are always fluctuating being traded in the currency pairs like Euro/Dollar, Dollar/Yen an others. 85% of daily trades are taken by major currencies trading.
Investments usually deal with 4 major pairs: Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc or EUR/USD, USD/JPY, GBP/USD, and USD/CHF used to sign these pairs accordingly. These major pairs are considered as Forex market's "blue chips". You will not receive any dividends on the currencies. Well known "buy low - sell high" gives the profit for currency trades.
In case you have a forecast that one currency would get higher to another you can exchange the second one for the first one and wait for the profit. If you are lucky to see the trades following your forecast you can make an opposite transaction and to exchange currencies back gaining the profit.

FOREX may be classified

• Type of transactions. For example, there is an international conversion market (conversion transactions such as US Dollar / Japanese Yen or US Dollar / Canadian Dollar etc.).
Geographic feature. Unlike other financial markets the Forex market has no physical location, like stock exchange, for example. It operates through the electronic network of banks, computer terminals or just by phone. The lack of physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another across the major financial centers (Sydney, Tokyo, Hong Kong, Frankfurt, London, New York etc). In every financial center there are a lot of dealers, who buy and sell currencies 24 hours a day during the whole business week. Trading session starts in Far East, in New Zealand (Wellington), then Sydney, Tokyo, Hong Kong, Singapore, Moscow, Frankfurt-on-Maine, London and ends in New York and Los Angeles. Below there are approximate trading hours for regional markets (Moscow time

Why Forex?

Nowadays Foreign Exchange Market (FOREX) is the most profitable sector for your investments.
Unlike other financial markets the Forex market has no physical location, like stock exchange, for example. It operates through the electronic network of banks, computer terminals or just by phone. The lack of physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another across the major financial centers (Sydney, Tokyo, Hong Kong, Frankfurt, London, New York etc). In every financial center there are a lot of dealers, who buy and sell currencies 24 hours a day during the whole business week.
Here the most important reasons why Forex is so popular nowadays:
• Liquidity. Forex is the largest financial market in the world, with the equivalent of over 3-4 trillion changing hands daily when the volume on the stock markets is only 500 billions of dollars.
• Flexibility. Because of 24-hour trading participants of the foreign exchange market would not wait to react on some events, as this happens on other markets (for example: stock markets). On other markets you simply can be late if you have to wait till morning to show your reaction, as in the morning the event will be already in the price, greatly differ from the desired level.
• Lower transaction costs. Traditionally the Forex market has no commissions, except spread, the difference between ask and bid prices.
• Price stability. High liquidity helps ensure price stability, when unlimited contract size can be executed at a fair price. It helps to avoid the problem of instability, as it happens in the stock market and other exchange-traded markets because of the lower trade volume, where at one price only limited number of contracts can be executed.
• Margin. Margin size for trading on Forex is defined in the contract entered between a client and a bank or a brokerage company, which gives the opportunity to enter the market for the individuals and usually it is 1:100. So, the collateral of 1000 US dollars allows a trader to make

A Forex Robot

Is there any difference between FAP Turbo and FAP Turbo Swiss? This is the first question my friend asked me when I read aloud to him about this forex robot. Well yes, there are many differences between both the software's. It uses MetaTrade4 as its base while the latter uses Dukascopy as its platform. The liquidity provided by Dukascopy is almost unlimited and therefore the growth is definite. The percentage of success is high when compared to other forex robots. People are nowadays investing in this software because they trust the efficiency of this robot. The latest version of this software which is known as FAP Turbo Swiss Edition is being released this month.
FAP Turbo Swiss is made of many additional algorithms which are complex in nature and have the ability to sell currencies. They deal the trades in their own style and make profits within a short time period. You can sit back and relax if this software is installed in your computer. It takes care of your trades and makes your career stable. The reviews posted by people are a proof for this fact. There are sites present online which will help you in understanding the efficiency of this software.

Money Transfer/Remittance Companies as forex

Remittance companies perform high-volume low-value transfers generally by economic migrants back to their home country. In 2007, the estimated that there were $369 billion of remittances (an increase of 8% on the previous year). The four largest receive $95 billion. The largest and best known provider is Western Union with 345,000 agents globally.

Non-bank Foreign Exchange Companies

Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account.
It is estimated that in the UK, 14% of currency transfers/paymentsare made via Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.

Retail foreign exchange brokers

There are two types of retail brokers offering the opportunity for speculative trading and makers. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated by the and might be subject to .At present, the NFA and CFTC are imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone. It is not widely understood that retail brokers and market makers typically trade against their clients and frequently take the other side of their trades. This can often create a potential conflict of interest and give rise to some of the unpleasant experiences some traders have had. A move toward NDD (No Dealing Desk) and STP has helped to resolve some of these concerns and restore trader confidence, but caution is still advised in ensuring that all is as it is presented.

Investment management firms by forex

Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.
Some investment management firms also have more speculative specialist operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.

Hedge funds as speculators

About 70% to 90% of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars of and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.

Central banks

National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank Several scenarios of this nature were seen in the 1992–93 collapse, and in more recent times in Southeast Asia.

Commercial companies of forex

An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.

Banks

The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago

Market participation

Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.

Rate of forex

Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over 50-60 billion).[6] Because foreign exchange is an market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey. These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually 0–3pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".

Market size and liquidity of forex

• Presently, the foreign exchange market is one of the largest and most liquid financial markets in the world. Traders include large banks, central banks currency speculators, corporations, goverments, and otherfinancial institution. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over 3.2 trillion in April 2007 by theBank of international settelment. Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.
• Of the $3.98 trillion daily global turnover, trading in Londonaccounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%. In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.
• Exchange-traded FX future contracts were introduced in 1972 at the Exchange and are actively traded relative to most other futures contracts.
• Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.

foreign exchange market (currency, forex, or FX

The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies.
The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.
In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rate from the previous exchange rate regime which remained fixedas per the Bretton woods system.The foreign exchange market is unique because of
• its trading volumes,
• the extreme liquidity of the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
• the variety of factors that affectexchange rate.
• the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
• the use of leverage

FOREX MARKET