In financial markets, the retail forex (retail off-exchange currency trading or retail FX) market is a subset of the larger foreign exchange market. This "market has long been plagued by swindlers preying on the gullible," according to The New York Times[1]. Whilst there may be a number of fully regulated, reputable international companies that provide a highly transparent and honest service, it's commonly thought that about 90% of all retail FX traders lose money. [2] [3]
It is now possible to trade cash FX, or forex (short for Foreign Exchange (FX)) or currencies around the clock with hundreds of foreign exchange brokers through trading platforms. The reason that the business is so profitable is because in many cases brokers are taking the opposite side of the trade, and therefore turning client capital directly into broker profit as the average account loses money. Some brokers provide a matching service, charging a commission instead of taking the opposite site of the trade and "netting the spread", as it is referred to within the forex "industry."
Recently forex brokers have become increasingly regulated. Minimum capital requirements of US$20m now apply in the US, as well as stringent requirements now in Germany and the United Kingdom. Switzerland now requires forex brokers to become a bank before conducting FX brokerage business from Switzerland.[citation needed]
Algorythmic or machine based formula trading has become increasingly popular in the FX market,with a number of popular packages allowing the customer to program his own studies.
The most traded of the "major" currencies is the pair known as the EUR/USD, due to its size, median volatility and relatively low "spread", referring to the difference between the bid and the ask price. This is usually measured in "pips", normally 1/100 of a full point.[citation needed]
According to the October 2008 issue of e-Forex Magazine, the retail FX market is seeing continued explosive growth despite, and perhaps because of, losses in other markets like global equities in 2008
Thursday, July 9, 2009
Interpretation for the Financial Markets
While the overall number of jobs added or lost in the economy is obviously an important current indicator of what the economic situation is, the report also includes several other pieces of data that can move financial markets:
1. What the unemployment rate is in the economy as a percentage of the overall workforce. This is an important part of the report as the amount of people out of work is a good indication of the overall health of the economy, and this is a number that is watched by the Fed as when it becomes too low (generally anything below 5%) inflation is expected to start to creep up as businesses have to pay up to hire good workers and increase prices as a result.
2. What sectors the increase or decrease in jobs came from. This can give traders a heads up on which sectors of the economy may be primed for growth as companies in those sectors such as housing add jobs.
3. Average hourly earnings. This is an important component because if the same amount of people are employed but are earning more or less money for that work, this has basically the same effect as if people had been added or subtracted from the labor force.
4. Revisions of previous nonfarm payrolls releases. An important component of the report which can move markets as traders re-price growth expectations based on the revision to the previous number
1. What the unemployment rate is in the economy as a percentage of the overall workforce. This is an important part of the report as the amount of people out of work is a good indication of the overall health of the economy, and this is a number that is watched by the Fed as when it becomes too low (generally anything below 5%) inflation is expected to start to creep up as businesses have to pay up to hire good workers and increase prices as a result.
2. What sectors the increase or decrease in jobs came from. This can give traders a heads up on which sectors of the economy may be primed for growth as companies in those sectors such as housing add jobs.
3. Average hourly earnings. This is an important component because if the same amount of people are employed but are earning more or less money for that work, this has basically the same effect as if people had been added or subtracted from the labor force.
4. Revisions of previous nonfarm payrolls releases. An important component of the report which can move markets as traders re-price growth expectations based on the revision to the previous number
Interpretation for the Economy
In general increases in employment means businesses are hiring which means they are growing and also that more people are employed so more people have money to spend on goods and services further fueling growth. The opposite of this is obviously true for decreases in employmentWhile the overall number of jobs added or lost in the economy is obviously an important current indicator of what the economic situation is, the report also includes several other pieces of data that can move financial markets
Nonfarm payrolls
Nonfarm payrolls is a U.S. economic employment report released monthly.
It is a compiled name for goods-producing, construction and manufacturing companies. The U.S. Department of Labor Bureau of Labor Statistics releases preliminary data covering the previous month's survey at 8:30 a.m. Eastern Time on the first Friday of every month, or according to the U.S. Department of Labor the report is released on the third Friday after the conclusion of the reference week, i.e, the week which includes the 12th of the month, and usually heavily affects the US dollar, the bond market and the stock market, if it is even slightly different from what is expected.
The figure released is the change in nonfarm payrolls (NFP), compared to the previous month, and is usually between +10,000 and +250,000 during non-recessional times. The NFP number is meant to represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry. The farming industry is not included because of its seasonal hiring which would distort the number around harvest times (as farms add workers and then release them after the harvest is complete).
It is a compiled name for goods-producing, construction and manufacturing companies. The U.S. Department of Labor Bureau of Labor Statistics releases preliminary data covering the previous month's survey at 8:30 a.m. Eastern Time on the first Friday of every month, or according to the U.S. Department of Labor the report is released on the third Friday after the conclusion of the reference week, i.e, the week which includes the 12th of the month, and usually heavily affects the US dollar, the bond market and the stock market, if it is even slightly different from what is expected.
The figure released is the change in nonfarm payrolls (NFP), compared to the previous month, and is usually between +10,000 and +250,000 during non-recessional times. The NFP number is meant to represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry. The farming industry is not included because of its seasonal hiring which would distort the number around harvest times (as farms add workers and then release them after the harvest is complete).
Interpretation
Traders often look to enter a position on the break of the neckline, interpreting the neckline as a support level. Upon a break of the neckline, traders will frequently set a target profit equal to the distance between the neckline and the head of the chart. A stop loss order is frequently set at where the right shoulder is. As a result, the head and shoulders pattern can be used by traders not only to identify entry points, but also to manage the risk of the trade as well.
The image below illustrates how a head and shoulders pattern can help traders identify entry points, stop-loss levels, and target profit levels.
The image below illustrates how a head and shoulders pattern can help traders identify entry points, stop-loss levels, and target profit levels.
Structure of Head and Shoulders Pattern
Head and shoulders patterns have four elements: a left shoulder, which is essentially a relative peak; a head, which is a peak above both shoulders; a right shoulder, which is a peak that is approximately parallel to the left shoulder; and a neckline, which serves as a support, or bottom, of price activity within the range of the head and shoulders pattern. The chart below illustrates.
Head and shoulders (chart pattern)
The head and shoulders pattern is a commonly found pattern in the price charts of financially traded assets (stocks, bonds, futures, etc). The pattern derives its name from the fact that its structure is visually similar to that of a head with two shoulders
Contents[hide]
1 Structure of Head and Shoulders Pattern
2 Interpretation
3 See also
4 External links
Contents[hide]
1 Structure of Head and Shoulders Pattern
2 Interpretation
3 See also
4 External links
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