Key To The Popularity Of Foreign Exchange Trading Is "Margin"

By John Eather

Margin is one of the key features that makes foreign exchange trading so exciting a prospect. Without a factor like margin, trading in this area would be completely out of reach for the ordinary man in the street who wants to invest in this area. However, what exactly does "Margin" mean?

Margin allows traders in forex to leverage by controlling a large amount of currency with a proportionately small amount, or what is called a deposit. Essentially a margin account has to be opened through a foreign exchange broker and the trader is then able to control currency lots. Currency lots vary in size but they generally are around $100 000.

The leverage the trader gains from the margin account is expressed as a ratio. For instance a leverage ratio of 100:1 means the trader is able to have access to control over 100 x their deposit amount of forex assets. So essentially in a $100 000 standard forex lot with a 1% margin will require a deposit of $1000.

Trading on a margin means that the broker is able to have access to very large profits. But as in all methods of investment there is risk too, so by the same token losses can be made. But reward does after all favor the brave. There are safeguards available that can limit the risk of losses and a broker will terminate a transaction which goes above the deposit margin. However it is still possible to lose more than the original deposit amount even if a small change in foreign exchange is experienced. By the same token, so can large profits be made.

Cash is traded in far larger units than foreign exchange. A good example of this is the USD, this currency trades down to 4 decimal places. In other words, what might be $1.35 in normal currency; in forex would be $1.3576. The smallest currency exchange unit is the pip. In a $100 000 lot the pip equals $10. and while $10 might have some meaning to a tourist from the US going on holiday, it has little meaning to an investor. So if the currency of exchange increases say to $1.457, it would either mean a loss or profit of $10. - 23223

About the Author:

Foreign Exchange Trading can be dangerous if you don't do your homework. For more details regarding Online Forex Trading click on the links included in this text.

A Stock Market History Guide

By Matt Harris

The more you understand about any subject, the more interesting it becomes. As you read this article you'll find that the subject of stock market is certainly no exception.

Almost as if the entire planet is vibrating out of control, has some kind of harmonic resonance pushed us out of kilter, like we are getting disconnected from our core and spiralling out of control? The stock market has seen many cycles of rising and falling investment values, and much of the US economy is tied to this market. Because so many individuals invest in the stock market these days, the ups and downs of the stock market affect more than just big businesses and government.

It's amazing to think of the impact that those 24 merchants had on stock market history and the world, even in the present age. Good stocks listed in Indian stock market have consistently given better returns than many other stock markets around the world in Stock market history. In the past 60 years of stock market history, the lowest multiple of bottom-of-channel earnings has been 10x, which occurred briefly in 1974 and again in 1982.

That's one reason why I think those long, flat periods that I mentioned in 100 Years of Stock Market History are important. For bulls and bears alike, the 1930s was the most fantastic period in stock market history. Stock prices collapsed between 1929 and 1932, losing an average 88%, but industrial, rail, and utility stocks all shot up from their lows in the summer of 1932, anticipating the end of hard times. It may have been the worst year in stock market history, but we can?t remember when we had such a good time. We barely broke a sweat the entire year; never were there more jackasses to laugh at or more con artists to admire.

It seems like new information is discovered about something every day. And the topic of stock market is no exception. Keep reading to get more fresh news about stock market.

The main reason is that people are naturally cautious, especially with their own money, and the return on stocks is highly volatile from day to day. This inclination toward caution is perfectly reasonable, reflecting an intuitive understanding of an important financial truth: the average return is not the only thing that matters when evaluating an investment. Shiller, a respected expert on market volatility, offers an unconventional interpretation of recent U.S. He warns that poorer performance may be in the offing and tells us how we--as a country and individually--can respond.

According to findings by Phil Maymin, professor of finance and risk engineering at New York University, the more regular the beat on Billboard's top singles, the more volatile the American markets. After studying decades of Billboard's Hot 100 hits, Maymin found that songs with low "beat variance" had an inverse correlation with market turbulence.

Thus, stock market chart history helps a person in many ways in ascertaining the stock market moves and in making right types of moves regarding selling and buying of different types of stocks. The above given fact was an imaginary one and now, let us try to understand more about the stock market chart history by taking as examples the stock markets of U.S in 1920s and 1930s. The private banks also started to increase money at that time by issuing their own shares and stocks and selling them in the market to increase their own funds. This also lured the rich people as they saw that it was a good method of getting richer. According to Murray Sayle, the Dutch were the originators of short selling, option trading, debt-equity swaps, merchant banking, unit trusts, and other speculative instruments. - 23223

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Learn more about the stock market history and find out how does the stock market work at ForexMomentum.info

The simple and easy to use Forex trading platform

By Collin De Ruyck

When I started into Forex trading online I wanted a system that was easy to use, and easy to understand. When your learning a new system of making money - you want your tools to be as easy as they can be on you. I am using the eToro forex trading platform my trading experience has got a ton better and profitable!

With eToros winning combination of financial know how and user friendly interface you can monitor, share, and discuss your trading activity while enjoying the latest financial updates all from the comfort of your own home and with the click of your mouse.

The cleanest trading platform ever!

When it comes to learning a new way of making money, training and education is very important. eToro gives you all the tools you need to fully understand how trading forex works and how you can be successful at it.

Getting started with eToro forex trading platform

Now, I am going to give you a little walk through of how to get started with eToro and how to get the trading platform installed on your computer. - 23223

About the Author:

The Forex Global Trading Group was started to help new forex traders get going in this 3 Trillion dollar a day business. To learn how to get set up and to finish this review of eToro please read eToro Forex Trading Platform Review

What You Need To Know About FDIC Coverage

By Melony Bronk

What's the FDIC?

The world financial crisis has dried up the credit market, caused money giants like Lehman Brothers to crash, and forced gigantic banks to combine, making many folks wonder where their money will be safe. Through the FDIC or the Federal Deposit Insurance Corporation the bank is still the best place to keep your money regardless of what occurs to your bank. In October 2008 the deposit insurance was briefly raised to $250,000 per depositor thru December 31, 2009, so if your area bank falls down you can still be guaranteed your deposit up to $250,000.

FDIC 101

Established in 1933, the FDIC was made to guarantee public confidence in the banking system. This worked by providing all depositors in FDIC-insured banks coverage up to $5,000 ( in the thirty's ), and second by taking over for a failed bank to gather and sell the bank's assets to settle the bank's debt including claims for deposits above the insured amount. The FDIC receives its funding from premiums paid by insured banks as well as revenues from its investments in US Treasury securities; no federal or state taxes are used.

When are you safe?

To use the full protection the FDIC offers, there are two things to keep in mind. First FDIC coverage does not extend to all financial firms so ask your bank if they are covered or check the FDIC site to see if you bank is listed. Second coverage is for individual deposit accounts only up to $250,000 so no stocks, bonds, safety deposit boxes, hedge funds, and so on.

How About $250,000+

For coverage beyond the $250,000 there are some particular examples like making deposits under different ownership categories where excess coverage is allowed. Revocable Trust Accounts, or a deposit account opened by an individual with the stated goal of the account being turned over to a number of beneficiaries on the passing of the first account holder, can receive over $250,000. As an example if Mr. Jones has a deposit account worth $500,000, both his children would get $250,000 each if they were the beneficiaries named on the account at the time of his death. - 23223

About the Author:

Learn more regarding FDIC insurance at MindOnYourMoney.com - go to the investing site and read the complete article regarding FDIC insurance.

Learn Currency Correlations

By Hass67

Everything is interrelated in the forex markets. It is important for you to understand that the price action of each currency pair is not mutually exclusive.

Most of the currency pairs move relative to one another. Understand that different currency pairs are correlated. These correlations can be positive or negative.

Knowledge of how strong this relationship is and its direction can help you in developing your trading strategies with a new perspective. This has the potential to become a great trading tool for you.

Correlations are calculations based on past pricing data between different currency pairs. It is always a number between -1 and +1. These numbers can provide you with a lot of information that can maximize returns, minimize risk and help you avoid counter productive trading.

Lets use an example to make it clear. Suppose USDJPY and USDCHF has a positive correlation of +0.83 last month. This number is close to +1. It indicates that both pairs move together most of the time in the same direction.

So, if you are trading USD/JPY and USD/CHF at the same time, it will double up your position if you take long positions or short positions on both simultaneously. What it means is this that if you lose a trade on USD/JPY, the chances are that you will also lose the trade on USD/CHF 83% of the times.

Take another example. Suppose EUR/USD and USD/CHF have a negative correlation of -0.9 in the past month. Both the pairs are moving in opposite directions. If you go long on one, it is not a good strategy to go short on the other. It will only double up your position and increase your risk.

When investing in two pairs at the same time, try to choose such pairs that have correlations close to zero. This will make the two pairs almost independent of each other and you can invest in both of them safely.

Always keep this in mind that currency markets are constantly changing. The correlation between currency pairs also keep on changing. It would be a good idea to calculate the correlations between pairs on a monthly basis. - 23223

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading; stocks and forex. Read about Trend Forex System. Best Forex Signal Service. Download Forex Scalping Cheat Sheets!