British Pound Currency Profile (Part I)

By Ahmad Hassam

Another name for the British Pound (GBP) is Pound Sterling. GBP is also known as the Cable. This name most probably struck in the late nineteenth century and the early twentieth century when most of the global trading used to be done through the cable. GBP used to be the international currency of choice in those days. United Kingdom (UK) is the fourth largest economy in the world. UK has a service oriented economy with manufacturing representing a small part of GDP. Manufacturing is only equivalent to one fifth of GDP.

London is still the forex center of the world. London Stock Exchange is still the second most important stock exchange in the world after the New York Stock Exchange. The British capital market systems are one of the most developed in the world and as a result finance and banking has become a strong contributor to the GDP.

UK has large reserves of oil and gas in its North Sea. Offshore drilling has made the energy production industry account for 10% of GDP which is one of the highest shares of any industrialized nation. UK is the largest producer and exporter of natural gas to EU although majority of UK GDP is from services.

Trade deficit is an important economic indicator for determining the strength or weakness of a currency. Overall, UK is a net importer of goods with a consistent trade deficit. Increases in energy prices such as oil will significantly benefit the large number of UK oil exporters. This is important for forex traders as energy prices are positively correlated with GBP.

The two main trading partners for UK are the EU and the US. The United States on an individual basis still remains UKs largest trading partner. However, the largest trading partner of UK is the EU. Trade between UK and EU accounts for almost 50% of UK imports and exports activities!

The leading import sources for UK are Germany, France, United States, Belgium and the Netherlands. The leading exports markets for UK exporters are the United States, France, Germany, Ireland and the Netherlands.

UK had rejected adopting Euro as its currency in June 2003. However, the possibility of Euro adoption will still be in the backs of minds of pound traders for many years to come. Now, if UK decides to join EMU, it will have significant ramifications for its economy.

One of the primary arguments used against adopting the Euro is that UK has sound macroeconomic policies that have worked very well for the country. The most important of these ramifications is the adjustment of UK interest rate with the Eurozone interest rate in case UK decides to join EMU.

Right now Brits are not in favor of a Euro entry. There are many arguments in favor of Euro entry and many against.UK is a highly political country with government officials highly concerned about the voter approval ratings. The voter opinion can change overtime. However, the likelihood of EMU entry will decline if the voters do not support Euro entry.

Bank of England: The Bank of England (BOE) is the UKs central bank. The Monetary Policy Committee is the nine member committee that sets the monetary policy for UK. It consists of a governor, two deputy governor, two executive directors of the central bank and four outside experts. The committee was granted operational independence in 1997. - 23223

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Treat Currency Trading As A Business

By Ahmad Hassam

Take forex trading as a business. You need to seriously treat trading as a business. If you are currently trading for a living or want to take on trading as a future substitute of your current job, you should always remember to take trading as a business.

How are you going to treat trading as a business? You need to give some consideration to the fact that how you are going to deduct your monthly expenses such as your computer equipment, your quote feed, your DSL line, travel to investment conferences and continuing education seminars. You should think whether you need to form a private limited company or a public limited company.

Take advantage of all the regular and necessary expenses as business deductions. This can help you save thousands of dollars annually. You should seek advice from a tax specialist so that you know the best way to cut your business expenses.

After you have consistently started making money in the market, it would be heart breaking to know that you cannot make expense deductions that could literally save you thousands of dollars.

Lets see what your expenses can be as a forex trader: You need to have a room where you have the required peace for trading. Then you have to have equipment that includes desktop computers, printers, laptop for travel and so one. Lets say these things cost you $5000. Suppose you rent a small one room office that could cost you like $500-1000 per month.

A price quote feed might cost you something like $200 per month. You need a good DSL connection for your trading, $50 per month for the DSL expense. You attend an investment conference that might cost you $1000 roundtrip airfare plus $300 per night for the night stay at a hotel.

There will be many business entertaining expenses for you. If you have business entertaining expenses and went to two investment conferences per year, you could be taking as little as $5000 to $25,000 per year in actual business expenses that could be deducted if you are running trading as a business.

Do you have a business plan? What business plan you have in place to protect the money you make in the market. If you are a small time investor and decide that trading for a living is something that interests you, you should think do you have the financial resources, time and emotional makeup to trade full time.

You need to cover your cost of living expenses, mortgage payments as well as your business expenses. As a long term trader what will you do when the market conditions change according to your system or methods?

Forex dealers provide free charts and quotes. But you have to cover the bid-ask spread each time you trade as a trading cost. The forex market offers you a unique opportunity to participate on a pay as you go method because there are no commissions.

Suppose you are a day trader, you trade twice a day with a 3 pips bid-ask spread. Suppose you trade 10 lots ($100,000) each trade. So your daily trading cost will be $600 = (3) (2) (10) (10). If there are 200 trading days in a year, it means $120,000. So you need to cover $120,000 as your trading cost annually not to talk of your actual losses. You need to keep this in mind that trading is not free. - 23223

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!

Rectangles -Short Trading Strategy

By Jeff Cartridge

The rectangle is sometimes referred to as a channel or a consolidation. It is a very well known and easily recognized chart pattern that has been used by many successful traders over the years, including Nicolas Darvas who made over $2 million in the stock market using a variation of the rectangle he called a Darvas box. A rectangle is formed when the price action is contained within two lines. Both the top line and bottom line are close to horizontal and the two lines are parallel.

Rectangles Can Be Traded Short

Rectangles provide no clear breakout direction, but 46% break out to the downside making it possible to trade on the short side. Just 42% of these breakouts are profitable and on average the profit per trade is negative -0.03% over a period of 10 days. The rectangle is not one of the best chart patterns when it breaks to the downside, but applying some filters can make this pattern more attractive to trade.

Refine Your Entries

When you look at the performance of a rectangle there is an unusual combination of market, sector and stock trends. The market should be consolidating or in an up trend. The sector is best if it is not consolidating, while the stock should be consolidating to make the best profits.

A breakout from a rectangle is best if the pattern is not formed by a large candle touching both boundaries. This does not happen very often. The best trades occur if the stock has lower highs and does not have a close equal to the previous day, before the breakout occurs.

Ensure that the volume is supportive of the breakout, i.e. volume as the stock falls is greater than volume as the stock rises.

Short Trading Rectangles Can Be Profitable

When trading rectangles short these filters are very important to get good results, making this an extremely difficult pattern to trade short. With these filters in place, an average return per trade of 1.07% in 13 days and a hit rate of 63%. There are better patterns to trade short.

Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23223

About the Author:

Jeff Cartridge has been trading chart patterns since 1998 and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains

A Review Of The Forex Broker eToro.

By Kris Deaney

The Forex marketplace is very exciting with over $3 trillion traded all over the world daily. However, if you are going to trade you need a good solid trading strategy that you execute with discipline, and a good broker.

eToro was set up with the vision to create an extremely usable trading platform that traders from novices up to professionals could use.

If you are new to trading Forex then you will love the eToro platform, which is set up like an interactive gaming platform. It's very easy and also a lot of fun. There are plenty of videos to take you through every step.

As you gain experience or for seasoned traders, there is a professional mode which continues to have the same functionality, but without the game like experience.

The spreads at eToro go down to 2 pips which is extremely competitive in the industry. Pips are basically the cost of trading, the difference between the bid and ask price. Many brokers will charge 5 pips as a standard. If you trade frequently this can become very expensive and eat into profits.

Also and perhaps most important, the platform at eToro has a high level of reliability. There is a dreaded aspect of trading which is know as 'slippage'. It is when a trader is trying to sell at a certain level, either manually or with pre-set limits and the brokers cannot get a price at that level, and have to re-quote at a price that is less good. This happens very little with eToro.

The customer service team are available 24 hours a day and they are focused on providing a community feel and have a lively forum for exchanging ideas.

Traders can also make use of the full tutorials and training materials to greater develop their technical and fundamental knowledge. There are also free practice accounts. These are invaluable for learning.

Traders can start their first real money trades with as little as $50. This means that traders only ever have to start trading with what they can afford to lose, which is very important. - 23223

About the Author:

For a more comprehensive eToro Reviews or to sign up for a free account just Look At This.

Starting Out In Stock Trading

By Mike Swanson

Investors are stock trading because of the profits earned when stock trading. You can use a small to medium investment and begin buying the 50 hottest stocks and the best part for investors is the immediate liquidation.

The terminology is the place to start for beginners. The market language fits the manner of marketing used, so the word trading actually means buying and selling. So you will buy and sell stocks and you can do this two ways. Electronic or computer trading and off the exchange floor. The NASDAQ uses the computer network and the NYSE uses the exchange floor.

When you are working on the NASDAQ, the computer trading will match you to buyers and sellers. You will find mutual funds, pension funds, and more funds to choose from. Most investors prefer this method for stock trading. You have advantages using the cn line network like keeping up with your investment. This does require you to have a broker to access the NASDAQ and work for you. Many investors want a daily account of what is happening with their portfolio.

NYSE works through brokers, so you need a broker to buy your shares. Then the brokers clerk will notify the exchange floor clerk about your trade. The floor clerk will announce it as a broker's trade on the floor. The brokers work together already familiar with each other, they sell your shares.

All the work is done by the brokers because they work together and are familiar with the others stocks. Once the brokers agree on a price the brokerage house contacts you with the price offer for the stocks and you agree or disagree. You will receive through the mail, confirmation of the transaction. The daily basics are dealing with blocks of stock. Then trading, using complex details and trading methods.

Once the transaction is complete, you will receive confirmation through the mail. The basics of stock trading is looking at blocks of stock and trading them according to details and methods used by brokers. - 23223

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