Spot Forex (Part II)

By Ahmad Hassam

These big banks make an exclusive club where most trading activities take place. This club is known as the Interbank Market. The worlds big banks are the main players in the spot forex market.

The wealthier you are and the more money you have or are bale to get credit for, the more chances you have of accessing this big boys club. Down the hierarchy in the spot forex market are the smaller banks, big multinational companies, hedge funds and other institutional investors or speculators and the retail forex brokers.

The independent retail traders lie at the bottom of the market structure. These big players conduct currency transactions in the interbank market if they have large capital and have credit standing with the large banks.

The retail forex traders trade through their forex brokers. They generally trade in much smaller lot sizes. Central banks are also occasionally involved in currency transactions. So there is no central exchange in the spot forex market to set the prices. Then who sets the currency prices?

Market makers make the bid and ask prices based on the currency movements that they anticipate will take place. Without a central exchange, the currency prices are set by the market makers.

Big banks are involved in currency speculations in a big way. Many banks have professional traders solely dedicated to trading forex for speculation. Largest banks are the major market makers and they handle billions of dollars worth of forex transactions on behalf of their clients like the other institutions and companies and also for themselves. 90% of the spot forex trading is speculative in nature. However, most of the big currency transactions take place between the big banks. Daily there is huge flow of money between the different banks globally.

This big money laden network is knows as the interbank market. Interbank market is where large banks deal with one another. The resulting massive flow of money handled by these big banks is what primarily drives the currency markets.

Most of the trading activity takes place in the interbank market. The transactions carried out by these big banks like the Citigroup, Barclays, UBS, Deutsche Bank etc amounts to the greatest bulk of the total daily forex volume.

The banks deal directly with one another through the electronic brokering platforms like the Electronic Brokering Services (EBS) or Reuters Dealing 3000 Matching. These brokering services get the best available rates for the various currency pairs.

The banks establish specific credit lines with one another in order to deal with one another in the forex market as there is no exchange to serve as each banks counterparty. These brokering systems match buying and selling requests from the bank dealers. Between these two competitors they connect at least 1000 banks together.

As the main market makers, these big banks constantly quote bid and offer prices to one another thereby making the market. Smaller banks that also trade forex also get access to these brokering platforms. Next large companies come. - 23223

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Develop Your Own Forex Trading System!

What Can Flipping My Property Investment Do For Me?

By Cody Scholberg

When you think about investment properties in a logical matter, when you commence in flipping these properties you're actually not investing. Flipping investment properties is a strategy that goes along with the buy and hold concept, however your having to put more money into your investment just to see a substantial profit.

Do not get misconstrued, if an investment property is flipped accordingly, you can end up making a decent profit off of the property. Many people simply want to buy the property and immediately sell it without remodeling it, doing this is not going to benefit you at all.

Do not think that flipping a property is a bad idea. Actually in some cases where flipping was done accordingly, it ended up becoming a highly profitable investment. A lot of people have the inclination to purchase the property with haste, and then commence in remodeling the property in order to see any means of a substantial income from their investment.

There is the attraction of getting your paycheck right now, rather than years from now. Another advantage of flipping is that it takes the market fluctuation out of the entire picture, buy now, sell now. As I said before, done properly, one can make a huge sum of money in a short period of time.

The basic idea that was meant behind the term flipping real estate is you can buy the property now and sell it immediately instead of having to wait an elongated period of time in order to see the benefits of buying the property. What's better, getting your money now for the property that you have invested in, or waiting years down the road to see any money at all? Another advantage of flipping is it takes the real estate market out of the equation; you are basically buying now and selling now. You can make a large sum of money in a short time frame.

You will have to be very careful not to spend more money than you planned on the necessary repairs. You must also know the least expensive way to sell the property in the least amount of time. Lastly, what happens if the flip deal you have lined up falls through, are you prepared for that? Before you get involved in flipping make sure you are fully informed and educated. - 23223

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Learn more about property investment and finding your first investment property.

How to Deal with Success in Investing

By Sam McNeill

What follows is a true and factual story. A University in the US did an experiment to understand more about the psychology of success. This experiment has subsequently been repeated a number of times at different places and by different people.

The experiment involved getting people to guess the outcome of tossing a coin. You know how it goes, I toss the coin, you guess the outcome and then you are either right or wrong.

On probability, if the coin is tossed you have a 50% chance of guessing correctly which way it will end up. The experiment required 500 tosses of the coin and the outcome followed the laws of probability of around half of the tosses producing a correct guess. This probability outcome is fairly well understood by the experiment subjects, and people generally.

However, within the 500 tosses you will have a good chance of stringing together a number of tosses in a row that you will guess correctly. This is where the psychology of success comes into effect. The experiment asked it's subjects how they felt about their performance in tossing the coin and guessing the correct outcome at various times during the experiment.

What they found was that when people were having successful runs - four or five or six correct guesses in a row - that they believed that they themselves were responsible for this success. Reasons ranged from, I am getting better at this, to I am now concentrating harder and that is improving my performance.

Remebering that the experiment subjects were fully aware of the law of probability at work in the experiment, with a likelihood of 50% of the outcomes being correct and 50% of the outcomes being incorrect, but believed that their talent and/or ability was attributing to their success. Quite disturbing in its contradiction.

The same contradiction happens with traders and investors all the time when trading or investing in the stock market. This is especially observable with new traders and investers. The trader/invester may grow to believe they have "special talents" after a string of winning trades. This may make the trader/invester believe that they are somehow better, or have a special talent for trading, whereby their success has really only been because of probable "chance".

The way to manage chance success in your trading/investing is to not become over confident and forget your risk management strategies. Enjoy your success but don't forget the risks. If you do not manage the risk of future trades properly or take on too many trades and over-extend yourself then you may leave yourself volunerable to the Market Slap. The stock market has a habit of slapping down traders who become over confident and take on too much risk with a large loss.

So remember, every trade you take has risk which you need to manage. If you manage your risks and enjoy the chance string of winning trades from time-to-time you will be successful and you will avoid the Market Slap! - 23223

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Want to find out more about share trading education then visit Just Shares' site on how to trade shares successfully with Just Shares Share Trading Course.

Gold Stocks 101

By Michael Swanson

Gold is loved universally so it is hardly surprising that millions of people want to buy gold stocks as a means to leverage their gold exposure. However, buying gold stock has its ups and downs and it is important to understand that there will be both good times for buying and bad times even when using technical analysis.

The current downturn in the economy is making things harder for those who wish to invest wisely in gold, though with a change for the better in the offing, it won't be long before the good times return.

Regardless, the value of gold stock will always fluctuate quite a bit and it will do so whenever there is a change in the price of gold, or when the stock market turns volatile. The stock market is not a sure thing all the time.

These factors could give the uninitiated gold investors a bout of schizophrenia, thus making it doubly difficult to properly trade, especially over the short term. Making use of an online brokerage firm will help you to make the correct decision regarding an interest you have in this commodity and should relive the schizoid tendencies.

Each broker has their own commission rate which is charged per trade, these brokers offer different levels of customer service and will have different levels of knowledge about various gold stocks.

Taking into account the fact that companies like Seabridge have fifty million ounces of gold waiting to be mined, it means that with gold at eight hundred dollars an ounce, such companies have about forty billion dollars worth of gold waiting to be mined.

At present, the price that buyers of gold are paying per ounce is much lower; and this indicates that things can only pick up in the future. Essentially this means it will pay to invest in gold stocks now. And you can then sit back and capitalize when prices start to rise in the not too distant future. - 23223

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Understanding Spot Forex Market (Part I)

By Ahmad Hassam

Of all the financial markets, spot forex market maybe considered as the most pure in the sense that supply and demand is strictly what determines the prices. Spot means that both the buyer and the sellers agree on a certain price and make the transaction on the spot without any delay. The spot forex market is an over the counter market. The spot forex market is a decentralized network of buyers and sellers. There is no physical central exchange that acts as a central clearing house.

Stocks, options and futures all are traded on centralized exchanges with a clearing house as the intermediary. This brings a lot of order in these markets. Unlike the forex futures trading that is carried out through the exchange like CBOT, CME etc, over the counter in spot forex means that the buyers and sellers make a binding contract with each other after agreeing on the price and this is not carried through an exchange. The buyer and sellers can agree on any price!

What are the advantages of a centralized market over OTC market? There is a better price discovery in a centralized market and there is trading anonymity something that big players want to hide their trails. There are several other advantages of a central exchange too like the counterparty risk for the trade is reduced. Forex traders in the spot forex market carry out their activities by dialing directly with one another or through brokers on telephone or internet.

Chicago Mercantile Exchange (CME) along with Reuters launched the worlds first centrally cleared global forex market place in 2007; FXMarketSpace. CME will act as the clearing house and guarantee the performance of all the contracts for both buyers and sellers in this centrally cleared system.

Only sophisticated investors with net worth of more than $20 Million can trade on the FXMarketSpace. Unfortunately FXMarketSpace is an institutional trading platform and is not open to retail forex traders.

There are many players involved in the spot forex market. The spot forex market has long been the playground of only the biggest and the baddest global banks. At its core, the spot forex market is a credit market. The dominance of big banks is unlikely to be challenged soon. Recently NFA (National Futures Association) had also passed certain new rules that make it more skewed against the small investor like you and me. The spot forex market is still skewed against the retail forex trader. Why is it so?

The spot forex market has always been an unfair playing field for the big boys. It became possible to introduce trading platforms for the retail investors with the advent of the internet. Previously spot forex trading was the playfield of the big banks, multinationals and the hedge funds.

Retail spot forex is seeing a lot of growth in the recent years. A mushroom growth of online forex brokers took place. Many did not have even enough capital with them to start the brokerage business. Most of these forex brokers behave like bucket shops. But this is the way; the spot forex market has developed over the years.

Why these players trade forex? What type of advantages they have over the retail forex traders? It is essential for you that you understand the nature of the spot forex market and who are the main players.

Over the counter nature (OTC) of the spot forex market means that currency transactions do not take place at any single place. Instead OTC means that the spot forex market is spread all over the globe.

Players in the spot forex market range from those who trade billions of dollars daily to those who only trade just a few thousand dollars daily. A players access to the spot forex market depends on the quantity of transactions of large amounts of money. Now who are the main players in the forex market against whom you as a retail forex trader will be competing? - 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. Develop Your Own Forex Trading System!