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Archive for July, 2010

Big Insider Forex Trading

Posted by TFNG Admin On July - 28 - 2010
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Big insider trading can get you a big fine and a jail term in the US securities markets. However, foreign banks, especially those holding huge foreign currency reserves routinely engage in big insider Forex trading and usually profit by it. How can the average Forex trader avoid getting hurt by big insider Forex trading? How can the average Forex trader anticipate and profit from big insider Forex trading. It probably has to do with walking in the shoes of the other trader for a bit. It is very easy for anyone to think of the world in terms of “them out there” and “us.” For a North American to trade successfully in foreign exchange markets it behooves the trader to walk a bit in the shoes of a currency trader from India, China, Germany, or Australia, to name a few possibilities. Whether one is trading factors influencing the EUR/USD pair or concerned about the Yuan exchange rate the actions of large central banks can be the main drivers of currency rates. Anticipating big insider Forex trading can lead to lucrative returns in Forex trading.

From the viewpoint of the USA China is holding an awful lot of US debt and could exert undue influence on the value of the dollar and on the US economy. From the viewpoint of someone in China there are not a lot of options when it comes to buying someone else’s debt. You can buy Yen, Euros, Pounds, Swiss francs, Australian dollars and Canadian dollars. However, the largest pools of capital are dollars and Euros. China has diversified its debt holdings but now has to worry about the Euro falling relative to the dollar and the seemingly eternal debt problems of Japan. The Chinese government has to balance the politics of modernizing an ancient country with its status as a world economic and political power. China has typically seen to its own needs first but, as seen just before the recent economic summit, has had to bow to international pressure to let the Yuan float compared to other world currencies. When China decides to change how it trades its currency it will do so in the most advantageous way possible. This is really big insider trading. As they are busy orchestrating Yuan revaluation the North American trader needs consider the needs of China as seen by the Chinese in order to anticipate how fast and how far Yuan revaluation will go. Anticipating correctly could lead to healthy profits in months to come.

European banks have come to the support of the Euro as the PIIGS and Forex crisis has threatened the economies and political stability of countries within the common market. Demonstrations and near riots in Greece followed austerity measures meant to give confidence to the rest of the Common Market that Greece would work to rein in its debt problems. In Europe these days big insider Forex trading has to do with maintaining the currency, keeping the politics of the European Union stable, and keeping home constituencies happy. When we see European central banks acting in their own self interest we should not be surprised. If the North American looks at things from the viewpoint of a banker in Berlin, Paris, or Rome he or she may successfully anticipate big insider Forex trading and make a tidy profit.

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Bank Forex Trading

Posted by TFNG Admin On July - 23 - 2010
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Bank Forex trading could disappear depending upon how regulators apply the new laws being passed by congress to regulate the United States financial industry. The big banks such as Morgan Stanley, Goldman Sachs, Citigroup, and J.P. Morgan Chase all profit handsomely from Forex trading. These profits could go away with the new law. Commentators have said that bank Forex trading could just move offshore but current legal opinion is that the new regulations would apply to banks and their foreign subsidiaries. The rules could even extend to foreign banks that do business in the United States. For the Forex trader the question is if cessation of bank Forex trading will substantially reduce trading volume and liquidity. Will price spreads increase? Will the absence of big traders skew the Forex market itself? Although the downward direction of the Euro or a rising dollar and lower commodity prices will still drive Forex exchange rates the Forex market may not respond as fluidly with less volume and liquidity.

The fact is that because companies and nations need to trade currencies the Forex market will continue and, in all likelihood, any loss in United States bank Forex trading will be picked up by traders and institutions outside of the United States. This could have an effect on Forex trading by itself. If the profits made in United States bank Forex trading go elsewhere it could also have a small but measurable effect on balance of trade and the value of the dollar versus other currencies. From a strictly economic viewpoint the loss of profits in the United States while it attempts to climb out the recession could, in theory, slow the process and harm the value of the dollar. The counter argument is that by cleaning house in the United States financial establishments the next market crash and recession will be delayer or averted. A stable banking system will probably do more to help the dollar over time. As usual understanding the Forex markets can be both complicated and obvious and traders are already taking the prospect of no United States bank Forex trading into account in their trades.

No matter what the effects on the average currency trader the fact is clear that a new world is in store for the large United States financial institutions that congress is blaming for the stock market crash and the recession. Good Forex advice may well be to watch the situation carefully in order to profit from any changes in trading that occur as a result of the coming regulations. It is possible that the accuracy of trading software predictions may suffer slightly if trading volume is significantly less that normal for the Forex markets but in the end Forex double bottoms and Forex double tops will signal market reversals. Nevertheless, the same trading signals will still work and those who learn market fundamentals and do their homework will prosper in Forex trading whether the banks are trading Forex or not.

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Disclaimer - Forex, futures, stock, and options trading is not appropriate for everyone. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using this methodology or system or the information in this site will generate profits or ensure freedom from losses.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN OR MENTIONED.

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