Thursday, September 23, 2010
RECOMMENDED BOOKS
 by R. Mark Rogers This handbook is geared to analysts and traders who need quick access to data relating to key U.S. economic indicators. It considers what indicators mean and how they are calculated, compiled, and reported to enhance informed financial decision making. Employment. . .Inflation. . .Consumer Spending. Each month, financial markets react to these and other important figures. The data, tables, charts, and graphs in this authoritative book explain how each indicator is determined, and how readers can effectively use this information. New sections include employment and labor figures, new GDP measures, and much more. |
 by W. Stansbury Carnes Useful for professional and individual investors, executives or business students--a unique atlas of what makes the markets move. Developed from a popular in-house pamphlet used at Shearson Lehman, this accessible and thoroughly illustrated resource makes understanding economic indicators much simpler. Charts and graphs. |
 The Trader's Guide to Interpreting Economic Indicators and Monetary Policy by Micahel P. Niemira, Gerald F. Zukowski Economic indicators and economic policy have an incredible impact on the volatile financial markets, yet it is often up to traders and investors to interpret the effects and take decisive action. Trading the Fundamentals explains the significance and market impact of all widely followed economic numbers, including the Consumer Price Index, Employment Report and other well-known indicators. Completely updated and revised to reflect today's highly computerized environment, Trading the Fundamentals provides readers with all the tools they need to analyze economic news and make appropriate investment decisions. New topics include: A new emphasis on data availability through the Internet; More detail on indicators such as layoffs and productivity; A completely overhauled discussion of Federal Reserve policy; A discussion of the phases of the business expansion part of the cycle. |
ECONOMIC INDICATORS ANALAYSIS
Economic Indicators analysis is the examination of the underlying forces that affect the interests of the economy, industrial sectors and companies. As with most analysis, the goal is to derive a forecast for the future. Learning the monthly sequence of economic releases and market reaction to each release is one of the first steps in learning to track the economy. Forex traders should be taught to compare market expectations with actual economic indicators and then evaluate market reactions. It's the difference between market expectations for an economic release and the actual release number that primarily affect market movement.
Currency prices reflect the balance of supply and demand for currencies. Two primary factors affecting supply and demand are interest rates and the overall strength of the economy. Economic indicators such as GDP, foreign investment and the trade balance reflect the general health of an economy and are therefore responsible for the underlying shifts in supply and demand for that currency. There is a tremendous amount of data released at regular intervals, some of which is more important than others. Data related to interest rates and international trade is looked at the closest.
Click to see upcoming economic events: Forex Economic Calendar
Currency prices reflect the balance of supply and demand for currencies. Two primary factors affecting supply and demand are interest rates and the overall strength of the economy. Economic indicators such as GDP, foreign investment and the trade balance reflect the general health of an economy and are therefore responsible for the underlying shifts in supply and demand for that currency. There is a tremendous amount of data released at regular intervals, some of which is more important than others. Data related to interest rates and international trade is looked at the closest.
Click to see upcoming economic events: Forex Economic Calendar
3. How to read quotes.
The rates are usually expressed as five-digit numbers. For example, USDJPY = 121.44 means that 1 US dollar is valued at 121.44 Japanese yens (i.e. they are willing to pay you that many yens for one US dollar while you are buying or selling). At the same time, GBPUSD = 1.6262 means that 1 British pound is valued at 1.6262 US dollars. Generally, if the rate XXXYYY = Z, it means that one unit of XXX is worth Z units of YYY.
When the rate has changed, for example USDJPY = 121.44 to USDJPY = 121.45 or GBPUSD = 1.6262 to 1.6263, they say that the rate has moved 1 point. As it follows from the information above, yen in this example has DEPRECIATED by 1 point, but the pound has APPRECIATED, also by 1 point.
While watching the charts, you should keep in mind that only euro (EURUSD), British pound (GBPUSD) and Australian dollar (AUDUSD) charts reflect real movements of the rates of these currencies (that is, chart going up, means increasing price), as growth (that is, charts moving up) mean decreasing rates (prices) for the other currencies.
Sometimes quotes are given as a pair, for example 121.44/49. It is a BID/ASK pair: the first number is BID, then the two last figures of ASK. Knowing that ASK is always higher than BID and that the spread is under 100 points, the full ASK real prices can always be defined. In this example ASK = 121.49.
When the rate has changed, for example USDJPY = 121.44 to USDJPY = 121.45 or GBPUSD = 1.6262 to 1.6263, they say that the rate has moved 1 point. As it follows from the information above, yen in this example has DEPRECIATED by 1 point, but the pound has APPRECIATED, also by 1 point.
While watching the charts, you should keep in mind that only euro (EURUSD), British pound (GBPUSD) and Australian dollar (AUDUSD) charts reflect real movements of the rates of these currencies (that is, chart going up, means increasing price), as growth (that is, charts moving up) mean decreasing rates (prices) for the other currencies.
Sometimes quotes are given as a pair, for example 121.44/49. It is a BID/ASK pair: the first number is BID, then the two last figures of ASK. Knowing that ASK is always higher than BID and that the spread is under 100 points, the full ASK real prices can always be defined. In this example ASK = 121.49.
2. Some codes, numbers and definitions.
2. Some codes, numbers and definitions.
Each currency is assigned a three-letter code. For example, US dollar is coded - USD (United States Dollar), euro is coded EUR (EURo), Swiss frank is coded CHF (Confederation Helvetica Franc), Japanese yen is coded JPY (JaPanese Yen), British pound is coded GBP (Great British Pound). The currency codes are defined by ISO-4217 standard. Usually they are formed as a two-letter ISO-3166 country code and the first letter of currency name. There are a few exceptions most notable being the euro (EUR).Currency rates are equal to ratios of currency units of different countries relative to each other. The rates are represented by 6-letter words composed of two three-letter currency codes. The first position is occupied, as a rule, by the code of a more expensive currency. The rates are expressed in units of the second currency per unit of the first one. For example, rates USDCHF (USD-CHF) show the number of Swiss franks in one US dollar, but rates GBPUSD (GBP-USD) show the number of US dollars having to be paid for one British pound. More detailed information on the codes of financial instruments may be found in this table.
CURRENCY TRADING
1. Purpose of trading
The purpose of trading on any market is to buy low and sell high. The foreign currency market FOREX is no exception. The goods traded on this market are rates of currencies of different countries. As any other goods the currencies have their prices.To settle transactions between businesses located in different countries, governments, speculative transactions and so forth, banks around the world execute currency trades on Forex Market. Depending on various trade, economical and other parameters, interest rates, central bank policies, time of the day, preferences and anticipations of the market players, and many other causes, the rates, that is prices, of currencies stay in ceaseless motion.
Your task as a trader is to determine the trend of the rate and buy an appreciating currency or sell a depreciating one, and then take your profits through execution of a reverse transaction.
And, at last, you will have a special trading account allowing you to buy and sell desired currencies. Despite of having US dollars in your account, you may start your trading from selling euro or japanese yens not concerning yourself with not having bought them in advance.
CFOS/FX division of Commodity, Futures, and Options Service, Inc. (CFOS)
CFOS/FX is the over-the-counter foreign currency ("forex") trading and forex brokerage division of Commodity, Futures, and Options Service, Inc. (CFOS), an Independent Introducing Broker in the cash and futures commodity markets with offices in Houston, TX, Sacramento, CA, Salt Lake City, UT, New York City, NY and Madeira Beach, FL. | ||||
| ||||
| Free demo account: | Yes | |||
| Trading Software: | ACC'T | |||
| Regulated: | NFA (USA) | |||
| ||||
| Headquarters: | CFOS/FX 2425 West Loop South, Suite 601 Houston, TX 77027 | |||
| Telephone: | 1-877-423-6739 (Toll Free U.S.) 713-622-7774 (Local) | |||
| Company URL: | www.cfosfx.com | |||
Subscribe to:
Posts (Atom)