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. CFOS/FX was established to provide clients with forex trading and forex brokerage services in over-the-counter (OTC) foreign currency markets, and offers state-of-the-art online forex trading platforms for both forex spot and forex options markets. CFOS/FX offers a variety of account plans, investment products, and services to choose from when creating or re-adjusting a portfolio, and the professionals at CFOS/FX can tailor a commodity investment portfolio based on an individual customer's short and long-term investment objectives.
BROKER INFO
Free demo account:	Yes
Trading Software:	ACC'T Live Streaming Quotes Fixed Spreads Free News, Charts & Research No Commissions or Fees No Dealer Intervention
Regulated:	NFA (USA)
CONTACTS
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

CAD/JPY Once Again

Tim Black hosts the live trading room for the Asia trading session. His background is in computers and technology. He is addicted to charts and technical analysis and enjoys teaching and sharing his viewpoints in these areas. If you would like to trade with Tim click here.
CAD/JPY did what I expected this past week, even coming within pips of our second target with the help of the Bank of Japan. But it did it without me. If you guys followed me on Twitter this week, you’ll know I didn’t get in this trade because it sorta spooked me the way it pushed back down through the trend line. Hopefully, some of you didn’t follow my tweets and made some pips on this trade.
Well, I’m still bullish on this pair but with the move it made this week, it’s going to have to do a little retracing before I get in it. Here’s what I propose:

CAD/JPY Weekly

Just like last week, there are three nice piercing bars into the support zone. It’s also still making higher lows and now there is a nice confirmed weekly buy signal.

CAD/JPY Daily

I’m going to look for this to retrace to the 61.8% Fibonacci level (around 81.92.) Then I’m going to WAIT until I get a confirmed 4 hour buy signal (a 4 hour candle that CLOSES higher than the prior candle) to get in long. I will place my stop below the 78.6% Fibonacci level (near 81.30) and target just below the recent high (near 84.00), the measured move (harmonic AB=CD, near 85.40) and the recent swing high near 86.20. This will give us a better than 3:1 Reward:Risk ratio.
ENTRY: Long on 4 hour buy signal near 61.8% retracement around 81.92.
STOP: Below the 78.6% retracement near 81.30.
TARGETS: 84.00, 85.40 and 86.20.
RR: Better than 3:1.
Remember to use your risk management rules in sizing your trade. And I know you’re very tired of hearing me say this WAIT, WAIT, WAIT for the proper entry. Just because I’m calling for an entry below the current level, doesn’t mean that a short to that level is a high-probability setup. What I’m saying is IF price action gets to the 81.92 level THEN a buy MIGHT be appropriate with the indicated signals.
Follow me on Twitter as I will tweet trade management for this trade.

Japan Can't Curb Yen's Gains by Acting Alone, Bank of Korea Governor Says

apan can’t resolve the difficulty of the strong yen unilaterally as currency-market intervention by a single country has limited effect, Bank of Korea Governor Kim Choong Soo said.
“Japan, alone, cannot resolve the problem of the strong yen,” Kim said at a media seminar in Incheon, southeast of Seoul, two days ago. “Japan will need policy coordination with others, including the U.S. and China. The effect is limited when one country tries to handle the issue by market intervention.”
Japan intervened on Sept. 15 for the first time since 2004 to protect its exporters, after the yen rose to a 15-year high against the dollar. The action stoked speculation that South Korea will move to counter a recent rise in the won, in an economy where overseas shipments are equivalent to about half of gross domestic product.
International trade has “significant impact on our relationship with other nations as we’re heavily dependent” on it, Kim said. His comments at the seminar were released today.
The won has risen 4.5 percent over the past three months and closed up 0.3 percent at 1,160.7 per dollar on Sept. 17. Further increases may hurt export competitiveness at firms such as Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, and Hyundai Motor Co., the country’s largest automaker.
Asked about international policy coordination on currencies, Kim said South Korea “is not in a situation to say something on the issue now and we need to see more how it affects our economy.” The yen has lost more than 3 percent of its value since Japan’s Finance Ministry sold the currency.
Interest Rate Policy
The Bank of Korea unexpectedly left its benchmark interest rate unchanged on Sept. 9, joining counterparts in Australia, Malaysia and New Zealand in pausing rate increases to assess the strength of the global recovery. A possible U.S. slowdown and persistent European fiscal problems are risks to growth, the central bank said after its decision.
Ten of 14 economists in a Bloomberg News survey projected a quarter-point increase to 2.5 percent, after Kim signaled on Aug. 25 that South Korea was alert to the risk of intensifying inflation expectations. The governor raised the benchmark by 0.25 percentage point in July from a record-low 2 percent.
The current rate of 2.25 percent “is not the most desirable,” though it will take some time to normalize as the bank must be certain of the world economic recovery, Kim said after leaving borrowing costs unchanged this month.
Asked about the central bank’s interest rate policy signals at the media seminar, Kim said “when we say we will take a right turn, then we will turn to the right -- the only matter is whether we will do it this time or next time. You should not believe that we’re not changing the direction.”
Exports fuelled a 7.6 percent expansion in South Korea in the first half, the fastest pace in a decade, and the economy will grow 5.9 percent this year, according to the central bank’s figures. The trade surplus will reach $32 billion in 2010, up from a previous forecast of $20 billion, the economy ministry said on Sept. 1.
-- Editors: Sunil Jagtiani, Paul Tighe
To contact the reporters on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net;

Queensland Opens A$7 Billion QR National Stock Sale, Largest After Telstra

Lance Hockridge, chief executive officer of QR National Ltd., speaks during a news conference announcing the company's initial public offering in Brisbane Photographer: Eric Taylor/Bloomberg

Queensland’s government opened the initial share sale of the state’s coal freight network, which may be worth A$7 billion ($6.5 billion) and become Australia’s largest offering since Telstra Corp. in 2006.
“QR National is a growth story - it is Australia’s largest rail freight company and the world’s largest rail transporter of coal from mine to port for export markets,” State Treasurer Andrew Fraser said at a pre-registration meeting for retail investors held in Brisbane today.
Queensland, the third-most-populous Australian state, is selling assets to prop up finances after the recession crimped government revenue. State Premier Anna Bligh said in December she’ll put other assets up for sale in the next two years, including a road network, a coal terminal and a port.
The government formed QR National in July when state-run rail provider QR Ltd., with assets worth A$12 billion, split its passenger train and freight operations. The sale of the non- passenger assets may fetch A$7 billion, Premier Bligh said in June last year. The Australian government sold A$15.5 billion of stock in Telstra, the nation’s largest telephone company.
QR National’s freight network is a “high-quality business” that will meet growing demand for resources in Asia, Fraser said. Public offer documents for the IPO will be available from Oct. 10, he said. QR National will “deliver value for taxpayers,” Fraser said, declining to indicate how much the government was hoping to raise.
Queensland, which is spending A$15 million on the IPO marketing campaign, will initially retain 25 percent to 40 percent of the floated entity, the state government said previously.
State Valuation
If the state keeps 25 percent of QR National and maintains Bligh’s A$7 billion valuation, the sale would be the largest stock offering in Australia since the Telstra sale.
QR National transported more than 198 million metric tons of coal during the 2009-2010 financial year and employs about 9,000 people, with a heavy-haul coal network of more than 2,300 kilometers, according to a presentation on its website.
The government in March appointed Credit Suisse Group AG, Goldman Sachs & Partners Goldman Sachs Australia Pty, Bank of America Corp.’s Merrill Lynch unit, Royal Bank of Scotland Plc and UBS AG to manage the sale.
Commonwealth Bank of Australia Ltd. and Wilson HTM Investment Group were named in July as co-lead managers and Ord Minnett Group Ltd. and Patersons Securities Ltd. were appointed co-managers.
Markets Tumble
Aston Resources Ltd., an Australian coal developer, had to cut the price of its IPO last month as markets tumbled. The reduction in Aston’s offer price follows a 5.9 percent drop this year in Australia’s benchmark S&P/ASX 200 index of stocks. Bilfinger Berger AG, Germany’s second-largest building company, pulled the IPO of Australian unit Valemus Ltd. after investors balked at the price.
Prices for coking coal, a steelmaking raw material, will peak in eight years, after which a market deficit will be plugged, Metal Bulletin Ltd. said in June. China and India, the world’s most populous nations, will account for 70 percent of coking coal demand by 2020, Metal Bulletin said in a report.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

Asian Currencies Rise for a Third Week, Led by India's Rupee, on Inflows

Asian currencies strengthened for a third week, led by India’s rupee, as global investors pumped more funds into the world’s fastest-growing economies.
The Bloomberg-JPMorgan Asia Dollar Index climbed to its highest in more than two years month and the MSCI Asia Pacific Index of shares advanced as stock markets in India, South Korea and Taiwan each attracted more than $1 billion from abroad. China’s yuan had its best week since May 2008 as the U.S. called for faster appreciation and government reports showed pickups in industrial output, retail sales and inflation.
“The trend remains for Asian currencies to strengthen,” said Tohru Nishihama, economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Funds will continue to flow into the region as the economic growth outlook in Asia is solid and stocks in the region have been rising.”
The rupee appreciated 1.3 percent this week to 45.845 per dollar in Mumbai, according to data compiled by Bloomberg. The yuan was 0.7 percent stronger at 6.7235, the Korean won climbed 0.4 percent to 1,160.70 and Taiwan’s dollar advanced 0.5 percent to NT$31.739. Thailand’s baht rose 0.4 percent to 30.72, a seventh straight weekly gain.
The Asia Dollar Index, which tracks the region’s 10 most used currencies excluding the yen, added 0.3 percent and the MSCI Asia Pacific Index climbed 2.2 percent. Developing economies in Asia will expand 9.2 percent in 2010, outpacing growth of 2.6 percent in advanced countries, the International Monetary Fund forecast in July.
Stock Inflows
Equity funds investing in Asia excluding Japan recorded the highest inflows in seven weeks during the period through Sept. 15, according to EPFR Global. The trend was “underpinned by renewed faith in the growth stories of the region’s heavyweights, China and India,” the research firm said.
India’s central bank this week increased interest rates for the fifth time in 2010 and Chinese Premier Wen Jiabao said his nation’s economy, the world’s second-largest, was in “good shape.” U.S. Treasury Secretary Timothy F. Geithner called for “significant” gains in the yuan, which yesterday touched the strongest level since official and market exchange rates were unified at the end of 1993.
The Philippine peso dropped 0.2 percent this week to 44.188 per dollar after central bank Governor Amando Tetangco said on Sept. 14 that policy makers were monitoring gains and signaled action may be taken to curb volatility. Japan unilaterally sold the yen on Sept. 15 in an attempt to halt appreciation after the currency climbed to a 15-year high versus the dollar.
“There’s a possibility that the rest of Asia will try to do the same to keep their exports competitive,” said Mohd Zaki Talib, a currency trader at RHB Bank Bhd. in Kuala Lumpur.
Malaysia’s ringgit rose 0.2 percent this week to 3.1020 per dollar, having reached a 13-year high of 3.0969 on Sept. 13. The Singapore dollar appreciated 0.5 percent to S$1.3340, a fifth straight weekly gain.

WHAT DRIVES SHORT TERM CURRENCY MOVEMENTS IN FOREX?

Short-term currency movements in forex are immediately impacted by:

There is an instant impact of short term currency movements in forex trading
World events.
Comments, statements by government officials.
Unexpected changes in economic numbers.
Technical - charts.
Stock markets.
Bond markets.
Commodity markets.
Newspaper articles.
Interviews with influential individuals.
Rumors.
World events:

Depending on the severity of the news, a world event can have an immediate substantial impact upon a currency and forex market. The British Pound for example took an immediate beating when the press reported they might have exaggerated Iraq chemical weapons plans. These types of news have high impact on forex market. A general opinion is a small trader can lost their money during this news if he works with TK (take profit) and ST (Stop Loss) they will save. So keep eyes on world news and events happen. These take major contribution in C urrency Movements.

World Events:

Significant international events can have a substantial impact on the currency and forex market, such as the outcome of news. When the news broke out about the Iraq�s chemical weapons plan. immediately the British Pounds took the beating. Such news have quick effect on forex market. If small traders works with TK (take profit) and ST (Stop Loss) the general view is that the effect of such news results in great lost for them. So keep a vigilant eye on international news and events as they happen. These events and news are foremost contributors in Currency Movements.

Comments, statements by government officials:

Direct statements or hints of changes in government policy by government officials will be immediately reflected in currency rates. For example, when former ECB president Dusenberg reiterates that Euro rates are at the correct level, the Euro jumps a quick 30 points. This is also a big factor in forex market but in real some time its work on same day some time on next day. But it takes impact. Government official news has high impact on currency market. Keep strong eyes on Government officials meetings and press briefing. These take major contribution in Currency Movements.

Comments, statements by government officials:

When some government officials give some statements regarding government policy, such statements immediately reflects currency rates. For example, when Dusenberg a former ECB president go over to announce that the current Euro rates are in correct level, it immediately follow a quick 30 points jump in Euro.

Unexpected changes in economic numbers:

When scheduled economic numbers are not close to what was expected the movements in the currency can be dramatic. We use these opportunities to initiate trades on a regular basis. Example. U.S. employment fell 100,000 versus an expected rise of 30,000; USD fell 1.5% in a few hours. Each day we have some economic data who impact on forex market. These data have quick impact on forex market but these data are not predictable that whether they go to upward or downward direction. These take major contribution in Currency Movements. There are some special strategies to deal in this situation. You will see these strategies in our FxCraz courses.

Unforeseen changes in economic numbers:

When well planned economic numbers are not near to what was foreseen, the currency movements can be intense. We make good use of these chances to begin trades on day to day basis. For example when US employment cut down to 100,000 against foreseeable set up of 30,000 USD cut down to 1.5% in a few hours. Every day we find some economic data that influence the forex market. Forex market have fast effect of these data, but whether these data go upward or downward direction is not predictable. Currency Movements depends on these data significantly. There are few distinct tactics to handle this state.

Technical - charts:

Breakouts on charts sometimes cause a good move to develop � and sometimes not. Failure to follow through on breakouts often causes a severe reaction in the opposite direction. For example, EURUSD could not hold a break above 113.30 and promptly fell 70 points. These take major contribution in Currency Movements.

Technical - charts :

Data analysis on visuals is sometimes work out excellent and sometimes not. Failure to understand data analysis repeatedly causes opposite reaction. For example, if EURUSD is not able to hold a break above 113:30 and sharply cut down 70 points. These are currency movements major contributors.

Stock markets:

Foreigners have been net sellers of U.S. stocks for quite awhile now. However, the amounts lately have not been great. Do not look for the USD to follow the stock market closely as it did during the boom. You will be disappointed if you do. Forex trading is different from other markets but these take major contribution in Currency Movements.

Stock markets:

Non nationals are net sellers of US stocks for some time now. On the other hand the net amounts lately have not be good. Never look for the USD to pursue the stock market watchfully as was during the boom period. You will not be happy because Forex trading is quite different from other markets, since these take foremost involvement in Currency Movements.

Bond markets:

Foreigners, especially foreign Central Banks have huge bond holdings. They are very much concerned with capital loss due to rising interest rates. In fact on those days when the 5 and 10 years auction results are announced at 1pm EDT, the currency markets or forex trading are very quiet, especially in Europe. These take major contribution in Currency Movements.

Bond Markets:

Non nationals, notably foreign Central Banks are holding huge bond. They are greatly alarmed with capital loss because of increasing borrowing rates. The currency market or forex trading are quiet, notably in Europe on those days when the 5 and 10 years auction results are announced at 1 pm EDT. These take foremost involvement in Currency Movements.

Commodity markets:

Some currencies react to significant changes in agricultural product price and gold, Australia for example. Forex market is link with other market as well. Commodity is one of them who make impact on forex market. These take major contribution in Currency Movements.

Commodity markets:

Few currencies respond to substantial fluctuations in farming product price and gold, Australia for instance. Forex Market is related besides other market too. Articles of trade is one of them who make significant effect on forex market. These take foremost involvement in Currency Movements.

Newspaper articles, interviews, and rumors:

In forex trading all can cause a short-term move in a currency. Because traders have strong eyes on world event�s and news. They make trade and on the rumor they show some quickness and make a wrong trade. Some time its fruitful sometime not. So try to move where mob is going. You may have minimum chances to lose. These take major contribution in Currency Movements.

Newspaper articles, interviews, and rumors:

In forex trading all can effect a short term shift in a currency. As traders possess strong eyes on world events, news and information. Sometimes they make bad trade due to some unconfirmed reports. Some time its useful and sometime not. Keep moving where the flock is going. That�s how your chances of loss remain small. These take foremost involvement in Currency Movements.