Friday, October 16, 2009

Forex Trading — Understanding Commissions, Spreads and Trading Costs


The forex market is quickly becoming one of the most popular markets for trading.
Not only are the experienced traders looking to this market to maximize their trading returns, but many new, individual investors are now able to trade the Forex market — just as they do stocks and futures.
More and more individuals are seeing Forex not only as a new way to diversify their portfolio, but are also finding that it is becoming the most profitable component of their investments.
And that's because of the many advantages Forex offers over other markets like stocks or commodities. Here's what you will typically see advertized about Forex:
— Unparallelled liquidity. It is the largest financial market in the world by far. Almost $2 trillion being traded daily!
— Excellent leverage potential. Individual investors have access to leverage of 100:1 and even 200:1
— No Commissions (more on this later on)
— Low trading costs.
And yes, the Forex market really does offer all these advantages.
But the last two points above talk about costs, and that's what we'd like to focus on in this article.
Like any trading, there are costs involved, and, while these may be much lower than they used to be, it is important to understand what those are.
Let's start by looking at stock trading, something that most of us investors are pretty familiar with.
When trading stocks, most investors will have a trading account with a broker somewhere and will have investment funds deposited in that account.
The broker will then execute the trades on behalf of the account holder, and of course, in return for providing that service, the broker will want to be compensated.
With stocks, typically, the broker will earn a commission for executing the trade. They will charge either a fixed dollar amount per trade, or a dollar amount per share, or (most commonly) a scaled commission based on how big your trade is.
And, they will charge it on both sides of the transaction. That is to say, when you buy the stock you get charged commission, AND then when you sell that same stock you get charged another commission.
With Forex trading, the brokers constantly advertise "no commission". And, of course that's true — except for a few brokers, who do charge a commission similar to stocks.
But also, of course, the brokers aren't performing their trading services for free. They too make money.
The way they do that is by charging the investor a "spread". Simply put, the spread is the difference between the bid price and the ask price for the currency being traded.
The broker will add this spread onto the price of the trade and keep it as their fee for trading.
So, while it isn't a commission per se, it behaves in practically the same way. It is just a little more hidden.
The good news though is that typically this spread is only charged on one side of the transaction. In other words, you don't pay the spread when you buy AND then again when you sell. It is usually only charged on the "buy" side of the trades.
So the spread really is your primary cost of trading the Forex and you should pay attention to the details of what the different brokers offer.
The spreads offered can vary pretty dramatically from broker to broker. And while it may not seem like much of a difference to be trading with a 5 pip spread vs a 4 pip spread, it actually can add up very quickly when you multiply it out by how many trades you make and how much money you're trading. Think about it, 4 pips vs 5 pips is a difference of 25% on your trading costs.
The other thing to recognize is that spreads can vary based on what currencies you're trading and what type of account you open.
Most brokers will give you different spreads for different currencies. The most popular currency pairs like the EURUSD or GBPUSD will typically have the lowest spreads, while currencies that have less demand will likely be traded with higher spreads.
Be sure to think about what currencies you are most likely to be trading and find out what your spreads will be for those currencies.
Also, some brokers will offer different spreads for different types of accounts. A mini account, for example may be subject to higher spreads than a full contract account.
And finally, because the spreads really are the difference between bid prices and ask prices as determined by the free market, it is important to recognize that they are not "guaranteed". Most brokers will tell you that there may be times during periods of low demand, or very active trading when the spreads widen and you will be charged that wider spread.
These do tend to be rarer situations because the Forex market really is so large and demand and supply are generally quite predictable, but they do occur, especially with some of the lesser traded currencies. So it's important to be aware of that.
In summary then, when trading Forex, understand that the "spread" is truly your most important consideration for trading costs.
Spreads can vary significantly between brokers, account types and currencies traded. And small differences in the spread can really add up to thousands of dollars in trading costs over even just a few months.
So be sure to understand what currencies you are going to be trading, how frequently, and in what type of account and use those factors to help decide which broker can offer you the best trading costs.

How To Spot Forex Fraud


As the popularity of Forex increases so do the number of scam artists attempting to cash in on the Forex gravy train. Since Forex involves trading money internationally, often over the Internet, a whole new breed of scams have come about. Ironically many of these scam artists are finding their marks through newspaper, television or other print media advertisements.
While these scams are generally easily spotted by experienced traders, new speculators may have problems knowing the difference between what is real and what isn't. It is absolutely essential to thoroughly research Forex trading, and any potential companies you may trade with before making an initial investment. The last thing you need is to find out that the company you have invested with is under investigation by the SEC for fraud. In this type of circumstance it can often be impossible to retrieve your money as the claims from all fraud of participants will be higher than the total payouts the government can guarantee.
One way to spot a scam on Forex is when someone promoting a Forex system guarantees no risk. It is a fact that there is risk with Forx trading, and generally anyone who claims otherwise is a liar, or more likely a criminal. Trading in Forex successfully requires knowledge, discipline, and a trading strategy. But there is no magic software or no risk way to assure that you will make money.
Another red flag indicating a sure sign of a Forex scam is a web site that guarantees profits. Nobody can guarantee profits and Forex trading. It is up to you as an investor to perform. If it were possible to guarantee profits in Forex trading then nobody would need to start a business showing others how to make guaranteed profits. The profit potential for anyone who could guarantee profits would be so enormous in Forex trading, that they would quickly become a billionaire by trades. So why would they waste time teaching others?
Another common tactic of Forex scam artists is to promise employment opportunities for people using their system. This is usually a trick to get you to spend your money with them. They are fishing for people with capital who can fund their enterprise. They typically promise to offer firm money to people using their system. But why would they do this? Instead what happens is they lure people into their training systems and convince people that they have done so well in the training session that they should start using their real money in order to make a fortune.
All reputable Forex trading web sites will be a member of the CFTC or the NFA. Make sure to check the company's claims out and assure that they are members of one of these organizations before dealing with them.
Keep in mind that Forex is a relatively unregulated system of exchanging money. In many cases Forex scams can become highly technical, involving brokers manipulating prices in ways that cannot be tracked by the average trader. Because of this is essential that you not become a mark for such brokers.
In the United States the CFTC is the federal agency responsible for regulating the trade of Forex currency. If you suspect that you have been a victim of some type of fraud contact the CFTC. They have jurisdiction for investigating and enforcing the laws.
by Willie Reynolds

Futures Versus Forex (Foreign Exchange Market)


Todays current futures market is quite unlike the futures of the 19th century. Todays future market is a worldwide one that includes manufactured goods, financial currencies and treasury bonds, and agricultural products.
When you speculate on futures it is not the actual good that is speculated upon rather it is the contract for the goods that is traded as value. Every futures contract includes a buyer and a seller. The following is an example of a futures speculation: A farmer agrees to deliver 1000 bushels of corn to a baker at a price of $5.00 a bushel. If the daily price of corn futures falls to $4.00 a bushel, the farmer's account is credited with $1000 ($5.00 — $4.00 X 1000 bushels) and the baker's account is debited by the same amount. Futures accounts are settled every day.
Using the above as an example this is how the contract settlement would play out: If the price of corn futures is still at $4.00 the farmer will have made $1000 on the futures contract and the baker will have lost an equal amount. However, the baker can now purchase corn on the open market at $4.00 a bushel — $1000 less than the original contract, so the amount he lost on the futures contract is made up by the cheaper cost of corn. Also, the farmer must sell his corn on the open market for $4.00 a bushel, less than what he anticipated when entering the futures contract, but the profit generated by the futures contract makes up the difference.
Speculators profit by daily fluctuations in the futures market by choosing to buy from the seller (buying short) or from the buyer (buying long).
The FOREX market has advantages over the futures market. FOREX is the largest financial market in the world. It is a liquid market and stop orders can be executed more easily and with less slippage than in other markets. The FOREX market is open 5 days a week, 24 hours a day. Traders can take advantages of opportunities as they become available. FOREX transactions are usually instantly executed. FOREX transactions are commission free. Brokers earn money on the spread.
Some investors feel that due to built in safeguards that FOREX trading is safer than futures trading.
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Thursday, October 15, 2009

Crude oil trade

Crude oil trade advises clients on effective management of market risk and credit risk. In addition, Crude oil trade acts as a general advisor on financial transactions that may have significant risk elements. We assist financial, energy, chemical and mining companies who are considering:
· Hedging with Derivatives
· Complex Customer Transactions
· Insurance
· Acquisitions
· Divestitures
· Trading (Commodities, Equities, Derivatives)
· Other transactions involving material risk
Crude oil trade provides advisory services for existing and potential financial transactions having significant risk elements, with a particular emphasis on commodities and credit risk. Crude oil trade represents both buyers and sellers at financial, energy, chemical and mining companies who are considering derivatives, complex customer transactions, insurance and other risky transactions. Our understanding of “both sides of the table” enables us to better structure and price commodity and credit transactions in the marketplace. Our best-in-class analytics allow us to present complex concepts in terms of clear decision criteria. These criteria help ensure that senior management has the analysis and support needed confidently make the best decisions for their specific corporate interests.

Crude oil trade provides three basic services for its global clientele:

  • Enterprise Risk Management Advisory for companies with exposure to volatile commodities, currencies and interest rates,
  • Risk Capital Measurement and Risk Mitigation Advisory for large transactions such as mergers and acquisitions and asset disposition, and
  • Customized Risk Management Solutions such as Credit Risk Management tools and Risk Capital Allocation methodologies for Trading Organizations.
  • Offers Analytical consulting, training, and strategic analysis software for load forecasting, pricing assessment, asset optimization, risk management, multi-commodity trading, energy-economic-environmental analysis, and greenhouse gas mitigation assessment

Forex Spreads List




Please note, spread amounts depends upon your overall account balance and trading volume. The spreads listed below represents the average for Forex accounts with a minimum of $3,000.00 equity.

For more information on our spread rates please contact our customer service department.
Currency Crosses
Target Spread (PIPs)
Currency Crosses
Target Spread (PIPs)
Currency Crosses
Target Spread (PIPs)
AUD/CAD
15
EUR/GBP
3
NOK/JPY
10
AUD/CHF
10
EUR/JPY
4
NOK/SEK
8
AUD/EUR
7
EUR/NOK
45
NZD/AUD
12
AUD/GBP
5
EUR/NZD
20
NZD/CAD
15
AUD/JPY
8
EUR/SEK
50
NZD/CHF
10
AUD/NZD
15
EUR/USD
2- 3
NZD/EUR
9
AUD/USD
4
GBP/AUD
15
NZD/GBP
5
CAD/CHF
8
GBP/CAD
10
NZD/JPY
8
CAD/JPY
6
GBP/CHF
7
NZD/SEK
90
CHF/AUD
10
GBP/DKK
75
NZD/USD
5
CHF/DKK
30
GBP/EUR
9
SEK/DKK
7
CHF/JPY
6
GBP/JPY
9
SEK/JPY
10
CHF/NOK
50
GBP/NOK
100
SEK/NOK
8
CHF/SEK
50
GBP/NZD
35
USD/CAD
5
DKK/JPY
10
GBP/SEK
100
USD/CHF
3-4
EUR/AUD
14
GBP/USD
4
USD/DKK
35
EUR/CAD
12
JPY/DKK
5
USD/JPY
3
EUR/CHF
3
JPY/NOK
5
USD/NOK
50
EUR/DKK
5
NOK/DKK
7
USD/SEK
50

Trade Forex with FX Solutions


FX Solutions was founded to provide individual foreign exchange traders with the same professional liquidity, execution, and trading functionality demanded by interbank traders. Our proprietary price discovery and risk management technologies offer individual traders liquidity, consistency, and execution stability in the fast-growing category of Forex.

Forex Global Trading System (GTS)



Cutting-edge technology

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Includes more than 150 fully customizable visual indicators to help traders recognize potential trading opportunities

Price engine efficiency

Our proprietary price feed provides fixed spreads and consistently competitive pricing. Read more about our currency pairs and spreads.

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More than 99.18% of our orders are automatically executed. † Read more about our automated execution.

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Speak to an experienced professional 24 hours a day from Sunday 17:15 to Friday 16:30 Eastern Time (US).

Market News International news feed

Provides real-time information on global current events that can affect the Forex market.

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