Sunday, May 15, 2011

International Finance Business Relating to Forex

I haven't been posting lately because things have been super busy in my life especially with Finals coming up. I've been studying like crazy hoping to get past this semester on the Dean's List again. I've decided that it is time to post something about international business finance because I feel that this is one of the most important aspect of finance and money today. So why is overseas financial investments so important? For one reason, long-run overseas investments earn higher returns than those obtainable in domestic capital markets. A second reason is that these investments reduce portfolio risk through international diversification. For example, the Eurodollar market is now larger than any domestic financial market, and the firms in the United States are increasingly turning to this market for funds. The increase in world trade and investment activity is reflected in the recent globalization of financial markets.

One important concept of international financing is exchange rates. A country's relative economic strengths, trade balance, balance of payments, and level of monetary activity are important determinants of exchange rates. These rates are important because they determine what a person is able to afford. Think about it this way. If the Euro is strong, it will boost American exports because American goods become much more affordable. On the other hand, if the Euro is weak, American exports will suffer because American goods become more expensive.

As one can see, international finance business is important and is very much relevant to the foreign exchange markets. As stated before, the foreign exchange market is organized as an over-the-counter market. Basically, it is a network of telephone and computer connections among banks, foreign exchange dealers, and brokers. The foreign exchange market operates at three levels: 1) customers buy and sell foreign exchange through their banks. 2) banks buy and sell foreign exchange from other banks in the same commercial center. 3) banks buy and sell foreign exchanges from banks in commercial centers in other countries.

So what does determine exchange rates? Exchange rates are affected by two things and they are foreign investors and speculators. Demand for the U.S. dollar will increase because foreigners need to convert, thus, dollar will appreciate. As for speculators, if the U.S. dollar is undervalued, speculators can buy into the dollar. As a result the demand for the U.S. dollar will increase, thus, value of the U.S. dollar will also increase.

I strongly feel that understanding international business finance is important for any traders on the foreign exchange market. With this understanding, traders are more aware of why currency rates move a certain way.

Wednesday, April 27, 2011

Four Tips to Help You Succeed in Forex!

Hey everyone. I know it has been a long while since I've last posted but I wanted to put up some valuable advice for all you forex beginners out there. Let me first begin by saying that beginners often have the best luck when it comes to forex.This is because they have yet to be poisoned by hopes of magical indicators to tell them exactly what to do. This, in turn, allows them to look at the markets with an unbiased set of eyes. I would like to share with you all that you will ever need to know to be a successful trader, whether you are new or not. It's just human nature and psychology that end up being what makes trading difficult for most people. Trading itself is a very simple concept but our human nature is what makes it difficult. Below are four things that will help you on your road to becoming a great forex trader.

1. Support/Resistance- This is simply your supply and demand. Knowing this real well will help you succeed.

2. Trend Lines

3. Risk/Reward- The key to this concept is do not risk more than what you are trying to gain.

4. Money Management- The key to this concept is to not be greedy. If you become too greedy, you may end up losing everything.

So I wish everyone the best of luck and may the riches be with you! :)

Saturday, April 9, 2011

Demo Trader Vs. Live Trader

Alright! I'm back after a week and a half off from blogging. I've decided to dedicate this post to show you all the difference between demo trading and live trading when it comes to forex. Over the years, people have been posting success stories of how they've made a "profit" while demo trading. For all of you who do not know what demo trading is, it is simply practicing trading without using real money. Usually people want to be successful in demo trading before stepping up the the big game and becoming live traders where their money is at stake. However, being successful at demo trading is completely different than being a successful live trader. This is due to one major reason, and that reason is the mental aspect of winning and losing your actual hard earned money. It is easy to risk "demo" money when you are not attached to the money and losing it won't change anything. However, if you were to lose your real hard earned money, you would be more conscious of the way you trade and the amount that you trade with. Therefore, this post is to warn anyone who may be currently be successful at demo trading and are thinking about going live and trading with real money. Be sure you know what you are getting yourself into. Again, the foreign exchange market has many profitable opportunities but keep in mind that there is still the potential of losing money!

Happy trading everyone!

Tuesday, March 29, 2011

Stock Knowledge

Although this is mainly a blog for forex, I've decided to dedicate a post to stocks since that is what I am currently learning in my finance course. Let's begin by giving beginner stock traders a crash course lesson in stocks. First off, there are two types of stocks: preferred stocks and common stocks. Each of these types of stocks have their own advantages. I will first start off by discussing preferred stock.

Preferred Stock

Preferred stock is often referred to as a hybrid security because it has many characteristics of both common stock and bonds. These types of stocks have many features that include cumulative dividends, protective provisions, convertibility, and retirement features. Cumulative feature requires that all past, unpaid preferred stock dividends be paid before any common stock dividends are declared. Simply put, preferred stock holders have priority over common stock holders. Protective provisions generally allow for voting rights in the event of nonpayment of dividends. They restrict the payment of common stock dividends if sinking-fund payments are not met or if the firm is in financial difficulty. Convertible preferred stock can, at the discretion of the holder, be converted into a predetermined number of shares of common stock. One noteworthy statistic is that almost one-third of preferred issued today has a convertibility feature. Lastly, stock issuing firms generally provide for some method of retiring the stock such as a call provision or sinking-fund provision.

Common Stock

Common stocks is a certificate that indicates ownership in a corporation. When you buy a share, you buy a part of the company and attain ownership rights in proportion to the amount of shares you buy. Common stockholders are considered the true owners of the firm. On the other hand, bondholders and preferred stockholders are considered more as creditors. Like preferred stocks, common stocks also have some features. These features include claim on income, claim on assets, voting rights, and preemptive rights. Common shareholders have the right to residual income after bondholders and preferred stockholders have been paid. Common stock also has a residual claim on assets in the case of liquidation. Generally, if bankruptcy occurs, claims on the common shareholders are typically not satisfied.When it comes to voting rights, common stockholders are the only security holders with a vote. Lastly, the preemptive right entitles the common shareholder to maintain a proportionate share of ownership in the firm.

Saturday, March 26, 2011

Today's Spotlight: New Zealand Dollars!

Happy Saturday everyone. So I just read some news about the New Zealand Dollar and the multiple trade opportunities that we can take advantage of and make a good profit. Currently, the New Zealand Dollar is trading at 1.3720 NZD to every 1 USD. This is a tremendous jump from yesterday when it went down to 1.3272 NZD to every 1 USD and I feel that this trend will still continue. In the past week, the NZD has hit past 1.3917 which is a noteworthy gain for in the foreign exchange market.

I truly believe that the NZD will not hit a new low until early summer during the week of June 10th. Therefore, if you do decide to invest in the New Zealand Dollar, be sure to monitor the daily exchange rates as they may fluctuate as summer draws near. Keep in mind that the foreign exchange market is dynamic, meaning it is always changing. In order to be a successful day trader in the foreign exchange market, you must be actively monitoring the progress of the exchange rates. This is exactly how some people make FX trading a profession. They are able to make good profit every day by forecasting and predicting the trends of all the rates.

Wednesday, March 23, 2011

Daily Currency Exchange News

Today, the dollar rose in value significantly. This was due to nuclear crisis occurring in Japan, the Middle East and Libyan violence, and convulsions of debt amongst several European nations. The specific event that spawned violence in the Middle East was the bomb explosion at a bus stop in Jersualem. According to news reports, about thirty five people suffered injuries as a result of the violence act. Because of this, the dollar gained strength.

Here are some of the updates for the various currency exchange rates today:
1 Canadian Dollar = $1.0197 US Dollar. (+0.0011)
1 Mexican Peso = $0.0833 US Dollar. (-0.0001)
1 British Pound = $1.6242 US Dollar. (-0.0111)
1 European Euro = $1.4099 US Dollar. (-0.0081)
1 Chinese Yuan = $0.1525 US Dollar. (+/- 0.0000)
1 US Dollar = 80.940 Japanese Yen. (+0.0800)
1 Australian Dollar = $1.0127 US Dollar. (+0.0039)

Tuesday, March 22, 2011

Back to Forex!

I know I've been swaying off the topic of Forex for the past couple of days so I've decided that it's a good idea to start blogging about it again. I was looking around for helpful tools for people to use when getting started in the foreign exchange market. I came across this nice website called forex forum. Basically, this forums gives you tips on different pairs of currencies and forecasts their high point, low point, and resistance. This can come in handy for anyone who is looking to see which currency is currently strong and which ones are weaker.

The current currency rates are:
1 Canadian Dollar = $1.0186 US Dollar.
1 Mexican Peso = $0.0834 US Dollar.
1 British Pound = $1.6364 US Dollar.
1 European Euro = $1.4171 US Dollar.
1 Chinese Yuan = $0.1525 US Dollar.
1 US Dollar = 80.8650 Japanese Yen.
1 Australian Dollar = $1.0092 US Dollar.

This is the currency rates of the various currencies as of March 22nd. Remember, currency rates are always changing and therefore the foreign exchange market appeals to active traders.