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FxGiants Review

June 14, 2018 by Forex guru

Introduction
The organization is a global forex broker that provides financial services for online trading regarding currency exchange. FXGiants as well serves the retail investors as well as investors from institutions from more than 150 countries across the globe. It is the among the leading online forex and CFDs broker organization across the globe more especially in the countries of incorporation. The company was established in the year 2015 at the same time in two countries; the UK and Australia. However, the company has been Australia for a longer time and has been operating under a veteran forex trading company in the brokerage industry. It forms a registered brand for the IronFX Global company. FXGiants has two trading companies presently which were both once owned by IronFX but currently one is owned by GVS Pty Ltd in Australia and another one by 8Safe in UK. The organization’s headquarters is based on London in the UK. The official address for the organization is 51 Church Street on the 5th Floor of the Andrew’s Place in HM12 Hamilton, Bermuda. The company trades with a wide range of commodities such as over 80 currency pairs, more than 200 kinds of financial instruments to numerous clients who come from more than 150 countries worldwide. The committed focus of the organization is to offer a fulfilling trading experience for the financial services consumers with the integration of latest technology and provision of high standard services. The organization’s popularity is well felt in the Australian nation, in Europe as well as South America.

Company license and regulations

The company is under stringent regulations that are spanning the globe from the various regulators of the countries of regulation. With the organization’s commitment to offer services compliant to the highest standards, it operates under full regulation of the financial regulating authorities of the two countries of incorporation. In the UK, the organization is regulated by the Financial Conduct Authority (FCA) under the license number 585561 while in Australia it is regulated by the Australian Securities and Investment Commission (ASIC) under the ASFL number 417482. This therefore makes the organization a fully compliant organization for laws of the land in both UK and Australia. The licensing and regulations verifies that the organization is a legit forex trading broker in the financial services provision industry. The company also being a participant in the European Union market, it is a full compliant of the guidelines and authorities provided by the European Union. It also complies to the rules and regulations of the Financial Services Compensation Scheme of the UK since it is protected by the scheme. The scheme can give compensation to the FXGiants’ investors in the event when the company has not met its financial obligations to the agreed rates between the company and the compensation scheme.

FXGiants reliability

With the desire of every investor to ensure that every dollar invested produces a yield, nobody wants to be a victim of scam forex traders. Especially in the online platforms, the practice of scamming is very rampant since the offices are not sometimes physical identified or they are in abroad regions where some other local investors cannot easily access them. Therefore, legitimacy and authenticity of the forex trading brokers is a question of great concern for the investors. Despite the fact that the FXGiants broker is young in the industry and has been operating for less than four years in the market, its age does not affect its reliability. With this doubt about its age, the company has been motivated to work harder seeking to win trader and investor trust in the online community.

The first evidence of reliability is seen in the company’s concerted efforts to secure regulation under two different jurisdictions in the two countries of operation. In a span of less than 2 years, the company has been able to be licensed under the Australian regulation and the UK regulation. This regulation gives assurance to the traders that any investment they make with the company is in safe hands. There is also constant supervision of the FXGiants company by FCA and ASIC thus ensuring that the company conducts its operations transparently and fairly which can assure the investors that they will be able to transparently see their investment performance as time goes. Additionally, the company has partnered with the Financial Services Compensation Scheme of the UK thus in any event of financial incapability or insolvency, the investors are assured of compensation amounting to a maximum of 50,000 pounds per every investor. The company also has an automated risk management system which manages the accounts of the investors thus they do not have to worry of their accounts running on negative state.

FXGiants trading platforms

Working in the financial brokerage industry, FXGiants company works solely on online platforms. Its specialization is inclined to forex trading with more than 80 currencies of operation. The company offers a wide variety of trading platforms that are compatible with Windows as well as Mac Operating Systems. The mobile compatible platforms are also available such as applications form tablets and smartphones which allow investors to access their accounts while even travelling. Any investor account offers unrestricted access to the company’s platforms at any time.

The major trading platform is the MetaTrader 4 (MT4) which is a software developed by the MetaQuotes Software company. The platform forms the major trading platform for the company since it is the most popular forex business platform in the forex trading industry. It is used as the main trading platform by over 80 percent of the companies that participate in the forex trading business. The MT4 trading platform is a highly popular platform that is user-friendly and robust thus supporting the forex trading business greatly since it is integrated with a charting package and other technical indicators which the investor can use to analyze the market thus guide informed investment decisions.
Another feature of the MT4 platform is the which is the most powerful feature is its capability to support automated trading with using the Expert Advisors. Those traders who are experts in computer applications can program the Expert Advisors to build an automatic trading on the platform. The platform is made available in various versions like MT4 for PC as well as MT4 for Mac. They both have features like activity reports, advanced charts, advanced security systems, real-time news feeds, real-time quotes, support trading signals, and support for various kinds of trading orders. The mobile trading platform has MT4 mobile compatible platform that can be downloaded from Google Play Store for android phones or the App Store for the iPhones. The traders can monitor their accounts or execute trades right from their mobile phones.

FXGiants transparency and trading conditions
The organization has strong transparency since it is regulated by two bodies which oversee its operations. The subjection to two kinds of regulations makes it achieve the highest standard of transparency as they move on with their operations. The organization has also specified the compensation limits for the investors in the event of financial difficulties or insolvency thus straightforward with the financial services that it offers. The accessibility of all their trading platforms with only one investor account also makes the trading to be highly transparent and makes the trading conditions convenient for every investor.
The company’s trading accounts
The company genuinely offers a meaningful and wide range of types of accounts from which the investor can choose from. Therefore, it is possible for an investor to open a market maker account or an account that deals with desk type on the basis of the commissions. There are five different types of accounts that from which the investor can choose from. The accounts are as follows

Micro account – The investor is able to choose between live fixed or live floating spread depending on the individual tastes and preferences. In any spread that an investor will choose, the minimum deposit remains to be $100 but an average of $500. The leverage range for this account ranges from 1:1 to 1:500 with variety of the currencies like AUD, EUR, GBP and many more. The benchmark for fixed spread is 2.2 while for the floating spread is at 1.1 with the freedom of opening one account with numerous base currencies. The min lot size for this account is 0.01 and the account is available for 24 hours for five days in a week. The transaction hotline is also available to sort out issues with investors.

Premium account – This also lies in the similar choice by the investor either live fixed or live floating spread. For either choice of the spread, the minimum deposit is $2500 with a benchmark spread of 1.2 maximum and a minimum of 0.7 USD floating rate. The highest leverage given for one account of this type is $500 and the account is also allowed to be opened with numerous base currencies. The min lot size for this type of account is 0.1 with also dedicated account manager in 24 hours in five days. It is therefore slightly below the micro account.

0 Fixed Spread account – This account can be opened with a minimum deposit of $500 with a minimum lot size of 0.01 and a minimum commission as from $18 per lot is charged on the account. The account manager for this account is also available for 24 hours for five days a week. A highest leverage of up to 200 base currencies which translates to around 1.8 pips of the currency pair used as benchmark.

STP/ECN No Commission account – This account’s deposit charge is similar to the minimum deposit for Micro account and 0 Fixed Spread account. Base currencies used in this account are also similar to the Micro account. The only difference is that the leverage caps for this account are at 1:200 other than 1:500 noted in the Micro account. Also there is no transaction hotline and also no account manager for the account. The minimum lot size is 0.01 with allowance for various base currencies as the Micro account.

STP/ECN 0 Spread account – The account has the same features like the STP/ECN No Commission account thus the two accounts can be opened interchangeably by the investors. This account forms the largest account in the company forex trading business thus can accommodate any investor who wants to invest huge amounts of money into the business.
Unique features with FXGiants

The company offers its products and services on its trading platforms in 24 hours in 5 days every week. Their services are available for online platforms and compatible with either PC or smartphones. The major trading platform used is well-known to people and always user friendly for either the MetaTrader 4 platform or the Personal Multi Account Manager (PMAM). For the PMAM platform, it allows for the creation and management of multiple accounts by the user. The company is also always aimed at becoming semi-professional money managers which can manage investor assets on their behalf. In addition, the company has a group of professionals with a wealth of experience in the field of international finance and forex trading business. The team of professionals deal with markets analysis, business solution specialization, business developers and risk management. The company goods and services are spread in over 150 countries across the globe with more than 200 financial instruments. The company also has interesting bonus package which has initial bonus at 35 percent free. It also includes incentives such as 100% bonus maximizer and also bonus advantage of 20 percent for deposits amounting up to $2000.

Company special offers, promotions and bonuses
The company is delighted in rewarding its investors with an array of variety of promotions. The promotions range from Live and Demo Trading competitions to extraordinary bonuses which boost the investors’ trading needs. The FXGiants company rewards its traders every month with a trading competition. From month to month the price changes. For example, in the month of January 2018 the price of the reward was a vacation package to Europe or a $5000 token. However, the bonus is given to those investors who fully comply to the terms and conditions of the bonus. All the promotions and bonuses are aimed at boosting the needs of the investor as well as enhancing the company reputation as it engages in forex trading business.

Company commissions and spreads
The company commission charges are only applicable to the Fixed Spread account. The investors with this type of account are required to make a payment of $18 for every lot of trading. However, for the other accounts for trading in this company, the investors are required to make a payment of small spreads for any trade that they engage in. They can participate in the fixed or floating spread regarding their tastes and preferences. When using the Micro account, the fixed spread can be to the minimum of 2.2 pips while the floating spread can be to the minimum of 1.1 pips. On the other hand, the premium account the least floating is 0.7 pips while the least fixed spreads is 1.2 pips. However, the typical spreads are different for the various currencies as indicated on the company website.

Deposit and Withdrawals of money
This is a trading exercise which needs recharging of funds when they go below the required level and also withdrawal when the investment makes a profit. The first and important exercise is the deposit of funds to the investor account such that one can become an active participant in the business and also to fund the account for transactions. The company has a proprietary interface which makes process simple, enhanced and secure. The company does not take cash deposits from the investors. Instead, there are several options that can be used to make automatic deposits to the investor account such as the Visa or MasterCard credit cards, Neteller, Skrill, Fasapay, UnionPay China, Safecharge, EccomPay, and DotPay. The investors can also use alternative deposit method of using the bank wire transfer to deposit finances to their trading accounts in case they do not have access to eWallet of credit cards. All these methods have different fees with different terms and conditions of operation. Withdrawal can also be made through the same methods used to deposit funds to the trade accounts. The withdrawal fee varies from one method to the other but the least withdrawal fee applicable is $0.5 while the maximum applicable $30.

Customer support
FXGiants offers 24-hour customer support services for 5 working days every week. The customer support staff is helpful in solving the customer complaints. The company’s customer support centers are based in London in the UK with the primary language in offering the support services being English but can also be translated to various languages which include Spanish, Italian, Korean, Chinese, Russian, Malay, Portuguese, Hungarian and Indonesian. Their customer support services can be reached through various mediums such as emails, telephone call, or a live chat at any time even in the instances when the market is busy. The company has also toll free contact numbers for customer support in specified countries such as China, Malaysia, Hungary, Spain, Poland, Indonesia, Italy, Thailand, Portugal, Russia, and Korea.

Education
The company is focused on the delivery of variety of assets that are easily tradeable by the investors in a simple execution of commands over the trading platforms. With this focus, the company therefore strives to educate its investors with an educational content that is always restricted to a forex trading glossary and the news releases for the company as well as other headlines that concern key economic performance across the globe and the region of operation. The company glossary despite being limited, it is useful to the investors to a great extent. The company website also has light educational materials regarding forex trading as well as basic economic news regarding forex trading market analysis that is fundamental to the investors.

Safety of finances
To curb insecurity issues, the company’s accounts are maintained in the top tier banks by the use of banking and treasury services that are applied at Westpac as well as other major high class institutions dealing with banking. The investor funds are in complete segregation with the other funds thus the customers can be sure that clarity, integrity and security is highly observed in dealing with their finances. Each investor account has a unique code which effectively guides depositing and withdrawal of funds from the account. The company is regulated and protected by recognized agencies in the lands of its operation thus very secure.

Pros and Cons
Pros
The company has variety of trading accounts (total of 5 types)
There is low deposit requirement for minimum initial deposit
The company is a regulated broker thus secure and legit
It has a wide range of financial instruments as well as products and services
Cons
The company lacks multi lingual support
They also lack local telephone customer support
They have no web based platform for trading
Only the MT4 trading platform is supported

Conclusion

With the company review, it is evident that the company has strong regulatory oversight, brilliant spreads and an array of accounts which the investors can choose from. It is true that is has been in operation for a very short period but it has managed to gain massive following and has accumulated a pool of loyal investors. The company has affordable accounts starting as low as $100 with amazing promotions and bonuses. Therefore, is it of no doubt that the company has proved itself as an investor friendly broker for those individuals seeking to begin their forex trading business.

What is Leveraged Buyout – LBO

June 13, 2018 by Forex guru

Leveraged Buyout – LBO
Definition
When you borrow a significant amount of money in order to complete the acquisition of another company, then this will be termed as a leveraged buyout. Now, since the amount of loans taken for acquiring the company is pretty high, so to pay them off, the assets of the acquired company are put to use. They are often kept as a collateral for the loans to the creditors. Sometimes, the acquiring company also uses its own assets to keep as a collateral for the loans. Now, the main reason behind this buyout is to make sure that when a company is being acquired, the acquiring company is not committing a lot of capital.

Historical aspects regarding Leveraged Buyout

The infamous history of leveraged buyouts suggests that they hadn’t been much successful in the past. Most importantly, when the 1980s are kept into account, there were various much important buyouts that happened and led to the eventual bankruptcy of acquired companies. Mainly, this was because of the pretty high leverage ratio that amounted to almost 100%. The interest payments were also so large that the operating cash flows of the company just couldn’t make it to meet the exceedingly high amounts and thus, they eventually got bankrupted.
One of the largest LBOs on record was in 2006 when Kohlberg Kravis Roberts & Co. (KKR), Merrill Lynch and Bain &Co. acquired the Hospital Corporation of America (HCA). The three companies had to pay a whopping amount of $33 billion in order to acquire HCA.

What are the reasons behind LBOs?

When a company is taking so much loan just to acquire another company, it raises questions and puts the acquiring company’s finances at great risk. So, one does wonder the reasons behind such a buyout. Well, there are three important reasons as to why companies come to this point.

1. First reason is when the company wants to take over a public company and make it private
2. When someone is trying to sell a portion of his existing business for its spin-off.
3. The third reason might be the transfer of any private property, or the case where a small change is to be made in the ownership of a specific business.
However, in all the cases, there is one common requirement that the acquired entity must be a profitable and growing venture. So that, spending all the large amount and acquiring all the loans are worth it.

Break down of LBOs
Usually, there is a ratio of 10% equity to 90% debt in an LBO. Due to the excessive ratio, usually the bonds issued in this buyout are referred to as the junk bonds instead of the investment grade. Moreover, a lot of people are of the view that the tactic of LBOs is highly predatory and ruthless because the target company never actually sanctions it. Moreover, it is pretty much ironic that the assets responsible for a company’s success are actually being used against the same company by the predator company as a collateral.

The process of LBO
The leveraged buyouts often contain many complexities and hence they take some time for completion. For instance, consider the example of JAB holding company. It is a private firm which makes investments in healthcare companies, coffee and luxury goods. In May 2016, JAB holding company started the leveraged buyout of Krispy Kreme Doughnuts, Inc. The acquired company came at a whopping price of $1.5 billion, out of which there was a leveraged loan of $350 million along with a revolving credit facility of $150 million through the Barclays investment bank.
However, the Krispy Kreme Doughnut Inc. already had a debt on its balance sheet which was also needed to be sold. Barclays made it more attractive by adding an additional 0.5% interest rate to it. Thus, the LBO was made quite intricate and the deal was almost cancelled. Nevertheless, on July 12, 2016, they went through with the deal and closed it.

Attractive aspects of LBO

An LBO generally represents a win-win situation for banks as well as financial sponsors, thus they are quite attractive. In case of financial sponsor, he can employ the leverage and thus enhance the rate of returns on his equity. The banks can also make it different from the corporate lending and thus attain some significantly high margins by supporting the finances of LBOs. This is because the banks will be charging a much higher interest. Moreover, the banks can obtain security or collateral too as a proof or surety that they will get repaid.
How much amount can the banks provide for an LBO
As mentioned, the LBO requires a lot of debt and this depends on how much amount the banks are actually willing to provide for supporting an LBO. The amount varies and is dependent on several factors that are mentioned as follows:
• Overall economic environment
• The quality of the company that is being acquired i.e. whether the operating cash flows of the company are stable, its history, the prospects of growth and the hard assets etc.
• The experience and history of the financial sponsor.
• How much equity is being offered by the financial sponsor.
Characteristics of leveraged buyouts
The leveraged buyouts greatly differ in many aspects. However, some characteristics are there that hold true in almost every LBO mentioned as follows:
• Strong management team – The chief executives will have worked with each other and by rolling over their shares in the LBO deal, they might have some vested interests.
• Relatively lesser existing debt – The private equity firm will add up more debt in the capital structure of the company which is to be repaid over time. Thus, this results in a lesser effective purchasing price. If the company already has acquired a huge debt balance, then the deal is very tough to be closed.
• Relatively lesser fixed costs – the fixed costs are to be repaid even if the revenues of private equity firms decline, thus the fixed costs pose risk for the private equity firms.
• Stability in cash flows – the acquired company in the LBO must have a stable operating cash flow.

New Zealand Dollars

June 10, 2018 by Forex guru

New Zealand Dollars
It is New Zealand’s currency. NZD is its currency code.

If you interested in NZDUSD trading see latest values and NZDUSD chart.

As can be seen from the name, the New Zealand dollar is used by New Zealand as its legal tender and currency. It is however also used by other independent countries and areas close to New Zealand, including Pitcairn Islands, a British territory, the Niue, Cook Islands, Tokelau and the Ross Dependency. The dollar ($) is mostly used as an abbreviation, while “NZ$” is commonly used to differentiate it from other countries that uses the dollar. The NZ$ is also informally known as the “Kiwi”. This is due to the fact that New Zealand is often associated with this bird which is indigenous to the country, and also depicted on the 1 dollar coin. The currency’s international currency code is NZD, as opposed to USD for the American dollar.
In 1967, the NZD was introduced and it is divided into 100 c. Although the original denominations included a 1c, 2c and a 5c, these were eventually withdrawn due to production costs and inflation. Nowadays the currency has to denominations of which 5 are coins and 5 are banknotes. Although New Zealand is a small island country, the NZD is regularly one of the ten currencies most traded in the world.

Before the NZD was introduced, the country’s currency was the New Zealand pound. Since 1933, the pound had been separate from the British pound and used the Lsd system, where there are 20 shillings in a pound and 12 pence in one shilling.
Since the 1930s, New Zealand has considered switching to a decimal currency, but it was only in late 1955 that the currency was finally considered too cumbersome and complicated, and plans were made to change it. Government set up a committee to consider using a decimal currency in 1957, and the decision to decimalize New Zealand’s currency was taken in 1963, followed in 1964 by the passing of a relevant Act for a decimal currency. The transition date was set to July 10, 1967. To avoid using the word “dollar”, alternative names including zeal, kiwi and fern were proposed. In spite of these suggestions, dollar was used in the end and “Mr. Dollar”, cartoon character depicting a dollar note was used as a symbol for transition in massive publicity campaigns.

The NZD was introduced on Monday July 10, 1967 the pound was replaced at 2 dollars per pound. 165 million new coins were minted and 27 million new banknotes were printed for the change.

Exchange rate
The NZD was initially linked to the American dollar at a rate of NZD 1 = USD 1.43. This changed to NZD 1 = USD 1.12 on November, 21 1967 after the GBP was devalued.
When the USA devalued the USD relative to gold in 1971, New Zealand followed by pegging its currency at NZD 1 = USD 1.216, maintaining an equivalent gold value with a fluctuation range of 4.5%. Between July 1973 and March 1985 the NZD’s value was calculated from a basket of currencies that was trade-weighted.
On March 4, 1985, the NZD was floated at a rate of USD 0.4444. Its value has been dependent on financial markets since then, and has been between USD 0.88 and 0.39.

The NZD’s low was reached on November 22, 2000 at USD 0.3922, while a high of USD 0.8821 was achieved on July 9, 2014, with most of the variation being attributed to interest rate differences.
Currency trading often strongly affects the NZD’s value and it remains one of the currencies in the world most traded.
The New Zealand Reserve Bank sold NZD worth nine billion USD on June 11, 2007, trying to decrease its value. This was the first time the Bank intervened in the markets since the currency was floated.
It is suspected that there were another two interventions, but these were not really successful. Although the 1st seemed to be effective when the NZD dropped to approximately USD 0.7490 from USD 0.7620 initially, within a mere month it rose to new heights and reached USD 0.8103.

After it reached a record high early in 2008, the NZD’s value dropped sharply throughout Q3 and Q4 of 2008, and Q1 of 2009. This was due to investors moving away from “uncertain” currencies including the NZD during the global economic downturn. The NZD reached a low of USD 0.50 on March 6, 2009, but it rallied strongly during the rest of the year and reached the USD 0.75 mark by Nov 2009.

The NZD was trading consistently above 0.80 USD by late 2012, even reaching 85c occasionally. This prompted the Green Party and the unions to call on the Reserve Bank and the Government for quantitative easing, but both had declined as at February 2013.
As of June, 2018, the NZD was trading at about USD 0.70.

What is Return on Investment?

June 4, 2018 by Forex guru

Understanding ROI

The financial world is riddled with jargon and a multiple of confusing words. Without the understanding of these, it may be difficult to survive in a world filled with bankers, investors and complexed corporate environments. So, without further delay, here is everything you need to know about Return on Investment (ROI).

Return on Investment is a measure of performance, as it is used to evaluate the efficiency of the investment of interest. It can also be used as a comparative tool, as it provides information about multiple investments in a manner that is easily understood and analyzed. This is achieved through the return on investment formula which gives a quantitative analysis of the amount of return of an investment in relation to its cost.

It provides an easily usable formula that has many practical uses. For example, one is able to compare the Return on Investment from a range of assets that are not generally compared. Therefore, one could compare performance on the stock market with that of a new niche start-up by simply plugging the correct financials into the Return on Investment equation.

The Return on Investment Formula
In order to calculate this, the amount earned is divided by the cost of the investment. The result is expressed as the Return on Investment ratio. Mathematically, the Return on Investment equation goes as follows:

ROI = (earnings from investment – cost of investment) / cost of investment

Next, one needs to consider how to practically calculate a Return on Investment. To this end, a return on investment example should suffice: John invested $1000 in Nice Shoe Inc in 2010. Today, he wishes to sell those shares and he sells them for a total of $1400. If he wanted to know his return on investment, John would first have to calculate his profits. This is done by subtracting costs of investments from the cost of investment: $1400 – $1000 = $400. Next, the profit must be divided in order to get the return on investment $400/$1000 = 40%. Therefore, John’s return on investment is 40%.
These equations may be made much simpler with the use of online return on investment calculators. This can make life simpler when comparing multiple investment opportunities at the same time, allowing for a simpler path to seeing the opportunity costs associated with a respective business path.

Return on Investment calculator:

Analysing the Results
Generally, any value that comes out of the Return on Investment equation as positive is considered a good return. An importance remains, nonetheless, on evaluating all options so that the investment chosen outweighs its associated opportunity cost. The opportunity cost is defined as the next best option that is forgone with the purchase of any good, service, or asset.
Consider this: John (from the example earlier) had the opportunity of purchasing shares in Nice Shirts Inc. For the same $1000 in investment, his Return on Investment would have equated 50% over the same time period. Therefore, John’s opportunity cost was greater than the profit he made buying shares in Nice Shoes Inc.
From this, one can see that opportunity cost plays an important role in decision-making. A comprehensive Return of Investment analysis may help dramatically in aid of this because, as stated in earlier, the equation provides a good basis for numerical comparison.

Return on Investment vs Return of Investment

Whilst doing these calculations, it is important to keep in mind that a return on investment does not necessarily mean a return of investment. Return on investment is speculative; Return of Investment is definite – cold, hard cash in your hands. The end goal of any investor must be to achieve Return of Investment

Limitations of the Return on Investment Analysis

Return on Investment is a profitability ratio. This means it is supposed to be an aid in the decision making of any investment opportunity. However, so that it can play a proper role in that situation, it is critical to establish that it does have limits. The equation does not take into account the time between the initial investment and the profit received. So, it may put investments that have different Rates of Return in the same category.
For example, the Return on Investment equation will say two 20% Returns on Investments are exactly the same. Even though the first investment may have achieved this in 6 months and the second in 2 years. Therefore, the Return on Investment analysis is not sufficient on its own and must be used alongside other crucial profitability measures. Such measures provide a better basis with which to make an investment decision. An example of such calculations would include the Net Present Value (NPV) and the Internal Rate of Return (IRR). These are not comprehensive and further research is suggested before making any critical decisions.
Furthermore, the Return of Investment analysis only provides historical data. This means that it cannot be a predictor of what an investment may do in the future. Although, certain implications may be drawn from this.

The Future for ROI

Recent times have seen the advent of the Social Return on Investments, a measurement system that takes into account the Triple Bottom Line: social environmental and economic factors. SROI helps the management of companies understand the scope of their decisions in a broader sense than just monetary policy.

Why Return on Investment Matters

Return on Investment calculations is important, as they show how your money is producing a profit. It does this in a manner that is able to show both the efficiency and the magnitude of the respective asset. Moreover, the Return on Investment analysis can act as an alarm bell, as negative products of the equation should see the immediate withdrawal of capital from the investment.
However, it must be remembered that ROI is easily manipulated and does not take into account certain crucial factors, time being an example. Despite this, it remains a critical weapon in the armory of the investor. A Return on Investment Analysis should form the foundation of any well-considered investment.

George Soros Biography

May 23, 2018 by Forex guru

Introduction

George Soros was born in the year 1930, August 12 in Budapest, Hungary. Soros is an American-Hungarian author, political activist, philanthropist, business magnate and investor. He is among the most successful investors in the world. He had a network of $7.6 billion as of 2017 February after donating $17 billion to the Open Society Foundations, his philanthropic agency. George Soros Net worth was $25.2 billion as of Mar 22, 2017. In 2018., George Soros net worth is 8 billion USD.
George Soros became popular in the year 1992, during the time that he made $10 billion from one bet that was against the British pound. The speculation of the currency gave the investor profits that added up to $1 billion in the first day and more than $2 billion afterward. He even was given the “the man that broke the Back of England” nickname.

Main facts:
Father:Tivadar Schwartz
Mother: Erzebet Szucz
Brother: Paul
Ex-spouse: Annaliese Witschak and Susan Weber
George Soros children are: Alexander, Andrea, Gregory, Jonathan, Robert
George Soros is married to Tamiko Bolton, who’s 42 years younger than him from 2018.
Where is George Soros ? – He lives in New York, Katonah, USA

Education and Career
He attended the School of Economics in London where he earned a bachelor of science in philosophy and Master of Science in philosophy in the years 1951 and 1954 respectively (“George Soros,” 2018). Soros could not find any jobs after he graduated and therefore he decided to settle for employment as a traveling salesman for wholesaler f of fancy gods that sold to retailers in the resort’s seaside. The individual described this moment as one of the lowest in his life. He wrote interview letters too many banks that ignored him and also humiliated him in the process of the interview (Soros, 2010). He worked as a clear at Singer and Friedlander, a bank in London. He also employed as an arbitrage trader in the years 1956 to 1969 at F.M Mayer. Here he was specializing in European stocks that were popular with the United States investors because of the formation of steel community that later transformed to the common market. Thereafter, he worked in an investment bank in the place. He later left for the US in the year 1956 where he was employed as an investment manager and an analyst for various firms.

Soros’s Philosophy of Investment
George Soros had an ability to synchronize world economic trend with leveraged and highly detailed strategy in currencies and bonds. He operated as a speculator shortly and was able to make bets on the trends of financial markets. He had a belief that the financial markets tended to depend on the amateur and professional traders and the people that purchase or sell assets on the market. Soros aimed at capitalizing on the emotional or human capacity of the influencers of the market to transform the investment decisions and opinions of others . The man was always looking for a way to stand out or be unique from the crowd as much as followed investment trends. This was one of the greatest paydays. He trusted his reaction regarding busing and selling and this made his strategy hard to emulate.

How did George Soros make his money ?
He left work in 1073 to look for his personal hedge fund, the Soros Management Fund. The fund turned to the Quantum Fund and eventually Soros was able to develop the company to a highly successful and aggressive hedge fund which made annual returns of 30% annually. There are two occasions when the fund posted profits that exceeded 100%. In the early 1990s, Soros was declared among the richest individuals on earth.

Market and Major Trades
Soros was contacted by Georges Pebereau a financier in France in the year 1988 that wanted him to take part in an effort of assembling a team of investors to buy a big number of shares in a French bank which was part of a program of privatization. Soros, however, decided not to participate in the effort and opted to move forward personally with the strategy of putting shares in four companies in France which included Paribas, Suez, and Societe Generale. In the year 1989, a French regulatory authority of stock exchange performed an investigation to know if the transaction of Soros in Societe Generale was inside trading. Soros got no information from the company and had no information of the business insider but he knew that there was a group of investors which was planning a takeover . The first investigation proved that Soros was innocent and there were no charges against him. The case was later reopened after a few years and he was convicted in the year 2006 by the French Supreme court. Soros, however, declined the charges and said that the takeover news was public knowledge and the document said that the intent of the individual to have the company shares showed that he was aware of the takeover.
George Soros Versus the British Pound – How Did George Soros Get Rich in one day ?

Soros is remembered by the “the man that broke the Back of England” nickname. He is also a known speculator of currency and does not limit his efforts to a specific area geographically but considers the whole world when looking for opportunities. The man borrowed billions of dollars in the year 192 which were worth British pound then changed them to German Marks. When the pound crashed, George Soros had to repay his lenders on the basis of the lower new pound value. He pocketed an excess of around $1 billion that is the difference between the pound value and the mark value in a one-day trading
George Soros made the same move with the Asian currency during the Asian Financial Crisis of the year 1997. He took part in a frenzy which led to the collapse of the Thailand currency. The trades became so effective since those national currencies that speculators bet against mostly got pegged to other currencies. This means that there were agreements to prop up those currencies to ensure that they were able to trade in a particular ratio against that currency which they got pegged.
As the speculators placed bets, the issuers of currency got forced to try and maintain the ratio by purchasing their currency on the open market. The government later ran out of money and was pushed to abandon the effort and this made the value of the currency to plummet. The governments feared that George Soros would start having an interest in their currency. When he did, the other speculators could ion in the fray, this was described as a group of wolves on a group of elk (“George Soros,” 2018). The big amounts of money that those speculators borrowed and leveraged made it hard for the governments to handle the assault or withstand it.
Despite the success of George Soros, it is not every Bet that he placed worked in his favor. For instance, in the year 1988, he made a prediction that the markets of the United States would rise continuously. His fund, as a result, lost $300 million in the crash process even though there were lower double digits delivered returns that year. In 1999, Soros also took a hit of $2 billion in the Russian debt crisis and lost $750 million during a technology bubble where he placed a decline bet (“Investopedia, n.d.”). He was stung by this loss and as a result, bought anticipation big in of a rise and lost about $2.9 million when the market crashed finally.
Soros’s family office has trimmed the stake in the Broadband Corp. during the first quarter, the management fund holdings of Broadband Corp reduced by seventy-four thousand shares to around 8000 million. The filing also shows the disclosed Soros’s stake of around 22 million in Vice Properties Inc. which the second biggest holding of the firm. George Soros also increased the stake by 330, 00 in Aetna and made the holdings of Baxter International by around 340,000 shares.
According to the recent news, the billionaire is weighing moves into cryptocurrencies. A member of the of office family got an internal permission to trade on cryptocurrencies which is an asset that several money managers avoid because of the track record of the sector which is limited and lack of volatility and regulation. The Soros Management Fund head of macro investing, Adam Fisher got the approval but has not made any bets yet on cryptocurrencies. The green light of the fund for cryptocurrencies came after the Bitcoin price that has served as a signal to several other cryptocurrencies. Recently, regulators have begun paying special attention to cryptocurrencies and this has scared investors off (“George Soros,” 2018). The interest in bitcoin is beginning to wan with the amounts of searches falling slowly since the start of this year.
George Soros current life

George Soros is Founder/Co-Founder of Quantum Fund . He lives in large estate, located in the Bedford Hills suburb of New York, Katonah, USA.

Conclusion
Trading like Soros is not for those with a light wallet or the faint-hearted. The drawbacks of the winning big and betting big is that betting big means losing big. If one cannot afford the loss, then definitely they can’t afford to resemble George Soros. While the macro hedge traders are the quite types and avoid spotlight as they earn a fortune, George Soros is taking and has been taking public stances on several political and economic issues. His success as a speculator and public stance has put Soros in a unique personal class. During a period of more than four decades, he made the correct moves almost every time and generated a large number of fans among investors and traders and detractors among the ones on the other end of losing for his speculative activities.

Forex Arbitrage Definition and Trading Example

May 23, 2018 by Forex guru

What Is Arbitrage trading?
Arbitrage theory:

Have you ever wondered how people profit from selling one commodity in one market when they have bought the same commodity in another? The difference in prices causes most people to profit. In a real example, an avocado could be going for $2 in one market and go for $3 in another. If you buy an avocado in the cheapest market and sell it in the next, you will have a $1 profit. You can keep doing this over and over again and continue making more profits. This is the pedestrian explanation of arbitrage. Arbitrage is the simultaneous purchase and sale of a commodity or asset, due to an imbalance in the prices. Securities, commodities or currencies are used in most arbitrage cases.
Arbitrage takes advantage of the price differences, to make a profit. Since no market is efficient, these differences in prices have to exist. The trade of using such differences and making a profit out of it is arbitrage. Arbitrage exists in two broad types: pure arbitrage; and risk arbitrage. Pure arbitrage is risk-free, whereas risk arbitrage is speculative. This is because it is founded on presumptions of future events that may or may not actually occur. Arbitrage works best in forex situation, hence the term ‘forex arbitration’.

Arbitrage definition Arbitrage trading is the process of purchasing securities in one market and immediately selling them in another market, in order to benefit or profit from the differences in prices. You end up with a risk-free profit. Here is a practical example: the stock of Company A is trading at $20 in the New York Stock Exchange (NYSE). The same stock is trading at $20.50 in the Toronto Stock Exchange (TSE). If a trader purchases the stock in the NYSE and sells the stock immediately in the TSE, they will earn a profit of $0.5 per share. This is trading in stocks. The immediate need for purchase and selling is based on the fact that prices can change, which can lead to better profits, no change in the profit margin, or less profit. If the prices adjust and the prices in the LSE go below your purchasing price in the NYSE, you will end up having a loss.

Is arbitrage legal ?
Arbitrage trading is legal. Arbitrage trading can be very profitable. For example you can read articles such as ‘latency arbitrage’ trading may be $3 billion as same as HFT trading problem is over.

Stock market example: ABC Bank is trading for CAD 74.50 on the Toronto Stock Exchange (TSX), and 56.50 on the New York Stock Exchange (NYSE). At the time, the exchange rate of CAD/USD is 0.77 meaning for every CAD 1, you have USD 0.77. Mathematically, it should mean that ABC Bank’s trade in the NYSE equivalent to USD 57.30. This means that you can purchase ABC’s share from the TSX at CAD 74.50 and sell it in the NYSE at 56.50, making CAD 0.8 profit per share. This is because the New York equivalent of CAD 74.50 is USD 57.30

Latency Arbitrage (High Frequency Trading Arbitrage)
In this example we have “slow broker” and “fast broker”. Using HFT trading we can see future price (fast broker) (0.5 seconds faster for example ) and then we can make profit using “slow broker”.
Latency arbitrage is complicated way of trading and if you want to learn more you can read research paper Latency arbitrage in fragmented markets.

Forex Triangular Arbitrage
Forex triangular arbitrage is a method involving offsetting trades in order to profit from differences in the prices of Forex markets. It is a more complicated arbitrage strategy than the ones above. Forex triangular Arbitrage involves a pair of currencies, for example, EUR/GBP, for the Euro and the British Pound. When trading in these pairs, it means that you are buying the first-named currency, while selling the second-named currency. In the example above, you will be buying the Euro, and selling the British Pound. In triangular arbitrage, a trader converts one currency against another, in three banks.
Forex triangular arbitrage example: you have $1,000. You will exchange the money in three banks’ situations, based on the currency exchange values. Take these exchange rates for instance: €/ $ = 0.90; €/ £ = 1.25; and $/ £ = 1.5 respectively. You will convert the $1,000 to Euros, giving you €900. Next, you will convert the €900 to Pounds, and you will get £720. Finally, you will convert the £720 back to Dollars. You will end up with $1,080. You will have earned an extra $80 in the process, assuming there are no transaction costs or taxes.

Technological Advancements in Forex Trading and Arbitrage
In an ever-competitive market, technology has been used to ease the means of acquiring an arbitrage. There are hundreds of trading companies, boasting with experts and excellent software, meant to ease in the day-to-day trading activities. Traders now are able to perform risk-free transactions in a quicker and more agile manner. The arbitrage is still the same, although the strategies used could be different. It is also important to note that each trading software is subject to extra risk, and profitability could change, depending on the software you use. The high number of competitors in the Forex market could mean lower arbitrage. Make sure the software you use is correctly coded, to avoid price quote errors, as well as working with an old version of a program. These tiny errors can cause a lot.
Other Forms of Arbitrage:
Other than the triangular and the forex arbitrage in general, there are several other types of arbitrage. The item in question is the one that varies, however, the concept is still the same.
Interest Rate Arbitrage
This is a common form of arbitrage, also referred to as ‘carry trade’. In this form, an investor sells currency from countries with low-interest rates and then purchases a currency paying higher interest rates. At a later time, the investor reverses the trade, meaning they sell the high-interest rate currencies and purchases low-interest rate currencies. They get to pocket the difference. This type of arbitrage is carried over a period of time and therefore involves more risk, majorly due to the variation of currencies and/or interest rates.

Spot-Future Arbitrage
The ‘cash and carry’ arbitrage, as it is commonly referred to, involves choosing or taking positions, on the spot and futures markets, with regards to an asset. The trader purchases a particular asset, at a certain price, and sells it in the futures market when the price is much favourable. The reverse of this can also happen, where the trader sells an asset and buys on the same asset in the futures market.
There also is dividend arbitrage, currency arbitrage, fixed-income arbitrage, political arbitrage, regulatory arbitrage and municipal bond arbitrage. All these forms revolve around the term mentioned. For example, dividend arbitrage is where options are purchased out at an equivalent amount of the underlying stock before the ex-dividend date. They are then exercised, collecting dividends. Fixed-income arbitrage profits a trader as a result of pricing differences in interest rate securities. An investor takes opposing positions in the markets, in order to take advantage of price discrepancies, at the same time limiting the interest rate risks.

Problems and Risks in (Forex) Arbitrage
As earlier noted, arbitrage exists because of the fluctuation in price differences. It is important to be fast about these differences, in order to achieve the desired profit. However, others also recognize the price differences, and under the laws of supply and demand, the price differences shrink. The overpriced items are made to be cheaper, whereas the under-priced ones, have their prices go up. The margin shrinks and the arbitrage becomes no longer profitable. Your execution speeds are very key because they can make the difference as to what amount you will be taking home.
Even in the original example involving an avocado, the prices will fluctuate because of the laws of demand and supply. When the demand is high, the prices go down, whereas when the supply is too high, the prices go high as well. This will cause the cheaper-trading markets to sell their avocados at a more expensive price, while the other market, where they were being sold, will have their prices go down. The arbitrage margins will shrink, causing lower profit margins.
There is also the fact that a ‘negative spread’ can happen. A negative spread is when the seller’s asking price is lower than another buyer’s bid. For example, a bank can quote a particular price for a currency, or a seller can quote a certain price of a product or asset, while another seller or bank, quotes a different selling price. It, therefore, applies that the arbitrageur will purchase from seller and sell the asset where they can make the most profit. Instead of the trader waiting for a favourable trend in the markets, they encounter one just like that. On the adverse hand, ‘execution risk’ can occur. This is when the price is quickly corrected, making the trade less profitable, meaning the trader could end up having a loss.

Abitrage examples :
It is a technique or strategy, using which you will place two separate trades at two different brokers and make money by the price discrepancies. Now the theory is very simple because each broker has its own platform and has a difference in price. In other words, we can say that money can be put together by the difference of two currencies while making pairs of that. Now if the paired money has a space to give something then profit is very limited due to opportunity window.

Using arbitrage strategy as a forex trader?
A strategy that involves no risk in trading in Forex is called arbitrage. It used to profit without currency exposure being open.
This particular strategy is based on aiming for inefficiencies in pricing in the time they are available.
For example, EUR/GBP, EUR/USD, GBP/USD exchange rates are 0,7231, 1,1837, 1.6388. this is time when you can buy a Euro mini-lot worth 11,837 dollars. Then trade 10thousand euro for GBP and earn 7,231, and then sell that and get 11,850, thus making 13 bucks of profit per trade. Short positions for each currency are canceled by long positions when the exposure isn’t open.
The catch is to act fast, as the inefficiencies with pricing are being corrected quickly. To exploit these inefficiencies, you have to have quotes of pricing in real-time, and you have to be able to quickly exploit the opportunity. There are available calculators to get to these chances faster.
There is a special calculator that can be used to calculate these situations, and it can be found all over the internet, as well as other tools for making finding these inefficiencies easier. Usually brokers are those who provide these sorts of calculators, sometimes for free, and it can be on a free trial, but they are available.
However, before going for this sort of profiting, you should practice. Demo accounts are good for that job as always.

Due to less risk than other forex techniques or strategies, traders normally prefer to make a transaction. When the risk is too high, the trader will obviously hesitate to put money into the trade or business deal.
Forex arbitrage is the process of profitable trading between two dissimilar forex dealers. Forex (Foreign Exchange) is the conversion of one country’s currency to another country’s currency and ‘arbitrage’ is the term used for increasing profits with a better price difference amongst different country markets. A forex broker is the person who mediates the transactions between two different country persons.
Forex arbitrage involves a currency pair to trade, as one currency is to sell and the other is to purchase. The profits are always in four decimals such 0.0001$ and as the profits are so minimal, they are called PIPs (Percentage in Points). The PIPs may look small, but they value more. Forex arbitrage software, released by Jason Fielder with Anthony Trister and his squad at forex collision, is used to place the trades.

How it works
Forex Arbitrage is a strategy which is used for making money due to the inefficiency in the two currencies and this is done very fast, because when the inefficiency is correct then there is no opportunity to trade off makes a profit. Real time currency rates are very important for this because international market prices changes in minutes, and even seconds.
The most popular trades used in Forex Arbitrage are two currency trades. Now the trader will trade with two different brokers, each with their own pricing spreads. You can make a profit from each transaction by keeping in mind the difference between each broker’s prices for the same currencies in a single quote, while keeping an understanding of currency exchange rate of the two currencies. The exchange rate of the currencies has a smaller ratio than the prices well also checked by the fluctuation of the currency rates.

Arbitrage Calculator
There are a number of techniques used to speed up profits, but the simplest way to do it is with the help of the Forex Arbitrage calculator. The only problem is that they are very expensive, so be very sure that the calculator is working properly before purchasing. The best way to save your money on a Forex Arbitrage calculator is to learn techniques from experienced traders.

The idea behind a Forex Arbitrage calculator is the same but it only automates transactions from different brokers trading in different pairs. There are some big investors who have their own advisory board for huge transactions, but normally two brokers with a single Forex fair. By this software you can keep track of 5 brokers pricing feeds along with each currency arbs they are working on.

Forex Arbitrage calculated normally cost from $2000 to $3000, but it also depends on the quality of the software. If it is a high end product then the price will be more than the standard edition. As advised earlier, before purchasing a calculator it is better to check the demo version to give you an idea of what to expect.
Let’s take an example of how it works theoretically with the help of three related currencies paired by the formula.
AAA/BBB x CCC/AAA = CCC/BBB
BBB = USD (US Dollar)
AAA = EUR (Euro)
CCC = GBP (Pound Sterling)
You can make profits from purchasing US Dollars and spend it but buying Euros, then once again buying Pounds Sterling by spending US Dollars and at the end by selling CCC with the pair of Euro; by making all this process a small amount of profit will be earned. You can also increase the profit by trading higher amounts for different brokers with a margin of prices.
You will probably have noticed that this technique is simple in theory, but sophisticated in application. If you have patience and have complex software which can formulate the huge amounts and exchange rates, then you have a little opportunity to make money because there are so many traders extracting the similar information. Forex Arbitrage only supports your income but it can not run your expenses.

Conclusion
Markets are dynamic, and they change every second. A trader can potentially lose or gain from any change in the markets. Executing arbitrage measures can be potentially profitable, but in certain situations, it can lead to losses. The advancement in technology has made it easier for traders to be able to generate profits in the Forex trading circles. However, caution should be exercised, since the increasing number of players in the markets, makes the arbitrage margins fluctuate. Such fluctuation can lead to losses, exceeding the amounts deposited. It, therefore, is imperative for traders, to check the news, prices, research, analysis, and other information provided relating to general market trends. However, they should stay away from investment advice as it may be clouded or wrong.

Flip

March 31, 2018 by Forex guru

Flipping: What Is It and What Does It Lead To?

Flipping is a term mostly used in the States to describe the process of buying a property, doing it up, and selling it on quickly. While it can be a term used for all types of assets, it’s commonly used in real estate, through buying distressed or foreclosed properties to sell on at a profit.
However, there are times that te term is used to describe illegal schemes or is used in a derogatory way for investments. In the UK, the term involves the British government and houses. Here’s a look at all you need to know about flipping and what it leads to.
Legal Flipping of Houses

Flipping in the real estate industry is extremely popular, but is sometimes considered as unethical or destructive socially. However, there are others who will say that it helps individuals out of ruin or to buy properties that would otherwise fall into disrepair.
The idea is that the a person will buy a house at a low amount. This can be for multiple reasons, whether though an auction, buying below profit because a seller wants a quick sell, or even from the bank at a low value due to foreclosure. A flipper will then make the necessary repairs and make other changes to help the property get back up to its value, before selling on at a profit – taking in the originally selling price and the cost of repairs into the value.
While the term flipping is used mostly in North America, the process is done in the United Kingdom and other parts of the world. In fact, there are TV shows that show the developers and the work that they put into their projects. In some cases, the properties will end up being rented out instead of sold on for profit for the longer-term benefits.
Wholesale Flipping

It can also be done with properties on a wholesale level, rather than just a personal level. Many wholesalers wil buy property from the seller and then resell to a third party. The wholesaler will often charge an “assignment fee,” which gives all the rights of the property to the new buyer.
Wholesaling is slightly different, in the sense that the wholesaler doesn’t have to actually buy the property—and many don’t even intend to. A contract usually has an “inspection period,” which allows the wholesaler to get out of the purchase should they not find a third-party in the end. There are complaints about this, as it can take properties temporarily off the market, increase the sale prices for the third parties, and put all but the wholesaler at risk.
Flipping of Other Assets

For the most part, the term is used when talking about housing, but that’s not the only type of asset that can be flipped. In fact, any type of asset can be used to “flip.” Car and product flipping are two popular ways to make a profit.
Both work in similar ways. Cars are popular for those with knowledge of vehicles, especially when it comes to the likes of classic cars. It’s possible for people to take it up as a hobby or for car dealers to get a license for the practice. It’s completely legal, as long as the vehicles are titled in the dealership or individual’s name. However, there are usually limitations to the amount of cars that can be flipped.
Product flipping comes to selling other items. They can be items bought on eBay, in the Dollar Store, or even at flea markets and garage sales. Individuals clean them or make repairs to them and then sell them on to others at a marked up price. This type of flipping comes with the lowest risk, which is why it’s the most popular.
When product flipping, less money is put into the business. People buy items for cents to then sell on for dollars. However, there are smaller profit margins, which is why flippers have to follow tricks and tips to get a profit.
Product flipping is popular with antiques. People will go to storage bin auctions to get access to some potentially valuable items. Of course, this can also be a risk, as it’s possible spend thousands of dollars on junk.
Second Home Flipping in the UK
The process of flipping houses in the American style does happen in the UK, but the term “flipping” means something different. It’s used to describe the UK Members of Parliament buying houses in London if their constituencies are outside. These MPs have access to a property closer to their home and closer to their work.
Either of the homes can be classed as a second home for tax advantages. The term “flipping” is given when an MP will continually switch between the two homes as their second homes. A second home can also be rented out for profit!
Effects of Flipping

Whether houses, cars or products, there are direct effects to everyone from the process of flipping. The effects are most seen on the housing, which is why flipping properties is considered unethical. Because of the sudden purchasing of houses, there’s a sudden boom for properties. However, the properties then increase in price, which can cause a house shortage for those who would have benefitted from buying at the lower rate.
The flippers have no intention of living in the properties, but solely to make a profit. This causes financial problems for many. The process has also been partially to blame for the financial crisis in 2008.
The process of flipping houses has also been linked to the gentrification in areas. Property values shift, which means the popular shifts. This has been mentioned a few times in Starz’s Vida. Of course, property and car flipping can also be a guise for something more serious and illegal.
Flipping houses, cars, and even products is all business. It’s something that people have done for centuries and will continue to do to make a profit.

Cash Market – What is the Cash Market?

January 9, 2018 by Forex guru

What is the Cash Market?
Definition of Cash Market Definition: This market is also commonly known as Spot Market. In this market the transaction are completed in a prompt manner which means that the ownership of an item or currency is transported from the seller to the purchaser and payment is not offered until the currency or commodity is delivered. This particular market differs with the other market known as the Futures Market. In this sort of market, the contracts are finished within a particular time period in the future. As far as a cash market is concerned, the purchasers make a payment of the market cost for the currencies, commodities or cost on the mark just like one would make payments for the gas, groceries and other products.

What comes to your mind when you hear about cash market? When making any purchase, the contract can be fulfilled either immediately or at a later date. For example, bonds and stocks require that the contract is fulfilled at a later date. They are classified as contracts for a future market. However, a product exchanged for money and within a span of two days, can be considered to be part of the cash market. A cash market is a market or marketplace for the immediate settlement of transactions. These could be commodities or securities. It is also called a spot market since the transactions involved occur on the spot. They can operate anywhere as long as the infrastructure exists for the conduct of the transaction. They can occur over-the-counter or through an exchange.

Cash Market Instruments
These are the items you can make good of when making cash markets purchase. They include:
• Securities;
• Shares;
• Bonds;
• Stocks; and
• Electronic traded funds (ETFs)

Cash Markets V/s Futures Markets
As regards transactions that can be concluded in the future, they are referred to as futures markets. In this case, the contract gives the buyer the obligation to purchase an asset at a price set at a point in the future. It also gives the seller the obligation to sell such asset at a price set at that point in the future. Stocks and bonds are the best examples of futures markets that are widely transacted. The price will be set by the laws of supply and demand at that particular point in the future.

Differences between Futures and Cash Markets
The difference between futures markets and cash or spot markets is the time spread involved in each of them. This time spread is important as it indicates the expectation of the markets, regarding prices in the future. Both cash and futures markets depend on the laws of supply and demand. Futures markets are also dependent on the expectation of future prices, weather conditions with regards to perishable products, storage costs, as well as other related factors. For example, the price of one tomato could be $1 today. But in some months to come, during seasons that cannot accommodate enough production of tomatoes from the farms, the price is expected to go higher. This is because there will be too much demand and low supply of the commodity, in addition to the weather condition that is not accommodative.

To fix the supply-demand gap, consumers might have to import, at extra costs, making futures unpredictable. The reverse in this example is also true. If the prices are high right now due to varying factors, when the conditions become accommodating, the price of one tomato should go down. Cash markets on the other hand operate on a +2 or 3 day trade period.
Another difference between these two types of markets is the regulator. Generally, a cash market is the actual exchange of an item or stock, over-the-counter. The regulation of futures markets is only made by an exchange. Such an exchange is subject to time as it will only happen when the specified time elapses.
Ownership of the item being traded changes immediately the exchange is done when it comes to the cash market. In the futures markets, ownership does not change until the agreement is completed. As regards the risks, it is a bit higher for future markets as compared to cash markets. However, the reward is also higher for futures. With cash markets, you can only sell an item you purchased at your convenience, or when the price goes higher. Cash markets also provide for holding the item for as long as you want. Shares bought for futures markets can only have a contract of a maximum of three months. Shares bought in cash are trans-generational.
When it comes to trading commodities, futures are the best. This is because of some reasons, including seasons, less financial exposure and pure play. For a trader who expects an upcoming season to bring about the shortage of a commodity, they will be able to leverage profits over the market. There is less financial exposure as you can purchase a huge quantity of a product, without subjecting yourself to a large cash portion. Pure play refers to the fact that with a commodity, you will have an actual product, versus owning a stock, which mirrors the derivative. The reaction between a stock traded on the spot, is different to trading a commodity, traded in the future.

Derivatives
These are financial instruments, where the price or value of one commodity is dependent on the price or value of another. It is closely associated with futures markets, but each has its own uniqueness. Cash markets operate on the immediate, irrespective of the price; futures markets rely on the price of a commodity in the future; whereas derivatives involve the price of one depending on another.

Cash Markets Vs Derivatives
Derivatives apply quite similarly to the futures. The ownership changes immediately for a cash market while that of a derivative has to wait because the product is depending on another. Holding a product in a derivatives market poses a bigger risk as compared to holding one after a cash market sale. Also, you can hold a purchase made in cash for as long as you can. For one in a derivatives situation, you will have to hold it until the prices become higher. In a derivatives market, you can buy in bulk, but for the cash markets, you can only buy shares. Also, for the cash markets, you have to pay the full amount, whereas in a derivatives market, just like in futures market, you will only make partial payment instead of the full amount.

What Percentage of Forex Traders Make Profit?

April 3, 2017 by Forex guru

Recently I have worked on one study. I watched questions on quora.com and I saw questions as :

Do only 1% of forex traders make a profit?
What percentage of traders lose money?
Why Do 90% Of Traders Consistently Lose Money?

etc.

On website financemagnates.com we can see excellent reports – “Forex Profitability Report”. (See example : http://www.financemagnates.com/forex/brokers/exclusive-us-q1-2015-forex-profitability-report-more-accounts-and-profits/)

I monitor last several years this reports not just for US. And I have simple answer : 70% of Forex traders Lose money during the year. 30% make profit..
If we look retail forex accounts at most famous brokers we will see yearly statistics around 70% losing accounts. Last couple years for few percent traders are better in profit. This is good.

Of course more than 90% of losing traders are new traders, without risk management.

Pin Bars trading strategy

April 5, 2016 by Forex guru

Traders in forex consider pin bars trading to be among the most efficient strategies. This article is going to bring out the most important things about trading pin bars. First of all, we need to not to assume that you would know that there are basically two sorts of pin bars, bullish and bearish bars.
pin bar on chart
It is noticeable that bullish pin bars are only valid when they emerge in a situation where there is a bearish trend, and vice versa; a bearish pin bars are valid when they occur during bullish trends. To be valid in such environment, its tail needs to be double the size of its body and the wick should be less than one third compared to its body.
So let’s get into the ways of trading pin bars. Those should be traded as soon as they get close on a certain time frame. Perfect time frame to trade pin bars are of four hours, on a daily or weekly basis. The best case when trading a pin bar is success is when other strategies can be conjugated with it. Those are for example Fibonacci levels or trending or swing analysis. Anyway, the pin bars are more reliable as they are closer to a support or when they are close to a horizontal level.
When a trader is handling qualified pin bars, stop losses should be positioned on a pin bar’s swing low. That is when a return profit can be about 2:3 or bigger. When a pin bar appears on low time frame, it usually requires smaller limits of stop loss. If it appears on higher time frame, it requires larger limits of stop loss.
All in all, trading a pin bar is better on high time frames, preferably on a daily or weekly basis, along with tight money managing. We also recommend to avoiding trading a pin bar that emerges inside the same or similar trend, because only pin bars that are counter-trend can produce reversal signals.

Pin Bar Strategy :
BUY if price is on daily chart above middle line of B. Band and price on H1 or H4 chart is bullish pin bar.
SELL if price is on daily chart below middle line of B. Band and price on H1 or H4 chart is bearish pin bar.