Archive for the "Trading" Category

05.12.2012 Post in Trading

What does a word “futures” imply? It is a derivative from English word “future”. Futures contract is a certain agreement to make a deal in the future at the fixed price. The main advantage is small start-up investments. Thus, if you buy futures, you can earn even more a bit later than when you buy stocks.

There are three types of futures: commodity, financial and stock index futures. How to make a choice? Better choose the instrument which liquidity is high enough to enter and exit the trade easily.

In order to make money while trading futures, be sure that the price is changing noticeably. Only in this case you can snatch a large sum. If the fluctuations are insignificant, you will not earn a lot.

With every year the demand for futures is increasing. For some futures contracts is a good opportunity to trade actively, for the others (as a rule seasoned traders) – a great instrument which can be used instead of stocks and can help to decrease expenses. Such kind of investment is beneficial for both bulls and bears.

Doubting if you can earn with futures? Do not hesitate, everyone can make a good profit trading futures! But do not be emotional: rely on common sense and do not invest your last penny.

28.11.2012 Post in Trading

Prior to starting trading actively on Forex, the trader should consider many factors which affect the market behavior, including holidays in different countries. When trader knows the dates of major holidays, it helps him to understand the market peculiarities at different periods of time.

To begin with, Forex working schedule is very convenient: it operates 5 days a week, from Monday to Friday. The weekends are set for Saturday and Sunday, but even during these days the trading does not stop, just shrinks significantly and can be carried out mainly on major currency pairs. Apart from the weekends, Forex activity can be interrupted during public holidays which widely affect the work of the market. As far as Forex is subdivided into 4 sessions: the European, the American, the Asian, and the Pacific, and due to public holidays in different countries, the market activity is changing constantly. When there is a holiday in a country or a group of countries, the trade can be performed with a delay and at the end of the weekends the situation may turn against the trader. That is why it is necessary to pay the outmost attention to such deals.

Undoubtedly, not all public holidays are of great importance and can trigger slowdown in activity of several countries. Basically, there are just New Year, Catholic Christmas, and Labor Day. But the work does not stop completely on currency exchange and in the economic world even during such occasions: information and finance flow provide trader with a great volume of information for Forex analysis. Despite that the price of some currency pairs moves much slower, after the break is over, traders expect new changes as Forex, undoubtedly, will react to new events.

12.09.2012 Post in Trading

There is no secret that trading is potentially profitable activity and therefore taxable. However, the issue remains vague while there is no question that any other employees are supposed to pay income taxes. So we will shake off the fog of obscurity and find out whether traders have to pay taxes.

Firstly, it should be noted that traders should pay income taxes according to the laws of the country they live in. In Russia revenue from Forex deals is taxable and Forex market is an official source of income. Therefore, just hypothetically, traders must pay 13 percent of their currency market earnings. However, when you think of the practical aspect of the matter, you can see some details that refer to no articles in the tax code.

It is not clear how tax administration will control the revenue of traders if they do not use their VAT number while trading on Forex. So if a trader does not file a tax return, tax officials will not receive his/her revenue information. It could be seen only when the trader will cash large sum of money or make a big purchase. Then tax inspectors would become interested in the source of income and demand an explanation. The trader risks being fined for tax evasion. Another question is how exactly 13 percent income tax is calculated. There is no consensus on this point.

There are also the ways of keeping money invisible for authorities. For example, the funds on Webmoney accounts are not taxable as they are considered non-bank currency in Russia. So tax officials should take it into consideration in order to improve the taxation and remove barriers from trading on Forex market.
In conclusion, it is up to you, whether to file a tax return or not, because only you are responsible for it. In any case, you should see that your actions are legal and weigh your risks.

05.09.2012 Post in Trading

George Soros: “I always had a strong feeling that I am an exceptional person.”

Is it possible that an ordinary trader can have an influence on the economic climate of the whole country? Trader can do anything he dares! This is the philosophy of a quite modest Gorge Soros who became immodestly well-off on Forex and went down in history of the international exchange market as “the man who broke the Bank of England.” A famous combination with the British pound made him prominent all over the world. The genius deal helped Soros to make the way from philosopher to millionaire just in some weeks.

George Soros is a son of Hungarian immigrants of Jewish background. His mother, Elizabeth Sutz came from a well-off family, while Soros’ father, Tivadar Shvartz, was not so reach but had an extraordinary mind and outstanding personality. That was a man, who went to the front on his own accord as he “did not want to lose such opportunity”, but not because of true or artificial patriotic feelings. Probably, Soros inherited his extraordinary mind, bravery and thirst for risk and interesting life from his father.

Black Wednesday – that is how was called the day of September 16, 1992. After a successful currency speculation deal, a 42-year old fantasist posed a threat to economic situation in the Great Britain. Having opened a short position for pound sterling totaling more than 10 bn US dollars, Soros earned more than 1.1 bn dollars in a day! He lost a lot during his trading career but the luck went with him. Soros’ strategy can be called a bearish one as he was selling shorts. Soros is ambiguous and contradictory person who does not favor long term investments: all his deals are of short and of speculative nature.

Being a financier by profession, Soros had passion for philosophy and even developed a theory based on the ideas of Karl Popper. It was called Theory of Reflexivity and posited that currency value is formed due to its expectations and one can put a pressure on them. However, Soros appeals to intuition and tries to develop with the help of hypnotizers. Despite a huge working experience on currency market, successful trader admits that he is still emotional about both bad and good deals. But he does not advise to give way to emotions.

Three years of economics school, internship in London Arbitrage, attempts to earn on investments and, finally, worthy life of a millionaire who can afford writing books and sharing experience, doing charitable work and even participating in the political life of the country. All this is the American dream as it is and the life of the most successful trader in Forex history George Soros.

29.08.2012 Post in Trading

As all processes in the world economy are closely interlinked, it is not a good idea to consider Forex market separately from other ones. Any changes on the currency market can have great influence on currency quotes. That is why it is important to know peculiarities of their interaction, common and distinctive features.
Today we are going to compare both currency and stock markets. Recall that the trading instruments of the stock market are securities – shares, bonds, derivatives (warrants, futures, and options), savings accounts and certificates of deposit (CDs), and promissory notes.

Two markets are compared by the following parameters:

1. Participants

The main difference of stock market is that the buyer and seller must find each other. This is complicated by the fact that the liquidity on the stock market is much lower than on Forex, so the probability of losses increases markedly. After all, if a trader would not find a buyer for shares in time, they will drop significantly in price.

2. Locations of Trade

Unlike Forex, which has no spatial restriction, trading on stock market takes place only on stock exchanges. Due to their locations in various spots around the world, share price on different stock exchanges can differ. So there is arbitrage with securities bought on one exchange and sold on another one. Forex market does not have such option. In fact, there is no need as Forex does not provide central location where trading takes place.

3. Features of Deals

Stock market operates on the principle: buy cheaper – sell more expensive. On the contrary, Forex trading focuses either on currency rise or fall.

4. Leverage

Margin Trading is available only on Forex. Whereas you can buy or sell on stock market using only the amount of money you have.

5. Working Time Limits

You can trade on Forex 24/7, while stock market has its opening and closing time.

Stock market surely has a number of its advantages. They are, for example, dividends and the right to manage companies, coupon payments on bonds, and redemption of government securities. Therefore, it is you to choose your market according to your own interests, goals and objectives.