Monday, September 24, 2007

Forex Day Trading Systems - The Opportunities Are Endless

Forex day trading systems offer you one of todays most lucrative and promising income opportunities. As the name implies, the day traders in Forex day trading system are concerned with what happens in the market today, not tomorrow or coming weeks or months whatever happens in the market, it happens today.

We all know that the Forex market is the largest financial market in the world and it is a 24-hour market. With the opportunity of flexible day trading, the Forex day trading system lets a Forex trader choose his/her most convenient time to trade in the Forex market.

In a Forex day trading system, you require quite less starting capital. With Forex brokers allowing traders to open trading accounts with less than $250, the Forex day trading system is open for everyone.

The main job of the day traders is to capture the intraday price swing. During each trading day in Forex day trading system the overall foreign currency trading volume is determined by the market time i.e. the times when the markets open and the times when these markets overlap with each other.

With each passing moment, the Forex currency trading volume remains high, but it goes to the peak when the European and US markets open at the same time from 1 pm GMT to 4 pm GMT.

During day trading, a day trader quickly buys a large number of foreign currencies at a time and sells it once they see that the price rises within a day.

However, it is very important for the day traders to understand how margin works in Forex day trading system, how much time they will have to meet a margin call and what is the potential for getting into it.

Forex day trading system is not for everyone because it involves significant risks. You should not start day trading with money that you cannot afford to lose. Since your job is to capture various price swings during the day, and the trade opens and closes on the same day, your profit would also be less than the trade that is set to meet long-term goal.

Forex day trading system takes you to one of the most promising business segments. According to the latest figures around 90% of the Forex trades are day trades.

However, before you venture into the Forex day trading system, you need to understand the basics of day trading along with the Forex techniques.

Once you know all these you can discover how to trade for yourself and not to rely on others. Remember, Forex day trading system is not only very glitzy and glamorous on the surface but it also is very financially rewarding.

Paul Bryan is a successful and experienced Forex trader and also the webmaster for, bringing you all the latest Forex news, reviews and advice.

The Current Financial Market Situation

The last two days the stock market has recovered some lost ground. On Friday, it recovered because of the Fed action to reduce the discount rate. Much was said about this but what does it really mean? It means that banks can borrow money from the Fed at a reasonable market rate that hopefully allows them to invest and earn a profit. This helps with liquidity. It does not, however, address the most fundamental issues facing the market, unless it results in an overall reduction in interest rates along the yield curve.

Let me explain this. The basic problem with the "subprime" crisis is that liberal lending standards have resulted in large pools of assets that investors of all sorts have purchased at relatively low spreads over the market interest rates. This means that there is a low risk premium built into those investments. If in fact, the underlying mortgages have higher than expected default rates, higher foreclosure rates, and higher loss rates, the investors are not fairly compensated and the investments in those bonds are not worth what was paid for them. While we cannot predict the future, it appears that this will in fact be the case. Mortgage default rates are increasing, real estate values are decreasing, and the likely result is that more losses will accrue on those portfolios and the bonds will be worth less than full value.

Now let's say that you are a Hedge fund. If you purchased a lot of these bonds and in order to increase the return on the equity put into your Hedge fund, you leveraged those bonds by borrowing against them, then the value of your assets may be less relative to the debt you owe against them. Then the value of the equity investments in your fund can rapidly decline or become zero.

So what would a Hedge fund manager or any other holder of the bonds want to do? Sell them. The problem is that the market now perceives the risk to be a lot higher and so requires a higher return. That means they have to buy the bonds at a lower price. Consequently, the current holder of the bonds will have to write them off at a loss.

While the Fed has provided liquidity to the holders of these investments, allowing them to hold onto them longer rather than fire selling them, this does not affect the value of the actual investment in the long run.

So until the market establishes a new value for all these mortgage backed investments, we will not know the extent of losses that various players will incur. Only know this, there will be a steady stream of loss announcements coming out of the financial sector. We have not even begun to see these.

So how do you invest? Good question. The value of stocks have fallen appreciably. So it may be time to buy for the long term. On the other hand, the market might react negatively to these earnings announcements and stock values may suffer. The overall economy is strong. The folks losing money are the ones that should lose money. They provided funds to a mortgage market without adequate risk protection. Their losses will be someone else's gain.

My suggestion is that you expect more negative reactions in the stock market for certain firms. This will create some stock price volatility. Yet, in the long run, the economy will produce positive returns for most firms including financial firms. Virtually all firms have been punished in the declining market, yet some will not be that adversely affected. Pick your investments. Know if you can stay in for the long run or not. Evaluate the balance sheets of the companies you have invested in to see what their potential loss exposure is, and reallocate or not based on your findings.

Neither over nor under estimate what the Fed can do. If it can lower all interest rates, the value of bonds will increase and losses will be minimized. But the Fed can only control short term interest rates and the policies it pursues can have additional affects on the value of the dollar and future inflation, which can turn long term interest rates the opposite direction, reducing the value of long term bonds.

Author has 23 years on commercial banking and has served as president of a bank, loan approver for large commercial loans, and regional manager for commercial banking for a major US bank.