Forex Investment and Currency Trading

The financial world consists of many specialized sectors – stocks, bonds, metals, commodities, options, futures, swaps, derivatives, derivatives of derivatives – each with its own dynamics and vocabulary.
Basic concepts of Foreign Exchange
Foreign exchange, often abbreviated FX or Forex, is a trade of one currency for another at a set rate called the exchange rate. This rate, often referred to as a price, can be the result of supply and demand for the currency in the open, unrestricted market or, at the other extreme, a firmly fixed value determined by an edict of a government and/or its monetary authority, usually its [...]

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Sell vanilla 3M USD/JPY puts: USD/JPY is likely to retreat into a relatively narrow range going forward, with the downside in particular limited by a material risk of BoJ intervention. The latter is currently compounded by JPY’s strength against all of the Asian EM currencies. Both USD and JPY are currently trading as safe havens, which should limit volatility in the cross
and, with margin traders having retreated to the sidelines one source of JPY strength is gone. Selling a 3M 92.00 strike USD put/JPY call raises 2.3% of USD in premium and exploits view that USD/JPY downside is limited and [...]

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In the current environment of deleveraging, the once funding currencies of carry trades are staging an impressive comeback. This is particularly the case with the JPY. The 3-month correlation between EUR-USD and USD-JPY is now at +0.25 compared to a 6-month correlation of -0.04. This suggests that the JPY and the EUR are now moving in opposite directions and it is even clearer when one compares the JPY to the AUD. The 3-month correlation between AUD-USD and JPY-USD is at +0.68 compared to a 6-month correlation of +0.50. It is interesting to note that earlier this year these correlations were [...]

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Perhaps the most important soft question is also the easiest to answer: At what level of trading do you feel most at home? Although levels are a continuum and not easily separated, four basic levels can be considered: guerilla, scalper, day trader, and position trader. Recognizing your trading level is the first step in defining a trader profile.
A trader’s profile is the decision to trade short-term, intermediate-term, or long-term markets. Very short-term traders are guerillas, short-term traders are scalpers, intermediate term traders are day traders, and long-term traders are position traders.
The orientation in FOREX is even shorter than it is [...]

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When using an online trading platform, entering a position is as easy as making a few simple mouse clicks. At the same time, the simplicity and speed of online trading platforms make those simple mouse clicks a done deal that puts your trading capital at risk.
That’s why it’s important to understand from the get-go that any action you take on a trading platform is your responsibility. You may have meant to click Buy instead of Sell, but no one knows for sure except you.
If do make a mistake, correct it as soon as you discover and confirm it. Don’t try [...]

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