Something Interesting in Financial Video October 2014 - page 3
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Something Interesting in Financial Video August 2013
newdigital, 2013.08.25 15:16
81. The Role of the Retail Forex BrokerBefore the internet, very few individuals traded foreign exchange as they could not get access to a level of pricing that would allow them a reasonable chance to profit after transaction costs. Shortly after the internet became mainstream however several firms built online trading platforms which gave the individual trader a much higher level access to the market. The internet introduced two main features into the equation which were not present before:
1. Streaming Quotes: The Internet allowed these firms to stream quotes directly to traders and then have them execute on those quotes from their computer instead of having to deal over the phone. This automated trade processing, and therefore made it easier for firms to offer the ability to trade fx to the individuals and still be profitable.
2. Automatic Margin Calls: What is not so obvious but what was perhaps even more key is that the internet allowed an automated margin call feature to be built into the platform. This allowed firms to accept cash deposits from clients instead of having to put them through the process of signing up to trade via a credit line. As we discussed in our last lesson it is very difficult to get a credit line to trade FX and for those who do it is a lot of paperwork and hoops to jump through before they can begin trading. This would have made it impossible to offer FX trading to smaller individual traders as the cost involved in getting them set up to trade would not be worth it.
As the electronic platform allowed clients to deposit funds and then automatically cut them out of positions if they got to low on funds, this negated the need for credit lines and made the work to get an individual account open well worth it to the forex broker from a profit standpoint.
If you don't understand all the ins and outs of margin at this point don't worry as this is something that we are going to go into much more detail on in a later lesson.
For now it is simply important to understand that what these firms did was take all the traders who were not big enough by themselves to get access to good pricing and routed their order flow through one entity that was. This allowed these firms access to much tighter pricing than would otherwise have been possible which was then passed along plus a little for the brokers to the end client.
So now you can see why although the forex market has been around for a relatively long period of time, individuals have only started to trade the market over the last few years.
Anther key thing that it is important to understand here is that the larger a firm gets in terms of trading volume, the greater access that firm has to tighter prices and liquidity and the more likely that firm is to be able to pass on better pricing and execution to their clients.
Difference between ECN, market makers and STP brokers
In a perfect world the cost of buying and selling currencies would be the same, no matter which Forex broker you use. Unlike the stock market where we get heavy regulation and where stock prices are derived from a single exchange, prices vary from different Forex broker platforms.
The reason why is because currency prices are derived from the Interbank market which is a conglomerate of banks and hedge funds that provide prices to various Forex brokers around the world. The better the relationship between the Interbank market participants and the broker means that the prices are cheaper.
We expand on this in the video tutorial whilst also describing the main difference between ECN, market makers and STP Forex brokers.
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newdigital, 2014.10.19 14:31
USD/CAD forecast for the week of October 20, 2014, Technical AnalysisThe USD/CAD pair rose during the course of the week, but found enough resistance at the 1.14 level to turn things back around and form a shooting star. However, the previous two weeks formed hammers, so we feel that the market is essentially going to consolidate in this general vicinity. We do not anticipate any type of selling to occur, so therefore we are going to step on the sidelines in order to avoid a lot of the potential volatility and grinding type of action that we are going to see.
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newdigital, 2014.10.19 14:33
EUR/USD forecast for the week of October 20, 2014, Technical AnalysisThe EUR/USD pair broke out during the course of the week, climbing above the 1.28 handle. However, we could not keep the gains from that move, and we turned back around to form a massive shooting star. That shooting star suggests that the market is going to drop down to the 1.25 level yet again, and as a result we think that ultimately this market will break down below that level and head to the 1.20 level given enough time. On the other hand, if we can break above the 1.30 level, we would be buyers.
Video: Equities Soar but Dollar, Euro, Yen Show Little ’Risk’ Response
Following its worst weekly tumble in over two years, US equities have extended their recovery to a fourth session and the best single-day climb in 12 months. Alongside, a drop in volatility measures, this looks like the makings of a recovery in investor sentiment. That said, there was little of the S&P 500 and Dow exuberance seen in other asset classes. Is the surge in equities a false harbinger or will it just take time for other markets to catch up? FX traders moving forward will have to assess broader sentiment trends against monetary policy forecasts as the economic docket fills out with key event risk. We look at both themes and their market influence in today's Trading Video.
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newdigital, 2014.10.24 05:23
Video: Major Event Risk Can Move and Restrain EURUSD, USDJPY, GBPUSD (based on dailyfx article)
Normally, we look at event risk like a Fed rate decision and ECB stress test results as the fuel for trade setups. Yet, the influence of such high level events and data can dampen markets as readily as they motivate them. Looking ahead to next week's docket, there is a range of high profile risk - any one capable of changing the trend on their respective currency and a few even capable of turning the tide on global sentiment. We discuss how headline events can disrupt active and potential trade setups like those seen from S&P 500, EURUSD, USDJPY and others in today's Strategy Video.
Trading Video: EURUSD Traders Buckle Up for FOMC, ECB Stress Tests, Risk Trends
- Next week's economic docket will create an extremely treacherous trading environment
- Top concern is Wednesday's FOMC rate decision which can shift the Dollar and 'risk' outlook
- However, there is plenty more scheduled and a particularly perilous week for the Euro
Was this past week's rise in capital markets and relief from volatility a false dawn? The recovery from a bad stumble through the first half of October drew limited participation and occurred during the lull of a changing landscape. Looking ahead, the bearings for sentiment, activity levels, positioning and established trends will be put to the test. In a docket that is overflowing with high-level releases, the FOMC rate decision will be the focal point. Not only will this tap a heavily disputed policy forecast for the Dollar's sake, but it could also carry the burden of defining the next 'risk' move for the financial system. Other key releases like the RBNZ and BoJ rate decisions should be accounted for, but the currency with the most persistent pressure will be the Euro - from week's beginning to end. We look at the risk and potential of the week ahead in this weekend Trading Video.Forum on trading, automated trading systems and testing trading strategies
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newdigital, 2014.10.28 06:30
Strategy Video: Volatility Underpricing FOMC Risk Suggests Explosive Markets Ahead
Heading into major event risk, we typically see expectations for volatility and the cost of hedges rise. Yet, as we close in on Wednesday's FOMC decision; we find the anticipation for market reaction is surprisingly stoic. Not only are activity levels generally higher now than they have been in past months; but the forecasts for the central bank's bearings have grown increasingly extreme towards the dovish view - at the same time the market grows increasingly aware of its dependency on temporary global stimulus. This disparity in impending event and the market's position reflects a similar type of mispricing to traditional scenario analysis. Yet, here, the result is greater volatility.
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newdigital, 2014.10.28 17:16
Forex technical trading (VIDEO): Keeping the EURUSD buyers in control (October 28th, 2014).
The EURUSD has been able to move higher in trading on Monday after finding support above a low from November 2012, the 100 hour MA and the 38.2% of the move down from last week.|
Traders will be eyeing these levels in the new trading day, to see if what was broken can remain broken – keeping the buyers in control.