Thats a fancy way of saying forex!

Forex brokers at the retail level did not exist because these institutions monopolized the foreign exchange due to their abilities to have access to information and data that allowed them to hedge their interests and profit from the monetary policy that the average investor could not get to very easily. This, combined with government regulations and the huge volume required in trades to maintain adequate liquidity,  prohibited the small speculator from participating.

Access to the currency markets changed however, first with the invention of the internet… this new and exciting information super highway opened the doors to allow anyone virtually instant access to the same macro-economic events, news and data that the large world banking institutions had previously dominated. Combine this new fangled world wide web with legislation by the CFTC and we soon found ourselves with a retail market for individual traders to have the same abilities to trade currencies as the big boys.

What Are The Differences Between Brokers?

In order to access the forex as a retail trader, we need brokers to provide us with a platform to trade from, liquidity and reliable execution of our trades. Much like a stock broker, the forex broker acts as  an intermediary for these ( relatively speaking) small trades, and they also can assist in advice, recommendations etc. Each brokerage house can have different commission rates, minimum balances and account requirements that make it essential for any forex trader to research and become familiar with before opening an account.

Before selecting a brokerage firm, it’s important to understand the basic differences from one to the other, and also to have a good understanding of what your choices are. Forex brokers, for the most part, fall into one of two categories. There are Market Makers, also referred to as “Dealing Desks” and there are Straight Through Processing Brokers (STP), also referred to as “Non Dealing Desks”.

Market makers provide the liquidity for a given currency market themselves, and they make their money off of the spreads, (the difference between the bid and the ask) and by placing hedges, or bets against their customers. In other words, when you place a trade with a Market Maker, more then likely, they will be taking the other side of that trade in the expectation that you will lose. So…. the market maker earns money through both the spread and by hedging your bet. It seems a bit counterintuitive doesn’t it? But this is how it works… your trades are commission free, but the spreads tend to be a little wider.

Straight through processing brokers, or non dealing desks, do not create their own markets… meaning that they do not take the other side of your trade. Your order is sent straight to the recipient on the other side of your position. These brokers however, do charge commissions for each trade you place with the advantage to you being a tighter spread.

Do Your Research First

Which type of broker you choose is dependent on what type of trading you do. If you are a day trader and a scalper, then it will probably be better for you to enjoy tighter spreads and just pay the transaction fee because you are attempting to make a profit with a smaller expected move by virtue of the very short time frame with this style of trading.

Conversely, if you are a swing or a position trader, holding onto a position for days, weeks or maybe even months, then the spread is of less consequence to you because your expected move will easily overcome this.

Knowing what type of trading you will be doing is a big part of choosing which type of brokerage house is best for you, but it’s most certainly not the only research you need to do when looking at different forex brokers. You also need to be aware of fraudulent enterprises know as “bucket shops”. Bucket shops are essentially fake brokers that work out of boiler rooms acting as legitimate forex brokers. They man the phones… take your orders and then promptly drop it in a bucket, hence the name. Simply being aware that these types of scams exist should be enough to insure that you do proper research and due diligence before transferring funds to anyone.

]]> http://www.forexyellowpages.com/why-do-forex-traders-need-forex-brokers/feed 0 http://www.forexyellowpages.com/choosing-a-good-forex-broker http://www.forexyellowpages.com/choosing-a-good-forex-broker#comments Wed, 02 Nov 2011 02:56:18 +0000 admin http://www.forexyellowpages.com/?p=818 Forex broker is an intermediary between a trader and a currency market. Retail trading isn’t possible with Forex brokerage. Finding the right Forex broker among hundreds of the online firms isn’t an easy task. That’s why you need to inform yourself on the specific broker that you will want to work with and collect important information on certain aspects.

The first question you have to ask yourself is: is the broker I want to use regulated? There must be no doubt about this first point. All regulated brokers must submit financial reports to regulatory authorities, and when they fail to do it, authorities have the right to fine them or terminate their membership. This enforces Forex brokers to keep transparent financial reports.

The brokers must be regulated by their local regulatory authorities, for instance, for brokers based in the US, they must be regulated by the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission), Swiss based brokers must be regulated by the FDF (Swiss Federal Department of Finance) and so on.

Also when a Forex broker is regulated allows investors to dispute any resolution, increasing the investor protection.

Trading conditions are very important also. This refers to the features of the trading platform and the trading conditions with the chosen broker. Amongst the most important factors are:

Spread – Obviously the smaller the spread on currency pairs the better the conditions are for investors and traders.

Platform execution – Trading execution refers to how fast and consistent are the execution of trades. Some brokers guarantee fast and transparent executions during normal market conditions.

Fractional trading – Some brokers allow investors and traders to trade on a fractional basis, instead of trading full lots “100,000 units” or “300,000 units”, they allow you to trade “163,345 units” or “325,911 units”. This is very helpful for trades risking certain percentage of their balance on each trade.

Safety of funds – We need to make sure our trading funds are kept in a segregated account or at least insured.

Customer support is very important! You need a broker with a LIVE CHAT feature so you can get in touch with a representative anytime you need for different kind of problems, like withdrawals, deposits etc.

Also you need to check the promo offers that the broker is offering you. Some brokers offer 10% BONUS on the first deposit.

MF Financial is offering up to 20% BONUS on first deposit plus an outstanding trading experience with an outstanding customer support.

MF Financial Ltd. is one of the world leading online currency trading broker offering low pips and commission-free online forex trading. Founded by Wall Street veterans, MFFX’s vision is to service individual and corporate investors such as money managers, banks, and financial institutions in easing the complexity in dealing with forex trading. Their dealing software which specialized in forex dealing is rated second to none for it user friendly environment. Lightning speed and efficient execution is one of its many benefits.

Any new investor should think twice or 10 times before choosing the right broker. I am personally a MFFX client for 1 year and I must say that I have no reason to change it. I will keep it as my trusted partner in forex trading for a long time! For any interested investor I invite you to check MF Financial`s website www.mffx.com

These  CFTC regulations led to the limitation of the number of forex brokers that accept US traders and most of the brokers available on the US market have low leverages and unfavorable trading conditions. Under these circumstances more and more US traders look for offshore forex brokers with higher leverages and better trading conditions.

Unfortunately neither the foreign brokers are allowed to accept US traders so the only option available at this moment is the binary option trading. All major binary option traders such as Ikko Trader,Anyoption, EZ Trader and Option Fire accept US traders.

The binary option brokers are licensed and regulated by trustfully boards and commissions. For example Option Fire is regulated by the Financial Services Authority (FSA), which  is the regulator of the financial services industry in the UK. So Option Fier is as secure and trustable as any English forex broker on operating the forex retail market.

All binary options brokers have high profit rates, most of them offering up to 85% profit for options expiring in the money and up to 15% refund for options expiring out of the money.

The binary options trading has many advantages compared to the traditional forex trading, the higher returns on investment and the shorter option expiration times being just the most attractive ones.

Best Offshore Forex Broker – www.MFFX.com

Recently, YB Teresa Kok asked me “Why are Malaysians so keen to leave this country? Life overseas is not necessarily easier!” I agree that life overseas is not necessarily. In fact my cousins living in Hong Kong, Singapore and London tell me regularly that they miss the food and that things are much cheaper at home. They complain about the weather, high cost of living and their long working hours. Despite this, when the possibility of coming back home is raised, they give me a smile and a shake of their heads.

Is living in Malaysia really so bad? What is it that other countries have that we don’t? Lim Kit Siang posted on his blog in December 2009 that more than 630 Malaysians are migrating overseas everyday, and that number is increasing year on year.

This is a worrying statistic and the brain drain issue is one that the current government acknowledges that it is a problem. However, the best they can come up with to make them come back are tax breaks, and tax free vehicles. From day one, it has become apparent these ‘perks’ would simply not work.

This government has a habit of tackling problems in this country by providing quick fixes. The 2012 Budget should really be called the ‘quick-fix’ budget as RM232 billion is mindlessly spent, with unrealistic economic growth forecasts to back it up.

Yes, 60% of households would receive a RM500 relief and we thank the government for it. What then? RM500 does not combat rising costs, or inflation. How far can RM500 bring us nowadays? Not very far.  In no time at all, that RM500 has become a distant memory and we are back to square one.

The Kedai 1Malaysia initiative was put in place by the government to sell cheap products subsidised by the government, and more are to be opened across the nation. Shop owners are now screaming in displeasure as they cannot possibly compete. If the government is intent on handing out subsidies, subsidise the shops which are already operating! Another poorly planned quick fix that provides no long term solution.

Where is the long term economic plan? Where is the investment in our children’s future? Fixing school buildings is an excellent initiative, but the real problem lies in the fabric of the education system.

Our children are taught to be robots, to regurgitate material and not to question their teacher. Many scoff at the lowering of standards in the ongoing PMR exams, and an Additional Mathematics SPM paper was allegedly leaked out to tuition centres. Is all this in the name of grades, just to make the Education Ministry look good? How can this system prepare our children to be competent, effective members of society? The biggest losers in all of this are our nation’s children.

A friend over dinner told me earnestly that he was preparing to leave the country for the sake of his children. As disheartening as it was to hear, he proceeded to tell me why.

His vision for his children was for them to grow up in a society in which they would not be discriminated against. Although racism is also prevalent in other countries, in Malaysia racism is institutionalised and sanctioned by the Barisan Nasional government.

Furthermore, corruption is rampant throughout all levels of government. The payment of corruption money in cases of obtaining building or business licenses is so prevalent, that many businesses have included such a payment in their expense budgets. How can this continue be the case?

These issues are all correlated, and opportunities continue to be stifled. Talented people leave because Malaysia appears to have no appreciation for their abilities. Nepotism and favouritism are practised on the basis of the “Lu tolong gua, Gua tolong lu” principle rather than getting the best person for the job.

Our English standards have been lowered in order to record more exam passes, but quality is sacrificed as a result. If even masters degree holders from local universities are unable to speak proper English, how can we then become a globally competitive nation?

After this budget, more and more people are convinced that this BN government cares only about staying in power and not for the long term development of the nation. The exodus of talented individuals will continue unless necessary reforms are put in place.

On a recent trip to the United States, on our stopover in Hong Kong, a fellow passenger remarked that they could finally talk about issues of Malaysia as they dared not voice out their displeasure at home. Recalling so many holding up their fingers to their lips to shush their friends from bringing up national issues, it is obvious that many feel that we are living under oppression.

Finally, one of my old schoolmates residing in Australia told me that he wanted to come home to take care of his parents. “But the biggest thing stopping me from coming home now is the government”. A change in government may not automatically bring Malaysians home, but what it would do is provide hope for the future of our nation, and hope for our future generations.

Change is needed, and change has to happen now.

Alternative assets are a good diversification tool because they’re generally not correlated to the stock market. This means when the market goes down, alternative assets may go up or stay the same and vice versa.

Large investors such as pension and endowment funds have been attracted to hedge funds because of their reputation for producing high returns. But it’s difficult to tell how successful hedge funds are because the historical data leaves much to be desired.

“They are self-reported. Indexes of hedge fund performance are biased by the fact that those that do poorly go out of business and those that do well stay in business,” says Walt Woerheide, Ph.D., CFP, vice president of academic affairs and professor of investments at The American College in Bryn Mawr, Penn. “And so when you look at the index over time, it’s really an index of those that have done well.”

Though people refer to hedge funds as a single category of investment, they actually follow different strategies that try to beat the market.

“One may engage in bankruptcy situations. Another may be involved in merger and acquisition opportunities. The variety of strategies that hedge funds follow is all over the place. It’s not a homogenous type of investment,” says Woerheide.

Like actual hedge funds, hedge-like mutual funds also follow various strategies, but they are much more transparent and less controversial than their brethren. In general, they’re more expensive than other stock funds, charging 2.04 percent a year on average, versus 1.47 percent for actively managed stock funds and 0.78 percent for equity index funds, according to Morningstar. Some hedge-like mutual funds cost as much as 3.89 percent, and a couple cost more than 5 percent annually.

That’s cheap compared to real hedge funds, though.

“They get something like a 2 percent fee and then 25 percent of the profits if they make money. And then nothing happens if they lose money,” says Woerheide.

Albert Chu, chief investment officer for Wealthstone in Columbus, Ohio, believes that getting exposure to the asset class is worth the fees in some cases.

“We index our large-cap managers since they tend not to outperform and with those savings we’re going to allocate some fee dollars to some of our alternative strategies,” he says.

Should you choose to dabble in these alternative investments, be sure to investigate them thoroughly or get some good advice from a trusted adviser.

Long-Short Funds

According to investment research company Morningstar, about 75 mutual funds employ hedging strategies.

“The easiest example of an alternative strategy is going to be a long-short fund or opportunistic equity,” says Chu, a chartered financial analyst and chartered alternative investment analyst.

A long-short strategy involves investing in stocks with positive prospects (making long bets) as well as stocks that are expected to decline in value.

“If a portfolio manager has a group of stocks, they’re going to go out there and buy their best ideas and hope they rise in value. And that is a long (bet),” Chu says.

Then if they find some challenged companies, the fund managers will short those companies and put together a long-short portfolio.

Here’s how short-selling works: The investor can use leverage, by borrowing money on margin from his broker, to borrow the stock at a certain price and sell it to someone else. When the stock price drops, the investor buys the stock at market price, gives it back to the broker and pockets the profit.

Short-selling is a highly risky strategy, because if a stock goes up instead of down as expected, the investor’s potential for loss is unlimited.

Long-short funds are the most widely available hedge strategies in mutual funds, and most don’t require big minimum investments.

“You’re going to have a different return pattern than the overall stock market,” says Chu.

Recent history bears this out. Long-short funds outperformed the S&P 500 during the 17-month bear market that ended March 9, 2009. The hedge-like mutual funds lost 15 percent on average while the broad market plummeted 43 percent.

Long-short funds also haven’t rebounded as much either. Since March 10, the S&P gained 50 percent through mid-August, while long-short funds advanced 16 percent.

Commodities

Commodities also may be a good alternative option for the individual investor’s portfolio.

“Commodities are worth considering not for returns but because they act like portfolio insurance. By themselves they’re very volatile, but when you add them to a portfolio, the historical evidence is that you reduce the risk of the portfolio and get higher risk-adjusted returns,” says Larry Swedroe, principal and director of research at Buckingham Asset Management in St. Louis.

That wasn’t particularly the case in the most recent bear market, though. According to Morningstar, most commodity indexes did worse than the S&P 500 in 2008, which was down 37 percent for the year. For instance, the natural resources category, which includes gas and oil, took a 48 percent hit.

Swedroe, author of “The Only Guide to Alternative Investments You’ll Ever Need,” particularly recommends commodities in the form of fully collateralized commodity futures.

Fully collateralized means unleveraged. Commodity futures are speculative financial instruments known as derivatives that are financial contracts written on the future price of a product.

Just like with equities, some commodity funds use long-short strategies in an effort to improve returns. Some commodity funds are actively managed, while other ETFs and mutual funds follow commodity indexes.

Multistrategy Funds

A few fund companies offer products with a number of different strategies in one absolute return product, called a multistrategy mutual fund.

As a mutual fund, the way it works is that the manager sets up different accounts as a custodian. All of those accounts together would be contained in one mutual fund.

They’re “just different alternative strategies combined into one. What they try to do is target equity-like returns and bond-like volatility,” says Chu.

Individual investors looking for alternative investments might rather go with a multistrategy fund than a long-short fund, Chu says. “You probably want to go with a multistrategy fund-of-funds mutual fund.”

Some of these funds have somewhat prohibitively high minimums, but others can be reasonable for anyone.

“We use those alternative mutual funds in our own 401(k) here at Wellstone, and we also recommend that for other 401(k) plans that we administer,” says Chu.

“In the end the manager selected may not be as, I don’t want to say ‘good,’ but may not be the best manager out there,” he says. “But again, it goes back to the fact that it is more important to get the asset classes correct since we know over time that tends to add more value than manager selection.”

Article by Bankrate.com

More related Reading:

Picks and Pans From Stock Market Pros
A Taste for Risk — Again
Common Questions About Currency Trading
The 7 New Rules of Financial Security

Fundamental Outlook for US Dollar: Bearish

- Fundamentals support a recovery in US and global growth, but how does risk appetite factor in?
- Bernanke sees signs of stabilization, calls focus on the deficit
- Do technicals call for a dollar collapse or recovery.

It was a tenuous week; but the dollar was able to ultimately hold its own through the close. However, just because momentum behind the earnings-driven rally in risk appetite has stalled does not mean that the world’s most liquid currency has avoided a collapse all together. Sentiment winds have died down; but they can easily jostle the safe-haven dollar should another economic catalyst surface. This makes for an uncertain future when combined with the fundamental influence that the 2Q GDP report will have on the currency. Now, not only do traders have to interpret the data, they will also have to judge whether it has a greater impact on risk appetite or growth considerations for the beleaguered dollar.

Looking ahead to next week, the most immediate threat to the greenback’s stability is the intensity and direction of risk appetite. While this currency is deeply mired in speculation surrounding the economy’s leading or lagging growth potential, interest rate expectations, and deficit projections among other influences; risk appetite has proven itself to be insuperable. With the Federal Reserve vowing to keep the benchmark lending rate at levels that insure a carry status when conditions do turn around and politicians ensuring the economy will struggle with record levels of debt for years to come, there seems little doubt that the dollar will maintain its position on the opposite of risk appetite. But, considering the stalled progress most of the dollar and yen crosses saw last week; is there a strong shift in sentiment in the works? With EURUSD and GBPUSD just off of key levels of resistance, the pressure is growing. However, the primary source of momentum this past week – the second quarter earnings season – is already on the decline. If left up to the markets alone, equities have already forged new highs for the year; but commodities, fixed income and risk-sensitive currency pairs have not pushed to comparable levels. Oddly enough, one of the most likely catalysts for risk going forward also happens to be the most attention grabbing indicator on the US docket: GDP.

According to economists forecasts, the world’s largest economy contracted at a 1.5 percent on an annualized pace through the second quarter. This would be a marked improvement from the 5.5 percent and 6.3 percent rate of the recession through the first quarter of 2009 and fourth quarter 2008 respectively. This would certainly confirm policy officials expectations for a return to positive growth by the end of this year or beginning of the next; but through the near-term it is still a call for speculation to rank the economy’s performance against that of its major counterparts. China recently reported a sharp advance to a 7.9 percent pace of expansion while the UK printed a record 5.6 percent contraction. And, then there are still those economies that have yet to report their numbers. Japan suffered a record-breaking 14.2 percent slump through the first quarter, but is expected to snap back according to BoJ and Cabinet officials. The Euro Zone awaits it August 13th release, but the Bundesbank has already stated Germany saw only a ‘slight contraction’ through the second quarter. This will increasingly become a consideration of nuance.

The other facet of the US 2Q GDP release is that it will be accepted as a gauge of global growth. This further complicates the issue. Should the reading be good, the influence on risk appetite could outweigh the implications for US returns and actually drag the dollar down; and vice versa.  Another important consideration is the timing of this release. Due Friday, speculators may decide to move the dollar before the data crosses the wires. If this is the case, the GDP report could factor into long-term projections but not short-term volatility. –JK

Written by John Kicklighter, Currency Strategist, Dailyfx.com

In Matthews’ opinion, the most disconcerting news from the weekend was that the external managers Buffett has hired to manage Berkshire’s money are doing a lousy job. Specifically, Matthews says, they all lost more than 37% on the year — worse than the stock-market average.

The only reason to hire a money manager is to try to beat the market, because otherwise you should just buy an index fund. The fact that Berkshire’s external managers lost money isn’t surprising — everyone got hammered last year. The amount they lost, however, is.

The reason Berkshire has hired external managers, says Matthews — founder of Ram Partners — is to conduct a sort of open audition for managers, who might take over this job after Warren Buffett retires. So far, all the managers Berkshire has hired appear to have flunked the test.

Berkshire devotees maintain that the company will be fine when Warren leaves. Given the performance of its external managers thus far, however, there wouldn’t seem to be much evidence of this.

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John Mauldin, president of Millennium Wave Advisors, thinks that’s ridiculous. He’s also author of the popular e-letter.

The Fed is printing money, Mauldin says, but overall credit is being destroyed. The government is desperately trying to bring back inflation, so we can lessen the real burden of our huge debts, but this will take a year or two at best.

So in the meantime, Mauldin says, ignore the gold bugs. They’ve been wrong for 25 years and they’ll keep on being wrong for the foreseeable future.

A consensus has formed that the government’s massive money printing and debt-powered spending binge will soon destroy the destroy the dollar, crippling the remaining savings of anyone dumb enough not to buy “real” assets–like gold.

John Mauldin, president of Millennium Wave Advisors, thinks that’s ridiculous. He’s also author of the popular e-letter, “Thoughts from the Frontline.”

The Fed is printing money, Mauldin says, but overall credit is being destroyed. The government is desperately trying to bring back inflation, so we can lessen the real burden of our huge debts, but this will take a year or two at best.

So in the meantime, Mauldin says, ignore the gold bugs. They’ve been wrong for 25 years and they’ll keep on being wrong for the foreseeable future.

A consensus has formed that the government’s massive money printing and debt-powered spending binge will soon destroy the destroy the dollar, crippling the remaining savings of anyone dumb enough not to buy “real” assets–like gold.

John Mauldin, president of Millennium Wave Advisors, thinks that’s ridiculous. He’s also author of the popular e-letter, “Thoughts from the Frontline.”

The Fed is printing money, Mauldin says, but overall credit is being destroyed. The government is desperately trying to bring back inflation, so we can lessen the real burden of our huge debts, but this will take a year or two at best.

So in the meantime, Mauldin says, ignore the gold bugs. They’ve been wrong for 25 years and they’ll keep on being wrong for the foreseeable future.