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Friday, August 21, 2009

How Does The Forex Market Work?

How Forex Works

by National Futures Association (NFA)

How does the off-exchange currency market work?
The off-exchange forex market is a large, growing and liquid financial market that operates 24 hours a day. It is not a market in the traditional sense because there is no central trading location or “exchange.” Most of the trading is conducted by telephone orthrough electronic trading networks. The primary market for currencies is the “interbank market” where banks, insurance companies, large corporations and other large financial institutions manage the risks associated with fluctuations in currency rates. The true interbank market is only available to institutions that trade in large quantities and have a very high net worth. In recent years, a secondary OTC market has developed that permits retail investors to participate in forex transactions. While this secondary market does not provide the same prices as the interbank market, it does have many of the same characteristics.

How are foreign currencies quoted and priced?
Currencies are designated by three letter symbols. The standard symbols for some of the most commonly traded currencies are EUR Euros, USD United States dollar, CAD Canadian dollar, GBP British pound, JPY Japanese yen, AUD Australian dollar, and CHF Swiss franc. Forex transactions are quoted in pairs because you are buying one currency while selling another. The first currency is the base currency and the second currency is the quote currency. The price, or rate, that is quoted is the amount of the second currency required to purchase one unit of the first currency. For example, if EUR/USD has an ask price of 1.2178, you can buy one Euro for 1.2178 US dollars. Currency pairs are often quoted as bid-ask spreads. The first part of the quote is the amount of the quote currency you will receivein exchange for one unit of the base currency (the bid price) andthe second part of the quote is the amount of the quote currency you must spend for one unit of the base currency (the ask or offer price). In other words, a EUR/USD spread of 1.2170/1.2178 means that you can sell one Euro for $1.2170 and buy one Euro for $1.2178. A dealer may not quote the full exchange rate for both sides of the spread. For example, the EUR/USD spread discussed above could be quoted as 1.2170/78. The customer should understand that the first three numbers are the same for both sides of the spread.

What transaction costs will I pay?
Although dealers who are regulated by NFA must disclose their charges to retail customers, there are no rules about how a dealer charges a customer for the services the dealer provides or that limit how much the dealer can charge. Before opening an account, you should check with several dealers and compare their charges as well as their services. If you were solicited by or place your trades through someone other than the dealer, or if your account is managed by someone, you may be charged a separate amount for thethird party’s services. Some firms charge a per trade commission, while other firms charge a mark-up by widening the spread between the bid and ask prices they give their customers. In the earlier example, assume that the dealer can get a EUR/USD spread of 1.2173/75 from a bank. If the dealer widens the spread to 1.2170/78 for its customers, the dealer has marked up the spread by .0003 on each side. Some firms may charge both a commission and a mark-up. Firms may also charge a different mark-up for buying the base currency than for selling it. You should read your agreement with the dealer carefully and be sure you understand how the firm will charge you for your trades.
Andrew Daigle is the owner, creator and author of many successful websites including ForexBoost, a free forex training resource for the novice and advanced forex traders and, a free DXSynergy e-currency exchange training site and many more.

Get Airline Miles With Credit Cards

Credit cards that offer airline miles are very popular, so it is very easy to find them. You can get credit cards airline miles by racking up points every time you make a purchase with the card. Airline miles are not the only thing that these credit cards can offer, though. You can get many more rewards that will help you travel, such as deals on rental cars, hotel rooms, or even food. This is the perfect way to make it easier for you to travel and you will look forward to making your next trip if you are able to earn enough rewards to truly save a lot of money. The advantages are endless for anyone who needs a break from the high costs of travel.
There are so many ways to get credit cards airline miles out there. How should you select the one that is right for you? You can get credit cards that offer airline miles from a bank or an airline. If you get a credit card from an airline, you will be able to only use that airline to benefit from the rewards, which is a good thing if you only use one airline. When you get a credit card that offers airline miles from a bank, you should be willing to fly on different airlines, especially ones with the greatest deals. Bank credit cards that offer airline miles usually have less restrictions that airline credit cards that offer free or discounted miles. Of course, when applying for any kind of credit card, you should always read the fine print and know what the restrictions are, and what is to be expected of you. There are sometimes limitations on the amount of free miles that you can acquire in a year. There also might be some fees, or minimum amounts that you have to purchase to keep the card active.
Another offer that you might be able to get from airlines that offer credit cards is something called loyalty programs. If you use a credit card to pay for your flight, you might be able to get discounts or free miles from the airline. It is kind of like when you go to your favorite sandwich shop and get a card stamped every time you order a sandwich. Eventually, after say, 10 or 15 sandwiches, you get a free sandwich from the same place. Businesses earn the most money from loyal customers, so many of the airlines also offer rewards like this to bring in repeat customers.
Be sure to calculate whether or not it will be worth getting a credit card that offers points for airline miles. If you do not like to use credit cards, it might be a waste to get one because the interest and fees might be more of a burden, and the rewards might not make up for it. If you never travel, what would you need airline miles in the first place? So, if credit cards online miles are something that you think you might save a lot of money with, check out the many credit cards rewards programs offered by popular cardholders like Mastercard and Visa.

3 Tips on How to Erase 50% of Your Credit Card Debt

Most credit card holders in United States today do not know how to improve their financial situation. For those who are in deep debt, they don't even know how to eliminate their debts. If you ask them to ERASE their credit card debts by 50%, it seems to be a very difficult task for them. However, reducing these debts is indeed possible if the following steps are taken.
First of all, negotiate with your banks or credit card companies to request for lower interest rates on the debts you have left. By paying lower interest rates, you will be able to pay off all your debts in a shorter period.
In order to eliminate your debt faster, you should work out your monthly budget by making double payment each month. This will help to speed up your repayment process. What you need to do is to readjust your monthly expenses and cut some unnecessary expenditure. If you really have tight budget every month, it is suggested that you can look for a part time job to generate more income to pay off your debts.
If your debts are too huge and you are not able to manage them on your own, don't give up. You should look for a reliable debt settlement company to assist you to negotiate with your creditors to reduce your debt amount.
You are reminded that you don't need to bear the financial burden for many years. You can take your effort to erase your debt at a faster pace with the right strategy.
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