Resources

Contract for Difference Trading 28.02.2015

Contracts for Difference were developed in the early 90s in London. The invention of CFD belongs to the financiers Brian Keelan and Jonathan Wood. The Contracts for Difference were first used in hedge funds with institutional trading. It was a cost effective way to hedge the positions of your shares on the London Stock Exchange. The effectiveness of CFD is high due to the low margins and lack of need for the payment of tax collection, and at the same time, the physical shares don’t migrate in other hands. The CFDs are a flexible method to trade on the price movements of products and instruments such as indices, shares, commodities, currencies or treasuries. In comparison to purchasing shares, when you trade CFDs, you don’t actually, or more precisely said, physically own the product, so you don’t have to pay the relevant fees of ownership like management fees and stamp duty. You can also sell the product and buy it back at a later stage. For instance, there is an im...

click for more

An Overview of Forex Regulators25.02.2015

Essentially, the regulation of foreign exchange markets was virtually non-existent in early years. Fast developments in foreign trading among retail financial traders sparked increased scrutiny and the emergency of Forex regulators or bodies. So what does this means for retail Forex trader? Does it really mean a big risk that goes hand in hand with non-regulation? Is that of outright fraud or illegal activity? Let’s first define fraudulent activities. These include unusual commissions brought about by individuals that “churn” their customers’ accounts using, call them high-pressure “boiler rooms” tactics, misrepresentation and Ponzi schemes. It is a fact that about 26,000 individuals in the U.S. alone lost approximately $450 million in Forex related swindles between 2001 and 2010. Is that a thing of the past? You cannot rule out the existence of opportunistic brokers posing to take advantage of unsuspecting individuals bearing in mind the fact that ...

click for more

A study of what sparked the strength and stability that forex brokers proved during the CHF cap removal10.02.2015

The 15th of January saw the SNB (Swiss National Bank) remove the floor on the EUR/CHF rate leaving it to freely float in the market. Immediately, the Swiss Franc quickly increased in value by nearly 20%. This caught most forex traders and market participants by surprise both on the degree of the business reactions and timing. Throughout the following days, it became evident that numerous forex exchange operators, with exceedingly leveraged positions trading on margin, had significant losing positions most of them having been caught unawares with this news. The unique arrangement of the online leverage FX business model hurls some interesting insights. The question is—why did most brokers still prove strong and stable during this period? The stun move from the Swiss National Bank essentially affected foreign exchange trade as well as foreign exchange brokers. At the end of the day, such events are tests for broker strength and stability. Here is how brokers’ reactions rou...

click for more

Hedging a portfolio with futures or CFD’s formula20.04.2015

Hedging your holdings has never been so easy. With the explained formula you will be able to follow multiple assets and simply view the hedging possibilities. The classic hedging is based on using Futures contracts on a regulated exchange while for shorter periods and swift actions, CFD’s can be recruited for the task as well. Hedging definition is: “To prevent or hinder free movement” . In finance we use hedging in order to lock down a gained profit for a certain period of time i.e. removing the risk of volatility. The classic example: An exporter is offering his buyer a 30 days credit. The exporter is producing his merchandise in US, i.e. his costs are in $$. The invoice is issued in €€ at the exchange rate on the day of invoice. Now, during the 30 days, the €/$ exchange rate may vary causing financing gains or losses. In order to remove the offsets, the exporter can initiate a sell position for the equivalent amount of €, making sure that the ...

click for more