There are certain things involved in it; these include:
(a)economic policy, disseminated by government agencies and central banks;
(b)economic conditions, generally revealed through economic reports, and other economic indicators.Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).
Economic conditions include:Government budget deficits or surplusesThe market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.Balance of trade levels and trendsThe trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.Inflation levels and trendsTypically a currency will lose value if there is a high level of inflation in the country or if inflation levels are perceived to be rising [. This is because inflation erodes purchasing power, thus demand, for that particular currency. However, a currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.Economic growth and healthReports such as GDP, employment levels, retail sales, capacity utilization and others, detail the levels of a country's economic growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.Productivity of an economyIncreasing productivity in an economy should positively influence the value of its currency. It affects are more prominent if the increase is in the traded sector
CURRENCY FLUCTUATION::
FOREX INTEREST RATES:
The World’s Central Bank sets the interest rates which are widely used in the Forex trading. Their changes are monitored by the traders and investors because the interest rates determine the fundamental value of the currencies. It’s important for every Forex trader to understand the impact of the interest rates on the currencies he trades on. It’s easy to find the interest rate table to know their latest values, but how to interpret them?
In general, the higher the interest rate associated with the currency is, the better it’s for that currency. Higher interest rates attract investors, because they offer a higher yield. Forex traders prefer buying high-interest currencies versus the low-interest ones to gain the difference yield (such trading technique is called carry trade).
On the other hand, the lower interest rates are usually more popular among the traders when the global volatility rises and the world’s financial system experiences problems. The current financial crisis shows that the currencies with the lower yield are the favorites, because they are less risky than he high-yielding ones.
Therefore, what to do and how to react on the interest rates? The volatility index (VIX) is a good tool to measure the global interest rates preference. If it’s below the «normal» level of 30%, the high interest rates act as the attractors and the currencies that have high yield grow. If the index jumps up above that level, the traders prefer to move into the less risky assets and the low interest rate currencies gain.
ONLINE FOREX AND ONLINE EARNINGS:
Today we look at the Online earning. It is same and like Forex. The only difference is here that you have to work instead of investing money. But don’t forget it is also huge market and there are number of ways to earn online. First one is to pick up some quick cash is to write articles and sell them. The Internet is run by content. Every site out there is hungry for content. If you can put together an English sentence, you can write articles. The number of topics you can write on are virtually unlimited. All you need to do is concentrate on something that you're interested and write about 400 to 600 words on it, depending on the requirements of the site, and you can earn anywhere from $3 to $200 per article, depending on the demand for that topic and the site you write for. Most places will make payment within two weeks.Another way to earn some quick cash online is to freelance at a place like Elance.com. Depending on what your skill is, you can make a quick killing by outsourcing yourself out to somebody looking for something to be done. Maybe you're a programmer. You can offer to do a simple programming job for somebody looking for a simple job. Maybe your skill is proofreading. If somebody is looking for a person to proofread their manuscript, you can make a quick few bucks doing that. Payment can be made to your PayPal account and again, just like with Ebay, you can have that money in your bank account within a few business days. Another and very important role of Google itself which very popular engaging people online.
Stock Exchange Trading:
The stock markets are pretty unpredictable. One minute you could be excited and encouraged thanks to the fact that the stocks you invested in are booming, and the next you could be broken because the bull run reversed and the stock fell even lower than it started.Obviously, a profit or a loss is calculated by comparing the prices of purchase and sales of the stocks.Stock exchange trades usually are done in the day. This is because of the assumption that it is during the day, that most of the big companies around the world normally conduct business transactions.As the saying goes, a work day cant ever be too long for stock trades. It is a common feeling that a work day is too short to negotiate all trades you wished to.Stock trade transactionsPrior to the purchase and sale of stocks,one is expected to do some homework, meaning do some background checks on the companies you are planning to invest into.The choice is solely yours, where you put your money in, or if you take out investment from a particular stock. Make sure you have a well thought out decision because your profits of commercial transactions.
FOREIGN EXCHNGE RATE:
IN FINANCE, the exchange rates (also known as the foreign-exchange rate, FOREX rate or FX rate) between two currencies specifies how much one currency is worth in terms of the other. For example an exchange rate of 102 Japanese yen (JPY, ¥) to the United States dollar (USD, $) means that JPY 102 is worth the same as USD 1. The foreign exchange market is one of the largest markets in the world. By some estimates, about 3.2 trillion USD worth of currency changes hands every day.The spot exchange rate refers to the current exchange rate. The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.Quotation.An exchange system quotation is given by stating the number of units of "term currency" (or "price currency" or "quote currency") that can be bought in terms of 1 "unit currency" (also called "base currency"). For example, in a quotation that says the EURUSD exchange rate is 1.4320 (1.4320 USD per EUR), the term currency is USD and the base currency is EUR.There is a market convention that determines which is the base currency and which is the term currency. In most parts of the world, the order is: EUR – GBP – AUD – NZD – USD – others. Thus if you are doing a conversion from EUR into AUD, EUR is the base currency, AUD is the term currency and the exchange rate tells you how many Australian dollars you would pay or receive for 1 euro. Cyprus and Malta which were quoted as the base to the USD and others were recently removed from this list when they joined the euro. In some areas of Europe and in the non-professional market in the UK, EUR and GBP are reversed so that GBP is quoted as the base currency to the euro. In order to determine which is the base currency where both currencies are not listed (i.e. both are "other"), market convention is to use the base currency which gives an exchange rate greater than 1.000. This avoids rounding issues and exchange rates being quoted to more than 4 decimal places. There are some exceptions to this rule e.g. the Japanese often quote their currency as the base to other currencies.Quotes using a country's home currency as the price currency (e.g., EUR 1.00 = USD 1.58) are known as direct quotation or price quotation (from that country's perspective) [1] and are used by most countries.Quotes using a country's home currency as the unit currency (e.g., AUD 0.97 = USD 1.00) are known as indirect quotation or quantity quotation and are used in British newspapers and are also common in Australia, New Zealand and the euro zone.direct quotation: 1 foreign currency unit = x home currency unitsindirect quotation: 1 home currency unit = x foreign currency unitsNote that, using direct quotation, if the home currency is strengthening (i.e., appreciating, or becoming more valuable) then the exchange rate number decreases. Conversely if the foreign currency is strengthening, the exchange rate number increases and the home currency is depreciating.When looking at a currency pair such as EURUSD, the first component (EUR in this case) will be called the base currency. The second is called the term currency. For example : EURUSD = 1.5877, means EUR is the base and USD the term, so 1 EUR = USD 1.5877.Market convention from the early 1980s to 2006 was that most currency pairs were quoted to 4 decimal places for spot transactions and up to 6 decimal places for forward outrights or swaps. (The fourth decimal place is usually referred to as a "pip.") An exception to this was exchange rates with a value of less than 1.000 which were usually quoted to 5 or 6 decimal places. Although there is no fixed rule, exchange rates with a value greater than around 20 were usually quoted to 3 decimal places and currencies with a value greater than 80 were quoted to 2 decimal places. Currencies over 5000 were usually quoted with no decimal places (e.g. the former Turkish Lira). e.g. (GBPOMR : 0.765432 - EURUSD : 1.5877 - GBPBEF : 58.234 - EURJPY : 165.29). In other words, quotes are given with 5 digits. Where rates are below 1, quotes frequently include 5 decimal places.In 2006 Barclays Capital broke with convention by offering spot exchange rates with 5 or 6 decimal places. The contraction of spreads (the difference between the bid and offer rates) arguably necessitated finer pricing and gave the banks the ability to try and win transaction on multibank trading platforms where all banks may otherwise have been quoting the same price. A number of other banks have now followed this.
Forex Account Performance Versus Real Account Performance:
Over the past several years, the popularity of online currency trading has grown substantially. Each day, online FX brokerage firms attract new investors - each of them lining up with a glint in their eye, lured in by promises of easy money. Most of these companies allow you to sign up for a free demo account which lets you place mock trades using their trading platform to get a feel for the excitement of currency trading. In the casual world of free demo accounts - many young traders find they are able to garner impressive profits without a significant amount of effort. It almost seems too good to be true. But transferring this success from a demo account to a real account is far less common. Why is this? The actual trading platform behaves the exact same way, the market doesn't care whether you're a demo or real trader - so what is different? It's you who has changed. Not your personality, not even your trading style - but the factors that affect you are different. What is the key factor to trading success? The search for the "Holy Grail" of trading has been a common theme throughout the history of markets. There are a variety of different techniques. Those whom are inclined towards number crunching and pattern recognition may prefer technical analysis, whereas those more focused on the big picture, logical macro perspective prefer fundamental analysis. Then there are specific methodologies like swing trading, trend following or even more esoteric ideas like the Elliot Wave theory. Which one is best? There are examples of very successful traders using each methodology.
FOREX success with Step by Step::
Choose an online Forex FirmWhat to look for in an online Forex Firm:
Low Spreads:
In Forex Trading the ‘spread’ is the difference between the buy andsell price of any given currency pair. The lower the spread savesthe trader money. Most firms offer 4-5 pip spreads in the MajorCurrency pairs. The best firms offer clients 3-5 pips.
Low minimum account openings:
For those that are new to trading, and for those that don’t havethousands of dollars in risk capital to trade, being able to open amini trading account with only $200 is a great feature for newtraders.
Instant automatic execution of your orders:This is very important when choosing a Forex firm. You want instantexecution of your orders and the price you see and ‘click’ is the pricethat you should get. Don’t settle with a firm that re-quotes you whenyou click on a price or a firm that allows for price ‘slippage’. This isvery important when trading for small profits.
Free charting and technical analysis:
You need a firm that gives you access to the best charting and technicalanalysis available to active traders. The firm that I recommend givesclients FREE professional charting services and even allows traders totrade directly on the charts!
High Leverage:
You want high leverage—the ability to trade a large amount with a smallmargin deposit. Some of the best firms offer .25% or 400:1 leverage.
Hedging Capability:
You want the flexibility of opening positions on the same currency pair inopposite directions without them eliminating each other and withoutmargin increase!
Basics of Forex Trading::
What Currencies to by or Sell::
There are two general approaches to understanding the markets, including the Forex market. The first - technical analysis - focuses on price patterns and uses charting tools to discover them. The second - fundamental analysis - regards price behavior as a product of economic and political events.
Some news from the Market::
Forex : Trade Pairs not currencies::
Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?This two-part report clearly and simply details essential tips on how to avoid typical pitfalls and start making more money in your forex trading. Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments. The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.
World Stocks Market - Recovery Clue::
European stock markets fell modestly Tuesday ahead of an expected subdued open on Wall Street as investors awaited key data later this week for more clues about the speed of any potential recovery. The FTSE 100 index of leading British shares was down 12.49 points, or 0.3 percent, at 4,281.54 while France's CAC-40 fell 7.93 points, or 0.3 percent, at 3,185.75. Germany's DAX was 9.20 points, or 0.2 percent, higher at 4,875.89. The relatively lackluster tone was expected to continue at the U.S. open, with Dow futures up only 9 points, or 0.1 percent, at 8,467 while the broader Standard & Poor's 500 futures rose 1.5 point, or 0.2 percent, to 922.70. "There seems to be a distinct lack of conviction in either direction for traders at the moment and low volatility is the order of the day," said Anthony Grech, market analyst at IG Index. Investors were bracing themselves for volatility later as Tuesday marks the last day of the month, quarter and half-year. The coincidence of these fiscal period ends can create volatility as investors book profits, stake out new positions or alter their hedging strategies. "The month and quarter-end could also see many traders out there looking to book whatever profits they can, again reigning in the upside potential," said Matt Buckland, a dealer at CMC Markets. During June, stock markets in the developed world gave up around 5 percent of the gains that they had made since March and investors will be looking to see if this week's economic data can boost sentiment and renew the rally. Looking ahead, Thursday is at the forefront of investors' attention as it brings the European Central Bank's latest interest late decision and the closely watched U.S. non-farm payrolls. Analysts expect June's U.S. unemployment rate to rise around 0.3 of a percentage point to 9.7 percent — President Barack Obama has warned that it will top 10 percent in the coming months. Equities rose from the middle of March until the start of June on hopes that the U.S. economy in particular will recover from recession sooner than anticipated. Many investors saw fallen stocks as cheap and started buying into the market. However, a run of downbeat economic news brought an abrupt end to the rally and altered the general mood prevailing among investors. Tuesday's news that the recession in Britain is even deeper than previously thought did little to alter the prevailing view in the markets that any recovery around the world will be a long, hard slog. The U.K. office for National Statistics said gross domestic product fell 2.4 percent in the first quarter from the previous three month period, way more than the previous prediction of a 1.9 percent decline. Renewed strength in oil prices, which powered to eight-month highs above $73 a barrel for a brief while, is considered a potential brake on economic recovery. Though higher oil prices can boost the earnings of oil companies, they have the capacity to rein in any recovery in consumer spending and stoke inflationary pressures. By early afternoon London time, benchmark crude oil for August deliver was up 16 cents to $71.65 a barrel. So far, however, falling prices remain at the forefront of central bankers' concerns. Figures earlier showed that prices in the 16 countries that use the euro fell 0.1 percent in the year to June, the first negative inflation rate in at least a decade. In Asia, Japan's Nikkei 225 rose 174.97 points, or 1.8 percent, to 9,958.44, while Hong Kong's Hang Seng reversed early gains to close down 149.78, or 0.8 percent, at 18,378.73. Elsewhere in Asia,South Korea's Kospi inched up 0.1 percent to 1,390.07 while Australia's benchmark rose 1.8 percent, Singapore's market gained 0.4 percent but China's Shanghai index dropped 0.5 percent Meanwhile, the dollar fell 0.3 percent to 95.80 yen while the euro gained 0.5 percent to $1.4145.(Note: FP Peshawar)