Wednesday, 23 March 2011

Billionaire Warren Buffett bowled by hospitality

Billionaire Warren Buffett bowled over by Indian hospitality

The Chief Minister, attired in a formal suit, briefed Warren Buffett about the investment opportunities in Karnataka, the progressive policies of the state government, the close to 400 MOus signed at the Global Investors Meet and the speedy implementation of several of the projects.
"I invite you to invest in Karnataka in different sectors and assure you all the support and coordination from our government," Yeddyurappa told the legendary investor.
To a question as to what Karnataka needs to be doing to woo more investors, Buffett said, "You are doing the right thing."
Asked what his own assessment was on the impact of the Japanese crisis on the re-insurance sector, he said, "It is very early to assess that."
"Much of the loss is uninsured... It is a wild guess at this point, but I would say that it will be probably be between half a billion and a billion dollars.
To put that in perspective, Katrina (hurricane) cost us USD 3 billion and we are much larger. It is a significant amount of money, but it is not what I call a super catastrophe from the financial standpoint," he said, but added that it was a great tragedy from the human loss point of view.

Monday, 21 March 2011

What is Margin Trading?

Forex margin trading is a way of applying leverage to increase the purchasing power of your money. Leverage simply means using a small sum to control a much larger sum. This is possible because it is unlikely that the value of a currency will change by more than a certain percentage over a short time. So you can place a few hundred dollars in your brokerage account to trade on the margin - the amount that you think the price will fall. Your broker will in effect lend you the balance.

Trading on margins is also known in stock and futures trading, but because of the special nature of currencies, you can get a lot more leverage in the forex market. Depending on your broker's terms, you may be able to control 50, 100 or even 200 times your account balance.

This can lead to big profits if you are successful, but it can also mean big losses if not. In general, the more leverage you use, the more risky your trading is.

We can understand leverage and margins if we consider an example.

Imagine that the current rate on the British pound to US dollar forex market is shown as GBP/USD 1.7100. So to buy one British pound you would need $1.71. If you expected the value of the dollar to rise against the pound you might decide to sell enough pounds to buy $100,000. If your broker used lots of $10,000 each, this would be 10 lots. Then you would sit back and wait for the price to go up.

A few days later you might find that the price had moved to GBP/USD 1.6600. Sure enough, the dollar has risen and the pound is now worth only $1.66. If you sell your dollars now and buy back into pounds, you will have made a profit of 2.9% less the spread. 2.9% of $100,000 is $2,900, so that would be an excellent trade.

But most of us do not have $100,000 spare cash that we want to trade on the currency exchange market. So here is where the principle of forex margins comes into play.

Since you are buying and selling different currencies at the same time, your own money only has to cover any loss that you might make if the dollar falls instead of rising. And you would put a stop loss into place to limit that loss, so $1,000 might be all you needed to have in your account to make this $100,000 purchase. Your broker guarantees the other $99,000.

In fact many brokers now operate limited risk amounts where the account will automatically close out the trade if whatever funds you have in your account are lost. This prevents margin calls which can be disastrous for a trader because they mean that you can lose more than you have. But with a forex limited risk account that is not a possibility. The broker's software that you use to control your account will not let you lose more than your account balance.

Using leverage in this way is so common in currency trading that you will soon do it without even thinking about it. Still it is important to keep in mind the risks. Lower leverage is always safer and you may never want to go to the maximum forex margin that your broker would allow.

Wednesday, 16 March 2011

Forex Market Hours: Can You Really Trade Currency 24/7?

The forex market hours stretch from Monday morning in Sydney, Australia to Friday afternoon in New York. During that time the market is open somewhere around the globe at all hours of the day or night.

However it is not a 24/7 market because it does shut down on weekends. 24/5 would be more accurate.

If you need to know the exact times that the markets open and close, you have to take time zones into consideration. It is very simple when expressed in UTC. This is Universal Coordinated Time, formerly known as Greenwich Mean Time. This is the standard (winter) time in Greenwich, London which is the point of zero longitude on the globe.

So, the normal forex market hours are 22.00 Sunday UTC to 22.00 Friday UTC. This is 10 pm in the UK in winter time.

New York is 5 hours behind the UK so the global forex market opens and closes at 5 pm Sunday/Friday in New York, 2 pm on the US west coast, 11 pm in Germany, 8 am Monday/Saturday in Sydney.

Things get a little complicated when you start to try to take summer time daylight saving into account. This makes one hour difference in countries that observe it. But daylight saving operates in a different way in the southern hemisphere countries such as Australia which have summer time from September to March instead of March to September.

The hours of the different major national markets are as follows:

Sydney: 10 pm to 7 am UTC
Tokyo: 12 midnight to 9 am UTC
London: 8 am to 5 pm UTC
New York: 1 pm to 10 pm UTC

Or we can express that in EST (Eastern US time):

Sydney: 5 pm to 2 am EST
Tokyo: 7 pm to 4 am EST
London: 3 am to 12 noon EST
New York: 8 am to 5 pm EST

You can see that these correspond to 24 hour cover.

However, this does not necessarily mean that trading will be good at all of these times. Just after a major market opens, the prices can be very volatile and unpredictable. Many traders will stay out of the forex market for up to an hour four times a day when the financial markets are waking up in these major cities.

The US dollar is the most traded currency by a long way, involved in 2.5 times as many trades as its nearest rival the euro. This means that events in the USA have a greater impact on the financial markets than events in other countries. The New York market tends to slow down around 3 pm local time (8 pm UTC) and if you are involved in a US dollar pair, this can be a good time to stop trading for the day.

So theoretically you can trade 24 hours a day from Sunday night to Friday night. Automated software in the form of a forex robot can even make this physically possible. However, a cautious trader will choose his times and will not be active during all of the forex market hours.

Thursday, 10 March 2011

Beginner To Forex Trading: What Is It All About?

For a beginner forex currency trading may seem to be a whole new world but in fact the basics are quite easy to learn. You just need to understand the buzz words and trading terms and grasp a basic understanding of how the markets work.

Making big money in a short time is what forex currency trading is all about! It is possible for investors to make a lot of money very fast because the rates of exchange on the foreign market can rise and fall quickly. This means of course that it is risky and there is also a chance of losing a lot, just like most things in life that have the potential of big returns.

As you will know if you have ever exchanged currency for a vacation, the rates are constantly changing. For example you may change $100 into another currency planning to travel, and then find that you do not need it and change it back. The rate will probably have changed in the meantime and you may even have made a profit.

Forex traders deal in currencies hoping to make a profit all of the time, but instead of changing money at the bank they use a broker. Most transactions these days are handled online. In many ways it is not so different from stock trading. There is the same potential to trade in margins where a small balance held by your broker can control much larger deals.

One difference from stock exchange trading is that forex traders are not limited to dealing in their own country. You can trade any two currencies regardless of where you live. This also means that the market is international. Because of time zone differences, it is open 24 hours a day from Monday morning in Australia to Friday afternoon in New York.

Each currency is represented by 3 letters: USD for the US dollar, GBP for the British pound, EUR for the Euro, JPY for the Japanese Yen, CHF for the Swiss franc, CAD for the Canadian dollar, AUD for the Australian dollar etc. The exchange rate between two currencies may be expressed like this: USD/CHF 1.14. This means that to buy one US dollar you will need 1.14 Swiss francs.

If you want to start out in forex trading you will need to look for a forex broker or investment management company that you trust. It is worth shopping around and checking online forums for recommendations. Check out how long the company has been in business and what your rights and liabilities will be. Read all of the fine print.

You will probably also want to use a bot to do your trading for you. This is automated forex trading software that can trade 24 hours a day according to rules that you set for it. There is usually a demo option so that you can test out the whole system for a while before you let it trade with real money. There are many forex robots on the market and most of them come with full instructions for beginner forex currency trading.

Dollar Soars as Stocks Slump on Oil Rebound

The US Dollar outperformed in overnight trade, rising 0.6 percent against its top counterparts as stocks slumped in Asian trade, boosting demand for the safety-linked currency. The MSCI Asia Pacific regional benchmark equity index slumped 1 percent as crude oil prices resumed their advance amid escalating violence in Libya, with government forces launching a fresh round of air and artillery strikes as well as offering a $407,000 reward to anyone who arrests the head of the rebel leadership. The WTI crude oilcontract added as much as 0.5% percent overnight.
The Australian Dollar underperformed, bearing the brunt of risk aversion as disappointing economic data compounded pressure on the risk-sensitive currency. Prices slumped as much as 0.6 percent asChina’s Trade Balance unexpectedly slipped into deficit as export growth slumped to the slowest in 15 months while February’s Australian Employment report showed the economy unexpectedly shed 10.1K jobs in February, marking the first decline since August 2009.
China – itself an export-geared economy – is Australia’s largest trading partner; a drop in its exports foreshadows a decline in its own demand for Australian raw materials (notably coal and iron ore). Indeed, imports from Australia dropped to the lowest in 10 months ($4.5 billion) in February while overall inbound shipments added grew at an annual pace of 19.4 percent, the slowest since October 2009.
The Reserve Bank of New Zealand cut interest rates by 50 basis points to bring the benchmark lending rate to 2.5 percent. Economists and traders alike had expected a 25bps reduction. The New Zealand Dollar took the announcement relatively well however as RBNZ Governor Alan Bollard said current monetary policy accommodation will be removed as rebuilding efforts following the Christchurch earthquake boost growth by 2012, labeling today’s move “pre-emptive”. On balance, the central bank seems to be signaling that no further easing ought to be expected, with markets now pricing in a return to rates at 3 percent within 12 months.


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