Forex Figures

ThinkForex may be a relatively new Forex broker, but they seem to be showing that they’ve learned from their predecessors and are ready to offer the latest, most useful services and competitive bonuses that will make almost any trader happy.

Among the offerings now available from ThinkForex:

• Free iPad3 for eligible traders, available through May 31, 2012. To claim your promotion, you must open a live account and email support@thinkforex.com with the promo code iPad Promo 52012. Then you must trade the required amount (which is not specified), in order to earn the iPad. Finally, you must contact the brokerage to claim your prize once you’ve met the eligibility requirements.
• ThinkForex is now also partnered with ZuluTrade, one of the most popular signals providers, which allows traders to choose the providers they want and to follow the trades directly in their MT4 platform.
• Finally, ThinkForex has recently implemented OneClick+, a system that simplifies the trading process and allows traders access to one click trading on their MetaTrader 4 platform, as well as real time tabular market data, both of which are available in easy to install plugins that can be used directly with the ThinkForex MT4 platform. Other OneClick+ features include default order entry, an active spread indicator, net position tracking and a close all order availability, highly useful features that aren’t generally included in the MT4 platform.

ThinkForex is an ECN Forex broker that launched in 2010 and is regulated by the FSC in New Zealand.

One of the most difficult aspects of Forex trading is the fact that there is no real course material used about to teach about the industry, as there are for many other aspects of business world such as accounting, banking and business economics. In fact, if you look at the courses offered by most business schools and universities throughout the world, you’d be hard-pressed to find a single course (let alone a set of courses) that focuses on trading the currency markets as a way to profit as an individual trader or as an advisor. Things may be changing, though, and FXCM, a leading global Forex broker, may be somewhat responsible.

In the spring semester of 2012, FXCM sponsored its first currency trading contest for students of Texas A&M University, West Texas A&M University and Baruch College. Participants in the contest were primarily students of business and economics, though anyone interested in the Forex market was eligible to enter. The contest took place over a 4 week span, during which the new Forex traders were able to study the international currency markets and to apply the technical and fundamental principles that they’d learned in class to the live market.

The contest’s winner, Bryce Moody, won a $10,000 tuition scholarship, courtesy of FXCM. The contest enabled the participants to get a sense of whether they would want to make Forex trading a part of their future trade plans or professional career, and it opened up opportunities that are never offered on the university level.

I think I can speak for the entire DailyForex team and for traders worldwide, when I say that it’s a wonder more universities haven’t yet incorporated classes about Forex trading into their syllabi, and that I hope we will see not only more trading contests in the future, but more accredited courses offered about these fascinating markets.

Do you think that Forex trading should be taught on the university level?

Binary options trading as an industry formed around 2009, and since then, literally hundreds of brokers have been sprouting up worldwide. Thus far, none have been regulated, as no regulatory body in the EU or elsewhere throughout the world has committed to overseeing or providing guidelines for the activities of binary options brokers. In other words, although many binary options brokers do operate quite professionally, there has been nothing stopping unscrupulous companies from swindling unsuspecting traders. This is about to change, however, as CySec, the financial regulatory agency of Cyprus, has just announced its intention to begin regulating binary options brokers.

The announcement comes after approximately two years of advocacy by MAP S. Platis, a consulting and advisory board that works closely with financial institutions in Cyprus, Russia and the European Union. According to MAP S. Platis, as of early May 2012, CySec has acknowledged that binary options trading activities should fall under the umbrella of MiFID, the Markets in Financial Instruments Directive, a directive which came into effect in November 2007 to promote competition and to protect consumer interests relating to financial services in the EU and several other countries. As a result of this ruling, CySec will now be regulating binary options activities.

The announcement coming from CySec regarding this new regulation instructs all binary options brokers to submit their intention to apply for regulation within 15 days. MAP S. Platis has noted that at least 3 binary options brokers have already applied for binary options regulation. It should be expected that more applications will be submitted in the coming days.

Photo Courtesy of MoneyShow

I recently had the opportunity to interview Ed Ponsi, a professional Forex trader who seems to be entirely immersed in the markets.  In addition to publishing a book recently titled Selling America Short: The New World Order vs. The American Middle Class,  Mr. Ponsi is also responsible for FXEducator, a Forex training course for new traders who are looking to gain a better perspective on trading the currency markets.  Mr. Ponsi will be presenting at the Traders Expo Dallas in June 2012, along with Rob Booker and a host of exciting speakers.  It was truly interesting and exciting to learn more about Mr. Ponsi’s work and his views about the Forex world, and I hope you enjoy an interview of this fascinating and personable Forex Figure.

1 – How did you first get interested in the world of Forex?

I was a stock trader for a boutique firm on Wall Street, but I had a tendency to think in global terms. I was always tuned in to the international news, looking for an edge, and paid more attention to macro events as opposed to micro. Someone pointed out that my methods and demeanor seemed built for the currency markets, which is known to be news-oriented and for forming massive trends.  So, I decided to investigate the currency market, and when I learned of its advantages, in terms of liquidity and transparency, I was hooked.

2 – What did you do beforehand?

I worked a summer job at the Philadelphia Stock Exchange when I was in my teens, and that’s how I became interested in trading. Later I owned a small business but traded my own account on the side. I built up a pretty good track record, and used it to land an entry-level trading job on a Wall Street desk. It was rough at first, I had to adjust my techniques to comply with the company’s trading profile, but after a rocky start everything fell into place. Once I successfully incorporated their techniques and risk management into my trading, there was no looking back.

3 – What trading methods or strategies do you use?

I don’t use just one technique. I feel you have to be flexible in order to take what the markets are willing to give you. For example, I sometimes identify myself as a trend trader, but markets don’t always trend very well – in fact, right now, the markets aren’t trending well at all, so I’m focused on other techniques. I probably use seven or eight techniques in all, each designed to take advantage of a particular market tendency.

4 – What pair/s do you trade?

It varies. I don’t believe you should specialize in one or two pairs; instead I trade whichever chart looks the best to me. I used to trade USD/CAD quite a bit, but now that pair has become dull. Most of the trades I’ve taken recently involved the USDJPY, the AUDUSD, the EUR/AUD, and the EUR/CHF. Six months from now, depending on how the market is moving, the answer could be completely different.

5 – Do you implement the same trades for yourself and your clients?  If not, why not?

Yes, it makes sense. Trading with other people’s money should be no different than trading your own; you should always try to make the best trade possible. I love the feeling of hitting a new high-water mark in the client accounts. If I see a great opportunity, I want everyone to enjoy the benefits.

6 – How many hours each day do you spend trading Forex?

It’s funny, I guess it depends what you mean by trading. Some people think trading consists of pushing a lot of buttons, constantly buying and selling. I tend to hold positions for awhile, sometimes weeks, so I’m not constantly entering or exiting. I’d rather place one good trade than a dozen mediocre trades, because one good trade will make more money.

But if you want to consider preparation, which is 90% of the battle, as a part of trading, then I’m always trading. I constantly read, I study economics, fundamentals, technicals, news, speeches, everything. I don’t keep track of how much time I spend doing this every day, because it’s a constant process. As a trader, you really have to love what you do, so I wouldn’t classify any of this as ‘work’. You learn everything you can because of a desire to know and understand, and of course to make the best trading decisions.

7 – What do you see as the biggest benefit of trading Forex?  The biggest drawback?

The biggest benefit is the transparency. In the stock market, if you really want to understand what is happening in a company, you read the news, study the balance sheet, listen to the conference calls, and a dozen other things. These companies can play tricks with accounting, write off losses, shift profits from one quarter to another – and there are thousands of companies to worry about.

In the currency world, it’s much simpler; every country releases virtually the same information; employment, GDP, inflation, manufacturing data, etc. There are only a dozen or so major currencies to follow, instead of a universe of 10,000 stocks. Because it is a much smaller playing field, it’s easier to keep track of everything.

The biggest drawback for me was the lack of accurate volume information in Forex. With daily turnover at $4 trillion USD and rising, there is simply no way to keep an accurate count of all the trading activity in the forex market. Tracking volume in Forex is like counting grains of sand on a beach, so we have to base trading decisions on factors other than volume.

8 – How did you come to develop FXEducator?  When?

I created FXEducator in 2005, because there was such a lack of good trading information available. I know exactly what traders need because I was in their shoes at one time. Traders need good, actionable strategies that work. They need to possess an arsenal of actionable strategies, and they need to know the right time to use the right strategy. And, they need to get solid information from an experienced professional trader, not from an experienced professional salesman.

9 – What makes FXEducator different from other Forex education systems?

There are people who understand how to trade, but can’t articulate it well. There are also plenty of people who are willing to teach you how to trade, but many of them can’t actually do it themselves. But there are very few actual traders who teach, and who are good at teaching. I’m lucky because I know how to make money as a trader, and I can explain it to anyone. People tell me this is a rare combination, and that’s why FXEducator has been such a huge success. FXEducator has been around for seven years now, and in that time I’ve seen many competitors come and go. People appreciate quality in this business, a willingness to go the extra mile, and that’s why we’ve been successful.

10 – Do you offer personal coaching or advising to your FXEducator students?

I haven’t done that for many years, but we are always getting requests. Between my trading, writing, and television appearances, it’s difficult to find the time, but we get so many requests, and I hate to let people down. Sometime later this year I might take a few students under my wing, if I can find the time.

11 – How, if at all, do you think the Forex world has changed in light of the Eurozone debt crisis?  Where do you see the future headed? 

There has always been crisis and change in the markets. Fifteen years ago, there was no euro, and fifteen years from now it might be gone, or survive in a very different form. The best traders are the ones who adapt to change. The game is always changing, and every time it does, some traders fall away, but the good ones always adapt and survive.

I can’t predict the future but I can prepare for it by allowing myself to accept the possibilities now. Maybe Greece leaves the Eurozone and the euro currency rises; or perhaps Germany will leave and we will trade the Deutsche Mark again. Maybe someday the U.S. dollar will not be the reserve currency of the world. Maybe China will float the Yuan, what will that do to the Japanese Yen? It’s an endless game of possibilities, and I’m fortunate to be able to play that game for a living.

Although based and regulated only in Cyprus, Trading Point of Financial Services has been caught recruiting brokers from the United States, despite its lack of NFA regulation.  Known for enticing traders with its unusually high Forex bonuses and promotions, Trading Point has been fined $140,000 by the CFTC and has been commanded to close all accounts of US citizens and to return their money.

In addition, Trading Point was requested to put a noticeable disclaimer on their site announcing that it does not accept US traders, something which many internationally-based regulated Forex brokers already do.  The CFTC claims that Trading Point is violating the 2008 Frank Dodd bill which provides strict rules for retail Forex brokers.  The goal of the bill was to protect US consumer interests in light of the financial crisis.  In recent months the CFTC has been pursuing both Forex brokers and money managers within the US and abroad that have failed to comply with the bill’s demands.

According to a recent article in the Financial Times, however, internationally-based Forex brokers are not the only ones dragging their heels against the implementation of the Frank Dodd bill’s stipulations – EU legislators have requested a gradual compliance to US regulations, rather than an immediate shift in their policies, as the CFTC regulations are still somewhat confusing and complicated for financial institutions based across the pond.

Whether Trading Point will comply with the ruling has yet to be seen, and the issue raises additional questions about how a US governing body can realistically enforce its laws and stipulations on external institutions that are regulated by other governing bodies.  It seems that the haste with which the Frank Dodd bill was past may end up causing problems for the CFTC that will need to be addressed in the very near future.

Is the European experiment a failure? It’s too soon to tell, but I believe that much of the doom and gloom crowd is simply misinformed about what’s going on in the European Union. Of course, had I posed this question around three or four years ago, people would have laughed at me for my naiveté. What do you mean? They would have asked – the EU is a great success story and the euro zone is chugging along beautifully.

The Ongoing Euro Crisis

The big question of course is the still ongoing Euro crisis. While the past week has not seen any major changes in the status quo, meaning that things haven’t gotten worse, this also means that things haven’t gotten better. Bottom line, the euro is still on shaky ground since the crisis is far from over. Many, many members of the Eurozone are finding it harder to borrow, with Spain still reeling from high borrowing costs and depression level unemployment rates.

Speaking of Spain

Speaking of Spain, they have a whopping 24% unemployment rate right now. This kind of rate is not sustainable in the long term and will eventually lead to civil unrest. This has already begun, with street protests becoming a regular occurrence, however one can expect things to get even worse as times get tougher for the average Spaniard.

The Brain Drain

Another unforeseen problem which the European Union is having is a brain drain, specifically from southern Europe to northern Europe – as jobs have become scarce on the Iberian Peninsula as well as in place like Greece and Italy, more people are making their way north to the wealthier countries of the EU. Places like Germany, France and the Netherlands are seeing their populations grow as those with skills and no jobs look elsewhere for a brighter future.

On the Good Side

The good side however is that Europe still has room for growth. I believe that what we are witnessing is no different than the early days of the American republic. In those days, people tended to think of themselves not as Americans but as Mainers, New Yorkers, Virginians and Marylanders (to name just a few of the original states).

It took a number of years before people stopped thinking of themselves as citizens of the individual colonies and instead began to see themselves as Americans who happened to have been born in one state or another. I believe that we are witnessing the early stages of this in Europe as people begin to realize that the EU means more than just open borders and a common currency. It means being a citizen of the European Union.

The Elephant in the Room

The one big problem which could keep Europe from becoming the melting pot that is America (well, two big problems – the first is the language barrier across different countries, though there are ways around this issue) is that Europe as a whole needs to decide for itself what it will be. Is it is going to be a free trade zone or is it going to be something more akin to the United States of Europe?

If the former, then the EU as we currently know it is likely doomed since a free trade zone doesn’t need or even benefit from a common currency and common laws. However, I believe that Europe’s politicians will ultimately choose the more practical alternative and find ways to work together more closely so that they can become ever more closely integrated, thus avoiding the potential for a divided Europe slipping into war as it did following the Great Depression in the 1930s.

The European elections in Greece and France have had even the most dedicated technical traders glued to their screens, especially after the surprising victory of Francois Hollande over incumbent Nicolas Sarkozy in yesterday’s first round of France’s presidential race.  The second round of French elections is just around the corner on May 6^th, followed by the German regional contests, the Greek parliamentary election and an Irish referendum at the end of the month.  At issue in each country is not just what party politics will prove triumphant, but which candidate or party’s view for the future will help mold the struggling economies throughout the region.  Perhaps equally important is what the voters see for the future of the Eurozone – do they wish to remain cohesive, or to change the system so dramatically that the glorious region of old will be forever changed?

Of primary consideration in Greece is whether the austerity plan should be carried out as it is now, or whether dramatic changes are in order.  The issues in France are similar, with voters at this point favoring Hollande’s commitment to promoting growth while relying less on austerity measures.  If his alternative approach does succeed, however, voters may rejoice at the national coup, but the relations between France and Germany, built over the past few years by Sarkozy and Germany Chancellor Merkel will likely suffer significant repercussions.  In that case, Merkel’s own chances of reelection next year may be called into question.

On the whole, data out of the EU is glum – the EU statistics agency announced that 17 of its members cut their deficits to 4.1 percent of the economic output in 2011, down from 6.2 percent in 2012.  But this good news was offset by the fact that the overall debt in the region rose to 87.2 percent of the GDP, up significantly from 85.3 percent.

Though it’s too early to predict the outcomes of the elections or the status of the unified Europe, most analysts agree that the dollar will likely strengthen in the coming days and weeks, especially on the heels of such disruptive news from the Eurozone.  What happens  after that remains to be seen…

Operating on 570 servers of Forex brokerages, the MetaTrader 4 platform that is published by MetaQuotes is, hands-down, the most popular and widely-used Forex trading platform in the world.  And, although the company regularly updates its software in what it hopes are the best interests of its traders, few upgrades are as significant as the release of the MetaTrader 4 platform for Android phones which took place this week.  Two months after the release of its iPhone application, MetaQuotes is finally offering the same mobile Fore trading ability to its Android users, allowing traders worldwide to execute trades even while away from their desktops.

According to Gaes Chreis, the COO of the MetaQuotes Software Corporation, mobile MT4 trading is now available to 70% of smartphone users – but the company aims to make their service available to all smartphone users in the coming months.

The MT4 Android app can be downloaded for free in the Google Play marketplace.  And, of course, if you plan to engage in mobile Forex trading on your Android, make sure to download the free DailyForex.com Android app which will provide you with market updates and research to solidify your trades before they’re placed.

Slippage and requotes are among the two most frustrating things that a Forex trader faces, as they cut into a trader’s profits, sometimes substantially.  Simply put, requotes are circumstances in which a broker cannot place a trade for the requested price, and the broker then confirms with the trader whether he or she wishes to place the trade at a different price.  Requotes occur mostly around the time of a big news announcement, or more frequently with brokers who have slower than ideal trade execution times.

Similarly, slippage is a difference in the price that a trader thinks the trade will be executed at, and the price that the trade is actually placed for.  Though some argue that slippage is a natural result of the volatile Forex market or the consequence of weekend trading when opening rates may not match the prior week’s closing rates, experienced traders should have an idea of whether their broker engages in slippage too frequently or at times when such a misrepresentation is uncalled for.

The NFA, which has recently exercised its control over US based Forex brokers has recently flexed its muscles again, by cracking down on brokers that engage in slippage and requotes.  Great news for American Forex traders – the NFA is moving to change the way requotes are implemented, so that they might sometimes be a good thing for traders.

New directives passed by the NFA in January and brought into effect at the end of March now require that just as requotes are imposed in favor of the broker, NFA regulated brokers must also offer requotes when the price moves in favor of the trader.  Likewise, the NFA now requires that slippage be applied uniformly as well, regardless of how the market has fluctuated.  Finally, NFA regulated Forex brokers must now provide more transparency about their slippage and requote policies.  A full explanation of the new regulations are listed in Compliance Rule 2-36.

Although PAMMs (Percentage Allocation Management Modules) aren’t quite as popular as the usage of NFA regulated brokers, money managers are growing in attractiveness, and the NFA has taken note, most recently in the form of new regulations to be imposed on these services.  The NFA has expressed concern that money managers and PAMMs are pooling their clients’ funds or placing simultaneous trades, both of which are potentially problematic for clients wishing to withdraw their funds, only to find out that the funds are tied up in a group position.  Likewise, during a recent investigation the NFA found, according to a letter written by Thomas Sexton, the Senior Vice President and General Counsel of the NFA, that “if an individual customer is removed from the PAMM module without their open percentage position being offset, then this customer account may not incur a profit or loss for this position and the original regularly offered  and tradable lot sized position is simply subsequently reallocated to the remaining sub-accounts thereby immediately increasing the percentage of equity each individual account has in the regularly offered and tradable sized position established based on the Master Account’s equity.”

It is likely that the NFA will take steps to prevent this problem, by requiring money managers and PAMMS to change the way they do business so that client funds will remain available as necessary.  For now, the NFA recommends that account managers use ‘bunch orders’ to circumvent this problem, such that “the sum of the quantity of regularly offered and tradable sized contracts that would be permitted based on the equity in each individual account, not the overall equity in the Master Account.”  Clients must also be allowed to make adjustments to their accounts within a timely manner without affecting the positions of other clients of the group.

The suggestions made by the NFA are designed to protect investors, though they will certainly complicate matters for money managers and PAMMs that have operated this way in the past.  And, based on the implications coming from the NFA, there will likely be additional regulations coming for money managers, as there have been for NFA regulated brokers in the past.