Monday, February 16, 2009

How to select a Forex Broker

The decision of which brokerage firm is best for you is as important in the Forex market as it is in the Stock Market. The way of evaluating the various firms differs slightly between the two markets, however. Forex trades do not involve commissions, but they do have what are known as spreads, which is the difference between the price a currency can be purchased and the price for which it can be sold at a given point in time.

This spread (which is expressed in "pips") is how the brokerage makes its money, so it serves the same purpose for them as a commission. You can be pretty certain that the spreads vary between brokerage firms just as widely as commissions do in the Stock Market, so investigate this carefully before making your selection.

Most brokerages dealing with the Forex market are involved with large financial institutions where the funds are available to provide sufficient leverage for their clients. It is still important to make sure your firm is reliable. They should be registered as a FCM (Futures Commission Merchant), and regulated by the CFTC (Commodity Futures Trading Commission).

Most firms offer widely varied packages of tools that assist you in making trading decisions and understanding the market better. They provide information and research that is available to you in many different formats. It is wise to take a little time to study these tools, and to find the ones that are most helpful to you. They are going to end up being very important and you need to be comfortable with them.

Look for a firm with a wide variety of account and leverage options. The ability to use the Forex market's advantages in leverage is one of the things that makes it the most attractive to you as an investor, and you want to have the maximum flexibility here. Although there are a few unethical firms operating, a few references and inquires should be able to identify them. This selection process is worth a little effort and an investment of time. It is an investment that is going to the most likely to pay off.

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Sunday, February 08, 2009

Despite grim news, market has best week of the year

February 8, 2009

More jobs were lost in January than in any month since December 1974. The unemployment rate is the highest since September 1992. President Barack Obama said the economic downturn "could not be more serious." Wall Street's reaction? Let's party.

Despite the grim economic news, the Dow and the S&P 500 index had their best week in more than a month. The Nasdaq composite index had its biggest weekly gain since November.

The Labor Department said the nation lost 598,000 jobs last month and the unemployment rate climbed to 7.6 percent. If part-time employees, discouraged workers and others are factored in, the unemployment rate would have been 13.9 percent in January, highest on record.

"People are thinking ahead to what are these numbers going to look like in June," said James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. "Main Street is in free fall, which is where Wall Street was in September and October. Wall Street since mid-October has been flat, and that's what Main Street might look like by spring or early summer."

The Dow Jones industrial average closed Friday at 8,280.59, a gain of 3.5 percent for the week. The Nasdaq composite index finished at 1,591.71, up 7.8 percent. The S&P 500 index ended at 868.60, a rise of 5.2 percent.

Much of the last week's big rally was attributed to hope that a bank-rescue plan, scheduled to be unveiled Monday by Treasury Secretary Timothy Geithner, will lift the economy from recession.

"All focus right now is now is really on Washington," said Dan Cook, senior market analyst at IG Markets