Tag Archives: exchange market

Forex fixing scandal: Big banks fined $6 billion for manipulating foreign exchange rates

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Forex fixing scandal: Big banks fined  billion for manipulating foreign exchange rates

Originally published on 21 May, 2015

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After a 19-month long investigation, several global banks have agreed to pay penalties to the U.S. Justice Department and the Federal Reserve for rigging the foreign exchange market.

Five banks were fined a total of around US .6 billion after pleading guilty to manipulating the foreign exchange market on Wednesday. Bank of America was fined separately by the U.S. Federal Reserve.

According to the investigation, senior traders from each bank met in a private chat room daily and used coded language to discuss moving the daily benchmark exchange rates set for the USD and the Euro. The exchange rate benchmarks are calculated each day based on actual buy and sell transactions conducted by forex traders, and using the median rate of all trades that go through within a one minute period around 4 p.m. GMT.

In the chat rooms, the traders exchanged pending client orders. With knowledge of an impending exchange, a trader may sell his Euros for USD before 4 p.m. Hoping to then bring down the price of the Euro, the trader and his counterparts at other banks will aggressively sell Euros from their ‘sell-Euro’ client orders. This skews the market’s impression of supply and demand, thereby bringing down the price of the Euro.

The trader is then able to buy back Euros with the U.S. dollars he had previously exchanged Euros for, and pockets the profits earned.

The resolution of the U.S. investigation includes some of the largest fines ever levied by the U.S. Justice Department for antitrust violations. UK and Swiss financial regulators are conducting their own separate investigations into the ‘forex scandal.’

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Africa’s first Forex trading retail lounge opens in SA

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Forex is the largest financial market in the world. It is how individuals and businesses convert one currency to another. Each day over 4 Trillion dollars are traded. Unlike stocks or commodities there’s no central exchange. Instead, currencies are traded by a global network of banks, dealers and brokers, which means you can trade any time, day or night, Monday to Friday. Because of the sheer volume of currency traders and the amount of money exchanged, price movements can happen very quickly, making currency trading not only the largest financial market in the world, but also one of the most volatile.

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What is FOREIGN EXCHANGE FRAUD? What does FOREIGN EXCHANGE FRAUD mean? FOREIGN EXCHANGE FRAUD meaning –
FOREIGN EXCHANGE FRAUD definition – FOREIGN EXCHANGE FRAUD explanation.

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Foreign exchange fraud is any trading scheme used to defraud traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading became a common form of fraud early 2008, according to Michael Dunn of the U.S. Commodity Futures Trading Commission.

The foreign exchange market is at best a zero–sum game, meaning that whatever one trader gains, another loses. However, brokerage commissions and other transaction costs are subtracted from the results of all traders, making foreign exchange a negative-sum game.

In August 2008, the CFTC set up a special task force to deal with growing foreign exchange fraud. In January 2010, the CFTC proposed new rules limiting leverage to 10 to 1, based on ” a number of improper practices” in the retail foreign exchange market, “among them solicitation fraud, a lack of transparency in the pricing and execution of transactions, unresponsiveness to customer complaints, and the targeting of unsophisticated, elderly, low net worth and other vulnerable individuals.”

In 2012, Christopher Ehrman, an SEC veteran, was selected to run the new SEC Office of the Whistleblower.

Frauds might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits, improperly managed “managed accounts”, false advertising, Ponzi schemes and outright fraud. It also refers to any retail forex broker who indicates that trading foreign exchange is a low risk, high profit investment.

The U.S. Commodity Futures Trading Commission (CFTC), which loosely regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry. Between 2001 and 2006 the U.S. Commodity Futures Trading Commission has prosecuted more than 80 cases involving the defrauding of more than 23,000 customers who lost 0 million. From 2001 to 2007, about 26,000 people lost 0 million in forex frauds.

The foreign exchange market is a zero sum game in which there are many experienced, well-capitalized professional traders (e.g. working for banks) who can devote their attention full-time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders.

Retail traders are, almost by definition, undercapitalized. Thus, they are subject to the problem of gambler’s ruin: in a “fair game” (one with no information advantages) the player with the lower amount of capital has a higher probability of going bankrupt than a high-capital player. The retail trader always pays the bid/ask spread which makes their odds of winning less than those of a fair game. Additional costs may include margin interest or, if a spot position is kept open for more than one day, the trade may be “resettled” each day, each time costing the full bid/ask spread. In some variations of forex trading, the customers do not obtain normal fungible futures, but instead make a contract with some named company. Even if the company claims to act as their “forex dealer”, it is financially interested in making the retail customer lose money. The contract is directly between the customer and the pseudo-dealer, so it is an off-exchange one; it cannot be normally registered and traded on futures exchanges.

Although it is possible for a few experts to successfully arbitrage the market for an unusually large return, this does not mean that a larger number could earn the same returns even given the same tools, techniques and data sources. This is because the arbitrages are essentially drawn from a pool of finite size; although information about how to capture arbitrages is a nonrival good, the arbitrages themselves are a rival good. (To draw an analogy, the total amount of buried treasure on an island is the same, regardless of how many treasure hunters have bought copies of the treasure map.)

By offering high leverage some market makers encourage traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases their profit, but increases the risk that the trader will receive a margin call. While professional currency dealers such as banks and hedge funds tend to use no more than 10:1 leverage, retail clients may be offered leverage between 50:1 and 400:1.

What is Forex Trading – Hindi Tutorial

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Happy Trading.

What is Forex Market? A simple Hindi Tutorial that can be easily understood by a 7th grade student. Forex Market is the Mother of all Markets with a 5 Trillion dollar transaction every single day. It’s almost 200 times bigger than the entire Indian Stock and Commodity trading market. This is a part of educational video series on Technical Analysis in Hindi. Kindly go through the basics, do paper trading/ demo trading and start with a small amount before you really invest serious money. Also don’t forget to watch our ‘Caution Video’ a must watch video, before you venture into any kind of online trading. Its our effort to give you the best tutorial and prepare you for ‘Your Journey’ into the trading world. We wish you all a very prosperous career. This is the first video for Forex Trading Beginners, keep watching and keep learning. God bless you.
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Important Risk Disclaimer:

The calculation of profits discussed in this video is subject to any applicable fees that may be incurred by customers.​ Certain leverage may not be available in your jurisdiction and you should contact your Forex dealers for more information regarding limitations on leverage.

Trading spot currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. Because the risk factor is high in the foreign exchange market trading, only genuine “risk” funds should be used in such trading. If you do not have the extra capital that you can afford to lose, you should not trade in the foreign exchange market. No “safe” trading system has ever been devised, and no one can guarantee profits or freedom from loss. See Full Risk Disclaimer: http://www.zulutrade.com/risk-disclaimer
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Foreign Exchange market Education: Support and Resistance levels in retail Forex day trading

In this free webinar, I talk and explain the concepts of Support and Resistance levels in retail Forex day trading, in relation to my approach to foreign exchange market analysis.

A renewed approach, based on math and market performance instead of only price action.

A good example for beginners which are learning Forex as well for advanced but not satisfied (with the traditional SR approach) traders.

By my experience, the best support and resistance levels information cannot be provided by simply applying an indicator in mt4 on a single pair, but rather can be obtained by a multidimensional approach with simultaneous analysis of all the pairs.

In fact, Support and Resistance levels are not provided by the information of the price itself only, but rather by the inter-correlation between one asset and all the rest of the assets that are composing the Forex object.

You are all welcome.
Thanks for watching, subscribing and for your comments.

dr. M Giavon
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Foreign Currency Exchange Broker

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Forex, foreign currency exchange market is the largest financial business in the world. Forex is dealing with millions of dollars every day and the constant change of currency conversion rate is the main factor of this currency exchange trading industry. The trading is done between financial institutions, banks and governments and it was not open for the public for a long period of time, it has only a trade between high level institutions. Later Forex was launched to the public.

As an Individual, you can not trade directly in this market; you can only participate through foreign currency exchange broker or banks as they are the smallest element in the industry. Many companies start foreign exchange brokerage and in this industries you do not need to provide any commission after selling. The brokers make profit by helping their clients buy and sell contracts.

Using a foreign currency exchange broker means you get the most out of your foreign exchange transaction and the benefits are:

  • You get the best foreign currency exchange rates that is available
  • You get much better deal on foreign exchange than you would with any bank
  • You are not charged for a high commission fees and there are no other charges
  • Foreign exchange broker will help protect you from adverse exchange rate movements
  • It will guarantee you the fastest available international payments
  • It will provide you more proactive account management and better customer service
  • Foreign currency exchange broker will have unrivaled knowledge of currency markets and trends

What does exactly foreign currency trading broker do?

First you need to understand one thing that separates a foreign currency exchange broker from seller and buyers; they act as a mediator or link between buyers and sellers and they are not the ones that have the treaties. They are not the person who converges values ​​and they are not the ones in charge of keeping it as well.

He knows when the best is and when it would be the best time to sell and identify profitable ventures in the market. With growing technological and Internet software industries foreign currency exchange brokers are aware of new forex technology that makes the whole process of trading much efficient. This is also the reason why certain forex system has been purchased trough brokers. Some of them end up creating such a system based on the combination of their own knowledge and industry insight with old age forex trading methods.

Forex broker often starts like any typical forex interpreter. They used to be buyers and sellers themselves. You have to start from the bottom if you really want to become a forex broker. You must study it from the lower class and only that way you can understand what completely happened to a buyers and sellers and this is the only way to understand it completely. When you start from the bottom you need to find your way to rise up and be able to learn how to do it.

Today, in 2010 internet era anyone can enter into this foreign currency exchange market. This type of trade has become popular work from home business for many individuals. As you can enter into the foreign currency exchange market only trough brokers you are free from the hassle of actual selling and buying currencies. All you need to do is manage your forex exchange account with the broker and watch the industry and trade at the right time. If you are able to follow the change in the conversion rate and determine the currency that is about to increase in value, then you can make good money income from the forex.

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