Market Wrap - 13 November 2007

USD: The dollar gained on Monday, reversing some of its recent losses as nervousness about credit-related losses at U.S. banks triggered a wave of risk reduction in light volume trading. With bets against the dollar at record levels, major investment banks have announced more than $50 billion in write-downs and losses resulting in part from subprime mortgage loans gone bad. This has raised fears that there may be more losses to come, driving dealers to reduce the level of risk they take overseas. Prior to Monday, the dollar had been falling steadily on expectations the Federal Reserve would cut its benchmark interest rate to stave off an economic recession potentially brought on by weakness in the housing sector.

EUR: The Euro dollar traded to a low of 1.4527 before closing around the 1.4550 level in the New York session. On the data front, Eurozone industrial output and the German ZEW survey are both due out later today in Europe.

JPY: Independent of dollar strength, the yen has been charging higher in the last week. It climbed to a 1-1/2-year high against the dollar on Monday, benefiting as investors unraveled risky trades in which they borrow low-yielding currencies to buy higher-yielding ones. Top government spokesman Nobutaka Machimura said on Monday it was wrong to conclude that a high yen was a bad thing for Japan and that the government has no plan to intervene in the foreign exchange market. Data released today showed that Japan's economy grew a bigger than expected 0.6 percent in the July-September quarter. But the market shrugged off the growth as it did little to alter views that the Bank of Japan will not raise interest rates until well into next year. The BOJ kept interest rates unchanged at 0.50 percent on Tuesday, as widely expected, reflecting caution among central bankers over market uncertainty and fallout from problems in the U.S. housing sector.

AUD: The Australian dollar recovered off three-week lows against the U.S. dollar after most regional stock markets edged up, leading to an easing in the savage unwinding of risky carry trades that hit the Aussie in recent sessions. The Aussie inched up against the yen from a two-month low of 95.58 yen, but investors remained wary of returning to carry trades as risk aversion remained dominant, given expectations big U.S. banks could face more subprime losses. A series of announcements by major U.S. investment banks about losses from the subprime mortgage crisis in the past week have raised fears that credit-related woes would spread to the broader U.S. economy.

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Absolutely COMMISSION FREE Trading

ForexCT.com charges NO COMMISSION to trade currencies online or over the phone. ForexCT.com is a market-maker and makes its earnings from the spreads that are imbedded into the currency rates.

Who Is ForexCT?

ForexCT - The Only Way To Trade!

About US

ForexCT.com was founded by an experienced mix of bankers, venture capitalists, internet experts and Forex specialists. The catalysts for forming this company were the current prevalent discrepancies between clients’ needs and the services offered by most companies.

ForexCT.com’s mission is to provide our customers with an online trading experience which is superior to any of our competitors. ForexCT.com offers an opportunity to all traders from novice to experienced to start trading within minutes of registering and with an amount as low as $100.

ForexCT.com’s state of the art platform is web based and does not require any software installation requirements or firewall modifications. The company’s experience in the foreign exchange market has proven that a platform of such specifications is imperative for the largest and most liquid financial market in the world.

Code of Conduct

Introduction

Forex Capital Trading Pty Ltd (ForexCT or the "Company") prides itself on upholding the highest form of ethical behavior when engaging in business transactions. ForexCT knows that the only way to build trust and confidence in the Company is to engage with customers in an ethical and respectful manner. Having a good reputation is vital to the success of any business, thus we feel that it is important that our employees follow a set Code of Conduct.

The Code of Business Ethics and Employee conduct introduces the principles and standards which have been set for the company, managers and employees. The reason for having this code is to prevent/deter any wrongdoing by those three parties. Adherence to the Code is imperative and failure to comply by any employee may result in disciplinary action. If an employee is unsure about any nature of the Code, then the employee is advised to seek legal advise.

Adherence to Laws & Regulations

At ForexCT, we regard adherence to the governing laws and regulations as paramount. Compliance must always come before profits!

Forex Capital Trading Pty Ltd holds an Australian Financial Services License (License No. 306400). The Australian Security & Investments Commission (ASIC) enforces the laws and regulations which govern Foreign Exchange trading and we are always in compliance with those standards. The Australian regulatory framework is widely regarded as the most stringent and best in the world for investor protection. If for some reason, a dispute arises, we will try to resolve the dispute internally in a fair and swift manner.

Our Core Ethical Principles

Integrity

At ForexCT, we have a steadfast adherence to strict ethical and moral codes. Nothing concerns us more than the integrity of our organisation.

Openness & Honesty

We are required by law to act in open and honest manner with our customers, thus any deceptive or misleading conduct will have harsh ramifications for the Company. By being open and honest with our customers, we are able to develop trust. As previously mentioned, trust is vital to the success of any organisation.

Competence

Competence relates to having the expertise and experience to complete the task required of you. ForexCT's personnel and management have many years of experience in the Foreign Exchange sector and the currency markets.

Fairness & Respect

At ForexCT, we adhere to the motto "treat others as you wish to be treated". We will always treat our customers with the utmost respect and dignity. It does not matter whether the customer is a large institutional investor or your average "mum and dad" investor. Both types of customers are regarded as equally important and will be treated accordingly. At the end of the day it is the customers who will create success for businesses, thus customers deserve nothing less than the highest level of respect.

Reliable

In business it is important that when someone says they are going to do something, then they do it. ForexCT regards this as a crucial part of business practice. Therefore, we will never make any promises that we cannot keep.

Employee Responsibilities

Compliance with Laws & Regulations

All employees are responsible for adhering to all the relevant laws and regulations as well as the rules and principles outlined in the Code of Conduct. Employees must ensure that they are familiar with the laws, regulations, best business practices, and the required ethical conduct which is befitting for being a ForexCT employee.

Honesty

All employees are expected to act in an honest and dignified manner. They must act in good faith when dealing with all customers.

Confidentiality

During daily business activities, employees are privileged to client information relating to account details, trade practices & patterns, fees & revenues, marketing practices etc. Employees are required to keep this information confidential. This means they are not permitted to disclose this information to any third-party unless they are legally permitted too.

Conflicts of Interest

A conflict of interest arises when an employee of the company has competing professional or personal interests. Such competing interests can make it difficult to fulfil his or her duties impartially. Employees are expected not to put themselves in a situation, where a conflict of interest may arise. Conflict of interests typically occur whereby an individual (or someone close to the individual) benefits at the expense of the Company. Employees must always act in the best interest of the Company and not do anything that may compromise the integrity of the Company. If an employee has any queries or questions regarding a potential conflict of interest, then they should immediately discuss it with management or seek legal advice.

Reporting Violations of Code

When an employee becomes aware of any violations of the Code committed by themselves, other employees or management, then they are required and encouraged to report these violations to the legal and compliance departments

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Forex VS Equities

Forex Trading: Advantages over Stock Trading

Historically, the majority of the general public has viewed the securities markets as an investment vehicle. In the last ten years securities have taken on a more speculative nature. This was perhaps due to the downfall of the overall stock market as many security issues experienced extreme volatility because of the irrational exuberance displayed in the marketplace. The implied return associated with an investment was no longer true. (If indeed it ever was.) Many traders engaged in the day trader rush of the late 90's only to realize that, from a leverage standpoint, it took quite a bit of capital to day trade, and the return while potentially higher than long-term investing was not exponential. After the onset of the day trader rush, many traders moved into the futures stock index markets where they found they could leverage their capital greater and not have their capital tied up when it could be earning interest or making money somewhere else. Like the futures markets, Forex currency trading is an excellent vehicle for pattern day traders who desire to leverage their current capital to trade. Spot currency or Forex trading provides more options, greater volatility and stronger trends than currently available in stock futures indexes. Former securities day traders have an excellent home in spot foreign exchange.


No Middlemen
Centralized exchanges provide many advantages to the trader. However, one of the problems with any centralized exchange is the involvement of middlemen. Any party located in between the trader and the buyer or seller of the security or instrument traded will cost them money. The cost can be either in time or in fees. Spot currency trading does away with the middlemen and allows clients to interact directly with the market-maker responsible for the pricing on a particular currency pair. Forex traders get quicker access and cheaper costs.


Buy/Sell programs do not control the market
How many times have you heard that "fund A" was selling "X" or buying "Z"? Rumor had it that the funds were taking profits because of the end of the financial year or because today is "triple witching day", all as an explanation of why this stock is up or the market in general is down or positive on the session. No matter what your broker says the stock market is very susceptible to large fund buying and selling, and it is not uncommon for a fund to run a particular issue for a few days. In spot Forex currency trading, the liquidity of the Forex market makes the likelihood of any one fund or bank to control a particular currency very slim. Banks, hedge funds, FCM's, governments, retail currency conversion houses and large net-worth individuals are just some of the participates in the spot Forex currency markets where the liquidity is unprecedented.


Analysts and brokerage firms are less likely to influence the market
Have you watched TV lately? Heard about a certain Telecomm stock and an analyst of a prestigious brokerage firm accused of keeping its recommendations, such as "buy" when the stock was rapidly declining? It is the nature of these relationships. No matter what the government does to step in and discourage this type of activity, we have not heard the last of it. IPO's are big business for both the companies going public and the brokerage houses. Relationships are mutually beneficial and analysts work for the brokerage houses that need the companies as clients. That catch-22 will never disappear. Foreign exchange, as the prime market, generates billions in revenue for the world's banks and is a necessity of the global markets. Analysts in foreign exchange don't drive the deal flow; they just analyze the Forex market.


8000 stocks vs. 4 major currency pairs
There are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. Which one will you trade? Got the software? Got the time? In spot Forex currency trading, you have 4 major markets, 24 hours a day 5.5 days a week. You have approximately 34 second-tier currencies to look at in your spare time (if you are so inclined). Concentrate on the majors, find your trade. Spend your afternoon on the golf course or with your kids (instead of with your eye doctor trying to diagnose why you are seeing double).


Commission free
Simply put: no commissions, no clearing fees, no exchange fees, no government fees, and no brokerage fees. Sure there may be different names for different fees at different places, but in spot currencies no commissions means just that- NO COMMISSIONS. ForexCT.com earns its income from participating, along with the various liquidity source providers, in the ‘bid’ and ‘ask’ spread of each trade. The tight spreads that ForexCT.com provides its customers is another reason to Open a Free Account with ForexCT.com.


Same price for broker assisted trades
No premium for calling in orders, whether or not you trade Forex via the phone, use market orders, stop orders, limit orders or even contingent orders. In spot Forex currency trading, you do not have to worry about extra charges. Ever wonder why a securities brokerage house charges you more if they have to guarantee you a price than if you give them a market order with no price qualifier? Well you don't have to worry about it if you trade the Forex currency markets.


Trade off your profits
Ever been up on a stock and wished you could leverage that profit and get in a little more of the issue? In spot Forex currency trading you can. Use your open profits to add to your positions. As you gain experience, experiment with pyramid trading strategies. The options are endless because the market is cutting edge.


Superior Liquidity
With a daily trading volume that is 50 x larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the Forex markets. The liquidity of this market, especially that of the major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price.
Because of the lower trade volume, investors in the stock market are more vulnerable to liquidity risk, which results in a wider dealing spread or larger price movements in response to any relatively large transaction.


Leverage
100:1 leverage and more is commonly available from ForexCT.com which substantially exceeds the common 2:1 margin offered by equity brokers. At 100:1, traders post $1000 margin for a $100,000 position, or 1%.

While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful, moneymaking tool. Rather than merely loading up on risk as many people incorrectly assume, leverage is essential in the Forex market. This is because the average daily percentage move of a major currency is less than 1%, whereas a stock can easily have a 10% price move on any given day.

While the 100:1 leverage can increase positive results it is equally powerful in its ability to decrease results. This is a dramatic tool that and it is important to realize that it can hurt as well as help.

The most effective way to manage the risk associated with margined trading is to diligently follow a disciplined trading style that consistently utilizes stop and limit orders. Devise and adhere to a system where your controls kick in when emotion might otherwise take over.

ForexCT.com provides an innovative profit-sharing model, where our affiliates can profit through several different tailored programs. These programs offer an opportunity to a wide spectrum of prospective affiliates, ranging from individuals, to fund-managers, to companies. There are several reasons why you should become an affiliate today:

1. Customized profit-sharing structures
2. Flexible periodic payments from an industry leader
3. Enhance or build your own brand by referring accounts to us
4. Superior trading platform for your clients
5. Secure & safe trading environment
6. High-end tailored back-office support
7. Professional personalized customer support
8. Sophisticated risk management solutions

The affiliate program is divided into two main structures:

- Referrals

- White Label Partners

For further information. Please contact us at affiliates@forexct.com

Learn About Forex Trading

What is Forex?
The Forex market (Foreign exchange Market) is the market in which currencies are bought and sold. For example, a market participant is able to receive Australian dollars by paying a specified amount of US dollars. In effect the trader has bought Australian dollars and sold US dollars.

The prices of currencies that are set in the market are determined by the amounts that buyers and sellers are willing to pay. For example if there are more participants in the market that want to buy Australian dollars, than want to sell Australian dollars at a specific price then the price of the Australian dollar will rise until it reaches a price where there is an equal amount of participants willing to buy and sell at the same price.

Profits can be made in the Forex market due to movements in the prices of currencies. The idea is; if you were to buy a currency at a lower price than you sell it for, you have made a profit equal to the difference in the two prices. This is made possible by the simple fact that the price of the currency has changed. If the prices of currencies are constantly changing by large amounts (the market is volatile), there is greater potential for higher profits to be made. The Forex market is recognized as one of the most volatile markets in the world.

The History of Forex
Prior to 1971, an agreement known as the Bretton Woods Agreement stopped speculation in the currency markets. It was set up in 1945 with the intention of stabilizing international currencies and preventing money fleeing across nations. This agreement fixed all national currencies against the dollar and set the dollar at a rate of $35 per ounce of gold. Prior to this agreement the gold exchange standard had been used since 1876. The gold standard used gold to back each currency and thus prevented kings and rulers from arbitrarily debasing money and triggering inflation. Institutions like the Federal Reserve System of the United States have this kind of power.

The gold exchange standard had its own problems however. As an economy grew it would import goods from overseas until it ran its gold reserves down. As a result the country's money supply would shrink resulting in interest rates rising and a slowing of economic activity to the extent that a recession would occur.

Eventually the recession would cause prices of goods to fall so low that they appeared attractive to other nations. This in turn led to an inflow of gold back into the economy and the resulting increase in money supply saw interest rates fall and the economy strengthen. These boom-bust patterns prevailed throughout the world during the gold exchange standard years until the outbreak of World War 1 which interrupted the free flow of trade and thus the movement of gold.

After the war the Bretton Woods Agreement was established, where participating countries agreed to try and maintain the value of their currency with a narrow margin against the dollar. A rate was also used to value the dollar in relation to gold. Countries were prohibited from devaluing their currency to improve their trade position by more than 10%. Following World War II international trade expanded rapidly due to post-war construction and this resulted in massive movements of capital. This destabilized the foreign exchange rates that had been set-up by the Bretton Woods Agreement.

The agreement was finally abandoned in 1971, and the US dollar was no longer convertible to gold. By 1973, currencies of the major industrialized nations became more freely floating, controlled mainly by the forces of supply and demand. Prices were set, with volumes, speed and price volatility all increasing during the 1970's. This led to new financial instruments, market deregulation and open trade. It also led to a rise in the power of speculators.

In the 1980's the movement of money across borders accelerated with the advent of computers and the market became a continuum, trading through the Asian, European and American time zones. Large banks created dealing rooms where hundreds of millions of dollars, pounds, euros and yen were exchanged in a matter on minutes. Today electronic brokers trade daily in the forex market, in London for example, single trades for tens of millions of dollars are priced in seconds. The market has changed dramatically with most international financial transactions being carried out not to buy and sell goods but to speculate on the market with the aim of most dealers to make money out of money.

London has grown to become the world's leading international financial center and is the world's largest forex market. This arose not only due to its location, operating during the Asian and American markets, but also due to the creation of the Eurodollar market. The Eurodollar market was created during the 1950's when Russia's oil revenue, all in US dollars, was deposited outside the US in fear of being frozen by US authorities. This created a large pool of US dollars that were outside the control of the US. These vast cash reserves were very attractive to foreign investors as they had far less regulations and offered higher yields.

Today London continues to grow as more and more American and European banks come to the city to establish their regional headquarters. The sizes dealt with in these markets are huge and the smaller banks, commercial hedgers and private investors hardly ever have direct access to this liquid and competitive market, either because they fail to meet credit criteria or because their transaction sizes are too small. But today market makers are allowed to break down the large inter-bank units and offer small traders the opportunity to buy or sell any number of these smaller units (lots).

The History of Retail Forex
Retail trading, is more structured than the Forex market as a whole. While Forex has been traded since the beginning of financial markets, modern retail trading has only been around since about 1996. Prior to this time, retail investors were limited in their options for entering the Forex market. They could create multiple bank accounts, each one denominated in a different currency, and transfer funds from one account to another in order to profit from fluctuating exchange rate. This was troublesome, however, because the transaction costs incurred were large due to the small quantity of funds being converted relative to the size of the market. This transaction type was at the very bottom of the Forex pyramid.

By 1996, new market makers took advantage of developments in web-based technology that made retail Forex trading practical. The new companies felt that there was enough liquidity in the Forex market, and eventually within their own customer base, to guarantee markets under all but the most unusual market conditions. These companies also created online trading platforms that provided a quick and easy way for individuals to buy and sell on the Forex Spot market. In addition, the companies realized that by pooling many retail traders together, they had the size to enter the upper echelons of the Forex market, which reduced the size of the spread. As the business grew, the market makers were given better prices, which they then passed on to the customer.

Who Trades Forex?
Central Banks
A Central Bank will intervene to buy or sell currencies if they believe it is substantially under or overvalued and that it is having a negative effect on the economy. The national central banks play a key role in the foreign exchange markets as many central banks have very substantial foreign exchange reserves, thus their intervention power is significant

Commercial Banks
Banks are licensed deposit taking institutions; they also support a variety of other services including foreign exchange. These banks will trade currencies among themselves as part of the system of balancing accounts. While exchange rates for their largest customers are extremely competitive, small and medium sized enterprises and individuals will typically pay a large premium when transacting foreign exchange with their local branch. The interbank market caters for both the majority of commercial turnover as well as enormous amounts of speculative trading every day. It is not uncommon for a large bank to trade billions of dollars on a daily basis.

Non Banking Corporations
This group comprises of companies who are involved in the 'goods' market, conducting international transactions for the purchase or sale of merchandise. Exporters are made up of a diverse range of companies exporting goods and services. Generally, exporters have a positive impact on the value of a country's currency. Importers use the foreign exchange markets to purchase foreign currency to make payments for the goods and services they have bought in other countries. They generally have a negative impact on the value of a country's currency. Their trade sizes are most often inconsequential to affect immediate moves in the market, given the large volume traded daily on the Forex market. However since a major key factor for long term trend of currency movements is the balance of trade, if taken as a whole the capital flows arising from these corporations end up having a significant impact.

Hedge Funds
Their influence has increased significantly in the last few years thanks to the overall growth in their industry and abundance of funds at their disposal; however the net effect of this group depends on the investment decisions they make. With the growth of the FX industry they have been, where possible, investing heavily in foreign securities and other foreign financial instruments.

Brokers
They can classified into Interbank and Client brokers with the influence of the former declining in the last few years due o the shift of businesses to electronic trading systems. The advent of online pricing systems has revolutionized the operational capabilities of this market and changed the traditional role of brokers. But even in the past, most banks were unable to service the needs of small to medium sized organizations as well as commercial & private clients with large corporations their main targeted market. Thus keeping in mind the client's needs ability to invest a certain amount of minimum margin and still be able to trade on competitive spreads led to the advent of Online Broking Companies and ForexCT.com belongs to this group.

Investors/Speculators
Given that the Forex market has high liquidity, a large amount of leverage and the 24/7 operational nature of the market, it has been an attractive playing field for speculators. The service provided by speculators to a market is primarily that by risking their own capital in the hope of profit, they add liquidity to the market and make it easier for others to offset risk, including those who may be classified as hedgers and arbitrageurs

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