Leverage Accounts Make Forex More Attractive

The popularity of Forex trading is partly due to margin accounts with leverage. Without this margin, currency trading would be out of reach of individual investors. Margin accounts are available to trade all types of markets on the rising or falling, you can trade online through a broker using CFDs, currencies with a forex broker, but also raw materials , indices, ETFs, precious metals etc. …

What is the margin and leverage?

Margin accounts allow you to control large amounts of money with a relatively small deposit. Opening a margin account with a forex broker allows you to borrow money to the broker to trade currency lots which generally have a value of $ 100,000. The maximum loan amount is determined by the leverage. A leverage of 100:1 means you can control assets worth 100 times more important to the filing.

With a margin account for 1% (100:1 leverage), so you can trade a standard lot of $ 100,000 for a $ 1,000 deposit. Trading with leverage increases both potential profits but also losses. The trader can quickly lose their initial deposit does not comply with strict risk management. Traditionally, brokers have a system that limits the maximum loss in the initial filing automatically closing positions if the loss is too great. This is called a margin call or stop out.

The benefits of leverage in a Forex trading strategy.

The advantage of the margin account is that it can make profits on small movements of the exchange market. It is possible to make gains even if the market is not very volatile.

Currencies are traded in forex with small units, sometimes up to 5 decimal places. The reference unit is the pip, it represents a variation of 0.0001, the fourth decimal place. For example, if you trade a lot of $ 100,000 on the EUR / USD each pip is worth $ 10. However, the value of a pip is different depending on the cross currency.

Read More

Bank Of Japan Looking To Strengthen Position

Addressing risks to the global economy, the Bank of Japan is preparing to strengthen itself … While the debate continues in the U.S. and Europe on the roles of the Fed and the ECB, the BoJ is expected to announce new measures on 27th April, after its next meeting. The Vice-Governor and the Governor of the BoJ and have both confirmed for 24 hours to be ready to act, citing the latent risks of deflation in Japan, and the uncertainties surrounding the global economy, starting with the continuing crisis sovereign debt in the Euro …

The BoJ could announce such an increase in its share repurchase program of government bonds, currently set at 65,000 billion yen (614 bn), analysts said. The last intervention of the BoJ was in February, when it increased the amount of its programs of asset purchases.

Under the effect of these expectations easing, the price of yen fell slightly against the dollar this morning at 81.40 Y / $ (-0.16%). However, the Tokyo Stock Exchange remained insensitive to the new, the Nikkei is folding up 0.9% at the end of the session, dominated by great caution before a new bond issue Spanish scheduled for today Thursday …

Read More

Goldman Sachs will pick up stake in top Chinese bank

An investment group led by Goldman Sachs has received approval from the Chinese State Council to acquire 10 per cent stake in the Industrial and Commercial Bank of China (ICBC). The group will pay USD 3.7 billion for the stake in China’s biggest lender. The State Council has also sanctioned a USD 1.2 billion investment by the nation’s Social Security Fund.

In August, Goldman’s private equity arm had agreed to team up with European insurer Allianz and American Express for the ICBC deal. The 10 per cent holding will be split between these three units. The sale price is equivalent to about 1.2 times the bank’s book value, based on paid-in capital of 248 billion Yuan as of June 30. The investment will facilitate ICBC’s planned USD 10 billion initial public offering next year. The Goldman fund may agree to increase its stake in ICBC during the IPO.

Meanwhile, a Kuwait state investment agency, Kuwait Investment Office (KIO) is also looking to buy a strategic stake in ICBC. KIO, a government agency responsible for managing some of the OPEC nation’s oil wealth, wishes to sign a MoU with the Chinese bank.

ICBC is following the lead of China Construction Bank Corp, the country’s No 3 bank, which raised about USD 8 billion in October in the world’s biggest IPO in four years and whose shares are currently trading at more than two times its book value. Many foreign investment firms are picking up stakes in Chinese banks eyeing big gains once the firms gets listed. Goldman Sachs and other investors too expect to book huge profits once ICBC goes public next year.

Read More

Regional bond market develops in Asia

In its continuing spotlight on Asian bonds, AFB focuses on the development of the regional bond market in Asia. The need for a bond market need not be overemphasized. A bond market is necessary to meet long-term investment needs and sustain growth. Had the bond market been developed in Asia earlier, these countries could have very well avoided the 1997 Asian crisis.

Most Asian countries have invested surplus domestic savings totaling about USD 2 trillion in Treasuries and bonds of developed nations whereas the former’s requirement for physical and social infrastructure upgrade is double the investible surplus. The poor Asian countries are financing the deficit of rich developed nations. AFB has earlier talked about the dangers of Asian banks’ over-exposure to the US dollar. These diversions are happening mainly due to the absence of developed bond markets to invest the surplus.

However, all these are slowly changing with the initiative to set up a regional bond market under the patronage of the Asian Development Bank. The Pan Asian Bond Fund initiative comprises the Central Banks in East Asian and Pacific regions who have joined hands to float a USD 2 billion single bond fund that will invest in sovereign and quasi-sovereign local currency denominated bonds of the member countries. This has already generated lot of interest among member countries.

Some of the member countries have already opened up their market for foreign players to participate in this bond market. This move will go a long way in deepening the market, and improving the market infrastructure.

Since the 1997 Asian crisis, the regional bond market in Asia has more than doubled to about one-half of the regional GDP. The early pointers are promising but to attain full potential, Asian countries have to jointly evolve guarantee mechanisms to improve investor confidence in cross-border investments.

Read More