Forex Capital Markets
Ruth asks…
How does the forex market grow?
The average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. It is reported that the forex market will experience a growth of approximately 20% over the $3.21 trillion daily volume.
My question is how does the forex market grow at 20% rate? How does the capital flow in?
James answers:
Long term, forex will grow roughly in line with global GDP at 3% to 4% per year.
Any growth above that is just short term speculation. New entrants to the market are generally novices with small accounts. Most lose quickly and never return. No way that model supports 20% growth.
Richard asks…
What kind of a corporation is this?
im planning to make a corporation (we will be 5 stockholders)
the corporation will only be engaged in buying/selling stocks in the stock market/forex using only the corporations capital.
we will not issue bonds or other means to raise capital to play in the stock market,,, we’ll be using our own corporations capital
what do you call this corporation? an investment company, a joint venture….??
this is a stock corporation by the way which i will be the 60%
James answers:
An investment company. Depending upon your articles of association, you can also do private equity fund management by accepting funds from others and using this. Subject to SEC rules.
Helen asks…
Tax on Forex profits in the UK?
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If you cannot be bothered to read this entire thread, please just read the paragraph below and comment on the limited information.
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I’ve read too many discussion forums on this subject and following which I have called HMRC on this issue and they said any form of forex trading, regardless of whether you have a full time 9-5 job, is regarded as trading depending on the frequency and knowledge of the subject. They said it cannot be regarded as gambling as per spread forex trades are and is therefore liable to tax and that too, income tax not capital gains tax because it is regarded as “trading”. Can someone in the UK who trades forex and has experiencing of dealing with HMRC please confirm their situation.
I have outlined my scenarios as follows:
Background to query
•I may casually on Sunday evenings, weekday evenings or occasionally during weekday lunch hours place some speculative forex positions with a currency broker to try and profit from a rise or fall in a particular currency e.g. GBP v Australian Dollar or US dollar. Most brokers will provide leverage to finance the position e.g. a £1m position will require me to put a deposit of 1% i.e. £10,000 as collateral. In addition to a profit or loss that materialises from the trade when it is closed, interest is either than earned or paid by me, depending on whether I buy the currency (going long) or sell the currency (going short). For the purpose of this example, let’s assume that the interest rate either way is £20 per day
•In terms of time spent dedicated to this “speculative currency undertaking”, it is difficult to quantify because I might place an automated limit order to buy or sell something which takes 2 minutes to do and then not look at again until I receive an email notification that the trade has executed and then place a limit order to close the trade with the target profit. Often, I may leave my iphone connected to the page that displays live information whether a transaction has been executed or not. As I have a day job, my time is devoted to that and not to currency trading. In the evenings, I may watch the prices whilst eating dinner / watching tv / playing with kids (but I am not glued to a trading screen)
•The volume of trading could be anything from £250,000 per leveraged trade to £1m per leveraged trade and positions could be opened and closed from 2 times per month to 20 times per month (I don’t think the size of the trade should matter here because the broker is funding the majority of the position, and the frequency is no different to somebody buying and selling many times on the stock market in the month be it on margin trading or outright purchase)
Could you please advise how HMRC will view the following situations in relation to tax in respect of the above:
Scenario 1
•As an employee with a full time job and my primary job/income not related to the activity of forex at all, I regard this speculation as a means of personal gain or loss. I am not a professional forex trader. I am simply a person who reads the papers, financial news and makes an informed decision and may make or lose money on the trade. I would undertake the forex trade as an outright cash (spot) transaction with the broker who would finance it i.e. not a “spread trade”. This example is no different to someone who likes to undertake equity share trading as a frequent hobby. How is any tax treatment on profit/loss made here and is it regarded as income or capital gains? Is this regarded as gambling and therefore no taxes are paid on profits and no relief can be granted against losses?
Scenario 2
•As per situation 1, except this time the transaction is undertaken as a “spread trade” which is therefore regarded as gambling and therefore not subject to either income tax or CGT (again this is not my primary job), rather than as an outright cash (spot) purchase/sale by the broker. How is any tax and relief treatment on profit/loss made here and is it regarded as income or capital gains?
Scenario 3
•If I opened a forex account in the name of my wife and I undertake all forex trading on her behalf (under her name), and her full time job is as a dentist , how is any tax treatment on profit/loss made here and is it regarded as income or capital gains?
Scenario 4
•Because technically I have a religious issue with gambling, yet current laws permit favourable tax treatment towards spread betting and gambling i.e. it is not taxable “if it is not regarding as trading and your main job”, my preference would be to undertake such position NOT via a spread trade. However, at risk of facing tax liabilities if I went the “non-spread betting route”, I don’t favour that idea either. Is there any way in which speculative forex trading (cash) can be undertaken which offers similar advantages as spread-betting but not necessarily via that route?
James answers:
HMRC have given you the advice you seek. That advice is spot on.
There are no special rules for forex trading (unless it is done by a company). The only question that needs asked is “are you trading”: are you engaged in a trading activity? That is not a simple question to answer. In its simplest, a tourist could return from holiday and convert his dollars into pounds at a better rate. That tourist has made a gain, but that is not a trading activity. On the other hand there is a person who regularly buys and sells large quantities of foreign currency with the sole purpose of realising a gain. That person is trading. There is a raft of scenarios in between. Each will fall on its own facts.
From what you say, you are without doubt trading. You are doing this on a grand scale. You are organised, and you have a profit seeking motive. It does not matter how many jobs or trades you have. If what you do on the foreign exchange is a trade, then the profits will be taxable (and your losses will be relievable).
Tax is charged on the profits of a trade. The person liable to pay the tax is the person who is entitled to the profits. It doesn’t matter whose name the account is in. It will still be you who his entitled to the profits, and liable to the tax.
A person who makes model boats and sells them at a Sunday market may be fulfilling a hobby, but is also trading. Again. Although doing it for enjoyment, he is also doing it to make money. Similarly a professional golfer cannot claim that his earnings are not from a trade because golf is also his hobby.
There is no law that prevents gambling from being a trade. The law defines a trade as “every trade, manufacture, adventure or concern in the nature of trade.” The courts decided that gambling did not fit that description. That makes perfect sense because if it were a trade every gambler would be able to set his losses against tax. There are more losses than winnings in the gambling world.
Lizzie asks…
How Would I Go About Starting This Business?
I have a Masters in economics and currently working on finishing my bs in Accounting, with a minor in finance. I also have an associates in Business Administration from my community college days. In addition, I’ve also been trading successfully trading in the foreign exchange market (forex) for almost 7 years now.
One day, not anytime soon, I would love to open up my own trading firm, accept a small amount of clients, and trading their capital.
My questions for you folks with a little more knowledge on the area is this: How would I legally go about starting this business?
James answers:
Hello,
If you live in the U.S. They have recently implemented laws so you will need to take the pertinent exam. Many agree these laws have no place since FOREX has no central exchange. Google search for NFA and you will see the test required to manage funds. You would take a cut of the profits as most money managers do and you are all set. U.S. Is one of the few countries that require testing to become a money manager for Forex.
Regards
Gerard (BT)
http://fxlivedaytrading.com
John asks…
what a beginner should do to for stock trading practise in india?
hi i am akshay 22, jamnagar, gujarat, india. I am new to stock trading. Have never done it before but doing a lot of market research lately. Now before stepping into full real time trading, i wantt to first practise it in a demo account. But i am not sure there are demo trading accoutnts in stocks trading in india (although there are a lot in forex trading). Please tell me what a begnner should do in a stock market. Should i go to the nearest broker in my locality or open online a demat account with something like share khan or angel broker or india infoline. is it necessary to go to a broker and take his advise or i can get sufficient guidance online when i open a demat account. Please dont give vague answers. Tell me something on which i can really do something
for extra informtation i am going to trade with 1 lac capital and am more interested in nifty options. i want to trade only intra day and not long term or medium term
James answers:
Try making your own account in an excel spreadsheet, or try wallstreetsurvivor.com
Maria asks…
thinking to start a hedge fund – will I be labeled the new Madoff?
So…I happen to have a little less than $100k – which I know is a tiny amount for professional capital.
And…that’s why I am thinking on how to raise additional funds. One of my ideas was to start a hedge fund and offer investors the option to open account online and deposit money easily…as if this is some online stock brokerage or forex, etc. I am also rethinking whether it will be a good option to offer some minimum interest rate per annum – like 6% minimum. Personally, I work as a software developer at a relatively big company so creating the website will be free in my case – most money will be spent for legal fees and marketing. Finally, I trade options, stocks and bonds for more than 5 years and 1-2 strategies that look as a safe bet – so offering 6% APY looks achievable. But…you know…the obstacle are obvious (weak ecomony, lowered investor’s trust, no track record…etc.).
thanks in advance!
James answers:
Having started a hedge fund myself, you need to see a lawyer. You can’t start a hedge fund and then hold it out for public investment like an online stock brokerage. Hedge funds are for qualified investors who sign up to be limited partners in a fund offered by you that has an offering memorandum that they need to agree to first (and 100 other complications with your idea). You can’t even allow access to your website without at least some token approval process first. You surely can’t allow people to “invest” online.
Prior to soliciting any clients for any sort of investment vehicle you need to be straight with the SEC and/or CFTC which means passing the Series [whatever is your thing] and registering your company with the proper authorities (otherwise you can’t even take the exams).
Guaranteeing a minimum return makes you look like an idiot or a scammer. You can’t “guarantee” a return higher than the risk free rate and your guarantee wouldn’t mean anything anyway as investors would have to sue you for their return and you would just close up shop and bankrupt the entity anyway.
Anyway, you don’t just start a hedge fund and expect high net-worth individuals and institutions to come to you (those are the only possible clients). You do $30K – $100K wrth up legal work, set up off-shore entities, write offering memoranda, find seed capital, and a whole bunch of stuff I had to learn after spending 10 years in hedge funds beforehand.
David asks…
is this considered fraud or illegal in anyway?
I’m 19 and Im a trader. Im good at trading but don’t have enough capital to actual get me anywhere anytime soon. Can I register for credit cards, make a paypal store for with buy it now buttons and charge my limit on my credit cards to my own paypal, then take that money put it into my forex account and trade with it? Is that legal or is it fraud? If its fraud what are my chances of getting caught? And i am fully aware of the risk of losing all the moenyin the market so don’t lecture me on that…
Rubadub I have a solution to them finding out.. I could always go into a walgreens and by a prepaid credit card or whatever you call those things then use that prepaid to buy another prepaid from walmart for example then finally put that into my paypal… they can probably track that too but I’m sure it will buy my some time
Rt u are right about investing but sir I am not investing I am speculating some would even say gambling… so y use my money when I can use the crreid card companies money
I’ve had a partrime job since 8th grade… and getting the cards should not be a problem, I’ve had a credit card in my own name since I was 16 which my parents got for me to start my credit score… I get credit card offers in the mail for cards with 10000 dollar limits so….
Also I do have every intention of paying the money back but obvioisly if i lose it all I won’t be able too…
I could do the cash advance thing I think I could manage but yeah the 29% after a month is what I. Worried about. That’s y I want to transfer it into my paypal and not make it a cash advance even though it is… I guess the prepaid won’t work if u can only use cash… hmmm I have to think now… I’m sure ill think of somthing
And this could destroy my credit score yes I know, that’s a risk I’m willinf to take.
James answers:
Yes, that is illegal. It’s a form of “kiting”. It’s also speculative so you could end up losing the money and then have nothing to pay off your debt. Investment should only be done with discretionary money!
EDIT:
You are still “playing the float”; borrowing money to use during the grace period. This is commonly referred to as “Check Kiting” but it’s the same principle.
Http://en.wikipedia.org/wiki/Check_kiting
Mandy asks…
Did we just see a dollar bubble (anti-bubble?) burst? What does this mean for stocks?
I’ve been into forex as part of my training in trading, and man has the dollar gone through the roof (in a good way) over the past two weeks, and even moreso today as it trucked through huge support and resistance levels developed over months and years!
My initial take is lower oil, higher stocks. Also, I imagine a respectable dollar will begin to attract more foreign investors, who don’t need to pay capital gains taxes on our securities. However, matching the oil index with the S&P didn’t really show much of a correlation.
What does this mean to the market?
Thanks for your help! Exciting stuff!
I meant that the dollar is strengthening at an unbelievable pace. The war is a very good point though. Nothing like solving a problem of money leaving the country like doing it with a few spare trillion.
What is your take on the strengthening of the dollar?
James answers:
The main problem is the war. The war is costing us so much, in addition to the various bail-outs, that the government has been forced to flood the economy with Dollars to pay for its bills. More Dollars means that the ones you have are worth less, and when yours are worth less commodities such as oil and gold go up. The Republicans in their obsession with low taxes and high spending have debased the currency…and is only going to get worse.
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Foreign Exchange Market Currency Rates
David asks…
How does the Federal Reserve attempt to reach its target?
On June 25, 2003, the Federal Reserve released a statement that began, “The Federal Open Market Committee decided today to lower its target for the federal funds rate by 25 basis points to 1 percent.”
A. The Federal Reserve instructs Congress to pass legislation setting the interest rate banks can charge one another for short term loans.
B. The Federal Reserve purchases bonds in the open market.
C. The Federal Reserve lowers the exchange rate between the dollar and foreign currency.
D. The Federal Reserve opens more branches. The increased competition lowers the interest rate.
James answers:
B is the correct answer.
The Fed has three main tools at its disposal to influence monetary policy:
Open-Market Operations – The Fed constantly buys and sells U.S. Government securities in the financial markets, which in turn influences the level of reserves in the banking system. These decisions also affect the volume and the price of credit (interest rates).
Setting the Discount Rate – This is the interest rate that banks pay on short-term loans from a Federal Reserve Bank.
Setting Reserve Requirements – This is the amount of physical funds that depository institutions are required to hold in reserve against deposits in bank accounts.
Nancy asks…
Homework help! Economics, not much time left please help!!?
Help on any of them would be greatly appriciated, thanks!
1. What does the international banking system consist of?
(Points: 2)
A set of tightly enforced capital controls
A network of world economic institutions
A decentralized set of central and private banks
A union of government-run banks and monetary funds
2. What does greater capital mobility mean?
(Points: 2)
Foreign investment is tightly controlled.
Governments impose restricted trade policies.
Investment money flows freely around the world.
Companies can only profit by investing, not producing.
3. What does the giving of foreign aid involve?
(Points: 2)
A high-interest loan from the International Monetary Fund
The return of natural resources to colonies
A gift of money from one government to another government
A lasting interest in the receiving country’s investment climate
5. How does the IMF use its loans to attempt to control and fix theeconomies of countries that need its help?
(Points: 2)
By imposing conditionality
By promoting infrastructure growth
By funding sustainable development
By raising and lowering interest rates
6. What is the purpose of the loans made by the World Bank?
(Points: 2)
To promote sustainable development
To stabilize the currency exchange market
To generate revenue for the United Nations
To get countries to accept free-trade policies
7. The WTO does all of the following except what?
(Points: 2)
Settle trade disputes
Enforce banking regulations
Stabilize the global economy
Help negotiate trade agreements
9. How can a country respond to a trade embargo?
(Points: 2)
By pursuing a policy of globalization
By seeking other trading partners
By developing its infrastructure
By imposing a protective tariff
No I’m not in Human Geography… And thanks for the help!!
James answers:
1) A union of government-run banks and monetary funds
2) Investment money flows freely around the world.
3) A lasting interest in the receiving country’s investment climate (I think)
7) Enforce banking regulations
9) By imposing a protective tariff
Just curious, are you in Human Geography?
Linda asks…
U.S. is under Attack Right Now!?
Citizens of the U.S. your country is under economic attack. Please copy the following letter and mail, fax, email your Representatives and Congressman/woman.
Dear [Elected Official],
I am gravely concerned that the recent actions of the Federal Reserve, to prop up banks holding insolvent mortgages and loans, is deliberately destroying the value of the dollar and endangering the entire US banking system.
The Federal Reserve has cut interest rates repeatedly in a time of high inflation, thus causing the value of the dollar to fall 5% on the foreign exchange markets in a matter of weeks, driving up oil and import prices even more. Even worse is this was done in an attempt to save bank profitability from their own mistakes thus serving as a bailout while simultaneously endangering our currency.
Furthermore, the Federal Reserve has lifted regulations limiting bank deposit exposure to their brokerage arms. These regulations were put into place after the Great Depression when excess bank exposure to bad assets destroyed banks across the country.
The entire process has broken down, being ignored and being gamed to the short term benefit of bank profitability. As an elected public official, it is YOUR JOB, YOUR RESPONSIBILITY and within your AUTHORITY to clamp down and return oversight to this extremely precarious situation.
Please note I will take your lack of, or even a weak response, as implicit approval of the deliberate gaming and endangering of our financial system. Furthermore, if we suffer a large scale financial disaster, I will also mention to all my voting age family and friends, which incumbents i have
contacted, and thus knew about the entire situation and did NOTHING to uphold our financial system.
Thank you otherwise for your time and consideration.
Regards
James answers:
I better withdraw all my money and sell my stocks before the banks crash.
Michael asks…
“spot rate” and rate of exchange question in economics?
Hi, Im having trouble with a homework problem in my international monetary economics class.. here it is =)
The pot rate is $1 = 1 Euro. the interest rate in the US is 4% per year and 12% per year in Europe.
a) we would expect that the foreign exhcnage market will set the 30 day forward exchange rate at $1 = _________ Euros…
i really have no idea how to do this =(
part b) assume that with the same spot rate and interest rates as in part A, we see a 30 day forward rate of $1 = .5 Euro. A reiskless way of making money would be to borrow (which currency) ____________ in ___________ (which country), convert the money borrowed into _____________ (which currency) and lend it out while buying a 30 day forward contract to sell ___________ (how much of which currency) for ________ (how much of which currency). If you start with $1million, your profit on this transaction is __________. This is called ___________
I think its called hedging, but i really dont know, my lecturer goes through things too fast for me to pick up ..
C) Assume u want to engage in uncovered interest arbitrage for a 30 day period. Assume you want to do this with $1million. Where would you borrow money?
what is arbitrage? and what is hedging?
Thanks soooooooo much for your help! I really can not express how much it means to me that you take your time out to help people like me! THANKS A TON!!!!
James answers:
Arbitrage: the process of making a profit off of differences in prices of the same commodity in two different markets. If the price of a good is $5 in one market and $10 in another an arbitrage opportunity exists. You can buy for 5 and sell for 10 making a profit of $5 for every good you buy and sell. Eventually the prices will reach parity becuase the supply and demand in the two markets will cause the expensive price to fall and cheap price to rise.
Hedging is the activity of engaging in forward markets to protect oneself from fluctuations in the prices of goods. Ie hedging your bets, locking in the exchange rate now so you dont have to worry about it changing in the future.
A) we assume covered interest parity holds. Use the formula (1+i)=(F/S)(1+i*) i is domestic interest. F is forward rate, S spot rate (where $/euro), i* is foreign (euro) interest rate.
Since the question says interest rate is 12 month and the forward is for 30 days, divide i and i* by 12 so, i=.00333 and i*=.01.
1.003333=(F/1)(1.01) so, F=0.99.
We expect the dollar to appreciate to cover the higher interest rate in euroland. $1= 1.01 euro.
B)borrow dollars at 4% in us. Convert to euro at spot=1/ lend at 12% annum. Sell 1,010,000 euros forward in 30 days for $2.02 million. Then subtract the interest you owe for borrowing at .333% in the us and that is your profit.
C) uncovered means that you will (and have to) accept the spot rate 30 days in the future. We at present do not know what that spot rate will be, but what can likely assume that the dollar will appreciate do to the interest rate arbitrage opportunity from the 4% us rate and 12% uk rate. Probably want to borrow US.
William asks…
Econ question help regarding the federal reserve, selling and buying bonds?
3. On June 25, 2003, the Federal Reserve released a statement that began, “The Federal Open Market Committee decided today to lower its target for the federal funds rate by 25 basis points to 1 percent.” How does the Federal Reserve attempt to reach its target?
A. The Federal Reserve purchases bonds in the open market.
B. The Federal Reserve lowers the exchange rate between the dollar and foreign currency.
C. The Federal Reserve opens more branches. The increased competition lowers the interest rate.
D. The Federal Reserve instructs Congress to pass legislation setting the interest rate banks can charge one another for short term loans.
James answers:
A. Buying bonds increases demand, bids up prices, and lowers interest rates.
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Forex Trading System
Sandy asks…
developing the forex trading system by new programming ideas then make this idea as a computerized program?
I want a new project programming idea in the field of Forex Trading strategy for my graduation project.
James answers:
Just take practice with examples that ll clear up you mind on it coz the trading tools are made up by algorithms i think so
James asks…
What is the best Forex trading system and what returns to expect?
James answers:
Www.4xgenie.com
code is MSMS555
Ruth asks…
How can I design a forex trading system based on price action?
I HAVE NOT COME ACROSS AN ARTICLE WHICH DEFINES AND EXPLAINS PRICE ACTION.
James answers:
I’m not too sure what you mean but here I go…
Price action in forex is basically governed by supply and demand theory – if there is demand for the currency it goes up. If there isn’t price goes down. If there is too much supply, currency goes down and if there isn’t enough, currency goes up. That’s the simplest explanation – you might want to search around for supply and demand theory.
Most forex systems are based on price action because most traders use charts – technical analysis which depends on price action.
Richard asks…
How do I go about selling my Forex Trading System, Any Idea?
James answers:
Why do you want to sell it?
If it works, you wont need the money….
George asks…
Has anyone any experience of an automated Forex trading system called Silver C Zita?
James answers:
Hi,
I have no experience with this system.
But I can tell you: be very very wary about trading systems being sold. Many trading robots (98%) are complete rubbish. They claim you make thousands of dollars with a few hunderd dollar.
Don’t believe the media tricks they pull on you. Backtested results always look good. It’s easy to create backtests that perform great. Walk forward is something else.
Ask yourself one question: why do they sell a system when they make millions already by using it themselves?
Charles asks…
Where can i get a reliable forex trading system?
A combination of forex indicators that is very reliable and gives at least reasonale trades
James answers:
Good stock day traders are happy with getting 50% of their trades correct. Forex traders can do less. What makes the average trader successful is how they practice risk control.
If you read books like Millionaire Traders you’d know that the only system that works for successful traders are the ones they developed for themselves. Trading isn’t a formula. It’s an art.
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Forex Capital Markets
Robert asks…
Help! Working experience for CV!?
I am an overseas student studying in a university in the UK. I’m not very familiar of what kind of working experience that you should include in your CV. I’m planning to apply for an internship in the UK next summer. I’m probably applying for a finance-related ones, such as capital markets. This summer, I worked for my parents who are doing some private forex trading activities as a personal assistant as I couldn’t really get a job out there in my country. I learnt quite a lot of stuff and I’m thinking of whether to include this as a working experience in my CV. A friend of mine said that I shouldn’t, since I wasn’t working for other parties. Do you think I should include this as I didn’t have any other working experience?
The other problem I’m worried about is since I was working privately for my parents and that’s their own trading instead of companies, I might not be able to provide a reference.
Thanks for answering…
James answers:
Yes, include it. You need to be specific about what skills you gained and give examples of each, eg communication, problem-solving, numerical. You can do this in a short paragraph or a bulleted list.
Maria asks…
Want to become a Proprietary Trader?
I’m currently interning @ RBS Greenwich Capital Markets in Credit. It is boring. I’ve been offered a chance to maybe move around the firm to a different area. I know I really want to proprietary trader or be a FOREX spot trader, but I was unsure if they would be too busy to work with an intern. I would think so, in which case where can I learn to trade for free? Also, I was hoping I could get some clarifications into the two areas, what seperates them, and what kind of person would be better fit for both areas. Thank you so much.
James answers:
If you like trading and some one offers you a chance to work on trading desk and you don’t take you’re a fool and don’t deserve to even work for that company
You don’t worry is someone is going to “work” with you, you take the golden opportunity and run with it. If you think traders are going to hold you hand and spend time teaching you better not take the job. You learn by doing, by following, by listening, and paying attention.
All traders have the some abilities, personalities & traits, some a little more servere than others. Traders are above average intelligence (you would know most of the time) quick thinking, good a math and have out going personalities and most importantly are not wrapped too tight.
I’ve been on the floor of most exchanges, including the options. Equities and commodities and a trader is a trader is a trader. A good floor trader (and most inhouse) can trade anything with a very short indoctrinization period
Sandy asks…
Do you like trading FOREX?
Who trades FOREX here?
Could you please help me make a small statistics about the market? (Not able to find any firm statistics on the web though).
1. What is your capital?
2. How many lots or how much per day do you trade? (micro, mini or standard)
3. What is your daily limit? (trades, profit, pips, etc)
4. What leverage makes you feel safe? (50:1, 100:1, 200:1, etc)
5. Do you like fixed or variable spread?
6. Do you prefer market execution or instant execution?
7. Is scalping always profitable to you, what do you think?
Appreciated a lot, thank you.
James answers:
This Seems very similar to another question I already answered so Here is a Quote of it:
“Hey,
Just want to start out with I’m no pro but I’ll give my 2 cents and help you on with more resources.
1. The great thing about forex market is that you can start small. Some start from 5000-10000 but many start with 250 and that’s all fine. If you’re new to the trade you likely want to start small and use minilots until you get the hang of things as there can be learning curves that can result in some unpleasing experience but it helps build your knowledge and wisdom.
2. Most people likely trade with standard however yet there are many who prefer to trade with minilots. Personally if I were new to a certain currency pair, minilots or micro lots would be my choice, if I were more familar with a specific currency then more onto standard might be my choice but yet sometimes I’d still like to trade mini depending on the trend and past results
3. That really varies from each trader however it would likely be contigency on their capital and lots traded
4. I’m one that takes things very save so I generally prefer 50:1 but that’s a personal preference sometimes I move 100:1″
John asks…
I need $30,000 so I can trading stocks but I currently cant figure out a way get a hold of that much money?
Ever since I was in middle school Ive known that I wanted to make my living trading stocks. I’m getting tired of paper trading, Ive developed a strategy that is a winner but I need day trading privileges to put it into execution. Ive always viewed the money markets (stock market, forex) as the best wealth generators available. But I wasn’t born into alot of money and have no rich friends or family, so its extremely difficult for me to come across the $30,000 I need to start trading stocks with day trading privileges.
So what I need help with is ways to raise the capital. I made some mistakes earlier in life so I don’t have a good credit rating and Im not a home owner. The most frustrating part of it all is knowing that I have the ability to do something great but I lack the resources. so please pour in the suggestions. Email me if you have any further questions bjulyjayjr@yahoo.com thanks in advance
James answers:
Rob a bank. They robbed us all anyway. Mine as well get some retribution.
Paul asks…
why do brokers not like their clients winning.?
ok this is regarding the forex market.ive read a lot about how forex brokers dont like theyre clients winning so much from proffesional investors..but they never say why.a person who keeps on winning will likely build their capital and probably trade at a greater volume. this greater volume will give the brokers a bigger cut of money due to the bid/ask spread……so why dont they like this then.does it cost them a lot to procces the transaction or something…any opinions would be appreciated
James answers:
A broker in the strictest sense is someone who arranges transactions between a buyer and a seller and gets a commission when the deal is executed. The more you are trading, the more you are paying. So they don’t really care whether you are winning or not, just so long as you are constantly placing trades. However, unless you have superior trading abilities, the more you trade the more money your going to loose, thus you will tend to loose as brokers win.
However I believe you may be referring to spread betting??? Such companies are not market makers, they agree to be on the opposite side of your bet. If your making money, they are paying out and visa versa.
Dealer market makers do hold assets in-between trades. The spread you pay is to take into account the volatility of the asset. It is to account for the risk that the asset price may go against the market maker during the period in which they hold the asset. So i guess the market maker would hope for you to sell them the asset immediately before a market rise and subsequently buy the asset from them immediately before a market fall.
Susan asks…
I am very decent trading in Forex. How can I make money without any of my own?
I have done research in it for maybe a little over two years now.I have traded several demo accounts and have always done very well, in my last account, 50k went to about 75k in a week of intense research, focus, and trading. Every trade resulted in profits, there were I think over 20 trades, some going on together with others, some 5 days, others 1 hour, etc.
I want to make big money trading real money, but I don’t have any money to invest with because I am a broke student. I am wondering how I can still make money in the market because I believe I have the ability to do so, without having the start up capital myself.
Thanks in advance for any helpful advice.
James answers:
Find a partner who has money and convince them you got the stuff.
Me: I’m pretty skeptical myself.
Maybe you’re just lucky. Maybe you makin’ it up. Maybe you’re a genius.
Steven asks…
Investing as a sole proprietorship vs individual for tax purposes?
If I wanted to set up a sole proprietorship company for my day-trading/investing in the stock market/forex…
Can I write off all of the stuff I would need (a % of utilities, courses, new computer to trade with, etc) as business expenses and claim the investment revenue as Capital Gains so that 50% of it is automatically tax free right off the top, or would I have to declare it as business revenue and pay based on the full amount?
If I can’t offset expenses as a company but claim the earnings as capital gains then it probably isn’t worth it, right?
James answers:
Whether your day trading/investing as “sole proprietorship vs individual” is the same for tax purposes, i.e., reporting the transactions on your personal tax return (T1 return), rather than in a corporation tax return (T2 return).
If you are serious in your day trading business (proven stock knowlege, # of trading transactions daily and time involved), and if your trading has a reasonable expectation of profit (making money), you may deduct a reasonable share of expenses mentioned by you. However, that means you have to report the gain 100%, not 50%.
On the other hand, if the CRA considers that your day trading has no reasonable expectation of profit, it may deny all your “business” expenses.
Capital gains are generallly for stock investments with a buy and hold strategy, rather than for day traders who flips their stocks daily or within a short time (known as “adventure in the nature of trade” in taxation). Under the capital gain scenario, you may deduct your interest or margin charges for the stock purchases.
Mary asks…
how should I invest, or what business should I run as a finance/accounting student?
I have a bit of capital I can invest towards starting a home based business or investing (about $2500), and I would like to get some ideas on how I can make some money online, through home business, or personal investments. I have a very analytical mind, and I would like to put it to use.
I have a weakness in advertising/marketing, but I am very good with budgets, margins, and things to do with numbers. Should I invest the money in the stock market or forex? If so, what kind of return would be “reasonable” for a novice? What other business/money making ideas do you have??
James answers:
My advice would be for you to look over this website, it is full of invaluable information that would pertain to your question.
Charles asks…
1 Million $ in 10 years ?
Is it possible to accumulate liquid funds of 1 million $ over a timeframe of 10 years ?
If yes, which of the following ways would be the best way to achieve this: (initial capital 10,000$)
1. creating a business
2. Investing in the stock market
3. trading commodities
4. trading forex
5. real estate
6. start an online retailing business
7. create an online affiliate website
8. buying and selling on ebay
9. Something else ?
winning the lottery is not an option !.
Happy New Year. Is your new year’s resolution also to steer towards financial freedom ?. Start now ! Ponder my question.
James answers:
You would need an average return of about 47 percent per year to achieve your goal. It is possible but not easy. What can work includes items 1, 2, 3, 4, and 5. With all of them you would have to take a lot of risk. You may just hit a lucky stock or a series of great commodity trades, or find a piece of real estate that increases many fold because of some development nearby that drastically changes its value. Your probability of reaching your goal is relatively low, but that does not mean you shouldn’t try.
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Foreign Market Currency
Donald asks…
Foreign currency intervention questions?
http://online.wsj.com/article/SB10001424052970204528204577009152325076454.html
The article is about how the Japanese government have intervened in the foreign currency markets.
I want to know a few things about this article… can someone with good background knowledge in currency trading and economics answer these questions for me??
How does foreign currency intervention work??
How is it actually done?? Do they print more money out? Sell more gov bonds or something like that?
Why has the yen being so strong recently? Shouldn’t it be weaker because of the disasters in Japan this year? What does a strong yen imply in relation to the Japanese economy?
Thank you for your time and effort.
James answers:
Under flexible exchange rate demand and supply of currency determines its price. Currency rate increases where d>s and vice verse. All currencies are backed by Gold and other acceptable currencies.
* Currency intervention: In order to correct BOP problem and stabilize currency rate Govt intervenes.
* Currency devaluation, depreciation,keeping overvalued or under valued currency price, transfer of currency etc are the ways to intervene.
* if you have a strong economy ( see all economic indicators ) , even if any disaster comes country can always put the economy in to proper track.
* Strong Yen implies the good economic condition of the economy.
Ken asks…
Where to buy foreign currency in Phoenix area?
I’m a foreign coin collector and new to the Phoenix area. I was thinking of expanding my collection and needed some places to find foreign coins. Perhaps flea markets or stamp collectors/vendors? Does anyone know of any place that fits this criteria in the Phoenix, AZ area?
Thanks!
James answers:
Bank of America will order whatever you want – for a fee.
Laura asks…
Is it a good investment to invest into foreign currency?
I have a friend who is investing heavily into the new Iraqi currency. He claims that right now its worth next to nothing but in a short time when the new currency hits the world markets it will sky rocket in value. Hmmm, Is that a good investment to make?
James answers:
Investing in a new currency is like investing in a new stock. Prices depend on demand and supply. But in the currency market, additional complication develops due to internationally relative factors such as inflation rates and policies that might affect export-import activities.
In the short run, I dare say that if the new currency is used for purchasing iraqi products, and if the demand for iraqi products is high, there will be huge demand for the new currency, and of course it will sky rocket in value.
However, I expect that other currencies will be in use concurrently (in practice) for some time, like in the Euro case (so, even if you gain, it would not be that much – think about this: if all contracts are priced in USD, there would be no needs to buy the Iraqi currency). Are you willing to take risks of self-adjusting machanism of the currency market?
There is nothing risk-free in the investment world, and remember the classic words: high risk, high return.
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Foreign Market Trading
Betty asks…
What is a good way to get in touch with foreign buyers?
Fairly new entrant into the United States export market. I have tried e-mailing off to their addresses off of company website so far. Buy doesnt have a high success rate. Unsolicited calls? I know one way is international trade shows, but any other more cost effective ways?
James answers:
I would say that participating at trade shows are definitely the way to go. It is an investment that will more than pay for itself, as well as giving you the chance to meet and network with hundreds, possibly thousands of business professionals. Face-to-face meetings are much more effective than trying to connect through emails and phone calls.
Lizzie asks…
How do you master Fundamental Analysis on Foreign Currencies?
I know Technical Analysis for me to break-even or come out w/ a small profit as a day trader, but I quite often exit trades too early to take all the profits a trend has to offer. I know technical analysis is great for finding entry/exit points, but trends often reverse due to sudden economic announcements. How can I learn to analyze where the market will likely be heading the coming week. I don’t need a year-long forecast, just the ability to make a decent forecast of the next week is good enough.
James answers:
Forget trying to analyize the fundamentals that may or may not affect the market. You just need to know what time the news will affect the market and just don’t trade during these times. They are highly volital times anyway and technically trading them is very hard.
Sounds to me like you just need help with entry/exit points to maximize your profits. And that is what it is all about.
Building personal wealth and financial success by trading currencies will only happen when you make financially sound decisions like/with the mentorship of successful investors who use the best resources on websites like these below. Mastering all the beneficial information available, along with setting a realistic goal, investment plan, risk/reward ratios, should be your objective. Developing good mental, emotional, and psychological habits are as crucial as patience and discipline and can only be accomplished with the proper attitude. And if the proper attitude is not correctly maintained, it can cause one to lose one of the most important resources of all—time. With only 24 hours in a day, once the minute, hour, or day is gone it can not be replenished. Choosing how, why, and when you manage your money with today’s efficient markets is important. Profit opportunities are eliminated almost instantaneously and timing is essential to ensure a profit while avoiding a loss.
And while you are learning the basic fundamentals and/or trading a demo account, you can go to the first website below for free training sessions 3 times a week. Where they have live real-time demo sessions trading the Forex market with the best software to trade anything. As I said timing is essential and I would not trade without it. It works on any time frame so forcasting for next day, week is easy. So you can get free training while observing their software. Which also works on stocks, bonds, futures, mutual funds, etf’s, and index.
I also highly recommend the 2nd website for learning just about everything.
Http://www.lightninglive.com/
http://stockcharts.com/
https://www.fidelity.com/
http://finance.yahoo.com/personal-finance
http://www.reuters.com/
Best wishes
Sincerely
Burt Whitley
rbw1226@yahoo.com
John asks…
I am Looking to do a reverse merger with a foreign canadian shell corporation?
I need an agent that sells reverse mergers publicly traded stock in a Canadian Shell Corporation, a Broker Dealer market maker.
James answers:
That’s a bit off my beat, but it sounds like you run a small corporation which wants to get listed. Suggest you contact the stock exchange, like the Toronto one.
Sandra asks…
One factor that motivated U.S. imperialism during the late 19th and early 20th centuries was the?
1.Closing of China to all foreign trade
2.Acquisition of new markets and sources of raw materials
3.Development of closer political ties with European nations
4.Support of international peacekeeping operations
James answers:
2
Linda asks…
A major change in our study of differing economic systems in the era of transition is?
a.the renewed importance placed on the polar extremes of plan and market.
b.the renewed importance attached to mixed systems rather than polar extremes.
c.a recognition of the limited importance of foreign trade in the study of different economic systems.
d.none of the above.
James answers:
The correct answer is :
d.none of the above.
Though the most appropriate answer is:
b.the renewed importance attached to mixed systems rather than polar extremes
[ The fashioning of the study of economic systems into market and planned system is become outdated. The emphaisis is more on nature of open economic systems that best harnesses efficiency and gains from trade and the recognition of response to uncertain events/ shocks that emerge. The interest on planned economic systems has died down because of the complete failure of the planned economic systems to deliver better efficiency and economic prosperity than what relatively advanced market economies have achieved despite the incidence of market failures and imperfect markets. Importance is attracted by the economies in transition from closed, planned and State-controlled systems to progressively open and market-based economic systems. The last 50 yeras has shown the fall and bankruptcy of relatively closed and planned economic systems one after another and the raid economic prosperity of economies that have abandoned State planning and controls and progressively adopted market mechanism and welcomed growing foreign trade and international capital movements.]
George asks…
hi everyone, anyone could share some foreign trade sales working experiences with me >? okay`-`?
nice to meet ya all here,on yahoo ask, and i am a sales clerk here in china, i am selling a product,—anti-static packages, to overseas market, i wanna share some similar experiences with you there if you hold the same work position, okay. just tell me ,buddy, how do u work . and may be some working experiemces here ,thanks~ brian
James answers:
Check this link its useful
http://jtty.com/lrz
.
William asks…
When China says the Senate’s currency bill violates WTO rules, what “rules” are they talking about?
The World Trade Organization says it’s okay to dump product on a foreign market and that market isn’t allowed to protect itself if it happens to be the United States?
What am I missing?
James answers:
It’s only bad for a country to protect its own people from cheap imports when its the rich developed countries doing the dumping on to poor developing nations.
If it’s the rich countries who look like they might be the recipient of dumping, then it’s okay for them to protect themselves.
Don’t forget with the WTO there are two different sets of rules – one for the rich, one for the poor.
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Forex Trading Signals
Carol asks…
Who has the best Forex trading signal tha has around 98% accuracy?
Please help I am new to the forex trading. Who has the best Forex trading signal tha has around 98% accuracy?
Who is the best forex broker in reliable forex trading signals
James answers:
No such animal living. However, if one can be just 60% accurate and he adopts sound trading principles, he can already earn from his trading. Anyone can learn to do it, himself, given the proper training.
Investment and free training in the Forex business
http://iqmoney.blogspot.com/
Daniel asks…
Any Website which provide free Forex Trading Signal?
I am very interested in Forex Trading but find its very difficult to identify the currency pair in which I should trade. Is there any site which provides free Live Trading Signals with high Accuracy.
James answers:
Ah…. It seems so easy. Believing there’s a web site that will help you make money for free is… Not realistic. It’s impossible to duplicate anyones performance…. Even the FX signal services charging $500 a month (assuming they’re legit in the first place).
Success in FX trading takes a lot of hard work & a lot of time. Unless you can put in 100%…. Don’t bother.
Donna asks…
Forex trading signals?
how would you advertise a trading signal in such a way that it reaches, companies, more than just the average traders
James answers:
Most large companies have their own dedicated team, it’s hard to reach them.
Sandy asks…
i need forex trading signals(buy/sell tips)?
James answers:
Your best bet would probably be go to some forex forum to learn about Forex Trading Signals.
You would really want to check out:
Http://www.ForexFactory.com
I really recommend them as they provide forex signals as well as forex news and a great vast resource
also you would want to check out babypips.com
This site is a free tutorial site giving you a lot of basic on forex
If you want something to watch you would want to see
It gives you the quick basics tips and more in about 4 minutes as well as giving you a vast list of resources you can use for learning forex, trading forex, forex softwares, and tutorials
Linda asks…
Did you apply trade signals for trading on Forex?
Was it profitable?
James answers:
Yes! Definitely!
If you go to any FOREX site, you would be able to see that most of these sites do offer FREE Technical Analysis Report, Daily Outlook or Trading Strategies. Use them! It works. You just need to ensure you follow this three conditions:
1-Open three different sites and look at the report. If 2 out of 3 or all 3 says Buy or Sell and having the same Enter and Exit targets, use it!
2-Wait for the price to reach or touch the Entry price mentioned in the report for that particular pair!
3-Ensure that the time the report was issued is synchronized with your local time!
You do need some basic understanding of some indicators though. If you can, trade with this FREE signals and why not open another account and trade without these signals! Diversify. You may also opt for automated software. However, this is not for newbies!
Happy posting and making money with the FREE signals! Yes!
Haneef Yusoff
www.forexreviewportal.com
William asks…
Do you know any Forex broker that offers trading signals to its clients?
James answers:
Hi Max,
As i am also a forex trader, i know that there are very less forex brokers that provide this facility. Even my broker Finexo.com offers daily market analysis and currency updates once in a day. Mataf brokers give buy/sell points recommendations too once in a day.
You can check both these sites as they can satisfy your need.
Regards
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Forex Capital Markets
George asks…
Is Forex Exchange an easy market to get into?
Hi, I’ve been considering the possibilities of opening a forex trade account. Which I hope to be long term starting with a small capital than build up upon. The only things I’m lacking is knowledge in the market or how to invest properly. I have opened a forex demo account to learn the functionality of things but I’ve heard its a different ball game once you start trading live. I would like to hear some responses from those who are or have been in the forex market. Such as how you started, the ups and downs on investing what you feel a beginner must learn etc. and if possible if you can provide some helpful resources to continue my research thanks.
I have looked into forex robots but I doubt real investors use those often..
I have tried project payday a few years ago. I’ll admit I did make money from it, it’s just I quickly ran into some issues with my bank. So for the lack of never getting a system down I stopped.
Forex is something I’m serious about and thanks all for your post I’ll look into your suggestions, and that link you provided Michael.
James answers:
First, I suggest to sign up for a demo account. Trade until you able to consistently making profit. Then, put in some real money that you can afford to loss. You may loss it, treat it as tuition fee. Finally, hopefully you would have master the skill to win in the long run.
There are many free resources, just search it online. Good luck.
Helen asks…
Hi friends I’m Suresh .I want to invest some money in good genuine schemes.What are the better option?
I want to invest 10000 as a starting capital.I’ve seen different ads in the newspapers regarding the investments in forex market promising very high returns.Is it true? Is it safe to invest in share market? Please advise me
James answers:
Hdfc Top200 or Reliance growth.
John asks…
In Forex trading market what are your earnings,how you get them back and when?
I’m in the process of studying,learning and understanding the Forex trading market.I’ve been watching two three pairs of currencies every day for the last 3-4 years and been into currency gaming in the past but not personaly.I just had the capital,somebody else was investing and had a small profit.
I wanna do it myself now and already training on metatrader 4 platform.
But some questions come along while other questions resolving.
My home currency is Euro.
Now i’m training with trial account but when i’ll make a live account my capital(margin) will be 30.000 with leverage 100:1,meaning 3.000.000 .
First question:
I sell 10 lots,1million(10.000 of my capital), on EUR/GBP at :
sell 0,90133/ buy 0,90158 and close it later at 0,89615/0,89630…
This means the first 1.000.000 will now be 1.005.612..meaning i made 5.612euro on this trade.
The question is ….are these 5.612euro my profit,my money?
On metatrader platform in the place where the margin is and it wrote 30.000 ,now it will say 35.612..
So its my clear profit right?
If no,then what will my profit be in lets say the specific trade?
If yes ,then how do i get those money(the profit) in cash? (from where and when?)
Thanks for the patience to read all this.
I dont need robots,no A.I. for now ,so please if u can answer my question,i will appreciate it …if not and just advertise,dont bother.
James answers:
Yes. 5,612EUR is your profit. And your account equity will be 35,612EUR. And your available margin will be 100x your account equity.
You withdraw funds from account usually the same way you deposit, ie. Contact your broker and ask them to transfer whatever amount you wish to withdraw to your euro account at a bank. Common methods of withdrawl and deposit are wire, eletronic transfer and check.
Nancy asks…
Several questions regarding the Forex market…?
Hi All,
I know everyone’s strategies, experience, capital, money management, time they spare for trading, etc are completely different than each other, but I will be really glad If you inspire this new guy who is eager to make a small statistics about the market. (Needed for a presentation).
Not able to find any firm statistics on the web though, anyways.
You may answer any question you like, Thanks.
1. What is your capital?
2. How many lots or how much per day do you trade? (micro, mini or standard)
3. What is your daily limit? (trades, profit, pips, etc)
4. What leverage makes you feel safe? (50:1, 100:1, 200:1, etc)
5. Do you like fixed or variable spread?
6. Do you prefer market execution or instant execution?
7. Is scalping always profitable to you, what do you think?
Appreciate your answers, time and help.
Regards,
James answers:
Hey,
Just want to start out with I’m no pro but I’ll give my 2 cents and help you on with more resources.
1. The great thing about forex market is that you can start small. Some start from 5000-10000 but many start with 250 and that’s all fine. If you’re new to the trade you likely want to start small and use minilots until you get the hang of things as there can be learning curves that can result in some unpleasing experience but it helps build your knowledge and wisdom.
2. Most people likely trade with standard however yet there are many who prefer to trade with minilots. Personally if I were new to a certain currency pair, minilots or micro lots would be my choice, if I were more familar with a specific currency then more onto standard might be my choice but yet sometimes I’d still like to trade mini depending on the trend and past results
3. That really varies from each trader however it would likely be contigency on their capital and lots traded
4. I’m one that takes things very save so I generally prefer 50:1 but that’s a personal preference sometimes I move 100:1
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Compare The Market Foreign Currency
Donna asks…
Economics test help PLEASEEE someone help i beggg?
18. (TCO 9) If the supply and demand for currency determines the exchange rates, this is called (Points: 5)
Fixed Exchange Rate
Freely Floating (flexible) Exchange Rate
Gold Standard-based Exchange Rate
A managed floating
19. (TCO 8, 9) Joe is laid off because the foreign demand for the product his firm produces fell. This is a result of the U.S. dollar (Points: 5)
Being strong relative to other nation’s currencies.
Being weak relative to other nation’s currencies.
Being targeted by the IMF for deflation.
none of the above
20. (TCO 8, 9) The U.S. Current Account Balance most often shows (Points: 5)
A surplus
A deficit
Zero balance, equal number of debits and credits
The smallest current account deficits relative to its GDP compared to other countries
13. (TCO 2) Mr. Smith has recently received a promotion with a significant increase in ‘salary.’ Since receiving his pay raise, Mr. Smith has eaten less canned foods. We would conclude that canned foods are (Points: 4)
inferior goods
substitute goods
normal goods
complementary goods
14. (TCO 3) The price leadership model is an attempt to explain the behavior of a ____ market structure. (Points: 4)
perfectively competitive
monopolistically competitive
oligopolistic
monopolistic
15. (TCO 3) Why would an economist argue that a firm can make ‘zero economic profit’ and still be okay? The firm (Points: 4)
has made zero accounting profit
has made an accounting loss
has covered its normal profit [break even]
does not know what to do
16. (TCO 3) Why do firms Not want to produce to at an output level that is to the left of the profit maximizing output point? (Points: 4)
They want to make sure they always produce where the marginal cost is greater than the marginal revenue
They will make more on a per unit basis and sell more units.
They will make more on a per unit basis but sell fewer units.
They typically have no idea where the profit maximizing output point is.
17. (TCO 3) The profit maximizing rule can be used with which market structures: (Points: 4)
Perfectly competitive firms.
Monopolistic firms.
Monopolies
All of the above.
18. (TCO 3) The average total cost (ATC) curve and the average variable cost (AVC) curve: (Points: 4)
get closer together as output rises
get further apart as output rises
remain parallel as output rises
intersect when average total cost is at its minimum
19. (TCO 3) Which of the following firms is operating in the long-run rather than the short-run? (Points: 4)
Wal-Mart
Microsoft
Google
None of the above
20. (TCO 3) Pat opened his restaurant 10 years ago. He has a 15 year mortgage on his $200,000 building. He just paid off all of his equipment last year. He has a payroll of $400,000 a year, and his cost for product was $600,000 last year. A new freeway section just opened which bypasses his market area. Traffic has dropped by 60%. He realizes that he can no longer stay in business so he chooses to ‘shut his operation down.’ Which of the following is not true? (Points: 4)
Fixed cost will be zero
Variable cost will be zero
Total revenue will be zero
Fixed cost still remains.
21. (TCO 4) Which of the following statements about GDP is most accurate? (Points: 4)
The dollar value of goods and services in a nation.
The dollar value of all intermediate goods and services in a nation.
The dollar value of all the final goods and services produced in a nation during the year.
The dollar value of all intermediate goods and services produced in a nation in one year regardless of who owns the resources.
22. (TCO 4) Which of the following items would be included in GDP? (Points: 4)
The value of French stocks purchased by a U.S. investor
The output of a U.S.-owned software company in California
The value of clean air
The coffee sales in Starbucks shops in Japan
23. (TCO 4) Why are intermediate goods not included in the GDP numbers? (Points: 4)
to restrict GDP to important goods.
to maintain a constant definition for the consumer price index.
to avoid multiple counting.
to restrict GDP to goods that can be priced.
24. (TCO 4) When economists measure how well a nation’s economy has been doing in recent years, they look at: (Points: 4)
nominal GDP.
real GDP.
nothing specifically
25. (TCO 5) In general, unanticipated inflation causes: (Points: 4)
creditors and debtors to be gainers
creditors and de
James answers:
The answers are
18. 2
19. 1
20. 2
13. 1
14. 3
15. 3
16. 2
17. 4
18. 1
19. 4
20. 1
21. 3
22. 2
23. 3
24. 2
25. You bet.
Helen asks…
Economics questions for review pleaseee help me?
18. (TCO 9) If the supply and demand for currency determines the exchange rates, this is called (Points: 5)
Fixed Exchange Rate
Freely Floating (flexible) Exchange Rate
Gold Standard-based Exchange Rate
A managed floating
19. (TCO 8, 9) Joe is laid off because the foreign demand for the product his firm produces fell. This is a result of the U.S. dollar (Points: 5)
Being strong relative to other nation’s currencies.
Being weak relative to other nation’s currencies.
Being targeted by the IMF for deflation.
none of the above
20. (TCO 8, 9) The U.S. Current Account Balance most often shows (Points: 5)
A surplus
A deficit
Zero balance, equal number of debits and credits
The smallest current account deficits relative to its GDP compared to other countries
13. (TCO 2) Mr. Smith has recently received a promotion with a significant increase in ‘salary.’ Since receiving his pay raise, Mr. Smith has eaten less canned foods. We would conclude that canned foods are (Points: 4)
inferior goods
substitute goods
normal goods
complementary goods
14. The price leadership model is an attempt to explain the behavior of a ____ market structure.
perfectively competitive
monopolistically competitive
oligopolistic
monopolistic
15. Why would an economist argue that a firm can make ‘zero economic profit’ and still be okay? The firm
has made zero accounting profit
has made an accounting loss
has covered its normal profit [break even]
does not know what to do
16. Why do firms Not want to produce to at an output level that is to the left of the profit maximizing output point?
They want to make sure they always produce where the marginal cost is greater than the marginal revenue
They will make more on a per unit basis and sell more units.
They will make more on a per unit basis but sell fewer units.
They typically have no idea where the profit maximizing output point is.
17. The profit maximizing rule can be used with which market structures: (Points: 4)
Perfectly competitive firms.
Monopolistic firms.
Monopolies
All of the above.
18. The average total cost (ATC) curve and the average variable cost (AVC) curve: (Points: 4)
get closer together as output rises
get further apart as output rises
remain parallel as output rises
intersect when average total cost is at its minimum
19. Which of the following firms is operating in the long-run rather than the short-run? (Points: 4)
Wal-Mart
Microsoft
Google
None of the above
20. (TCO 3) Pat opened his restaurant 10 years ago. He has a 15 year mortgage on his $200,000 building. He just paid off all of his equipment last year. He has a payroll of $400,000 a year, and his cost for product was $600,000 last year. A new freeway section just opened which bypasses his market area. Traffic has dropped by 60%. He realizes that he can no longer stay in business so he chooses to ‘shut his operation down.’ Which of the following is not true?
Fixed cost will be zero
Variable cost will be zero
Total revenue will be zero
Fixed cost still remains.
21. Which of the following statements about GDP is most accurate?
The dollar value of goods and services in a nation.
The dollar value of all intermediate goods and services in a nation.
The dollar value of all the final goods and services produced in a nation during the year.
The dollar value of all intermediate goods and services produced in a nation in one year regardless of who owns the resources.
22. Which of the following items would be included in GDP?
The value of French stocks purchased by a U.S. investor
The output of a U.S.-owned software company in California
The value of clean air
The coffee sales in Starbucks shops in Japan
23. Why are intermediate goods not included in the GDP numbers? (Points: 4)
to restrict GDP to important goods.
to maintain a constant definition for the consumer price index.
to avoid multiple counting.
to restrict GDP to goods that can be priced.
24. When economists measure how well a nation’s economy has been doing in recent years, they look at: (Points: 4)
nominal GDP.
real GDP.
nothing specifically
25. (TCO 5) In general, unanticipated inflation causes: (Points: 4)
creditors and debtors to be gainers
creditors and debtors to be losers
creditors to be gainers and debtors to be losers
creditors to be losers and debtors to be gainers
James answers:
25 creditors to be losers and debtors to be gainers
24 real gdp
23 to avoid multiple counting
22 question not clear…gdp of which country
21 dollar value of all final goods……
20 fixed cost still remains the same
19 google
18 get closer
17 all the above
16 make more sell more
15 break even
14 monopolistic
13inferior good
20 deficit
19 stronger
18 flexible
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Forex Trading
Linda asks…
How much is 1 pip worth in forex trading?
I have been trading forex for a little while and am still confused as to how I can calculate the value of each pip change in my trades. That is, how much will I profit or lose by a change of 1 pip in the currency pair?
James answers:
Full contract: 1 pip = $10.00
Mini Contract: 1 pip = $1.00
(These amounts are approximate…… Some pairs they will be exact)
You are on your way to losing most of your money… If you don’t take 6-12 months reading several books on trading & several books on FOREX Trading.
And always remember….. Paper trading results mean totally nothing.
John asks…
How does forex trading really work; what are the driving factors behind the FX markets? – I’m a newbie?
I am a relatively new person to forex trading who’s had practice in demo accounts, and I’m wondering how forex trading really works, i.e what are the dring forces behind the forex markets, what moves them, etc? Please help/advise as I’m quite new to them. Thanks.
James answers:
My best advise to you — don’t do it. This is strictly for professionals and they don’t even get it right sometimes. You’re more likely to lose than gain.
Laura asks…
What is the Best Forex Broker Offer Automated Forex Trading System?
Hi everyone!
I am new to forex and have only just found out about all these automated forex robots and such that are supposed to really take a lot of the risk out of forex trading. I need an real working automated forex robots, automated forex system that really works. Can anyone suggest a good one?
Thank you!
James answers:
You can get the Leading Automated Forex Trading System Here for Free:
http://www.ava-fx.com/
Avafx has a forex autotrading service called Avafx Auto Trader, a platform that allows its forex brokerage clients to choose from various trading signals providers and have those signals traded automatically in their live trading account. With a free 30-day demo, decent web-based platform and comprehensive signals performance, the Avafx Auto Trader is a very good broker-based service to look at when comparing autotrading providers. This service does come highly recommended for traders looking to add autotrading to their forex portfolio.
Firstly, the Avafx Auto Trader platform is fairly easy to navigate and start up its 30-day demo. The demo allots an account of $100,000 to trade with. Avafx allows trading on 23 different currency pairs. The performance page is very comprehensive to compare and choose from the hundreds of expert trading signal providers: you can filter the trade signal providers by profit($), max draw down, profit factor, date started, average pip profit, winning percentage, and currency pair. You can also set your maximum number of trades that you wish to be open for your trading account, your lot sizes per signal provider, or maximum stop losses per trade provider. Right away you can pick up to 10 different signal providers, choose pairs and lot sizes, and have the platform take over from there, automatically trading your account with your selected trading signals. Your computer does not need to be on for the signals to be traded in your account, as this service uses a remote server.
Now, to go live with a live autotraded account there are a few rules. Your trading account minimum investment is $1000. Also, Avafx charges you 1 pip commission on each round trip trade on top of their normal spread to use their autotrade system. Seem unfair? Not really. Comparing ZuluTrade to Avafx Auto Trader, Avafx actually comes out on top. Yes, ZuluTrade does not charge a commission, however comparing the best signal providers, Avafx appears to have the best performing signals. Avafx’s performance comparison is actually much more user-friendly than ZuluTrade’s performance page: you can quickly compare important trading system factors like risk adjustment rate (RAR) and profit factor which cannot even be determined on ZuluTrade. Both do provide maximum drawdown for each signal provider, which is one of the most important. But when looking at the RAR, total pips accumulated divided by max draw down, the Avafx providers have a much better RAR than the ZuluTrade signals providers. Is that worth the 1 pip commission per trade? Absolutely. Now, if your trading account is $50,000 or more, you are then a VIP level account which means you will not be charged the 1 pip commission and you will get a better deal on the spreads as well. Another thing to note: Avafx is an approved broker for ZuluTrade. So, if you try out Avafx Auto Trader signals and are not impressed, then it will be very easy to set up a ZuluTrade account using Avafx as your broker.
On the negative side, the Help section and Support Center are not very helpful regarding the Auto Trader. However, the Live chat help was very responsive and they answered most of my questions quickly. There was one question that remains with Auto Trader: there is a very large disclaimer at the bottom of the trading platform about “Hypothetical trading results and performance data”. It is unclear if Avafx Auto Trader signals providers are using live trading accounts or DEMO accounts for their trading performance data. I would think that DEMO trading is likely to be less accurate than live trading performance data. Avafx support did not answer this question directly. Also the Avafx Auto Trader does not have the Margin-call-ometer that ZuluTrade does, which is a very nice feature that explains and guards against account margin calls. However, Avafx’s platform does have some decent features to help clients remain positive and not margin call their accounts.
In writing this review, only a demo account was used to try out the system and platform. Avafx insists that the platform and service are identical whether trading demo or live with them.
Overall the Avafx Auto Trader receives 4 stars and comes highly recommended.
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