Derivatives Options » Broker

Why People Trade Forex

admin — Wed, 06 Jan 2010 12:14:35 +0000

In today’s information technology driven economy you can just about trade anything you want. Whether it is currencies, metals, shares, wheat, pork bellies you name it.
Not only can you trade the main security but also in most cases you can trade the derivative of it e.g. Forwards, Futures and Options.
The Forex market is also vital to the general prosperity of the free world economy. Why? Some $1.5 trillion dollars worth of international currencies are bought and sold every single trading day.
It is by far the largest traded market in the world. This volume of trade is equivalent to over six months of trading in the New York Stock Exchange, which has an average daily volume of $10 billion dollars.
Even though the major focus in this country in reference to investing has always been and still is the stock and equity markets, the Forex market is 150 times larger than the New York Stock Exchange.
All financial instruments are commonly referred to as securities regardless of their name. When I mention securities it encompasses everything that can be traded.
The main thing to remember when trading, is first to decide if you are a speculator or investor.
If you are an investor it makes sense for you to know something about the thing you are investing in. It might be that you are in that field already or have a good knowledge base of what you are investing in.
On the other hand if you are a speculator who only intends to hold something for a few hours and are covering many markets, you will not have time to research as much as an investor.
Even as a speculator though, you should know something about what makes that market tick. In the currencies for instance, when the dollar strengthens it can effect all the major currencies at the same time.
In technology shares you might find that the whole sector is strengthening at the same time.
If the interest rates are raised in one country how will that effect the market you are in?
The point in all of this is that I think it is a good idea for people to trade something they either like, have an interest in or at least are familiar with.
For example I would not feel comfortable trading oil because I don’t know what drives the market or who the main players are.
Last but not least, the journey to the road of successful trading will make you confront your deepest fears. Your armor on this journey will be confidence, knowledge and believing that you can achieve your dreams.
Never, never equate your success or failure in the markets with who you are as a person!

The Role of a Cta, Commodity Trading Advisor

admin — Tue, 22 Dec 2009 00:42:47 +0000

Commodity Trading Advisor, Genuine Trading Solutions, a registered CTA with the CFTC, says the role today of a CTA is constantly evolving.

Dwayne Strocen, President of Genuine Trading Solutions says once upon a time a Commodity Trading Advisor was content to be known as a Portfolio Manager trading commodities and futures for a managed futures fund. There is no question today’s investor has become more sophisticated. In response, today’s selection of investment products has become ever more complex and varied, the need for the CTA to understand the uses and management of these products becomes even more acute.

So what exactly is the role of today’s Commodity Trading Advisor. Certainly trading of derivative products for a managed futures fund continues to be as important as before. A CTA has also become more involved with derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.

The use of derivative analytics to manage the adverse risk of an equity or bond portfolio brought about by adverse market conditions is critical in preserving asset growth. The uses of hedging to prevent volatility has long been understood by the largest institutions but is now available to the smaller sized company and to the individual investor. No doubt as products continue to evolve so too will the CTA evolve to meet the need of today’s professional money manager.

Derivative products are no longer limited to exchange traded commodities futures and options. There continues to be an ever expanding list of over-the-counter derivative products. These are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. The difficulty is the buyer and seller must find each other to undertake such an arrangement, not always easy. The second problem is no liquidity. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.

A Commodity Trading Advisor’s role is no longer sufficient to be limited to trading. It is now imperative to understand the industry in a new light so to understand the changing investment environment. Analysis now becomes the catalyst to include a value added service to retain customers. This includes structured products, risk management and OTC derivatives. Continuing education has been and continues to be the hallmark of the best in the industry.