foreign currency mortgage

A foreign currency mortgage is a mortgage which is repayable in a currency other than the currency of the country in which the borrower is a resident. Foreign currency mortgages can be used to finance both personal mortgages and corporate mortgages.

The interest rate charged on a Foreign currency mortgage is based on the interest rates applicable to the currency in which the mortgage is denominated and not the interest rates applicable to the borrower's own domestic currency. Therefore, a Foreign currency mortgage should only be considered when the interest rate on the foreign currency is significantly lower than the borrower can obtain on a mortgage taken out in his or her domestic currency.

Borrowers should bear in mind that ultimately they have a liability to repay the mortgage in another currency and currency exchange rates constantly change. This means that if the borrower's domestic currency was to strengthen against the currency in which the mortgage is denominated, then it would cost the borrower less in domestic currency to fully repay the mortgage. Therefore, in effect, the borrower makes a capital saving.

Conversely, if the exchange rate of borrowers domestic currency were to weaken against the currency in which the mortgage is denominated, then it would cost the borrower more in their domestic currency to repay the mortgage. Therefore, the borrower makes a capital loss.

When the value of the mortgage is large, it may be possible to reduce or limit the risk in the exchange exposure by hedging (see below).

Managed currency mortgages can help to reduce risk exposure. A borrower can allow a specialist currency manager to manage their loan on their behalf (through a limited power of attorney), where the currency manager will switch the borrower's debt in and out of foreign currencies as they change in value against the base currency. A successful currency manager will move the borrower's debt into a currency which subsequently falls in value against the base currency. The manager can then switch the loan back into the base currency (or another weakening currency) at a better exchange rate, thereby reducing the value of the loan. A further benefit of this product is that the currency manager will try to select currencies with a lower interest rate than the base currency, and the borrower therefore can make substantial interest savings.

There are risks associated with these types of mortgages and the borrower must be prepared to accept an (often limited) increase in the value of their debt if there are adverse movements in the currency markets.

A successful currency manager may be able to use the currency markets to pay off a borrower's loan (through a combination of debt reduction and interest rate savings) within the normal lifetime of the loan, while the borrower pays on an interest only basis.

FOREX TRADING SYSTEMS

A FOREX Trading system is a very short-term investment strategy in relation to other investment vehicles. Trades may last a few minutes to several days, or sometimes a few weeks when Position Trading. The goal is to increase daily profits in your FOREX brokerage account, compared to long-term growth investments like stocks, mutual funds, bonds. FOREX traders frequently jump in and out of the market and closely monitor their positions throughout the day. Generally very low capital as less as 2,000$ can get you started. A good forex trading system should yield between 3% and 5% per month.

In A Forex Trading System, we trade major currencies from over the world like US dollar (USD), Eurodollar (EUR), etc. There is no stock trading in that kind of trading system.

To limit risk and create consistent profit, trading is always done by pair. For example we can Buy the US dollar and sell in the same trade the EuroDollar. In a Forex Trading System we work on the spread gained or lost between each part of the pair.

Each point gained or lost from the spread on a pair is called a PIP point. Each PIP point worths 10$ USD.

In a Forex Trading System we can use leverage. Here is an example. If you are trading 6 lots of $10,000 for a total of $60,000 in open trades and you have $20,000 on deposit in your account, you would be trading at 3:1 leverage. Some brokers allows as much as 100:1 leverage. At this level it is getting too dangerous and you must choose a more comfortable leverage.

With a good Forex Trading System you should be able to perform day trading as well as position trading. Either get in and out in the same day or you could trade over a few days sometimes weeks. Basicly we use a Forex Trading System with short term trading in mind.

To be able to use a Forex Trading System you must fulfill basic requirements :

Find a good trading software. This kind of software can be very costly since it must support day trading. So you can expect a good 1,000$ up front or high monthly charge to use such software.

You will also need a data feed such as quote.com, signals, etc. This is another charge of between 100-300 per month depending on the service used.

You will also need solid education to learn how to perform with a Forex Trading System. This could also costs quite a bit of money. For those interested in very explicite courses either in class or on DVD Click here for trading materials at Online Trading Academy.

Finally you will need some capital in a brokerage account to start trading for real. It is recommended to fund your account with at least 2,000$.

LEARN FOREX TRADING

The Foreign exchange market is a nonstop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.

The participants in the currency exchange markets have traditionally been the central and commercial banks, corporations, institutional investors, and hedge funds managers. In 2002, Bank of America alone made a $530 Million profit in Forex trading as stated on their annual statement under "Global Investment Income". In 1986, Caterpillar made a 100 Million profit in Forex trading and would have actually had an operating loss for the year on their normal business if it were not for that profit from Forex. In 2003, half of Daimler Chryslers 2Q operating profit was from currency trades, making more money on foreign exchange than by selling cars.

Due to its popularity and the potential for very lucrative returns on investment, many private investors have also migrated into this fast growing arena. Some of the major reasons why private investors are attracted to currency exchange market and short-term Forex trading are:

* The Forex market is open for business around the clock. Nonstop 24 hours a-day 7 days a-week access to global Forex dealers are at the disposal of the trader.

* The Forex market is the biggest market in the world. It is an enormous liquid market, with a daily turnover of more than 2.5 trillion dollars, making it easy to trade most currencies around the clock.

* The Forex markets can be very volatile due to the interdependencies of the world economy on current events. As such, the Forex market offers opportunities for huge profit potentials that are derived from volatilities of world currency prices.

* The Forex Market contains inherent standard instruments for controlling risk exposure.

* An investor has the ability to profit in both a rising or falling market.

* The investor can maintain leveraged trading with relatively low margin requirements.

* The Forex trader has many options for zero commission trading.

Just like in any other market, the goal of the investor in Forex trading is to make profits from price movements. In Forex trading, an investor makes money by trading foreign currencies and the trading is always done in currency pairs. For example, the exchange rate of EUR/USD on Jan 15th, 2004 was 1.0757. This number is also referred to as a "Forex rate" or just "rate" for short. If the investor had bought 1000 euros on that date, he would have paid 1075.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.90 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a "risk-free" investment. One example of a risk- free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation.

The whole premise behind trading currencies is that, the investor trades only when he expects the currency that he is buying to increase in value relative to the currency he is selling. If the currency he is buying does increase in value, he must sell back the other currency in order to lock in a profit. An open position is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position. However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Most of the remaining percentage of the forex market belongs to hedging (managing business exposures to various currencies ) and other activities. Forex trades (trading onboard internet platforms) are non-delivery trades, i.e., currencies are not physically traded, but rather there are currency contracts which are agreed upon and performed. Both parties to such contracts ( the trader and the trading platform ) undertake to fulfill their obligations: one side undertakes to sell the amount specified, and the other undertakes to buy it. As mentioned, over 70% of the market activity is for speculative purposes, so there is no intention on either side to actually perform the contract (i.e., the physical delivery of the currencies). Thus, the contract ends by offsetting it against an opposite position, resulting in the profit and loss of the parties involved. An example of a trading platform is the Easy-Forex Trading Platform. A free video lesson in trading the forex market using MarketClub charting analysis can be downloaded from the ino.com website.

Spreads

Spreads are the difference between Buy and Sell ( or BID and ASK). In other words, this is the difference between the market maker's selling price (to its clients) and the price the market maker buys it from its clients. If an investor buys a currency and immediately sells it ( and thus there is no change in the rate of exchange), the investor will lose money. The reason for this is the spread. At any given moment, the amount that will be received in the counter currency when selling a unit of base currency will be lower than the amount of counter currency which is required to purchase a unit of base currency. for example, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015, representing a spread of 1000 pips (percentage in points; one pip=.0001). such a rate is much higher that the bid/ask currency rates that online Forex investors commonly encounter, such as 1.2015/1.2020, with a spread of 5 pips. In General, smaller spreads are better for Forex investors since they require a smaller movement in exchange rates in order to profit from a trade.

Price, Quotes and Indications

The price of a currency (in terms of the counter currency), is called "Quote". There are two kinds of quotes in the Forex market:

The Direct Quote: the price for 1 US dollar in terms of the other currency, e.g. - Japanese Yen, Canadian dollar, etc.

The Indirect Quote: the price of 1 unit of a currency in terms of US dollars, e.g. - British pound, euro.

The market maker provides the investor with a quote. The quote is the price the market maker will honor when the deal is executed. This is unlike an "indication" by the market maker, which informs the trader about the market price level, but is not the final rate for a deal.

Cross rates - any quote which is not against the US dollar is called "cross". For instance, GBP/JPY is a cross rate, since it is calculated via the US dollar. Here is how the GBP/JPY rate is calculated:

GBP/USD = 1.7464

USD/JPY = 112.29

Therefore: GBP/JPY = 112.29 X 1.7464 = 196.10

The Exchange Rate

Because currencies are traded in pairs and exchanged one against the other when traded, the rate at which they are exchanged is called the exchange rate. The majority of the currencies are traded against the US dollar (USD). The four next-most traded currencies are the euro (EUR), the Japanese yen (JPY), the British pound sterling (GBP) and the Swiss franc (CHF). These five currencies make up the majority of the market and are called the major currencies or "the Majors". Some sources also include the Australian dollar (AUD) within the group of major currencies.

The first currency in the exchange pair is referred to as the base currency and the second currency as the counter or quote currency. The counter or quote currency is thus the numerator in the ratio, and the base currency is the denominator. The value of the base currency (denominator) is always 1. Therefore, the exchange rate tells a buyer how much of the counter or quote currency must be paid to obtain one unit of the base currency. The exchange rate also tells a seller how much is received in the counter or quote currency when selling one unit of the base currency. For example, an exchange rate for EUR/USD of 1.2083 specifies to the buyer of euros that 1.2083 USD must be paid to obtain 1 euro.

At any given point, time and place, if an investor buys any currency and immediately sells it - and no change in the exchange rate has occurred - the investor will lose money. The reason for this is that the bid price, which represents how much will be received in the counter or quote currency when selling one unit of the base currency, is always lower than the ask price, which represents how much must be paid in the counter or quote currency when buying one unit of the base currency. For instance, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015, representing a spread of 1000 pips (also called points, one pip = 0.0001), which is very high in comparison to the bid/ask currency rates that online Forex investors commonly encounter, such as 1.2015/1.2020, with a spread of 5 pips. In general, smaller spreads are better for Forex investors since even they require a smaller movement in exchange rates in order to profit from a trade.

Margin

Banks and/or online trading providers need collateral to ensure that the investor can pay in case of a loss. The collateral is called the margin and is also known as minimum security in Forex markets. In practice, it is a deposit to the trader's account that is intended to cover any currency trading losses in the future. Margin enables private investors to trade in markets that have high minimum units of trading by allowing traders to hold a much larger position than their account value. Margin trading also enhances the rate of profit, but has the tendency to inflate rates of loss, on top of systemic risk.

Leveraged Financing

The ratio of investment to actual value is called "leverage". Leveraged financing, i.e., the use of credit, such as a trade purchased on a margin, is very common in Forex. Using a $1000 to buy a Forex contract with a $100,000 value is "leveraging" at a 1:100 ratio. The invested amount of $1000 is all that is under risk in order to achieve the gain of $100,000. The loan/leveraged in the margined account is collateralized by an investor's initial deposit. As a result, this may result in being able to control $100,000 for as little as $1,000.

Five ways private investors can trade in Forex directly or indirectly:

* The spot market

* Forwards and futures

* Options

* Contracts for difference

* Spread betting

Spot transaction

A spot transaction is a direct exchange of one currency for another. The spot rate is the current market price, otherwise known as the benchmark price. Spot transactions do not require immediate settlement, or on-the-spot payment. The settlement date, or "value date," is the second business day after the "deal date" (or "trade date") on which the transaction is agreed to by the two traders. The two-day period provides time to confirm the agreement and arrange the clearing and necessary debiting and crediting of bank accounts in various international locations.

Risks

Although Forex trading can lead to very profitable results, there are risks involved: exchange rate risks, interest rate risks, credit risks, and country risks. About 80% of all currency transactions last a period of seven days or less, and over 40% of forex trades will last no more than than two days. Given the extremely short lifespan of the typical trade, technical indicators heavily influence entry, exit and order placement decisions. To learn more about technical indicators and charting analysis in forex trading, consult the The Trend Strategist Handbook.

How To Start Trading Forex

Trading Forex can be done online by the private investor anywhere in the world at any time of the day. An investor only needs a computer with broadband internet access and a Forex trading account. To obtain a forex trading account, the investor must register and then deposit the amount of cash that he wishes to have in his new margin account. Registering is relatively simple. All online forex trading sites will have a signup page available to accept payment via a major credit card or even from a PayPal account. A sample signup page can be found at the Easy-Forex Trading website.

FOREX TRADING TRAINING

More than 100 million people in the world are looking for profitable investment. We love talking investment because this is the energyless but high profit gain business. Forex Trading is the world's largest financial market with an estimated daily average turnover between $1.5 trillion to $2.5 trillion that we cannot doubt. If we want to make profit from this investment, there are some related knowledges that we definitely need to know.

• Use Future data to justify market trend.
• Pivot Program shows entry & exit signals.
• Familiar Chart Patterns and Trend lines.
• how big dogs are doing?
• euro vs USD Tricks.
• Be Smart to Filter Various Currency pairs.
• Confident to Control Up and Down Trendy.
• Avoid Pitfalls of Dumb money.
• Intelligent stop loss strategies implementation.
• AIME methodology
• History is your tips.
• Hedge currency Trades .

Advantages of Forex Trading

Are you new to trade currency? Are you giving up due to your past trade? Get yourself to know the primitive advantages of Forex trading. And you are also essentially advised to refer to the risk-bearing.

• Two Way Market where traders can trade in Bull and Bear market
• Margin Trading 100 : 1 leverage
• Low Account Balance for entry
• Can work in odd work due to 24 hours a day from Sunday night to Friday noon
• Flexible transaction sizes
• Very dynamic and trendy
• No worry about bad fills due to price gaps
• Can practice at online simulation until you become expert
  read more..

There are many courses and books available on the market today - all of which seem to cover similar topics and lessons. Why not give yourself a try on the simulation account. So that you can really experience on Forex Trading.

In addition to the training material, forexyard provides all of you with direct access to our professional traders and educators. These professional traders and educators are active FX traders and work hand-in-hand with you to help you to deliver the very best trading experience.

What is so special to Forexyard training platform?

• Superior order execution
• cutting edge real time trading tools
• a user friendly trading system that's fast, secure and reliable
• 24 hours support along your path to forex success
• a trading system with proven reliability in terms of trading connectivity.
• Instant Deposit for Credit Card
• Start Trading in Minutes
• Fixed Spread in all markets, all the time
• Continuous quoting, with no price freezes
• Executable quotes- click on any bid or offer
• No Slippage on market, limit and stop orders
• Negative balance protection - No debits
• Unparalleled 24 hours support
• Trading Account as little as $100
• No software download needed

Find out What You Will Get in Forexyard Training Platform.

Other Benefit from Forexyard Platform

• Free Demo Account with Real Time Quotes
• Free Training Course available
• Updated Economic News
• Forex Analysis Research
• Super Mini Account for Beginner Traders
• Standard Account for Pro Traders
• Teaching tools, technical analysis, fundamental analysis, charting, trading tips for VIP customers.

If you want to trade forex, you must use the following Forex Trading Tools to increase your trading confident level.

• Daily Forex Trading Summary for major currencies and currency pairs.
• Weekly Forex Trading Summary for major currencies and currency pairs.
• Thin Chart . Single Chart and Charts Station
• Monitor most countries interest rate
• Summary of major currency rates
• Get to know the Financial Calendar
• Complete glossary database.
• more..

FOREX INVESTMENTS

In an increasing variety of markets, ranging from spread-betting on stocks and shares to more exotic futures and derivative markets, internet technology has made it possible for a growing number of day traders situated around the globe to bet on the markets via online platforms from the comfort of their own home or office. Even the previously off-limits currency markets, which will be explored in this article, can now be traded online by the individual investor, and there is a growing list of banks, brokers and specialist firms offering these services.

Until relatively recently the foreign exchange market was strictly the preserve of institutional investors and hedge funds. Large minimum transaction sizes and stringent financial requirements dictated that only the largest and most capitalised investors could make bets on the direction of the world's currencies. However, in order to make any meaningful profits from these 'over the counter' currency bets, traders and money managers would frequently have to place positions the equivalent of millions of dollars, putting the world of forex trading way out of the reach of individual investors unless they invested through a currency fund.

But all that began to change when the internet revolution of the late 1990s swept through the financial markets and radically altered the way in which trades were executed in most markets. When placing a trade on a company's share or on a futures contract became as simple as a couple of clicks on the mouse, suddenly, the traditional broker/client relationship was no longer a pre-requisite and some of the barriers that prevented many investors from taking part in the financial markets began to tumble.

This has had something of a democratising effect on the financial markets, and in the years that have followed a plethora of banks and brokerages have extended the range of their services to a new market by packaging up their online trading systems for the retail market, enabling the more modest investor to trade from their own computer screen - even on the previously out-of-reach currency markets.

By offering clients high levels of leverage the banks and brokers give the small foreign exchange trader the opportunity to make some impressive gains for relatively little outlay. Of course, it also gives them a chance to make some pretty impressive losses. Therefore, any foreign exchange virgins who are considering making their next fortune via an online trading platform must understand the implications of leverage and the risks associated with these types of margin account.

Whilst leverage ratios can vary, typically brokers offer levels of anything up to 100:1, (far in excess of the leverage even the most experienced institutional investment managers are permitted) enabling traders to buy or sell foreign currencies in 'lots' of US$100,000, (or whatever the base currency of the trade happens to be). It means that the trader only has to put down $1,000 as margin to control $100,000 in the market place. The rest is effectively borrowed from the broker or market maker. Without this degree of leverage, it would be almost impossible for smaller traders to make any worthwhile gains in the currency markets.

So, by way of illustration, suppose a trader anticipates a rise in the US dollar against the Swiss Franc and buys 1 'lot' ($100,000) of USD/CHF at 1.2950 (thus controlling CHF129,500.) As expected, the USD/CHF rate rises to 1.3050, meaning the trader now controls CHF130,500 so the trade is closed out with a profit of CHF1,000. When converted back into dollars by dividing this profit with the rate at which the position is closed, the trader has realised a gain of $766.

Until recently many trading firms have required that clients maintain a minimum balance of $10,000 in their accounts to ensure adequate protection against sudden swings, putting forex trading out of the reach of those without HNWI status. However, it is now common for clients to open trading accounts with many firms for as little as $500, although minimum opening balances of $250 are not unheard of. For these 'mini' accounts, smaller lot sizes of $10,000 have been created, and leverage ratios are often as high as 200:1. Many firms consider such products are too risky to offer.

In spite of the inherent risks of the foreign exchange trading, one of the major bonuses of currency trading is the sheer volume and liquidity of the market place. It is estimated that the average daily volume of transactions in the global currency markets is in the order of $1.5 trillion. Therefore, in theory, traders should face little difficulty having their trades filled at their desired price. Also, the vast majority of online forex platforms offer commission-free trading, although bid/offer spreads may be somewhat wider than the big players are used to getting.

The trading interfaces themselves are not so different to those used by money managers, and the live prices displayed on the client's user interface are said to be the same as those shown on the terminals of professional currency traders. The systems also enable users to place a variety of different market orders that are standard in the industry, such as stop losses (advisable in the often volatile currency markets) and limit orders.

Most trading platforms are also packed with a variety of other features to help the trader formulate his or her strategy, including charts with basic technical analysis features, live news feeds and reporting tools permitting the user to analyse trading performance. Many firms have also incorporated chat rooms into their platforms enabling one to share tips and experiences with fellow traders or seek advice from a company broker or expert.

While the currency markets have the potential to make traders quick and substantial profits they can be a high risk financial instrument. An increasing level of regulatory supervision of the financial markets designed to prevent the mis-selling of unsuitable investment products means that opening an online trading account will require at least some degree of investment experience. This ranges from about six months upwards, although accounts aimed at the HNWI will often stipulate a minimum of two years' trading experience. Money laundering and fraud regulations also make it necessary for providers to ask for proof of identity, most commonly a passport.

FOR MORE VISIT--http://www.investorsoffshore.com/html/specials/may04_forex.html