The FAQs of Currency Trading

Exchange Money Conversion to Foreign Currency (Photo credit: epSos.de)

Trading currency in the foreign exchange market is literally a trillion dollar business. And it used to be only large financial institutions and very wealthy people could take part in the trade. Now, with the advent of the internet, the average person can trade on the market with the click of a button. If you’re interested in getting started in trading currency, here are some frequently asked questions that might help you get going.

What is the Forex?

“Forex” is a moniker for the foreign exchange market. You may also see FX.

What is a liquid market?

You will often hear the Forex referred to as the most liquid market in the world. A liquid market is one filled with liquid assets, or assets that can be sold instantly with almost no loss in value. You car, for example, is not a very liquid asset. Although you could probably sell it very quickly, you would have to lower the price. In order to find a suitable buyer willing to pay a suitable price, you’d likely have to wait a while.

In the Forex, because currency is such a massive asset, it can be traded almost instantly. The sheer size of the Forex (it’s a worldwide market) also means that no key players or institutions, no matter how large, can control the price of currency. This makes the Forex the most stable market in the world.

Who trades in the foreign exchange market?

Like I said, it used to be mostly large financial institutions, central banks, hedge funds, international corporations, and massively wealthy people who traded on the Forex. Now more and more individual people are able to take part. 

How is money traded on the market? Is physical money traded?

No. Most often money is simply traded virtually. In fact, there is no centralized market in the Forex. Trades take place between traders all over the world through the internet. The Forex is open 24 hours a day, five days a week (closed on the weekends), across all time zones. This means that as the market closes in the U.S., it’s opening somewhere else in the world, so the market is active at every point in the day.

How do you make money in the Forex?

Currencies are usually traded in pairs on the Forex. To make money, you basically have to correctly predict which currencies will gain and lose value. For instance, one popular pair of currencies is the U.S. dollar and the euro. Currently, the exchange rate between the dollar and the euro is .73 dollars to one euro. That means it takes about 1.3 dollars to equal one euro. In order to make money in the Forex, you would have to predict when the dollar would reevaluate or when the euro would devaluate, and buy currency accordingly.

What currencies are traded on the market?

Although some retail traders deal in less-known currencies, the most popular currency pairs are:

• EUR/USD (euro/dollar)
• USD/JPY (dollar/Japanese yen)
• GBP/USD (British pound/dollar)
• USD/CHF (dollar/Swiss franc)

As well as the three “commodity pairs.” The commodity pairs are so called because they are from countries that include a large amount of commodities. That means these pairs are highly correlated to changes in commodity prices. They are:

• AUD/USD (Australian dollar/U.S. dollar
• USD/CAD (U.S. dollar/Canadian dollar)
• NZD/USD (New Zealand dollar/U.S. dollar)
• 
  

What is “leverage” in the Forex?

Leverage is using borrowed capital to get a higher return on your investment. Let me unpack that phrase for you. Basically, leverage is borrowing money in order to trade more than you have. If you have a mortgage on your home, you are already leveraged.

In the Forex, there are often many high leverage opportunities, sometimes up to a 100:1 ratio. That means if you had a dollar in the Forex, you’d be able to leverage that dollar to trade one hundred dollars. If you have a thousand dollars, that amount goes up to one hundred thousand. This high leveraging makes it easier to trade large amounts of currency and keep the market moving.

What is carry trading?

To understand carry trading, you have to understand that each central bank determines the interest rate on currencies. Carry trading is all about funding the purchase of a currency with a high interest rate with a currency with a low interest rate.

For example, in 2005, many people bought New Zealand dollars (whose interest rate was 7.25%) with the Japanese yen (whose interest rate was 0%). In this interaction, because there was such a huge difference in the interest rates between the two currencies, carry traders were making money in the trade alone, without having to wait for the money to gain value. 

What does “long” and “short” mean in foreign exchange?

Because currencies are traded in pairs in the Forex, you are often “long” one currency and “short” another. For instance, if a person traded 100,000 dollars for yen, she would be “short” the dollars she just traded, but “long” the yen she received.

This is just the beginning of the Forex! It’s a very complex, but exciting market. If you’re interested in learning more about the trade, I’d visit Investopedia, as they have a lot of great resources about the fundamentals of the Forex.

Mary Kremer writes content for Dinar Daddy, the number one source of information for trading the Iraqi dinar.

7 Items You Don't Need Anymore That You Can Turn Into Some Extra Cash

In a financial crunch, most people will take money from anywhere they can find it. Before going into debt, consider using some of the assets you already own. Chances are, there are things you own and no longer have a use for that do have some value. Below is a list of seven such items.

Scrap Metal

If you have owned motor vehicles and a garage for a period of years, chances are you have amassed some scrap metal. Instead of taking it to the dump, sell it to a scrap yard. This is a quick way to get some cash instantly. Consider letting family and neighbors know that you are taking a trip and offer to get the scrap metal off their hands for even more cash.

Jewelry

While jewelry may look nice, it isn't always a necessity or in style all the time. Authentic jewelry holds monetary value that you may not even be aware of. For example, old jewelry that was handed down to you by family members are often worth much more than you think. You can get money from the gold in unwanted jewelry, no matter how out of style it is. If you need money fast, one great idea is to take some of the jewelry you own to pawn shops in DC. Pawn shops will typically buy old jewelry for a great price. 

Collectibles

In the past, you may have collected things like baseball cards, figurines or comic books. Whatever the case, these items don’t have a lot of extended use. Most people, for example, only read a comic book once. Consider selling these items on online auction websites to convert them into their cash value. Chances are, someone will find them valuable and be willing to pay a good price for your collectibles. Ebay is a great place to sell your collectibles and get the most money out of it, since people can bid however much they want, and you get to choose the starting bid. 

Old Computers

One thing that must be constantly replaced is your computer. However, what you may not know is that even computers from the 90’s or 80’s are still valuable today. There are many collectors out there as well as stores that allow you trade in older models for part of the price of new ones. You can even sell certain parts of your computer for quick cash. People are always looking for specialized parts to finish their projects or build a new computer.

Sporting Equipment

Most people go through stages where they try out new sports they quickly abandon. They may have spent a lot of money on things like skis, tennis rackets or golf clubs. If this is a case, turn these items into cash. Many people are looking for lightly used sports equipment to find better deals, and you can sell them for a decent price. 

CDs

If you have a computer with a CD drive, you have the ability to back up all the CDs you have on your hard-drive. After doing so, sell these CDs to a music store or through an online retailer. While they may seem outdated, you can still get some extra cash from them. 

Baby Items

After your children grow up, chances are you’ll no longer have a need for things like cribs and baby toys. Instead of letting these take up room in your home, trade them for other things you may need with couples that have or are expecting children. You could also sell them online for a quick and easy way to make extra money on the items you don't need anymore.

Overall, there is no reason to take on a loan you won’t be able to pay off if you haven’t made true use of the assets you already own. There are likely to be many valuable items in your home that you no longer use. Get creative and find ways to turn your unwanted items into quick cash. You should also consider selling old items at a yard sale or online.

Have Bad Credit? Here's How to Apply and Get Approved for a Loan

Many of us have incurred bad credit, i.e. a poor credit rating/score and have consequently found applying for financial products – credit cards, personal and home loans, etc. – tough going.

That’s rapidly changing and many banks and lenders are now far more willing to work with people with bad credit than in the past.

If you’ve incurred a poor credit rating there’s still a good chance that you’ll be able to successfully apply for financial products again the future, though you might have to improve your credit rating beforehand in order to access financial products on competitive terms once again.

Improve your credit rating

Do you know your credit rating? If not, how do you know you’ve incurred a poor credit rating or are you just making an educated guess based on your adverse borrowing history?

Many borrowers have no idea of their credit rating before applying and they’re putting themselves at a disadvantage straight away because knowing your credit score enables you to leverage your borrowing options.

You can obtain a copy of your credit report once per year and under various circumstances from any of the national CRBs – D&B, Experian and Veda – for free; however, if you’ve already obtained a copy within the last year you’ll need to pay a small fee.

To obtain a copy, contact one of the national CRBs and provide the following details:

• a. Full name
• b. Date of birth
• c. Current and previous addresses
• d. Driver’s licence details

Obtain a copy before applying for credit – you’ll better understand the options available to you.

If you still have a credit card, use it to make small purchases on a regular basis and pay the outstanding amount in full each month in a timely manner. This will help to repair your credit rating, though bear in mind it takes time. 

Bad credit loans – An option to consider

Bad credit loans are loans made available to people with poor credit ratings – including those who’ve really made a mess of their borrowing history.

These loans generally come with a high APR and are hardly competitive with regard to interest rates or terms and conditions, but if you’re really stuck they’re an option you may need to consider. 

Apply to your bank

After you’ve obtained a copy of your credit report and you know your credit score, contact your regular bank and discuss your situation with them, preferably informally, i.e. without making a formal loan application.

The reason for this is that every time you apply for credit you’re triggering an enquiry into your credit history which has the effect of lowering your credit score slightly.

By enquiring informally and informing them of your credit rating you’ll be able to avoid this and you might also be able to successfully apply for a personal loan through you regular bank, though this will naturally depend on your banking history with them.

However, if they knock you back because of your credit score you’ll need to look at other alternatives, many of which like bad credit loans, instant payday loans and similar loans are often, though not always, hardly competitive though they may be the only options available to you.

There are an increasing number of reputable online lenders, some of which actually offer competitive rates, terms and conditions in addition to quick and easy online application processes.

Nonetheless, double-check lenders’ backgrounds you consider applying to before applying and bear in mind the importance of limiting the number of applications you make.

There are a number of options available to those ‘bad credit’ – ensure you know what to make of them.

About the Author:
Get Approval is a finance company in Australia that seeks to assist individuals in applying for a business or personal loan. They have devised a simple process for loan applications so eligible applicants can receive their needed funds quickly and with less hassle.

Tips to Get Back on your Feet after Bankruptcy

Bankruptcy can be one of the most difficult events to recover from financially after the credit becomes destroyed and the bankruptcy is recorded for the next seven to 10 years. Although it can be difficult to regain your financial standing, there are several ways to get back on your feet with the right resources and tools. Although it can take up to a decade to have a clear record, there are important steps to take to regain your standing.

Consult with Credit Counseling

Several non-profit credit counseling services are available, making it easy to become educated on improving the future of your credit score. A counselor will be able to provide you with a plan and steps to take to regain a foothold on your score. If you are still in the bankruptcy process, you'll also want to talk to a bankruptcy attorney to find out ways to minimize the effects of bankruptcy on your financial future. Some bankruptcies are due to lack of financial education or bad financial planning. Take the time to educate yourself on money management by taking a free online class

Monitor Your Credit Score

It's important to check your credit score periodically and look for possible errors in your history. Credit repair services can assist with removing the errors should they prove to be illegitimate. Avoid closing credit cards, which can reduce the age of your credit history. It's important to keep an eye on your credit to not only keep track of the progress of your score but to ensure that no one is using your identity or opening fraudulent account in your name.

Apply for a Secured Credit Card

You may find it difficult to be approved for a credit card after going through bankruptcy, but a secured credit card from a major bank will gradually increase your limits when you prove to make payments on time. Although the cards come with high interest rates and upfront fees, they will be worth the investment with proper use. A normal credit card can then be opened after your credit score is above 600. It's a good idea to use credit to start rebuilding your credit score, however you need to use credit wisely. Use it to buy the things you need and then pay the balance in full each month.

Avoid Unfair Lenders or Deals

Many lenders specifically target those recovering from bankruptcy in an effort to rip off those who may be uneducated and desperate for a loan. Look at the fine print and avoid rent-to-own offers or loans that have astronomical interest rates. If it sounds to good to be true, it probably is. So avoid potential ripoffs after filing for bankruptcy. Bankruptcy is tough, but it can give you a fresh start. Don't get off on the wrong foot by taking more loans and getting buried in debt again.

Create an Emergency Fund

Create a plan and prepare for the unexpected by creating an emergency fund to ensure that you have the financial means for paying medical bills or unexpected car repairs. This will prevent using a credit card and going back into debt. In order to start saving money, you will need to create a well planned budget. Make sure you are living within or even below your means so that you will avoid a situation where you get back into a cycle of debt.

With an estimated 1.6 million people who file for bankruptcy annually, many people may feel helpless and out of control with their financial future. Take advantage of a few important tips, which will work in your favor and with a bit of responsibility. Although bankruptcy can be devastating, there are several ways to recover and learn from past mistakes.