FOREX TIPS

You’ve decided to become a trader on the Forex market but since you’ve never played on the currency market you aren’t sure where to start. Not to worry – we’ve got some great tips for global Forex trading,

Forex is the foreign exchange market where currencies are bought and sold. It began back in the 1970’s with the introduction of free exchange rates and floating currencies. Thanks to the internet more and more people are able to reap the profits of the currency market with global Forex trading.

This is a market that trades as over US$1 trillion a day. It trades more than any other market. There are some distinct differences in the currency market compared to the stock market. Money moves much faster so no single investor has the ability to actually affect market price and trades are able to open and close within seconds which is not possible on the stock market.
To start your global Forex trading you need to open a Forex account. Just fill in the application and the sign the margin agreement which let’s the broker intervene at any time. That makes sense since it’s the broker’s money that just makes sense.

You need to choose a trading strategy that works for you. Different strategies work for different traders to don’t try to makes something work, instead find the right trading strategy for you.
It’s important to understand that trends move prices so a smart investor will make trends their friend and even go so far as to examine historical trends.The top five currency pairs are USD/Yen, Euro/Yen, Swiss franc/USD, Pound USD/ and the Euro/USD. Make sure you know and understand them.

Forex market has several advantages and benefits:
And Forex being a 24-hour market gives Currency trading the biggest advantage ever. With no external control and a market open to all, Forex is the perfect currency trading platform to invest in. with the power in the hands of the currency traders, to choose any time of day to trade, whenever they want to, Forex trading basically puts the traders or investors in charge of how they want to trade and how much as well.

This is also because of the fact that Forex currency trading requires a very less amount of starting investment, which can easily enable a trader to open an account and start trading, unlike the cases in Stock Exchange and Futures market, where in, a fair amount of capital is required to start trading.

This facilitates trading for individuals or small traders, who can easily start trading small in the Forex market. Being a round the clock market, Forex day trading enables the investor to select any time to trade, whatever is more suitable to him/her. The Forex market is known as the “Day Trading market” because of the reason that basically, it trails the sun going around the world, and shifting from one main economic or banking center to another, starting from the United States to Australia, to New Zealand to the Far East, and towards Europe and then, again back to the United States.

The currency price at Forex day trading market, changes every second. One second a currency is up, the other second the other beats it to go high. Currency trading volume at Forex market remains high throughout, but it hits the highest point when the U.S, London and European markets are open, all at the same time, which only happens between the time periods of 1 p.m. to 4 p.m. by the GMT (Greenwich Mean Time). As compared to the high volume of the U.S market, the level of the Pacific border markets, Japan and Hong Kong for instance, is quite low, but this still provides a Forex investor the opportunity to study and explore the vastly traded markets and currencies of the Pacific Region.
With more than $2 trillions of money being traded every day, Forex market is indisputably the biggest fiscal or financial market in the whole world. Here, the investors need to focus only on a few major currencies, rather than hundreds of equity or stocks. Forex market also is known for its fair costs and thin spreads.
Furthermore, Forex market has high levels of liquidity as compared to any other financial market and this is what makes Currency trading market the biggest economic market in the whole world. This liquidity largely comes from the banks which provide liberal cash flow to individual investors, companies and trade houses. And since the Forex market is a 24 hour market, the currency exchange trading experiences superior liquidity around the clock, as compared to the stock market, which contains a limited time period for high liquidity. The instant trading through various means of communication such as phone and internet makes Forex day trading an instant trading business alongside making it a global trading platform. Another basic benefit offered by the Forex market is that it is a no-commission market. With this free of commission trading, an investor gets to keep whole of the profit that he has earned through a day’s trading at the market.

FOREX CURRENCY TRADING

Forex currency trading has become popular because it is backed by the world’s leading financial institution and you are playing the stock market based on cash and not just supply and demand, your placing your money in the market hoping the exchange rate you are buying into will come out in the end with the most profit. For example If you are placing your money being USD into the forex currency trading market and your currency of choice for the trade gains backing and increases in exchange rate, you make profit.

Forex currency trading is effected by many different variables which change day to day. Some of these variables include economic and political conditions in each respective country offering their currency on the Forex market. If the economy takes a hit on any given day, you can be sure you will see a drop in the currency exchange rate and you will experience a greater loss. During war, if a specific country is at war with another country you can also guarantee there may be a greater loss due to the fluctuation of the exchange rate of the currency being traded

FIVE MAJOR CURRENCIES DOMINATE TRADING IN TH FOREX

Five major currencies dominate trading in the foreign exchange markets:
They are
1. U.S. Dollar.
2. Eurocurrency.
3. Japanese Yen
4. Swiss Franc and
5. British pound.
The foreign currencies are traded in pairs, also known as crosses, in the forex spot market. For example, purchasing the EUR/USD in the forex spot market simply means the purchaser is buying the Eurocurrency and selling the U.S. Dollar in anticipation of the Eurocurrency gaining value in relation to the U.S. Dollar. Similarly, the seller of a EUR/USD contract would be selling the Eurocurrency against the U.S. Dollar. Official figures show the U.S. Dollar is on one side of 83% of all spot foreign exchange transactions. The "spot" market simply refers to a currency contract with a prompt valuation date requiring settlement within two business days.

1. The right to immediate, uncensored access to the marketplace
2. The right to trade real spot
3. The right to know
4. The right to trade whenever you want
5. The right to equal treatment
6. The right to choose and manage risk
7. The right to understand cost
8. The right to learn – on your own, or through free exchange with other traders
9. The right to full disclosure
10. The right to pay and receive interest

FOREX

BROAD SCHEME OF THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999

SECTION 3 - Prohibits dealings in foreign exchange except through an authorized person. This Section says that no person can, without general or special permission of the RBI-

(a) Deal in or transfer any foreign exchange or foreign securities to any persc4~iot being an author ides person (corresponding to sections 8 and 19 of FERA).
(b) Make any payment to or for the credit of any person resident outside India in any manner (corresponding to section 9(l)(a) of FERA).
(c) Receive otherwise through an authorized person, any payment by order or on behalf of any person resident outside India in any manner (corresponding to section 9(1)(b) of FERA) and
(d) Enter into any financial transaction in India as consideration for or in association with acquisition or creation or transfer of a right to acquire, any asset outside India by any person (corresponding to sections 9(l)(f) & (g) of FERA).

SECTION 4 - restrains any person resident in India from acquiring, holding, owning, possessing or transferring any foreign exchange, foreign security or any immovable property situated outside India except as specifically provided in the Act. The terms "foreign exchange" and "foreign security" are defined in sections 2(n) and 2(o) respectively of the Act. The Central Govt. has made Foreign Exchange Management (Current Account Transactions) Rules, 2000.

SECTION 6 - deals with capital account transactions. This section allows a person to draw or sell foreign exchange from or to an authorized person for a capital account transaction. RBI in consultation with Central Govt. has issued various regulations on capital account transactions in terms of sub-sect ion (2)and (3 )f section 6.

SECTION 7 - deals with export of goods and services. Every exporter is required to furnish to the RBI or any other authority, a declaration etc. regarding full export value.

SECTION 8 - casts the responsibility on the persons resident in India who have any amount of foreign exchange due or accursed in their favors to get same realized and repatriated to India within the specific period and the manner specified by RBI..

SECTIONS 10 and 12 - deals with duties and liabilities of the Authorized persons. Authorized person has been defined in Sec.2(c) of the Act which means an authorized dealer, money changer, off shore banking unit or any other person for the time being authorized to deal in foreign exchange or foreign securities.

SECTIONS 13 and 15 - of the Act with penalties and enforcement of the orders of Adjudicating Authority as well power to compound contra vent ions under the Act.

SECTION 36 to 37 - pertains to the establishment of Directorate of Enforcement and the powers to investigate the violation of any provisions of Act, rule, regulation, notifications, directions or order issued in exercise of the powers under this Act.The Director of Enforcement and other officer of Enforcement not below the rank of Asset. Director has been empowered to take up investigations.
ENFORCEMENT DIRECTORATE
The Directorate of Enforcement is mainly concerned with the enforcement of the provisions of the Foreign Exchange Management Act to prevent leakage of foreign exchange which generally occurs through the following malpractices
1) Remittances of Indians abroad otherwise than through normal banking channels, i.e. through compensatory payments.
2) Acquisition of foreign currency illegally by person in India.
3) Non-repatriation of the proceeds of the exported goods.
4) Unauthorized maintenance of accounts in foreign countries.
5) Under-invoicing of exports and over-invoicing of imports and any other type of invoice manipulation.
6) Siphoning off of foreign exchange against fictitious and bogus imports land by.
7) Illegal acquisition of foreign exchange through Hawala.
8) Secreting of commission abroad.

Directorate has to detect cases of violation and also perform substantial adjudicatory functions to curb such malpractices.

FUNCTIONS
The main functions of the Directorate are as under:
1) To collect and develop intelligence relating to violation of the provisions of Foreign Exchange Regulation Act and while working out the same, depending upon the circumstances of the case:
2) To conduct searches of suspected persons, conveyances and premises for seizing incriminating materials (including Indian and foreign currencies involved) and/or.
3) To enquire into and investigate suspected violations of provisions of the Foreign Exchange Management Act.
4) To adjudicate cases of violations of Foreign Exchange Management Act for levying penalties departmentally and also for confiscating the amounts involved in contra vent ions;
5) To realize the penalties imposed in departmental adjudication;
In addition to the above functions relating to the Foreign Exchange Management Act, the Directorate also processes and recommends cases for detention of habitual offenders under the Conservation of Foreign Exchange and Prevention of smuggling Activities Act, 1974 (52 of 1974), which provides inter-alias for detention of a person with a view to preventing him
from acting in a manner prejudicial to the conservation and augmentation of foreign exchange.
PROCEDURAL PROVISIONS
For enforcing the provisions of various sections of FEMA,l999, the officers of Enforcement Directorate of the level of Assistant Director and above will have to undertake the following functions
1) Collection and development of intelligence/information.

2) Keeping surveillance over suspects.

3) Searches of persons/vehicles as per provisions of Income-tax Act,1961.

4) Searches of premises as per provisions of Income-tax Act,1961.

5) Summoning of persons for giving evidence and producing of documents as per provisions of Income-tax Act,l96l.

6) Power to examine persons as per provisions of Income-tax Act,196l.

7) Power to local for any information/document as per provisions of Income-tax Act , 1961.

8) Power to seize documents etc. as per provisions of Income-tax Act,196l.

9) Custody of documents as per Income-tax Act,196l.

10) Adjudication and appeals- Officers of and above the rank of Day Director of Enforcement, are empowered to adjudicate cases of contravention of the provisions of the Act; these proceedings which are quasi-judicial in nature, start with the issuance of show cause notice; in the event of cause shown by the Notice-not being found satisfactory, further proceedings are held, vis. personal hearing, in which the notice has a further right to present his defense, either in person or through any authorized representative; on conclusion of these proceedings, the adjudicating authority has to examine and consider the evidence on record, in its entirety and in case the charges not being found proved, the notice is acquitted, and in the event of charges being found substantiated, such penalty, as is considered appropriate as per provisions of section 13 of the Act can be imposed, besides confiscation of amount involved in these contraventions.