Oil & Forex Trading

By Ahmad Hassam

Wall Street watches oil prices like a hawk. Remember the early part of 2008 when oil prices skyrocketed from near $70 to almost $150 within a few months. This was more than a 100% increase in oil prices. Many hedge funds heavily betted on the increase in oil prices and made a windfall.

Most of the increase in the oil prices was due to speculation. When the stock markets crashed, most of the hedge funds had to liquidate their investments in oil futures. The prices came down. The prices are down due to low consumer demand in a recession. But it is being predicted that with a recovery in the economy, the oil prices will go up again.

As oil prices go up, consumers are forced to spend more on oil. The more they spend on oil, the less they can spend on other products. The less they spend on other products, the less profit companies make. Declining profits made by these companies mean declining stock prices.

The opposite is also true. The less the oil prices become, the more Wall Street becomes optimistic about the profit potential of companies. This increased optimism leads to increase in stock prices. Two large futures exchanges are used to determine the prices of oil. They are the New York Mercantile Exchange (NYME) and the International Petroleum Exchange (IPE).

Historically, rising oil prices have been associated with falling stock markets. NYME is where most of the crude oil futures are traded. By monitoring the movement of the crude oil futures in NYME, you can develop a feel of the future economic situation of the United States. Since oil is heavily traded in US Dollar, this affects the US Dollar. The net effect is however a bit complicated.

Lets take a look at it more closely to understand the two effects that pull USD with oil. When oil prices increase, the demand for US Dollar also increases. Most of the countries need US Dollar to pay for their oil imports. High demand for US Dollar means that it should appreciate.

But this is not the whole story. Increased oil prices also take its toll on the US economy. The question is which effect is more important for the forex markets.

The effect varies for different currency pairs. Suppose you are watching a currency pair that involves the USD and a currency representing a country that does well during the times of high oil prices. Take Canada that has huge oil reserves after Saudi Arabia. The effect would be depreciation in the value of USD/CAD pair. US imports more oil from Canada than any other country. And if you are watching a currency pair that involves USD and a currency whose economy is harmed by the rising oil prices, the demand for USD will rise.

So we can see, some currencies have positive correlation with oil prices and other currencies have negative correlation with rising oil prices. The currency pair CAD/JPY shows the strongest reaction to rising oil prices. Japan imports 100% oil.

So when oil prices rise again, watch for a currency pair that has the strongest correlation with oil prices like CAD/JPY. CAD is positively correlated with oil prices and JPY is negatively correlated. So CAD/JPY can be a very good currency pair to trade during times of rising oil prices. - 23200

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Discover Forex Magic Machine. Try Netpicks Forex Signal Service.

Jump Start Your Success With A Forex Education

By Bart Icles

Even though a lot of companies and individuals claiming to be experts in the forex market and in forex trading are offering what they say are excellent forex education, a lot of forex traders still do not really win in the forex market. About 70 percent of forex traders lose in trading, big time.

The reason why seventy percent of forex traders lose despite having availed of a forex education is because not a lot of the theories that you learn from it really works. Individual traders have individual needs that are unique. These needs cannot really be defined properly by joining or availing of the usual forex education classes offered by thousands, even millions, of companies.

To be able to do forex trading the right way, you should look for the following characteristics in the forex education that you will be choosing:

1. Find a free forex education or a cheaper forex education that will give you the different options that you need to know so that you can develop your own forex trading strategy. Developing your own strategy will enable you to make steady profits.

2. A great forex education should teach you that the right strategy, the right amount of confidence, and the most rigid discipline is the secret to having a long term forex trading success.

3. The forex education that you should be taking should be able to teach you a forex trading method or strategy that is east to execute and understand. That way, it will be east for you to track every single thing when you trade. 4. The forex education should be able to inculcate in you a discipline that you will hold on to no matter what. Face it, in forex trading, you are bound to lose at some point. Trying to recoup your losses right away might make you lose your control, which may result to more losses instead of more profits. A lot of people lose in forex trading simply because they cannot stick to their strategy or because they do not really understand the ins and outs of it or a combination of both. A good forex education will be able to help you avoid both.

5. You should avoid a forex education that will teach you to do short term trading with short term successes. This type of trading will just make you lose and lose some more.

You should always keep in mind that the best type of forex education is made available for free. The internet has made that possible. When you avail of one, you should check testimonies or comments about it first so that you can gauge whether you will be successful or not if you follow it. - 23200

About the Author:

When learning to trade forex know it starts with a desire to learn and a drive to become a great trader. When you learn forex trading online it takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

Important Information For When Investing Financially

By Mr Christopher Latter

Have you yet thought about investing financially? If the answer is no then you definitely have a point to think. Ever growing expenses in today's world have made our future insecure. It is not wise to just depend on the social security benefits. You would end up with no money in your bank account when you retire. When you lose your capability to earn i.e. in the old age, you should have a lot of money left in your bank account. You can never be sure of your future needs. So it is mandatory in the present scenario to Invest financially as it is the only way to earn money quickly with out much of an effort. So, let us start with the appropriate things that should be done before you begin to invest. The 1st thing is to get the basics understanding about the field you are interested in investing. Why is this necessary? You should have the perception and insight to make wise investments. The 2nd thing is to get the money required to make an investment of your choice. The 3rd step is to make a choice i.e. setting up your priorities.

How do I get myself educated and get all the basic understanding required to start investing financially? This would be the doubt many of you will have. There are quite a lot of ways to get your self educated. The most preferred mode is through online. Online learning can help you in learning enough in less time. Do not worry if you are a busy guy. Do not worry if you do not have enough time to spend as you work through out the day. Online learning through internet will solve all your learning problems.

Do you want to get the necessary insight for investment? Do you want to have the ability to deal with volatile scenarios, ever changing market trends? Don't worry. You will be able to master the art of investing financially with online learning. Do you think you have more time to spend? Do you need the extra edge over others? There are lot of other ways such as Television channels, News papers etc to help you. You can also try out the training sessions conducted by various financial organizations and institutions.

What is the next step after getting the education? For any investment you require capital. If you have the money then you can begin Investing financially. If you do not have it then you have to find ways to accumulate the capital. Are you unemployed? It is the right time to get a job and start proceedings by saving money. Are you already an employee? It is time to cut back on the spending and save more. The more you save the more you can invest. If you are already investing in the IRA's (Individual Retirement Account) and you have this wonderful option of directing your invested money to further invest in the areas of your interest then just start proceedings. Do you feel like "Am I very young to start investing?" You are wrong. Even if you are just in school you can divert the money you earn from part time jobs in to investments.

The next step would be prioritizing your investments. There is lot of info available on the web to help you. You can start investing financially in traditional modes like mutual funds, dividend bonds or the non traditional modes like the field of real estate.

Investing financially in new business's which are untouched till now and there is a scope for maximum growth is also a good idea. You have to look at what is urgently required for the society and what is scarcely available and should have less competitors. This will result in higher profits in a shorter period of time.

In this world where the prices of commodities are ever growing there is definitive need of investing financially to achieve ultimate independence financially and avoid the scenario of being left with an empty savings account on the day you retire, when the money matters most. - 23200

About the Author:

Find out even more about investing financially, be taken to a huge list of articles to help you invest financially, as effectively as possible.

How to Invest For Retirement

By Joe James

Saving for your future is very important. You work all your life and you want to be able to live comfortably without working and enjoy the fruits of your labor. The Best Way to do that is to invest your money in either a 401k or IRA retirement fund. These retirement funds give you a lot of flexibility and tax benefits so you can maximize your savings. However, they are very different types of funds and must be used differently.

A 401k is an option that is set up by your employer. They give you a select number of stocks and mutual funds to invest in and you can set the ratio you want to invest in. This is an optional plan. The money is taken out before taxes meaning your contribution is not taxed. However, when you retire, the money you take out is taxed so if you are in a higher income bracket than when the money went in you will have to pay more taxes than you would. But your money does grow tax free and many employers will match you contribution.

With this type of plan, you can invest up to 14,000 dollars per year, which is the sum of both your contribution and that of your employer. A 401(K) is great investment if your employer is matching your contribution. If they are, you should always invest up to the that number. But since your probably will be in a higher tax bracket when you are older, you should focus more of your investments in a roth IRA, which is tax free upon withdrawal.

IRA's are meant for individual people and can be used to invest in any you want. Unlike a 401k, it is not tied to your job so you don't have to be tied to an employer's plan. There is a 5,000 dollar limit to your investment and you can't take the money out until you are 59 1/2. However, since the money put in is already taxed, the money coming out is tax free. It's the opposite of a 401k.

You should invest in both if you can but always invest in the 401k if your employer matches your contributions. You want to think about what your tax bracket will be when you are older too. If it will be higher, you would want to consider putting more money into an IRA. Both options are good and should be used but the balance of where you put the most money depends on the type of plan your employer offers and the amount of flexibility you want.

Saving for your retirement is important as you want to be able to afford all the things you want to see and enjoy when you are older. By investing in these options, you'll be able to maximize your retirement savings. After all, your goal is to never work again so you'll want to save as much as you can. - 23200

About the Author:

Joe James gives financial advice for a living. He resides in the southwest of the United States and is a retirement specialist. You can find out more information at his website, http://www.figuringoutfinance.com.

The Stock Market Takes Patience

By Sharon Demeter

Learning how to navigate the stock market might be intimidated to someone just starting out. Even though many of us have lost money, there are those that are becoming interested in the market for the very first time. With the Dow being the lowest it has been in a long time, these people are probably thinking that now might be a good time to get on board. Anyone new to stock investing should know though, that just because the market is low doesn't mean it can't go lower.

Anyone who is hoping to learn the market for the first time need not feel like it is too intimidating. If you want to learn how to buy stocks, it is easy to open an account online and you can do it all without even speaking to a real person. With Internet trading, there is never any reason to feel embarrassed by any of the market jargon either. You can learn at your own pace and find all the answers to your questions online.

Opening a stock account online is not much different than opening up any other type of account online. You will need to get a user name and password, and then enter your name, address, and social security number. The social security number is required because law requires that your transactions be sent to the IRS. After you send in your money, you eill be able to start buying stock with the click of your mouse.

Before you open a real account, if you want to learn about buying stocks, one of the best ways is to join a fantasy online stock trading game. There are several of them where you can set up an account and trade stocks just like you would online only with virtual fake money. These games let you get used to all the nuances of the market and you will be managing your own portfolio. Of course nothing is ever like the real thing but this is a good way to learn about stocks and how to do the research. Some of these stock trading games are available for free and even give out prizes!

Beginner investors need to know that they can indeed lose money in stocks. This is one of the things that makes it scary to buy your first stock. Once your money is in play, it is real and the stock you buy can go down. Nevertheless, the stock market has been a historically good place to invest and beginners should remember that. - 23200

About the Author:

Are you interested in learning about buying stocks for beginners? Please visit my site Stock Market For Beginners.