Choosing a Forex Broker
For newcomers to the online forex market, choosing a forex broker is a key step to becoming a successful trader. You will want to choose a broker who will be a good fit for you and who has the experience necessary to help you be successful. The choice should be one that will last throughout your trading career. A “good” broker is not necessarily the right broker for every trader. You need to find a broker who will match you in aggressiveness, who is experienced working with the kinds of investments you are wanting to make and that you can afford. Following are some simple steps to follow in the process of finding a forex broker.
Step 1: Research
When seeking a forex broker, there are certain credentials you will want to look for. Be sure to find a broker who is registered with one or more regulating authorities. Brokers in the United States should be affiliated with the National Futures Association (NFA) or the Commodities Futures Trading Commission (CFTC); for brokers in the United Kingdom, look for the Financial Service Authority.
How much or how little leverage does the broker require for a trade? This question is very important to a new trader who does not have a lot of capital to work with. Some brokers will only broker a deal with a substantial investment. If you are a conservative trader or have a slim budget to get started, be sure to seek a broker who will work with what you can afford and will not pressure you to go beyond your limits.
If you plan to hold positions overnight, it will be necessary to find a forex broker who credits or debits daily rollover interest. This is a practice that not all brokers will take part in, and depending on the kind of trading you are hoping to process, this will be a very important point.
Step 2: Compare Brokers
Once you have researched a number of forex brokers, and have narrowed your choice down to the top two or three options, take the time to compare their histories and statistics. There are websites available that will delineate vital information about each broker so you can compare their strengths and weakness, their habits, and their requirements. Use this to rank your choices.
Step 3: Open Demo Accounts and Ask Questions
Demo trading sites are available online. New traders can “practice” without investing money at these sites. It is advisable that you choose two brokers, and open a demo account with each of them. This will give you an opportunity to experience simulations of real trade experiences so that you can ask educated questions and observe each broker as they respond to various situations. The advantage here is twofold: first, you will learn a great deal about the practice of forex trading before investing any real money, and second, you will get to experience each broker’s techniques and reactions in real life scenarios. After this experience, you will likely have chosen your most appropriate forex broker.
Allied Irish Banks to give $50 million bonuses amid government bailout
Dublin, Ireland, United Kingdom (AHN) – Financially challenged Allied Irish Banks is scheduled to give $50 million (EUR 40 million) bonuses to bank officers despite the company being a possible recipient of another bailout from the Irish government.
The bonuses, amounting to $214,328 (EUR 161,000) for each of 2,400 bankers in the Dublin capital markets division, are part of a court award in 2008. The bonuses are scheduled to be given Dec. 17.
Because of the AIB situation, European banking regulators were scheduled to meet in London Thursday to come up with new rules applicable within the regional bloc on payment of bonuses amid financial crises. The rules propose to defer paying the bonuses over three years and forfeiting the payments if the banks suffer more losses.
AIB is 19 percent owned by taxpayers, but the government share is expected to go up to 95 percent after the Irish central bank required AIB to raise another $6.9 billion (EUR 5.2 billion) by the end of February. The amount will likely come not from the private sector, but from the $113 billion (EUR 85 billion) bailout from the International Monetary Fund and the European Union.
AIB investors, including some of the world’s largest fixed-income pension and insurance funds, are scheduled to meet Friday to discuss a possible lawsuit against the Irish government if the bank will be required to reduce again the value of subordinated debts issued by AIB.
Investors who held Tier 1 and Tier 2 bonds in AIB agreed in June 2009 to trade in these bonds for a new issue of lower Tier 2 debt. The move caused investors to lose 33 to 50 percent of their investments’ face value.
The investors warned that if they were forced to another round of swap, many pension funds, insurers and main fixed-income funds would shirk from Irish paper in the future for a long time.
Subordinated debt investors have filed similar legal cases against the Anglo Irish Bank and Irish Nationwide, but with little success.
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British Families’ Euro Bailout Share Is $1,050
London, England, United Kingdom (AHN) – Because of Britain’s commitment to help bail out European Union countries facing financial difficulties, British families could have to shell out $1,050 (GBP 700) as their share despite already having to tighten their own belts.
The $1,050 is on top of yearly contributions of Britain to the EU and a potential UK liability of $60 billion (GBP 40 billion) for the eurozone bailout.
However, assurance of an international bailout to Ireland and Greece has not placated the markets, as the contagion has started to spread to Portugal, Spain and Italy. On Wednesday, borrowing costs for Portugal went up to 5.3 percent from 4.8 percent two weeks ago for buyers of the $627 million (GBP 418 million) 12-month Portuguese bonds on the table.
After the auction, ratings agency Standard & Poor’s warned Lisbon it may cut Portugal’s credit rating. By evening, S&P placed Portugal’s debt on negative credit watch and said it may further downgrade Lisbon’s A-minus rating in three months.
The worsening currency crisis has prompted the U.S. Treasury to send a representative to Europe this week to sit down with the governments of German, Spain and France.
The nervousness of the markets over the situation in the eurozone has fueled speculation that the European Central Bank could increase the bailout funds, which would translate into higher costs and liabilities for EU residents.
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Irish Corporate Depositors Withdraw Money
Dublin, Ireland, United Kingdom (AHN) – Despite the agreed $105 billion (70 billion pounds) bailout for Ireland, trouble continues to hound Dublin as corporate depositors panicked and withdrew their savings.
The Irish Central Bank admitted Tuesday that major international firms had been withdrawing their deposits from Ireland, which worsened the anxious mood of the market.
The chief investment officer of a major bond manager described Irish banks as bleeding deposits, recalling it was the same phenomenon that happened in Argentina and other emerging economies.
With the bailout, Ireland’s banking sector will be recapitalized, which would place the Allied Irish Banks into state control and the government majority stake in Bank of Ireland. The effect of this would be a mandated increase in capital cushions for the Irish banks from 8 to 12 percent. The move is expected to improve confidence in Ireland’s banking sector and stop the financial hemorrhage.
More than half of the bailout would be used to fund Dublin’s deficit spread over three years, while the remaining balance would be used to recapitalize banks and serve as contingency fund.
Markets are also still shaky that borrowing costs for Portugal and Spain jumped to dangerous levels over fears that European Union leaders are losing political control over the Irish crisis.
On Tuesday, yields on 10-year Portuguese bonds went up to 6.9 percent, which repeats the pattern of what happened to Greece and Ireland before these two nations were capitalized by the EU and the International Monetary Fund.
Spreads on 10-year Spanish bonds also grew to a record of 233 basis points over Bunds, which pushed the yield to 4.87 percent. With this development, Spanish Central Bank Governor Miguel Angel Fernandez Ordonez called on Madrid to fast track fiscal reforms to convince the market that Spain could put its house in order.
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Irish Government Stands Firm On Keeping Corporate Tax Rate Low
Dublin, Ireland, United Kingdom (AHN) – Ireland is defending its low corporate tax rates even in the midst of talks over a European Union-led bailout for its troubled economy.
Ireland’s corporate tax rate of 12.5 percent is much lower than the EU average, however Deputy Prime Minister Mary Coughlan says that rate is not negotiable.
Officials from the EU, the European Central Bank and the IMF are expected to formulate a bailout plan sometime next week.
High-tax nations such as Germany and France want Ireland to increase its corporate tax rate. However, some observers say Ireland’s fiscal problems stem not from low corporate taxes but high spending by the Irish government.
Ireland’s low corporate tax rate has attracted foreign investment. Proponents of keeping the tax low say it would not make sense to hamper the nation’s economic engine.
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EU Gives Ireland 24 Hours To Seek Bailout
Dublin, Ireland, United Kingdom (AHN) – Pressure is increasing for Ireland to make a decision on the offer of a financial bailout by the European Central Bank or the International Monetary Fund.
Dublin was given just 24 hours to decide if it will accept the offer to prevent the negative impact of another Irish economic crisis on the 16-nation eurozone.
Finance ministers from the zone are scheduled to hold emergency meetings Tuesday night, while global financial markets are waiting for Dublin’s move to finalize negotiations with the EU.
Fund managers are urging the Irish government to accept the EU bailout offer or face harder times ahead if they delay their decision.
Even before Ireland agrees to the bailout offer, borrowing cost for Dublin has gone done following reports of the ECB financial lifeline offer. Yield on benchmark 10-year Irish bonds went down to 8.1 percent from last week’s 9 percent. Premium sought by investors to hold on to their Irish bonds over the standard German bunds or spread also decreased to 545 basis points from 652 basis points on Thursday.
Irish officials are still balking at the proposed bailout because of the probable loss of sovereignty. The fast-paced developments may possibly result in the Irish government announcing the 2011 budget a week earlier than the previous Dec. 7 schedule.
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U.K. Registers 3.1 Percent Inflation Rate In September
London, England, United Kingdom (AHN) – The United Kingdom registered an inflation rate of 3.1 percent for September, according to the Office for National Statistics. The rate has been unchanged since July.
Decreases in air fares and gas prices were offset by a major rise in clothing and food prices, leading to the static Consumer Price Index, the ONS said. Prices of airfares dipped by 27.8 percent in September, but clothing and footwear prices logged a 6.4 percent increase and furniture and furnishings prices surged 4 percent.
It is the first time since 1992 that clothing and footwear prices went up. Economists theorized the jump in prices is because of retailers raising their prices ahead of the forthcoming increase in the value added tax.
The 3.1 percent inflation rate, however, is way off the Bank of England’s 2 percent target. Experts said the static CPI would add pressure on the British central bank’s Monetary Policy Committee, which decides if they will retain the record-low 0.5 percent key lending rate.
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Bank Of England Urges Retirees To Spend
London, England, United Kingdom (AHN) – To boost the sagging British economy, Bank of England Deputy Governor Charles Bean urged on Monday retirees to spend, not save. Bean estimated that five million elderly Britons live off interest from their pension funds have been complaining that their savings accounts pay less than inflation.
Bean explained the low interest rates were part of a strategy of the British central bank because the retirees have benefited in the past from capital gains on their houses. Data said borrowers gained $39 billion (26 billion pounds), while savers lost $27 billion (18 billion pounds) because of interest rates that were deliberately reduced by the Bank of England.
He urged the senior Britons to touch some of their capital even if the average savings interest rate had dipped from 2.8 percent before the financial crisis to 0.23 percent in August.
The Bank of England has held benchmark lending rates at 0.5 percent for 18 months. Bean said the low interest rates could still stay for several rates.
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Bank Of England Mulls Another Round Of Fiscal Stimulus Action
London, England, United Kingdom (AHN) – The Bank of England is considering another round of fiscal stimulus after the pound dipped and interest rates suffered its largest drop in over 18 months on Wednesday.
Reports said the British central bank may order another round of quantitative easing – or the printing of electronic money. The move would boost money supply and improve the pound’s standing against other currencies.
Some of the nine-members of the Monetary Policy Committee of the Bank of England pushed for more stimulus action because of threats to the recovery of the British economy. The committee, in a 8-1 vote, opted to keep key lending rate at the record-low level of 0.5 percent and not to increase the bank’s $300 billion (200 billion pounds) quantitative easing program for the meantime.
On Wednesday, the business group CBI forecast that the Bank of England would hike benchmark interest rates later than previously anticipated. CBI foresaw key lending rates going up to 1.25 percent by the end of 2011.
CBI said Britain’s tentative recovery will be sustained, but with weaker levels of growth because of massive spending cuts by the coalition government.
Among CBI’s other major predictions are that inflation would remain above the Bank of England’s 2 percent target until 2011, exports would rise by 3.5 percent in 2010 and 6.4 percent in 2011 and unemployment would even grow to 2.62 million jobless Britons by end of next year.
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FSA Fines Goldman Sachs $30 Million
London, England, United Kingdom (AHN) – British’s Financial Services Authority fined Goldman Sachs (NYSE: GS) $30 million (20 million pounds) for failuring to inform the City regulator that one of the bank’s officers under investigation for fraud in the U.S. was transferred to the U.K.
The FSA identified Goldman official as Fabrice Tourre, who was facing a Securities and Exchange Commission probe for fraud.
While the SEC investigation was ongoing, Goldman reassigned Tourre to its London office from its New York unit.
The SEC had charged Goldman with failure to disclose that a hedge fund betting against a mortgage-backed security called Abacus picked some of the mortgage loans included in the portfolio. The move cost investors up to $1 billion.
Because of the charges, a U.S. Senate Committee questioned seven Goldman directors, including Tourre. Goldman eventually settled the case and paid SEC a penalty of $550 million (355.5 million pounds) without admitting wrongdoing.
Reports said Goldman is expected to admit it made a mistake in not informing the FSA of Tourre’s transfer, but the bank has so far officially decline to comment on the matter.
Goldman, like many American banks hit by the global financial crisis, is trying to rebuild its image and rebuild public trust.
Goldman has also been accused by Greece of profiteering from the country’s sovereign debt crisis by short selling the nation’s bonds.
The FSA had been slapping large western banks with hefty penalties. In 2009, the FSA penalized another U.S. bank, JPMorgan, a record $49.5 million (33 million pounds) for the bank’s failure to separate client money from its own. Also last year, the regulator penalized Barclays, Credit Suisse and Commerzbank $3.7 million (2.45 million pounds) each for failure to maintain proper trading records.
In August, FSA fined the London branch of French bank Societe Generale $2.4 million (1.57 million pounds) for lack of accurate transaction records.
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