Saturday, September 18, 2010

Risk in Forex

Risk-aversion continued to dictate market direction, with the Japanese yen touching a fresh 15-year high against the dollar while most of the major currencies tumbled against the greenback. The Canadian dollar slid by 1.2% and the euro dropped by more than 1.5%. The US equity bourses slid after returning from the long-weekend, with the major indexes shedding more than 1%. Meanwhile, safe-haven flows propped spot gold it’s a new record higher to settle around $1,257.30 per ounce while crude oil drifted lower to dip beneath the $73-per barrel mark. 

Central bank policy decisions will be the key event risks in the week ahead. The Reserve Bank of Australia announced the results of its policy deliberation, leaving interest rates on hold at 4.5%. The accompanying policy statement was largely unchanged from the August statement, widely seen as more dovish and indicative the RBA leaving rates on hold for the rest of the year. 

The Bank of Canada is scheduled to announce its monetary policy decision at 9:00 AM EDT, with consensus forecasts calling for a 25-basis point rate hike to 1.0%. Traders will closely scrutinize the accompany statement from the BoC. In light of the sharp pullback in second quarter GDP growth, which revealed the pace of economic growth slowing to 2.0% and down drastically from first quarter growth of 5.8%, it will be interesting to see whether the Bank will downwardly revise its growth outlook again following the downgrades from the policy statement issued in July. Given market expectations leaning toward a rate hike tomorrow, the risk stands with an unchanged BoC decision and a signal that interest rates will remain on hold in the near future as a result of the pullback in economic activity. If that scenario was to materialize, the reaction in the currency market will likely prompt a knee-jerk sell-off in the Loonie to breach the 1.0550-mark. 

Forex Income Reporting Rules Can Work to One’s Advantage

This activity was once the sole province of large global banks, central banks, and other financial institutions due to large lot sizes of $1 million and average transaction amounts of $5 million. However, with the creative spirit of brokers to aggregate accounts, along with the advent of the Internet and sophisticated software trading platforms, the ability to trade foreign currencies was open for any consumer on the planet with the will, the capital, and a PC.

When the end of the year came around, most forex traders found themselves in a quandary as to how to prepare and report their various gains and losses from their trading activities. They quickly confronted an “unfriendly” IRS Tax Code that was extremely vague about treatment, tax rates, and where to enter anything on Form 1040. A majority of tax professionals were most likely confused as well since the language of the Tax Code had not kept up with the current state of affairs. Attempts to clarify some sections resulted in ambiguity in others. Matters have yet to be fully addressed, but weary traders have had to scan forex news and tax websites to do what is right.
The Tax Code assumes that trading in forex futures is similar to trading regulated futures contracts in the over-the-counter market. RFCs are not like securities where professional traders must treat everything as if it were ordinary income and expense related to a business activity. Forex futures contracts are accorded special treatment under Section 1256 where they receive a “60/40” split.
For example, 60 percent of the net gain for the year is treated as a long-term capital gain, and the remaining 40 percent as short-term capital gain. The rules apply equally to losses. Long-term capital gains are typically assessed at a lower rate of tax, such as 15 percent versus 35 percent at the high end of the ordinary income scale. These rates are scheduled to change in 2011 and do not include various state income tax burdens.
A subset of forex traders does trade forex futures contracts on the OTC exchange. However, most forex traders deal in the spot or cash forex market. To complicate matters, many traders transact business in both forex markets, including futures and spot. The RFC part of tax reporting is straightforward, although there was a move early in 2010 to eliminate the 60/40 split benefit, but it died in committee. This proposal will likely be raised again since the administration is searching for new tax revenue.
Brokers in the OTC space do provide 1099s at yearend with appropriate tax information. Spot forex brokers generally do not provide 1099s. By default, these gains fall under Section 988. In this code section, the gains and losses from forex are treated as interest revenue or expense, the net to be reported on Line 21 of Form 1040. Consequently, capital gains rules do not apply, the 60/40 split is not available for use, and unwary traders can expect to pay more if they do not know their rights.
Section 988 is further complicated by requirements to record currency value changes on a daily basis, but the IRS also permits a trader to opt out of these provisions. A forex trader may choose Section 1256 treatment for each separate transaction by opting out of Section 988 before each trade and maintaining personal records to support these elections. Most traders wait until yearend to make these decisions, but this bending of the rules will most likely draw IRS attention at some point.
The present situation is open to obvious manipulation and abuse. In order to minimize taxes, a taxpayer would only have to treat all losses as Section 988 to offset other ordinary income, and then treat all gains as Section 1256 to benefit from favorable capital gain treatment.
To complicate matters further, the IRS has provided Notice 2007-71, which states that “over-the-counter currency options” may no longer be treated as “foreign currency contracts” in Section 1256; instead they are now part of Section 988. Forex binary options have arrived on the scene in the past two years as if the IRS anticipated the arrival beforehand. An opt-out election exists for these, too.
Perhaps the IRS intended to clarify matters, but the 2007 notice and Sections 988 and 1256 remain conflicted and confusing as ever for most all forex traders and brokers.
The one positive point is that none of these revenue items are subject to self-employment taxes, a relief of sorts. However, forex traders would be wise to check with their tax professionals before filing their tax returns, especially regarding documentation for Line 21 items. 

Foreign Forex Brokers

The new CFTC rules consist of 50:1 leverage decision as well as many other regulations for the industry. But there might be one big hidden rule: US clients won’t be able to open accounts with foreign brokers. This can be implemented by assigning the notorious 7995 credit card classification to foreign brokers – preventing American from depositing funds with foreign brokers. Here are the full details.
The CFTC finalized their ruling for forex, with the 50:1 leverage decision taking the headlines. The rules that will be in effect on October 18th, about 6 weeks from now are based on the initial proposals from January, but also on the Dodd-Frank act. And this is already something else:
In the past 24 hours, there’s been a lot of talk about one implication of the Dodd-Frank act – that US brokers won’t be able to open accounts with foreign brokers – including subsidiaries of respected and regulated US brokers in the UK.
Here’s what Rob Booker said on a comment on Michael Greenberg’s post yesterday:
The requirement that a counterparty to retail fx transactions be a U.S. financial institution has not changed. That is not part of the CFTC regs that were published today, but rather part of the ‘‘Dodd-Frank
Wall Street Reform and Consumer Protection Act’’ – the finreg that everyone has been talking about.
Francesc Riverola mentions and then emphasizes on a small comment on the official statement made by InterbankFX:
InterbankFX in its public note states: “Beginning October 18, 2010, overseas brokers will no longer be able to service U.S. customers.
So, in order to protect the American public, regulation in the US may not be enough. “Protection” may go beyond dmoestic regulation – it may forbid US clients from opening accounts abroad.
In my report about the CFTC 50:1 ruling, I asked if US traders will run away. But maybe they’ll have nowhere to go to.
How can this be implemented? By blocking credit cards.
Every company has a credit card classification by the IRS. This is called Merchant Category Code (MCC). 7995 is the code for Betting/Casino Gambling.
US credit cards are often rejected when a client tries to fund an account with an online gambling company. This is one of the ways to prevent Americans from gambling outside the US.
This 7995 mechanism to keep money in the US already exists for gambling. Will it also be used for forex trading?
Now, I’m sure there are workarounds, and as Michael states, the gambling industry is still on its two feet. So, this may not fully prevent US clients from trading abroad.
But,  it still might have a strong implication – the average American will virtually have no choice.

Winning Forex Brokers

This year, a total of 10 retail FX broker firms were honored from a pool of close to 90 brokers nominated by more than 1000 traders in 111 countries.  The FX Traders' Choice Awards offer the highest recognition a broker firm could receive and the most reliable results to traders within the fast growing retail Forex trading market.
Because of significant disparities in broker preferences from people in various continents, the FX Traders' Choice awards fall into two major categories: brokers with the widest client acceptance worldwide and brokers with the highest client satisfaction by continent.  
Among Global FX Brokers – those with highest client acceptance worldwide - the FX Traders' Choice Awards evaluated how clients ranked these brokers in five sub-categories: Overall, Trading Platform, Client Service Department, Account Department, and Funding Department.
This year's nominees designated as Global FX Brokers were: FXDD, FX Pro, FX Open, IBFX, FXCM, Oanda, Alpari UK, FX Solutions, Gain Capital (, IG Markets, e-Toro, Easy-Forex, and Saxo Bank.
The top firm in each sub-category received an Eagle award, whereas the 2 runner-up firms were honored with a Falcon award. A total of 30 awards were announced.
For each continental leader, the FX Traders' Choice Awards granted its highest recognition, the Best FX Broker Eagle award. The top 2 runner ups in each continent received the Falcon award. To measure client satisfaction, Forex Datasource drew on its expertise of Net Promoter Score (NPS), a well recognized statistical method to determine what firm counts with the highest net percentage of highly satisfied clients (promoters).  
Full results to the 2010 FX Traders' Choice Awards can be viewed at the official awards website:
About The International Business Times
With over 5 million unique visitors per month, the International Business Times is a leading global financial newspaper online published in 14 countries and in 9 languages. IBTIMESFX, the Forex portal of IBTimes has grown during the past 3 years into a leader in Forex News, Analysis, Education, with over 1 million unique visitors per month. It aims to provide FX traders of all nations the most useful information available. Visit
About Forex Datasource
Launched in 2007, Forex Datasource is a leader in the area of FX broker sentiment analysis and retail FX market research. Through the development of vote-inducing practices and use of statistical methods, Forex Datasource collects accurate trader sentiment information and crafts the criteria for FX broker evaluation. Forex Datasource also offers a portal rich in news, broker ranking information, and Forex education for retail FX traders. Visit
About the FX Traders' Choice Awards
The FX Traders' Choice Awards is the result of a partnership between Forex Datasource and International Business Times (IBTimes) over the course of two years. The Awards are generated using the input of thousands of retail Forex traders from over 110 nations.  The high integrity, scientific approach to data analysis, and vast geographic scope of the results make the FX Traders' Choice Awards the most reliable broker distinctions in the retail Forex industry.  Visit

Pips Geek Forex EA Review

You can continue to do research and find web  sites that actually used the Pips Geek softwareon their own accounts. But honestly, it won’t do you any good.
Here is why:
1. If somebody used the software and made huge profits, that person will most likely keep their mouth shut. Writing review is a profession that pays very bad. So, don’t expect an honest review from a poor writer.
2. Let’s say somebody tested the software and it did not perform. Do you expect that they openly admit how stupid they were and then publish everything with their name in return for a few dollars that they get for the review?
So, either way, you won’t find any review of Pips Geek that will help you much.

Here is a way to get 100% reliable results with Pips Geek, 100% risk free.

There is a solution: Just go ahead and buy the software and then use it. You are not stupid. You will see pretty fast, whether Pips Geek makes you any money or not.
If it makes money you have basically a bonus for Pips Geek: You can keep the software and now you and only you know it works. Keep the software, keep your mouth shut and happily see your money double and triple fast. And in case they thing does not work, just ask for a refund and you are all set.
That is the only way how you will know. But you can wait a couple month and then read stories in the newspaper how people got rich using Pips Geek. But then it will be too late, as the market will be crowded and as you know, every forex robot works for a while and after a certain time the results get slim.
There is a company that offers free practice accounts. They also offer “playing money”. If you deposit just $50, they’ll give you $1,000 real money to play with. That should be enough to get Pips Geek started and make some money. $1,000 is not a lot, but if you let Pips Geek run for some time, it should make at least the money back that you paid for and the $50 that you deposited. After that you are completely in the black and you know it’s working. You can then add some money to your account to get larger gains, or let Pips Geek just work it up to where you want it to be.
When you purchase your copy of the Pips Geek software it comes with a money back guarantee, so you have time to put what I’m telling you to the test.
If it doesn’t work, simply return it and get your money back, no harm done.
So, to recap, here is what you do:
1. Get your hands on Pips Geek here.
2. Download eToro trading platform and install Pips Geek
3. Either deposit $50 and get $1,000 real money bonus and test Pips Geek with real money, of which only $50 was yours or, if you are too shaky, just let Pips Geek play with the practice account from etoro.
There is no risk. You can only win either way.

Thursday, September 16, 2010

How to Choose Forex Broker

We maintain had citizens ask us how to go for a Forex Broker in place of online forex trading. Here we will discuss in order pardon? We think you ought to know not far off from choosing a forex dealer.

Low Spreads or Transaction Fees

Online Forex Trading Transaction overheads are calculated in pips. The lesser the better. Generally, spreads are at present sandwiched between 2-5 pips on usual. Be present watchful of forex brokers advertising 0 stone spreads. They are likely charging fees in selected other way.

Leverage Options and Margin Requirements

how to choose forex brokerLeverage can be a high-quality gadget, or a bad gadget, depending on how you wear out it. Better brokers will maintain diverse influence options, connotation a selection of influence ratios. Perhaps a 400:1 influence ratio is too prohibitive in place of you. Do they maintain a 200:1, or 100:1 option? You need a forex dealer with the aim of can offer the influence morals you hunger.
Most online forex brokers wage consequence on a trader's margin tally. Keep in mind with the aim of nearly everyone forex brokers resolve not allow you to be credited with consequence save your margin requirement is by the side of smallest amount 2% (50:1).

Forex Brokers Customer Service

Almost nothing is as valuable as high-quality customer service, especially with online forex trading. Even if you don't wear out it, you ought to maintain access to selected most minuscule service necessities. Does the Forex dealer maintain 24-hour support? Can you write to them by phone? Email? Chat? When you oration to them, resolve the citizens seem knowledgeable? A word of caution... Service might be better by you release and deposit a real money tally. If you unearth with the aim of to be the legal action, withdraw your money and move on to a another forex broker.

Quality of the Forex Broker

how to choose forex broker
You hunger to kind really you maintain a quality dealer.Online Forex brokers are not requisite to be registered or regulated with some agency, since the Forex marketplace is labeled as an "unregulated" marketplace. However, the better brokers will typically be registered as a Futures Commission Merchant (FMC) as well as being regulated by theCommodity Futures Trading Commission (CFTC) and a organ of the National Futures Association (NFA).

Forex Brokers Trading Tools and Research

Better brokers maintain trading tools to be had in place of their tally holders to aid them in their forex trading. Also, nearly everyone brokers will maintain selected form of explore to be had or displayed precisely on their trading situate.

Online Forex Trading Platform

Most, if not all, Forex brokers allow trading on the Internet. The backbone of some online forex trading platform is their software organization and as such is very of great consequence.

Forex Brokers Available Currency Pairs

Make really with the aim of the prospective dealer offers, by the side of most minuscule, the seven major currencies (AUD, CAD, CHF, EUR, GBP, JPY, and USD).
how to choose forex broker

Minimum Trading Size Requirement

The size of single fate may well hold opposing views sandwiched between forex brokers, spanning from 1,000 to 100,000 units. If you are solitary preliminary an tally with a combine hundred dollars, you'll hunger to unearth a forex broker with the aim of allows mini fate trades.

Rollover Charges, Interest, or Swap Fees

Rollover refers to the process of concluding release positions in place of today's quantity engagement and opening the same perception in place of the subsequently day's quantity engagement by the side of a charge shimmering the difference in consequence tax sandwiched between the two currencies. This is besides famous as Interest or Swap Fees.

Forex Broker Trading Hours

Online forex trading occurs 24 hours a daylight hours sandwiched between Sunday late afternoon and Friday late afternoon, so you will hunger to go for a forex broker with the aim of will give permission you trade throughout all marketplace hours.

Hint for Best Forex Brokers

Hint 1 - Experience And Trust Go Hand clothed in Hand

There is rebuff central theme even allowing for entering into a correlation with a forex broker if the trust element is not near. Call me old train, but trust needs to be earned through experience. Sure near are another forex brokers suitable to be had frequently - and selected of them are high-quality by the side of pardon? They resolve. There are besides sufficiently of scam artists with the aim of are looking to prey on the inexperienced. Generally the superlative online forex brokers through their helpful experiences with clients happen to attached to a broking safe. This is unquestionably the basic place to start your search.

Hint 2 - Location Does And Does Not Matter

With forex going away online it has made the high-quality of forex brokers with the aim of much wider. It really does not carry some weight someplace your best forex brokers is located - as long as they are willing to trade in the region you live in. Certain forex brokers will solitary endure some currencies which will place an immediate limitation on whether you can wear out their services. Make really you understand this by you surplus your schedule and effort on researching a broker.

Hint 3 - Get References From Previous Clients

When it comes to choosing the best forex brokers references from prior clients are crucial. Any broker worth their salt will maintain a chain of references from content clients which will noticeably corroborate their track pick up. Be present very wary if a broker does not hunger to reveal you references - a exonerate indication of a scam.

Hint 4 - Understand The Margin & Your Leverage

The margin a forex brokers can offer is crucial. The senior the margin the more influence you will be able to complete with your trades. So near is a great big difference sandwiched between a margin of 20 and 50. Clothed in broad-spectrum brokers with senior margins maintain more experience and reputation as they will maintain bigger amounts of wealth and funding behind them in order to complete the senior margin.

Hint 5 - Make Sure They Are Quick Communicators

It goes not including aphorism with the aim of you need to kind almost split flash decisions in forex trading. What high-quality is a forex broker who is slack by the side of habitual phone calls and emails. You need someone who is going away to be straight on the phone or email whilst a crucial decision needs to be made. Sus barred the forex broker with your opening write to once upon a time you maintain proven with the aim of you are an interested client seeking his/her services. If you perceive some slackness after that pick up again your search.

Hint 6 - Find Them Online

If you are serious not far off from pronouncement a quality forex brokers after that all of the beyond points can be researched online. There is an continually increasing amount of forex forums which are fantastic spaces to start your search. I myself spent days on forex forums asking questions and looking in place of harmful criticism on the forex brokerage firms I was interested in pursuing. It is a little effort - but it will wage inedible in place of you in the long run. Another high-quality tip is to subscribe to Google News in place of 'best forex brokers' - with the aim of way some news regardingforex brokers will be emailed to you - so you ensure you stay up to engagement.


Finding the superlative forex brokers can take selected schedule. Hopefully the advice in this site has certain you selected hints on how to haste up the process. Remember with the aim of a forex broker is near to service you, and they ought to be willing to explain everything and provide fast and detailed transfer. They ought to offer you a tape tally to trial their services. Furthermore a high-quality forex brokers will take the schedule to explain everything and ensure you are comfortable withforex trading.
Struggling to unearth a high-quality forex broker? Discover a foolproof automated forex organization which comes with a highly recommended dealer to ensure you serious profits.