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EarnForex.com Monthly Newsletter
| | | | Welcome to the latest issue of EarnForex.com newsletter — October 2015. In this issue of EarnForex.com newsletter, I will remind you about the most important Forex-related events of the last month and will also show you the list of the site's latest updates. | | EDITORIAL: Interest Rates in Forex | | Interest rate difference (called Swap in MetaTrader platform) can be confusing to new Forex traders. The concept is simple: you are paid or pay for holding a trade open in your account because what you buy or sell in Forex is not delivered. If you spend 110,000 USD to buy 100,000 EUR, you should be paying interest on 110,000 USD and receiving interest for 100,000 EUR. The actual interest rate values are based on the overnight LIBOR for a given currency. LIBOR depends heavily on the official overnight interest rate set by the issuing central bank. In theory, it means that you will be earn from swaps when buying a currency pair with high-interest currency on the long side and with low-interest currency on the short side. In reality, brokers add their own markup to the rates so you may end up paying both ways no matter which currency pair you choose. When taking swaps into account you have to remember the following: - 99% of brokers apply swap at New York closing time — 17:00 EST.
- You get triple swap on Wednesdays — one for Wednesday and two for the weekend.
- You do not need to keep position open during the whole day (or weekend) to get full swap for it — you can open it a second before 17:00 EST and close it a second after you receive your swap.
- Some brokers do not pay or charge swaps. They can be useful in certain cases (even if you are not Muslim).
- You can shop for better swaps by looking at what brokers have to offer.
- Approximately 90% of all brokers use MT4 platform. Those who do not may use other rules for handling swaps. You need to study their conditions carefully.
| | Overview of the major currency pairs' performance in September | | EUR/USD — was up during the first half of the month but soon lost all of its gains to close near its opening level. It was at the maximum at 1.1460 on September 18, at its minimum at 1.1087 on September 3, finishing the month at 1.1176. GBP/USD — traded similarly to EUR/USD but with a much sharper decline in the second half of the month, resulting in a negative total monthly outcome. The highest monthly rate was at 1.5658 on September 18, while the lowest — at 1.5107 on September 30. GBP/USD finished September trading at 1.5125. USD/JPY — consolidated in a sort of a tightening rectangle. The pair rose to as high as 121.32 on September 10, reaching a bottom at 118.58 on September 4 and closing the month with the 119.87 rate. EUR/JPY — posted two price humps in September, the second one being much lower than the first one. The monthly high was at 137.43 on September 17, the monthly low — at 132.22 on September 4. Trading ended at 133.95 for this currency pair. GBP/JPY — fell somewhat during the first week, rallied during the next two weeks, declined through the last trading days of the month. The maximum level for this pair was 188.28 on September 17, while the minimum — 180.39 on September 7. The month's trading ended at 181.30 for GBP/JPY. | | Fundamental background of the past month | | The US dollar was relatively strong in September due to the outlook for an interest rate hike later this year. Yet the Federal Reserve policy meeting dashed such expectations as markets considered the statement to be rather dovish. Remarks made by Janet Yellen, Fed Chairperson, later reinvigorated speculations about monetary tightening in 2015. Yet such talks hushed after US non-farm payrolls turned out to be very poor. The euro was surprisingly resilient, and even the dovish stance of the European Central Bank did not weaken the currency much. While the outcome of the Greek parliamentary elections was not helpful for the currency, comments from ECB President Mario Draghi, who downplayed expectations of further quantitative easing, certainly were. September was not a good month for the Great Britain pound as it has started with a big slump of the currency. Even positive employment and GDP data as well as talks about monetary tightening did not help the currency much. Not all reports were favorable to sterling, including the ones that showed a widening budget deficit and a decline of consumer prices. Risk aversion caused by expectations of monetary tightening was beneficial to the Japanese yen, and the passiveness of Japan's central bank helped the currency as well. There were negative factors for the yen too, like the downgrade of Japan's credit rating by Standard & Poor's and deflation in the country. The Swiss franc was mostly unchanged last month following the policy decision of the Swiss National Bank. The Canadian dollar was weak due to the fall of crude oil prices. Even the favorable outcome of the Bank of Canada policy meeting did not help the currency. The Australian dollar slid as well despite the supportive employment data and the hawkish comments from Glenn Stevens, Governor of the Reserve Bank of Australia. At the same time, the policy statement from the central bank was detrimental to the currency. The New Zealand dollar fell too, following the interest rate cut and disappointing economic growth in New Zealand. Gold dropped due to the outlook for an interest rate lift-off from the US central bank, though it is important to note the metal has rallied strongly after the dismal non-farm payrolls. | | Interest rate changes in September | | New Zealand | 3.00% | -0.25% | 2.75% | | Norway | 1.00% | -0.25% | 0.75% | | Republic of India | 8.25% | -0.50% | 7.75% | | Taiwan | 1.88% | -0.13% | 1.75% | | | Top 5 Forex brokers of the last month | | Five new Forex brokers have been added to EarnForex.com since the last issue of the newsletter: - BCapitalsFX — an unregulated MT4 broker with a full range of account types, starting with $10. The maximum leverage is 1:400, and the spreads are pretty low.
- Seven Star FX — an offshore company with Belizean registration and MetaTrader 4 platform. Standard accounts start at $500 while ECN accounts require $10,000 minimum. Both offer leverage up to 1:100. Many trading instruments are available for choosing.
- Vomma Trading — an unregulated Russian Forex broker aimed at small traders. Their minimum is just $10, and their leverage is maxed at 1:500. The only available trading platform is MetaTrader 4.
- Bulls Capital Markets — a regulated Forex broker from New Zealand that started offering its services back in 2013. They offer MT4 platform with $50 minimum account size, up to 1:1000 leverage, and micro-lots.
- FinPro Trading — an unregulated company with offices in several countries. This broker offers a range of account types: micro, ECN, STP, and Muslim. Three trading platforms are available: MetaTrader 4, ZuluTrade, and TradeStation. The lowest minimum to start trading is $5.
You can always view our full list of Forex brokers. | | There were the following important Forex industry news since the last issue of the newsletter: - CFTC launched a RED List of trading companies that solicit US traders without a proper registration.
- FXCM has got some of its clients' accounts hacked. According to the report, all the stolen funds have been returned, but the company suggests all traders to reset their passwords.
| | Until the next newsletter issue! | | That is all for the October issue of the EarnForex.com newsletter. If you have questions, comments or just want to see something else in the next monthly issue, please let us know. | | |
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