Tuesday, January 27, 2009

Play or earn?

Play or earn?


Today, many companies offer services to private individuals cvoi as brokers in the foreign exchange and stock markets. The first question that comes to investors - which make the currency market or the stock, and no less tremulous question of choosing a broker. These and other issues with the vice-president of financial services company "Forex Club" (www.fxclub.org) and vice-rector of the Academy of stock trading Vyacheslav Taran.

What are the roots of the popularity of exchange of instruments of one over the other?
Coglasites, trading on the stock exchange in the first place is associated with securities?


Until now, there are a number of myths and beliefs, which do not allow many people to take a step in the direction of the market "Forex". It is obvious that this is the consequences of past closed exchange transactions from the time when these were only the banks.
Trading on the FOREX market to the average person looks like a kind of mystery, accessible only to professionals with vast sums of money, expertise and special education. However, for most people in the world of buying and selling, for example, shares of corporations that have long been present no problem. Little GM, IBM, Coca Cola or Microsoft can afford to buy a student and a housewife.
But if you look at market rates from another angle - the banknotes, it shares the same states. A gosudarstvo - are the same corporations, large or small, strong or weak. The interior of the device is very similar to the administrative structure of large private companies. Even the titles and functions often coincide. The President and President of the company, the Ministry of Finance and the Finance Department, Ministry of Trade and Commercial Department, police and internal security service, etc.
If the economy are good, and manages the skillful leader - its currency just as shares of private corporations is growing. If the economy is poorly both at home and in the company, this leads to a loss of value of the currency or stock.


There is a widespread view that the market "Forex" very risky compared to stock?

There are many similarities between the stocks of large corporations and the currencies of countries. But there are some differences.
Daily trading volume on the forex market is about 1 trillion U.S. dollars, in 6-8 times the volume of trade on the stock market around the world. It should be obvious conclusion - the market rates simple investor more immune to the action of the major players, with insider information, because at a volume market with a huge number of participants, a very large speculator difficult to play in their game. "
Not a single case in the history of the foreign exchange market when the money would be developed obestsenivalis to absolute zero.
Bankruptcy is the largest corporations in the modern history of everyday business, is to remember the most striking examples of modern times - the company WORLDCOM and ENRON. Then the ordinary equity holders do not receive a penny for their cheap paper in one day.
After the events of 11 September in New York, the vast majority of the shares have not recovered from the losses, which are now the majority of investors make up 10-35% of the capital. On the same currency, this is not possible - all currencies can not be cheaper once or appreciate because They are listed on each other. Obviously, if desheveet USD, EUR expensive and vice versa. Ie always have a choice of currency, which is currently growing.
It's very interesting to see what happened to shares of companies Microsoft Dzhenera Motors, Coca-Cola and AyBiEm (unquestionable "blue chips" American stock market), and with the same "blue chips" currency market - the dollar / franc, the dollar / yen and pound / dollar and euro / dollar.
Consider the year 1998 - the year preceding the introduction of the euro, in this sense, the year is nervous for the currency markets. This year, shares of Coca-Cola first went up by 33%, then fell by 66%, then again went up by 25%.
Shares of General Motors went up by 27%, then fell by 62%, then again went up by 55%. Shares AyBiEm steadily grown throughout the year and grew by 81%. Shares of Microsoft first went up by 84%, then fell by 37%, then went up by 76%.
At the same time, Swiss franc oslabel at 5%, then strengthened by 18%, then again oslabel at 6%. The Japanese yen has weakened by 13%, then matured at 30%. Pound was stable throughout the year, magnitude between the maximum and minimum of the year amounted to only 7%, and by the end of the year the price was different from the price of the beginning of the year Sunday at his 0,6% (!).
Currencies show much greater stability.
Even the celebrated in the history of Forex market drop pounds and strengthen the yen against the backdrop of the shares are fairly light - 39% weakening of the pound in five months in 1992-93 (by the legendary George Soros speculation), and 50% of the strengthening of the yen over five years (1990-95 biennium ).
Year 1998 was another year of relatively stable movement of the U.S. stock market. Began in the fall and subsequent panicheskie ups expectations made the situation even less predictable. In doing so, you need to keep in mind that "leverage" in the stock market is no more than 1 to 4, on the currency market as "shoulder" may vary at will the investor relations from 1 to 1 to 1 to 100. Prone to risk traders can make the price change interest rates in hundreds of percent changes in the deposit, so the forex market as the stock market can meet and desperate speculators and investors cautious.
Yes, in the Forex market the interests huge number of participants. This leads to unpredictable changes in exchange rates in the short term. But here you need to remember that the risk of investment in a specific financial asset is determined not by the difficulty of predicting changes in its value, and so the notion of volatility. It may seem incredible, but on the Forex market rate second only to the market of government bonds in developed countries. In comparison, the volatility of the shares of Russian companies is between 30% to 50%, while the world's major currencies - only about 11%. Courses leading currencies are rarely changed in one day more than 1%.


Well, what with choosing a broker? So, whom to choose? Russian companies or foreign?

Of course, at first glance a foreign company is preferable. And why not? The main argument of many traders - the money will be tselee, and away from our tax. The logic of those words are. Major, what it involves - this is how to distinguish genuine, solid foreign companies from offshore pomoyki established as our fellow citizens.
It is no secret that now anyone can buy American, British, Cypriot, or other similar companies are not more than $ 2.000-5.000, this amount includes the opening of accounts in the normal west bank. Then rent a computer program for trade, a modest (or not so small) office, hired several people staff, and business is ready to work. It is clear that the financial business, these organizations will have no relations.


And how to distinguish a forgery from the original?

Foreign organizations can be divided into two groups - banks and financial companies. Banks have a banking license state, while confirming its existence, is in many public sites on the Internet, in particular at the Central Bank's country-specific. Therefore, if you choose a broker from the bank to check for licenses.
The true financial companies under the supervision of special organs. For example, American companies are controlled by NFA (www.nfa.futures.org), controlled by the UK FSA (www.fsa.gov.uk), Malaysia - LOFSA (www.lofsa.gov.my). If the company complies with the requirements of controlling the organization, it is assigned the appropriate number (ID). Does your potential partner ID, can and should be verified on the official websites of these bodies. Consider the existence of a registration number NFA or FSA test of reliability. By the way, please note that the regulation of the FOREX market in the UK is much stricter than in the United States. In this respect, British companies are preferable to others - the client is protected in an order of magnitude worse than anywhere else. The absence of such registration in the NFA or FSA means that you are faced with an organization that only masquerades under foreign.

Finally the theme of psevdoinostrantsami, I would like to emphasize the main point. There are no problems that the financial business in Russia is forced to resort to all kinds of offshore schemes. Around the world, their legal purpose - minimizing taxes, all the major global brands are subsidiaries anywhere in the Virgin Islands, Panama, Uruguay, and so on. As a living example of the world famous English bank Barclays (www.barclays.co.uk) and its special unit for wealthy clients, registered in the area of tax in the Isle of Man (www.barclaysprivatebanking.co.uk). Or, here at least another major U.S. bank CITIBANK (www.citibank.com) has a "daughter" CITIBANK IPB (www.citibank.com/ipb/europe/global/centres/1.htm) at about strove Jersey. The list goes on, moving in the telephone directory alphabetically otodnogo big name to another. In all this, there is absolutely nothing wrong and reprehensible. If the company openly claims that such a foreign firm is a subsidiary unit under full Russian control, the honor and praise for her candor and openness! In such a situation, the Client has full information to assess their risks, advantages and disadvantages encountered in the process of cooperation with such a partner. There are already in the first place stands clear and tangible reputation of the parent company in the Russian Federation, and any person can easily determine whether imozhet whether he wants to trust their money this organization.


And what about Russian companies?

Legal authority to conduct operations on purchase and sale of foreign currency in our country, only those banks which are licensed currency Central Bank of Russian Federation. The second option is Bookmaker license from GOSKOMSPORTA. Then, the company provides services that are referred to in the West as the "Financial Spread Bettingservice". Many well-known companies, such as SMS (http://www.deal4free.com/spreadbet/benefits_details02.jsp) and IF Markets (http://www.finspreads.com/spread.asp) using this scheme. In any case, it is regulated at the state level, and therefore has legal force.


It is dangerous to "play" on Forekse? What is the probability of losing an attachment?

Forex - it is just normal business, such as, for example, the contents of the restaurant, salon or fitness center. There are interesting statistics of the World Bank refers to the success of small and medium-sized businesses. According to the statistics, not all people can be successful. In the long run, the percentage of successful people become close to the percentage of success in the usual business.

Novikov MS FOREX MAGAZINE

6 comments:

Hedge Fund Lawyer said...

Forex managers are not currently required to be registered in any capacity with the NFA. However, new forex registration requirements will mean that managers will need to register with the CFTC and become members of the NFA which will increase forex compliance costs.

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