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Internship Report




Dr. Rehana Kousar


Fraz Inam MAF-11-02 M.Sc Accounting & Finance (2011-13)

Department Of Commerce

My loving family. Their love, affection and prayers walk with us and hold our hands in the maze of life. Their hands clear the thorns of our way.

First of all I would like to thank ALLAH ALMIGHTY, Who enables me to perform the given task, and then I would like to thank those people who help me in the finalization of this report by giving me sufficient data and assistance.

The introduction contains the definitions, nature, and features of forex trading. It also contains the objectives and advantages of forex trading. Foreign exchange trading is discussed in this report. While importance in different fields and functions are also mentioned in it. The last section of the report shows SWOT Analysis, Conclusions and Recommendations related to forex trading.


History of Forex Trading Scope of Forex Trading Introduction to FBM Introduction to WTM Products & Services Margin Trading Culture of Company Internship Work in different departments SWOT Analysis Financial Analysis Week by Week Learning & Working Conclusion

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This report is about my internship in Financial Business Magnate, Multan. In this comprehensive report, I have discussed about every major aspect of the company, which I observed and perceived during my internship program. In this report I have mentioned every aspect of my professional work or internship program and discussed in detail about the various departments where I work. Also discussed about the organization business sector, overview of the organization, its competitors, organizational structure, my comments on the organizational structure of this organization, starting and ending dates with departments in which I got training and the duration of my training period. Detailed description of the tasks which was assigned to me during my internship, structure of the finance department, functions of the finance department, Critical analysis i.e. financial analysis, ratio, SWOT analysis of the organization, conclusion in the light of critical and SWOT analysis, at the end some recommendation and suggestions for the solution of all the problem and for the improvement is also given in this report.

History of Forex Trading

The foreign exchange market (fx or forex) as we know it today originated in 1973. However, money has been around in one form or another since the time of Pharaohs. The Babylonians are credited with the first use of paper bills and receipts, but Middle Eastern moneychangers were the first currency traders who exchanged coins from one culture to another. During the middle ages, the need for another form of currency besides coins emerged as the method of choice. These paper bills represented transferable third-party payments of funds, making foreign currency exchange trading much easier for merchants and traders and causing these regional economies to flourish. From the infantile stages of forex during the Middle Ages to WWI, the forex markets were relatively stable and without much speculative activity. After WWI, the forex markets became very volatile and speculative activity increased tenfold. Speculation in the forex market was not looked on as favorable by most institutions and the public in general. The Great Depression and the removal of the gold standard in 1931 created a serious lull in forex market activity. From 1931 until 1973, the forex market went through a series of changes. These changes greatly affected the global economies at the time and speculation in the forex markets during these times was little, if any. The Bretton Woods Accord The first major transformation, the Bretton Woods Accord, occurred toward the end of World War II. The United States, Great Britain and France met at the United Nations Monetary and Financial Conference in Bretton Woods, N.H. to design a new global economic order. The location was chosen because, at the time, the U.S. was the only country unscathed by war. Most of the major European countries were in shambles. Up until WWII, Great Britain's currency, the Great British Pound, was the major currency by which most currencies were compared. This changed when the Nazi campaign against Britain included a major counterfeiting effort against its currency. In fact, WWII vaulted the U.S. dollar from a failed currency after the stock market crash of 1929 to benchmark currency by which most other international currencies were compared. The Bretton Woods Accord was established to create a stable environment by which global economies could restore themselves. The Bretton Woods Accord established the pegging of currencies and the International Monetary Fund (IMF) in hope of stabilizing the global economic situation. Now, major currencies were pegged to the U.S. dollar. These currencies were allowed to fluctuate by one percent on either side of the set standard. When a currency's exchange rate would approach the limit on either side of this standard the respective central bank would intervene to bring the exchange rate back into the accepted range. At the same time, the US dollar was pegged to gold at a price of $35 per ounce further bringing stability to other currencies and world forex situation. The Bretton Woods Accord lasted until 1971. Ultimately, it failed, but did accomplish what its charter set out to do, which was to re-establish economic stability in Europe and Japan.

The Beginning of the free-floating system After the Bretton Woods Accord came the Smithsonian Agreement in December of 1971. This agreement was similar to the Bretton Woods Accord, but allowed for a greater fluctuation band for the currencies. In 1972, the European community tried to move away from its dependency on the dollar. The European Joint Float was established by West Germany, France, Italy, the Netherlands, Belgium and Luxemburg. The agreement was similar to the Bretton Woods Accord, but allowed a greater range of fluctuation in the currency values. Both agreements made mistakes similar to the Bretton Woods Accord and in 1973 collapsed. The collapse of the Smithsonian agreement and the European Joint Float in 1973 signified the official switch to the free-floating system. This occurred by default as there were no new agreements to take their place. Governments were now free to peg their currencies, semi-peg or allow them to freely float. In 1978, the free-floating system was officially mandated. In a final effort to gain independence from the dollar, Europe created the European Monetary System in July of 1978. Like all of the previous agreements, it failed in 1993. The major currencies today move independently from other currencies. The currencies are traded by anyone who wishes. This has caused a recent influx of speculation by banks, hedge funds, brokerage houses and individuals. Central banks intervene on occasion to move or attempt to move currencies to their desired levels. The underlying factor that drives today's forex markets, however, is supply and demand. The free-floating system is ideal for today's forex markets. It will be interesting to see if in the future our planet endures another war similar to those of the early 20th century. If so, how will the forex markets be affected? Will the dollar be the safe haven it has been for so many years? Only time will te TIMELINE OF FOREIGN EXCHANGE 1944 Bretton Woods Accord is established to help stabilize the global economy after World War II. 1971 Smithsonian Agreement established to allow for greater fluctuation band for currencies. 1972 European Joint Float established as the European community tried to move away from its dependency on the U.S. dollar. 1973 Smithsonian Agreement and European Joint Float failed and signified the official switch to a free-floating system. 1978 The European Monetary System was introduced so other countries could try to gain independence from the U.S. dollar. 1978 Free-floating system officially mandated by the IMF. 1993 European Monetary System fails making way for a world-wide free-floating system. The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. The main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.

The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as dealers, who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the interbank market,although a few insurance companies and other kinds of financial firms are involved. Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. The foreign exchange market assists international trade and investment by enabling currency conversion. For example, it permits a business in the United States to import goods from the European Union member states, especially Eurozone members, and pay euros, even though its income is in United States dollars. It also supports direct speculation in the value of currencies, and the carry trade, speculation based on the interest rate differential between two currencies.

The Scope Of Forex Trading

As compared to other financial trading markets, Foreign exchange day-trading has numerous advantages. Currency trading is, in a lot of ways, more beneficial than trading futures or stocks. The Foreign exchange market is really a 24-hour market, daily. It means that the trader of currency can essentially choose their own hours to do their trading business. Foreign day-trading demands a lot less beginning capital than day stock-trading, hence, investors can really begin small in the currency market. Traders need to focus on several leading currencies only, instead of on tens and thousands of stocks. What is more, Foreign exchange day-trading has good liquidity. The Forex currency exchange market is the biggest financial market around the globe today. This leads to narrow spreads and fair prices. The stock liquidity is cut after normal trading hours. Forex trading does not suffer this conflict, since the currency market is available around the clock. Not only because of the around-the-clock market and the liquidity, but because of electronic Foreign exchange day-trading, fast entries and exits are combined with global trading. Traders can choose their most feasible time to do trading business with Forex day-trading, as it is a 24/7 market. The high liquidity of Forex is combined with a real 24-hour market. It offers traders with exceptional independence, and Foreign exchange currency trading, when they want to, and not when the market wants traders to. The Forex market virtually follows the sun, moving around the world from major banking and financial firms of united states, to New Zealand and Australia, to the Far East, to Europe, and then back to United States. With each trading day in Forex day-trading, total currency trading volumes are identified by the markets that are open, and the times each of the markets intersect with one another. With each second, minute, and hour that pass, Foreign exchange currency trading volume stays high, but the peak is reached when British, European, and United States markets open at the same time - this is from 1 p.m. GMT to 4 p.m. GMT.

By all accounts, foreign exchange is the biggest financial market around the globe. In the Forex market, there are no limitations to sell currencies short, not like in stocks, that have to be sold, at short currencies, on an up scale.

Introduction of FBM
FBM is well established Business Identity registered in Pakistan for support services. Fbm is innovative and successful Business Identity and playing its part in continuing development in domestic and international reputation of Support Services Sector. FBM is the trade name of Financial Business Magnate. It help individuals, corporate clients and institutions, work toward better lives by developing and implementing comprehensive plans designed to meet their unique goals and objectives. They are committed to maintain the highest standards of integrity and professionalism in relationship with customers. FBM endeavor to know and understand your Business situations and provide you highest quality information, services, and product to help you reach your goals. Today FBM offers to its clients a wide array of services for business management and effective investment solutions. All of their clients get the same high class services at FBM platform, irrespective of their capital or experience. FBM employees are being professionals in the support services for international markets, which guarantees the clients proper and accurate access for decision making. The FBM comprises a team of professionals which guarantees a high level professionalism, combining experience, skills and dedication. FBM is addressing a growing clientele of retail and institutional traders, 24 hours a day, 5 days a week from Sunday 22:00 GMT (Asian market is open) until Friday at 22:00 ( US markets close) offering the latest technology in trading through WTM Markets trading platform. Their stability is based on our sensitivity to market dynamics and ability to keep up with modern instruments and technologies.

Profile of FBM
FBM aims to achieve excellence in providing brokerage, research and marketing services to its valued customers up to their satisfaction.It consists of highly trained, dedicated professionals, who understand the market. Today, FBM is trying to bring and build a strong domestic skills base in Pakistan, which will provide a lasting legacy It is electronically operated (Computer/internet) based platform allow them to access International markets online with the facilities of round the clock news/wire, charts, products info, trend finding studies and other helping materials. FMB is working with overseas principal WTM Markets New Zealand. WTM Markets Limited is a New Zealand incorporated and registered private limited company under the New Zealand Companies Act 1993, registration number 3862916.

WTM Markets Limited Corporate Profile

WTM Market (NZ) Ltd. is a specialized online foreign exchange and precious metals and commodities trading company that provides high value added services to institutional clients and individual sophisticated traders as well. With our exceptional roster of client services, comprehensive investment research , cutting- edge technology and highly educated and experienced market professionals. WTM is well positioned to provide clients with the product and services and investment advisory services needed to meet the challenges of investing in the new millennium. WTM Markets Ltd. is registered in New Zealand with company office, WTM Markets Ltd. is authorized and regulated by FSP & FDR. FSP (Financial Services Provider) New Zealand is part of the governments financial sector regime. FDR( Financial Dispute Resolution) was established by the Government as part of new regime to provide greater accountability and transparency in the financial sector.

FBM (WTM) Services & Products:

FBM is specialized in providing the most effective research and analysis in the circle of online trading.They give us round the clock customer support and troubleshooting tools and analysis from their research department to maximize our profits and minimize the Risk factors. They welcome their clients to use their workstations in the office any time they want. These are the Products in which FBM are providing Research and Brokerage Services: Currencies Commodities Bullions: (Precious Metals like Gold, Silver) Crude Oil

COPPER Copper, one of the oldest commodities known to man, is a product with fortunes which directly reflect the state of the world economy. It is the worlds third most widely used metal, after iron and aluminum. Copper was first used as early as 10,000 years ago. There is evidence that by about 6400 B.C. copper was being melted and cast into objects in the area now known as Turkey. The first mention of the systematic extraction of copper ore comes from about 3800 B.C. when an Egyptian reference describes mining operations on the Sinai Peninsula . Copper is a compound metal that is a reddish brown in colour. It occurs naturally in various minerals that can be mined, and is frequently employed as a component in a number of metal alloys, such as brass and bronze. Copper is available in a number of deliverable grades, and high grade copper futures contracts are traded under the ticker symbol of HG.The United States and Russia are at the forefront of refined copper production, whereas Western Europe and the USA are the leading consumers. As the developing world continues to industrialise, though, it is

likely that the global copper market will continue to expand, leading to greater demand for copper and therefore rising copper commodity prices. The copper commodity has a number of appealing features. As the copper commodity price is so closely tied to the state of the economy, global economic recovery can be a clear signal that demand for copper is due to increase, as decreased unemployment will result in more houses being constructed, for which copper is a key component. As copper is required for housing construction worldwide, such trends, observable by copper traders on copper futures charts, can result in a massive increase in the sellable price of copper and copper futures. With global demand likely to keep rising, copper trading could be very profitable in years to come. Copper commodities are traded on several major commodity exchanges, such as the New York Mercantile Exchange (NYMEX), the Mumbai-based Multi Commodity Exchange, the Shanghai Futures Exchange (SHFE) and the London Metal Exchange (LME). There are several factors that are observable as affecting the copper forecast, of which copper traders must be aware. Copper future prices are affected mainly by the global demand for housing and electrical appliances, which is a direct reflection of the state of the global economy. Spot prices can also be affected by the current supplies of copper available in a particular region. The shift in the public towards a desire for cleaner energy sources may also affect the price of the copper commodity, as copper is an important component in solar panels, which are believed to become more prevalent in the coming years. The same is also true of cars that run on electric batteries. Improving living conditions worldwide may become a significant market factor, as any expansion of commercial, industrial and residential infrastructure increases the demand for copper. Demand for copper is expected to remain high, especially in the electrical and electronics industries. The current trends in copper processing are towards methods and equipment that use less energy and produce less air pollution and solid waste. In the United States, this is a difficult assignment because of the stringent environmental controls and the very lowconcentration copper ores that are available. In some cases, the production costs may increase significantly. One encouraging trend is the increased use of recycled copper. Currently over half the copper being produced in the United States comes from recycled copper. Fifty-five percent of the recycled copper comes from copper machining operations, such as screw forming, and 45% comes from the recovery of used copper products, such as electrical wire and automobile radiators. The percentage of recycled copper is expected to grow as the costs of new copper processing increase. SILVER Silver has long been valued as a precious metal, and it is used to make ornaments, jewelry, high-value tableware, utensils (hence the term silverware), and currency coins. Today, silver metal is also used in electrical contacts and conductors, in mirrors and in catalysis of chemical

reactions. Its compounds are used in photographic film and dilute silver nitrate solutions and other silver compounds are used as disinfectants and microbiocides. The principal sources of silver are the ores of copper, copper-nickel, lead, and lead-zinc obtained from Peru, Mexico, China, Australia, Chile, Poland and Serbia. Peru and Mexico have been mining silver since 1546 and are still major world producers. Top silver-producing mines are Proao / Fresnillo (Mexico), Cannington (Queensland, Australia), Dukat (Russia), Uchucchacua (Peru) and Greens Creek mine (Alaska). Most people know about the practical applications of silver, such as its use in jewelry, cookware and industrial products, but like gold, silver is also an actively traded commodity and can present investors with real profit potential. Like gold and other commodities, investing in silver is riskier than owning stocks and bonds, but that shouldn't scare investors away from considering silver investments as part of their portfolios. And of course, there are silver stocks and exchange-traded funds (ETFs) available, too. Silver futures are traded at the New York Mercantile Exchange and the Tokyo Commodity Exchange. The New York Exchange deals in dollars per ounce, and trades futures in 5000 troy ounce packages. The Tokyo Exchange uses the equivalent of 965 troy ounces and prices are listed in yen per gram. An important factor that silver investors continually tend to review is the gold/silver ratio. Investors use the ratio to evaluate the relative value of silver and to decide if its an optimal time to purchase gold or silver and how to diversify their precious-metal holdings. Over the last 100 years the price of silver and the gold/silver price ratio have fluctuated greatly due to competing industrial and store-of-value demands. GOLD Gold is one of the coinage metals and has served as a symbol of wealth and a store of value throughout history. Gold standards have provided a basis for monetary policies. It also has been linked to a variety of symbolisms and ideologies. A total of 165,000 tonnes of gold have been mined in human history, as of 2009. This is roughly equivalent to 5.3 billion troy ounces or, in terms of volume, about 8,500 cubic meters. Gold has been widely used throughout the world as a vehicle for monetary exchange, either by issuance and recognition of gold coins or other bare metal quantities, or through goldconvertible paper instruments by establishing gold standards in which the total value of issued money is represented in a store of gold reserves. Because of the softness of pure (24k) gold, it is usually alloyed with base metals for use in jewelry. In medieval times, gold was often seen as beneficial for the health. It is also used in electronics and for other industrial purposes. The price of gold is determined on the open market, by a procedure known as the Gold Fixing in London. Originating in 1919, it provides a twice-daily benchmark figure to the industry. Demand

for gold is widely spread around the world. East Asia, the Indian sub-continent and the Middle East accounted for 72% of world demand in 2007. 55% of demand is attributable to just five countries - India, Italy, Turkey, USA and China, each market driven by a different set of socioeconomic and cultural factors. The main sources of supply are: i. Mine Production ii. Scrap Sales iii. Central bank reserve disposals Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, currency failure, inflation, war and social unrest. Investors also buy gold during times of a bull market in an attempt to gain financially.

CRUDE OIL Petroleum, in one form or another, has been used since ancient times, and is now important across society, including in economy, politics and technology. The rise in importance was mostly due to the invention of the internal combustion engine, the rise in commercial aviation and the increasing use of plastic. The top three oil producing countries are Saudi Arabia, Russia, and the United States. About 80% of the world's readily accessible reserves are located in the Middle East, with 62.5% coming from the Arab world: Saudi Arabia, UAE, Iraq, Qatar and Kuwait. The top three consuming regions are United States, China and Japan. Oil prices are largely controlled by OPEC, or the Organization of the Petroleum Exporting Countries, including Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. These 12 countries control 40% of the world's crude oil supply. This puts OPEC in the unique position of having a lot of influence on the price of gas around the world. OPEC controls gas prices by either increasing or decreasing the amount of oil available. If the amount available goes down, the prices go up. This is the law of supply and demand. This increase or decrease in supply by OPEC can affect the cost of oil in indirect ways as well. The cost of crude oil controls more than just the price of gasoline; heating

costs are also affected. Higher gas prices also influence the cost of travel. If gas prices are high, car buyers are more likely to buy smaller, more gas efficient vehicles. Fewer families can afford to travel, decreasing the money brought into the economy by tourism. Crude oil began futures trading on the NYMEX in 1983 and is the most heavily traded commodity. Crude Oil Futures trade in units of 1,000 U.S. barrels (42,000 gallons). Crude Oil Futures trade 30 consecutive months plus long-dated futures initially listed 36, 48, 60, 72, and 84 months prior to delivery. Additionally, trading can be executed at an average differential to the previous days settlement prices for periods of two to 30 consecutive months in a single transaction. Crude Oil Futures are quoted in dollars and cents per barrel. The price of a barrel of oil is highly dependent on both its grade, determined by factors such as its specific gravity or API and its sulphur content, and its location. The vast majority of oil is not traded on an exchange but on an over-the-counter basis. The price of oil, like the price of all commodities, is subject to major swings over time, particularly tied to the overall business cycle.

NATURAL GAS Natural gas is a fossil fuel. Like oil and coal, this means that it is, essentially, the remains of plants and animals and microorganisms that lived millions and millions of years ago. Natural gas is a vital component of the world's supply of energy. It is one of the cleanest, safest, and most useful of all energy sources. Natural gas is often informally referred to as simply gas, especially when compared to other energy sources such as oil or coal. During most of the 19th century, natural gas was used almost exclusively as a source of light. The invention of the Bunsen burner opened up new opportunities for the use of natural gas in America, and throughout the world. Once the transportation of natural gas was possible, new uses for natural gas were discovered. These included using natural gas to heat homes and operate appliances such as water heaters and oven ranges. Industry began to use natural gas in manufacturing and processing plants. Also, natural gas was used to heat boilers used to generate electricity. The transportation infrastructure made natural gas easier to obtain, and as a result expanded its uses.

Natural gas is commercially produced from oil fields and natural gas fields. Gas produced from oil wells is called casinghead gas or associated gas. The natural gas industry is producing gas from increasingly more challenging resource types: sour gas, tight gas, shale gas and coalbed methane. The world's largest proven gas reserves are located in Russia, with 4.757 1013 m (1.6 1015 cubic feet). With the Gazprom company, Russia is frequently the world's largest natural gas producer. Major proven resources (in billion cubic meters) are world 175,400 (2006), Russia 47,570 (2006), Iran 26,370 (2006), Qatar 25,790 (2007), Saudi Arabia 6,568 (2006) and United Arab Emirates 5,823 (2006). It is estimated that there are also about 900 tetrillion cubic meters of "unconventional" gas such as shale gas, of which 180 tetrillion may be recoverable. The world's largest gas field is Qatar's offshore North Field, estimated to have 25 trillion cubic meters (9.0 1014cubic feet) of gas in placeenough to last more than 200 years at optimum production levels. The second largest natural gas field is the South Pars Gas Field in Iranian waters in the Persian Gulf. Located next to Qatar's North Field, it has an estimated reserve of 8 to 14 trillion cubic meters (2.8 1014 to 5.0 1014 cubic feet) of gas. Before natural gas can be used as a fuel, it must undergo processing to remove almost all materials other than methane. The by-products of that processing include ethane, propane, butanes, pentanes, and higher molecular weight hydrocarbons, elemental sulfur, carbon dioxide, water vapor, and sometimes helium and nitrogen. Natural gas prices, as with other commodity prices, are mainly driven by supply and demand fundamentals. However, natural gas prices may also be linked to the price of crude oil and/or petroleum products, especially in continental Europe.

FOREX The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized overthe-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers. The foreign exchange market determines the relative values of different currencies. In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity

of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system. The foreign exchange market is the largest and most liquid financial market in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. According to the Bank for International Settlements, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, as of April 2010. The foreign exchange market is unique because of its huge trading volume, leading to high liquidity, geographical dispersion, continuous operation, the variety of factors that affect exchange rates, the low margins of relative profit compared with other markets of fixed income, the use of leverage to enhance profit margins with respect to account size. As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding market manipulation by central banks. The U.S. dollar is the currency most used in international transactions. Several countries use it as their official currency, and in many others it is the reserve currency. Most assets are priced in terms of the dollar which underlies the importance of assessing the direction of the dollar in order to determine price trends in that respective asset. Fluctuation in exchange rates are caused by an excess of supply or demand of that currency. For example, if demand of customers to buy US Dollar and sell British pound exceeds, the Pound will lose value against the Dollar. Factors affecting the FX rates include economic situation, political condition and market psychology.

COTTON Relevant references point to two distinct geographical origins of cultivated cotton, namely, Asia and pre-Columbian America. The first cotton fabric would date back to approximately as early as 3,200 BC, as revealed by fragments of cloth found at the Mohenjo-Daro archaeological site on the banks of the River Indus. From India, cotton textiles probably passed to Mesopotamia, where the trade started around 600 years BC. The Arab conquests introduced the first cotton

manufacturing facilities into Spain (Granada), Venice, and Milan. In England, the first cottonspinning factory opened its doors in Manchester in 1641. This date marked the beginning of the cotton industry in Europe. The industrial revolution of eighteenth century Europe paved the way for the most far-reaching, influential transformation of cotton textile manufacturing.

Besides being a major natural fibre crop, cotton also provides edible oil and seed by-products for livestock food. Cottonseed oil is a vegetable oil ranking fifth in world use among edible oils. The cottonseed meal is usually used as roughage in the diet of cattle for its high protein and energetic value. Cotton is bought and sold by investors and price speculators as a tradable commodity on two different stock exchanges in the United States of America. Cotton futures contracts are traded on the New York Mercantile Exchange (NYMEX) under the ticker symbol TT. They are delivered every year in March, May, July, October, and December. Cotton #2 futures contracts are traded on the New York Board of Trade (NYBOT) under the ticker symbol CT. They are delivered every year in March, May, July, October, and December. On the international level, despite increasing local processing (especially in developing countries), cotton is still the main traded agricultural raw materials with more than 30% of cotton production (approximately 6.3 million tonnes of fibre) traded per annum since the beginning of the 1980s. United States is by large the dominant exporter with regard to cotton fibre. Cotton is grown in 90 countries. The four main producing countries are China, India, the USA and Pakistan and account for approximately three quarters of world output. If we add Uzbekistan and Brasil, six countries would account for 83% of world cotton production. Since the collapse of the former Soviet Union, Uzbekistan has been the second major cotton exporter after America. Despite increasing local processing (especially in developing countries), cotton is still the main traded agricultural raw materials with more than 30% of cotton production (approximately 6.3 million tonnes of fibre) traded per annum since the beginning of the 1980s.


For centuries, sugar has been a highly valued and widely traded commodity. Sugar cane production originated, according to historians, some 2,500 years ago on the Indian subcontinent. Today, sugar is a basic part of the production and consumption of many foods worldwide which has made sugar futures very necessary to hedge production and consumption price risk. There are two main types of sugar grown in the world: cane and beet. Both produce the identical refined sugar product. Sugar cane accounts for about 70% of world production. Beet sugar comes from the sugar beet plant, which grows in temperate climates and accounts for the balance of world production. India, Brazil, China, Thailand, Cuba and Mexico are among the leading sugar cane producers. European Union nations, the Russian Federation and Ukraine produce the majority of all sugar beets. The European Union, Brazil, Thailand, Australia, Cuba and Ukraine are leading sugar exporters. Industrialized nations account for most sugar consumption. The European Union, Russian Federation, United States, China and Japan are among the worlds largest sugar importers. Most sugar is either consumed in the country where it is produced under government controlled pricing arrangements or moved from one country to another under long-term supply agreements. The sugar not subject to such agreements is freely traded among a number of nations, corporations and individuals. This makes the market for sugar a "residual" market - a market in which freely traded sugar is only a fraction of worldwide production. The sugar industry closely monitors the level of sugar stocks relative to sugar consumption as a measure of available supply. In the past, small changes in the ratio have led to large sugar futures price movements in the opposite direction.

WHEAT Wheat is one of the first cereals known to have been domesticated. The archaeological record suggests that it first occurred in the regions known as the Fertile Crescent, and the Nile Delta. These include southeastern parts of Turkey, Syria, the Levant, Israel, and Egypt. Wheat is the staple food of millions of people. Wheat, which can be produced in a wide range of climates and soil conditions, grows in areas as far north as the Arctic Circle and as far south as the

equator. It is the most important food grain in the world that ranks second in total production as a cereal crop after maize. China, the Commonwealth of Independent States, the European Community and the United States, lead in world wheat production. The world wheat market is enormous. Annual global wheat consumption is in excess of 550 million tonnes (20 billion bushels). The global grain trade has always been of interest to investors because wheat represents one of the single most important components of world food consumption. Wheat is one of the worlds key staple products, with about 10 percent of production traded on world markets each year. Investing in wheat futures allows traders to participate in the agricultural markets without holding a physical market position. Investing in wheat futures also provides growers with a risk management tool to protect the price of their expected purchase or sale of physical grain. The United States is one of the world's largest wheat producing countries. Japan is one of the largest importers of wheat in the world, with imports originating from Australia, Canada, and the United States. Exportable wheat supplies are also available from Argentina, Europe, Ukraine and other areas of the world, depending on crop situations. This makes wheat a truly global market and allows traders to enter into a global environment to create a broad trading strategy using wheat alone or in combination with other grains. Wheat futures are traded on the Chicago Board of Trade, Kansas City Board of Trade, and Minneapoli Grain Exchange, and have delivery dates in March (H), May (K), July (N), September (U), and December (Z). Like most crops, wheat tends to follow a seasonal price pattern based on the weather. If the winter wheat crop has broken dormancy in good shape and spring rains are sufficient, wheat prices may decline seasonally going into the harvest period as the market assumes an injection of new, larger wheat supplies. After harvesting reveals the size of the crop, wheat prices tend to move up seasonally from June/July through the end of the year. This seasonal price pattern is also the basis for a typical wheat/corn spread that is, buy wheat in June/July when prices presumably are at their lowest level of the season and sell corn, which often rallies to a seasonal high in mid-summer based on weather fears. As a crop grown in many areas of the world, wheat has a fairly stable price history and more trend-based moves compared to other commodity sectors. However, traders and investors in

the wheat market must understand how intermarket influences affect the market on a continuous basis. U.S. wheat has to compete with crops such as corn, milo/sorghum, oats, soybeans and sunflowers, depending on the area of the country, so production incentives in the U.S. can influence wheat production. As a result, wheat prices tend to trade in concert with prices for other crops, sometimes as a leader but more often as a follower.


You just open a US Dollars foreign currency account in any bank in Pakistan. Deposit your equity in your account. As I have mentioned we have a principle broker in New Zealand. Suppose you want to start Business with WTM Markets Limited. We will send your application to WTM Markets Limited. They will open a segregated account with your name in WESTPAC Banking Corporation, 219 Don McKinnon Drive, Albany, North Shore, Auckland, New Zealand . Now your equity will be transferred to your own foreign account through TT.As soon as your amount will be transferred in your account. WTM Markets Limited will give you Username & Password of your Trading Platform (trading software through which you will become able to buy or sell any product above mentioned).

Margin is essentially collateral for a position. It allows traders to take on leveraged positions with a fraction of the equity necessary to fund the trade. In the forex market leverage ranges from 1% to 5%. An investor taking advantage of a 99% leverage facility will only be required to pay a deposit of $1000 to take a position in 100,000 euros. In this arrangement, the broker charges interest on this loan (in addition to the commission on each buy/sell trade) and the investor has to keep the entire amount with the broker as collateral. Also, the investor has to put up additional cash in case the value of margin money falls below a certain amount.

ADVANTAGES OF MARGIN TRADING i. Increased buying power with minimal investment. ii. More profit with less investment. iii. Flexible margin facilities that allow investors to borrow upto 100% of their initial equity iv. Greatly suitable for short-term investors, who trade with high volumes. v. Suitable for sophisticated investors, having knowledge of financial market trend patterns.

DISADVANTAGES OF MARGIN TRADING i. A dual-edged sword; similar to the magnified effect on gains, losses can be more acute. ii. There can be overnight interest due on the amount borrowed iii. The account balance and buying power changes with change in prices. iv. The chance of margin call is always prevailing. v. Investors are obliged to maintain a minimum amount in the margin account, called the maintenance margin. Any fall below this level prompts a margin call.

Culture of company At FBM, we are putting forward a culture of integrity, knowledge and responsibility. Our policies and ancestors are committed to provide the best customers satisfaction with delivering incomparable service. We provide the ultimate experience and knowledge to our clients by putting them at the heart of everything we do. Our people are passionate about clients benefits and are constantly guiding the people through advanced gear to invest in international markets. We believe that what sets us distinctly is our dedication to understanding our clients and listening to what they need. At FBM we are motivated to deliver whatever it takes to help our clients be as successful as they can be.

My Internship Work in different Departments:

The company has following departments:

Marketing Department Research and Analysis Department Admin Technical Department Sales & Customer Services Department Accounts & Finance Department

1. Marketing Department:
Marketing Department is the core department of any organization to sell and introduce the products and services. The head of marketing department is Salman Waheed. This department focuses on the marketing of their company through various means i.e Telephonic Calls, E-mails, Outhouses, Inhouses, Web Marketing etc. Through these means the marketing officers and managers manages to tell the scope of Forex Trading Market and the conditions and opportunities related to the market. The market fluctuations and opportunities are the main key for the clients attention. In this way the clients are attracted towards them and invest in this market. Day-to-day updates and follow-ups are also considered to be a great marketing tool. Company targets the different types of markets which includes: Natural Market Referral Market Cold Market

2. Research and Analysis:

This department deals with all the research & analyses related to the forex and trading. Their research and analysis depends on different factors. In this department Market is analyzed by the professionals on the basis of i. Technical analysis techniques ii. News form the major economic sectors i-e form US, Euro Zone, United Kingdom iii. Data of high impacts which is expected to be released on that day

After the careful analysis and research brief is conducted by the managers at 11 in the morning and at 5 in the evening. The contents discussed in brief are: i. Major news ii. High impact data iii. Buying levels of major products iv. Selling levels of major products v. Quantity of the products to be traded vi. Limit and stop levels of a trade vii. Discussion about the last days market trends and trades

3. Admin:
The CEO of the company is Ejaz Sarwar who supervise all the activities and operations related to FBM and WTM within and outside the country. The COO is Ahsan Joiya who supervises in head office of FBM Lahore and also in FBM Multan Office. He spends his time working in both offices by his physical or virtual/online presence. Under his supervision are the two BDMs of Lahore and Multan offices each. In Multan office, The BDMs are Atif Iqbal and Irfan Gillani. Both the managers control the day to day activities of the Multan office. They handle the clerical and lower staff as well. The staff is divided into two teams which are lead and supervised by each BDM. If they face any issue then they consult with their COO Ahsan Joiya. He also deals with salaries of the employees and staff.

4. Technical Department:
The head of this department is Ishtiaq Hameed. This department deals with Technical issues, computer systems, software development and management, networking, electricity & power problems, devices, wiring etc. Under Ishtiaq Hameed, 4 employees are working daily to manage the technical activities.

5. Sales & Customer Services:

This department focuses on selling their services after getting the client. The company sells its services and its platform to the client to generate profits. They are basically attached and dependent on Marketing Department. If the marketing goes right, the clients will enter into the company as a customer and thus selling department will start its work. The company follows a sales cycle which is as follows: 1. 2. 3. 4. 5. 6. Prospecting Approach Presentation Objection handling Closing Servicing

STAGE 1: PROSPECT POOL Natural Market (Endless Chain) Referrals Cold Calling Intuition and Observation

STAGE 2: APPROACH Ways of Approaching Direct Contact Telephonic Approach Mailing

Qualifying your Prospect The right M.A.N. M. Money A. Authority N. Need

Elements of a Good Approach

Positive opening Benefit (Not features) for prospect Arouse clients curiosity and interest Be specific and to the point rather than generalized

STAGE 3: PRESENTATION This is the main body of the process in which the BDO attempts in a structured and formal manner to explain how he or she can help the prospect C - Compliment M - Mystery Q - Questions S - Sincerity I - Introduction N - Need G - Gift E - Exhibit R - Referrals S - Sale / Close

STAGE 4: OBJECTION HANDLING Common objections Too risky No time No knowledge No Confidence Alternative Investments Interest Investing with another firm Hesitant due to past incurred losses

STAGE 5: CLOSING Tactics Avoid third party Simplify the process Capitalize on closing signals Minor point closing Ram through Close by continual questioning

Reasons of failure Fear Feelings of Guilt Shyness Too early Closing at improper time

STAGE 6: SERVICING Reporting Information Customer Satisfaction & Build up Support

Customers Services department deals in providing the consultancy to their clients. They also provide them the daily basis follow-ups. Clients can learn about how to operate the software to generate and maintain trades. If they dont want to use the software or if they are unable to use the software then the CS Department helps in the operations of their software to process the desired trades. Market Analysis is also provided to the clients on daily basis through Telephone calls, e-mails, meetings etc. They also guide them about when and how to buy/sell the currencies and commodities. The clients can go to office and meet the BDOs/BDMs anytime they want in 5 days a week.

6. Accounts & Finance Department:

The functions of this department are:

To maintain complete record of bills received and payment received. General manager finance keep eye on all process. Verification of completeness and correctness of document received Account & Finance department resolves all queries, problem and issues related to All departments coordinates and employees contacts account coordination information Account & Coordination department maintain records of budgets of all departments Provide useful financial information to company for decision making The finance department is major department in any organization, FBM deals with

ii. iii. iv. v. vi. vii. ix.

department. regarding their payment except admin.

WestPac Bank which is registered in New Zealand linked with WTM Market Ltd. It work as by opening US Dollars foreign currency account in any bank in Pakistan.The customer Deposit their equity in their own account. FBM has a principle broker in New Zea land.The customers equity will be transferred to his own foreign account through TT.As soon as amount will be transferred in Customers account. WTM Markets Limited will give you Username & Password of Trading Platform to the customer and for providing the consultancy services automatically the fees will be deducted from the customers account on every transaction.

SWOT Analysis

Increased buying power with less money. More profit with less investment. A trader can borrow up to 100%of his purchasing price as initial margin. Significantly suitable for short term traders, who need to complete more number of trades with higher volume. Appropriate for skilled traders, having knowledge of Forex and stocks markets trend patterns. Offering minimum spread. Have to remuneration interest on margin because of borrowed amount. Your account balance and buying power changes with changes in market prices. The chance of margin call is always prevailing. The traders are always favored to keep a minimum account in the margin account, called the maintenance margin. Not advocated for neophyte traders without proper consultancy People do not have well information about forex trading.


Opportunities Open branches domestically and internationally. Should focus on the cities like Karachi, Islamabad, Fasialabad where there is more business opportunities. Threats

Harvest is the only competitive company of FBM in Multan.


Profitability Ratios: Formula 1. Gross Profit Ratio 2. Net Profit Ratio 3. Operating Ratio 4. Expense Ratio GP/Sales NP/Sales CGS/Sales Expenses/Sales 2011 2012

26,300,000/36,300,000 20,500,000/31,500,000 = 72.45% = 65.07% 13,900,000/36,300,000 8,500,000/31,500,000 = 38.29% = 26.98% 10,000,000/36,300,000 11,000,000/31,500,000 = 27.55% = 34.92% 12,400,000/36,300,000 12,000,000/31,500,000 = 34.16% = 38.09%

INTERPRETATION OF RATIOS ANALYSIS: 1. This ratio measures the margin of profit available on sales. The higher the gross profit, the better it is. Gross profit ratios shows decreasing trend due to decrease in sales. 2. This ratio shows the rate of net profit earned on sales. It helps in determining the overall efficiency of business operations. This ratio was more in 2011 as compared to 2012 due to decreased expenses. 3. Operating ratio is a measurement of the efficiency & profitability of the business enterprise. The ratio indicates the extent of sales that is absorbed by cost of goods sold. Lower the operating ratio is better, so it is better in 2011 because sales are more & CGS is low as compared to 2012. 4. This ratio shows the relationship between expenses and sales. Although expenses are decreased in 2012 but ratio is greater because of low sales.

Week by week learning and working

Week 1: Training Program
First week was about the training. The training batch was consisted of ten employees who were appointed as BDO (Business development officers) and four internees. Our batch was taught about the company and its business by assistant manager Atif Iqbal. In our training classes we were given detailed information about the company (FBM) its broker (WTM) and its nature of business. Financial Business Magnate is basically providing the support services in Pakistan for its broker of international market in New Zealand WTM. We were taught about FBMs valued principals and their meanings. Veracious: We always give clients complete information about the services we offer; Candor: Our specialists are always available to consult with clients on whatever issues concern them; Translucency: Our operations are simple and straightforward and meet all professional requirements and standards. We value our reputation and always fulfill our obligations towards clients. We were told about the mission of the company which is To Support our customers triumph financial affluence and peace of mind. It is reflected from their principals and mission statement that the first priority of this company is their clients. We were taught about the Rules and Regulations governing this business in Pakistan. We were taught about the advantages of trading in the FOREX which were: 1. 2. 3. 4. 5. 6. Unmatched liquidity and continuity A highly trending market with fewer gaps No hidden clearing and exchange fee and trading charges A user-friendly electronic interface facilitating speed of transaction Better leverage as compared to exchange-traded futures Least chances of artificial manipulation because of huge size.

Another learning we got was about the components of Forex and commodities trading. A brief introduction was given to us about all the aspects and departments of the company along with their workings. In the end of the training, after we learned everything, I appeared in an Evaluation Test and passed.

WEEK 2: Presentations & Clients Handling

In this week, I was told that how can I give presentations to our clients. I was told about the procedure of giving presentations. I was given the handouts of the steps of giving presentations. I read the given handouts and then practiced it by myself. After that, my manager took a test/quiz about those handouts. Then he himself gave different kinds of presentations to the whole batch. The presentations covered a lot of different situations. Then after that the managers asked seniors to assist us with different queries. They also gave several presentations and then asked us to give presentations to the imaginary clients. Then they pointed out our mistakes so that we could be more perfect in dealing with clients and customers. In the end of the week, we were fully experienced about giving every kind of presentations and answer every question of the clients.

WEEK 3: Marketing & Selling (Phase I)

In this week, we learned about different phases and aspects of Marketing and Selling. Marketing Department is the core department of any organization to sell and introduce the products and services. The head of marketing department is Salman Waheed. In this department, I focused on the marketing of their company through various means i.e Telephonic Calls, E-mails, Outhouses, Inhouses, Web Marketing etc. Through these means I managed to tell the scope of Forex Trading Market and the conditions and opportunities related to the clients. I was given the task to generate 25 in-houses/out-houses (friends or MANs). The reason for this task was to make me able to give presentations to them properly and to polish my marketing and clients handling skills. The market fluctuations and opportunities are the main key for the clients attention. In this way the clients are attracted and invest in this market. Day -to-day updates and follow-ups are also considered to be a great marketing tool. Company targets the different types of markets which includes: Natural Market Referral Market Cold Market I practiced to target all the above mentioned markets.

WEEK 4: Marketing & Selling (Phase II)

In this phase, I focused on selling their services after getting the client. The company sells its services and its platform to the client to generate profits. They are basically attached and dependent on Marketing Department. If the marketing goes right, the clients will enter into the company as a customer and thus selling department will start its work. The company follows a sales cycle which I followed as well. The sales cycle is as follows: 1. 2. 3. 4. 5. 6. Prospecting Approach Presentation Objection handling Closing Servicing

As I was only an Internee there, my work was to prospect the client, then approaching to that specific client and giving a good presentation about our work and its scope, then answer the queries and to satisfy him all the way so that he can invest and start his account in the company.

WEEK 5: Software Operating & Market Analysis

This week we were introduced to a software named WTM Live used by the FBM & created by the WTM. We were taught about its basic inputs and outputs i.e., how to sell, buy, trade, put limits, executing the trades etc and few other important functions. We also learned how to customize the software and how to apply certain features based on different studies that were conducted, for e.g. we were told how to analyze the graphs, values & charts and how to refer the news related to the market ups and downs. Our senior employees took the gratitude to guide us and share a few informative views and our trainers gave us their excellent guidance. We made our teams and different projects and assignments were made related to the trading platform/ WTM Live. The last day of the week, we had a viva-voce and a written test which we had successfully passed as desired.

When we trade in the market there is no such way which can eliminate risk factor. A traders remedy for this problem is disciplined trading. Meanings he should know how to maximize his profits and minimize his losses, this can only be done if he knows when to get it and where to get out of the market. Market analysis is a tool which helps in getting this discipline. In this week, we learnt about how to analyze the market to minimize the risks and generate more profits. The basis of such analyses are 1. Market Action Discount everything, 2. History Repeats itself 3. Prices always moves in trend There are two kinds of analysis which we gained experience about:
1. Fundamental Analysis Any event that we can relate with economy of a country is called fundamental analysis.

Key Fundamentals for 4 major Global Economies are: US Euro zone Japan UK

United States of America: 1. GDP 2. Trade Balance 3. Non Farm Payrolls 4. CPI 5. ISM (The Institute for Supply Management) Manufacturing 6. ISM Non Manufacturing 7. Industrial Production 8. Durable Goods 9. Existing Home Sales 10. TIC (Treasury International Capital ) Report 11. Personal Consumption 12. University of Michigan Consumer Confidence

Euro Zone: 1. 2. 3. 4. 5. 6. 7. 8. 9. GDP Current Account German Unemployment CPI ZEW Economic Survey IFO Economic Survey German Factory Orders German Retail Sales PMI (Purchasing Managers' Index) Services

United Kingdom: 1. 2. 3. 4. 5. 6. 7. 8. 9. GDP CPI Royal Institute of Chartered Surveyors (RICS House Balance) Nationwide House Prices British Retail Consortium (BRC) Shop Price index Industrial production CIPS (The Chartered Institute of Purchasing and Supply) Services CBI (Confederation of British Industry ) Industrial Trends Survey CBI Distributive Trends Survey

2. Technical Analysis When we plot market history graphically and try to find out the future market direction with the help of various charts formation and quantitative tools, this kind of analysis are technical analysis : Political Stability Government Policies. Economic Situation. Natural Hazards.

Technical analysis is a method of market analysis, which deals with plotting market history in graphical formation for forecasting future markets moves. There are many ways of depicting historical numeric data into graphical form (at FBM we refer it as charts). In financial markets following graphical presentation are commonly in use:

Bar chart Line chart Candle Sticks Trend lines Trend Channels Head & Shoulder formation Retracement line Gaps There are two common studies which are mostly used for technical analysis. i. The Moving Average ii. Relative Strength Index (RSI)

WEEK 6: DEMO Trading

I put my steps into the world of trading but it was all risk-free. These pretend accounts have the full capabilities of a real account except the money/equity which is not real. I learned the ins and outs of the trading platform, and had a good time learning without any risk. It allowed me to learn about the forex market and test my trading skills with zero risk.

After the completion of six-weeks internship program, I was having the complete knowledge about all the departments, working and procedures of this company and its field of work.