Fxtradermagazine 2 Eg

TRADER MAGAZINE
Central Banks
disregarding
t h e d o ll a r ?
Broker reviews
brokers
survival
Green Shoots
Recovery
CL S global
Market gate
Majors
guide
Report
Trading Psychology the impact of new US regulations
and the markets and the private traders choice
JULY - SEPTEMBER 2009

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CONTENTs FX
CENTRAL BANKS
DISREGARDING THE
DOLLAR ?
A study about central banks’

current monetary policies
13
FOREX BROKER SURVIVAL GUIDE:
16
The impact of the new NFA regulations and the traders’ choice from the
Forexds Awards 2009
TRADING
S Y S TEM S :
Why building a
reliable FX historical
database is a real
challenge
28
05 Editor’s note INTERVIEW TECHNICAL ANALYSIS
34 Mike Buzzeo, Sr. Vice President 54 Majors Technical Outlook
MACROECONOMICS Marketing, FXCM, shares his views on EUR/USD – EUR/GBP
07 Green Shoots Recovery: the new US regulations and explains the 57 New Zealand Dollar
fundamental analysis of the first company’s current development
economic recovery signs and their 59 Majors Report
impact on currencies 59 Dollar/Yen, Euro/Dollar,
43 Franz Schmadl, CIO, OSV Partners, Euro/Yen, Euro/GBP
FOREX INDUSTRY explainstheimportanceofriskmanagement
24 CLS : a gate for the global FX coupled with a solid investment and INTERNATIONAL DATA
market independent decision making process 63 FX Spot Monitor
TRADING PSYCHOLOLGY 64 Central Bank Rates
BROKER REVIEWS
48 ODL Securities Limited 40 Why successful trading has very little 65 Economica Data - FX Poll
51 GFT UK to do with the market 66 Markets View
OPTIONS FOCUS 67 ECONOMIC CALENDAR

37 The dynamics of option 46 Bonds: How to choose a bond,
pricing balancing risk and reward
FX TRADER MAGAZINE July-September 2009
FX CONTRIBUTORS
Alessandro Balsotti, is head of FX trading in Tradermades technical analysis service. Fully
Abax Bank and covered the same role previously annotated Technical commentaries are
in Banca Caboto. For several years he has been provided on Tradermades Maverick charting
the FX market-maker of Italian Lira, Greek system. The service is available as an add-on to
Dracma and Czech Crown in JP Morgan. Maverick, or via a separate web-based login. To
arrange for a free trial, call 020-8313-0992 or
D. Roy Fraser, is the Managing Director of e-mail sales@tradermade.com
Incapital Europe Limited, the investment
bank that runs a platform providing regulated Ruggero Mameli spent 11 years in London
financial intermediaries with investment-grade working in FX, Derivatives and Fixed Income.
bonds. Their tenet of “Bonds For Today’s He joined Danske Bank and worked between Editor :
Investor” can be further explored at incapital. London and Copenhagen and was also Emmanuelle Girodet
com,internotes.comandstructuredinvestments. involved in some project developments with
editor@fxtradermagazine.com
com the New York office. He is a contributor to
Bloomberg Television, CNBC Class and CNB
Steffen Gregersen has played a leading role in Arabya. He is a specialist in Islamic Finance Advertising manager:
Saxo Bank’s Quantitative Analysis and Advance and Geopolitics of the Middle East. Monique Atlan
Research Department in its development of ad@fxtradermagazine.com
the bank’s option pricing models. He holds a Caspar Marney, started his trading career, as a
degree in Mathematics and Economics from spot currency trader and technical analyst with
the University of Copenhagen where his thesis HSBC in London. He then moved to SBC Webmaster:
was on the effects of jumps in underlying prices Warburg (later UBS) as a proprietary trader Hristo Katzarski
on option prices. and global head of technical analysis for FX webmaster@fxtradermagazine.com
and precious metals, where he became one of
Jason Alan Jankovsky is a 20+ year veteran the bank’s most successful traders and a regular
Graphic design:
of leveraged transaction trading. He has been commentator on financial television.
trading extensively in Futures, Options, and Preslav Dobrev
FOREX since 1986. Working in almost all Giorgio Martini has been a forex trader since
facets of the business, he has authored several 2000 and has worked for leading Italian banking Editorial support:
trading systems, he has trained other successful groups. His articles are regularly published on Lorenzo Lorenzi
traders and has been published in many industry the Italian financial portal www.smartTrading.
Luca Di Bari
periodicals. His numerous articles on global it . He also collaborates with Age Italia, an
cash FOREX have appeared in “Tradersavvy”, independent financial consultancy firm. Kylie Lippert
“The Perspective”, “SFO Magazine” and other
industry publications. He is the author of Maurizio Milano, began his career as forex
“Trading Rules that Work: The 28 Essential dealer in 1995. He started the technical
Lessons Every Trader Must Master” and “The analysis department at Banca Sella Group. He Trading carries a high level of risk, and may not be
Art of The Trade: what I learned (and lost) teaches technical analysis at the University suitable for all investors. The objective of FX Trader
Magazine is to give readers the tools, training and
trading the Chicago futures markets” (Wiley & of Turin, Italy. His contributions can be
information which will help them be better prepared
Sons, October 2006). Both books are Amazon. found in the most renowned Italian financial to trade on the foreign exchange. However, any analysis,
com top-100 best seller. newspapers and televisions: Borsa&Finanza, news, research, strategy, or other information contained
Il Sole24Ore, Il Corriere della Sera, Class- on this magazine is provided as general market
information and does not constitute investment advice.
JW Partners is an independent FX solution CNBC, RadioRai1. He is member of SIAT
provider, based in Milan, with a strong (the association of the Italian technical analysts) FX Trader Magazine, will not accept liability for any
FX specific know-how. JW supports and IFTA (the International Federation of loss or damage, including without limitation to, any loss
institutional investors and HNWI in building Technical Analysis). of profit, which may arise directly or indirectly from use
of or reliance on such information.
quality FX multimanager portfolios, and FX
underlying structures. Javier Paz is the CEO of Forex Datasource, a
boutique market research firm that continues
Steve Jarvis has over 20 years experience of to track and attract broker evaluations from
providing technical analysis to FX professionals. traders worldwide through its website www.
Formerly Chief Technical Analyst at MCM forexds.com. The firm will announce on May Subscriptions:
Currencywatch and Informa Global Markets, 2010 the results of its 2nd Forexds Trader’s www.fxtradermagazine.com
Steve is head of technical analysis at InterpreTA, Choice Awards.

EDITOR’s note FX
New US broker regulations for a

better protection of the FX trader
Welcome to the second edition of can now expect a complete new set of protection and service supply but,
FX Trader Magazine. It’s with great of regulatory decisions which will most importantly, in terms of trading
pleasure that we publish this edition, transform the industry in the next execution transparency and price
considering the big success of the years, and inevitably generate further quotations.
previous issue. industry consolidation. We might start to see a change
The magazine has not only been of market sentiment in the various
downloaded by a great number of Europe will very probably follow internet forums regarding issues like
traders but, we also received many the same path as well, as soon as Stop Hunting and other aspects of
compliments and messages of forex will have reached Mass Market trading execution, which are at the
congratulation from disadvantage of forex traders.
the industry, for the And why not expect best
quality of the articles execution to be introduced
and of the editorials. on the retail market as well?
This, of course, is This is possible too. In other
our best reward but, words, a very exciting future
also emphasizes that is ahead of us…
the interest for forex The Interview of Michael
markets is always there Buzzeo, Sr. Vice President
and continues to grow. Marketing of FXCM, also
So, we will try to do allows to understand why
our best to pursue our one the leading international
mission by continuing forex brokers supports those
to provide readers new regulations and explains
with quality editorial how, in his opinion, they
content. could impact the European
In this issue, we’ve markets.
chosen Javier Paz’s Safe Keeping Cage of Thomson and Mckinnon Brokerage Firm To summarize, the forex
article as the main market continues to expand
one, because the author underlines dimensions. This could even happen and get better structured. FX Trader
the progressive regulation process of before we expect it to, considering Magazine will be there to follow
the FX market, currently taking place the strong disparity in terms of costs industry developments and will
in the US. The introduction of rule and regulation procedures, which continue to inform you and analyze
2,43b from the NFA is the first strong currently benefits European brokers, new important market news and
signal that the regulation entities want as Javier points out in his article. If, on events.
to protect the final client. This is, we the one hand, this implies higher costs
believe, a positive thing. From the for brokers in the future, on the other
original “far west” market conditions hand, this invevitable process will
that were ruling FX in its infancy, we benefit the final client, both in terms Emmanuelle Girodet

MACROECONOMIcs FX
Green Shoots Recovery

I am not young enough to know everything
Sir James Matthew Barrie (with Peter Pan’s voice)
The macro framework in the last victory for the CAD (+12%). More
three months has evolved into a surprisingly, after facing plenty of
clear direction: the triumph of the obstacles, the Pound has also been
‘green shoots’. In mid-March, the a real outperformer (+18% on the
struggling stock market was just Dollar and +8% on the Euro), the
beginning to recover from violent UK perhaps being the nation where
declines suffered in the first nine more evidence of the ‘green shoots’
weeks of 2009. By mid-June, the of recovery showed up.
message is clear: the market seems Of course the emerging currencies
to have chosen, from the alphabeti have performed well, especially
soup of potential recoveries from those whose value is usually
the darkest of recessions, his letter. measured versus the Dollar, such
The equity market each day that as the ZAR (+19%), the currencies
passes seems to say emphatically: it of Latin America and those of NJA
will be a V recovery (and not a U, (non-Japan Asia). Eastern Europe
a W or, worse yet, an L of Japanese and Turkey, quoted instead against
memories). a Euro in-shape, have shown rather
The FX world, for many months marginal progress (between flat and
deeply bound to the destiny of the 3%).
global economy, could not respond The other side of the coin has been
in a more coherent way. the renewed weakness of the Dollar.
From March 15 th to June 12 th The first week of June has seen the
market close AUD and NZD have greenback mark yearly lows against
definitely been the victorious all major currencies: 1.4337 Eur/
currencies (around 24% gain on the Usd, 1.6363 Gbp/Usd, 1.0592
dollar!). Easily explained given their Usd/Chf, 0.8264 Aud/Usd, 0, 6435
notoriously cyclical nature, linked Nzd/Usd, 1.0785 Usd/Cad. in an intermediate position.
to global growth, especially to Asian The Euro has settled, along with The Yen, without much noise, has
growth (which seems to be a primary the Swiss Franc (for now quite able actually shown a similar weakness
force in this recovery, with the to resist the strong will of weaker to the Dollar, with Usd/Jpy
notable exception of Japan). Partial currency of its own central bank), virtually unchanged in the middle

FX MACROECONOMIcs
of an uninspiring three months

range (93.50 - 101.50), unusually
peaceful compared to the crazy
volatility of the last two years.
Renewed Dollar weakness
Talks of a weak Dollar are back

in the news after an age of lasted
for months in conjunction with
the most violent period of the
economic-financial crisis and the
de-leveraging that has been an
obvious consequence. The inverse
correlation between its USD
strength and ‘risky assets’ health
has been further confirmed.
But other factors have helped the
market to focus on current and
prospective weakness of the U.S.
spiral. This led the market to statements need to be followed
currency. The particularly aggressive
question the future sustainability carefully because in their hands are
and prompt policy of the Federal
of the U.S. debt or even to blame concentrated around 2,750 billion
Reserve lowering interest rates
the Fed. They are even regarded of foreign reserves. Even slight
and pursuing Quantitative Easing
as willing to monetize the debt changes in allocation can generate
has been accompanied politically
(i.e. buying Treasuries without huge flows. Concern that the fiscal-
with a significant fiscal effort in
sterilization) in a premeditated monetary policy of the U.S. could
an attempt to avoid a deflationary
effort to move the costs partially trigger instability in the Dollar and
away, thanks to a major increase in its status as world reserve currency
inflation. Big deficits considered has been often flagged recently.
unsustainable (though we are still Some warnings on the desire /
far from the debt / GDP ratio of need for gradually removing the
some countries in Europe or Japan, Dollar as the main instrument of
there has been talk about a possible world trade and reserve have even
future downgrade for government done the rounds from time to
debt in Dollar rating ) and, worse time. However, it is quite difficult
still, a scenario of hyper–inflation, to give face value to statements of
obviously go hand in hand with a central bankers in countries with
marked weakness of the currency huge reserves in Dollars: they
involved. are trapped in an uncomfortable
Much emphasis has been given position, in the middle of risking
to the voice of the main holders losses due to a weak Dollar and
of Dollar reserves (China, the even bigger risk of generating
Japan, Russia, Korea, the Gulf those losses themselves if the longed
countries and many others). Such diversification were to become
MACROECONOMIcs FX
already mentioned torments of the

weakening Dollar. The 10 year yield
differential between the U.S. and
the Euro-area, in normal times, is
positively correlated to the Eur/Usd.
Since mid-April this correlation has
completely broken down (actually
it did inverted): relatively higher
yields for the U.S. fixed income are
no longer an element of support for
the currency (more interesting and
rewarding for the foreign investor),
but indicators of a potential crisis
of confidence in the Dollar (Chart
1). A correlation to be closely
monitored in the coming months.
Pound is back
Chart 1. The correlation between Eur/Usd and 10Y yield differential reverses.
disordered. It will be worth keeping a better economic scenario and Among the major currencies, the
an eye on the statements that will a faster and stronger recovery best performer in recent weeks has
follow the first official summit of than expected. But more recently certainly been the Pound.
the BRIC’s (Brazil, Russia, India, we got overlapping threatening At the end of 2008 it was trading
China) leaders on June 16th in clouds: fears of hyper-inflation and at 0.9800. It seemed that parity
Yekaterinburg (Russia, the Urals). debt (un) sustainability and the between the Euro and Pound were
For a more detailed analysis on
the delicate relationship between
central bankers and the loved/hated
Dollar please refer also to the article
Central Banks disregarding the
Dollar? - Nomura FX Research on
this same number.
Here we just want to point out
another key element of the Dollar
price action in the last few weeks.
The rates of the long part of the curve
climbed relentlessly, consistently
with the improved world growth
prospects (the ‘green shoots’ again).
Treasuries in particular have shown
a horrible price-action: 10 year
yields briefly touched 4%, in a
few weeks. The primary mover has
been the positive news painting Chart 2. Pound is back.

FX MACROECONOMIcs
countries out of the recession. downmove Eur/Gbp has broken the

The market has continued to try, 200 days moving average (just above
stubbornly, to sell GBP considering 0.8600) and the previous year low of
from time to time to have good 0.8638 (February 10th). And such a
reasons to do so. price action now appears to many a
- In April, after the of Alistair clear reversal of trend.
Darling’s heavily criticized Budget
2009 (between April 22nd and 24th The Baltic countries and the
Eur/Gbp climbed to 0.8940 from European periphery
0.8800).
- In May, after dovish declarations by The Baltic States are in a complicated
the Bank of England (May 7th) and and uncertain situation. For sure
then after the outlook downgrade one in which it is worth keeping the
from stable to negative on UK debt radar well lit on Latvia, Lithuania,
by S & P (May 21st). Estonia. These countries have
- Before the June election weekend, their currencies tied to the Euro.
when a political crisis for Gordon The situation most at risk is the
inevitable. Such an impression was
Brown’s government seemed Latvian one (whose currency, the
renewed in January and March
imminent (the last rattle of Pound Lat, is actually free to fluctuate in a
(Quantitative Easing announced by
bears with Eur/Gbp hitting 0.8860 narrow band of +1 / -1% around a
the Bank of England): the Eur/Gbp
from 0.8600). parity of 0.7028 against the euro).
cross found strength again to try the
All brief glory for Sterling haters. After years of economic boom,
upside however, stopping short at
A clear demonstration of force built on the weak foundations of
0.9500.
from this battered currency. In the the uber-abundant world liquidity
Around mid-March a new era was
starting : a relentless march for the
British currency, even more striking
against the Dollar. The most deadly
scenarios for the British economy
(scenarios who had many supporters,
among all of whom we remember
Jim Rogers with his ‘all rats have to
abandon the sterling sinking ship’)
were – easier now to say in retrospect
- already discounted at those prices
closer to parity. Besides, the popular
green shoots of the second quarter
seem to have enjoyed a particularly
climate on the island: most economic
data (indicators of confidence,
unemployment, house prices, retail
sales) kept beating expectation,
indicating how the British economy
may be anticipating other western Chart 3. Swedish Crown and the Baltic problem.
10 FX TRADER MAGAZINE July-September 2009

MACROECONOMIcs FX
and excessive private sector estimates recently saw the deficit to economies (the banking sector in
borrowing in foreign currency, the reach 12%. It is therefore necessary those countries is mostly owned
GDP contracted -18% in 2008 and for the government to make further by major Swedish banks). Many
an equally dramatic decline is to be budget cuts to bring it back to fluctuations in the Swedish Crown
expected in 2009. about 7%. Unemployment has recently have been generated by
The current account deficit reached already reached 14%. Many people escalation of tensions and following
a record 25% of GDP, the private wonder if this blind determination relaxation in the financial system of
debt with foreign countries increased to defend the currency would turn Latvia and other Baltic countries.
to 130% of GDP and with the out to be a cure worse than the Eastern Europe: the link here is
currency tied to the Euro, there has disease: the economy falling apart not as ‘real’. However HUF and
been a loss of competitiveness made and an unchanged need to devalue PLN have been used as proxy for
even more worrying considering thereafter. Exactly what Argentina playing devaluation (or resisting
recent currency devaluations in was forced into in 2001 (see on this devaluation expectations). The
Eastern Europe. A situation that parallel a recent Roubini article in contagion reasoning goes that in
in some ways recalls the 2008 the FT). Some argue that an early case of breakage of fixed exchange
Iceland experience (unfortunately devaluation (25%-30% suggested in Latvia and shortly afterward in
not marked with a happy ending ). by most economists), accompanied Estonia and Lithuania, the currency
Currently local authorities, by an extraordinary entry path into of Bulgaria (also linked to the Euro)
supported by the EU and the IMF, Euro, could be way better than an would be dragged into the same fate,
say they are fully determined to outright fundamentalist currency. despite economic fundamentals not
defend the currency. An aid package In any case, the situation is fluid, so disastrous (current account deficit
was already established last year fragile and uncertain. It could create actually quite at Baltic levels, 26%
(7.5 billion euros), against a budget an impact in the FX market, either GDP, but an expected contraction
deficit that should not exceed 5% for way. Let’s see where. of the economy for 2009 of ‘only’
2009. But with the current economic Sweden: Swedish banks are -1.6%). Romania would be next
contraction heavier than expected, notoriously vulnerable to Baltic with inevitable tensions, due also
to common exposure of the private
banking sector (German, Austrian,
Italian, Greek), throughout Eastern
Europe.
Such mechanisms of cause and effect
are certainly extreme and unlikely to
be so deterministic even in a ‘Baltic
disaster’ event. It would not be very
likely as well that any generated
downfall would be permanent in
the medium to long term. Still
it is important to monitor the
situation if we are interested in the
FX movements of the European
periphery.
Alessandro Balsotti
FX TRADER MAGAZINE July-September 2009 11

MONETARY POLICIES FX
Central banks
disregarding the
dollar ?
Last month we recommended confident on our short dollar call holding within its foreign currency
taking profits on many of the for the following reasons. reserves. The percentage of reserves
trades that we had been advocating held in euros rose to 47.5% as of
this year (On the sidelines, 14 May Russia is moving out January 2009, up from 42.4% a year
2009), expecting the market to have of dollars; are others earlier. As the euro’s price fell by
a decent correction from the recent likely to follow ? around 4.5% between the two dates
rally in risk and associated sell-off in we know the change is not a result
the dollar. Specifically, we expected The Russian Central Bank is one of of valuation effects.
EUR/USD to drop to either 1.3450 the most transparent of the global
or 1.3200 and NZD/USD to central banks about the make-up of Over the same period, the dollar’s
correct to around 0.5850. As both its reserves. Its latest annual report share in Russia’s FX reserves fell
of these levels were achieved on reveals that the euro overtook to 41.5% from 47% previously.
18 May we recommended reselling the dollar as its primary currency Given the valuation effects, if the
dollars against both EUR and NZD.
We added these trades to our G10
portfolio (Selling USD vs EUR and
NZD, adding to the printer basket,
18 May 2009). Subsequently a
number of additional factors have
made us more comfortable with
adding dollar shorts and we remain
structurally bearish expecting
EUR/USD to rise to 1.50 by year-
end.
Indeed, on a break above 1.3750 we

would look for a fairly rapid move
up to 1.47, and would perhaps
add more risk to our portfolio at
that time. We are becoming more
FX MONETARY POLICIES
Bank did nothing dollar reserves already started switching out of

would have risen to around 49%. dollars although this is difficult
This is particularly important if to ascertain for certain given the
other central banks start to do, or financial crisis that unfolded during
are doing, the same. With global the quarter and the associated
central banks holding USD6.7trn reserve declines that occurred for
of FX reserves at the end of 2008, many EM central banks as they
even small shifts are likely to have sought to defend their currencies
a big impact on the market. Every from excessive weakness.
1% move amounts to USD67bn of
dollar sales. The deputy governor Swap line agreements,
has subsequently said that this does SDRs another move away
not represent a fundamental change from dollars
in the way the Bank intends to keep
its reserves, but the annual report Some central banks have also made deals with the likes of Brazil and
is factually correct. The IMF’s less direct attempts to disregard the Argentina, so that local currencies
latest data on the composition of dollar. Mr Zhou, governor of the can be used instead of the US
global currency reserves showed PBOC, recently posted an essay on dollar.
that there was significant selling of the central bank website discussing
dollars in the final quarter of 2008 the need to create a reserve This was in the news again recently
(exhibit1), as we have mentioned currency “that is disconnected as Brazil’s president visited China
previously (Not so Reserved?, 7 from individual nations”, possibly with aides suggesting that the two
April 2009). There was USD176bn in the form of Special Drawing countries would work towards
of USD selling in the 4Q 2008 Rights (SDRs). China has also using their own currencies in trade
suggesting that central banks had agreed a number of bilateral trading transactions rather than the US
dollar.
Exhibit 1. Central bank buying of major currencies (quarterly)
While such arrangements have
limited impact on the dollar in the
short term, they of course come at
a time when the US is pursuing a
policy of quantitative easing which
we think will eventually undermine
the dollar. As we discussed here a few
weeks ago, we know that the Chinese
authorities share our concerns about
this and the potential risks that are
being taken with future inflation if
the Federal Reserve’s balance sheet
cannot be shrunk quickly enough
once the economy starts to recover.
We therefore think it conceivable
that the big reserve holders of the
world might want to limit their
Source: Nomura, IMF exposure to such risks, and Russia
MONETARY POLICIES FX
and it is accompanied by weakness

in US fixed income assets, then
higher yields might undermine the
economic recovery and the strong
performance of risk assets.
For now we remain constructive on

risk. Over the past weeks there have
been a few developments which
have supported this view. The
election result in India is positive
for risk generally. Despite our
concerns about long-dated fixed
income assets the money market
continues to normalize rapidly.
Exhibit 3 depicts this clearly.
certainly seems to be thinking along area), despite the fact that the The front Eurodollar contract has
these lines. Federal Reserve has been buying rallied by almost 90bp since mid-
Treasuries. March. The fact that three big US
A simple chart of the yield This perhaps suggests that demand banks seem likely to pay back the
differential between the euro area for US fixed income assets is TARP loans soon could be another
and the US (Exhibit 2) reveals that starting to weaken, a factor which is sign that the worst of the financial
so far this year yields on US paper, likely to undermine the dollar and crisis is behind us.
especially those further out the potentially challenge the funding of
yield curve, have underperformed the US current account deficit. So
Europe (i.e. yields in the US have far this process has been slow, but if Global Foreign Exchange Research
risen relative to those in the euro the dollar starts to fall more quickly NOMURA International
Exhibit 2. Bund – US Treasuries Exhibit 3. Eurodollar front contract
Source: Nomura, Bloomberg Source: Nomura, Bloomberg

FX MARKET REGULATIONS
Forex Brokers The traders opinion from

Regulatory changes the 2009 Forexds Awards
Survival guide
for FX Brokers

MARKET REGULATIONS FX
CURRENT BROKER LANDSCAPE Association (NFA) were to fail, chances are that one
morning clients might receive an e-mail from the
O
ver the course of the past two years, regulatory broker’s CEO informing them that their accounts
oversight in the US and the global financial will be serviced by some big firm within days. In
meltdown have changed the landscape other words, the transition to a new broker would be
of what it takes to be a competitive FX broker. a bit disconcerting, but smooth. But what about if
a firm is regulated elsewhere or not regulated at all?
As you read this a few regulated FX brokers are teetering
on the verge of going out of business, most unregulated This article takes a hard look at how client
brokers are complacently moving on, while a new batch perceptions of brokers may be leaving some firms more
of brokers are entering the market, probably unprepared, vulnerable than others in light of regulatory changes.
driven by the allure of profits or by the zeal of sponsoring
a perceived technological or business improvement. Even if you followed FX brokerage news over the past
18 months, it is very likely that each announcement
The FX broker market is consolidating in regulated was evaluated in isolation. A clearer image of industry
countries like the US, Switzerland and Japan. If a trends emerges as we evaluate these announcements as
FX broker regulated by the U.S. National Futures a whole.

• Jan 08. IFX Markets, founded in 2004, is fined $60,000 • Nov 08. CMC Markets pulls its registration from the
by the NFA for failing to supervise its Introducing Brokers NFA and announces personnel cuts in the US, Australia and
(IBs). Aug 08, IFX parent company City Index merges IFX other parts of the world
Markets into FX Solutions • Jan 09. ODL Securities sells its US accounts to FXCM
• Jan 08. NFA completes closure of two FX brokers: • Jan 09. Hotspot FXr announces the sale of its retail FX
One World Capital Group, FXLQ for insufficient net capital accounts to FXCM
requirement • Jan 09. ACM USA, NFA-registrant since 2007 and
• Jan 08. NFA fines Advanced Markets Inc $150,000 indirectly related to AC Markets, announces suspension of
for inadequate record-keeping and introducing broker operations and the transfer of accounts to AC Markets of
supervision Switzerland
• Jan 08. NFA launches a massive effort to close down • Feb 09. US regulator FINRA announces reduction in
fraudulent commodity pool operators (CPOs), resulting in leverage for Forex traders to 1.5:1, reportedly in response to FX
dozens of high profile scams brokers that wanted to circumvent NFA oversight in the US
• Jun 08. Saxo Bank begins NFA registration process as • Mar 09. Last month for online FX brokers in
Futures Commodities Broker (FCM, i.e. FX broker dealer). Switzerland to register as banking entities, as mandated by The
Swiss Federal Banking Commission and FINMA in 2008.
Oct 08 Saxo Bank pulls out registration petition. Saxo Bank
Bank license applicants: AC Markets, MIG Investments,
announces personnel cuts throughout the world. May 09
Dukascopy, and GFX Group (Forex.ch). Realtime Forex S.A
financial statements show increase in revenues and net profits,
decided to move operations to Malta.
of 61% and 23% year-on-year, respectively. • Apr 09. NFA fines FX broker I-Trade FX $250,000
• Aug 08. The US Congress passes the “CFTC for inadequate anti-money laundering (AML) procedures.
Reauthorization Act of 2008” granting expanded powers to A week later, on May 09 I-Trade FX announces sales of its
the CFTC and its enforcement agency, the NFA. The Act accounts to FXCM.
raises the Net Capital Requirement (NCR) FX dealers would • Apr 09. GFS Forex & Futures, a NFA-regulated firm,
need to keep to $20 million by May 2009. The NCR had been exits the US market to be based in the United Kingdom
$5 million through Sep 08 and only $250,000 through Feb
06. • Apr 09. NFA announces rule “NFA Compliance
• Sep 08. IG Markets buys an 87% stake in Japanese Rule 2-43(b)” prohibiting hedging trades, mandating FIFO
currency broker FXOnline for $207 million. May 09 Financial accounting, and imposing restrictions on pending orders
Times report casts negative light on the acquisition due to
• May 09. Japanese FSA announces intention to curtail
recently announced Japanese regulator’s intention to drastically
leverage to 20:1 or 30:1 by the summer of 2009.
curtail leverage, IG Markets publicly trades prices fall • May 09. Ava FX, a FX broker owned by an Israeli public
• Oct 08. MG Financial, founded in 1992, becomes a firm, reports 1Q09 revenues of $11.8 million, with net income
subsidiary (IB) of Rosenthal Collins Group (RCG), a futures of $5.1 million after marketing and advertising expenses of $3.6
broker million.

These series of events leads us to think that a number by the direct and indirect cost of regulation. There
of major brokers entered the US late, in 2007 and are approximately 15 FX brokers that are regulated in
2008, allured by the fact that the US represents some the US, down from about 22 a year ago. Our estimate
30% of the global market place. Who were these is that we might have only 10-12 firms left a year from
firms? There were brokers with a substantial following now.
in other continents, like Saxo Bank, Alpari, and IG Clearly, the industry appears to have reached a point
Markets. There were US futures brokers that wanted where there are two very different types of FX brokers:
to expand into spot FX, like MF Global, Rosenthal 1) well capitalized, highly regulated, operationally
Collins Group, PFG Best, and Ikon Global Markets. sophisticated brokers, and 2) unregulated/lightly-
And there were also new entrants like I-Trade FX and regulated brokers that have profitable businesses but
Advanced Markets. have questionable operational sophistication and
MG Financial, a broker dating to 1992 but not known marketing.
for keeping up with the times, sold out to Rosenthal There are two regulatory bodies with substantial
Collins Group and became an introducing broker to experience in spot off-exchange currency (Forex)
them. The passage of the markets: the United States
CFTC Reauthorization NFA and the United
Act was a major cause for Kingdom’s Financial
CMC Markets closing its Services Authority (FSA).
US operations to focus on The majority of the
more competitive regions remaining regulators are
like the EU and Australia. either increasing their
This move was also matched regulatory oversight in
by Saxo Bank, which Forex – like Switzerland
abruptly ended its four- and Japan – or maintaining
month dealer registration lower regulatory standards
request with the NFA. – Malta, Cyprus, Belize,
and other off-shore
As the minimum regulatory jurisdictions.
capital increased in the The differences in
US from $5m to $10m to regulatory oversight
$15m to $20m within a and the associated cost
few months, more brokers are dramatic. A broker
continued to either sell out outside of the NFA/FSA
or move out of the United regulation does not have
States. ODL Securities and the incentive to adhere to
Hotspot FXr opted to sell their US retail FX business any of the following major NFA requirements:
to FXCM. ACM USA, a partner with (but separately - Report key statistics on a daily, weekly, monthly
owned than) AC Markets of Switzerland suspended and quarterly basis, under the threat of major fines for
its US venture. Right before the increase to a capital lateness, inaccuracy, or deception
requirement of $20m, I-Trade FX, a newer MT4 - Keep records, transactional data and price data
platform broker was heavily fined by the NFA and for years
sold its entire business to FXCM. - Have emergency contingency plans and data
Some like Alpari US and IG Markets have stayed in the privacy protection plans
US while others have exited the market, driven away - Be able to prove marketing claims and have
clear dispute-resolution procedures months – Crown FX was able to continue to attract

- Screen accounts according to anti-money clients throughout much of the shut down process
laundering and anti-terrorism rules while existing accounts had their accounts frozen.
- Strictly supervise the marketing claims of Major changes also appear to be brewing in the
authorized agents soliciting accounts Japanese retail FX world. Since its inception, the
- Publish detailed risk disclosures Japanese retail FX market has been in the hands of
Since 2006, the NFA has not hidden its displeasure a few dozen Japanese brokers. There are reports that
with (spot) Forex brokers that were not part of its on- this later group routinely turned down equity stake
exchange futures brokers group. It set out to fine most offers in their firms from foreign brokers. Finally in
such regulated brokers operating in the US from 2006 late 2008, FXOnline, one of the top five Japanese
through early 2008. As these brokers adhered more brokers, sold an 87% stake to IG Markets of the UK
strictly to the newly aggressive rule enforcement, the for $207 million.
NFA sought approval from Congress to increase the
minimum capital requirement to levels that were 80 Unfortunately for domestic brokers, regulatory winds
times what they were through Feb 2006. appear to have changed in Japan. In May 09, the
Japanese Financial Services Authority reported that
The odds are high that the new “NFA Compliance it was requesting a sharp reduction in leverage for all
Rule 2-43(b)” announced on April 09 will prove retail FX transactions to a maximum of 20:1 or 30:1
to be a serious regulatory overstep by the NFA. It no later than the summer of 2009. Some believe that
is likely to hurt the broker industry in the United this change will mean higher spreads in Japan and
States. All brokers offering MetaTrader4, by far the lower liquidity during the Asian session. More likely,
most popular trading platform in the world with over though, will be the gradual flow of FX accounts out
50% market share, will be particularly hard-hit. US of Japan and a more rapid foreign takeover of Japanese
brokers will have costly modifications to make on the brokers.
client interface and broker backoffice for something
that will actually deter a substantial number of traders
to open accounts with them. In our opinion, UK FX
brokers are best positioned to gain from this NFA
controversial decisions, as long as the UK FSA does
not follow the same regulatory steps.
A massive regulatory shakedown is also taking place
in Switzerland, where the Swiss Federal Banking
Commission had given FX brokers until Mar 2009 to
register as a bank with FINMA (Swiss Financial Market
Supervisory Authority) in order to continue to offer
retail Forex from a Swiss headquarters. AC Markets,
MIG Investments, Dukascopy, and GFX Group (Forex.
ch) filed their banking application with FINMA by
the deadline, while others sold out to existing banks
or left Switzerland to less strict jurisdictions within
the EU zone. The Swiss regulatory push would have
greater credibility if FINMA had not dragged on
the closure of fraudulent Swiss broker Crown FX for

THE 2009 FOREXDS AWARDS Broker Capital - US$ million

THE OPINION OF FX TRADERS
OANDA 159.7
S
o as the winds of regulation change and create FOREX.COM (Gain Capital) 90.8
high
opportunities, the broker sentiment of FX traders is GFT 80.7
what ultimately decides winners and losers. The average FXCM 60.5
trader has to choose from a pool of over 100 FX brokers that, FX SOLUTIONS 41.5
to most traders, appears confusingly similar. Information IBFX 36.5 medium
about brokers on the web is highly dispersed, has questionable
CMS FOREX 29.7
credibility, and is arranged in ways that make comparisons
IG MARKETS 22.8
difficult. Most people choose a broker using a trial and error
method, which can be very costly. FOREX CLUB 21.8
At this point, it is appropriate to take a short detour and ALPARI (US) 21.0
explain the origin of the Forexds Awards. My involvement ADVANCED MARKETS 19.8 lower
in foreign exchange began in 2000, working for BankBoston MB TRADING 17.1
as a currency strategist. Then in 2005 I came to know the EASY FOREX US 15.6
needs of retail traders as I launched the institutional sales IKON GLOBAL MARKETS 13.4
department of Interbank FX. By mid 2007, I felt strongly Source: CFTC, Apr 2009, Adjusted Net Capital
to do something about the abundance of low quality broker
data and left IBFX to launch ForexDatasource.com as a The Net Promoter Score is calculated as follows: percentage of
market research firm and information portal. promoters – percentage of detractors = NPS %. A promoter
After a year of preparing the survey methodology, we began rates a broker with a 9 or a 10, while a detractor rated it with
to collect broker data in a systematic way with minimal self- a 1 through 6. Votes of 7 or 8 are considered “neutral” and are
referral bias or double counting. This research was aided not considered in the NPS.
by the fact that my team counted with a background in For the Forexds Awards, Forex Datasource used simple
applied statistics and broker operations. After one year of averages of the evaluations in the Global FX Broker category
data collection, we gathered slightly more than 1000 broker and NPS scores in the ranking of Continent Leaders. We
evaluations from 82 countries. This extensive statistical recognized that ranking all brokers globally had many
sample with a wide geographic representation was the basis shortfalls. Most brokers had a strong presence in one continent
for the Forexds Awards. only. We discovered significant differences in the average
number of promoters and detractors in different con
We asked traders to rate a FX broker from a list of 50 medium
tinents – see table. We also had diversity in the number of
and large brokers. They answered the question: “How likely
votes for a broker as well as diversity in the size of brokers.
are you to refer this broker to others, from 1 to 10 (where
1=low, 10=high)?” They applied this broker evaluation in five NPS by Promoters Detractors Neutral NPS
satisfaction categories: overall, trading platform, customer Continent
service, accounts department, and funding department.
The numeric results allowed us to calculate what is known AFRICA 25% 24 50 1
in statistics as the Net Promoter Score (NPS), a simple ASIA 21 29 50 -8
percentage that reveals whether a firm has more “promoter EUROPE 27 27 46 0
clients” than “detractor clients.” The simplicity and logic of AMERICAS 39 14 46 25
the NPS statistic is powerful, and it is also helpful to know
OCEANIA 29 29 42 0
what firms are more likely to gain market share and remain
in business. Source: Forex Datasource, 2009, Best Overall category

The Global FX Broker category recognized seven brokers Global FX Best Platform Cust Accounts Funding
that were among the top 6 brokers in more than one Broker Overall Svce
continent. This group of peers was then matched against one
another in the five sub-categories: Best overall, platform, IBFX 1 1 1 1 1
customer service, accounts and funding departments. This OANDA 2 7 2 2 2
year’s winner in this category was IBFX, followed closely by Alpari UK 3 4 3 3 3
Oanda and Alpari UK in third place. FXDD 4 3 5 4 4
Some of the 50 brokers in the survey did not sufficient votes FXPRO 5 2 6 5 5
to allow us to consider the results representative of their FXCM 6 6 7 6 6
client base. We applied the criteria of a minimum of 8 votes, SAXO 7 5 4 7 7
resulting in a list of 28 brokers that accounted for 96.3% of
Source: Forex Datasource, 2009
all votes received.
The Continental Leader category allowed all 28 brokers three winners per continent in two sub-categories:
(even Global FX Brokers) to compete on an equal basis, Highest Broker Satisfaction, and Highest Platform
using the Net Promoter Score of each firm to determine Satisfaction.
Twelve Continental Leaders
Highest ASIA EUROPE AMERICAS AFRICA OCEANIA

Broker Broker NPS Broker NPS Broker NPS Broker NPS Broker NPS
Satisfaction
1 ODL 18.00% ODL 15.40% Interactive 66.70% Alpari 26.00% Oanda 33.30%
Markets Markets Broker UK
2 IBFX -7.80% GFT 9.10% CMS 58.30% FXDD 14.00% IBFX 16.70%
Forex
3 Saxo -10.00% Alpari 8.30% GFT 30.00% FXCM -14.00% FXCM 0.00%
Bank UK
Continent -8.00% 0.00% 25.00% 1.00% 0.00%
NPS
Highest ASIA EUROPE AMERICAS AFRICA OCEANIA

Platform Broker NPS Broker NPS Broker NPS Broker NPS Broker NPS
Satisfaction
1 IBFX 18.60% IBFX 30.00% IBFX 45.70% FXPRO 50.00% Oanda 33.30%
2 FX 12.50% Alpari 21.10% FXDD 37.50% Alpari -10.00% IBFX 25.00%

Solutions UK UK
3 FXDD -8.30% FXCM 21.10% GFT 37.50% FXDD -20.00% FXCM 11.10%
Continent -20.00% -1.00% 15.00% -10.00% 0.00%

NPS
Source: Forex Datasource, 2009, Best Overall and Best Platform categories

angle from which to analyze brokers. There is a

logarithmic trend line in each graph to provide a
sense of benchmark for each of the three tiers.
Something to consider when viewing these graphs
is that brokers who received a lot of votes may be
a reflection of having been in the retail FX market
for many years or having a big marketing budget, and
not necessarily a reflection of how popular they are.
Our sense is that companies like Ava FX and DBFX
have lower number of votes because they are new
entrants. A low number of votes can also be seen
as an indication of declining performance or lower
appeal within a very competitive market. Others like
AC-Markets may have been hurt because our survey
focused on English speaking traders, not on a French-
speaking audience.
In conclusion, there are major regulatory changes
underway in some areas of the world that are
leading to a sharp contrast in FX broker selection:
either a transparent, highly regulated broker or an
opaque, lightly regulated broker. Beyond the issue of
regulation, there is the issue of broker performance as
perceived by clients. The Forexds Awards is arguably
the first major public study to systematically measure
trader preferences and to create a framework of FX
broker comparison. Even after you have considered
all the facts presented in this report, a wise trader
would do well to heed the following broker-selection
tips:
- First identify your own “key FX broker criteria”.
Answer the question “the one or two items that are
most important to me are”, for example: high leverage,
fixed spreads, tight spreads, regulatory environment,
high platform rating , high capitalization, etc.
- Use the key criteria that is necessary to screen out
most brokers, leaving 2-3 brokers that meet all or
most of your criteria,
- Conduct deep due-diligence on the remaining
In our mind, the Global FX category is a recognition brokers, interviewing them directly and using the
of a broker’s size and standing in the market, whereas information on this report and other reputable
the Continental Leader is perhaps more important public sources to determine the best match,
to determine client satisfaction. - After six months, re-evaluate your broker relationship
The three graphs breaking down brokers by number and possibly repeat the selection process
of votes and Overall rating provide yet another
Javier Paz
FX FOREX INDUSTRY
CLS
A gate for the global FX market
Meeting former colleagues and old Italians, Scandinavia was the country managed to receive the elusive Italian
friends is always a pleasure, and each time of Santa Claus, numerous blonde girls balance sheets and after a few minutes
we all tend to say the same thing at least looking forward to enjoying some time of happiness and classic Italian pride
once: “I miss those days when we traded with a wild group of Italian “geezers”, who (consisting of going around the trading
FX together”. Honestly, I don’t. I’d rather love karaoke, wear splendid sunglasses floor to chat with colleagues, casually
trade FX today, it’s much easier. and, moreover, were great lovers. None holding the balance sheets in my
of them ever related their respective hands and displaying them as though
By the end of the 90’s I was in London. countries to finance let alone financial. they were a trophy, showing off as only
It was my first job in the city, I was Food or sex - this is all it was! Italians can do, possibly making a few
enthusiastic and excited. I knew every calls on my two new super hi tech
single spot trader in Italy, so the flows When I first started setting up a credit mobile phones), I then realized that
were guaranteed. My first job was in Den line, this is when I began to realize how the balance sheets were in Italian and
Danske (Danske Bank) and it was then big the problem actually was. To obtain not English. To obtain the English
that I had to face my first problems - to get a credit line I had to get incredibly version was a much bigger issue.
one of the thousand small Italian banks boring balance sheets to my colleagues I remember, in a moment of deep
to trade with a Scandinavian bank and it in the credit department. These depression caused by the hard work
wasn’t easy at all. For Danes, Italy was of balance sheets were finalized with huge that relations with Italians can involve,
course the country of Michelangelo, but delays and published with even longer going to pay a visit to the Royal Marine
that was an old story. Now it was just the delays, which got promptly lost in the Forces representative office to look for
country of pizza, pasta and wines. For Italian mail system. When I had finally a job and telling them I was Albanian,
FOREX INDUSTRY FX
view, no thanks. The situation today, I

think, is much better.
It is already a few years that, thanks to a
consortium of the biggest banks in the
world, a new settlement system is taking
over. It is the CLS or Continuous Linked
Settlement. CLS allows, whoever is
involved in the system, to trade FX
with any of its members or third party
participants - which, as of today, counts
for over 4600 names - eliminating the
risk of settlement due to time zones.
The difference between CLS members

and CLS third party participants is the
following - the first are shareholders
to avoid having to deal with Italian dared to ask: and they are selected according
traders anymore. My mother asked me -mate, something wrong? – to liquidity, capacity to offer a
to not join the Royal Marine Force so I -No, nothing wrong- was the reply. professional service and financial
didn’t. I decided at the end of the day, But then, he added: assets. The latter are just “market users”.
there were worse things than dealing -tell me Ruggero, how is it the Italian Years ago it was extremely difficult
with Italians. A month prior to the version weighs 3 Kg and the English if not impossible, for a medium size
publication of the new balance sheets, version about 100 gr.?- bank, to have trading relations with
I generally managed to get the English Good question indeed! banks in Asia, the Middle East or Latin
version from the previous year. At this America. These days, CLS members
moment I ran to the credit department It was true, there was a huge difference in like UBS, HSBC and many others
with my Danish, German, French, weight, number of pages and definitely (70 banks among the top names),
and British colleagues laughing at me. in content. Just for the love of God, give the opportunity to small banks
CLS allows to trade FX with any of its members and 3rd party
participants eliminating the risk of settlement due to time zones
I couldn’t blame them, I had to agree. they usually proceeded without further to easily approach the FX market.
Once I had all the documents in place, questions. Unfortunately, more often This means tighter spreads, big or
it was finally time to proceed with the than not the applications were declined,
small amounts receive the same quality
credit line procedure. Here I had to face although if I insisted, I was offered a
of service and access to international
my worst nightmare - the British sense few thousand lira credit line, equivalent
counterparts. Thanks to CLS, even a
of. The credit analysts, before even to 1 or 2 British pounds - enough for a
small Italian bank could, in theory (but
opening the balance sheets, looked at coffee with tip. Whenever I have the
them, took them in their hands, looked opportunity to meet old friends and probably not, after what I’ve written)
at me, then glanced at the balance sheets colleagues, I always think of those years trade with a small Australian bank -
again, looked at me again. I couldn’t - the fun, the easy life and while I miss provided they both have a trading line
figure out what was going on, until I all of that, from a professional point of with one of the 70 member banks.

FX FOREX INDUSTRY
This is a “dream come true” for every As I said, there are 70 member Banks means that for 1 trillion $, only 50 billion
FX sales guy and for the small banks and each of them gives access to a large is funded by the CLS Bank. This is the
which have been ignored for years by the number of users, 4688 as of today. There real gate for the FX global market.
bigger local banks. The extraordinary are 17 currencies currently available in Definitely a great development which
thing regarding the CLS system is that the system: US Dollar, Euro, UK Pound, comes from an intensive study of FX
every member bank is responsible for Japanese Yen, Swiss Franc, Canadian market needs. How and when CLS will
all of the transactions of the third party Dollar, Australian Dollar, Swedish be properly appreciated and adopted in
participants they sponsor. Practically, Krona, Danish Krone, Norwegian Italy is not known. Obviously if Italian
if one of the third party participants Krone, Singapore Dollar, Hong Kong banks continue considering only the
fails to make a payment, the sponsor Dollar, New Zealand Dollar, Korean balance sheet figures before granting an
member will be responsible, ergo, even Won, South African Rand, Israeli FX trading line, ignoring completely the
the counterpart risk for aim of CLS and
users is eliminated. its concept, the
Finally the market is gate to a global
truly global. CLS was FX market will
up and running in be kept closed
September 2002 with to potential
only 39 members, 7 Italian market
currencies available users. CLS is
to trade and very not accepted
low flows. In 2008 by Italian
the success is so big traders purely I
that in 24 hours the think because
amounts traded are in they consider
the order of 10 trillion themselves
$. The rhythm of better than
growth is incredible others. This
and CLS has finally outdated
been given the mentality
success it deserves. A precludes several
network which covers every single Shekel and Mexican Peso. The system companies which work hard and require
corner of the globe and involves not is based on a continuous process of that access, the opportunity to approach
only the banking industry, but also those payment instructions. CLS receives the FX markets. If Italian FX traders
corporations which need to have direct the instructions within 38 minutes of would spend more time trading the
and professional access to the FX market, the trade. The instructions are checked market rather than feverishly following
such as Nike and Hewlett Packard to and once matched, the exchange of Prada’s last collection, spending less time
name just two of many. Investment funds currencies proceeds at the same time. In drinking cappuccinos in the morning
and hedge funds are also users, though the event that instructions don’t match, and Apes (trendy word for aperitif ) in
their names are not disclosed since they counterparts are immediately alerted. the evening, I’m sure they would begin to
use CLS banking services. Identities are The status of every single transaction understand that the FX global platform
not published in the list of CLS users. is available to counterparts in real is much wider than the one they view
55% of FX transactions executed by the time around the clock. The funding of through their Gucci sunglasses.
member Banks are done across the CLS transactions is executed on a multilateral
network. basis for about 95% of the cases. This Ruggero Mameli
FX TRADING SYSTEMS
Building Robust Trading Systems

Part 2 - Finding a good historical data source
“Reminiscences of a Forex Operator…”
In the last article, we introduced the side’ counterparties can submit their spot dealer (the author pre-dates the
idea of building robust trading systems own prices into the systems. This Euro) might have one broker box
for foreign exchange, and compared makes it impossible to get a truly calling out, “thirty, thirty-five, in five”
some of the characteristics of the FX complete, clean and accurate picture of and another, “thirty, thirty-four, three
and Futures markets, with FX having intraday FX prices. However, even the by five” etc., with the ‘three by five’
its own unique, but also non-random, current, fragmented, electronic market denoting the size, in millions, that the
behaviour. This article now explores is a quantum leap forwards, from only price was good in and the ‘big figure’
the first major challenge of actually relatively recent years: not quoted as that was known by all
building a system, namely, building a involved.
reliable historical database: In the beginning – Voice Brokers Each trader, for each currency pair,
If we were discussing futures would have a number of boxes shouting
markets, this would be relatively Before ECNs existed, most FX out similar prices and hence the classic
straightforward, as there is only one trading was done over the phone, with image of a bank’s trading floor, being
price traded at any given time with a trader sitting on a ‘spot’ desk, as the a cacophony of sound. The reality is
a specific volume, which is readily author once was, with half a dozen much different these days, with the
available, direct from almost all of the ‘broker boxes’, all shouting out prices. voice brokers having been almost
relevant futures exchanges as well as For example a ‘Dollar Mark’ (US entirely replaced by ECNs, particularly
third parties. The FX market is rather Dollar v German Deutsche Mark) in the major currency pairs.
unique though:
While being by far the most liquid
market in the world, it’s also the
most fragmented. With no central
exchange, each bank makes its own
price, for each currency pair. Therefore,
at any given moment, EURUSD may
theoretically be quoted as 1.3340/42
at one bank, 1.3339/41 at another and
1.3341/43 at a third, each with their
own white labelled, or proprietary,
electronic trading platform, otherwise
known as an ECN (Electronic
Communication Network). There
are also a growing number of ECNs
competing for liquidity, where ‘buy

TRADING SYSTEMS FX
In the days of voice brokers, part of their order. This meant that one would Therefore the chief dealer and his
the spot traders’ art was to recognise often buy from the first few ‘calls’, number two, the Yen trader, knew that
the brokers voice with the best price, hoping this would prompt the other if the bank was to be seen selling a huge
good in the size he wanted to execute, banks to believe you were a buyer, drive amount of DEMJPY and USDJPY, the
which as a junior dealer, was probably the price up, quoting higher prices, into market may well think that the BoJ was
the hardest skill to master; particularly which you could then sell. Hence it was intervening and would then also start
when the broker at each institution always a game of bluff, counter-bluff selling, to capture the pending move
wouldn’t always be the same person, and spoof. down. One day they stood up and
as they would need to go to lunch, be One anecdote worth recounting, in shouted “Get me calls!”, which in itself
away on holiday, or just step off the desk which the author was involved, is a spot wasn’t unusual, as this happened on
for a few moments. A junior on a desk desk of a first tier bank, making a huge most large orders:
would usually cover several dealers, return in the space of a few minutes, As each of the other traders, and
when they similarly stepped off the desk, solely by a simple, but beautifully assistants, all started getting prices from
so may have had over twenty voices to executed spoof: banks and shouting them out, they
recognise and remember which ‘box’ The bank was known to be one that shouted, “yours!” together with the
they were on. All the deals were also had a good relationship with the Bank hand gesture of pushing an open hand
entered manually, unlike today’s ECNs, of Japan (BoJ) and through which they down and away from the body (for
where the deals automatically go in the had intervened in the market before, to the avoidance of any doubt as to the
trading ‘blotter’. On this occasion it strengthen their currency, occasionally instruction) until they’d sold literally
is probably very fair to say that junior coming into the market and selling a several hundred million US Dollars
traders today really do have it easy by collosal, market-moving amount of and German Deutsche Marks, against
comparison. USDJPY and DEMJPY. This always the Yen.
If an order was too large to execute kept dealers wary of being the other way Nobody knew what was going
with just one counterparty, a ‘call out’ around, lest they got caught the wrong on, but everyone did his or her job
would be made, where the dealer would way on an intervention, and hence kept and got the order executed. The sales
stand up and shout, “Get me calls!” the Yen supported. desk was asking what was happening,
Every other dealer on the desk, would
then either call up several banks on, ‘The
Reuters’ (an inter-bank chat system)
and/or the telephone. Each dealer
would then shout out the prices he was
being made and the dealer initiating the
activity would make hand signals and
shout “yours” or “mine”, to indicate if he
wanted to buy or sell. There was a great
deal of ‘spoofing’ that went on, which
was part of the art of good execution
and mastering the art of spot trading:
For example, if a dealer at one
bank took a ‘call’ from another, and
found they were a seller, he might also
sell, believing a large order was going
through and expecting the price to fall,
as the other bank continued to execute
FX TRADING SYSTEMS
as customers called up to ask what time, price and volume of every trade.
the reason was for the big move, as However, there is still no central ECN
everybody saw and heard the huge and rather than one becoming the
commotion coming from the spot dominant player, as some expected,
desk and the inevitable rumour spread the market has continued to fragment.
that it was ‘BoJ’ intervention. Nobody This means that at every minute of the
on the desk said a word to confirm or day, each currency pair is trading at
deny the rumour, as nobody else on the different prices, bid/ask spreads and
desk, knew what was really going on. volume.
Just tallying the total amount sold and Only if one could aggregate all of
reconciling the now huge position the the prices made on every ECN and by
desk had, was not an easy task. every bank and broker, could a truly
As the rumour spread and speculation accurate record be built. Even then
mounted, USDJPY and DEMJPY though, a bank may provide a rate on
continued to fall rapidly. Then came the several ECNs, good in $10mio, but as
second wave, or so everybody thought. soon as one of its prices is hit, it will
Again the Chief Dealer shouted, “Get immediately ‘pull’ that rate from the
me calls!” and started to sell USDJPY other ECNs. Therefore, even though
and DEMJPY again. The market transactions went through in those few a 40 bid may appear to be good in
thought it was the start of a second wave minutes, none were recorded by exact $50mio, if one could aggregate all
of selling by the BoJ, as this was their time. The author himself probably of the prices at a given moment, the
typical style and accordingly marked executed trades, with more than half reality is, that it may well not be case
their prices much lower and again sold a dozen banks, but the most that if you tried to execute a trade of that
themselves. Then came the stroke of would have been recorded was either a size.
genius – they started to buy, and buy conversation on ‘Reuters’ or a hurried
everything, shouting, ”Mine, mine, scribble on a deal ticket after a phone Trading the Crosses
mine…” with the accompanying hand transaction, later reconciled with the
gesture of bring the palm of the hand up counterparty. If someone wanted to sell the
towards the shoulder, to the still falling Therefore, although an extreme Swiss Franc against the Japanese
prices, as other banks initially thought example, it illustrates the point very Yen, as it’s not a commonly quoted
it was just part of a ‘spoof ’ to sell into. well; there simply isn’t a completely pair, it has relatively little liquidity
Before the market realized what reliable source of accurate, historic FX on the electronic platforms and as
was going on, they’d covered the entire data available before the dominance a consequence has a wider price.
position and locked in a massive profit, of ECNs and the situation hasn’t However, USDCHF and USDJPY are
literally in the space of a few minutes. improved significantly since: more actively traded, so a professional
Everybody on the desk was given a trader would go ‘through the legs’
slice of the pie, for a job very well done The Advent of Electronic Trading or ‘components’, buying USDCHF
and it’s the type of trading that we will Platforms and selling USDJPY, with the USD
unlikely see again – such were the days amounts netting out to zero, leaving
before the dominance of ECNs. As electronic platforms began a CHFJPY position. This means the
There is of course a point to this to dominate more and more of the trader actually traded CHFJPY, but
anecdote of course, other than to volume, so accurate data has become no price may actually have traded on
record it for posterity: more readily available, as computers any ECN or with any broker ‘direct’ in
Although a huge amount of are easily able to capture the exact CHFJPY.
TRADING SYSTEMS FX
Gaps and Spikes was ‘off market’, or fair given the time of the definitive highs, lows and the
day and liquidity. volume they traded in, order fills remain
Although FX is by far the most liquid One of the challenges of using a a cause of much debate, on a daily basis,
market, there are still times when no simple algorithm to clean the data is in the FX market.
prices are recorded for periods of time, that some genuine market moves can
particularly during the less liquid Asian look a lot like a ‘spike’ in a fast market, Predictive Pricing
session and, as we have seen above, when some news, or economic data,
particularly in the less liquid crosses. has just been released. A way around As there is no central price for a
This means that not only do genuine this is to confirm the rate via the other currency pair, a bank or broker is free
gaps occur in historic data, but there components. Looking at AUDUSD to make whatever price it wants to their
are also often times when a certain pair and USDJPY components at the time customers and the customer is equally
traded on one electronic platform, but could check for example, a ‘spike’ in free to trade on that price, or trade
not on others. These gaps in the price AUDJPY. elsewhere.
data need to be ‘filled’, which can be done Some traders are very predictable in
using a simple algorithm, otherwise Highs and Lows their trading behaviour and only trade
any indicator, even a simple moving with one counterparty. This leaves them
average, would have an input of zero One of the most commonly asked open to ‘predictive pricing’ algorithms.
for the price at that time, which would questions in FX trading is where the For example, if some traders sold
of course USDJPY
create a earlier in the
hugely there simply isn’t a fully reliable source of accurate, day, then it’s
incorre ct
reading ,
historic FX data available before the dominance of ECNs likely that
their next
w h i c h trade in
may well trigger an erroneous trading highs and lows were, as this is where USDJPY will be to cover that position
signal in an historic simulation. queries occur and money is lost and and buy. Some ECNs therefore have
Conversely, not only are there times made on orders. If an order to buy the ability to show each customer a
when there is no price, there are times was placed at 0.9840 and the low was different price.
when a spike in the data appears: 0.9839 offered, then the order would Therefore while a neutral price
This can be due to a number of be filled. If the low price quoted was in USDJPY may be 98.94/96, one
factors, but often where somebody 0.9840/43 but was never traded, or customer’s ECN might show a price
has left an offer to take profit at, ‘given’ at 0.9840, then the order would always marked a point higher at
for example, 1.2580 overnight. If not have been filled. As it’s often hard 98.95/97, until they have closed their
somebody else has a stop order to buy if enough to determine in a real trading short position, when it will then go
1.2520 is traded and there are no other situation whether an order should have back to a neutral price, earning the
prices in the system until the 1.2580 been filled, it’s impossible to be certain bank an extra pip on that trade and the
offer, then that would be the next price with a historic simulation. In fact, if customer believing he’s being shown a
dealt. It’s market practice to cancel a large buy order had been placed at relatively tight two point price all day.
these deals the following morning, 0.9840, this could affect the price action The author has first hand experience
when an obviously ‘off market’ rate itself, with market makers buying ahead of such pricing engines, with one of his
was traded, but nonetheless, it will still of the 0.9840 bid, knowing the market former colleagues having built just such
often appear in the historical data made will be supported there. an engine, for a first tier investment
available and there is a ‘grey’ area where With the market so fragmented, and bank. It’s a perfectly legitimate practice,
it is questionable whether the rate dealt with no central exchange to determine as the customer has the freedom to

FX TRADING SYSTEMS
trade on the price, or not, but the phrase, Time Zones

‘Caveat Emptor’, is just as true in today’s
FX market, as it was in Roman times, Probably the most overlooked factor
when the phrase was first coined: when dealing with FX data is that
Consider a system, which generated Europe, the US and Asia, all operate
a trading signal, in USDJPY, just once a on different time zones. If we wanted
day, for 252 trading days a year. Giving to code an ‘opening range break out’
one point away on each trade may well system for the London open, which is
result in an otherwise profitable system, one of the most liquid times of day, then
recording a net loss. Without knowing that paid borrowing Japanese Yen. we should use local time in London and
why the losses were occurring, the trader That difference is accounted for by not GMT.
may believe a perfectly robust system was ‘rolling’ the position every night, or Although most data is provided in
no longer performing and even worse, ‘tom/next’ as it’s called. When a trade GMT, traders and therefore market
if he were to run a simulation on that is rolled, it’s closed out at an agreed rate behaviour, operate on local time, so
years’ data, he might see that he should at the end of the day (called a ‘reval.’ daylight savings need to be taken into
have made a profit, still not knowing being short for ‘revaluation’) and re- account. Unfortunately the US has
where the 252pt ‘loss’ was made. instated with a small adjustment made slightly different dates when they
This highlights how critical efficient in the price, to account for the roll (the observe DST and most of Asia doesn’t
execution is, no matter how robust the difference in the interest rates). observe daylight savings at all, so it’s
back testing and how clean and reliable For an intra-day trading system, impossible to make one universal
the historical data; something that we’ll this isn’t a factor; if the positions are adjustment for local time across all the
look into in much more depth, in a flat overnight, then there is no ‘roll’. sessions and days of the year.
future article. For a longer term trading system, Therefore one either has to adjust
which holds trades overnight, then the data, to local time, for the session
Interest Rates the interest rate differential has to be one is interested in trading, or write an
taken into consideration, to correctly adjustment into the code, dependent
One extraneous factor we have to calculate the results. With some on both the time of day, and date
take into account, when dealing with historic interest rate differentials being that the order is being executed. For
FX, which Futures traders do not very large, this can make a dramatic example, if the data is in GMT, then
have to account for, is the interest rate difference, and again be the difference closing a position at the close of the
differential. As each currency yields between a system being profitable day in London, at 5pm, would still
a certain rate of interest, then one or otherwise, hence the ‘carry trades’ be 5pm in November as local time is
earns interest in the purchased (long) which seek to exploit exactly those
currency and pays interest in the sold differentials.
(short) currency. This means that if However, although the central bank
a position was held long “Kiwi Yen” rates may be fixed and known, the
(NZDJPY) then the interest rate, or counterparty will usually charge a small
‘carry’ would be approximately 3pct per mark-up on the ‘tom/next’. Sometimes,
annum, at current rates. That is to say, this can be as much as several percent.
if the exchange rate and interest rates Therefore it’s important to know both
remained the same in one year’s time, the interest rates and the mark-up
then the trade would yield a 3pct return, from the broker, to negotiate them as
being the interest rate differential earned low as possible and factor them into
by holding the New Zealand Dollar vs. any simulations.

TRADING SYSTEMS FX
GMT. However, if the same trade Conclusion system itself.

were done in June, closing at 5pm Finally, if it’s a system that holds
local time in London, would be 4pm Historic FX data is an absolute many positions for a number of days, or
according to the time stamp of the prerequisite, before even attempting to frequently overnight, then the rolls must
data, as Daylight Savings would have build a robust FX trading system, but be factored into the simulations. There
been in effect. it can only ever be an approximation, are many pieces of software available
unlike the futures markets, which have a for analysing futures markets that can
Synthetic Prices central exchange and no interest rates or be adapted for FX data but none ‘off
‘rolls’ to take into account and where the the shelf ’ to date provide, as far as the
We know that the major currency data is almost always supplied in local author is aware, the unique functionality
pairs are the most liquid, with the exchange time. required to account for such unique
better pricing; being those traded The FX market is simply too nuances of FX.
against the Dollar and the Euro. fragmented to have one universally All of these challenges probably
Therefore, if we had the data for agreed set of historic data and the contribute to the relative lack of
those, then we could derive the ‘cross trend is for the market to become more successful systematic traders in FX, given
rates’, such as CHFJPY, GBPCAD fragmented and not less so, with new its huge liquidity and clear capacity for
etc. electronic platforms being released each systematic trading.
The one challenge here of course year, some carving a niche in certain Better software and data will certainly
is that if we had 60 minute OHLC currency pairs, or time zones. be more readily available in the future, as
(Open, High, Low, Close) data, for Historic price data before the FX continues to grow as an investment
each hour of the day, and calculated dominance of ECNs is much less accurate class. The author himself is currently
the implied ‘crosses’, then we would than more recent data and is, at best, an involved in beta-testing a number of
only know the open and close average rate traded for a certain time software packages and working with one
accurately for those hours, as we have period. Accurate Open, High, Low and software company to provide the unique
no way of knowing that the high or Close (OHLC) data simply cannot, and functionality needed to test FX systems,
low of each component occurred does not, exist before the days of ECNs ‘off the shelf ’, so it’s certainly something
(and almost certainly didn’t) at the and since then (approximately late 1990’s that will be available, in the near future.
same time, within the hour. onwards) it is far more accurate and more In the meantime, the following resources
However, it’s certainly one viable readily available, but can still only be an may be useful:
method to create a reliable database. approximation. (Daily data is much
If we had hourly data for the seven more accurate as the ‘OHLC’ rates for Historic FX Data
major currency pairs i.e. 8 currencies, a given currency pair on a certain date
Olsen Data
then we could calculate a synthetic are generally agreed, particularly for the www.olsendata.com/
price from those ‘components’ for ‘majors’).
EBS
the other 21 ‘crosses’. For example, As an algorithmic FX trader, the best www.icap.com/markets/foreign-exchange/spot-fx.aspx
GBPJPY is the GBPUSD rate solution is to find a good source of data
Tradestation
multiplied by the USDJPY rate etc. and then ‘clean’ it as much as possible, www.tradestation.com
This creates a relatively clean set cross referencing the crosses and majors,
Interest Rate Data
of data for the crosses, but only a filling in any gaps and cleaning out any
line chart, as the crosses would not spikes. Then the data must either be Pinnacle
www.pinnacledata.com/
contain accurate highs and lows. i.e. offset to account for ‘daylight savings’
one could not plot a bar chart, which in the time zone one is interested in
would require the Highs and Lows trading, if the system has any time input,
of each hour. or it can be written into the code of a Caspar Marney

FX BROKERS
Mike Buzzeo
Sr. Vice President - Marketing
FXCM - Forex Capital Markets LLC
shares his views about the new US Regulations and

explains the reasons of FXCM’s fast development in
the last 2 years, with recent office openings in various
European locations and soon a new FXCM Italy.
INTERVIEW
FXTM: FXCM claims over 100.000 Authority (FSA# 217689). FXCM is FXCM offers a twenty-four-hour-a-day,
trading accounts today. What is the dedicated to technological innovation seven days a week live support by phone,
company’s average nominal trading that enhances the online trading IM, and e-mail.
volume per month? experience, and this is why FXCM has
MB: Over the past sixteen months attracted over 125,000 live accounts FXTM: With a view to the new US
(Jan ‘08 - April ‘09), on average over which trade through FXCM’s multiple regulations, which fundamental assets a
USD$590 billion of notional volume is platforms, including MetaTrader 4. forex broker should have to ensure stable
traded across the FXCM platforms on a At the core of FXCM’s business model growth in the US?
monthly basis. is its No Dealing Desk execution which MB: Speaking on behalf of FXCM we
eliminates conflict of interest between see our competitive edge with No Dealing
*Notional USD volume is base currency USD
exchange rate. Average monthly exchange broker and trader, ensuring that there is Desk as the fundamental assets that will
rates are used to calculate notional volume. no dealer intervention in trades. Trades continue to ensure our stable growth in
are executed back to back with some of the US and abroad. We recognize that
FXTM: Which are the distinctive the world’s premier banks or financial clients are concerned that dealing desk
advantages which make FXCM one institutions, who compete to provide brokers are trading against them, and
of the world leading market brokers? FXCM’s clients with the best bid/ask hunting their stops. More than 85% of
In other words, why do many private prices. Some even provide spreads as low our trading volume is generated through
currency traders choose to open an as 1 pip. the No Dealing Desk model and this is
account with FXCM today? FXCM also offers clients an extensive the number one reason clients switch to
MB: Forex Capital Markets (FXCM) suite of free forex trading signals through FXCM.
is a leading global forex broker that caters DailyFX +. These signals are interactive Other key assets we at FXCM
to the retail and institutional market trading alerts that update automatically attribute to our steady growth would be
in over 80 countries. Founded in 1999, in real time, twenty-four hours a day, on a our segmentation and product offerings.
FXCM is one of the largest and most dynamic basis. Tracking six strategies on FXCM offers different account sizes
financially strong brokers, regulated in fourteen currency pairs, FXCM Trading (Micro or Standard) to appeal to many
the United Kingdom, the United States, Signals have a customizable alerts section different traders. FXCM also offers
Australia, Canada, France, Dubai, Hong that updates live when signals change. specialty products for target audiences.
Kong, and now Italy. In the United The FXCM Trading Station also features Examples of these products include:
Kingdom, FXCM UK is a regulated the ability to trade from charts and has Forex System Selector, an automated
forex broker with the Financial Services won multiple awards through the years. currency platform; MetaTrader4, a
BROKERS FX
world known and well-liked platform; The average daily volume in the global offerings for traders and we are excited to
Proprietary trading signals and DailyFX. foreign exchange market is continuously deliver these offerings to new markets.
com, a top research and news site that growing. Traditional daily turnover was
provides a constant twenty-four hour reported to be over US$3.2 trillion in FXTM: Where does Italy stand in
stream of in-depth market analysis that April 2007, and since then, according FXCM’s international development
is designed to give the foreign exchange to Euromoney’s annual FX poll, volume plan? How important is it compared to
trader the edge in today’s market grew a further 41% between 2007 and neighboring countries such as France,
2008. Spain o Germany for example?
FXTM: FXCM has chosen a No The recent regulation changes from MB: FXCM has recently expanded
Dealing Desk system in order to eliminate the NFA including higher capital its global foot print by opening offices
the potential conflict of interest that requirements and oversight of firms, in Paris, Sydney and Dubai, and also
some brokers have between their clients’ seems natural with the increasing by opening dedicated desks for the
profit/loss and their own firm’s bottom popularity of forex trading. FXCM German and Nordic markets. We are
line. How important do you reckon this proud to announce that Italy will be
decision might have been in the success next. Soon FXCM Italy will be opened
and growth of the company over the last and ready to service Italian clients.
years? FXCM is dedicated to the Italian forex
MB: FXCM has experienced market and will provide an advanced
tremendous client growth over the and transparent platform with the
last two years as a result of the firm’s benefits of local regulation, banking, and
switch to No Dealing Desk execution. customer service. Like all other FXCM
One main reason for the switch is offices we will be holding in-house forex
FXCM’s belief that transparency is of educational seminars and will invite all
utmost importance, especially in today’s local traders to visit with us.
economic climate.
The decision to enhance FXCM’s FXTM: What do you estimate is the
business model to No Dealing Desk current size of the Italian retail forex
provides traders with very tight spreads trading market (in terms of number of
and fast execution, something traders fx traders)? And how do you expect the
and brokers can benefit from and feel FXCM New-York
Italian forex market to evolve in the next
comfortable with. FXCM has been years?
a pioneer for retail forex brokers, and believes that the changes are - due to the MB: FXCM sees enormous potential
other firms have started to follow our evolving economic time - positive and and growth in the Italian forex market
example and execution model. FXCM’s necessary. FXCM expects other markets and we want to introduce high quality
No Dealing Desk execution is one of the will be developing to create a better execution, service, and forex education to
most important and successful strategic overall environment for traders and we our Italian traders. This is very important
decisions in the company’s history. welcome that. to FXCM.
We are confident that, by opening
FXTM: Do you expect other markets, FXTM: Will such regulations affect a locally regulated office in Italy that
outside the US, to follow the latest NFA your international development plan in provides full brokerage services, the Italian
regulation decisions? any way? forex market will grow exponentially.
MB: The forex market is fast growing MB:No,even though the environment FXTM: What will be the key
and is one of the largest and most is likely to be in flux for a while to com, advantages FXCM will offer to Italian
liquid financial markets in the world. we believe that we have the best product clients compared to other local and

FX BROKERS
international brokers? FXTM: What is the minimum account accounts are provided through FXCM
MB: FXCM will strive to be the size you propose, and the maximum UK, an FSA regulated entity. For a
premier forex provider in Italy. Because leverage? Are these key competitive novice trader, FXCM offers a $50,000
of FXCM’s access to highly competitive advantages to get new clients today? practice account as well as a number of
prices from our relationships with some MB: Standard account size: forex trading courses.
of the world’s largest banks, and as a Minimum Account Size $2,000 FXCM also has many referring,
premier “No Dealing Desk” or agency Recommended Account Size $10,000 institutional, and white-label
execution forex firm focusing on Italian and Up relationships and is always looking to
traders, FXCM offers clients no dealer Smallest Trade Size 10k Units expand its affiliates.
intervention and tight spreads as low as Available Leverage Up to 200:1
1 pip. Approximate Pip Value $1 per Pip FXTM: What is your advice to a
FXCM will provide a variety of Micro Account (via FXCM UK) new currency trader today with regards
currency trading products, forex trading Minimum Account Size $25 to choosing the right broker?
technology services, and education, with Recommended Account Size $500 MB: First, I would advise new
superior personalized customer support Smallest Trade Size 1k Units traders find a broker that exercises
in Italian. Available Leverage 400:1 due diligence, one that is regulated
Additional benefits to trading with Approximate Pip Value $0.10 per Pip and financially strong. FXCM is
FXCM will include; trading directly FXCM specializes in self-traded forex regulated in eight jurisdictions and
from charts, positive rolls at all margin accounts with options available for has offices, partners, and affiliates
levels, twenty-four hour online access all levels of trading experience. Micro in the major financial centers of the
with customer support, and free access accounts available through FXCM UK world. This positions FXCM to
to real-time proprietary trading signals. (fxcm.co.uk) begin at only $25 and offer provide exceptional service to traders
1K lot sizes. Benefits include trading everywhere. FXCM also believes clients
FXTM: Some international brokers directly from charts, positive rolls at should have the necessary information
already have a local presence in Italy all margin levels, up to 400:1 leverage to make intelligent choices. That’s
through a translated website and offer and free access to real-time proprietary why we publish our quarterly balance
customer support in Italian. What trading signals. FXCM offers live sheet. FXCM is proud of our financial
difference does it make for the end user support twenty-four hours a day, seven discipline and strong balance sheet.
to have a registered office and physical days a week via phone, IM, and e-mail. Second I would also like to add that
presence in the country? new traders getting into the forex
MB: FXCM believes that, whenever FXTM: Forex trading is becoming market should gain as much practice
possible, local presence and registration more and more accessible to people and education as possible. There is a
within a particular region are key of various levels of income. What is lot to know and learn before trading
ingredients to connecting with traders. FXCM’s typical potential customer? in the forex market. FXCM offers a
People want to know that they are MB: FXCM works with all types of $50,000 practice account, educational
trading with a reputable firm that traders who are looking for excellent courses, free webinars, and free news
takes the time to understand the local execution, low spreads, and superior and research via DailyFX.com, a
environment. By opening an office in customer service. On the retail side, site where traders can communicate
Italy and securing regulatory licensing, FXCM segments its self-trading accounts with one another, ask questions on
FXCM is committing its resources to into Micro, Standard (10K) and Active the forum, stay up-to-date on the
the region and, through the strength of Trader, as well as an automated trading latest economic events and read over
its products and customer service, hopes system called Forex System Selector. numerous articles written by the
to gain the trust and confidence of the Accounts can be denominated in seven DailyFX analyst team.
Italian trading community. different currencies and segregated

OPTIONS FX
The dynamics of option pricing
Like we established in the introductory which is paid up front (see Figure 1). general pricing of options. The Black-
article, an option represents a right So a call option can always be replicated Scholes model prices the option using
with no obligations for the option by the comparable put option strike, spot, time to maturity, interest
holder. Also, we saw that the seller of combined with a forward contract rates of the domestic and foreign
an option runs a much greater risk than and vice versa. This relationship is currencies in the underlying, and
the buyer, which is why a premium known as the put–call parity. Given finally volatility.
passes from buyer to seller. To liken it the price of an equivalent option, Starting with the placement of the
to our everyday lives, we can observe it is possible to replicate the payoff strike, if we look at a call option, the
that the valuations the options seller thereby inducing a price on the option higher the strike the less likely it is that
must make are comparable to the being valued. Replication using the the option yields a payoff at maturity.
considerations an insurance company underlying forward or spot is the main The call option is therefore cheaper for
makes when pricing an insurance cornerstone used to price options higher strikes. In the option market,
policy – the two parties have to agree and is the foundation of the famous the measure of how likely the option
on the size of the premium. This is B l a c k- S c h o l e s
where it gets challenging, so let’s have pricing formula.
a look at the considerations that must The Black-
be made. Scholes model
We can start by establishing that and its extension
the premium can never be negative, to FX markets,
since payoff at maturity is zero or the German-
positive. Digging deeper, the size of Kohlhagen
the premium must naturally depend model, is based
on the choice of strike, the time to on trading the
maturity and the expected movements underlying. We
in the underlying FX rate. However, will not go into
the price of options also has much to the details about
do with our abilities to replicate the this here, but we
payoff. will look into
Starting off very simply, if we choose it in upcoming
to buy a call option and sell a put articles regarding
option with the same strike and hedging. Great
maturity we end up with a payout intuition can,
profile at maturity equal to that of a however, be Figure 1 Payout at maturity. Red line is the forward
long FX forward outright contract, made of the contract. Green line the payout from the short put option
with a difference attributable to B l a c k- S c h o l e s and blue line the payout from the long call. The similar
funding cost on the option premium model and the payoff is the reason for the put-call parity.

FX OPTIONS
is to have a positive payout at maturity the underlying FX rate, the last is like an 18 old boy taking out car
is called moneyness. In general, call component of the Black-Scholes insurance – he will have to pay a high
options are said to be in-the-money if price, is therefore important for the premium, because he is perceived as
the strike is below the forward of the value of the option. FX spot traders “risky” to the seller of the insurance
same maturity and out-of-the-money will know that some currency crosses (option). Conversely, EURCHF
if the strike is above. The opposite such as AUDUSD tend to exhibit might be likened to a middle aged
is true for put options. The option much larger moves up or down than female driver who has never had an
with strike equal to the forward is others, for example EURCHF. Say accident – naturally, a lower premium
said to be at-the-money. Notice that we look at a call option in both the will be asked for! Actually going back
the in- and out-of-the-money term AUDUSD and EURCHF with the to the put-call parity, from which we
is with respect to the FX forward strike placed 10% higher than the know that a short put and long call
outright and therefore is implicitly a current forward price. It is much with same strike and maturity should
function of the interest rates of the more likely that the AUDUSD would be equal to the forward plus premium
domestic and foreign currencies in have moved up more than 10% by the funding, the price of the put and call
the underlying (given that the FX time of maturity. Furthermore, since with same strike and maturity must
forward outright rate is calculated the option has limited down side, therefore increase with the same value
simply as a product of the FX spot the increased likelihood for a fall in from an increase in volatility.
rate and the ratio of discount factors underlying from higher volatility Looking at the parameters used to
from each of the two currency yields does not increase the risk in the price the option, we see that volatility
over the respective time period). option, therefore a higher volatility is the great unknown. Therefore,
The value of being in - or out-of- of the underlying always translates the options market has adopted the
the-money of course also depends into a higher price of the option. The terminology of trading “vols”. If the
on the time to maturity. If we think same holds true for the put option. market participants anticipate larger
of options like insurance, it becomes So again, to liken the theory of moves in the price of the underlying in
easy to understand that the longer you option pricing to our everyday lives, the future, the volatility parameter is
have to expiry, the more the option we could say that AUDUSD cross raised, raising the price of the traded
will cost, just like with car insurance:
if you take it out for one day, it costs a
little, if you take it out for one year, it
will cost a lot more. Holding an out-
of-the-money option is not a problem
if maturity is far away, since the price
will have time to move the option in
the money. In the case of in-the-money
options, it is also a benefit to have a
long time to maturity, since downside
risk is limited and there is a potential
for larger gains. An interesting
consequence of this is that everything
being equal an option loses its value
as time goes by, known as time decay
Figure 2 shows the one month historical volatility versus the implied volatility of
or bleed. This is how earnings can be
an at-the-money option with one month to maturity. Notice that implied volatility
made by selling options. rises before historical volatility.
Volatility, or the movement in

OPTIONS FX
options. Conversely if the market that some of the assumptions don’t many reasons, not least because it
participants expect price to be more always strictly hold, e.g. that interest provides all market participants a
stable in future, then the volatility rates and volatility are known well-understood common ground
parameter is lowered. Note that and constant over the term of the reference framework for agreeing
the volatility parameter used is option or that the price changes prices, which therefore lends
participants’ expectation about in the underlying follow a normal support to a market like fx options
future volatility, not the historic distribution as opposed to a model with transparency and decent depth
volatility measured from past FX which incorporates kurtosis, or the of liquidity.
rate changes, as can be seen in gap risk of significant immediate
Figure 2. The volatility parameter is changes/jumps of prices from one
referred to in the markets as implied level to another. However, the
volatility, since it is the volatility pricing dynamics remain broadly Steffen Gregersen
the markets imply will be observed the same and the Black-Scholes
in the underlying over the life time model is very robust compared In the next articles, the author will
of the option. to fancier academic models. cover the reasons and suitability of
Readers may be familiar with the Therefore, the Black-Scholes hedging; speculative trading and
fact that the Black-Scholes model is model remains the dominant way basic options strategies; Black Swans
considered by some to be
C32046 FXMgTrim137x216 flawed in29/6/09
TA124x191 of pricing
10:24 and
Pagequoting
1 options for and exotic options.
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FX TRADING PSYCHOLOGY
SUCCESSFUL TRADING HAS

VERY LITTLE TO DO WITH
THE MARKETS
As an educator working with traders they have missed the best point to do. There is only so much to learn.
of all levels of ability, I am always execute for no other reason than Additionally, traders often place too
struck by how little most traders they were afraid of taking the risk much reliance on study/education/
really concern themselves with the at that particular moment. Often, analysis in the first place. Analysis
issue of market psychology and their these same traders feel a strong sense does not produce 100% winning
own personal trading psychology. of anxiety once they finally take a trades no matter who you are or how
In my opinion, this is the single position or “kick themselves” for much you have to invest. This over-
most significant part of a winning missing the perfect place to trade. In confidence in analysis is compounded
approach and no trader can reach his the long run, although they have a by the traders own need for
or her full potential without a sound solid method of finding opportunity, confidence when he executes. When
understanding of market psychology their participation is fraught with working with traders directly, I find
and their own psychology. emotional turmoil. that most traders resist the concept
What is the problem here? of thinking in probabilities; which is
For example, I work regularly with all that you can do when working in
traders who have very well-thought A LACK OF PERSONAL any traded market. Trading is about
out methods of analyzing markets and UNDER STANDING AND probabilities—not certainties.
very carefully select their positions. ACCEPTANCE OF WHAT
They have back-tested their approach TRADING REALLY IS Because the markets are zero-sum
and have a high degree of confidence transactions it is not mathematically
in what they uncover with their In my view, the problem is a lack of possible to ever know with certainty
system—but that any trade
Trading is about
lack the ability hypothesis is the
to “pull the correct one until
trigger” at the
best execution probabilities, not certainties later. No matter
how you slice it,
spot. They can there will always
show me very precisely why a market personal understanding or acceptance be orders placed into the market
had potential to move in a particular about what trading really is and a from both sides as long as there will
direction and often have uncovered lack of understanding of underlying be markets to trade. No matter the
a significant turning point that may market structure. First, there is only current level of price, there will always
last for weeks in some cases—but so much analysis of the market we can be a group of traders who feel the price

TRADING PSYCHOLOGY FX
that it uses price to project and/or

predict price. Through various ways of
applying algorithms or mathematical
variation all technical analysis attempts
to “massage” prices in such a way as to
provide some clue as to where prices
are going next. The reason this can’t
be done with any certainty is for the
reason mentioned before: the issue
of zero-sum transactions. At the
simplest level—there must be a buy
order matched to a sell order for any
transaction to complete. This happens
at the last traded price. If those orders
are both orders to open a position, one
trader is now long at that traded price
is “too high” or “too low” relative to the probabilities in your analysis is and the other is short. The issue of
their individual point of view or the the first step in learning to take every why two people can come to equal yet
systematic approach they use. In fact, signal you get from your system. You opposite conclusions about any price
this potential increases with each will never be 100% correct anyway and is an entire different discussion but
“new” advance in economic theory, you don’t need to be. for now, we are concerned about how
fundamental change, computing prices move from the moment after
power or mathematical hypothesis. Your only need is to get on the right the execution is done.
The more people think and the more side of the order flow often enough to
people participate, the potential for get a lead on the price change. The rest After the order was filled only one
something “new” to grab someone’s is discipline to hold your winners and thing can happen: more buy orders
attention remains. This is why every cut your losses. The issue of trusting will come in and more sell orders will
year there are new methods of your analysis/system and maintaining come in. If the buy orders are larger
analysis, new trading systems based on discipline is a purely psychological than the sell orders from that moment
something never thought of before, one—it has very little to do with the on, the market will rise. If the sell
and new ways of reading into the markets. orders are larger than the buy orders,
fundamentals; none of which improve the market will fall. There is no way on
the net result traders are seeking. A LACK OF UNDERSTANDING earth to know if that will happen until
OF UNDERLYING MARKET it DOES happen. Technical analysis
But the fact is—all of this technology STRUCTURE cannot “predict” that nor can you.
and/or change still results in the same Your system cannot know for certain
thing happening: someone has to Next, once you have learned to develop if the order flow will come on larger
decide to place an order. There will the psychology behind thinking from which side. BUT—and this is
always be a certain percentage of them in terms of probabilities, you need a huge “but”—you MIGHT be able
going long/short and someone will be to adjust your developing market to find a reasonably sound reason
on the other side. Therefore, as this awareness to focus on underlying for a change in the order flow and a
order flow develops and changes, it market structure—not prices. The reasonable guess as to which price
creates a constantly changing price inherent limitation (some would say that MIGHT happen at. But there
level for the market. Learning to accept failure) behind technical analysis is is no way to know for certain. This

FX TRADING PSYCHOLOGY
is why you need to think in terms of

probabilities and be concerned with
the underlying market structure.
For example, if a market has been in a

steady climb for several straight days
and each day the highs are higher,
the lows are higher and the closes
are higher; one thing is certain: the
order flow has been dominate on the
buy side. If this action represents an
“overbought” condition from some
form of analysis a system might
offer a “sell” signal. If at this point
the market corrects, your system is
“right” and a winning trade is now on
the table. But if your system signals the trading system is the key to his cannot offer a quick solution to
a short—and the market rises—you long-term success. Whatever the managing trader psychology or
have a loss. In either case, the analysis issues are that a trader is dealing understanding market psychology
did not predict the next price action; with, for the most part, they have but hopefully it will give you a start.
that was determined by the order flow nothing to do with the market. They In my experience, I have found that
and that represents the psychology of have to do with his trust in himself, journaling your trading thoughts
the traders involved. Another system his willingness to think in terms of and logging your trade results can
might have signaled a “breakout” probabilities and his commitment to help provide you a solid foundation
while another might have signaled managing his trades no matter how to finding clues needed for you to
“neutral”.
In any case, the system is not the

It is the trader’s discipline that creates
important thing. It is the trader’s
discipline that creates the eventual
the eventual gain or loss in the account
gain or loss in the account. If the trader
knows the probability of his approach they are found. In the end, the trader win. Always remember: the market
and a short works, that is one of the himself determines his results; not is a machine that processes orders.
winners the system finds. How the the market. The market will only Nothing more. We as traders
trader manages that lead determines do one thing and that is process the participate in that machine and it
his results; not the signal. If the system orders as traders place them. If you is how we participate that makes
puts the trader in a loser, it is how fast can learn more about what is likely all the difference. The more you
the trader liquidates that determines to cause a rush of orders into the study your actions the more you can
his results. If the trader “overrides” his market that is certainly an edge. get knowledge of how you use the
system and takes a trade the system More importantly is to trust your machine. In any case, you determine
did not call—his results again are approach and take every signal. After your results.
determined by his discipline. that, your thinking determines how
The point is for the trader to get far you go.
beyond the flawed thinking that Of course, this short discussion Jason Alan Jankovsky
FX MANAGERS FX
Franz W. Schmadl
Founder and CIO of OSV Currency Partners, based in Bad Homburg,
Germany, and Darien, Connecticut.
explains the importance of risk management coupled with a

very solid investment and independent decision making process
Interview by JW Partners for FX Trader Magazine

INTERVIEW
Manager OSV Currency Partners

Strategy OSV Currency Program
Location USA / Germany / Switzerland
Assets Under Management 135 mln Usd
Type Systematic fundamental modelling, discretionary decision process
Style Spot /Forward, NDFs
Instruments FX Spot or NDF
Currencies Major, selected EM
JW: How long have you traded about your job? In addition currencies are the most
foreign exchange, tell us about your FS: It never gets boring and there sensitive asset to changes in the
career evolution are new challenges every day. There macro landscape. They are traded 24
FS: I started in the mid 80’s and is neither rest, nor complacency hours and represent the most liquid
held numerous positions in research possible. One has to constantly market.
and in asset management. Currency analyze the world and refine the
management was always an essential investment ideas and positions. JW: What are the key positions
part of the investment process and I Interaction with clients and other n an FX Management company?
started to develop a return oriented players serves as much for collecting RS: CIO, Risk Manager, Head of
currency program in 1997. OSV important information as well as for Trading Executions, COO and Head
was founded by myself and other personal contacts. of Marketing.
partners in 1992. After having sold
the company to a large investment JW: How is FX a unique market? JW: Which authority regulates
holding company in 1996, my partner FS: Currencies are truly global OSV Partners? Do you keep and
Fred J. Gatling and I bought it back and reflect a country’s entire update a compliance and risk
in 2007. Today, OSV Partners has a position versus the rest of the world. management policy? How time
total staff of 17 people. Currencies serve as a reference point consuming, and how important, is it
for a country’s general investment to satisfy regulation requirements on
JW: What do you particularly like rating and standing in the world. one side and internal procedures on

FX FX MANAGERS
the other? crisis we closed out all our US Dollar capture more inefficiencies?
RS: We are regulated by the CFTC short, only to see the markets collapse FS: Our trading focuses primarily
and NFA. Impeccable compliance right after it. Would we do it again? on EUR/USD and USD/JPY. These
activity and documentation is an Yes, because it was the result of our are liquid, low spread relations that
important element in a firm’s success. risk management discipline. can be traded intraday as well as
Without it a firm cannot exist. for strategic positions. Less mature
We at OSV put great emphasis on JW: Do you use a blend of strategy currencies are better suited for
transparency, independent third types for diversification or only one? longer term structural positioning,
party valuation and independent FS: Our investment process while trading them in the short term
holding of client assets. is screening the world in a gets diluted over time through the
comprehensive way. Diversification spreads. For this reason, I would not
JW: You are in charge of the is entering our process through the suggest individual traders to trade
currency program. How would you selection and de-selection of trades. them.
describe your investment strategy? Within the portfolio we believe
FS: Our investment style is that concentration can add value JW: When developing strategies
discretionary. We use a theme driven, while still maintaining a proper risk how approximately would you expect
macro top down research process, profile. to allocate your time among building
focusing on the most attractive entry signals, exit signals and money
fundamental / technical constellations JW: How do you think your management rules, and how much
between various countries and/or performance has been over time? time will you allocate to further
regions. This strategy is the result of What market conditions are expected research?
more than 20 years of life work and to have a positive and negative impact FS: Our investment process is
research. on it? very disciplined. Within the entry/
FS: Overall excellent, our clients exit strategy a well defined loss/risk
JW: Risk, an exciting yet dangerous have made money over time. We had management procedure basically
word. How do you manage risk? a dry period in between, but that is takes care of all decisions. Entering
FS: Risk management is one of over with last year’s performance of a position is a function of risk
the cornerstones of our successful almost +40%. tolerance, volatility expectation and
currency program. We place big the impact of this particular trade
emphasis both on our risk management JW: Can you give some recent for the rest of the portfolio. Exits
and our systems. The reward is a very examples of where you have made a are a result of hitting profit targets
attractive gain/loss ratio and strong unique winning decision? or loss limits and volatility based
long term performance. FS: USD/JPY short in 2008 is a portfolio adjustments. We are a
good example. Also, the rise of the discretionary firm that reacts to a
JW: What’s an example of the kind Dollar against the emerging market changing environment. It is clearly
of trade that added value to your currencies during the last quarter in important to consider volatility
learning process? 2008. changes and to assess on an ongoing
FS: The biggest value from this basis the fundamental environment.
learning process is how to trade and JW: Do you use less mature If it changes it is likely to have an
manage a loss profile. Losses and currencies, or do you plan to add impact on the portfolio. And also,
loss trades are an essential part of them to your studies and trading? we are a research driven firm and we
every investment strategy. The key Or do relative lack of liquidity and allocate a significant amount of time
difference is how to trade and manage wider dealing spreads outweigh any to research. There is no one set system
your loss profile. During the Russian potential gains from being able to that works forever. It is essential to

FX MANAGERS FX
solid investment and independent

decision making process.
JW: At JW we say it’s more

important to plan and know how
to react than forecast, but can you
give us your feeling about the most
popular, EURUSD, over the next
6/12 months.
FS: That will be a hard one. Since
the key drivers for the EURO are
resting with the outlook for monetary
policy and the action of the ECB
much will depend on their assessment
of activity. As we, like everyone else,
don’t know about what they will
do – the decision to forecast EUR/
USD is not tied to fundamentals like
growth differentials, yields, etc. but
to the assessment of how strong the
have a well defined discipline of risk capital and maximum can go to as ECB will push rates lower or even go
taking and loss cutting. Without that high as 5 times. quantitative. Additionally, I believe
you will go under. the U.S. in the long run needs a lower
JW: How many execution brokers Dollar and will produce one. That
JW: Do you favour any particular do you use? How do you split said, I expect US Dollar weakness to
time frames in your strategies, or execution between electronic and set in, but not before the ECB has
do you diversify across a range of “dear old voice”? decided on its quantitative easing.
them? What is your average trade FS: We have six execution brokers
duration, and how is high the trading on the boxes, but electronic execution JW: What’s the best advise to
frequency? constitutes 70% of all trades. give to an inexperienced or semi
FS: We believe there is value in both professional trader who wants to
short-term and long-term trading JW: How does liquidity impact the enter the FX fund management
strategies. Short-term trading can be efficiency of your strategies? Have industry?
of high frequency, ranging between you already explored to what AUM FS: Start as short-term as possible
intraday to a few days. Strategic limit the strategies would allow you and have tight stops. If possible, sit
positions are targeting time frames to grow to? next to a very experienced person.
of up to a year. It is quite important FS: Our strategy can accept a lot of Learn by watching and how to avoid
not to mix up the activities of these assets. We currently have in place an mistakes. That’s key. Be prepared
two areas. For example, strategic infrastructure that can manage assets to deal with your losses and deploy
positions are not really qualified to in excess of one billion US Dollars. a proper risk management system
be traded and vice versa. before you start. That will keep you
JW: What is the single biggest out of trouble and alive to benefit
JW: What are your average and strength of your team? from your good trades.
maximum leverage used? FS: Experience and quality risk
FS: Average is around 1.25 times management coupled with a very
FX FOCUS ON BONDS
How to choose an appropriate bond:

balancing risk & reward
Bonds, in the sense of financial government is supervising the financial policy, an equity portfolio, a bond or a
instruments, have been in circulation system and would never let a bank fail, structured product, this simply isn’t a
virtually ever since people began to would it?” Hah. “With so many bankers, long-term truism.
accumulate wealth. The term “bond” in accountants and lawyers working with
its literal sense means “that with or by borrowers, everything should have been In terms of traditional risk assessment for
which a thing is bound” (source: Oxford taken into account so that my money is bonds, an approximate “hierarchy of risk”
English Dictionary) and also means an protected, no?” Wishful thinking. would look something like the following,
obligation, a duty, or a covenant between with the entities at the top of the drawing
two parties. In the technical and legal In addition to ingraining the concept of representing the “greatest” amount of risk,
sense, it is a deed by which one party a balanced portfolio in the mind of every and those at the bottom representing the
agrees to pay an amount of money (or investor, there is one other phrase that “least” amount of risk:
transfer property) to another party under needs repeating at every turn: no reward
certain conditions and usually within a without risk. In the simplest of terms, the
certain timeframe. higher the return on an investment, the
there is no reward without risk

As markets have evolved and become greater the risk. If there was no chance
fully internationalized, it is quite whatsoever that a borrower could default One has to be very careful in these
impossible for investors to have a personal on its obligations, the real interest rate days of “stress-tested” banks to say
knowledge of the other party that is that it would pay on its bonds would that there aren’t a lot of corporations
being “bound” through the issue of debt theoretically be zero (real interest rate that seem less risky than many
instruments such as bonds. Even when being defined as nominal interest rate banks, even governments for that
the most sophisticated fund managers less inflation). I would hope that after the matter, but over time this grid offers
in the world employ analysts and events of the last 2 years, no one out there a fairly consistent basis for assessing
accountants to quantify the risks involved still believes that financiers are alchemists risk. Within each of these boxes,
in purchasing bonds, there are regularly who can turn lead into gold. Except for however, there are subgroups that
nasty surprises. Investors are expected a miniscule number of financial geniuses, have higher or lower levels of risk: a
to make rational risk assessments for the anyone who consistently beats average municipal government is likely to be
bonds in which they invest, but for all but returns is consistently taking above riskier than a national government,
the most highly-informed investors, this average risk with their investments. Retail and local savings bank is likely to
is an extremely difficult task. “Argentina investors always want to think there is a be riskier than a global bank, a local
is a sovereign nation and will always way of “beating the odds” without taking company is likely to be riskier than
repay its debts, right?” Wrong. “The extra risk, but whether it be an insurance a multinational corporation, etc.

FOCUS ON BONDS FX
Current As most are aware, global ratings

Issuer Ratings Maturity Coupon Comment
Yield agencies do extensive research
Sleep at night and get a decent coupon for going
EIB Aaa/AAA 15/10/2025 4.50% 4.60%
longer; easy to sell if need be
on nearly every borrower in the
KfW Aaa/AAA 16/01/2012 3.375% 2.00% Still better than a bank account
world and assign their own risk
assessment ratings (Moody’s,
Denmark Aaa/AAA 17/03/2014 3.125% 3.08% Recent sovereign issue mid maturity
Standard & Poors, Fitch, DBRS,
Bit better yield for going down the sovereign
Italy Aa2/A+ 01/08/2016 3.75% 3.95% etc). The point being made is that
credit curve
Rabobank Aaa/AAA 05/05/2016 4.375% 4.45% Highest rated bank left standing your investment choices come
Bank of
A2/A 23/03/2015 4.00% 6.75% This is a test of your risk-reward skills
down to a fairly simple risk-reward
America
calculation.
Shell Aa1/AA+ 14/05/2013 3.00% 3.00% Solid company, solid business sector
Here are some bonds in EUR that
BASF A1/A+ 09/06/2015 5.125% 4.20% Good corp story but now a bit expensive
give matter for thought in relation
Telecom This one will keep getting more expensive as the
Italia
Baa2/BBB 01/02/2012 6.25% 4.05%
year goes by
to the above descriptions and
comments:
Will they go bust? Is 4% a decent return for this
Daimler A3/A- 10/06/2011 6.875% 4.00%
risk? Are they really single A?
Roy Fraser
MARKET Incapital products are designed

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Primary Corporate Bonds
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This is neither an offer to sell, nor the solicitation of an offer to buy any financial instrument. Always consult the applicable prospectus prior to purchasing any securities. EU sales restrictions apply.

FX Brokers
ODL Securities Limited
Graham Wellesley, CEO

ODL Securities Group
ODL (Order Direct Limited) was founded in the ODL Capital (for institutional business), ODL
UK in 1994. It was the first and most important Japan KK , Tokyo, ODL Monaco SAM and ODL
Electronic Option Broker House in the London Vancouver, Canada. The group can also count on
Stock Exchange. In 2004 ODL received a new an extremely active Corporate Finance Division
liquidity injection by the new senior management specialised in the Mining and Oil sector, raising
team and expanded in terms of regional areas funds for the leading companies in the mining
and financial products. 28 of staff in 1994, ODL field in several developing countries. The Market
Markets (the name under which ODL trades in Maker entity is ODL Securities Limited and it is
the UK for retail clients) now relies on over 200 authorised and reg ulated by the Financial Ser vices
professionals worldwide and an impressive client Authority (FSA). It is a member of the London
base from over in 100 countries. The London Stock Exchange, NYSE, LIFFE and Euronext and
Head Office manages the risk exposure generated a designated broker and member of APCIMS.
from the trading activity of ODL Markets,
BROKER REVIEW
Main Strengths:
ODL’s principle strengths are: consistent liquidity, Unlike most brokers, ODL pays interest on
transparency and price integrity with spreads in unused margin. All platforms provided give
over 80 currency pairs (2 to 5 pips on the major access to your own back office system: clients can
currency pairs). monitor their trading position constantly and
receive confirmations in real time, illustrating
Risk management is one of ODL’s priorities: clients the remaining margin, statements, realized and
can monitor risk exposure in real time. Clients can unrealized profit/loss.
also run multiple positions for each currency pair
which can be individually selected for closing. ODL Securities is a third party member of CLS
(Continuous Link Settlement), allowing the
Another aspect that differentiates ODL from other company to offer pricing to the big/medium banks
brokers is the earning of interest on cash balances. worldwide.

Brokers FX
Innovation and technology

essential to have had several years experience among the top
ODL offers various free trading platforms which are 10 international market makers, and the company will only
easy-to-use, Windows-based, customizable, with pre- consider applicants with such experience.
programmed configurations and which allow users to place
various order types such as - MARKET, LIMIT, STOP and Accounts and Trading Conditions
OCO. Trading strategies are also available to professional
traders along with support to small or new traders. The ODL offers mini-accounts and full accounts:
company’s main objective is to guarantee a professional Mini accounts need minimum funding and can be opened
service to enyone intending to approach the FX market, online with one acceptable proof of ID. The maximum
independently from a trader’s background trade account is €5000 and its value cannot exceed €10 000
(cumulative over 12 months), after which clients will be
Customer Service invited to switch to a “full account” (an account for active
and professional traders). There are no fees for upgrade to a
The non trading desk is covered by multilingual staff from full account, but further proof of ID is required.
07.00 until 19.00 London Time. Their responsibility is
to answer all client calls for trading, orders, back office ODL is committed to ensure you deal on the price you see
and admin issues, basically anything clients might need. and to give clients the opportunity to access the Gold and
The trading desk runs 24 hours and is covered by very Silver market with just 1% leverage (1 to 100). The deal
experienced and professional traders. All of them have an size is not restricted: clients can trade from 10 000 to 100
interbank background. To be part of the trading team it is million (equivalent of $1 /point to $10 000/point).
Trading Platforms • Internal e-mail;

ODL proposes various trading platforms including • Comprehensive trading statements.
MetaTrader4 for retail traders, Strategy Runnner for • Mobile Trading: MetaTrader 4 Mobile for PDA’s
futures traders, and Ariel, Currenex, or HotSpotFX for and mobile phones
professional traders.
We’ve chosen to give a brief overview of Meta Trader 4 as

the most commonly used platform amongst retail clients.
MT4’s main advantages are:

• Instant execution and request-for-quote execution
(RFQ)
• Possibility to use Trailing stops
• Technical analysis package: 30+ in-built indicators
and charting tools, the ability to create various custom
indicators, different time periods (from minutes to
months);
• Multi-language program interface; Fig. 1 Central panel
• History database management and real time data
import/export facility;
• Signals of system and trading actions; MT4 offers the following useful applications:

FX Brokers
- Toolbar: allows modification of the platform quickly positions , track history, news, alarms and a few
according to the trader’s needs. It is possible to insert new other options. It also allows traders to check details of
windows via the Insert and remove buttons. Moreover it their account, select technical analisys applications or
is possible to decide the position of every single button create new indicators according to trader needs.
in the toolbar by clicking on the “up” and “down” button
and to memorise the chosen configuration by clicking
the reset button. Fig.3 Creating a new EA (Expert Advisor)
- Languages: MT4 allows traders to choose from
25 languages including Arabic and Chinese; once a - Chart Window: with MT4 it is possible to
language is chosen it is enough to restart the PC. visualize various chart types (such as candlesticks, lines,
- A window to the market: from this window it is bars…) and create personalized charts with timeframes
possible to monitor almost the entire market: bid and from 1, 5, 15, 30 minutes, 1 and 4 hours, daily, weekly
ask for every single currency pair (FX), CFD’s (Europe to monthly; it offers many technical analysis features,
and US), Index and commodities. Moreover, clients graphic tools and studies like Fibonacci Retracement,
can insert at the market orders or pending orders, select Fibonacci Channel, Fibonacci Time Zones, Fibonacci
charts and select the most interesting currency pairs by Fan, Fibonacci Arc and many others. (Fig.4)
clicking on the “show all” button. It is possible to have
access to other features by right-clicking on the markets
window.
Fig. 2 Order Window
Fig.4 Chart
- Window navigator: it gives the opportunity to
FX Trader Magazine comment:
A very good MetaTrader broker, with 2 pips fixed spreads the customer service on the web, but as
on the Major currency pairs. for many brokers, opinions vary a lot from user to user.
As it is also a multi-platform broker, users can Overall, a great forex broker with over 10 years of
find the platform which best suits their trading experience in the sector, which is proof of seriousness and
needs. There have been some complaints about professionalism.

Broker review FX
GFT UK
GFT Global Markets UK opened High technology meant the introduction of a propriety
in 2006, thanks to the expertise operating platform focused on
of Gary L.Tilkin, a veteran of user needs, which offered access
financial markets and president of to the market, order execution,
the company. market analysis and graphic
support all in one free and
GFT was born as a “rib” of integrated package: GFT
Global Futures & Forex Ltd and Dealbook. In 2004 Dealbook
constituted in 1997, a business FX2 was also launched. It
challenge that originated in Tilkin’s home office and that offered additional tools but
now has clients in 120 countries, more than 240 employees what impresses is GFT’s capacity
(40 of which are in the London branch) located in New for continuing investment in
York, Chicago, Tokyo, Dubai, Singapore, Sydney and research and development
obviously London. despite the groups leadership in
the market.
From the beginning Tilkin’s philosophy was hinged on
5 fundamentals: high technology, quality and service Today GFT offer Dealbook in 3 different configurations:
variety, security and financial strength. 360 Dealbook (tested), Dealbook FX web and Dealbook
Mobile for mobile smart phone use.
DealBook 360 DealBook Web DealBook Mobile
STRENGTHS BROKER REVIEW
Technology and innovation
One of GFT’s main strengths is certainly the proprietary institutional growth forced the company to differentiate
technology, which differentiates them from other forex the offer with one of the most reliable ECN platforms in
brokers, offering third party trading platforms. the market, and with very competitive liquidity.
GFT also created a series of high added value analysis Financial stability
instruments for Dealbook, such as Foresight-AITM
revision software (based an Artificial Intelligence principle), The financial solidity of the company has been confirmed
Dynamic Trend Profile (offering trading signals) and the by several awards including:
Di Napoli Levels pack (including proprietary indicators). - One of the best 500 high technology growth firms of
North America for 3 years ( Deloitte)
The company also now has a white-label product such as -16th company in 2005, just 2 companies behind Google,
the Currenex platform, that is particularly appreciated 236th in 2006 and 305th in 2007 among US firms with
by institutional investors and FX Managers. Exponential the highest yield (Inc. Magazine)

FX Broker review
TRADING INSTRUMENTS
GFT can provide products for all FX Market needs and in a brilliant track record. We argue that GFT should
particular: provide more investment programs based on different
- “contracts for differences” (CFDs) where traders trading strategies to offer clients more diversification of
can exploit opportunities by trading on open and close of investment on FX markets related to the risk inclination
the market among more than 2,900 financial instruments of the client.
(stocks, futures, currencies, interest rates and metals)
- “spread betting”, which allows the use of a fiscally COSTS AND EXECUTION
appealing derivative in particular use in the UK GFT DealBook360 is the platform for retail clients.
- “spot trading”, for trading on more than 120 Being a propriety platform, it uses the normal scheme of
currency pairs a market maker with all flows managed directly by GFT
desk. On this account there are no commission costs on
CUSTOMER SUPPORT FX spot only on CFDs on particular stocks.
GFT offers both a dealing desk and technical support
available 24 hours a day, available today only in English. Using Currenex platform (GFT Prime configuration)
Costs are applied on volumes and are negotiable each
ACCOUNTS time on the basis of the trading amounts and actual
Clients can choose different types of accounts: Mini , and prospective turnover. GFT Prime is offered only to
Standard, Silver, Gold, and Platinum , from 500 USD for a institutional clients, and it requires minimum sizes in
Mini to 250.000 USD for a Platinum. terms of funding and expected turnover.
GFT also offers various free additional services such as Liquidity offered through GFT Prime is excellent. GFT
analysis instruments and news services for Silver, Gold and Prime is a white label version of Currenex, so someone
Platinum accounts (6 months for Platinum accounts). would think liquidity is as all other Currenex versions, but
it’s not. As many of our readers may not know, Currenex is
Wallwood is a GFT Investment Program. It is dedicated only a software product, and the liquidity provided fully
to investors who have a medium inclination to risk with depends on the quality of the credit relationships of the
at least a two year investment horizon. This program has counterparty with the market making banks. GFTPrime’s
medium-low volatility but at the present time cannot prove liquidity is in line with the best offer in the market.
Proprietary PLATFORM
DealBook360
Dealbook 360 which is available on the web and

on mobile smartphones competes with the diffused
Metatrader of Metaquotes. The interface philosophy is
quite the same with a unique cockpit offering different
views and functionalities (fig.1), such as
-pending order window

-open position window
-quotes window
-news window
Fig.1 Main window
-account window

Broker review FX
The graphic quality of the interface is pleasant and user

friendly, and is available in many languages.
The orders window provides a good solution , where in
addition to the usual options (at best, stop, limit, OCO,
and so on) users can also customize orders with the “scale
out” option (Fig.2), a feature which is far more comfortable
than for example the Metatrader4 scaling, which creates 2
separate orders.
Moreover, and this is an important plus for intraday
traders, the orders window allows the customization of the
minimum size/amount/lot, whereas most platforms have a
Fig.3 DealBook Charting
pre-defined minimum amount.
In general, customization options of charts are complete
and allow for a comfortable setup; the visual space between
candles c
an be customized, and the candle size can even be defined in
pixels; very interestingly for high frequency traders, orders
can be input with a click from the chart itself.
Fig.2 Orders Window
The charting package of Dealbook 360 is quite complete,

in line with competition, on the number and variety of
indicators to choose from, possibility to customize the
worksheet and to design proprietary trading strategies.
Another useful feature is the possibility to add alarms by
default to the indicators, which is an option that requires
more complicated programming on other competitors’ Fig.4 Chart customization window.
platforms.
FX Trader Magazine Comment:
We found that DealBook 360 is an excellent software to trade exists in English, considering that the sales department is
Forex both at the retail and semi-professional level. Combined available in other languages such as Italian, Spanish, Portuguese
with the very good liquidity of the GFT Prime version, the offer and German.
is precise and comprehensive for FX market users. We appreciate Good secondary services such as training, comments &
the investment effort on a proprietary trading technology for analysis, and “ready trading solutions” are provided for retail
the retail market, as opposed to many competitors who chose clients too.
a common third party trading platform provider. However, it We hope GFT will add further functionalities to DealBook
is important that GFT continues investing in DealBook 360 360 for trading systems programming and interface, similar to
in order to keep up with competitors’ platforms, especially as those currently offered by other leading trading platforms.
MetaTrader is now near to release MetaTrader5. Overall, GFT is a top tier FX retail broker and the company’s
From a customer service point of view, we appreciated the expansion in the last years has proven that GFT’s offering has
skilled technical staff. It is a pity that technical support only been well received by the market.
FX TECHNICAL ANALYSIS
Technical outlook
MAJOR TRENDS AND TARGETS FOR THE MAJOR FX RATES
Current level Major trend Major target Trend change level

EUR/USD 1.3900 Up 1.5163 1.2888
USD/JPY 97.00 Up 105.10 93.57
USD/CHF 1.0850 Down 1.0018 1.1741
GBP/USD 1.6465 Up 1.7451 1.4400
USD/CAD 1.1250 Down 1.0005 1.2503
AUD/USD .8015 Up .8930 .7251
NZD/USD .6365 Up .6951 .5444
EUR/JPY 134.85 Up 147.09 124.44
GBP/JPY 159.75 Up 178.82 139.06
AUD/JPY 77.90 Up 87.74 66.87
EUR/CHF 1.5070 Down 1.4818 1.5233
EUR/GBP .8440 Down .8192 .9081
EUR/NOK 8.9200
ADVERT ARMAGEDDONCOPYPDF
Down 8.4597 9.1610
EUR/SEK 10.8500 Down 10.2200 11.2880
FX TRADER MAGAZINE April-May 2009 39

TECHNICAL ANALYSIS FX
EUR/USD
EUR/USD retreate d from its new a ll-time Sig nificantly, this cleare d the downtrend line
trade d hig h at 1.6039 on 15 July 2008 to reach from 1.6039 (around 1.3550), the mid March
a 2 ½ year low at 1.2329 on 28 October 2008, re cover y hig h at 1.3739 and the 260 day (1
close to the 50% retracement of the 8 year rise year) moving avera g e near 1.3900.
from the October 2000 a ll-time trade d low
at .8232. Initia l consolidation was followe d Althoug h a head and shoulders top pattern
by a strong corre ctive re cover y to 1.4721 in has de velope d over re cent we eks since pea king
De cember 2008, slig htly exce e ding the 61.8% at 1.4338, a re versa l is favoure d to be limite d
retrace of the 1.6039-1.2329 de cline. to the 1.3313-1.3423 area (the middle of the
pre vious 1.3739-1.2888 de cline, and the mid
The 1.4721 re cover y hig h was actua lly spot- on March hig her low). The uptrend conne cting
the fa lling 260 day (1 year) moving avera g e, and 1.2459 and 1.2888 a lso interse cts around this
a re versa l then commence d. Steady losses then support area .
a lmost f ully retrace d the t wo -month re cover y
phase, reaching 1.2459 in early March. The rising 1 month and 3 month moving
avera g es (shown in g re en and re d ) are a lso
Althoug h the re cover y from 1.2459 initia lly supportive, favouring a subse quent extension
lef t a potentia l lower top at 1.3739 in mid hig her throug h the 1.4338 top towards the
March ( just under the 8 month downtrend De cember & S eptember 2008 hig hs at 1.4721
line conne cting 1.6039 and 1.4721), the & 1.4862, possibly the 76.4% retracement
subse quent emerg ence of a hig her low at 1.2888 of the 1.6039-1.2329 de cline at 1.5163 over
a month later set up a renewe d re cover y phase. coming months.

EUR/GBP
EUR/GBP bottomed at .5684 in 2000, but it was not lasting decline. The loss of the 5 month uptrend line at
until late 2002 that a major uptrend was confirmed. An that time warned of a further decline towards .8499, the
initial rise to .7253 in 2003 was followed by a prolonged 61.8% retracement of the .7695-.9801 bull leg, and this
sideways to slightly lower correction, hitting .6537 in has since occurred. In doing so, the 260 day (1 year)
early 2007 before returning to strength. moving average which did so well in containing losses
in October 2008 has been exceeded and if the break of
The 2003 peak at .7253 was cleared in late 2007 and a .8499 is sustained then the risk will rise for a further
run-up to .8184 occurred in September 2008. As the tumble over coming weeks and months towards .8192-
chart below shows, weakness from .8184 was supported .8193 and possibly to eventually retest .7695.
at .7695 in October 2008, spot-on the rising 260 day
(1 year) moving average. An accelerated rise was then To avert the immediate risk of a further sustained
enjoyed, peaking at .9801 on almost the last trading day decline, we need to see a rebound over recent lower tops
of 2008. at .8866 and the .9036-.9081 area. At present this is
not the expected course of action and an initial bounce
A choppy decline has occurred since then, but it was not towards those levels may simply unwind an oversold
until early April that the dynamics changed from being a condition, paving the way for the next leg lower.
correction within an uptrend to unwind an overbought
condition into a more significant and most likely longer Steve Jarvis

TECHNICAL ANALYSIS FX
NEW ZEALAND DOLLAR

Central Bank: RBNZ Economic data
Pil reale: +0.5%
www.rbnz.govt.nz
Real GDP: -1.9%
Current interest rate: 2.50%
Inflation: 3.0%
Last change: 30/04/2009
Unemployment: 4.6%
Next meeting: 10/06/2009
Current account balance/GDP: -8.9%
NEW ZEALAND DOLLAR (06/05/2009)

EurNzd has violated its long bearish trend which began might be flat or a triangle, but anyway should not become
with a max of 2.4322 in 1998. Between May and June lower than a 38.2% retracement of the third wave (2.2437
of 2008, the downtrend line connecting the max 2.4322- while the April bottom was 2.2458) or, in the furthermost
2.3025-2.1164 was broken with a great rally, which was hypothesis, lower than the first wave, defined by 2.1164.
able to push the cross up to 2.5770 in February of 2009.
The 40 weeks moving average that has seen the end of
Observing the lowest part of the chart, we note that the bear market rally, is now at 2.2640 and should be
EurNzd appreciated to 2.4322 from 1.6172 (+50%) considered as a future support.
between 1997 and 1998. Following this, there was a very
long correction in 3 waves. The currency finished 2005 over From a temporal point of view, we can estimate the
the min 1.6321 of 1998 and the bull market started there, end of the fourth wave between October 2009 and
completing its first February 2010, when
wave in July 2006 at the temporal length
2.1164, followed by of the second wave
a deep second wave will be retested at
of correction which 61.8% and 100%. We
saw the currency end can only guess a price
July 2007 at 1.7046, target for the end of
close to 78.6% wave 4, but surely
retracement of the the trend line which
first wave. This was connects the max of
a launching pad for wave 1 (2.1164) and 3
the next extended (2.5770) will represent
wave. The third an important limit to
wave finished after the future fifth wave.
80 weeks at 2.5770
(+51% - similar to the rise of 1997-1998). The real change is the rate that you can use to buy goods
or services produced in a country with other goods or
This extended third wave had the same price expansion services produced in another one.
of the first wave, shifting the starting base from the top This rate can evaluate the convenience to buy in a foreign
of the first impulse (2.1164). Considering the second country, and a value lower than 100 means that the local
wave was very deep and displayed a zig-zag pattern, all goods are more profitable in price terms compared with
expectations are now addressing the fourth wave which those imported from a foreign country.
NEW ZEALAND DOLLAR (06/05/2009)

On the 31st March 2009 (Bank of International
Settlement) the effective real change of the New The bearish theory persists, at least until the
Zealand Dollar was 74.62. resistance of 0.6128 is breached, with 0.6350 (38.2%
of retracement for the whole bear market) as the next
The “Purchasing Power Parity” fundamental resistance.
assumption is that the exchange rate between two In case there will be new downtrends in the next
currencies should naturally have a tendency to improve weeks, as we predict, the first target for the third wave
so that the basket of basic goods in both currencies has will be represented by 0.4808, a level where this third
the same cost and that the nominal change between movement will be equal in wideness to the first wave.
two currencies from two countries is equal to the Instead, the 17th June will represent a first possible
ratio between the bottom date, as
two currencies the number of
purchasing power. descending days
here in the third
In accordance wave will be
with the most equal to 1.618
recent evaluations in wave 1 (32).
supplied by the In the event the
OECD, the New third wave is
Zealand Dollar has extended, then
an undervaluation we can expect a
of 22% with respect fall at least until
to the Euro, and 0.4087, a level
12% with respect that we have
to the US Dollar. not seen since
2001.
NzdUsd maintains its bearish sentiment from February
2009, when it reached a top of 0.8210. From that The Big Mac Index is a comparison tool for the
point, there has been a downtrend that, in 5 waves, currency purchasing power. The parity ratio of the Big
has scored the first min at 0.5200 in November 2008, Mac purchasing power between two currencies, comes
after a drop of almost 37%. from the division of the Big Mac cost in one nation (in
Soon afterwards, there was a Kiwi reaction that its own currency) with the Big Mac cost in another
stopped at 0.6068, under the 0.6128 that represents one (in its own currency). This value is compared with
the bear market max of the fourth wave. the current exchange rate. If it is lower, then the first
currency is undervalued (according to the purchasing
The most interesting point is the next bearish power parity theory) with respect to the second one.
movement, still in 5 waves so that it confirms a bear If it is higher then the first currency is overvalued.
market is setting out again.
The 0.4964 min was readjusted at 0.4902 on the 4th At the moment, the New Zealand Dollar compared
March 2009, but we think that this is the result of an with the Euro is undervalued by 59% while compared
expanded flat that at 0.5974, probably completed the with the US Dollar it is undervalued by 26%.
second wave with a 200 days moving average to form a
dynamic resistance. Giorgio Martini

Technical Analysis FX
MAJORS REPORT
TREND EURO, US DOLLAR, YEN, BRITISH POUND
SPOT PRICE 22/06/2009 01/01/2009 ∆% 01/01/2008 ∆%
EURUSD 1.3845 1.3952 -0.8% 1.4583 -5.1%

USDJPY 95.99 90.79 5.7% 111.79 -14.1%
EURJPY 132.77 126.65 4.8% 163.04 -18.6%
EURGBP 0.8447 0.9573 -11.8% 0.7350 14.9%
DOLLAR/YEN
Dollar/yen has been moving in a major down trend for several reached and overcome the psychological resistance at 100 (high
decades: at the beginning of the seventies it was trading at at 101.50 on April 6th). The following correction brought the
around 350, since the mid-eighties it went stably below 175. pair back to 93.85 at the end of May; then it started moving
After having collapsed to a historical low at 79.75 in April 1995, sideways below 99. By and large, in the last three months the
the dollar started a strong reversal, reaching a top at around dollar moved within a trading-range between 93.55/85 and
147.65 in August 1998. From that level, the major down trend 100/101.50. If the support at 93.55/85 holds, the picture for the
resumed, with a series of falling highs and “raids” below the key coming weeks remains sideways: new buy orders are expected
support at 115 (a level repeatedly supported by the Bank of over 99-100, for a new test of 101.50. If the pair succeeded in
Japan’s interventions). The dollar reached a bottom at around overcoming this level (premature) the rally would resume, with
101.35/85 at the end of 1999, level tested again at the end of first target in area 103.75/104 and extensions, in the coming
2004. The break of that support during last year, caused a new months, towards the key resistance area 110-115, where strong
sell-off, that led the dollar towards 87 at the beginning of this sell orders are to be expected. Renewed weakness for the dollar
year. is expected below 93.55/85, targeting 91.40-92.00 and then
From the beginning of February the dollar started to rally and the January 2009 low at around 87.
TREND SUPPORTS SPOT PRICE RESISTANCES

Trend 3-6 months side S1 93.55/85++ R3 103.75-104.00+
Trend 6-12 months side S2 91.40-92.00 95.99 R2 101,50++
Trend 12-18 months side-up S3 87++ R1 99-100+

FX Technical Analysis
EURO/DOLLAR
Euro/dollar was first traded in January 1999, at upwards, with a first wave that reached a top at
around 1.1800-1.1900 and fell to a historical low at 1.3735, followed by a pull-back towards the support
0.8231 on October 26th, 2000. From that bottom, at 1.2885 (April 20th-22nd) and a second rally with
the euro began accumulating and – since summer a peak at 1.4340 at the beginning of June. The rise
2002 – moving upwards, entering progressively a of the pair in the last quarter must be read within
major up-trend and reaching a top at 1.6038 on a bigger sideways frame, between 1.2330/1.2460
July 15th, 2008 (+95% vs. the historical low). The and 1.4360/1.4720, from the beginning of October
fall below the strong support at 1.5275 on August 2008. The technical picture for the coming months
8th, 2008 (level that had supported the pair in the remains sideways/slightly positive: there would be
period April-July) caused a major reversal, with a a confirmation of the recent bullish signal for the
fast decline towards 1.3900, followed by a pull-back euro above 1.4340/60, targeting the December 18th
to a top at 1.4866 on September 23rd and a new 2008 peak at 1.4719 and then 1.4865-1.4900, with
sell-off to a bottom at 1.2330 on October 28th. extensions towards the critical resistance at 1.5000,
In mid-December, a strong rally brought the pair, where strong sell orders are to be expected. A fall
in just a week, to a top at 1.4719. Then it started below 1.3700/50 would imply a loss of momentum,
going down again and fell to a bottom at 1.2460 at even if a signal of weakness would require a break
the beginning of March, 2009. below 1.3400: in that case, the target would be the
strong support in area 1.2885-1.3000, where buy
During the last three months, the pair moved orders are to be expected.

Trend 3-6 months up S1 1.3700/50+ R3 1.4865-1.4900++
Trend 6-12 months up S2 1.3400+ 1.3845 R2 1.4720++
Trend 12-18 months side S3 1.2885-1,3000++ R1 1.4340/60+

Technical Analysis FX
EURO/YEN
The cross euro/yen was first traded in January 1999, yen. After the break of 156 in September 2008 – in
at around 132.50-135.50, and fell to a historical low correspondence with the trendline that sustained the
at 88.96 in October 2000. From the bottom, the euro major up trend), the cross collapsed to a low at 113.65
began moving upwards, entering progressively a major on October 27th, 2008. In the following months, the
up-trend, and reaching a historical high at 169.95 in cross moved sideways, above that level and below 131.
July 2008 (+91% vs. the October 2000 bottom). The In January 2009, the euro reached a new low at around
strong depreciation of the yen during last years has 112.10 (-34% form the historical high).
been mainly caused by the so called “carry trade”, i.e.
the funding in low-yield currencies like the Japanese Form the end of January, the cross started to rally,
yen with the contextual reinvestment in asset classes reaching a top at 137.41 at the beginning of April,
in other currencies (i.e. stocks and bonds in euro, followed by a correction towards 124.40 on April 28th
Australian and American dollars, etc.). After the burst and a second up-movement with a peak at 139.19 on
of the real estate and financial bubble – begun in the June 5th. If the support at 128.25 holds, the sentiment
2007 summer, with an acceleration after September remains positive, with a possible rise over 139.20 to
2008 – a progressive strong disinvestment from Stock test the resistance in area 140-142, with extensions
Exchanges around the world led to massive yen buying in the coming months towards 150, where strong sell
in order to square up carry trade positions. That orders are to be expected. Renewed weakness below
provoked a crash of euro vs. yen, driven by a double 124.40-126 (not very likely), targeting 122 and then
source: the fall of euro against the dollar and, at the 120. Below this support (unlikely) there would be a
same time, the decline of the US dollar versus the new test of the January low at 112.11.

Trend 3-6 months up S1 128.25 R3 140-142++
Trend 6-12 months up S2 124.40-126++ 132.77 R2 139.20+
Trend 12-18 months side-up S3 120-122+ R1 135.50

FX Technical Analysis
EURO/GBP
The cross euro/gbp was first traded in January 0.8000-0.8200, where buy orders are expected;
1999, at around 0.7100, and fell to a historical below this level the fall could continue towards
low at 0.5683 in May 2000. From the bottom, 0.7695. The overcome of 0.9080 (not very likely
the euro began moving upwards, entering at the moment) would give a signal of renewed
progressively a major up-trend, and reaching a strength for the euro, targeting the January-
historical high at 0,9809 on January 1st, 2009 March highs in area 0.9475-0.9520 and then
(+72.6% vs. the May 2000 low). From that peak (unlikely) the historical high at 0.9809, reached
a strong correction drew the cross down to a low on January 1st 2009, with extensions towards the
at 0.8638 on February 10th, 2009. Then the cross psychological resistance level at 1.0000.
bounced back to a top at 0.9478 on March 19th.
From the tops of March, the cross started heading

south again, broke the previous lows of February
and reached 0.8400. As long as the cross remains
below the resistance at 0.8800, the sentiment Maurizio Milano
remains bearish, with a possible prosecution of
the downtrend towards the critical support in area

Trend 3-6 months down S1 0.8335 R3 0.9475-0.9520++
Trend 6-12 months down-side S2 0.8000-0.8200++ 0.8447 R2 0.9080+
Trend 12-18 months side S3 0.7695++ R1 0.8800

INTERNATIONAL DATA FX
FX SPOT MONITOR
Country Flag USD Spot Last vs USD % Ch 3M % Ch 12M 12mth High 12mth Low
Eurozone EUR= 1.4058 -12% 13% 1.5987 1.2457
UK GBP= 1.6485 -18% 20% 2.008 1.3746
Japan JPY= 95.22 -14% 9% 110.49 87.31
Switzerland CHF= 1.0859 -11% 10% 1.2241 0.9843
Australia AUD= 0.8053 -18% 34% 0.9787 0.6018
Canada CAD= 1.1535 -11% 17% 1.2995 0.9832
New Zealand NZD= 0.6448 -20% 31% 0.8097 0.4923
Sweden SEK= 7.7813 -16% 33% 9.2927 5.838
Norway NOK= 6.4459 -11% 30% 7.2227 4.953
Iceland ISK= 127.55 -14% 78% 147.55 71.67
Israel ILS= 3.963 -6% 23% 4.236 3.213
South Africa ZAR= 7.907 -32% 10% 11.62 7.2025
Egypt EGP= 5.598 -2% 6% 5.694 5.2825
Saudi Arabia SAR= 3.75 0% 1% 3.7685 3.7115
Czech Rep. CZK= 18.501 -21% 28% 23.438 14.404
Poland PLN= 3.2091 -18% 59% 3.9003 2.0221
Hungary HUF= 196.76 -22% 37% 251.64 143.19
Russia RUB= 31.1604 -14% 35% 36.3438 23.1531
Turkey TRY= 1.5354 -15% 33% 1.806 1.1512
China CNY= 6.833 -4% 0% 7.083 6.8108
Hong Kong HKD= 7.7499 -1% 0% 7.8142 7.7483
Singapore SGD= 1.4525 -7% 8% 1.5562 1.3476
Taiwan TWD= 32.95 -6% 10% 35.21 29.996
India INR= 48.02 -8% 21% 51.96 39.75
South Korea KRW= 1278.3 -19% 31% 1570.1 973.5
Thailand THB= 34.04 -6% 10% 36.26 31.04
Malaysia MYR= 3.53 -5% 13% 3.726 3.1305
Indonesia IDR= 10220 -16% 13% 12100 9070
Philippines PHP= 47.95 -4% 16% 49.94 41.3
Mexico MXN= 132383 -15% 34% 15.555 9.858
Brazil BRL= 19472 -22% 25% 2.511 1.5591
Chile CLP= 528.2 -23% 23% 682.5 430.6
Venezuela VEB= 2144.6 0% 0% 2144.6 2144.6
Colombia COP= 2164 -17% 31% 2608.15 1655.9
Levels Date:26-Jun-09 Source: Thomson Reuters

FX INTERNATIONAL DATA
CENTRAL BANKS
Country Flag Central Bank Rate Name Actual Previous
USA FED Fed funds 0-0.25 0-0.25
Eurozone ECB Refi 1.00 1.50
UK BOE Bank Repo 0.50 0.50
Japan BOJ O/N Call 0.10 0.10
Switzerland SNB 3 mth Libor 0.25 0.25
Australia RBA Cash 3.00 3.25
Canada BOC O/N Funding 0.25 0.50
New Zealand RBNZ Cash 2.50 3.00
Sweden Riksbank Repo 0.50 1.00
Norway Norges Bank Depo 1.25 1.50
Iceland CBI Policy 12.00 13.00
Israel BOI Short Term Lending 0.5 0.50
South Africa Reserve Bank Repurchase 7.50 9.50
Egypt CBE O/N Depo 9.00 9.50
Czech Rep. CNB 2 Week Repo 1.50 1.75
Poland NBP 28 Day Intervention 3.50 3.75
Hungary MNB 2 Week Depo 9.5 9.50
Russia CBR Refinancing 11.50 11.50
Turkey TCMB O/N Borrowing 8.75 10.50
China PBC 1 Year Lending 5.31 5.31
Taiwan CBC Discount 1.250 1.250
India RBI Repo 4.80 5.00
South Korea BOK O/N Call 2.00 2.00
Thailand BOT Repo 1.25 1.50
Indonesia BI BI 7.00 7.75
Philippines BSP Repo 4.25 4.75
Mexico BDM Target 4.75 5.25
Brazil BCB Selic 9.25 10.25
Chile CBC MPR 0.75 0.75
Levels Date: 26-Jun-09 Source: Thomson Reuters

INTERNATIONAL DATA FX
ECONOMIC DATA
GDP CPI Industrial Production Unemployment
y-o-y y-o-y y-o-y level
USA -5.50 0.10 -1.10 9.40
Eurozone 0.60 0.10 -1.90 9.20
UK -4.10 0.60 0.30 7.20
Japan -4.00 -1.10 5.90 5.00
Switzerland -2.40 0.20 3.50
Australia 0.40 2.50 5.70
Canada -5.40 0.70 8.40
New Zealand (partecipation) -2.70 3.00 68.4(partecipation)
Sweden -6.50 -0.40 -2.10 9.00
Norway -0.40 3.00 -1.40 2.60
South Africa -1.30 8.00 -21.60 23.50
Czech Rep. -3.40 1.30 -22.10 7.90
Poland 0.80 3.60 -5.20 10.80
Hungary -6.70 3.80 -27.10 9.90
Russia -11.00 0.60 -17.10 9.90
China 6.80 -1.40 8.90
India 6.70 9.80 1.40
Mexico -8.20 0.26 -13.20 5.31
Brazil -1.80 0.47 -14.80 8.80
FX POLL
3 Month Days since Poll Poll Median Poll Min Poll Max Poll Mean Std Deviation Spot@Poll Date
EurUsd 23 1.38 1.23 1.5 1.373 0.0.62 1.4151
GbpUsd 23 1.57 1.39 1.73 1.569 0.082 1.6296
AudUsd 23 0.77 0.65 0.89 0.771 0.055 0.8001
UsdJpy 23 98 87 110 98 4 95.92
UsdChf 23 1.1 1.03 1.24 1.113 0.049 1.071
UsdCad 23 1.135 1.01 1.34 1.143 0.071 1.1128
EurJpy 23 135 119.6 154 134.7 6.5 135.75
EurChf 23 1.526 1.469 1.596 1.53 0.023 1.5149
EurGbp 23 0.87 0.818 0.96 0.876 0.028 0.8678
GbpJpy 23 155 129.6 176 135.7 9 156.3
1 Year Days since Poll Poll Median Poll Min Poll Max Poll Mean Std Deviation Spot@Poll Date
EurUsd 23 1.388 1.16 1.6 1.363 0.113 1.4151
GbpUsd 23 1.605 1.28 1.86 1.609 0.134 1.6296
AudUsd 23 0.78 0.677 0.91 0.786 0.0654 0.8001
UsdJpy 23 102.9 85 116 102.8 7.9 95.92
UsdChf 23 1.12 0.95 1.35 1.139 0.097 1.071
UsdCad 23 1.13 1 1.33 1.14 0.086 1.1128
EurJpy 23 138 114 165 140.3 11.6 135.75
EurChf 23 1.555 1.456 1.687 1.561 0.049 1.5149
EurGbp 23 0.845 0.778 0.962 0.85 0.049 0.8678
GbpJpy 23 161.7 133 201.6 165 16.3 165.3

FX INTERNATIONAL DATA
MARKETS VIEW
Stock Indices Last % Ch 6M % Ch 12M Commodities Last % Ch 6M % Ch 12M
Gold 939.05 7.30% 2.49%
MSCI World 962.83 7.61 -32.96 Silver 14.11 30.17% -17.58%
Dow Jones Ind. 8424.1 0.05 -28.27 Brent DTD 68.43 98.23% -49.86%
S&P 500 916.39 6.00 -30.39 WTI 69.1 73.23% -50.26%
Nasdaq 100 1478.87 34.62 -23.69
Eurostoxx 50 2389.91 0.85 -30.58 Bonds Last % Ch 6M % Ch 12M
UK FTSE 100 4241.01 0.85 -24.95 5Y Euro 2.52 0.249 -1.969
Dax 4776.47 3.70 -27.46 10Y Euro 3.427 0.530 -0.088
Cac 40 3129.73 1.50 -30.27 10Y US Treasury 3.544 1.440 -0.487
S&P Mib 18831.48 -1.05 -36.88 30Y US Treasury 4.332 1.696 -0.264
Swiss SMI 5375.99 -0.71 -24.29 10Y UK Gilt 3.703 0.604 -1.304
Nikkei 225 9877.39 13.91 -29.17 10Y CH Govt Bond 2.358 0.187 -0.977
Australia AORD 3899.5 9.57 -28.19
HK Hang Seng 18600.26 28.84 -19.26 Money Markets Last % Ch 6M % Ch 12M
Shanghai Comp. 2928.211 57.90 0.69 US 6M Depo 1.095 -0.716 -2.039
Singapore StraitT. 2317.95 32.55 -22.91 EUR 6M Depo 1.334 -1.703 -3.787
India BSE30 14764.64 49.92 0.88 GBP 6M Depo 1.41625 -1.582 -4.752
Brazil Bovespa 51649.84 41.25 -21.77 CHF 6M Depo 0.50667 -0.340 -2.458
Russia RTSI 955.45 44.46 -58.99 JPY 6M Depo 0.68875 -0.296 -0.325
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Economic Calendar FX
JULY, AUGUST, SEPTEMBER 2009

GMT London Time
July Tentative JPY BOJ Press Conference

12:50am JPY Tankan Manufacturing Index 9:30am GBP Claimant Count Change
2:30am AUD Building Approvals m/m 1:30pm USD Core CPI m/m
2:30am AUD Retail Sales m/m Wed 15
3:30pm CAD BOC Business Outlook Survey
9:30am GBP Manufacturing PMI 7:00pm USD FOMC Meeting Minutes
Wed 1
1:15pm USD ADP Non-Farm Employment 11:45pm NZD CPI q/q
Change
3:00pm USD ISM Manufacturing PMI Thu 16 2:00pm USD TIC Long-Term Purchases
3:00pm USD Pending Home Sales m/m 8:15am CHF Retail Sales y/y
2:30am AUD Trade Balance Fri 17 1:30pm USD Building Permits
12:45pm EUR Minimum Bid Rate
Mon 20 2:30am AUD PPI q/q
Thu 2 1:30pm EUR ECB Press Conference
1:30pm USD Non-Farm Employment Change 2:30am AUD Monetary Policy Meeting Minutes
1:30pm USD Unemployment Rate 9:30am GBP CPI y/y
Fri 3 9:30am GBP Services PMI 12:00pm CAD Core CPI m/m
Tue 21
9:00am GBP Halifax HPI m/m 2:00pm CAD BOC Rate Statement
Mon 6 3:00pm USD ISM Non-Manufacturing PMI 2:00pm CAD Overnight Rate
11:00pm NZD NZIER Business Confidence
2:30am AUD CPI q/q
5:30am AUD Cash Rate
Wed 22 9:30am GBP MPC Meeting Minutes
5:30am AUD RBA Rate Statement
1:30pm CAD Core Retail Sales m/m
Tue 7 9:30am GBP Manufacturing Production m/m
9:30am GBP Retail Sales m/m
1:30pm CAD Building Permits m/m
3:00pm USD Existing Home Sales
3:00pm CAD Ivey PMI Thu 23
3:30pm CAD BOC Monetary Policy Report
2:30am AUD Home Loans m/m
Wed 8 4:15pm CAD BOC Gov Carney Speaks
1:15pm CAD Housing Starts
9:00am EUR German Ifo Business Climate
2:30am AUD Employment Change Fri 24
9:30am GBP Prelim GDP q/q
2:30am AUD Unemployment Rate
Thu 9 Mon 27 3:00pm USD New Home Sales
Tentative GBP MPC Rate Statement
11:00am GBP CBI Realized Sales
12:00pm GBP Official Bank Rate Tue 28
3:00pm USD CB Consumer Confidence
12:00pm CAD Employment Change
4:00am NZD NBNZ Business Confidence
12:00pm CAD Unemployment Rate
Fri 10 1:30pm USD Core Durable Goods Orders m/m
1:30pm CAD Trade Balance
1:30pm USD Trade Balance Wed 29 10:00pm NZD Official Cash Rate
10:00pm NZD RBNZ Rate Statement
Sun 12 11:45pm NZD Retail Sales m/m
11:45pm NZD Building Consents m/m
Mon 13 9:30am GBP PPI Input m/m
10:00am EUR German ZEW Economic Sentiment 2:30am AUD Building Approvals m/m
Tue 14 1:30pm USD Core Retail Sales m/m Thu 30 7:00am GBP Nationwide HPI m/m
1:30pm USD PPI m/m 1:30pm CAD GDP m/m
1:30pm USD Retail Sales m/m Fri 31 1:30pm USD Advance GDP q/q

FX Economic Calendar
August 2:30am AUD Employment Change

Sun 2 11:45pm NZD Labor Cost Index q/q 2:30am AUD Unemployment Rate
2:30am AUD RBA Monetary Policy Statement Thu 13 1:30pm USD Core Retail Sales m/m
2:30am AUD Retail Sales m/m 1:30pm USD Retail Sales m/m
Mon 3
9:30am GBP Manufacturing PMI 11:45pm NZD Retail Sales m/m
3:00pm USD ISM Manufacturing PMI 7:00am EUR German Prelim GDP q/q
Fri 14
5:30am AUD Cash Rate 1:30pm USD Core CPI m/m
Tue 4 5:30am AUD RBA Rate Statement Sun 16 11:45pm NZD PPI Input q/q
3:00pm USD Pending Home Sales m/m 8:15am CHF Retail Sales y/y
Mon 17
2:30am AUD Trade Balance 2:00pm USD TIC Long-Term Purchases
9:30am GBP Manufacturing Production m/m 2:30am AUD Monetary Policy Meeting Minutes
9:30am GBP Services PMI 9:30am GBP CPI y/y
1:15pm USD ADP Non-Farm Employment Tue18 10:00am EUR German ZEW Economic Sentiment
Wed 5 Change
1:30pm USD Building Permits
3:00pm USD ISM Non-Manufacturing PMI
1:30pm USD PPI m/m
11:45pm NZD Employment Change q/q
Wed 19 9:30am GBP MPC Meeting Minutes
11:45pm NZD Unemployment Rate
Thu 20 9:30am GBP Retail Sales m/m
12:00pm CAD Core CPI m/m
12:00pm GBP Official Bank Rate Fri 21
3:00pm USD Existing Home Sales
Thu 6 12:45pm EUR Minimum Bid Rate
4:00am NZD Inflation Expectations q/q
Mon 24 9:30am GBP Revised GDP q/q
1:30pm EUR ECB Press Conference
Tentative GBP Halifax HPI m/m
12:00pm CAD Employment Change Tue 25
11:45pm NZD Building Consents m/m
Fri 7 9:00am EUR German Ifo Business Climate
1:30pm USD Non-Farm Employment Change
Wed 26 1:30pm USD Core Durable Goods Orders m/m
1:30pm USD Unemployment Rate
3:00pm USD New Home Sales
3:00pm CAD Ivey PMI
2:30am AUD Private Capital Expenditure q/q
Mon 10 Thu 27 11:00am GBP CBI Realized Sales
9:30am GBP PPI Input m/m
1:30pm USD Prelim GDP q/q
Tentative JPY BOJ Press Conference
Tue 11 Fri 28 1:30pm CAD GDP m/m
12:50am JPY Prelim GDP q/q
9:30am GBP Claimant Count Change September
10:30am GBP BOE Gov King Speaks 2:30am AUD Building Approvals m/m
10:30am GBP BOE Inflation Report 5:30am AUD Cash Rate
Wed 12
1:30pm CAD Trade Balance 5:30am AUD RBA Rate Statement
Tue 1
1:30pm USD Trade Balance 9:30am GBP Manufacturing PMI
7:15pm USD FOMC Statement 3:00pm USD ISM Manufacturing PMI
7:15pm USD Federal Funds Rate 3:00pm USD Pending Home Sales m/m

Economic Calendar FX
2:30am AUD GDP q/q 2:00pm USD TIC Long-Term Purchases

1:15pm USD ADP Non-Farm Employment Tentative JPY BOJ Press Conference
Wed 2 Change
8:15am CHF Retail Sales y/y
7:00pm USD FOMC Meeting Minutes
Thu 17 1:00pm CHF Libor Rate
2:30am AUD Trade Balance
1:00pm CHF SNB Monetary Policy Assessment
9:30am GBP Services PMI
1:30pm USD Building Permits
Thu 3 12:45pm EUR Minimum Bid Rate
9:45am GBP Inflation Report Hearings
1:30pm EUR ECB Press Conference Mon 21
12:00pm CAD Core CPI m/m
3:00pm USD ISM Non-Manufacturing PMI
9:30am GBP CPI y/y
Tentative GBP Halifax HPI m/m Tue 22
12:00pm CAD Employment Change
9:30am GBP MPC Meeting Minutes
Wed 23 7:15pm USD FOMC Statement
Fri 4 1:30pm USD Non-Farm Employment Change
7:15pm USD Federal Funds Rate
1:30pm USD Unemployment Rate
9:00am EUR German Ifo Business Climate
3:00pm CAD Ivey PMI
9:30am GBP Retail Sales m/m
Thu 24 3:00pm USD Existing Home Sales
9:30am GBP Manufacturing Production m/m
Tue 8 11:45pm NZD Current Account
11:45pm NZD GDP q/q
1:30pm USD Core Durable Goods Orders m/m
2:30am AUD Retail Sales m/m
Fri 25 3:00pm USD New Home Sales
Wed 9 Day 2 ALL G20 Meetings
10:00pm NZD Official Cash Rate
Sun 27 10:45pm NZD Building Consents m/m
10:00pm NZD RBNZ Press Conference
Mon 28 9:30am GBP Current Account
10:00pm NZD RBNZ Rate Statement
11:00am GBP CBI Realized Sales
2:30am AUD Employment Change Tue 29
2:30am AUD Unemployment Rate
12:50am JPY Tankan Manufacturing Index
2:30am AUD Building Approvals m/m
12:00pm GBP Official Bank Rate
Thu 10 2:30am AUD Retail Sales m/m
1:30pm CAD Trade Balance
Wed 30 3:00am NZD NBNZ Business Confidence
1:30pm USD Trade Balance
7:00am GBP Nationwide HPI m/m
2:00pm CAD BOC Rate Statement
1:15pm USD ADP Non-Farm Employment
2:00pm CAD Overnight Rate Change
Sun 13 11:45pm NZD Retail Sales m/m 1:30pm CAD GDP m/m
Mon 14 9:30am GBP PPI Input m/m
2:30am AUD Monetary Policy Meeting Minutes October
10:00am EUR German ZEW Economic Sentiment 9:30am GBP Manufacturing PMI
Tue 15 1:30pm USD Core Retail Sales m/m Thu 1 3:00pm USD ISM Manufacturing PMI
1:30pm USD PPI m/m 3:00pm USD Pending Home Sales m/m
1:30pm USD Retail Sales m/m 1:30pm USD Non-Farm Employment Change
Fri 2
9:30am GBP Claimant Count Change 1:30pm USD Unemployment Rate
Wed 16
1:30pm USD Core CPI m/m

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TRADER MAGAZINE

JULY - SEPTEMBER 2009

artwork for connoisseurs.

A study about central banks’

OPTIONS FOCUS 67 ECONOMIC CALENDAR

 FX TRADER MAGAZINE July-September 2009

New US broker regulations for a

FX TRADER MAGAZINE July-September 2009 

Green Shoots Recovery

FX TRADER MAGAZINE July-September 2009 

of an uninspiring three months

Renewed Dollar weakness

Talks of a weak Dollar are back

already mentioned torments of the

FX TRADER MAGAZINE July-September 2009 

countries out of the recession. downmove Eur/Gbp has broken the

10 FX TRADER MAGAZINE July-September 2009

FX TRADER MAGAZINE July-September 2009 11

Indeed, on a break above 1.3750 we

Bank did nothing dollar reserves already started switching out of

and it is accompanied by weakness

For now we remain constructive on

Exhibit 2. Bund – US Treasuries Exhibit 3. Eurodollar front contract

Source: Nomura, Bloomberg Source: Nomura, Bloomberg

FX TRADER MAGAZINE July-September 2009 15

Forex Brokers The traders opinion from

16 FX TRADER MAGAZINE July-September 2009

FX TRADER MAGAZINE July-September 2009 17

18 FX TRADER MAGAZINE July-September 2009

clear dispute-resolution procedures months – Crown FX was able to continue to attract

20 FX TRADER MAGAZINE July-September 2009

THE 2009 FOREXDS AWARDS Broker Capital - US$ million

FX TRADER MAGAZINE July-September 2009 21

Twelve Continental Leaders

Highest ASIA EUROPE AMERICAS AFRICA OCEANIA

Highest ASIA EUROPE AMERICAS AFRICA OCEANIA

2 FX 12.50% Alpari 21.10% FXDD 37.50% Alpari -10.00% IBFX 25.00%

Continent -20.00% -1.00% 15.00% -10.00% 0.00%

22 FX TRADER MAGAZINE July-September 2009

angle from which to analyze brokers. There is a

view, no thanks. The situation today, I

The difference between CLS members

FX TRADER MAGAZINE July-September 2009 25

Building Robust Trading Systems

28 FX TRADER MAGAZINE July-September 2009

FX TRADER MAGAZINE July-September 2009 31

trade on the price, or not, but the phrase, Time Zones

32 FX TRADER MAGAZINE July-September 2009

GMT. However, if the same trade Conclusion system itself.

FX TRADER MAGAZINE July-September 2009 33

shares his views about the new US Regulations and

FX TRADER MAGAZINE July-September 2009 35

36 FX TRADER MAGAZINE July-September 2009

The dynamics of option pricing

FX TRADER MAGAZINE July-September 2009 37

38 FX TRADER MAGAZINE July-September 2009

Start trading now at www.saxobank.co.uk or call 020 7151 2100

FX TRADER MAGAZINE July-September 2009 39

SUCCESSFUL TRADING HAS

40 FX TRADER MAGAZINE July-September 2009

that it uses price to project and/or

FX TRADER MAGAZINE July-September 2009 41

FX TRADER MAGAZINE July-September 2009

FX TRADER MAGAZINE July-September 2009

FX TRADER MAGAZINE July-September 2009

FX TRADER MAGAZINE July-September 2009