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New Hyundai i30

New Hyundai i30

South Korean auto major Hyundai Motor Company Wednesday revealed the first picture of its new generation i30 hatchback, ahead of its unveiling at the Frankfurt Motor Show next week.

Fractions of the quote rate

Commander in Pips: Ok, son, let’s continue with math. But before, I want to ask you – what do you know about the minimum fraction of a rate quote on FOREX?

Pipruit: Well, every quote that we’ve discussed previously has 4 decimal places. So, I suppose that it’s 0.0001.

Commander in Pips: Well, in general, you’re right – 0.0001 is a most common minimum fraction of rate and it is called a “pip”. Can you tell me, what move has happen in terms of pips if EUR/USD rate has increased from 1.3325 to 1.3383?

Intermediate Checkpoint

Commander in Pips: Ok, son, I think that now is the time when I will ask some questions and you will have to answer.

Pipruit: Well, Sir maybe we should study a bit more. I’m not sure that I’m ready to take a test yet.

Commander in Pips: Don’t worry, pal. This will just be shallow checkpoint that is based on a previous chapter – a single chapter. If you’ve listened carefully, you will not have any problem at all.

Pipruit: If you are saying it like that… I have nothing more than just to believe you. But I have to warn you, that I’ve skipped all the classes at McConnell-Brue’s Economics Course, so I’m absolutely flat with it.

Where does the money come from in FOREX?

Commander in Pips: Ok, son, now we are shifting to the trading process directly.

Pipruit: Finally, Sir. I really can’t hold myself back anymore and want to make my first trade now.

Commander in Pips: Well, there is still a long way to that moment, son. I’m not saying that “we start to make trades”. I’ve just said that we now turn to trading process education.

When should we trade?

Pipruit: So, as I suspect, we finally, have known all necessary stuff about trading time. May be we should turn to trading directly?

Commander in Pips: Hold your horses, son…

Pipruit: More studying? Noooo!!!

Commander in Pips: Just one final step remains – what about suitability for trading of a particular trading days?

Pipruit: Well, are they might be different?

It’s double time – trading sessions overlapping

Commander in Pips: Maybe you have noted already, we’ve talked about the fact that liquidity increases during crosses of different trading sessions. So, I offer to talk about this. There are two major overlaps here – “Tokyo-London” and “London-New York”. As you will see, the reason for that is not only the liquidity growth.

Pipruit: And what about “New York-Tokyo, so to say, closes the loop?

Commander in Pips: Hm, if you take a look at our trading sessions diagram in the first part of this chapter, then you’ll see that the New York session barely crosses with Tokyo. Even if it does, this overlapping has an absolutely insignificant effect.

New York trading session

Pipruit: When does the New York trading session start?

Commander in Pips: Just after the British lunch…I’m kidding, but in general it starts to pick up steam roughly at this time – 12:00-13:00 GMT, and gradually fades out to 21:00-22:00 GMT. In terms of America’s time scale – this is just a simple day time – 8:00-17:00 EDT/EST

The New York trading session takes second place in overall day trading volume with about 17-18% of overall turnover. The major point of the NY session is that 80-85% of all transactions involve the US Dollar. So this is a solid reason to pay particular attention to major pairs with USD during this session.

BIG BEN time – London trading session

Commander in Pips: When the Asian market participants little by little finish their trades and prepare to sleep – their European counterparts are taking the next leg of the FOREX relay and starting their business day. This usually happens from 7:00-8:00 GMT in the morning. The London session gradually fades to 16:00-17:00 GMT. As with the “Tokyo” session, the “London” session includes not only UK trading activity, but overall European trading. There are some economic centers in Europe besides the London (Amsterdam and Frankfurt, for example), but it happens that historically, London has become the trading and economic center of Europe.

Japan trading session

Commander in Pips: When we talk about the “Japan” trading session, it does not mean that there are only Japanese trading forex during this time. This session is sometimes called the “Japan Session” or “Tokyo Session” instead of the "Asian Session" because, as we’ve already estimated, the Yen is the third most traded currency, and, as we’ve talked about in the previous chapter – Tokyo is the third largest trading center in the world.

Statistic tells that about 1/5 of all daily transactions happen during Japan’s trading session.

Trading sessions

Pipruit:Sir, can we finally turn to some real FOREX stuff? I’ve tired already with this “around” talks, concerning, futures/spot, banks, market makers, trading diagrams, history and other things. Although I have to say that some of these things are exceptionally important and some are interesting, but still I wish to turn to FOREX trading directly…

Commander in Pips:Yes, I think the time has come for this purpose. And we will start with the timing of FOREX. In other words, when can we trade it, and what is the difference is between different trading times.

Pipruit:Huh, you think that it’s funny, do you? Even I already know

Look in the rearview mirror

Pipruit: And how did it happen that the dollar became the dominant currency in the world?

Commander in Pips: In general there were a couple of major turning points – the Bretton Woods System and the Marshall Plan after the WWII.

Bretton Woods System

Closer to the end of WWII has appeared a necessity to develop new rules of international commercial and financial relations among world’s major industrial states. For that purpose 730 delegates from 44 Allied

Participants

Pipruit: Greetings, commander, I’ve heard that in recent time the share of bank’s transaction on FOREX becomes lower than even 10 years ago, and you’ve said that FOREX in general an interbank market. So, who are the major participants in FOREX trading?

Commander in Pips: You’ve asked the right question, son. Indeed the part of pure banking transactions jas become lower. So let’s talk about the different participants on the market and their role in FOREX.

The structure of the FOREX market

Pipruit: Well, it looks like I’m starting to understand some things, but one thing is still confusing me. Where is the center of FOREX, the major transaction point, control center or something? Who regulates and coordinates all this stuff? For example, I know that on stock market, the stock exchange is a central point, because all transactions are processed by the exchange itself and in line with strict exchange rules. Does FOREX have something like that?

Commander in Pips: You will be surprise with this, but my answer is “No”. FOREX is a over-the-counter market without any central regulator or processing center. It looks more like the global internet. All FOREX transactions are electronic and the market works in 24/5.5 mode. All FOREX participants are linked to each other.

There is quite different story with the futures market

Pipruit: Commander, once you’ve said that futures market is also exchange traded, so maybe we should skip this part, because I expect nothing really new from this comparison, unlike stocks vs. FOREX…

Commander in Pips: You think you’re very smart, eh? Although you’ve noted correctly about “Exchange traded”, indeed, futures and stock markets have a lot of common qualities. But at the same time, futures market has some extremely important differences that make currency futures more attractive than spot FOREX for many traders.

Pipruit: Hm, and what are they?

Commander in Pips: For example, you can trade currencies on futures market…but in the beginning, I will point qualities that are common for futures market as for stock market without many details, because we’ve talked about them already in previous part of this chapter.

what the about the stock market?

Pipruit: Sir, I still have some concerns. Yes, we’ve investigated and seen that the FOREX market is the most liquid and huge and is the best of the best, etc. But, the majority time on TV financial news is about stock markets and other stuff that is linked with stocks. Is it correct to compare these markets from the trading point of view?

what the about the stock market?

Commander in Pips: Not quite, because these markets have absolutely different purposes, this is almost the same as compare fish advantages to bird advantages. But during recent times some myths have appeared concerning FOREX and Stock market comparison. Besides these, there are some points that could be used in comparison, because they are common for any trading market. These things have nothing to do with the nature of particular market, but refer to technical issues of market functioning. I mean timing, fees and other things.

Why FOREX?

Pipruit: I want to ask you something – why is FOREX so popular? What does it have that other markets do not?

Why FOREX?

Commander in Pips: The simple and fastest answer is - major possibilities with minor requirements.

Pipruit: Uh, there is no prize for guessing that!