Friday, 20 January 2012

Great resources and information for free!

I didn't expect myself to do anything like this, but I have recently purchased a kindle which gives me free assess to heaps of ebooks at
You are able to rent books for free if you have a kindle account.
I of course have spent a lot of time searching through what they have to offer in regards to ebooks about investing, passive income etc and this is a short list of some of the best
P.S. If you dont have a kindle account you can still purchase the books, each of the ones I have chosen to include cost only $3.00 each

Free Money Through Passive Income
2012 your year to make a fortune
The $500 fortune
Free Money, Smart Investing

Remember these are free! There are also a large range of other books which may be worth reading but from what I have seen so far these are some of the better.

Saturday, 14 January 2012

The Year Of The Yuan

China holds the largest population and biggest total area. China is second only to the United States as the worlds greatest superpower.
Many economists are predicting much stability for the Yuan this year as it has been for years, its at approximately 6 yuan to 1 American dollar. I however, disagree.
This year, 2012, is the year of the Yuan

There are a number of reasons I believe this.
China's economy is largely dependent on exports and despite exports dropping last year China's economy grew extravagantly, in fact its economy is predicted to grow at at rate of 9.5% this year and every year until 2015. China has many other industries other than the export one, you may be noticing an influx of cheap Chinese cars hitting the markets around the world. They are becoming increasingly popular and there is no chance of it slowing down.

The Chinese, as a communist nation has strong political stability. The government has not been questioned since dynasty days and it is become more and more attuned to the peoples needs, after all it is known as the Peoples Republic of China.

China's currency the Yuan was once quite competitive, during the 1970's only 1.50 yuan to 1 USD
It was in the 1980's when the Chinese government took steps to depreciate the Yuan to improve competitiveness of its imports and maintained this value until 2005. Since then it appreciated slightly sitting around 6.00 to the USD by the end of 2011.

Since 2005 Chins economy has grown by an average of 10% per year to the point where it is now a major world player.
The Chinese government is now faced with a situation they have never been put in before, where there economy is the 2nd strongest in the world.
To go further they need a currency which can be used globally and the Yuan at its rate of approximately 6.00 is not good enough.
Look at the euro or the USD for instance.
Another reason the Chinese need the value of the Yuan improved is because 90% of trades from china are done in Dollars. 
It is possible that this year the government will begin to reduce the restrictions surrounding the exchange of the Yuan to increase its value.

There is one other factor influencing the Chinese government to reduce the restrictions. The United States government.
Washington is creating more and more pressure for China to improve the value of the Yuan.

If the Chinese government does reduce the restrictions surrounding its currency then it is possible to expect to see a value increase the likes of which has never been seen before and it is quite likely that within a few years the Yuan will be worth more than the USD

Despite many economists views my forecast for china this year is great. This could certainly be a once in a lifetime investment.
Its likely to be a long term investment. But I predict that if you buy Yuan today you could see a return of up to 600% in just a few years.

This year is certainly shaping up to be the year of the Yuan.

Top Three Performers of 2012

From my research I have noticed a trend in the predictions of economists and investors, although many have differing views most can agree that there are a specific three currencies which will perform well this year. Economists don't claim to be fortune tellers, in fact they often change there minds about what will perform well. The profitability of a currency relies on so many outside factors that it can change in an instant. These few currencies though, at this stage appear to be the most likely to perform stably.
These currencies are The Chilean Paseo, the South Korean Peso and the Canadian Dollar.

Firstly the Chilean Paseo
It can be argued that Chile is the best run country in South America. It has a stable government with elections not due until the year 2013. It is in the midst of a resource  boom and is profiting highly from the rising prices and it is a little known fact that Chile has a Transparency International Corruption Perception Index (Which is a rating given by the Transparency International coalition) better than the one the USA currently holds. In 2011 the Paseo lost approximately 8% due to fears of emerging markets but it only have a deficit of 1%. With a stable banking sector and incredibly little government debt Chile is in a an excellent position to cushion any blows it might sustain, for example from natural disasters (like the earthquake in 2011)
Due to these reasons the Paseo is in one of the best positions of all world currencies to gain value in this year.

The South Korean Won
The Won is generally unfazed by the problems of the United States as well as a collapse in the commodity prices. Since 2007 The Won has lost approximately 20% against the green back but flat lined in 2011. Korea holds an enormous budget surplus with government debt practical nonexistent. Elections are scheduled for this year however, both the government and opposition are highly pro market so any outcome should not effect the market.
There are risks though. The most worrying of these is the new leader of North Korea. It is unsure times and the risk of attack is unknown.
Generally though the South Korean Won should be a good investment. Just watch the tensions over the border!
The Canadian Dollar
The Canadian Dollar is possibly the surest bet this year. 
Canada is the closets neighbour the the United States, however, unlike many people think it is a strong economy of its own distinguished from America. Canada has a great banking system as well as enormous amounts of mineral and energy wealth. Its budget deficit is much smaller than many other countries as well. The Dollar rose to a record height of $1.06 American in early 2011 but by the end of the year dropped back to around 0.98. This demonstrates that it has the potential to rise and given its good economic climate is most likely.

Friday, 13 January 2012

What 2012 Will Bring

2011 left us with many lessons, namely, currency can be deadly.
The simplest hedges against the declining dollar and the US federal reserves monetary policy has been caught in trouble. Causing the loss of billions of dollars and upsetting even the more respected bankers on Wall Street.
One of the best performing currencies of 2010, the Brazilian real lost ground sharply.
The Euro zone was left in uproar as the countries managing the crisis continue to find solutions to bail out the countries in great peril.
However, if you study 2011 you may be able to see opportunities which are being presented this year.
But firstly, lets look at which currencies should be religiously avoided.

Lets first start with the Euro. The strength of the Euro is such that if the crisis were confined to Greece and Portugal the currency would remain strong. The system is set up in a way to support struggling countries by the strength of greater countries. Unfortunately the crisis is much more widespread. Economic upturn has spread to Spain and Italy, both of which are far to large for the Euro zone to bail out. This leaves the Euro zone in a precarious position.
In the same way that it is set up to secure the financial future of smaller economies, the suffering is also spread through the larger economies. Many economists are predicting that the Euro zone will have no choice but to fall apart, securing the economies of the strong economies by separating them from the weak ones. If this happens the Euro value will drop as it gets fazed out.
The Euro zone destruction may create opportunities, but more about that latter.

The Japanese Yen has been an excellent performer over the last few years. Since 2007 it has risen in value by 50% US dollar and despite the disasters of 2011 rose 6% over the year. However, Japan relies heavily on exports and at this high value exports are suffering. The Government is likely to take actions to reduce the value to encourage the market. The Government is also suffering from a debt of over 200% GDP which is become seriously worrying.
The Yen may still rise and there might still be money to be made, however, anyone thinking of investing should be very careful. The yen should be treated as unsafe.

The British Pound may also face trouble. The British Government has a deficit as large as Americas and the economy is quite reliant on the financial services.
The Bank of England has announced a quantitative easing program equal to the $2trillion program of the united states.
The Pound will be effected by the American economy, if the US comes into more trouble so will the Pound.
That said there is some good news for the Pound, they have managed modest debt repayments which encourages confidence in its economy.

The Swiss Franc made a lot of ground during 2011 and looked set to continue into 2012 however, the Swiss government have made it clear that they intend to print money in order to ease its gain.

If you steer clear of these currencies you should remain relitivly safe.
That said I would encourage you to do research of your own, remember, economists aren't always right.

Thursday, 12 January 2012

Understanding The Charts

At first glance the charts can be confusing. A x/y chart.
If you look to the graphic at the side of of this blog you will see the two axis of the graph x and y.
In a currency comparison graph the x axis is time and can be expressed in minutes, hours, days, months or years. y is expressed in the number of units of currency which can be bought with 1 unit of your base currency.

We will use the graphic below as an example.

This chart is named AUD/USD (Australian dollar/ United States dollar) and has a period of one week
The position of the currencies in the names tells you which is the base currency, in this case the base currency is AUD
Reading from any random part of the graph will tell you how many USD can be purchased for 1 AUD.
For example, if you want to know what the value of the AUD compared to the USD on the 8th of Jan, you would simply look at the part of the line which crosses the 8th of January. We can see that at that date one AUD would buy approximately 1.02250 USD
If you wanted to know what the current rate is you would look at the far right side of the graph. Here we can see that for every 1 AUD aproximatly1.03500 USD can be bought.

I have taken this graph from On the website you can drag your cursor across the line to get an accurate value at any given time.

Understanding Influences On The Market

The next step in your goal to successful investing is to understand what the influencing factors are on the foreign exchange market. Traders use fundamental analysis to try to forecast the effect that economic, social, and political events will have on currency prices. There are 3 main focus points which traders watch to predict movements.

Interest rates:
Every currency has an overnight lending rate which is determined by that countries central bank. The central bank makes the decision based on the level of inflation. If inflation is to high the central bank will raise the interest rate to slow down spending and relax the economy. If inflation is to low the bank will lower the interest rate to encourage spending and essentially economic growth. Lowering the interest rate typically suggests that the value of the currency will decrease. This is partly due to to carry-trades which is a strategy many traders use where they will sell a currency with a low interest rate and buy a currency with a high interest rate.

One of the best indicators for economic strength is the rate of unemployment. A high rate of unemployment suggests that the economy is not strong enough to provide people with jobs. This often leads to its currency losing value.

Geopolitical Events:
All markets are effected by key international political events. These can results in movements either way.

You need to remember though, that three events can occur at the same time, for instance, employment rates may be dropping exponentially which causes the central bank to lower interest rates in an attempt to encourage the economy while political leaders may meet to discuss the problems.

It is also important to remember that sometimes markets don't behave how we predict they will, a country may raise its interest rate and have nothing happen to its currency value.

Tuesday, 10 January 2012

Forex, Steps To Improve your Trading

I'm going to take my previous blog further now by giving you some steps and tips to follow when you start trading currencies.
The difference between successful traders and unsuccessful traders is planing. If you fail to plan you plan to fail. Successful traders have set procedures which they follow each time they invest.


Choose currency pairs which operate in the way you wish to trade.
Some currencies value is sporadic and changes many times per day while others are far more steady, making slow progressive movements up and down in value over a extended period of time. Your safe bet is always the slow yet steady, however, this means potential profits will be less often.
Once you have made that decision the next is slightly easier and to a degree has already been made. How long will you hold your position? This could be as little as minutes or as long as weeks.
Next you need to consider what you will do if your investment makes or loses ground faster than expected? At which rates will you sell? This is your exit strategy. Once you have decided on this be sure to follow it accordingly.

Analise the markets.
Forex offers a lot of great resources to help you get an idea of how the market is going to perform. Do your research, study graphs read relevant news articles. There are also a number of other websites which offer comprehensive research for free, XE.COM is one of the best ones.

Keep track of what you have done
It can be difficult to keep track of your investments, especially when you begin trading more that one currencies at a time. A good habit to get into is to keep a diary. Set up your diary so that it is easy to read and understand, consider the following things each time you make an investment and entry:
The date and time you bought, the rate you bought for, your reason for investing how you did, your strategy including your exit, the time you sold, the rate you sold, the gain or loss on your investment.
 The diary will help you spot potential successful trading patterns which may come up again in the future.

Manage your risk
There is always a risk in every investment, it is important to manage this so that if the worst happens you aren't left in an awful situation.
Forex offers a number of safeguards for traders, it allows you to set reserves for currency
movements so that if something happens while you aren't at your computer you will automatically sell.
This is a great feature because it can be set to your exit strategy limits and so stops you losing more money than you had anticipated without you knowing.