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Linked exchange rate system is a currency exchange rate regulating system where exchange rate of one currency is linked to the exchange rate of other currency. This system was introduced in 1983 in Hong Kong after the Black Saturday crisis. Unlike fixed exchange rate system, linked exchange rate system do not involve government/central bank interfere other than setting the exchange rate.

In linked exchange rate system the exchange rate between two linked currencies are kept constant (or at a range). When ever there is a shift occurs, excess currency is quickly taken out or adequate currency is added to the economy to keep the balance. For keeping the relation the nation back up its currency with its foreign reserve. When ever a change in monetary base occurs, then the foreign reserve is also adjusted to meet the change.

For example Hong Kong follows a linked exchange rate system for its currency Hong Kong Dollar (HKD) with United States Dollar (USD) at 7.8 ($7.8 HKD = $1 USD); actually Hong Kong now allows its currency to float between an upper (7.85) and lower (7.75) limit. When market rate drops bellow 7.8, banks will buy USD spending HKD and if it rises above 7.8 then banks will buy HKD spending USD. Advantage of linked exchange rate is the low inflation, but the disadvantage is less adaptive economic policy.

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The Week Ahead: As Congress began coming to terms this past weekend with the $700 billion dollar bailout of the financial system, Washington Mutual became the largest bank failure in U.S. history before J.P. Morgan stepped in to buy their deposits. A vote on the bailout package will commence this week in both houses. Normal reports to watch are personal income and spending on Monday, the Case Shiller Home Price Index on Tuesday, ISM Manufacturing and construction spending on Wednesday, factory orders on Thursday, and the September employment report on Friday.

Stocks to Watch: Research in Motion (RIMM) missed its Q2 earnings by 1 penny while gross margins slipped. This was enough to crush the price by over 27% as investors began to feel the gravity of a company whose book value is less than $8. Mentor Corp. (MNT), The breast implant company, received a downgrade from buy to hold by Jeffries & Co. Perfumania Holdings (PERF) sees Q3 same store sales falling 2.5% from a previously expected rise of 5% causing a 50% drop in the stock. Finally, Flowserve Corp. (FLS) will replace the bankrupt Washington Mutual on the S&P 500.

Special Note: The passing by Congress of Treasury Secretary Henry Paulson's bailout plan this week albeit phased in over 3 stages may help to calm markets this week, but still raises questions as to its longer term viability. With a large number of bank failures still expected to come after the the bill's passing, it's possible the worst may not be behind the markets. Also, questions arise as to how this plan will help stabilize the economy with so many consumers mired in debt and confidence falling.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Alternative trading system or ATS is a trading system which acts as an alternative to equity exchanges. It automatically match buy and sell orders of its customers (subscribers) at specific prices. One common example of ATS includes Electronic Communication Networks or ECNs; others include matching systems, call markets and crossing networks.

Alternative trading systems are getting increasingly popular as they 1) reduce transaction costs, 2) offer real-time order execution, 3) offer access to worldwide equity markets and to different investment categories, 4) offer extended trading hours – after-hours trading, 5) have less strict rules than stock exchanges, 6) add to the liquidity of market and 7) offer more customization power to traders/investors. Subscribers of ATS include market makers, broker-dealers and institutional traders/investors. Retail traders/investors can direct their orders to ATSs through broker-dealers who are subscribers of ATS. Alternative trading systems profit by charging fee for each transaction.

SEC introduced Regulation ATS in 1998, which is meant to protect investor concerns. It necessitates strict recording keeping by alternative trading systems and to ensure enhanced transparency, especially at high trading volumes. ATS usually offer real-time market information - ask and bid prices, volume, etc – to their subscribers free of cost.

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Hammer is a candlestick market reversal pattern, which indicates a market reversal. Hammer candlesticks resemble Hanging man pattern, but they are formed after a downtrend. Hammer candlestick pattern is so named because they are hammering out the bottoms.



Hammer candlestick is a small colored (dark) or clear (white) candlestick with no, or very small, upper shadow – which indicate highest price of the day, and a long lower shadow – which indicate lowest price of the day. The lower shadow should be double the length of candlestick body. Hammer pattern is produced when there is high selling pressure at opening hours but after that bulls have managed to bring the price close to the opening price.

Inverted hammer candlesticks are colored or clear candlesticks with no low lower wick and long upper wick. Inverted hammer are produced after a significant downtrend where market opens at lower ranges, but bulls have dominated most of the day bringing the price to upper ranges, but fails to sustain the move.

Both hammer and inverted hammer are considered less reliable trading patterns. Their reliability increases with decrease in length of candlestick body, increase in length of lower wick (for hammer) and upper wick (inverted hammer), increase in trading volume and with the formation of clear (bullish) candlesticks. With both hammer and inverted candlesticks, confirmation of trend reversal is strongly recommended, which can be a large trading gap, bullish candlestick, or higher price close on the following day.

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Security market line or SML (also known as characteristic line) is the graphical representation of Capital Asset Pricing Model or CAPM. Know more about Capital Asset Pricing Model. Security market line is a straight sloppy line which gives the relationship between expected rate of return and market risk (or systematic risk) of over all market.

The X-axis of the security market line represents the market risk or beta and the Y-axis of SML represents expected market return in percentage at a point of time. Usually the rate of risk free investments is represented as a line parallel to X-axis and it is from here that the SML starts. Fore example if the risk-free ratio is 4%, the beta value of market is 3% and expected return from market is 10%, then expected return will be 4+3(10-4) = 22%; and SML will start from 4% at Y-axis and will pass through 22% when beta is 3.

Security market line is a simple yet powerful tool for finding return and risk associated with a portfolio. Investors can plot individual stock’s beta and expected return against SML. If the expected return from the stock is above SML the stock is considered undervalued and is predicted to offer good return for the risk taken. If the expected return falls below SML, the stock is considered overvalued and is predicted to offer lesser return for the risk taken.

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Trading forex currency through ECNs (Electronic Communication Networks) is one of the two ways to trade forex market; other way is through market makers. When forex trades are done through ECNs, they tend to offer better (tight) spreads. They can offer so as their counter parties include different market makers, banks, and other traders. ECNs show best ask and bid prices derived from these different sources.

Like market makers, ECNs also act as counter parties for forex trades. But rather than trading against us, they match our orders against others’ to execute a trade; i.e., they operate on settlement basis rather than pricing basis. ECNs offer varying forex spreads, which can considerably differ with currency pair trading and market liquidity. They tend to offer very low (some times no) spreads for liquid currency pairs when market is less volatile. Unlike market makers, forex trading through ECNs include fixed commissions, usually on per trade basis. ECNs can be institutional ECNs, who offer services to institutional traders and retail ECNs, who offer services to retail traders.

Advantages of forex currency trading through ECNs include 1) better ask and bid prices than market makers, 2) low spreads on liquid currency pairs and 3) reduced chance of price manipulation as ECNs are not trading against traders. Disadvantages of forex market trading through ECNs include 1) often less trader-friendly forex trading platforms, 2) varying spreads making stop-loss setting difficult, 3) commissions involved for each transaction, and 4) lack of integrated charting and news feeds in many trading systems.

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The Week Ahead: Sparked by a government plan to rescue an ailing financial system, markets breathed a collective sigh of relief as a tumultuous and historic week ended with a 1000 point rally from Thursday's low to Friday's high. Investors will now look for details of the rescue plan this week. However, don't overlook other important reports such as existing home sales on Wednesday, durable goods and new home sales on Thursday, and Q2 final GDP and the University of Michigan Consumer Sentiment report on Friday.

Stocks to Watch: General Motors (GM) shares were up on growing optimism for a $25 billion dollar government loan package. Other noteworthy DOW gainers include: American Express (AXP), Chevron (CVX), DuPont (DD), International Business Machines (IBM), and 3M Company (MMM). One of the world's largest life insurance and pension groups Aegon (AEG) says it does not hold any AIG stock and has cut exposure by 20% which helped propel the stock back above $10 a share. Finally, OfficeMax (OMX) was downgraded by a major brokerage.

Special Note: When the Dow Jones Industrial Average closed beneath 10,800 on Wednesday of last week panic was starting to set in before the government rescue plan. As it turns out 10,800 may be a "line in the sand" for technical reasons. The DJIA's 10 year moving average is approximately this number. The 20 year moving average is between 7600 and 7800. If the DJIA closes below 10,800 this year, there is not much support in between with the exception of the 9600 area which is a another critical support level that will be covered later.

Commentary provided by Barry ward, Registered Principal, NobleTrading.com, Inc.

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Exchange trading notes or ETNs are one of the newest products available for investing and trading, and offer many advantages and disadvantages to investors/traders.

Advantages of Exchange Traded Notes

1. They are traded on exchanges, and like ETFs, can be shorted.
2. No tracking error – Exchange traded notes offer returns which are exact replica of underlying index, minus any fees involved.
3. They are issued by large financial institutions, like big international banks.
4. They offer tax efficiency – ETNs are treated as prepaid contracts, as there is no taxable incomes like dividends or interest rate payments with ETNs.
5. Liquid products – as ETNs are structured to resemble ETFs, they are liquid; investors can buy and sell them in normal trading hours and institutional redemption is available on a weekly basis.

Disadvantages of Exchange Traded Notes

1. Counterparty risk in addition to market risk. Return from ETNs greatly depends on the issuer’s capability of repay to investors.
2. Illiquidity in trading the product – As there are not much performance history available, many investors are hesitant to trade ETNs. The illiquidity increases as only weekly redemption is available for institutional investors; compared to daily redemption of ETFs.
3. The tax benefits may fade away in future as IRS is yet to decide exact tax treatment.
4. Expenses and commissions – Although costs involved ETNs are as cheaper as ETFs, the investor may get a little/no profit when the market is not performing to the expectations.

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Piercing line pattern is a candlestick trend indicating pattern, which indicate the end of downtrend and start on an uptrend. This pattern is opposite to dark cloud cover pattern. In bullish piercing line candlestick pattern, a long dark (colored) candlestick of the first day is followed by a white (clear) candlestick of the second day.

The requirements for a piercing line pattern include,

• The long dark (bearish) first day candlestick must be formed after a significant downtrend.
• The opening price of the second day white (bullish) candlestick must be below the previous days low.
• The closing price of second day candlestick must be with in, but must exceed the midpoint of first day dark candlestick.

Bullish piercing line candlestick pattern is considered as a highly reliable market reversal indicator. The idea is that, even after a lower opening (with a gap) in second day because of a significant downtrend the bulls have managed to bring the market close to (or above) the previous days closing price. The reliability of piercing line candlestick pattern increases: 1) with increase in length of both candlesticks, 2) with increase in gap between first day’s closing price and second days opening price, 3) the higher the closing price of second candle with respect to first one and 4) with the volume of trades. Many traders look for a confirmation, which can be a gap or a white candlestick in the third day.

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Exchange traded notes or ETNs are one new financial instrument available for investing. ETNs combine the features of Exchange Traded Funds (ETFs) and Mutual funds. Like ETFs, they are traded on exchanges and offer profit when the underlying index performs better. But unlike ETFs, ETNs are debt securities which have a maturity date.

Exchange traded notes are promises (bonds) issued by a bank, or other financial institution, that they will pay the cash back to the holder upon maturity with respect to the performance of a market index, minus applicable (investor) fees. Usually there are no interest/dividend payments until maturity. Unlike ETFs, when you are buying exchange traded notes you are not buying a portfolio of stocks or a portion of underlying index. You are just buying a promise.

The first ever exchange traded notes, iPath ETNs, were issued by Barclays Bank in June 2006. Now there are more than fifty ETNs, categorized as commodity ETNs, currency ETNs, emerging market ETNs and strategic ETNs available for investors. Exchange traded notes do not have tracking risk, but have counterparty or credit risk – the risk that result from poor credit rating or bankruptcy of the note issuer in future.

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Traders can trade forex currency market through two different types of brokers, as Market Makers and Electronic Communication Networks (ECNs). Each method has pros and cons; and the type of broker that suits one depends on his trading style, opted currency pairs, margin requirements, risk tolerance etc.

When forex trading is done through market maker, the market maker is simply trading against us; whenever we sell they buy and whenever we buy they sell. They fix ask and bid prices, which may greatly vary with different market makers and currency pairs, and their profit is the difference between this ask and bid prices. As market makers offer fixed spreads, they add to the liquidity of market, and thus less favor scalpers who look for volatility. Most market makers offer free (and powerful) forex currency software platforms, which offer charts, news and other market analysis tools to traders. Because of tight competition, market makers tend to offer tight spreads for liquid currency pairs. There are institutional forex market markers – who offer their service to banks, institutions and ECNs, and retail market makers who offer their services to retail traders.

Advantages of trading market makers include, 1) free advanced currency trading platforms, 2) fixed (and tight) currency spreads, 3) and increased liquidity. disadvantages include 1) worse ask and bid prices at times, 2) chance of high slippage on news releases, 3) less favorable for scalpers, and 4) possibility of currency price manipulation, and 5) possible conflicts as they are trading against us.

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The Week Ahead: The looming bankruptcy of Lehman Brothers, and capital deficiencies at American International Group, both financial powerhouses, will rock markets and keep investors on edge. Pressures will mount for the Fed to lower rates possibly at the FOMC meeting on Tuesday if not sooner. Reports to watch are Monday's industrial production, Tuesday's CPI, Wednesday's housing starts, and Thursday's leading economic indicators. Also Goldman Sachs and Morgan Stanley release earnings on Tuesday and Wednesday respectively.

Stocks to Watch: The Federal Agricultural Mortgage Corp. (AGM) also known as Farmer Mac, warned that impairment charges linked to Fannie Mae preferred stock will result in a Q3 loss. The stock hit a multi-year low on this news. Cemex (CX), a global building materials company, cut full year guidance due to the weak outlook in the US and UK markets. Pharmanet Development Group (PDGI) tanked after cutting its 2008 forecast from a gain to a loss. Diodes Inc. (DIOD) sees Q3 earnings at the low end of their target range after reaching a new 52 week low.

Special Note: News of the acquisition of Merrill Lynch, a 94 year old investment house, by Bank of America completes a trilogy of events in the financial sector this weekend that like last weekend is historic in nature and has many investors asking what it will take to restore confidence in the financial markets? The bigger picture shows the S&P 500 and S&P 100 actually leading the larger trend down already having exceeded the 2006 lows in July with Dow Industrials not far behind and Nasdaq still further back.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Leveraged Exchange Traded Funds (ETFs) are one of the newest financial instruments available for trading and investing; introduced in 2006. They are index funds which try to amplify the return from the underlying index using leveraged money. Leverage ETFs keep a constant leverage level, which can be 2:1 (to double the return) or 3:1 (to triple the return).

Unlike trading on margin, which involves paying off of interest on burrowed money, leveraged exchange traded funds use derivatives like index options, index futures and equity swaps to increase or reduce market exposure. They do so in a daily basis, and thus there is no surety of amplified annual returns. For example for a fund that doubles the return, if the index return 1% in one day, the fund value raises 2%; and if returns -1% the fund a return -2%. But as the leverage is constantly adjusted (rebalanced) on daily basis to keep the ratio constant (say 2:1), losses produce bigger effects than profits. For example a 1% loss for 4 days and a 4.1% gain on fifth day will produce no net loss/profit in a normal index ETF performance, but a 0.2% loss in original leveraged ETF value.

The daily rebalancing of leverage results in extra trading, interest and management costs, which can eat up the profit. This make leveraged ETFs unsuitable for long-term profiting. It is advised to analyze the leveraged ETF’s past daily returns with respect to the underlying index before start trading the ETF.

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Hanging man or hangman is a candlestick market reversal pattern which indicates a market reversal. Hangman candlestick occurs at the end of an uptrend and is named because it resembles a man hanging on a rope.

Hanging man candlestick is a small candlestick either white (colorless) or dark (colored). It has no, or very small, upper shadow (indicating highest price of the day) and long lower shadow (indicating lowest price of the day) which often more than double the length of candlestick body. Hangman candlestick pattern is created when there is high selling pressure at opening hours of the day, but bulls have managed to bring back the price near the opening price at the end of the trading day.

Hanging man candlestick formations favor day traders more as they are more easily identified in intraday trading charts. Hangman is considered as a modestly reliable candlestick formation; and the reliability increase with the increase of the length of the lower shadow, with the decrease in length of candlestick body and with the formation of a colored candlestick. Most traders initiate trade after the confirmation of trend reversal, which can be a gap or decrease in price in succeeding day.

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Pairs trading strategy was introduced in 1980s, but over the past it was practiced exclusively by institutional trades and hedge funds. The strategy became popular among retail traders after the introduction of online trading of financial instruments. Pairs trading strategy is a market neutral strategy, enabling the trader to profit from both market ups and downs.

Pairs trading strategy works with stocks, options, futures and currencies. The trader first identifies a pair of instruments which show great correlation. In stocks trading, it is often two stocks of same industry (or two related industries); the trader, when he identifies a diversion from relative performance, takes long position for one stock (under performing stock) and shortens the other (the over performing stock). The cost for long position is partially or fully covered from revenue from short position. Pairs stock trader profit when stocks of the pair converge to original correlation.

In options trading, the pair can be options on two highly related stocks. The trader writes a call option for the outperforming stock and put option for underperforming stock. In futures trading, it is a pair of mini or full-size contract or futures on related instruments. The trader takes long position for one future and short for other.

In pairs trading strategy, the most difficult task and major success determining factor is finding instruments with high correlation. Trading pairs can be figured out using both fundamental and technical analysis tools. The position sizing and timing of trades are also very important. Often a pairs trading opportunity last for a short-time, thus the trader needs automated trading systems and faster decision making skills.

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Forex market is unique in many senses. Unlike most other financial markets where scalping is done solely based on technical analysis, scalping on news in currency market requires both fundamental and technical knowledge. Every nation’s economy is interlinked with other nations’ economies and thus any news that affect a nation’s economy (and currency pairs having that nation’s currency) can impact other nations’ economies (and corresponding currency pairs).

In forex trading, it is a good strategy to trigger your trades fundamentally and to enter and exit trades technically. Knowing market expectations is one of the most basic requirements of scalping the forex market. A forex scalper must anticipate what can happen if the news fails to meet market expectations or what can happen if it meet expectations or when it exceed market expectations. Then he must rely on his technical analysis tools to analyze the most profitable entry and exit points (or if there is any).

A forex scalper must be vigilant about market extremes like oversold and overbought conditions, highest highs and lowest lows, etc; because these are the positions which can produce big profits or big losses. Remember, good news for a currency may produce reduced effect when it is in overbought condition or enhanced effect when it is in oversold condition. Both effects can be magnified (or nullified) when the big players, like banks, enter the market.

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The Week Ahead: With 605,000 jobs now lost in 8 consecutive months for 2008 many are concerned that the economy is at a tipping point for a prolonged recession or worse. Each economic report from here will carry more weight than usual starting with consumer credit numbers on Monday followed by wholesale trade inventories and pending home sales on Tuesday. It's Friday though that contains the most content with retail sales figures, the Producer Price Index, business inventories, and an important consumer confidence index.

Stocks to Watch: Freeport Mcmoran (FCX) continued its torrid sell off after copper prices reached a 7 month low, but the stock looks oversold short term. Abm Industries (ABM) missed its earnings forecast for Q3 and lowered estimates for next year as the stock gapped strongly lower. Pike Electric (PEC) gave a very cautious outlook after revenues dropped 4.5% in Q4. Cooper Companies (COO) doubled earnings in Q3 but lowered estimates for all of 08', while Martek Biosciences (MATK) beat Q3 estimates and offered an upbeat outlook.

Special Note: News of the official and historic bailout of Fannie Mae and Freddie Mac by the US Treasury this weekend will no doubt have markets souring early on Monday. Oversold conditions had developed before this news hit so stocks were due for a strong bounce anyway. Tech stocks have thus far led the way down to the latest low as the (NDX) and (QQQQ) actually closed below there July closing lows. This may be a harbinger of things to come for the other major indexes after the next rally fades.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.


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Enhanced Index Funds or EIFs are mutual funds which track stock market indices but try to beat normal market returns. EIFs do so by modifying position sizes and market timing, investing extensively in certain securities, excluding some market segments, and/or carefully using leverage. Enhanced index funds falls into the category of Active Index Funds.

Where normal index funds and ETFs try to profit by going inline with their tracking market index by passive management of portfolio and low fees, enhanced index funds often change their investing preferences to beat the tracking index. This active management demands higher fees. Conventional index funds only have market risk – the risk as a result of market volatility; but enhanced index funds also have management risk – the risk associated with ineffective fund management.

Advantages of enhanced index funds include higher return, lower expense ratio than mutual funds, and semi-active fund management. Disadvantages include higher risk and higher expense ratio than index funds. As EIFs are new to the market, there is no enough performance history to evaluate them. Investors are recommended to choose an enhanced index fund only after thorough understanding of their active management methodologies.

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Bearish dark cloud cover pattern is a candlestick trend indicator which indicates the end of an uptrend and start of a downtrend. In dark cloud cover pattern, a long white (clear) candlestick of first day is followed by a dark (colored) candlestick of the second day, forming a dark cloud over the existing bullish trend. Bearish dark cloud cover pattern benefits short sellers and place a ‘seed of doubt’ in minds of bearish day to day traders.


The requirements of a bearish dark cloud cover patter include

1. The long white (bullish) first day candlestick must be preceded by a noticeable uptrend.
2. The opening price of second day’s candlestick must be above the high of previous day’s candlestick.
3. The closing price of second day’s candlestick must be within, and also below the midpoint of, the previous day’s white candlestick.

Bearish dark cloud cover pattern is considered as a highly reliable pattern of market reversal; the lower the second day’s closing price the more reliable the pattern. The reliability also increases with increase in gap between closing prices of both candlesticks and with increase in volume of trading for both days. Many traders also look for confirmation of trend reversal, which can be a lower price close, a large trading gap or another black candlestick in the third day.

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Statistical Arbitrage or StatArb is an arbitrage trading strategy to profit from pricing inefficiencies in an equity market. It is a broader scale application of pairs trading strategy, and is based on the idea that prices of stocks return to historical norm or market normal levels. Unlike pure arbitrage strategy, statarb involves substantial risk.

Statistical arbitrage is a market neutral strategy as the long and short positions are carefully matched for eliminating stock beta and market risks. Usually the portfolio is constituted for tens or hundreds or different stocks, which are carefully chosen according to industry, beta, growth, previous performance, etc. Statistical arbitrage opportunities are figured out through mathematical modeling methods. Often the stocks are scored based on mean reversion principle, where stocks which should be held long or which are underperformed recently receive high scores and stocks which should be shorted or which outperformed recently receive low scores.

Statistical arbitrage strategy mainly favors hedge funds and institutional traders as it require good data mining, price analysis and price matching capabilities and automated trading systems. More over, the position size must be very high and trading costs must be very low because of very low per share return.

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The Week Ahead: A pick-up in trading activity is in store for this week as the vacation season comes to an end on Wall Street. The choppy rally that began on July 15 will be watched closely for a continuation into the first half of September. Key reports this week include: construction spending and ISM Manufacturing on Tuesday, factory orders on Wednesday, chain store sales and 2Q productivity on Thursday, and the all important August employment report on Friday.

Stocks to Watch: Genesco Inc. (GCO), a specialty retailer, beat second quarter estimates by a good margin as the stock continues its strong performance from the March low. PetSmart (PETM) came in ahead of estimates for its second quarter, but the stock could hit resistance at 28 after 7 strong weeks in an uptrend. Recent upgrades by major brokerages include Excel Maritime Carriers (EXM) and Eagle Materials (EXP) with the latter near resistance. On the flipside, International Paper (IP) was downgraded.

Special Note: The presidential election campaign season kicks in full gear this week and thus the markets volatility is expected to increase ahead of the November 4 Election Day. Furthermore the peak in the major indexes that occurred last October appears to be a major one as the Dow Industrials have been stair stepping lower from the 14,198 peak with each 1000 point level beneath the peak eventually setting up as resistance when the market bounces. If the DOW approaches 12,000 look for another top to form.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Ever since its introduction in 1993, Exchange Traded Funds (ETFs) remain one of the most popular trading instruments. Trading ETFs offer many advantages to short-term and long-term traders over equities, index funds and bonds. Here are some advantages of trading exchange traded funds.

• ETFs are actively traded just like stock. This makes them easy to day/position trade, short sell and trade on margin.
• ETFs are liquid trading instruments making them flexible to handle.
• ETFs ensure diversity of trading portfolio.
• Variety of ETF products available for trading including index and sector based ETFs, currency ETFs, International, regional and country specific ETFs and industry based ETFs with various risk and return levels.
• ETFs certainly have low expense ratios than index funds.
• Fixed income and some equity ETFs pay dividends just like funds and stocks.
• ETFs are more tax efficient than stocks and index funds.

But like stocks, trading exchange traded funds involves risks and are not suited for traders/investors with little market knowledge. Trading ETFs also involve brokerage fees and minimum margin requirements which differ with brokerage firms.

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Forex market differs very much from all other markets. It is the world’s largest financial market with transactions worth trillions of dollar per day and is also the most liquid market. There are also many other things which make the currency trading market unique, especially for retail traders.

• Market is least regulated by retail traders. More than 95 percent of global currency transactions are done by central banks, big companies and hedge funds. They trade currencies with specific rules and principles and are not at all thinking like a retail trader.
• Transparency – Local news less regulate market movements. It is the macroeconomic news that regulates forex market, which are readily become available to all persons by worldwide media.
• Least chance of scams – No single trader, or even a government, can play the fabricating game in this most liquid market.
• More opportunity for retail traders – Retail scalpers looking for short-term profits can react to news faster than big banks and companies as it is pretty easy for them to take trading decisions and to open/close positions.
• Trade both fundamentally and technically – Fundamental traders can profit from trading with long-time frames – days and weeks. Technical traders can profit from trading with shorter-time frames. Low margin requirements and less trading costs offer great flexibility.

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