Forex Tutorial: What is Forex Trading?

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What Is Forex?
The foreign exchange market is the "place" where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in Egypt can't pay in euros to see the pyramids because it's not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate.

The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion per day. (The total volume changes all the time, but as of August 2012, the Bank for International Settlements (BIS) reported that the forex market traded in excess of U.S. $4.9 trillion per day.)

One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.

Spot Market and the Forwards and Futures Markets
There are actually three ways that institutions, corporations and individuals trade forex: the spot market, the forwards market and the futures market. The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on. In the past, the futures market was the most popular venue for traders because it was available to individual investors for a longer period of time. However, with the advent of electronic trading, the spot market has witnessed a huge surge in activity and now surpasses the futures market as the preferred trading market for individual investors and speculators. When people refer to the forex market, they usually are referring to the spot market. The forwards and futures markets tend to be more popular with companies that need to hedge their foreign exchange risks out to a specific date in the future.

What is the spot market?
More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards ongoing political situations (both locally and internationally), as well as the perception of the future performance of one currency against another. When a deal is finalized, this is known as a "spot deal". It is a bilateral transaction by which one party delivers an agreed-upon currency amount to the counter party and receives a specified amount of another currency at the agreed-upon exchange rate value. After a position is closed, the settlement is in cash. Although the spot market is commonly known as one that deals with transactions in the present (rather than the future), these trades actually take two days for settlement.

What are the forwards and futures markets?
Unlike the spot market, the forwards and futures markets do not trade actual currencies. Instead they deal in contracts that represent claims to a certain currency type, a specific price per unit and a future date for settlement.

In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves.

In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the U.S., the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement.

Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well. (For a more in-depth introduction to futures, see Futures Fundamentals.)

Note that you'll see the terms: FX, forex, foreign-exchange market and currency market. These terms are synonymous and all refer to the forex market.

The Shocking Truth About How Web Graphics Affect Conversions

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Does this situation feel familiar? —

Your web designer reckons your site is outdated. It makes you look amateurish. If we’re being honest, we might even say it’s downright ugly and you should be ashamed of attaching it to your brand.

The solution?

A redesign, of course. Not just a few tweaks, mind you, but a reinvention, taking your tired old website and bringing it into the modern day.

It’ll have snazzy vector paths, cute cartoon scenes, jQuery carousels, full-page high-resolution background photos, the works. By the time you’re done, you’ll have a breathtaking design that cost you a fortune to create—but you shouldn’t hesitate, because it’ll be worth it.

Why?

Well, check out the reasons!

1. Sites with images look good, and people enjoy eye-candy, so they’re more likely to browse around

2. Images are attention-grabbing, so new visitors won’t hit the back button

3. An eye-catching site impresses prospects, and impressed prospects are more likely to buy

4. Flashy images show that you’re hip and modern, and people trust hip and modern companies—so you get more sales

5. In summary, for every bit of eye-candy on your site, your sales will increase an average of 16.5%*
Wrong, wrong, wrong!

Many years ago, advertising legend David Ogilvy commissioned research into the use of images. He wanted to be sure that when he wrote ads, the images in them would increase response rates. The prevailing wisdom was that any kind of image would attract attention, and therefore get people reading. But Ogilvy wasn’t so sure.

What he discovered from testing various kinds and placements of images was quite different to the popular opinion of designers—then and now:

Images can reduce readership.

Yes, they catch people’s attention. But without some very specific conditions in place, that attention does not translate into people reading the body copy—or coughing up cash.

You might be wondering why you should care about research done in offline advertising. Well, Ogilvy’s ads were specifically structured to look like news articles. They bear an uncanny resemblance to most forms of online content. And the best practices he discovered for images revolve around broad psychological principles, rather than medium-specific tactics. So they apply to all kinds of content—not just advertising copy.
What Ogilvy Discovered

Here are four principles Ogilvy’s research turned up. If you ignore these principles, your images will generally reduce your readership. If you apply these principles, your images will increase your readership.

Of course, they are just best practices—a sensible place to start. The only way to know for sure how they will work for you is by testing.
 
1. Placement matters—a lot

The natural sequence for reading involves a very specific order. First we look at the image, if there is one. Then we scan the headline. Then we read the body copy (if the headline is interesting enough).

An image at the top of the page is a common practice, to catch people’s attention and draw them into the article. But if you’re doing this, you’d better be sure it’s above your headline.

tried-and-true layout—situated below the image

This site’s headline isn’t much to speak of, but at least it follows the tried-and-true layout—situated below the image, where it will get read.

Ogilvy found that, on average, headlines placed below an image are read by 10% more people than headlines above. Since reading the headline is a prerequisite of reading the body copy, you’re losing a potential 10% of your audience if you’re distracting them with an image in the wrong place. If you have a large audience—say 145,000 people—then putting your image below your headline could be costing you nearly fifteen thousand potential readers! As Ogilvy sardonically said, that’s not to be sneezed at.
 
2. Captions get read more than body copy—four times more

An image placed somewhere in the middle of text draws the reader’s attention more than the text itself. It might even draw him out of the copy (see the next point). For that reason, it’s extremely important to have a caption under every image—to press your main point home, and hopefully to get him back into the copy.

Captions under images are read on average 300% more than the body copy itself, so not using them, or not using them correctly, means missing out on an opportunity to engage a huge number of potential readers. (For images above a headline, the headline itself can serve as a caption.)

Captions under images are read on average 300% more than the body copy

Newspapers have long understood the value of captions for drawing readers in. Yet this knowledge doesn’t seem to have filtered down to web designers and marketers.

In copy that aims to sell something, your caption should include your brand name and your promise. That way, you have another chance to get your reader interested and to push him back into the copy—or even directly to the call to action. You have to make the most of his brief attention.

For other kinds of content, figure out the central purpose of the page itself, and encapsulate that in your caption. It is wise to craft your captions as you would craft your headlines—because they are similar lengths, with similar purposes.

3. Don’t break the left margin

When we read, we rely on the left margin always being there as an anchor, to give us a place to return our eyes to. Without a consistent left margin it’s exceptionally difficult to follow the text. (The reverse is true for text read right-to-left.)

That’s why body copy is never justified to the center or right in the Western world: if the location of the left margin changes, we have to relocate it before we can continue reading. Our eyepath is interrupted, along with our train of thought.

Yet you’ll see an awful lot of websites that scatter left-aligned images throughout body copy. If you have a particularly clever designer, copy might even flow around images in an arty way.

This forces the left margin of the copy to change location—breaking your reader’s flow and forcing him to readjust. Far from helping to keep his attention, such techniques threaten to lose it.

breaking the left margin on a blog

“Oops”. I couldn’t resist a gentle poke at Unbounce, who break the left margin here on their blog.

For images placed inline with text, always be sure to align them on the right margin. Never break the left margin.

4. Images without clear relevance are a waste of space

If the images you’re using are not clearly tied to your value proposition, or to the central theme of your page, then they will only confuse your readers. At best, they’ll be pointless distractions. At worst, they’ll give the wrong impression and lead readers to feel tricked or disappointed.

It’s actually pretty easy to avoid irrelevant images just by using captions. If you can’t come up with a good caption for an image, it’s probably because the image has no place on the page.

The best kinds of images fall into just two categories:

1. Images with story appeal

2. Images which demonstrate

An image with story appeal is best for putting above your headline. It evokes a strong sense of curiosity in your reader. He wants to know what’s going on in it—so he reads your copy to find out.

homepage image with some serious story appeal

Although brewshop.co.nz doesn’t do everything right, its homepage image has some serious story appeal.

But these kinds of images are not very easy to come up with. Most of the images I see at the beginning of web pages are obviously taken straight from some stock photography site, and have at best a tenuous connection to the content on their pages. Not only do they have little story appeal, but when I see them, I immediately suspect the story they’re telling is not the same as the story in the copy.

An image which demonstrates is exactly as it sounds. It demonstrates something you’ve said in the copy.

It’s hard to go wrong with this sort of image—the only caveat is that it needs to convey your value proposition or central theme with more force than copy alone could. Product photos, before-and-after shots, charts or graphs showing comparisons and so on all fit the bill nicely. And the higher quality the better—if it needs to be downsized to fit into a fairly narrow column of text (and it probably will), then make it clickable, so readers can see a larger version in a lightbox.

Images that turn readers off

Here are some kinds of images to avoid like the plague. They will distract your readers with their visual dominance, without the benefit of interesting your readers with their content. And very often they will convey the impression that you are incompetent, thoughtless about your page content, or just unable to come up with anything of real quality.

    Stock photographs that are obviously stock photographs—their generic dullness and lack of imagination rubs off on you. Just because a stock photo is attractive doesn’t mean it will be effective.
    Poor quality images of any kind—better to not show anything than to show something pixelated, over-compressed, badly resized, of a low resolution, or otherwise shoddy-looking.
    Crowd shots. Try to use photos that have a single main subject—people find crowd shots boring because there’s no one to focus on.
    Bigger than life-size images of faces. According to Ogilvy, readers avoid them because they seem slightly grotesque.
    Historical subjects—unless you’re catering to an audience of history enthusiasts, it’s a safe bet your readers will find historical shots boring.


This website is a study in images done wrong: there is a stock photo top center depicting a model we all know doesn’t work for Datacom—and to add insult to injury, it has been distorted from resizing. The images in the columns beneath have relevance only in the sense that they were forced into context without being needed—they convey no value whatsoever since they demonstrate nothing.

Every image must be worth its page weight in gold

Lastly, while you’re mulling over whatever fancy graphic your web designer wants to sex your page up with, mull over this: page load times are still the number one criterion for maximizing readership. For example, a few months back Google discovered that a loading time increase from 0.4 seconds to 0.9 seconds decreased traffic by 20%. In fact, we created a handy infographic showing how more and more readers abandon a page as load time increases. Needless to say, images increase page load time.

So take a look at your latest graphically-endowed content. Is that extra weight really helping? Is each image demonstrating your value proposition forcibly, or teasing your reader into your copy with story appeal? Is it positioned correctly and captioned enticingly? Is it worth its weight in gold? If you’re not sure, it’s time to start testing, measuring—and perhaps culling.

* Figures are entirely made up for effect. Designers don’t really go this far…but I’m sure some of them want to.

The Age of Excellence

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Age of Excellence is one of Sydney’s premier landscaping and horticultural teams, with a great passion for creating beautiful, modern, outdoor landscapes.

Our team sees every job as a privilege, and our mission is to lead people into a love affair with their gardens.

Wherever we’re asked to begin, we have one purpose:
to create quality surroundings that nurture and inspire.

New gardens are like people: they are singular and unique. For us, every project is a new beginning. No templates, no recycling of previous designs. Our experienced team of designers, horticulturalists, and project managers will work to understand what a beautiful garden means to you.

Installation is an earthy, practical process where plans become reality. We quote carefully, execute on time, and work with the highest quality materials and craftspeople. Focused attention and thorough professionalism render a finished garden for you to enjoy your own, personal outdoor space.

Five Grammatical Errors That Make You Look Dumb

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One thing blogging and good copywriting share is a conversational style, and that means it’s fine to fracture the occasional rule of proper grammar in order to communicate effectively. Both bloggers and copywriters routinely end sentences with prepositions, dangle a modifier in a purely technical sense, or make liberal use of the ellipsis when an EM dash is the correct choice—all in order to write in the way people actually speak.

But there are other mistakes that can detract from your credibility. While we all hope what we have to say is more important than some silly grammatical error, the truth is some people will not subscribe or link to your blog if you make dumb mistakes when you write, and buying from you will be out of the question.

Here are five mistakes to avoid when blogging and writing web copy.
1. Your vs. You’re

This one drives me insane, and it’s become extremely common among bloggers. All it takes to avoid this error is to take a second and think about what you’re trying to say.

“Your” is a possessive pronoun, as in “your car” or “your blog.” “You’re” is a contraction for “you are,” as in “you’re screwing up your writing by using your when you really mean you are.”
2. It’s vs. Its

This is another common mistake. It’s also easily avoided by thinking through what you’re trying to say.

“It’s” is a contraction of “it is” or “it has.” “Its” is a possessive pronoun, as in “this blog has lost its mojo.” Here’s an easy rule of thumb—repeat your sentence out loud using “it is” instead. If that sounds goofy, “its” is likely the correct choice.
3. There vs. Their

This one seems to trip up everyone occasionally, often as a pure typo. Make sure to watch for it when you proofread.

“There” is used many ways, including as a reference to a place (“let’s go there”) or as a pronoun (“there is no hope”). “Their” is a plural possessive pronoun, as in “their bags” or “their opinions.” Always do the “that’s ours!” test—are you talking about more than one person and something that they possess? If so, “their” will get you there.
4. Affect vs. Effect

To this day I have to pause and mentally sort this one out in order to get it right. As with any of the other common mistakes people make when writing, it’s taking that moment to get it right that makes the difference.

“Affect” is a verb, as in “Your ability to communicate clearly will affect your income immensely.” “Effect” is a noun, as in “The effect of a parent’s low income on a child’s future is well documented.” By thinking in terms of “the effect,” you can usually sort out which is which, because you can’t stick a “the” in front of a verb. While some people do use “effect” as a verb (“a strategy to effect a settlement”), they are usually lawyers, and you should therefore ignore them if you want to write like a human.
5. The Dangling Participle

The dangling participle may be the most egregious of the most common writing mistakes. Not only will this error damage the flow of your writing, it can also make it impossible for someone to understand what you’re trying to say.

Check out these two examples from Tom Sant’s book Persuasive Business Proposals:

After rotting in the cellar for weeks, my brother brought up some oranges.

Uhh… keep your decomposing brother away from me!

Featuring plug-in circuit boards, we can strongly endorse this server’s flexibility and growth potential.

Hmmm… robotic copy written by people embedded with circuit boards. Makes sense.

The problem with both of the above is that the participial phrase that begins the sentence is not intended to modify what follows next in the sentence. However, readers mentally expect it to work that way, so your opening phrase should always modify what immediately follows. If it doesn’t, you’ve left the participle dangling, as well as your readers.

P.S. You may find it amusing to know that I, like David Ogilvy, have never learned the formal rules of grammar. I learned to write by reading obsessively at an early age, but when it came time to learn the “rules,” I tuned out. If you show me an incorrect sentence, I can fix it, but if I need to know the technical reason why it was wrong in the first place, I go ask my wife.