BALANCE OF PAYMENTS, SMART ZOMBI'S.

In Economics, the Balance of payments (BOP) measures the payments that flow between any individual countryand all other countries. It is used to summarize all international economic transactions for that country during a specific time period, usually a year. The BOP is determined by the country's exports and imports of goods, services, and financial capital, as well as financial transfer. It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits) Balance of payments is one of the major indicators of a country's status in international trade, with net capital outflow.

BALANCE OF TRADE, SMART ZOMBI'S.

The balance of trade forms part of the current account which includes other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly. Equally, a deficit decreases the net international asset position.

The trade balance is identical to the difference between a country's output and its domestic demand (the difference between what goods a country produces and how many goods it buys from abroad; this does not include money re-spent on foreign stocks, nor does it factor the concept of importing goods to produce for the domestic market).

Measuring the balance of trade can be problematic because of problems with recording and collecting data. As an illustration of this problem, when official data for all the world's countries are added up, exports exceed imports by a few percent; it appears the world is running a positive balance of trade with itself. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation. The discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, smuggling and other visibility problems. However, especially for developed countries, accuracy is likely.

Factors that can affect the balance of trade include:

• The cost of production (land, labor, capital, taxes, incentives, etc.) in the exporting economy vis-à-vis those in the importing economy;
• The cost and availability of raw materials, intermediate goods and other inputs;
• Exchange rate movements;
• Multilateral, bilateral and unilateral taxes or restrictions on trade;
• Non-tariff barriers such as environmental, health or safety standards;
• The availability of adequate foreign exchange with which to pay for imports; and
• Prices of goods manufactured at home (influenced by the responsiveness of supply)

In addition, the trade balance is likely to differ across the business cycle. In export led growth (such as oil and early industrial goods), the balance of trade will improve during an economic expansion. However, with domestic demand led growth (as in the United States and Australia) the trade balance will worsen at the same stage in the business cycle.

Since the mid 1980s,United States has had a growing deficit in trade able goods, especially with Asian nations (China and Japan) which now hold large sums of U.S debt that has funded the consumption. The U.S. has a trade surplus with nations such as Australia and Canada. The issue of trade deficits can be complex. Trade deficits generated in trade able goods such as manufactured goods or software may impact domestic employment to different degrees than trade deficits in raw materials.

Economies such as Canada, Japan, and Germany which have savings surpluses, typically run trade surpluses. China a high growth economy, has tended to run trade surpluses. A higher savings rate generally corresponds to a trade surplus. Correspondingly, the United States with its lower savings rate has tended to run high trade deficits, especially with Asian nations.

SAVE YOURSELF FROM DEMERITS IN FOREX TRADING, SMART ZOMBI'S.

1. HIGH LEVERAGE:

While high leverage serves as an advantage to attract traders to the market, it can at times also act as a disadvantage for them. With such high levels of leverage available to traders in the FOREX market, comes an equally high level of danger.

This can be true for the high stake positions which carry along with them, too much risk, leading to margin calls. This is where efficient money management comes into play for playing safe.

Today, you can leverage your investment with an online FOREX broker by 200, or even 400 to 1 and this creates tremendous profit potential. But it's a fact that most traders actually over leverage and lose.

In stock trading you can buy and hold and you only risk what you have paid for the stock and so long as it comes back you make a profit and you can wait.

In FOREX trading its different - you have losses that are open ended and they pile up quickly. You can't just sit back - you need to take action.

2. VOLATILITY:

FOREX prices are volatile and make big moves everyday - combine this with leverage and you have a powerful tool for profits which of course can also cause losses.

Most traders have no idea about how volatility affects their trading and how to deal with it. Most FOREX traders have never heard of, let alone understand "standard deviation of price" yet it's an essential part of any traders FOREX education.

You have to know what is normal volatility and what isn't, to have any hope of succeeding with your FOREX trading strategy.

Most traders make the error of placing stops to close to their entry point and they get taken out by normal volatility and this is because they are normally over leveraged. Most traders try so hard to avoid risk they actually create it for themselves.

3. ALL TIME MARKET:

Although it is convenient for the trader to trade whenever it is suitable to him, it can be a rather tough job too. This is because, at times, it is not possible for an individual trader to keep track of the FOREX market, 24 hours a day.

This is where a broker comes into the picture. Retail or individual investors should try taking help from a professional broker rather than doing all the dealings himself straight with the huge market.

The broker will be an experienced professional who will act as an equal in your transactions, keeping you informed and updated about minute to minute details and fluctuations, and even guide you about the conditions, when to and when not to trade in the market.

Like every other financial market, FOREX market also has its share of advantages and disadvantages. But keeping in mind the two can surely help a trader become more vigilant and aware of what to expect while trading FOREX.

MERITS IN FOREX TRADING, SMART ZOMBI'S.

ADVANTAGES OF FOREX TRADING:

Although the FOREX market is by far the largest and most liquid in the world, day traders have up to now focused on seeking profits in mainly stock and futures markets. This is mainly due to the restrictive nature of bank-offered FOREX trading services.

There are many advantages to trading spot foreign exchange as opposed to trading stocks and futures. Some of these are given below.



1. SPREAD RATES:

Most online FOREX brokers offer a spread of 5 pips on EUR USD which is the most widely traded and liquid currency pair.

In the futures market spreads can vary anywhere between 5 and 9 pips and can become even larger under illiquid market conditions (which tends to happen substantially more often in futures currencies.

2. ALL TIME MARKET:

Foreign exchange market trading occurs over a 24 hour period picking up in Asia around 24:00 CET Sunday evening and coming to an end in the United States on Friday around 23:00 CET. Although ECNs (electronic communications networks) exist for stock markets and futures markets (like Glob-ex) that supply after hours trading, liquidity is often low and prices offered can often be uncompetitive.

From Sunday evening to Friday Afternoon EST the FOREX market
never sleeps. This is very desirable for those who want to trade on a part-time
basis, because you can choose when you want to trade--morning, noon or night.



3. QUICK SELL BEFORE YOU PURCHASE:

Equity brokers offer very restrictive short-selling margin requirements to customers. This means that a customer does not possess the liquidity to be able to sell stock before he buys it. Margin wise, a trader has exactly the same capacity when initiating a selling or buying position in the spot market. In spot trading when you're selling one currency, you're necessarily buying another.

4. HIGH LEVERAGE MARGIN:

FOREX brokers offer trade margin of 50, 100, 150, or even 200 to 1 of trade margin.

FOREX traders often find themselves controlling a huge sum of money with little cash outlay on the table. For example, a $1,000 in a 150:1 FOREX account will gives you the purchasing power of $150,000 in the currency market.

While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful, moneymaking tool.

Rather than merely loading up on risk as many people incorrectly assume, leverage is

essential in the FOREX market.

5. LIQUIDITY MARKET:

Turnover value in FOREX is $1.9 trillion per day. It is the largest trade

market in the world and the liquidity of the market is huge. Traders can easily cash in or cash out their capital in Forex market.

6. SMALL TRADING:

One might think that getting started as a currency trader
would cost a lot of money. The fact is, it doesn't. Online FOREX Firms now offer
'mini' trading accounts with a minimum account deposit of only $200-$500 with
no commission trading. This makes FOREX much more accessible to the

average
individual,

without large, start-up capital.

7. EVERY TIME MAKING PROFIT:

On the stock markets, you can only make money if shares are rising, but in economic
recession and falling 'bear' markets, there is little chance of making big money.
Forex is different. One of the most exciting advantages of FX trading is the ability
to generate p

rofits whether a currency pair is 'up' or 'down'. A trader can profit
by taking a 'long' position, (buying the currency pair at one price and selling it

later at a higher price), or a 'short' position, (selling the currency pair and buying
it back at a lower price). For example, if you think the US dollar will increase in
value vs. the Japanese Yen then you will buy Dollars and sell Yen (go long). If
you think the Yen will increase in value against the Dollar then you will sell
Dollars and buy yen (go short). As long as the trader picks the right direction, a
potential for profit always exists.

8. HIGHLY DESIRED TRADING ENVIRONMENT.

Market transparency is highly desired in any trading environment. The greater the market transparency, the more efficient the market becomes. Unlike other markets where transparency is compromised. FOREX markets are highly transparent.

Because of this transparency, as an FX trader, you will be able to exercise risk management strategies in accordance to the proper fundamental and technical indicators.

The FOR

EX market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just 1-2 seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably.

IS FOREX TRADING BETTER THAN STOCKS?,SMART ZOMBI'S.

STOCK:

A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks

A stock exchange is a corporation or mutual organization which provides "TRADING" facilities for stock brokers and traders to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividend.

FOREX:

The Foreign Exchange Market (FOREX) is quite different from the stock exchange. FOREX is primarily a short-term market. Most traders enter and exit deals within a 24 hour period -- sometimes within a few minutes. Many FOREX trades can be made in 1 day without building up a large brokerage fee, because FOREX trades are commission-free. Brokers earn money by setting a spread -- the difference between asking and selling prices.

The FOREX is the largest financial market in the world, with transactions worth $1.5 trillion every day. By comparison, all the American stock exchanges combined handle about $100 billion. The huge volume of FOREX allows it to be 1 of the most liquid markets in the world. There is always a buyer and seller for any type of currency, because the world economy relies on the movement of goods from country to country. The stock market is less liquid because participants may choose to hold their investments indefinitely or move on to other markets.

Non-Stop Trading 5 Days A Week.The FOREX is not based in any 1 location. Trading markets are located worldwide and, due to time zone differences, trades can be made 24 hours a day, 5 days a week.