Tax Strategies for Forex Traders

by TradersAccounting.com Research

Forex: Know What You Trade to Avoid Tax Traps:

Forex, the foreign currency exchange market, can be a lucrative one indeed for traders skilled in its dynamics. This worldwide network of government central banks, commercial and investment banks, hedge funds, international corporations and brokerage firms enables traders to capitalize on the rise and fall of a currency dollar volume that exceeds $1.4 trillion every day, making it the largest and most liquid of the world markets.

But when income tax time rolls around, currency traders receive special treatment from the Internal Revenue Service, the subtleties of which can sometimes trip up the unsuspecting.

Here's a look at the tax landscape for forex traders, and why it may be a good idea to have a Traders Accounting tax professional help guide you through the twists and turns.

Futures and Cash Forex

Forex is traded in two ways: as currency futures on regulated commodities exchanges, which fall under the tax rules of IRC Section 1256 contracts, or as cash forex on the unregulated interbank market, which fall under the special rules of IRC Section 988. Many forex traders are active in both markets.

Because futures and cash forex are subject to different tax and accounting rules, it is important for forex traders to know which category each of their trades fall into so that each trade can be reported correctly to receive optimum tax advantage.

Section 1256: The Advantageous Split

Forex traders receive a significant tax advantage over securities traders under Section 1256: reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles) allows you to split your capital gains on Schedule D, with 60%
taxed at the lower long-term capital gains rate (currently 15%) and 40% at the ordinary or short-term capital gains rate of up to 35%. That combined rate of 23% amounts to a 12% advantage over the ordinary (or short-term) rate.

If you trade exclusively in forex futures, it's smooth sailing come tax time; your trades fall under Section 1256 and automatically receive the 60/40 split.

But things get a little more complicated tax-wise if you dabble in cash forex, which is subject to Section 988 (Treatment of Certain Foreign Currency Transactions).

Section 988: To Opt Out or Not?

Section 988 was enacted as a way for the IRS to tax companies that earn income from fluctuations in foreign currency exchange rates as part of their normal course of business, such as buying foreign goods. Under this section, such gains or losses are reported and treated as interest income or expense for tax purposes, and do not receive the favorable 60/40 split.

Because forex futures do not trade in actual currencies, they do not fall under the special rules of Section 988. But as a currency trader, you are exposed daily to currency rate fluctuations, hence your trading activity would fall under the Section 988 provisions.

But because currency traders consider these fluctuations part of their capital assets in the normal course of business, the IRS enables you to opt out of Section 988, and thereby retain the favorable 60/40 split for these gains under Section 1256.

The IRS requires that you note "internally" your intention to opt out of Section 988 before making the trades; you are not required to notify the IRS. Obviously, some traders bend this rule based on their year-end outcome, and there seems little inclination on
the part of the IRS to crack down, at least so far.

As a rule of thumb, if you have currency gains, you would benefit (reduce your tax on gains by 12 percent) by opting out of Section 988. If you have losses however, you may prefer to remain under Section 988's ordinary loss treatment rather than the less favorable treatment under Section 1256.

Tax Time: Tougher for Currency Traders

Forex futures traders tend to breeze through tax time; their brokerage firm sends them an IRS Form 1099, on which their aggregate profit or loss is listed on Line 9.

But since currency traders don't receive 1099s, you are left to find your own accounting and software solutions. Don't be tempted to simply lump your currency trades in with your Section 1256 activity, a common temptation; these trades need to be separated
into Section 988 reporting, and in cases of loss, you could wind up paying more tax than necessary.

As a fast-growing market segment, forex trading is almost certain to come under greater IRS scrutiny in the future. An experienced Traders Accounting tax professional can help you file in full compliance with IRS rules and make the most of your tax advantages.

For more information, visit TradersAccounting.com

How to investigate your Forex Broker

The forex market is the largest market in the world, 1.9 trillion traded daily and unregulated - this last adjective is an often repeated warning, but what does it mean for you, the forex trader? When a forex broker offers guarantees on execution and account safety, can they really back this up?

The Commodity Futures Modernization Act, introduced in 2000 did not extend regulation of the CFTC to cover the spot forex market. However, The NFA offers a free database called BASIC which provides registration and membership information and shows regulatory actions brought against CFTC registrants by the CFTC, NFA or exchanges.

Here are two measures you can use to check into the background of your forex broker:

1. Check that your broker is a registered futures commission merchant. Get the brokers NFA ID and look them up at www.nfa.futures.org/basicnet/ Beware of affiliates.

2. Go to the CFTC website at www.cftc.gov/tm/tmfcm.htm and make sure that the registered FCM has substantial assets. The NFA required minimum is 250,000. However, many experts see this as a modest requirement and would like to see assets of at least 10 million.

To confirm the validity of your forex brokers price feed, cross check the trading platform feeds against eSignal and Reuters.

Slippage, (when you get a worse fill than the price you requested), and requotes (when you enter or exit the market and a different price comes up, leaving you seconds to leave the worse bid or offer) should be rare and only in fast markets. Slippage is already built into the spread

'FDIC insured' and 'segregated accounts' does not necessarily guarantee the safety of your account. Your funds would probably not receive priority in a bankruptcy as demonstrated by the Refco scandal.

Chosing a Forex Broker - What to Look For

Choosing a Forex Broker - What to Look For

Tight Spreads: Look for competitive spreads. This is the difference between the bid and offer and is measured in pips. This is what it will costs to enter a trade, since it is not possible to buy on the bid or sell on the offer in the Forex market.

Forex brokers are usually tied to large banks due to the large amounts of capital required for the leverage that they provide. While the forex market is unregulated, reputable brokers will be registered with the NFA.

Leverage is necessary because the price fluctuations are so small. It reflects the ratio between usable trading capital and the actual capital in your account. Some brokerages offer leverage as high as 250:1 – so in this case the broker is lending you 250 for every 1 dollar in your account.

When signing up for a forex trading account you will be required to sign a margin agreement. This states that due to the fact that you are trading with borrowed funds the brokerage has the right to interfere with your trading to protect its interests.

Managed Forex Account

Interest in the FX market has grown exponentially as the market has opened to individual investors over the last few years. Many have realized the potential for diversification and the possibility of outsized returns that were previously available only to a select few. Yet while the FX market has long been a source of income for financial institutions and high-net worth individuals, unfortunately returns on many individual investor accounts have struggled to match those of more established participants.

The FXCM Managed Accounts Program is now offering the Galaxy System Fund to address these issues. Investing in the Galaxy Fund allows you to utilize many unique advantages that the FXCM Managed Funds Program and Galaxy can provide:

1) Lower Costs: until now, fees and commissions paid by the individual investor for managed accounts in the FX market are higher than those of institutions and high-net work individuals. The Galaxy Fund leverages the 50,000+ currency trading accounts FXCM has serviced to pass along some of the best pricing available in the FX market. Moreover Galaxy Fund has low fees, with a monthly management of 0.1667% of funds under management, and a monthly performance fee of 20%.

2) Experience: FXCM has over 500 employees worldwide with traders and analysts from the world’s most recognized banks, such as UBS, JP Morgan Chase, Citibank, Goldman Sachs, Merrill Lynch, ABN Amro, and many more. The Galaxy System Fund has been selected by seasoned system trading professionals out of hundreds of systems that we have observed live.

3) Consistent Returns: While most currency trading managed funds rely on trend-following strategies, the Galaxy Fund is designed to exploit both ranging and trending markets. The system trades 5 different currency pairs across 5 different time frames, further increasing the diversification and limiting overdependence or overexposure on any one type of market condition. Moreover, the fund uses stop losses readily to limit losses. Historically, Galaxy has had modest drawdowns that are compensated by frequent months of modest positive returns and occasionally months of double digit returns. The maximum drawdowns on the backtests are small in comparison to the maximum returns.

Forex Trading Education

Forex Trading Books:

Day Trading the Currency Market : Technical and Fundamental Strategies To Profit from Market Swings

Forex Trading Signals

Many Forex traders prefer to follow a system or receive trading signals. There are a variety of options for traders seeking this type of guidance.

Kshitij.com Forex Trading Signals, Forex Risk Management, Hedging, Currency Forecasts Consultancy Services for Forex Traders.

FXMaster.net Offers daily forex forecasting reports, SMS signals and education.

Forex Trading Systems

Here are a few of the trading systems and signal services that cater to the Forex Market:

Global Forex Signals Real Time Forex Signals.

Fractal Finance Cubed Fractal Finance CUBED is the culmination of years of work in developing fractal based indicators, trading tools and techniques. As our flag ship product, Fractal Finance CUBED is designed for professional money managers, floor traders and speculators. Designed with the professional trading community in mind, Fractal Finance CUBED is modular and can be customized for specific trading applications.

TradeGuider Trading software and investment software that shows supply and demand based trading signals in any market, including stocks, forex & commodities. Our trading software gives you a significant edge over other traders and investors.

FXMaster.net Offers daily forex forecasting reports and SMS signals. Auto trading of Fxmaster signals is now available.

MCFX Features thousands of indicators and support for writing your own, strategy back-testing, high performance and reliability.

Overnight Surprise: Understanding the Overnight Interest Calculation in Forex

By MURRAY A. RUGGIERO JR.

Article Contributed By Futures Magazine

When you trade the cash forex markets, you incur an interest profit or loss when your trades are held overnight. To develop a forex trading system that carries such trades, you need to make concessions for this interest effect in your analysis.

Two rates are involved when calculating the interest incurred by a trade: a rate for the base currency and a rate for the quote currency. If you have a pair of currencies B/Q with B being the base currency and Q being the quote currency, the following possibilities exist:

· If the trade is long B/Q, interest is charged for borrowing B with the rate determined by B’s borrowing rate. Interest is received from the lending interest for Q determined by Q’s lending rate.

· If our trade is short B/Q, then interest is received from the lending interest for B and charged the borrowing interest for Q.

In both cases, the difference between lending interest and borrowing interest or swap will be incurred. If the lending interest is greater than the borrowing interest, interest is paid to us; otherwise, we have to pay interest. To calculate the difference, both interest values must be converted into the account currency. If the account currency is the same as either the base or the quote currency, no conversion is needed for that currency.

For a particular currency, the borrowing interest rate is always higher than the lending interest rate. Interest applies if a trade is held overnight, which is considered after 5 p.m. Eastern Standard Time. We will look at some examples. In each case, the account currency is U. S. dollars.

Example 1. We enter a trade long one lot of NZD/USD on Monday and maintain the position overnight. The borrowing interest rate for NZD is 7.6%. The interest for one day is calculated at (0.076 * Since the account is maintained in U. S. dollars, this amount needs to be converted to dollars. We find an exchange rate of 0.6808 for the day in question yielding a borrowing interest of $14.18.

The lending rate for USD is 3.75%. To calculate the interest, we need to know the number of USD units equivalent to 100,000 units of NZD, which is given by the price where the trade was opened. For example, 0.6879, making the lending interest calculation (0.0375 * * Subtracting the two interest values of 7.07 – 20.82 = –13.75. Since this value is negative, we will be charged interest of $13.75

Example 2. We enter a trade short one lot of AUD/CAD on Wednesday and maintain this position after 5 p.m . The lending rate for AUD is 5.2%. The lending interest calculation is (0.052 * To convert this value into USD, we need the AUD/USD exchange rate, which is 0.7465, giving us a lending interest in dollars of $10.64.

The borrowing rate for CAD is 3.4%. To determine the number of CAD units equivalent to 100,000 units of AUD, we look to the opening price for the trade at 0.8770. The borrowing interest value is (0.034 * *

For the USD/CAD exchange rate, we find a value of 1.1644, giving a borrowing interest in dollars of $7.02. Note that since the USD is the base currency in USD/CAD, we need to divide the price by the exchange rate or multiplying by the rate of the inverse pair CAD/USD. Subtracting the interest values gives 10.64 – 7.02 = 3.62. Since this value is positive, we will be paid interest. As the trade is open after 5 p.m. on Wednesday, the calculated interest must by multiplied by 3, giving an interest payment of 3 *

Both examples show that it is necessary to know the price where the trade was opened to calculate the interest contributed by the quote currency, as this determines the number of units of the quote currency sold or bought when the trade was opened.

Example 2 shows that when the base currency and the quote currency are both different from the account currency, access to price quotes of additional pairs is necessary. To convert the lending or borrowing interest rate, we need a quote for the pair at the time of the rollover.

The bottom line is that you need to include the effects of interest rates in your historical testing. This effect can be sizable. For example, trading forex on an end-of-day basis with a 20-day channel breakout, the interest rate effect could account for a 25% adjustment in the profit or loss of a given trade.

Murray A. Ruggiero Jr. can be reached at ruggieroassoc@aol.com.

The Major Trading Sessions in the Forex Market

The FX market is active 24 hours a day - it is important for the active forex trader to identify the times where there is the most volatility and largest trading ranges.

1. Asian Session (Tokyo) 7PM-4AM EST

Tokyo is one of the principle dealing centers in Asia and is the first major Asian market to open. USD/JPY, GBP/CHF and GBP/JPY have large ranges, and offer short term traders opportunity.

2. US Session (New York) 8AM-5PM EST

New York is the second largest Forex marketplace. For active traders GBP/USD, USD/CHF, GBP/JPY and GBP/CHF are good choices, with large daily ranges.

3. European Session (London) 2AM-12PM EST

London is the most important dealing center in the world and the majority of forex trading takes place during London hours. For traders looking for volatility GBP/JPY and GBP/CHF provide large daily ranges.

4. US European Overlap Period 8AM-12PM EST

This period is the most active - the best period for day traders looking for volatility.

Leverage in the Forex Market

Leverage is necessary in the forex market because the price fluctuations are only fractions of a cent. Leverage is measured through the comparison between the capital available for trading and the capital in your account. So with a leverage ratio of 250:1 means that you have $250 worth of trading power for every 1 dollar in your account.

Why are there no commissions in Forex Trading?

When trading stocks, futures or options an investor will use a broker who executes the trade and charge a commission for the service. Forex trading, however does not involve commissions. Forex trading firms are dealers not brokers - they assume market risk by acting as a counterparty to the trade. Forex dealers make money through the bid ask spread rather than commissions. This means that while the forex trader can never buy on the bid and sell on the offer as in other markets - and give up the spread when they enter a trade - they lose no profit to commissions in the event of a winning trade. The bid ask spread is measured in pips.

Automated Trading Systems and the Forex Market

An army of small speculators have entered the forex arena armed with pooled knowledge and sophisticated technology rivaling that of large institutions.

By Dan Blystone

As the editor of a website focused on trading and investing I try to keep track of industry related trends and the hot topics of the moment. Notably, the combination of the forex market and automated trading systems has generated a massive hive of interest online. In this article we'll cover the salient characteristics of trading systems and the forex market. We’ll also take a look at platforms offering the development, backtesting and automation of forex trading systems.

Trading systems have, of course, been around for decades. Many leading traders have long understood the virtues of using mechanical trading systems. Back in the early 1980's Richard Dennis' 'Turtle Traders' were sticking to a rigid set of rules, a mechanical trading system - the system itself a closely held secret for many years. The use of trading systems has been central to the success of many if not a majority of top performing traders.

A trading system is simply a set of specific rules, or parameters, governing entry and exit points. The technological advances of recent years have opened up a world of opportunity for the individual trader through the use of trading systems. For example, thanks to the internet and the PC, backtesting analysis of a trading system that would previously have taken months or years can be now done within minutes. Further, trading systems can now be fully automated - having the ability to both generate signals and execute trades automatically. Online communities of traders from all over the world, discussing and sharing strategies, are springing up and thriving.

The foreign exchange market is the largest and most liquid market in the world with trillions of dollars being traded daily by governments, banks, and large institutions. The volume traded in the foreign exchange market is several times greater than the total cash volume of the stocks and futures markets combined. This highly liquid, highly volatile market only relatively recently became available to the mainstream trading public. Prior to the late 1990's an investor was normally required to have millions of dollars to access the market at all. Technological advances and the advent of the internet have finally brought this market into the hands of the 'retail' trader.

In order to see why trading systems and forex have made such a compelling combination to traders, let's start out by taking a look at their respective advantages:

Advantages of Trading Systems

- A rigorously tested trading system gives the trader confidence, and a framework for discipline.
- Trading systems take the emotion out of trading. Unlike a human, an automated trading system will never second guess itself, or be misguided by fear and greed.
- Automated trading systems free you of the necessity of being in front of the markets at all times. Once an effective system is developed and optimized it can be left to run independently. Being a 24 hour market, some of the best forex trading will likely take place in the middle of the night regardless of your location. For example, if you are a trader in the US trading GBP/USD - you will likely be asleep during the volatile London open. Automated trading systems allow you to capitalize on market movement at all times. An automated system will allow you to focus on optimizing your strategy and money management rules rather than having to constantly watch the market.
- The use of automated signals and order execution allow you to trade multiple markets simultaneously rather than being glued to the movements of one market.
- Trading systems will increasingly afford faster identification of signals and reaction to them. As you might imagine, a machine will typically beat a human in the speed of identifying a trading signal and the entry of the corresponding order.

Advantages of the Forex Market

- The forex market is a true 24 hour marketplace five days a week, allowing for uninterrupted trading.
- The market is massively liquid: under normal conditions there is no problem entering or exiting a trade.
- There are no commissions, only spreads.
- There is no fixed lot size allowing a great deal of flexibility in your position sizing.
- The scope of the market is so vast that it is impossible to for any entity to manipulate it for an extended period.
- Forex dealers typically offer a great deal of leverage, sometimes as high as 400:1. Bear in mind this can work against you also if misused, and is probably the single factor contributing most to the failure of novice fx traders.
- Short Selling. Unlike the equity market, there is no restriction on short selling in forex.
- The market is highly volatile, creating many trading opportunities night and day.

Components of a Trading System

In developing a trading system the following basic components need to be considered:

- Market and timeframe.
- Entry. The trigger that initiates your buy or sell signal.
- Stop Loss. The level at which you will cut your losses in the event of the trade going against you.
- Profit Target. The level at which you will exit the trade to take profits.

To give you an idea of what a basic system might consist of here’s an example:

- Market and timeframe: EUR/USD, Daily.
- Entry: Buy entry occurs when the 50-day moving average crosses above the 200-day moving average. Sell entry signal occurs when the 50-day moving average crosses below the 200-day moving average.
- Stop Loss: Set at 50 pips from the entry.
- Profit Target: Set at 200 pips from the entry.

An oscillator such as RSI (Relative Strength Index) could be used as a filter - so that you only enter a long trade when the RSI indicates oversold conditions and a short trade when the RSI indicates overbought conditions. The conventional wisdom holds that fewer parameters or 'rules' are better in developing trading systems.

A system like this can be programmed to auto-execute in a trading platform. Alternatively, the system could be 'semi-automated' whereby you are alerted when the entry trigger occurs, and oversee the placement of the trade yourself. Alerts can be audible through your computer, sent to your email or even sent as a message to your cell phone. The semi-automated system clearly carries less risk, with you being there in person to 'pilot' the system and execute the trades manually. A fully automated system should be rigorously tested both in a simulated and live environment.

Now let's take a look at some of the Trading Plaforms that are making the automated trading of the forex market possible:

MetaTrader is a forex trading platform built by MetaQuotes. The MetaTrader platform has a built in programming language called MQL4 (MetaQuotes Language 4) that allows the user to create and backtest trading strategies using historical data. MQL4 is used to write Expert Advisors, mechanical trading systems which can be used for both trading alerts and automated trading. Custom Indicators are indicators created by you or by other MetaTrader users in addition to the suite of built in technical indicators. MQL4 is easy to learn and understand even for those with limited programming experience. MetaTrader has a large and active user community online, discussing strategies and helping eachother with programming issues. The MetaTrader platform can be used with a variety of different forex brokers.

TradeStation has been a pioneer in trading systems development, backtesting and automation. Tradestation 8.3 allows you to design and backtest forex trading strategies using their EasyLanguage® technology. Forex trading strategies can be fully automated through their platform. TradeStation also offers automated trading of the stocks and futures markets. The TradeStation platform is now incorporated with a brokerage firm, TradeStation Securities.

Strategy Runner is another innovator in the world of automated trading systems, offering fully automated trading with high-quality execution of trading strategies using a server-based solution. Strategy Runner hosts and executes your strategies for you on secure servers located in the broker's facilities, ensuring that technical problems on your computer will not interrupt trading. The platform allows you adjust or manually override your strategies at any time. Strategy Runner also offers the Strategy Exchange, a marketplace of automated trading strategies developed by industry professionals. The Strategy Exchange allows individual investors to select and build their own automatic systems portfolios and then auto-execute them via Strategy Runner.

Educational Resources

Among the hundreds of forex trading websites, I think there are three that really stand out. These sites offer excellent free educational resources, provide in depth coverage of forex trading systems and host active communities. They are: FXStreet.com, ForexFactory.com, BabyPips.com.

Conclusion

Both the forex market and trading systems are here to stay and have a long evolution ahead. The future outlook is bright for the speculator - increased fx market regulation, tighter spreads, better execution and constant innovation and improvement in trading systems technology.

Trading Forex News Releases

Due to the frequent number of releases of economic data globally there are many opportunities to trade news releases in the forex market. US economic indicators have the largest impact on the market, and the most important figures are normally released between 8:30 and 10:30 EST. The most influential US data for the forex market are dispursed through the Employment Report, (including Non-Farm Payrolls) and Interest Rates (FOMC Rate Decisions). These figures normally create a high degree of volatility in the market, sometime creating trading ranges of over 100 pips and significant opportunites for traders.

See also: Economic Indicators, Fundamental Analysis

Exotic Carry Trade Currencies

By Dan Blystone

Introduction to the Carry Trade

The carry trade, a strategy favored among hedge funds and investment banks, is now growing in popularity among retail forex traders. A number of forex brokers are currently offer trading in exotic currencies such as the Turkish Lira (TRY) and South African Rand (ZAR) yielding strikingly high interest rates. These exotic currencies present a high risk/high reward vehicle for use in a carry trade strategy.

The carry trade is an investment strategy that involves a basic arbitrage between interest rates. In any forex transaction you are simultaneously selling one currency and buying another. In doing so, you are borrowing at one interest rate and investing at another rate. The carry trade involves selling a currency with a low interest rate, then using the proceeds to purchase a currency with a higher interest rate. If you buy the GBP/JPY pair, you are buying the British Pound and selling the Japanese Yen. You collect interest on the currency you buy and pay interest on the currency you sell.

In buying a high interest yielding currency and selling a low yielding currency you capture the interest rate differential. For example if the New Zealand Dollar has an interest rate of 8.25% and the Japanese Yen has an interest rate of 0.5%, an investor buying the NZD and selling the JPY will earn the interest rate differential of 7.75%. This return does not assume any leverage is used. At 5 times leverage the interest would yield 38.75% annually.

Between 2000 and 2007, one of the best carry trade pairs was the NZD/JPY. NZD interest rates have risen dramatically while JPY rates have remained very low. Japan's lending rate of 0.5% is the lowest among industrialized economies. The global commodities bull market and anti-inflation policies of the Reserve Bank of New Zealand have contributed the NZD’s recent historic highs.

Click here to see Figure 1: NZD/JPY Carry Trade (DealBook® 360 screen capture used by permission. © 2008 by Global Forex Trading, Ada MI USA)

The carry trade is normally used as a long term strategy, from 6 months to years, allowing the investor to weather short term market volatility.

The carry trade involves funds flowing from countries with currencies paying low interest rates to countries with high interest yielding currencies. Typically the higher yielding currencies are higher risk investments and are associated with rapidly growing economies. The ideal time to position yourself in a carry trade is at the beginning of a rate-tightening cycle in the currency you are buying.

In a time of crisis such as the terrorist attacks of 9/11/2001, investors seek safe haven currencies such as the Swiss Franc. Times of uncertainty can create an ‘anti-carry’ climate with funds moving away from higher risk currencies.

The three main funding currencies for the carry trade are the US Dollar, the Japanese Yen and the Swiss Franc. The New Zealand Dollar (NZD), Australian Dollar (AUD) and the British Pound (GBP) have been the main recipient currencies of the borrowed funds in recent years.

In the forex market interest payments are made daily based on your position. Your positions are closed out and reopened by your broker daily, a process known as ‘rolling over’. Your account is then debited or credited based on the overnight interest rate differential.

The ability to leverage your position is a key element of the carry trade. The leverage available in the forex market allows you to multiply by many times the interest rate of return. In using leverage the level of risk is also increased exponentially. There of course remains the large risk that currency market moves will erase the profits generated through the interest rate differential.

If for example a terrorist attack took place in London the GBP/JPY could easily fall by 1000 pips. The carry trade has the potential of generating a very high rate of return annually, but that gain (and possibly more) can be wiped out in a day. In order to offset risk in any one pair you can diversify carry trades among many different pairs, creating a carry trade basket.

Yen Carry Trade

The USD/JPY carry trade entered the spotlight when the Yen started trending downwards in 1995. From 1990 to 1995 the Bank of Japan had lowered the official discount rate from 6% to 0.5%., enabling low cost borrowing in the Yen. From 1995 to 1998 the USD/JPY market soared from 80 to 147 Yen per dollar.

An increase in currency volatility was an important element in the unwinding of the USD/JPY carry trade. In 1998 when massive Yen carry trades had built up, the Russian Financial Crisis and the collapse of Long Term Capital Management triggered uncertainty and volatility in the market. Hedge funds scaled back their leveraged positions and the Yen began to appreciate in value.

Click here to see Figure 2: Yen Carry Trade (DealBook® 360 screen capture used by permission. © 2008 by Global Forex Trading, Ada MI USA)

US Dollar as a Carry Trade Funding Currency

Falling US interest rates and increasing volatility in the Yen and the Swiss Franc are making the US dollar a more appealing funding currency. We may begin to see a major movement in borrowing from Yen and Swiss Francs into US dollars, adding further downward pressure to the already beleaguered US currency.

Exotic Carry Trade Currencies

Exotic carry trade currencies yielding enticingly high rates of interest include the Icelandic Krona, Brazilian Real, Turkish Lira, South African Rand, Mexican Peso and the Hungarian Forint.

The most commonly offered of these exotic currencies among retail forex brokers are the Turkish Lira, South African Rand and Mexican Peso. Below we’ll take a look at some of the fundamentals behind these high yielding emerging market currencies.

Turkish Lira (TRY)

The Turkish Lira currently offers the highest interest rate in the industrial world, with the Turkish Central Bank’s benchmark overnight rate standing at 15.25% as of this writing. One of the most popular carry trade strategies of 2007 was to go long TRY/JPY (borrowing Japanese Yen to buy Turkish Lira).

Turkey experienced significant economic gains between 2002 and 2007 in part due to increased foreign investor interest in emerging markets. The robust GDP growth rate during this period placed Turkey among the fastest growing economies in the world. International Monetary Fund (IMF) backed reforms starting in 2001 helped to improve economic stability. In January 2005, with the high inflation rates contained, the old Turkish Lira was replaced by the New Turkish Lira (dropping off six zeros). Prospective EU membership and economic reforms contributed to the rise in foreign investment. However, the Turkish economy is still has to overcome the challenges of a high current account deficit and high level of external debt. The Lira is also threatened by the possibility of political instability and the global credit crisis deterring foreign investment.

Turkey is a founding member of the OECD (Organisation for Economic Co-operation and Development) - an international organisation of thirty countries, that accept the principles of representative democracy and a free market economy. Turkey is also a member of the G20 industrial nations. The G-20 (Group of 20) is a group composed of 19 of the world's largest economies, along with the European Union.

South African Rand (ZAR)

The South African rand (ZAR), is among the world's most actively traded emerging market currencies. The Central Bank of South Africa’s overnight rate stands at 11% as of this writing. The central bank of South Africa, raised interest rates four times last year to to contain inflation and contain consumer spending. South Africa has an abundant supply of natural resources and is another economy to have benefited from the global commodities boom. However, high unemployment, inadequate infrastructure and HIV/AIDS remain challenges yet to be overcome. While economic growth has been strong in recent years, power shortages from state-owned electricity supplier (Eskom) and global economic volatility suggest that real GDP may slow in 2008. The eyes of the world will soon be on South Africa as it hosts the 2010 FIFA World Cup.

Mexican Peso (MXN)

Banco de México’s overnight rate stands at 7.5% for the Peso. Mexico has a free market economy with a Gross Domestic Product surpassing a trillion dollars measured in purchasing power parity. The world’s 13th largest economy, Mexico is an export oriented, and the biggest exporter and importer in Latin America. Oil is the largest source of foreign income. As a result of economic stability and the growth in foreign investment, the Mexican peso is now among the 15 most traded currencies in the world, and is the most traded currency in Latin America. Since the late 1990s the peso has remained stable trading at about $9 to $10 to the U.S. dollar.

While the Federal Reserve is expected to continue lowering interest rates to stimulate the U.S. economy, Mexico's central bank is expected to keeping rates unchanged creating a widening spread between the interest rates (as of this writing).

Conclusion

The daily interest payouts and massive leverage available make the carry trade a fascinating, if high risk opportunity for investors, and a compliment to purely directional trading strategies. Exotic currencies offer further diversification to a traditional basket of carry trade currencies. However, rising inflation, volatile currency markets and uncertainty resulting from the sub prime credit crisis has let to a dangerous level of instability in the markets. The international credit crisis has dampened investors' enthusiasm for riskier emerging markets. The return of an increased risk appetite among investors and diminished market volatility will set the stage for a steadier carry trade environment.

Carry Trade, Definition

The carry trade strategy is based on buying a high interest yielding currency and selling a low yielding currency. This allows the trader to earn the difference in the interest rates between the two currencies, referred to as the interest rate differential.

The differences between interest rates of countries is what creates this opportunity. Countries who are experiencing economic growth will offer higher rates of interest. However, with the high

Asian Currency Crisis

A financial crisis that started in July 1997 in Thailand, and affected currencies, stock markets, and other asset prices of several Asian countries, many part of the East Asian Tigers. The Thailand Baht was devalued by as much as 48%, dropping to close to a 100% fall by New Year of 1998. The Indonesian Rupiah was the hardest hit, falling 228% from its previous high of 12.950 to the fixed US Dollar. The Japanese Yen fell about 23% from its high to its low against the US Dollar in 1997 and 1998.

Plaza Accord

Methods of regulating the foreign exchange market - such as fixing currency values to a commodity such as gold, or setting maximum exchange rate fluctuations had proven to too rigid. After the regulatory mechanisms- such as the gold standard, the Bretton Woods Accord and the Smithsonian Agreement - were no longer in place, the currency market was left with only the forces of supply and demand to guide it. Economic events such as OPEC oil crises, stagflation during the 1970's and severe changes in the US Federal Reserve's fiscal policy gave rise to a need for regulation.

These conditions led to the Plaza Accord, where on September 22nd 1985, finance ministers and central bank governors from the then G-5 nations- the United States, Japan, West Germany, France and the UK- gathered at the Plaza hotel in New York.

In 1985 inflation was low and growth was rapid. Low inflation allowed for low interest rates- however there was a threat of protectionist tarrifs entering the economy. The US was experiencing a large and growing trade deficit, caused in part by the rising dollar. Japan and Germany were facing large and growing surpluses. This imbalance threatened to upset the foreign exchange market. The 80% appreciation in value of the US dollar against the currencies of its major trading partners was seen as the source of the problems. A US dollar with a lower valuation would help stabilize the global economy- creating a balance between the exporting and importing capabilities of all countries. Devaluing the dollar made US exports cheaper for its trading partners, which caused other countries to buy more American-made goods and services.

The US persuaded the leaders to coordinate a multilateral intervention, designed to allow for a controlled decline of the dollar and the appreciation of the main antidollar currencies. Each country agreed to make changes in it's economic policies and to intervene in currency markets as necessary to bring down the value of the dollar.

The US agreed to cut the federal deficit and to lower interest rates. Japan promised a looser monetary policy and financial-sector reforms, and Germany agreed to institute tax cuts. France, the UK, Germany and Japan agreed to raise interest rates.

Not every country fulfilled their agreements however. The US did not follow through on it's promise to cut the budget deficit - Japan was badly affected by the dramatic rise in the Yen- it's exporters unable to remain competitive overseas.

The impact of the intervention was immediate and within two years the dollar had fallen 46% to the deutsche mark (DEM) and 50% to the Yen (JPY). By the end of 1987, the dollar had fallen by 54% against both the D-mark and the yen from its peak in February 1985.The US Economy became geared more toward exports, while Germany and Japan increased their imports. This helped resolve the current account deficits and helped to minimize protectionist policies.

Currency speculation caused the dollar to continue its fall after the end of coordinated interventions. The Louvre Accord was signed in 1987 to halt the continued decline of the US Dollar and stabilize the currency. The United States pledged to tighten Fiscal Policy, Japan agreed to loosen monetary policy. The participants agreed to intervene if major currencies moved outside a set of ranges. The dollar rose shortly after the accord was signed.

Floating Exchange Rates, Definition

The Bretton Woods system of currency exchange rate management remained in place until the early 1970's. However, the system came undone as a result of increasing structural imbalances between nations. The U.S. dollar could no longer hold the value of the pegged rate of USD 35/ounce of gold as set out in the Bretton Woods Accord.

See also: Smithsonian Agreement

Smithsonian Agreement

A revision to the Bretton Woods Accord, signed at the Smithsonian Institution in Washington, D.C., in December 1971. This agreement aimed to maintain fixed exchange rates, but without using gold, and to allow greater fluctuation between currencies. While Bretton Woods allowed the dollar to float in a range of 1 percent, the Smithsonian Agreement proposed a range of 2.25 percent. The system set out by the Smithsonian Agreement did not work - the foreign exchange markets were forced to close in 1972, and when they reopened in 1973 they were no longer bound by the Smithsonian Agreement.

Bretton Woods Accord

The Bretton Woods Accord was established in 1944, towards the end of World War II. The United Nations Monetary Fund convened in Bretton Woods, New Hampshire, with representatives from the United States, Great Britain and France. The Bretton Woods Accord established the policy of pegging currencies against the U.S. dollar in order to stabilise the global economy. It set fixed exchange rates for major currencies and subsequently established the International Monetary Fund (IMF).

Up until WWII, the British Pound was the the dominant world currency by which most currencies were compared. However, during World War II the Nazis undertook a major counterfeiting effort against the British Pound, and thus damaged it's standing. In contrast, WWII transformed the U.S. dollar from a failed currency after the stock market crash of 1929 to benchmark currency by which most other international currencies were compared. The U.S. economy was thriving, and the United States emerged as a world economic power. The first element of the Bretton Woods Accord was to peg the U.S. dollar to the price of gold at $35.00 an ounce, using the Gold Standard. With this benchmark anchoring the U.S. dollar, other major currencies were pegged to it and allowed to fluctuate no more than 1% on either side of the set standard. When a currency's exchange rate would approach the limit on either side of this standard the respective nation's central bank would intervene to bring the exchange rate back into the accepted range. The Bretton Woods Accord governed currency relationships until the early 1970's when a floating exchange rate system was adopted.

Related Websites:

International Monetary Fund (IMF) The IMF is an organization of 184 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.

SEC, Definition

The Federal regulatory agency established in 1934 to administer Federal securities laws. Banks and investors had lost great sums of money in the crash of 1929, and the depression that followed caused people to loose confidence in the markets. To restore investor confidence, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. The Securities and Exchange Commission was created to protect investors and regulate the securities markets.

Gold Standard, Definition

The gold standard is a monetary system in which a country's currency unit is freely convertible into a fixed weight of gold. The Gold Standard was used between 1870 and 1914 - currencies were fixed at a set exchange rate to ounces of gold. Countries that shared this fixed unit of account in principle shared a fixed currency relationship. The Gold Standard was dropped at the beginning of World War I and is no longer used in any nation.

Federal Reserve

The Federal Reserve is the central bank of the United States. It was created by the US Congress in 1913 with the Federal Reserve Act. Alan Greenspan was previously Chairman of the Board of Governors of the Federal Reserve, and in October 2005 President Bush nominated Ben Bernanke to be his successor.

The Federal Reserve serves to study and implement monetary policy. The Fed is made up of a central government agency in Washington D.C. - known as the Board of Governors - and twelve regional offices in major cities throughout the country.

The principle duties of the Federal Reserve are:

*Oversee and regulate the banking system - protecting the credit rights of the public.

*Carry out monetary policy

*Maintain the stability of the financial system.

The Federal Reserve System also includes the Federal Open Market Committee or FOMCopen market operations. who are responsibe for overseeing

Central Bank Intervention

Central Bank Intervention occurs when governments attempt to manipulate the value of their national currencies - they either flood the market to lower prices or buy up currency in order to inflate prices. A central bank may intervene if it's currency is weakening, in order to control inflation or to stabilize the currency in times of high volatility.

Interbank Market, Definition

There is no physical or centralized exchange in the forex market as seen in the stocks and futures markets. Multiple market makers are used (unlike the specialist system used by the NYSE). The forex market operates in a similar way to Nasdaq - and is also referred to as an over-the-counter (OTC) market. The backbone of the forex market consists of a global network of dealers - largely the major commercial banks of the world, who communicate through networks and by telephone.

The Interbank Market trades the greatest volume in the forex market. The Interbank Market describes the marketplace that exists between the largest banks, who trade with eachother directly, via interbank brokers or through electronic brokering systems such as Electronic Brokering Services (EBS) or Reuters Dealing 3000 Spot Matching. The rates can be seen by all banks - however each bank must have an established credit relationship with another in order to trade the rates being offered. Other participants in the forex market - such as online forex market makers - must trade through commercial banks.

The internet and online trading has allowed the retail trader more efficient and lower cost access to the forex market - through online fx market makers.

Advantageous Features of the Forex Market

Fees associated with Forex Trading: Due to the fact that the forex market is decentralized - there are no exchange or clearing fees involved. There are no government fees or brokerage commissions. Forex brokers make their money through the spread - so when evaluating a broker, you should consider how tight a spread they offer.

No fixed lot size: Unlike other markets, the flexibility of lot size allows participation in forex trading with a very small account size (sometimes as low as $300).

High Volume and Liquidity: The electronic marketplace offers alomost instantansous transactions and the volume traded is greater than all the stocks and futures markets combined - over $1.9 trillion.

Around the clock access: Unlike the stock market, the forex trader is able to get in or out of a position at any time, day or night.

Highest leverage available in any market: Most online brokers offer 100 to 200 times leverage.

No Uptick Rule: Unlike the stock market, where traders cannot short a stock in a downtrend without an uptick - a forex trader can short a currency pair whenever they want.

Insider Trading: Due to the sheer size of the forex market, insider trading and other manipulations (such as an attempt to corner a market) are far harder to achieve than in other arenas.

Bull/Bear Market: In the stock market, the majority of investors are long and suffer in a bear market. However, in the forex market, due to the fact that if you are long one currency, you must be short another - there is an equal opportunity for profit whether a market is rising or falling.

Forex Market Participants

The main participants in the forex market are central banks, commercial and investment banks, hedge funds, pension funds, corporations and private speculators. An estimated 95% of the daily trading volume in the is done by speculators and investors - ranging from the individual trader to the leading banks of the world.

The remaining 5% is traded by companies and governments who need to convert profits made in the course of doing business into their domestic currency.

The advent of online trading has made the forex market more accessible than ever before - opening up the opportunity to individual speculators in a less expensive and more efficient manner.

Currencies Traded in Foreign Exchange

Virtually any currency can be traded through a broker - providing it is backed by an existing nation. Currencies are defined by three letter symbols, where the first two letters stand for the name of the country and the third stands for the name of the currency. The major currencies are: the US Dollar (USD), the Euro Dollar (EUR), the Japanese Yen (JPY), the British Pound Sterling (GBP), the Swiss Franc (CHF), the Canadian Dollar (CAD) and the Australian Dollar (AUD). All other currencies are known as minors - for example the Thai Baht.

Forex Rollovers

Forex Rollovers

Rollover describes the process where the settlement of an open trade is rolled forward to another value date. In the Forex Market trades must be settled within two business days. However, open positions can be swapped forward to the next settlement date. Normally, open positions are automatically rolled forward. The interest rate for such a swap is predetermined - and swaps are themselves instruments that can be traded.

Rollover in the Forex Market simply reflects the cost of carry - the interest rate differential of the two currencies.

Introduction to Forex Trading

The 1971 abandonment of the Bretton Woods Accord and the subsequent unwinding of the system of fixed exchange rates gave rise to the foreign exchange market as we know it today.

Forex refers to the foreign exchange market, where brokerage firms and banks are connected over an electronic network that allows them to convert the currencies of countries around the globe.

The forex market is the largest and most liquid financial market in the world. The daily dollar volume of currencies traded in the currency market exceeds $1.9 trillion, many times larger than the combined volume of all U.S. equities and futures markets.

While forex trading used to be executed exclusively between government central banks and commercial and investment banks, trading forex has become increasingly accessible to private investors thanks to the PC and internet.

The most commonly traded currencies are the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. The FX market runs 24-hour hours a day, 5 days a week with continuous access to global dealers. Trading is not centralized on a physical location or an exchange, as with the stock and futures markets.

Foreign Exchange is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

For example, you would execute a trade when you expect the currency you are buying to increase relative to the one you are selling. If the currency you are buying increases in value, you must sell the other currency to close the position and take a profit. The first currency in the pair is called the base currency and the second is called the counter or quote currency. Usually the US currency is the base currency and quotes are given in $1 USD per counter currency, e.g. USD/JPY. The exceptions are the British Pound, the Euro and the Australian Dollar.

Understanding forex quotes: 1 unit of the base curreny = the exchange rate in the quote currency. Eg if EUR/USD is trading at 1.2762, 1 Euro will buy you 1.2762 Dollars.

Understanding contract size in forex trading: The contract size is normally a lot of 100,000. This means per standard contract you are controling 100,000 units of the base currency. For this contract size, each pip (the smallest price increment) is worth $10. Many firms offer mini accounts now where you can trade units of 10,000, where the pip value is $1.

Trading the Forex market allows very low margin requirements relative to other markets.

In my Forex Trading Journal I explain and test strategies.
TradersLog

How Forex Works

How does the off-exchange currency market work?

The off-exchange forex market is a large, growing and liquid financial market that operates 24 hours a day. It is not a market in the traditional sense because there is no central trading location or “exchange.” Most of the trading is conducted by telephone orthrough electronic trading networks. The primary market for currencies is the “interbank market” where banks, insurance companies, large corporations and other large financial institutions manage the risks associated with fluctuations in currency rates. The true interbank market is only available to institutions that trade in large quantities and have a very high net worth. In recent years, a secondary OTC market has developed that permits retail investors to participate in forex transactions. While this secondary market does not provide the same prices as the interbank market, it does have many of the same characteristics.

How are foreign currencies quoted and priced?

Currencies are designated by three letter symbols. The standard symbols for some of the most commonly traded currencies are EUR Euros, USD United States dollar, CAD Canadian dollar, GBP British pound, JPY Japanese yen, AUD Australian dollar, and CHF Swiss franc. Forex transactions are quoted in pairs because you are buying one currency while selling another. The first currency is the base currency and the second currency is the quote currency. The price, or rate, that is quoted is the amount of the second currency required to purchase one unit of the first currency. For example, if EUR/USD has an ask price of 1.2178, you can buy one Euro for 1.2178 US dollars. Currency pairs are often quoted as bid-ask spreads. The first part of the quote is the amount of the quote currency you will receivein exchange for one unit of the base currency (the bid price) andthe second part of the quote is the amount of the quote currency you must spend for one unit of the base currency (the ask or offer price). In other words, a EUR/USD spread of 1.2170/1.2178 means that you can sell one Euro for $1.2170 and buy one Euro for $1.2178. A dealer may not quote the full exchange rate for both sides of the spread. For example, the EUR/USD spread discussed above could be quoted as 1.2170/78. The customer should understand that the first three numbers are the same for both sides of the spread.

What transaction costs will I pay?

Although dealers who are regulated by NFA must disclose their charges to retail customers, there are no rules about how a dealer charges a customer for the services the dealer provides or that limit how much the dealer can charge. Before opening an account, you should check with several dealers and compare their charges as well as their services. If you were solicited by or place your trades through someone other than the dealer, or if your account is managed by someone, you may be charged a separate amount for thethird party’s services. Some firms charge a per trade commission, while other firms charge a mark-up by widening the spread between the bid and ask prices they give their customers. In the earlier example, assume that the dealer can get a EUR/USD spread of 1.2173/75 from a bank. If the dealer widens the spread to 1.2170/78 for its customers, the dealer has marked up the spread by .0003 on each side. Some firms may charge both a commission and a mark-up. Firms may also charge a different mark-up for buying the base currency than for selling it. You should read your agreement with the dealer carefully and be sure you understand how the firm will charge you for your trades.
TradersLog

Careers at FOREX

Careers at FOREX.com - Come Work With A Leader In The Exciting Global Foreign Exchange Industry!

For nearly ten years, FOREX.com has helped define the global online foreign exchange industry. As a market leader, FOREX.com continues to attract highly motivated people who seek career opportunities with unlimited potential to grow along with their firm.

FOREX.com is one of the world's largest and most respected online forex trading firms. From being the first firm to introduce innovative online trading practices -- such as instantaneous execution from streaming quotes -- to our commitment to fair and honest dealing practices and our cutting-edge proprietary trading technology, FOREX.com remains at the forefront of the exciting and vibrant global foreign exchange industry.

We continually recruit talented individuals across all skill sets and experience levels for roles in our Bedminster, New Jersey headquarters (conveniently located 30 minutes due west of New York City at the junction of I-287 and I-78), as well as for our Wall Street sales and customer service office in Lower Manhattan.

Posted to the right is a list of current career opportunities. Only those candidates with relevant experience for each job description will be considered. Also, if you have any experience in the foreign exchange industry but do not see a relevant job opening, we would encourage you to submit your resume for future consideration.

GAIN Capital Group, LLC, and FOREX.com are registered with the National Futures Association (NFA) as a Futures Commission Merchant (NFA ID #0339826). FOREX.com, a division of GAIN Capital Group, is an equal opportunity employer.

Why work at FOREX.com?

Stellar growth, reputation and recognition, with a global footprint in an exciting industry

Since FOREX.com was founded in 1999, the firm has experienced tremendous growth, helping pace the emerging online foreign exchange (forex) industry:FOREX.com's international customer base represents traders from over 140 countries. The firm's average monthly trade volume exceeds $200 billion with its customers and trading partners.*


The company grew over 70% for the fiscal year ending December 31, 2007, marking the sixth consecutive year that the company has reported top line growth in excess of 65%.


FOREX.com is a division of privately-held GAIN Capital. GAIN Capital has a very strong balance sheet with over $225 million in assets and membership equity.


GAIN's investor group includes several prestigious venture capital firms that collectively manage over $28 billion in assets. GAIN's investor group includes 3i, VantagePoint Venture Partners, Tudor Ventures, Cross Atlantic Capital Partners, Edison Venture Fund, and Blue Rock Capital.


Industry-recognition: For the last four consecutive years (2005-2008), GAIN Capital was named to the prestigious Inc. 500 list as one of the fastest-growing private companies in the United States. GAIN Capital was also ranked #41 in the Financial Services sector on the Inc. 5000 list in 2007.


The firm was ranked as the #1 Fastest Growing Company in New Jersey on the 2005 Deloitte Technology Fast 50 list, and has been on the Technology Fast 50 list for the past four consecutive years (2007-2004).


GAIN was also voted 2003 "Growth Company of the Year" by the New Jersey Technology Council and "Start Up Company of the Year" in 2002 by the Eastern Technology Council.


Our proprietary trading platform continues to receive industry accolades and awards. In recent years, GAIN Capital Group was the first non-bank institution to be named #1 Currency Forecaster by FX Week magazine. In addition, FOREX.com's ForexTrader platform was selected as the 2008 Best Retail Platform by the readers of Profit & Loss magazine. FOREX.com was also a 2008 Finalist for Best Forex Brokerage, as chosen by the readers of Technical Analysis of Stocks and Commodities, and was also a 2006 finalist for the Best Retail Platform for FXWeek's e-FX Awards, who stated that "...GAIN has done [the] most to deliver the best, most rounded offering to consumers".
Excellent compensation and benefits with attention to work-life balance

Beyond helping our employees grow personally and professionally, we believe in pay for performance, and provide our employees with many opportunities to succeed financially. In addition to competitive compensation packages, 401(k) plan and full benefits with modest or no employee contributions, we also offer an employee Restricted Stock Unit Plan that allows all employees to share in the success of the firm.

A talented and diverse workforce who work hard, play hard and have fun

FOREX.com's office culture is best described as casual and collaborative, yet dynamic and professional. The firm is growing rapidly, especially in the areas of client services and sales, and a significant percentage of our employees are under the age of 30.
FOREX.com's CEO and executive team are highly respected Wall Street veterans who not only share their experiences and market expertise, but also take the time to coach and mentor our developing talent. And, we encourage open door and two-way communications. All employees are empowered to offer observations and suggestions on how the company can not only perform better as a team, but also how we can provide an even higher level of customer service.

We also take the time to chill out and have a good time! The firm organizes frequent social events such as quarterly theme outings, Friday bagel breakfasts, an off-site holiday gathering and more. And, free dinner is served every evening for sales, trading desks, client services and support teams.

Commitment to being good corporate citizens

GAIN Capital and FOREX.com are making a concerted effort to foster an environmentally and socially responsible work environment. From our "Green Committee" of employees who help identify ways to help us help the environment, to our annual participation in "Take Our Sons & Daughters to Work Day," we never overlook that our own greatest natural resource is our employees themselves.

A fast-paced entrepreneurial culture focused on customer service

At FOREX.com, providing the highest level of customer service is our credo, and it's why and how we continue to build our business. We are committed to providing our clients with the best online trading experience, backed by the best technology and outstanding customer service. As a modest but growing company, every position at FOREX.com is critical to our operations, and employees at all levels participate in directly servicing our clients. We work hard every day to exceed our customers' expectations. And, in this age of Internet hyperconnectivity, company reputations are constantly being put to the test -- as they should be. So we strive for responsive, open and honest customer service with our clients. It's Job #1.

Unlimited growth potential with attention to your career development
Diverse "hands-on" job experience
Opportunity to rotate to new positions and departments based on skill set and achievements
Chance to contribute personal impact on the business
Direct interaction with clients and senior management
Unlimited advancement potential
From Day One, FOREX.com employees gain a wide range of experience within the firm, and our flexible approach to development enables our employees to explore a variety of career paths. This attention to professional development is especially attractive for newer entrants to the workforce who may still be discovering their own talents and interests.

New FOREX.com employees are enrolled in an intensive two-week training program, which introduces them to the world of foreign exchange, online trading, and brokerage operations. And, as part of our commitment to our employees, we provide the resources needed to develop your analytical, relationship-building, management and leadership skills. Our employees are exposed to the challenges and responsibilities of a rapidly-growing firm, and your on-the-job experiences at FOREX.com can help you gain valuable insights on what it takes to build a growing organization through its crucial, defining moments.