Financial Markets Explained

Learn about the economy and the markets in general as we present a comprehensive explanation of the most commonly used jargon.

iShares ETF – An Introduction to iShares

Financial Markets Explained
iShares ETF  is a combination of an index fund and a share. iShares ETFs are traded on the local stock exchange the same way as any publich company shares. iShares ETFs can be easily bought and sold through any brokerage account such as AvaFx. Trading iShares ETF are done during normal trading hours and uses the same transaction types associated with stocks such as market or limit orders, short sales, or even margin buying. iShares ETF are not shares of a company but are units of a fund holding a portfolio that closely tracks the performance for a chosen market index. In terms of market exposure, iShares ETFs work similar to a mutual fund and tracks specific market indexes as such iShares ETF investors own a pool of securities. So when you invest in a fund such as MSCI Emerging Marke
Carry Trade Strategy Explained

Carry Trade Strategy Explained

Financial Markets Explained
Carry trade strategy is an interest rate arbitrage strategy which aims to take advantage of interest rate differentials between two economies of currencies. With a carry trade strategy, investors borrow or exchange a low interest bearing currency for a higher interest bearing currency to either profit from the difference in interest rates or to fund their investments at a lower cost. Carry trade strategy is employed by large institutional investors who borrow a higher interest rate currency by selling a lower interest rate currency to profit from the interest rate differential. The funds can then be used to invest either in equities or bonds, or to simply park the money and earn a higher interest rate. Readers should note that carry trade strategy are not as popular as they were a ye

ETF Trading – Diversify your forex portfolio

Financial Markets Explained
ETF Trading is one of the most popular alternatives to the conventional forex trading. ETF stands for exchange traded funds. ETF Trading makes for an exciting and fast growing segment of the financial investment industry and makes for a formidable replacement to mutual funds as a preferred choice for fund managers. ETF Trading has been available since the late 80's as they are growing at a tremendous rate as more and more financial investors are starting to be aware of the profit potential from trading ETF's. At the outset, an ETF Trading fund comprises of a group of stocks, bonds or other investment vehicles similar to that of a mutual fund. But there in ends the similarity. Unlike mutual funds, ETF's trade the same way as stocks do, thus allowing an investor to buy and sell during the...

Dodd-Frank act and July 15th Deadline

Financial Markets Explained
July 15th 2011 is a big day for forex brokers as well as binary options brokers across the world. Exactly one year ago, on July 15th 2010, the Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). On July 21, 2010, President Obama signed into law the “Dodd-Frank Wall Street Reform Act” (the “Dodd-Frank Act” or “Act”). The Dodd-Frank Act most likely will bring about sweeping regulatory changes within the financial services industry. However, at over 2,300 pages in length, few people have read this legislation in its entirety. Of those individuals who have read the Act, few can comprehend the implications of such sweeping reform. This act/regulation will significantly change the structure of US based over-the-counter derivaties markets. The reg

What are credit rating companies and their impact on the economy

Financial Markets Explained
At the outset, credit rating estimates the credit worthiness of either an individual, corporation, or even a country. The credit rating is usually a company, referred to as a credit rating agency which assigns the credit ratings for the issuers, which is a legal entity that develops, registers and sells securities for the purpose of financing its operations. This legal entity, as mentioned earlier can be an individual, corporation or a country which issues debt securities such as bonds in order to raise money. 1916: First credit ratings on corporate bonds and sovereign debt Credit rating plays an important role as it estimates if the subject (individual, corporation or a country) has the potential to pay back the loan. This can be a critical factor especially from a lender or investor