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What is Negative Interest Rate Policy?:

A negative interest rate policy is an unconventional monetary policy tool employed by Central Banks where the nominal interest rate is below zero hence the term negative. It is unconventional because instead of the depositors earning money for their deposits in Banks, the depositors are charged for their deposits in the banks. Negative interest rate do not directly impact small investors but can indirectly have effect from the spillover of banks having deposits at other big banks/central banks.
Why Negative Interest Rate Policy?

The policy of negative interest rate is employed when the central bank observes in its economy of the following :
  1. Low or no growth
  2. Deflation
  3. Hoard of money by people and business
Central Bank’s policy aim is to make people and businesses to spend and invest money instead of keeping money at the bank and to stop prices from falling, increase real production and output, and decrease of unemployment. Such loose and expansionary monetary policy is employed usually to deal with such stagnation in the economy.
When a Central Bank has set a negative interest rate, it means depositor will be charged for keeping their mone…
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zarina avatar
zarina 27 Feb.

You are waiting for the fall of the Euro ?

Nihad avatar
Nihad 27 Feb.

Good luck buddy

wisdom_consultant avatar

nice article

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Trading Fundamentals & Price Action Part 1 When I started trading in Forex, almost three years ago, I started like the most of people, technically. With a lot of indicators and colors on the screen. After two years I realized that profitable trading in Forex can be accomplished in different ways and methods.
Some traders use only technical analysis, other fundamental and another a combination of both. And I became one of those who use the combination of both.
Why? Would you ask. Because when I was trading only technically I always had a feeling that something in my trading was missing, the market was still not clear for me. There were things happening in the market that were caused by something else than price action. It were The Fundamentals.
So I started to learn about fundamentals and begun to understand that on the big picture, we do not trade the price. We trade the economies, and their fundamentals. And they move the markets in large. But what is fundamental analysis in Forex anyway?
I think that it can be described as the study of underlying factors that drives the price of a currency, like strength of economy, its growth, political situation, actions of the central banks to…
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Mariia avatar
Mariia 22 Jan.

Well done!!Good luck!!!

aa3381 avatar
aa3381 24 Jan.

Thank you. You too.

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2014 is lining up to be a very interesting year, and this article is broadly summing my thoughts from the webinars that I've conducted on this idea.
So starting off - 2013 - volatility has been very low, and the EURUSD has had its smallest range since its introduction. With it performing the best on a YTD basis (up 4.11% when writing), with AUD and JPY being the weakest down 13.7% and 16.1% respectively.
2014 - Fed heads to the exit. The USD has failed to gain top spot for 2013 after being no.1 in June, and since this we've been going through a slow upswing, but there are a few factors that show real USD potential
1. The US economy is leading the Global Recovery with forecasts approaching 2.9% growth and a reasonably strong housing market, the US economy has great potential and we need to remember that the unemployment rate has recently dropped to 7% with payrolls being >200k.
2. There is unlikely to be another Fiscal crisis as in the last couple of days congress has finally sorted their problems out and fixed any funding problems that were likely to be a headwind in 2014. Bear in mind, Fiscal constraints is the reason why we didn't taper in Sept and now that it …
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xau avatar
xau 16 Dec.

Very informative, thanks Adrian!

mimuspolyglottos avatar

After reading, no need to go to FT, DJN or to Bloom. The highest grade. We will see how euro will behave after AQR which is supportive factor now. Thank You very much.

Daytrader21 avatar

Definitely 2014 will bring many trading opportunities, and I'm expecting volatility to raise and as you pointed out it seems that Fed will be the first central bank to move away from his easing cycle and this will have massive consequence on the back of the dollar. Can we see the start of the multi year dollar rally? that's the question from my own point of view.

scramble avatar
scramble 24 Dec.

I do really expect the ecb to introduce something weakening the euro. And the fed started tapering already. The process has already started. Now "we" only have to wait and see first results of these early actions in the first part of 2014! Nice article, well exposed with good explanations!

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I felt the need to cover this subject as well before the year end, because in my humble opinion it will be the dominant market driven theme of 2014, and if you're an investor or an active trader you want to make sure you understand the market implications of such a big event, because it will dictate the market tone for the next year. Even if you're only a technical analyst trader there is no way you haven't heard at least one time about "Taper", so have you ever asked yourself what does it mean and how it will affect your trading operations? The sole purpose of this article will be to answer precisely to that question.
The word tapering in financial terms is increasingly being used to refer to the anticipated reduction of the Federal Reserve's quantitative easing(QE), or bond buying program. The current Federal Reserve quantitative easing (QE3) accounts for purchases amounting to $85 billion in Treasuries and Mortgage Backed Securities (MBS) per month, with the main scope lower interest rates and therefore bolster growth.
  • What is Quantitative Easing?
Since the global financial crisis of 2007–2008 the FED has begin using new type of market policy like Quantitative Easing to try to
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Daytrader21 avatar

Update: For the December meeting the market expectation for a taper where considerable low, however FED is shocking the market again with a taper decision. If you try to make a reasoning of WHY now tapering? my take is that this was last appearance for Bernanke and his last change to make a good impression in front of the public, and it was also a good strategy for the Fed because if something would have gone terribly wrong, Yellen the New Chairman could have promise that she will do changes and fix the problem, and this would certainly send confidence signals to market participants (2)

Daytrader21 avatar

Update: As expected market reaction was in both direction and we saw a big whipsaw as volatility was very high during the news release and also during the Q&A session. Although Fed decided to do a small tapering and only cutting back their stimulus programs by a minor 10B, Ben Bernanke has said during the press conference that any further cut in QE is data depending and "end of QE certainly won't be at mid-year" suggesting that it will take longer before they will end the QE programme for good. And this can easily extend through the whole 2014 year and beyond, but that remains to be seen.(3)

Metal_Mind avatar
Metal_Mind 19 Dec.

Thanks bro.....I owe my 210 pips on gbp /jpy..hope to get 2000 pips until i closed it ... to your article. I sow the third picture of what was the reaction of no tapering on euro usd,,,,whatch it on gbp usd and correlated with gbpjpy because beiing a cross is more volatile and i kinda anticipated this move. Thanks again.

FXdream avatar
FXdream 20 Dec.


ilonalt avatar
ilonalt 26 Dec.

well done!

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