Will the Swiss go for Gold?

Switzerland goes to the polls this weekend to decide whether or not the Swiss National Bank (SNB) should be prohibited from further gold sales, to ensure that all Swiss-owned gold is repatriated to Switzerland, and to mandate that gold makes up at least 20 percent of the SNB’s assets.

This is a time of huge interest to traders… and the mainstream media discussion has proven to pique the interest of even the novice market watcher to analyse what will happen to the price of gold as the result is announced.

The Academy of Financial Trading has noticed a huge increase in the interest being exhibited to the gold market as a result of this pending vote.  As an online trading academy, the company has a wide and diverse student base – but the interest in trading transcends all demographics. 

It is fair to say that this decision will impact the market from a fundamental perspective. Co-incidentally however, it is also a time where technical price action must be appreciated.  As an educational entity who specialises in short term trading techniques, we believe that the technical side will win out.

The gold market appears to be building a base around the supportive area of $1,140 - $1,180.  If this supportive zone proves to be impenetrable, then the market should rally from here in the relative short term.  A break below this level might however see quite a rapid fall towards $1,100 at least. 

It goes without saying that a “Yes” vote would be incredibly supportive for gold.  It would force the SNB to purchase 70% of total global production over the next 3 years to fulfil the wishes of the electorate.  Fundamentally positive for the price of gold?  Yes!

Currency: Vital to Financial Trading

If you ever want to even have a hope of being successful at financial trading, you need to know why currency is so pivotal to market activity. So that’s why this week at the Academy of Financial Trading we’d explain just why currency is so vital to financial trading.

Currency is the system by which we receive goods and services. Essentially, the currency system has been around since the earliest days of civilisation and it works through one party giving money in exchange for a good or service. It’s the modern form of trading.

This is why money is so essential to modern life. That saying that ‘money makes the world go round,’ really is true. Every transaction on the planet involves exchanging money for a good or service. Without money you wouldn’t be able to live in the modern world.

So naturally it’s pivotal to market activity. This is because shares and stocks are given a monetary value and whether you make money or not depends on whether that share/stock rises or falls in monetary value.

Currency values play a huge part in this, and you need to know about it. Currency values concern how much a particular currency is worth in comparison to other world currencies. This is best explained by when you go on holiday to a foreign country. You exchange a certain amount of money for that country’s currency and the amount in that currency you receive back is calculated by how much it is worth in relation to the one you are trading.

Take the UK and the US for example. At the time of writing, the exchange rate is £1 GBP equals $1.65 USD. This means that if you exchanged £100 for USD, you would receive $165 in USD. Obviously, this means that the stronger a currency is the more power you have on the financial market, as you get more money back when you trade it for a weaker currency.

This is why currency and exchange rates in particular have so much value in financial trading. It’s possible to use them to make money and to maximise your options. If you’re trading in pounds but in the US market, the strong value of the pound in relation to the dollar gives you a certain amount of strength when trading.

At the Academy of Financial Trading we recognise that in order to be successful in financial trading you have to know the basics.  If you don’t how can you ever hope to grasp the more complicated aspects of financial trading and how can you ever hope to make a profit?

A Starting Point: Commodities

When you are trading in financial markets, there are certain terms you need to know in order to be successful. One of these is ‘commodity.’ So this week, the Academy of Financial Trading turns its attention to commodities; what are they, why do you need to know about them?

Every business, sector, industry etc. comes with its own terminology; its own words that hold meaning specifically in that area. A basic step to learning about financial trading is to learn to speak their language, so that you can understand that they are saying and how you can turn it to your advantage.

You will hear the word ‘commodity’ bandied around by traders, industry experts and financial news columnists as though it’s part of everyday speech,  so if you are ever going to get to grips with the finer points of financial  trading, this is a good  place to start.

A commodity is a marketable item that is produced to satisfy wants and needs. Essentially this means that they are physical goods that meet a demand; this is why they hold value.

You get many different classes of commodity but the one you’re most likely to encounter is a goods commodity. These are the physical goods that hold value through their use in the real world. Goods commodities can range from oil to tea to wheat to sugar; it’s a very varied category.

Typically they are bought and sold on commodity exchanges – so this is where you will most likely encounter the term – on a three month contract basis. The values these commodities fetch have a very significant effect on real world prices. For example, the value of wheat affects the price of a loaf of bread or packet of pasta in your local supermarket.

All You Need to Know About the G8

With the crisis in the Ukraine prompting talk of Russia being ejected from the G8, the organisation is at the forefront of financial headlines all over the world. At the Academy of Financial Trading we reckon that you need to know about the G8. So what is it and why do you need to know about it for financial trading?

The G8 is an international group consisting of the representatives from the eight most developed nations in the world. These nations are Canada, France, the US, the UK, Italy, Japan, Germany and Russia. The European Union (EU) also holds representation within the G8, but it cannot host or chair summits.

The Group, which literally stands for ‘Group of 8,’ acts as a forum for the discussion of a variety of topics for ministers from the eight most developed nations on the planet. This is why ministers of varying portfolios from the G8 hold meetings on their specific interest each year; G8 foreign ministers, G8 environment ministers etc.

Since economics plays a crucial role in the maintenance of global stability, it should be no surprise to you that one of these yearly meetings is the meeting of the G8 finance ministers. Considering that this is a meeting of the eight largest industrial nations in the world, to discuss financial issues, you need to know about it if you hope to be effective in financial trading.

Collectively the G8 nations held 50.1% of global GDP in 202. This means that together they are responsible for half the world’s wealth. Any meeting between them would theoretically affect half of the world’s wealth.

This is because the annual summit isn't just a discussion of ideas, it’s an active meeting where serious financial issues are

Global Events Effecting Gold Prices?

At the Academy of Financial Trading Blog we’ve talked before about the value of real assets, however there’s never been a better time to illustrate the point than now. So why is the situation in the Ukraine pushing up gold values, and what does this mean for online trading?

Real assets, as we’ve previously explained, are literally real. Unlike financial assets, which are things like shares and stocks, when you invest in real assets you are investing in tangible things; in the product/resource itself.

Naturally this means that the value of real assets in the online trading game is very different to the one held by financial assets. You trade in financial assets when you’re playing the short term game; you invest in real assets in the long term. This is because real assets tend to be valuable in times of market turmoil.

This makes sense, as when the market is turmoil (made so by bubble’s bursting, current affairs casting doubt on supply etc.); shares that physically have no value go down in price. Consequently when you can’t be sure of the value of a share, you place more value in something physical just because it always has value; you can always use it no matter what is going on in markets.

Gold is the perfect example of the real asset; it always has been. Gold, because of its value as a precious metal that has been recognised as valuable since ancient times, has always acted as a real asset in times of market instability. This is because people always find value in gold, even when currency is inflating. It’s why nations around the world have gold reserves, to enable international trade in times when their currencies don’t hold much value.

Now we turn our attention to the current situation. The Ukraine’s Crimea region has been invaded
by Russia and the region has been deemed unstable. Furthermore at the time of writing gold prices
currently stand at $1,350.04 per ounce, only slightly down from a four month high of $1,354.80 on

Monday. See the connection yet?
The instability in the Ukraine has made people doubt oil availability; a large part of Europe’s oil comes from Russia via the Ukraine. Also threats of economic sanctions on Russia have made people doubt market stability. Therefore gold prices have risen because prices in markets have fallen due to instability in the region.

If this teaches you anything it should be that in online trading you always have to keep tabs on current affairs; if you don’t you could be left seeing your investments plummet in value. Always remember when financial assets and when real assets should be utilised to ensure success in the financial trading game.

The Importance of US Dollars in Financial Trading

Whenever you start financial trading you’ll notice that everything’s priced up in US dollars. At the Academy of Financial Trading we recognise that this can be confusing to people who don’t know the culture of financial trading. So what is the importance of US dollars in financial trading?

First of all the US dollar is important in financial trading because it is the unit of currency used in the United States of America. The US is the largest economy in the world and this alone means that the US dollar has immense value for everybody else.

This is because of the investing power the US holds. A good lesson to learn is that the larger the economy, the greater scope it has for ploughing that money back into businesses around the world. This means it makes sense that they are trading in the US dollar, because they’re business is largely fueled by investment from the US.

However it goes further than this .The US dollar is used as the standard unit of currency in international markets for all sorts of commodities and products.

This means that if you are investing in the Indian gold market, you’ll be doing it in terms of dollar worth. If you’re investing in the technology markets of Japan you’ll be doing it in dollar terms. Whatever company in whatever area of the world you’re trading in, it’ll be in dollars.

This practice is so common place that a whole host of non US based companies even list their share prices in US dollars. Airbus is one notable example where this happens.

Furthermore the US dollar is one of the world’s most popular reserve currencies. A reserve currency is a currency that a country hold in large amounts (that is not their own) that is used in international transactions between nations.

So when a nation makes a trade deal, for example, with another nation, it’ll do it in a popular reserve currency such as the dollar. This is because both nations find value in a reserve currency; whereas there might be problems if the nations used their own currencies in terms of value and exchange rates. The fact that many nations recognise the dollar as a reserve currency speaks highly about its value.

In conclusion a currency only holds so much value as people are willing to give it. The US dollar is generally held to be one of the most valuable currencies in the world; this is why the US dollar is so important in financial trading. 

An Economic Guide to Japan

Considering that rising Japanese inflation has come to our attention recently, this week the Academy of Financial Trading blog thought we’d bring you a basic guide to the Japanese economy. Why do you need to know about it to succeed in financial trading?

Basically Japan is the third largest economy in the world, behind only the US and China. Considering that the larger the economy, the greater impact it has on global financial affairs, it stands to reason that Japanese economic activity stands only behind American and Chinese in nations that could have an effect on markets that could alter your financial trading strategy.

Now for a little history lesson. The Japanese economy was devastated by its loss in World War Two, however it quickly recovered, and in the three decades following 1960 expanding majorly because it cut defense spending to solely focus on economic growth. However more recently the country has been dealing with a 15 year long deflation problem.

Today Japan is impressive statistically. It is the country with the third largest GDP (Gross Domestic Product, a nation’s market value of all its final goods and services) in the world. It is the third largest car manufacturing country in the world and has a large electronics industry that is valued by many.

Japans key exports (goods and services it sells to other nations) are cars, electronic devices and computers. Its key imports (goods and services it buys from other nations) are raw materials such as oil, foodstuffs and wood. Trade partners include the US, China, Singapore, Hong Kong, Germany etc.

From this it’s easy to see why you have to watch what’s going on in Japan. It trades with many countries heavily; meaning that any economic development in the island nation could have ramifications internationally and its role in a myriad of industries indicates that trading in any of these areas means you’ll have to deal with Japan in one way or another.

Generally Japan is a strong nation that can bear economic storms well, however it has its fair share of issues. One problem we’ve already alluded to is its 15 year battle with deflation. Deflation is a fall in consumer prices throughout the economy, usually coming at a time of high unemployment.

This has proved a key issue in Japan because lower consumer prices mean that companies are less eager to sell in your country. Nobody wants to sell their product at a loss and this has had a shrinking effect on Japanese economic growth. However despite this Japan is still a thriving market.

Japan is an amazingly innovative, diverse economy that has an impact on numerous areas of global trade. This is why you need to know about Japan in financial trade, so you can anticipate how its developments may affect your investments.