ANALYSIS-Wall Street banks see dollar signs in forex business

Credit:  http://www.cnbc.com/id/100946026

By:  David Henry and Peter Rudegeair

 

NEW YORK, Aug 7 (Reuters) - A surge in currency trading earlier this year and favorable regulatory treatment of the foreign exchange business have unleashed an intense fight on Wall Street, with banks battling one another for a larger share of an increasingly fractured market.
Volatility in major currencies has created opportunities for Wall Street banks to make money facilitating client trades.
In recent months, Bank of America Corp, Goldman Sachs Group Inc, Morgan Stanley and other banks that historically had smaller foreign exchange businesses than major rivals have stepped up efforts to gain market share, according to traders, recruiters and other people familiar with the business.
They are taking on Deutsche Bank AG, Citigroup Inc, Barclays PLC and JPMorgan Chase & Co , which have long dominated currency trading. Smaller firms like BTIG, Newedge, FXCM Inc and Gain Capital Holdings Inc have further fragmented the market.
Competition is particularly intense among banks because the foreign exchange sector is under fewer new regulations than other areas of trading, like derivatives or corporate bonds. That means banks can fund currency trading with less capital than they need for other businesses.
"This is one of those products that looks good to regulators and looks good to shareholders and looks good from a capital perspective," said George Kuznetsov, head of research and analytics at consulting firm Coalition.
Trading volumes in major currencies rose in the first half of the year, supported by a massive monetary easing program in Japan and expectations that the U.S. Federal Reserve will start pulling back from its bond-buying program. Such central bank moves spurred companies to hedge their currency risks, industry sources say.
A slowdown in fast-growing markets like China and Brazil also affected currencies, with particular ripple effects on resource-rich Australia. With the prospect of less demand for raw materials from emerging economies, the Australian dollar has dropped to lows against the U.S. dollar not seen since 2010.
Average daily trading volume in major currencies jumped to $5.6 trillion in June, a record, up 15 percent from $4.9 trillion in May, according to CLS Bank, which operates the largest foreign exchange settlement system.
Volumes have declined in recent weeks, but the competition remains fierce.
"There's a very low barrier of entry to this game," said one senior foreign-exchange executive at a major bank. "Just Google how you would send money overseas - you'd find a number of FX providers that probably didn't exist 10 years ago."

NARROW PROFITS
Although policy moves and favorable capital treatment have turned currency trading into a bright spot for banks, the business is far from lucrative.
A broker typically earns just fractions of a cent for every dollar's worth of a trade, and banks have been cutting prices to gain market share.
Foreign exchange contributed just 8 percent of fixed-income revenue at the top global investment banks last year, down from 36 percent in 2008, according to Coalition. While the first half of 2013 was a good one for Wall Street, foreign-exchange volumes are down 24 percent so far in the third quarter, Barclays analysts said in a note on Tuesday.
Yet, for many banks, foreign exchange trading is an alluring business if only because new regulations are making other businesses unviable.
Under international capital rules designed to ensure banks have enough capital to cushion against losses, foreign exchange is treated as less risky than other fixed-income businesses. That is because assets involved in foreign exchange trading are essentially cash, said Coalition's Kuznetsov.
Even Swiss bank UBS, which pulled back from most fixed-income trading businesses to conserve capital, opted to stick with currency trading.

NEED FOR PEOPLE
Michael Karp, CEO of the Options Group, an executive search and consulting firm, said that while banks are cutting staff in many fixed-income trading areas, foreign exchange "is the one place where banks are expanding and looking to get back in action."
Since last year, big banks have been snapping up executives from competitors to bolster their foreign-exchange trading businesses.
In the spring, Bank of America hired Jim Coulton and Babak Eftekhari from Goldman Sachs to take on senior forex trading roles. JPMorgan in May hired Ron Karpovich, an architect of cross-border payment systems at Royal Bank of Scotland Group PLC , to build out its software for payments by corporations in foreign currencies. Morgan Stanley hired Giovanni Pillitteri late last year from Citigroup as head of FX electronic trading.
Matthew Miller, co-founder of consulting firm Shift Forex, said he has been getting a lot of calls from recruiters and clients asking if he can suggest candidates for foreign-exchange positions at big banks.
"They all seem to have a need for people, whether on the retail side or the institutional side," he said.
The industry has also spent millions of dollars developing and marketing new foreign-exchange trading technology software in recent years, Miller said, with development costs ranging from $50,000 for a small platform to $500,000 or more for larger ones.
"People have made significant investments in technology," said Troy Rohrbaugh, JPMorgan's global head of interest rates, foreign exchange and public finance.
(Additional reporting by Gertrude Chavez and Lauren Tara LaCapra in New York and Katharina Bart in Zurich; Editing by Dan Wilchins, Paritosh Bansal and Dan Grebler)

Why It's Good To Be Selfish

Credit: http://www.selfgrowth.com

Surprising title for an article, right? In today's society 'selfish' has such negative connotations how could anyone say it’s a positive thing? Let me explain.

Traditionally the term ‘selfish’ has been associated with such things as being greedy or acting like an obnoxious fool. Those are the definitions with which most people associate the term, and the dictionary agrees. That's why children are always taught not to be selfish, and adults are always wary of others 'being selfish'.

What I’m talking about what being selfish really means — you take care of yourself first and then help others. This is a crucial concept to understand since it forms a great foundation for your own success. To be blunt, the more selfish you are the more successful you can be.

Being unselfish is dangerous

Religions, society, the media, family and your friends are always promoting being unselfish. You’re a “better person” if you give and give and give of yourself. In theory that sounds good, but in practice it fails. This is because you are taught to suppress yourself in order to help others, and that’s not a good thing. Your flow, your true life’s purpose, is 100% about success. So if you are repressing that success in order to “help” others you are creating blockages, sometimes severe.

There are numerous examples of where being unselfish is detrimental to your wellbeing. The most obvious has to do with charity. If you gave every dollar of your paycheck to charity every week how would you live? Likewise with the parent/child dynamic. If children were truly unselfish and obeyed every single thing their parents ordered them to do they would never grow into their own independent beings. Imagine a parent telling a child what music to listen to, what clothes to wear, what friends to have, whom to marry, and so on.

A Fun Event with Metisetrade

I attended an event last friday Sept 06, 2013 at Marajo tower The Fort.  This is a regular Friday event of Metisetrade. Inc which they called HAPPY Trading hours.  Most of the visitors are new in FOREX Market some are already traders.

Some lose others won on their trades but all in all the event is fun and successful.  I am looking forward to attend this Friday.

Below are the Pics Taken during the Happy trading Hours.

HAPPY TRADING HOURS

Credit:  https://www.facebook.com/events/19675338716571

Becoming the Person You Know You Can Be

Credit: http://www.brettsteenbarger.com

In bodybuilding, there is a principle known as "train-to-failure" (TTF).  The idea is that you lift that amount of weight that permits you at least ten repetitions, but continue the lifting to the point of failure: the point at which you can no longer sustain the repetitions.  Such a heavy-duty program, as outlined by the late Michael Mentzer, is low force (to minimize injuries) and high intensity (drawing upon the body's full reserves).  This program also contradicts usual practice, which has athletes lifting every day.  Mentzer, a world class bodybuilder, found that a limited number of repetitions to failure were sufficient to stimulate muscle growth, as long as there was an adequate period of recovery following the training stimulus.  When first espoused, the idea of doing a limited number of intense repetitions and then staying out of the gym during the recovery phase was heretical.  Now it is the backbone of many successful approaches to bodybuilding and strength training.
As Mentzer noted, the idea of TTF is itself a reflection of a principle in exercise physiology called SAID: Specific Adaptation to Imposed Demands.  The body, according to SAID, will develop along the lines of the demands imposed upon it.  If you impose intensive demands upon a muscle set, that set will develop more than others that have not been challenged.  The opposite of SAID is deconditioning: the absence of demand upon the musculoskeletal system.  Astronauts in space for a considerable period of weightlessness lose body mass due to deconditioning and, at times, have had to be carried from their spacecrafts due to a loss of strength.  Their bodies adapted to the absence of demand.
The vast majority of people live their lives the way uninformed athletes train: they take on too many demands, none of which are sufficiently intense to take them to failure.  Theirs is the equivalent of lifting a twenty-pound barbell for hours on end.  They become tired, but not strong.  By the time they get old, they are chronically tired, and then retire from all demands.  For many, retirement is an exercise in mental, physical, and spiritual deconditioning.
Truly great people live their lives on a TTF basis.  They challenge themselves until they fail, and that provides new challenges.  They ultimately succeed, because the challenges that produce failure also build their adaptive capacity.  Their minds and their personalities exhibit SAID: they adapt to imposed demands.
Now ask yourself:  If you trained in the weight room as hard and as smart as you train for trading success, how strong would you be? 
The reality is that few traders train at all, and those that do rarely impose demands on themselves that require growth and adaptation.  The bodybuilder knows that effort is a friend, a stimulus to development.  You push yourself to your limits, and then you adapt to those imposed demands.  In simulated trading--and in the practice that comes from trading small size--it is not enough to concentrate and focus: you develop the capacity to operate in "the zone" by testing the limits of your mental stamina.  Similarly, don't just follow your trading ideas; test them until they break.  Then you'll be able to figure out where they are weak and how you can fix them.  We cannot know our limits unless we are willing to venture beyond them.     

Mentzer realized that, to become the person you know you can be, you have to do more than you think you can do.  Paradoxically, you will find your greatest freedom, in the gym and in life, in the imposition of your most stringent demands.