December 8, 2013

Currency Carry Trading - Advantages, Risks and timing

Carry trading is buying currency with a high interest differential rate against one with a low interest rate. As one of the simplest strategies in currency exchange, it is the most commonly adopted approach. For a day a trade is held, brokers will pay investors the interest differential rates between two currencies. Even without activity, making a profit is possible.

Example


If the Japanese Yen has an 8% interest rate and the US Dollar has 3%, there is a 5% difference. Since the beginning of the trade, the broker will shoulder the amount of its equivalent. Regardless of it initially being small, it will be a grand sum over time. This portion will keep on accumulating profit for the investor and their gaining potential knows no limit.

Advantages


Other than giving investors a guarantee that they will earn from interests, carry trading allows leverage to be used as an advantage. When brokers pay the daily dues, the amount depends on it. For instance, if a trade is opened for $5000 and $100 is the actual margin, the interest that needs to be paid will be based on the $5000 instead of on the $100 margin.

The Best Timing


Not all the time is it wise for investors to use carry trading. Only when they feel incredibly optimistic and can afford to buy high-yield currencies while selling low-yield ones should they consider it. More likely, the outcome depends on the lengths they are willing to go. If they are doubtful of the trade they are holding, chances are, they won’t raise their interest rates so they could control inflation.

If they are certain about taking the risk, they won’t hesitate to support their trades. Their outlook plays a major role as it is the one driving them toward aiming for the best. Even with higher risk aversion and circumstances not seeming to be in their favor, they’ll devise a plan to pursue their earnings.

Risks


Despite being free of intricacies, carry trading poses its fair share of risks. Usually, the currency pairs with the best conditions for the approach are volatile. Though the daily payments forwarded to accounts lessen their chances of matters going downhill, investors have to be careful as losses can cause immense impact on their current financial state. Without proper risk management, the probability of them suffering a drastic turn and face bankruptcy is high.

With carry trading being among the no-brainer strategies in foreign exchange, it is the ideal approach for investors looking for a stable flow of profit while participating in active trades. So long as they are trading currencies in the interest-positive route, they may expect high earnings paid by brokers. Proper execution along with the right state of the market may promise them substantial results.

Pavel is a Forex analyst and writer from www.admiralmarkets.com.au
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December 4, 2013

Three Major Benefits of Company Liquidation

If you think you may be facing company liquidation, it could seem like one of the worst scenarios in the world. The trouble is, UK culture tends to look on business insolvency as failure, whereas in America business owners are applauded for trying and getting right back up again when they fail.

The truth is, company liquidation is far from the major disaster that many people believe. In fact you may be surprised to learn that the decision to liquidate your company could have many positive benefits.

Any Debt Disappears Once You Liquidate your Company


If your business is in trouble and facing insolvency, you probably already know that a huge amount of debt piling up makes it impossible to move forward. You can’t afford to grow, so you can’t afford to pay your bills. If you have reached the point where the debt has become overwhelming and you can’t see a way out, liquidation for your business may be a good choice. You will be able to begin again without the burden of any unsecured loans or debts your business has.

Company Directors Are Not Affected


Unless you have been trading illegally, or you have broken the law in some other way, or been disqualified from being a Director of a Limited Company, your life can continue as normal. You are free to get another job, re-start your business, or launch a completely different company.Your previous business insolvency won’t affect you at all.

You Will No Longer Face Legal Action


If your business has been bombarded with threats of legal action for unpaid debts, company liquidation will stop this if your business is a limited company. This is because all legal threats or pending proceedings are against the business, not you. So once the business ceases to exist, nobody can take you to court.

So Should You Liquidate Your Business?


If your business is a limited company, and you have been struggling with finances, these facts may be reassuring. Obviously, you can’t liquidate several businesses without the risk of being disqualified as a director. But if you are generally struggling and can’t see a way out then company liquidation may be the ideal solution for you.

Before you make a decision, or things become so bad that the decision is taken out of your hands, it is worth speaking to a licensed insolvency practitioner, or business liquidation experts. They will be able to guide you through your options and help you to decide if it would be in your best interests to liquidate your company.
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