From someone who has absolutely no idea how the markets work and what are the 'mechanics' behind the stock markets, economy etc: what is the good/productive way to learn about such things? The linked article provides some explanation, but I still don't feel that I 'feel'/truly understand the topic. I'd recommend books/videos/articles recommendations.
Of particular note if you are interested in the mechanics of exchanges is "Trading And Exchanges" By Harris. It is a little old at this point (and thus doesn't deal with RegNMS which is of particular importance to HFT) but a very good book on the basics.
The Coursera course "Economics of Money and Banking" is fantastic, and focuses on real-world mechanics rather than theory. You should be able to view archived lectures if there isn't an active course: https://www.coursera.org/course/money
This is a great overview done by Ray Dalio, founder of Bridgewater Associates; one of the world's largest hedge funds.
"Created by Ray Dalio this simple but not simplistic and easy to follow 30 minute, animated video answers the question, "How does the economy really work?" Based on Dalio's practical template for understanding the economy, which he developed over the course of his career, the video breaks down economic concepts like credit, deficits and interest rates, allowing viewers to learn the basic driving forces behind the economy, how economic policies work and why economic cycles occur."
I highly recommend Trading & Exchanges, by Larry Harris. He walks through many kinds of transactions from end to end, with concrete examples, in plain language.
I can not imagine it is that good of a deal as I get calls about people wanting to help me with my foreign exchange on a monthly basis for many years now.
There is not topic that I get more cold calls on than this. This suggests to me, this means it must be fairly profitable for those companies offering it, and that profit likely would come out of my pockets, but I haven't done the analysis.
That said, I know my bank has pretty shitty exchange rates:
I transferred some savings last year, because I emigrated.
All the normal British banks offered very poor exchange rates. Traditional money exchange sites, which seemed to target people making large foreign purchases (houses etc) or people looking to invest in foreign currency were better, but as soon as I signed up on the website I received calls from their staff, which annoyed me.
In any case, the rates were still beaten by http://www.TransferWise.com/ (London startup). Transfers with TransferWise aren't instant, they wait until there's a transfer in the opposite direction. But I wanted a relatively obscure European currency, and my transaction was only in the queue for about 45 minutes.
> Transfers with TransferWise aren't instant, they wait
Do note that if the market moves a long way while they are waiting they will cancel the entire transaction.
This is a very different product to the one offered by your bank. Your bank takes some risk (and they charge a huge premium which more than covers it); TransferWise makes you keep the market risk.
Most days this makes no difference. On a day when everybody is trying to move money in the same direction, you will notice.
I've been studying on the continent now (from the UK) for the past year and a half and I've mainly used TransferWise to send money. When I first used it about a year and a half ago they took 2 to 3 days to send money, now if I order in the morning I usually get it just after lunch. Incredibly fast and competitive rates for low prices.
For example: Natwest charge you something like £30 to send money within the EU urgently within 1 to 2 business days. Their slow one take 2 to 4 days and still costs £10. By contrast TransferWise charged me £2.50 last time I sent £450. Presently TransferWise offer a GBP to EUR rate of £1 to € 1.3404, by contrast Natwest offers £1 to €1.3077.
I wish their "see how" section would explain how it actually worked (including what the source and destinations can be), rather than just telling me it's cheaper than the banks. The site seems to want me to sign up before even giving any hint what's required; that's not an on-boarding experience that my 15seconds of curiosity will work with.
That's true. TransferWise ran a lot of poster advertisements in London, but I think I realised how it worked from a competitor's advertisements — https://www.weswap.com/ (slightly worse rates, and works by using a card, but they have a better website).
You can also use a plain old brokerage account. My broker charges 0.2% commission, less than half TransferWise's lowest rate, and it's direct access to the interbank market so there's no margin, execution delay, etc.
The downside is you need to own the account you send money to, due to AML laws.
>All the normal British banks offered very poor exchange rates.
Nationwide offer some of the best rates, before that I used to use Norwich Peterborough which actually allowed fee free withdrawals abroad at spot rate.
I also emigrated form the UK to another European country a while ago. Previously, I've always been transfering GBP to EUR, using a broker. This has been cost effective, but a bit of a pain to submit the order, deal with the broker etc.
I just used TransferWise to transfer some EUR back to GBP and I must say it's been the easiest, most painless forex transaction I've ever undertaken (also completed a lot of GBP to AUD back and forth over the years). The website UI and process flow was straightforward and intuitive. Obviously the money hasn't arrived in my UK account yet, so one must reserve final judgement.
While I use TransferWise for getting paid by clients in other countries, I rely on http://currencyfair.com for my own money movements.
The typical "catch" in most FX services is a hidden 2.5% - 5% fee in the exchange rate itself. You might be offered free, better rates than your bank! and will still be paying 2%.
The likes of CF or TW have got this fee down to well under 1%, although TF certainly give every impression of skimming off the rate for amounts under $1,000.
(at least, that's the impression the rate on their website calculator gives; I've only used larger transfer than that, and can't say anything from experience)
The problem with CurrencyFair is that you are still left paying the wire fee in a lot of jurisdictions.
Sometimes this fee is larger than local banks. In Canada for example I can wire money for $13.50 CAD ($9.50 US) up to $2500 CAD to almost anywhere in the world. CurrencyFair wrongly estimates Canadian bank fees at $35.00 CAD.
They also only have bank accounts in certain jurisdictions. For example they ask customers in Canada to wire money to their bank in New York rather than say by Interac which would cost Canadian a lot customers nothing.
I also find it strange they ignore what I would have thought was the largest market for remittance. Namely India and the Philippines. They also don't support the US because of the state licensing mess that the US requires for money transfer services [1].
I think that's allowed. My impression is that you as the end receiver are not allowed to be in the US.
>I live in the US can I still use you?
>Unfortunately at this time we are not licensed to receive business from United States residents. We do hope this will change in the future but for now we are unable to provide a timeline as to when this might happen.
Mondo is looking like an interesting bank. I've had my eyes on both them and Simple for a while; unfortunately, I'm not in the UK anymore nor in the US so I went with Number 26 instead. Anyone have any experience with either?
I live in the UK and have had a Mondo card for about a month and a half. I've been very pleased with them so far, and there is clearly a big opportunity for them to bring some innovation to traditional banking.
It's a little hard to compare fully as they're not a bank yet (the current card is a prepaid one which you top up via the app). Everything is a lot more simple than my traditional bank (Lloyds), they've clearly put a lot of effort into the app UX which I value. They're very responsive, both via support channels, and on the discourse forum we're all in.
There are a few issues. One is a tradeoff which can't really be fixed - all transactions are "online", allowing them to do push notifications and live fraud checks. For some card machines, particularly when using contactless, this can substantially increase the time it takes for the card machine to process the payment.
Most of the issues though seem be caused by their card issuer - rather than interfacing with the card networks directly, they currently go via a company called "GPS" (pretty sure it's http://www.globalprocessing.ae). This seems to add notable latency to some transactions, as well as causing a couple of limitations on how you start using the card. I expect all of these problems will be resolved once they issue cards directly.
I haven't used the card physically outside the UK, but I have done a number of non-GBP transactions online and they all worked fine - with good conversion rates. A number of people on the discourse forum have used it outside the UK and it looks as though they didn't have any problems.
Support is good - generally very quick responses in-app (they use Intercom), and they're very active when it comes to the extended discussion in the discourse forum. A few of the blog posts came about as a result of those discussions.
One cool thing is that almost every single screen of the app allows you to give feedback in various ways - flagging merchant details as incorrect, providing suggestions, and letting them know how urgent upcoming features are.
Having good APIs is pretty important to me also - although I haven't used them yet. The app keeps detailed logs of the internal APIs which I like to regularly dump onto my laptop for reference too!
I tried to open a Number 26 account. After going through, and passing, their KYC process I found out the account could only be activated through their app. That is despite lack of clarity in their documentation, which I believe clearly suggest activation can be completed online through a browser.
Guess what? Their Android app can only be downloaded through Google's Play Store. I'm running CyanogenMod on my phone without gapps installed, so there was no way forward for me.
Number 26 even sent me a debit card in the post, which I couldn't activate.
Yeah, I had some similar issues with their activation process - I don't have a mobile phone number and part of their activation process requires one, so I had to borrow a phone. The idnow.eu company they work with is a nice idea (and far better than the alternatives) but I actually found they were rude and unhelpful when camera quality isn't at its best.
I think these things can be fixed though, and I'm willing to take one-time signup pains for a continuous pleasant experience. I'm still waiting on my card, looking forward to actually trying them out day to day.
Far better than HSBC in any case. What a joke. I could write a few paragraphs on how atrocious everything about them is...
I also remember that they talked about such an option. To be fair they state in multiple locations that using their app is a prerequisite for having an account (I think I even remember checking such a box during signup). You also can't authorize transfers without their app. This is a deliberate choice on their side.
I have talked to Number 26 support about it and their response, while courteous, amounted to "too bad, we don't offer a direct apk download. If you don't download the app from the Play Store, you can't verify your account."
I have been using Number26 as my main spending account for a few months now but wouldn't use it as my main account. There are a few things that aren't implemented yet, such as crediting cheques (I still get one or two a year) or non-SEPA transfers (though to be fair it is very expensive at banks compared to e.g. Transferwise so I wouldn't use it either way). The support is overwhelmed at the moment and over Christmas they had technical diffuculties that weren't fixed for around a week, presumbly because they had no staff on-call to do so. Also their card doesn't have a Girocard function which makes it unusable at some locations in Germany.
Unlike other banks they don't refund ATM charges. Also, according to internet forum users those tend to be a bit higher compared to other MasterCard cards for some reason. Additionally multiple users reported problems using at card at some South-East Asian POS Locations. But having a backup card is never a bad idea.
It's very convient that they immediatly deduct money from your account as soon as the charge is authorized (which makes it easier to model in my mind as it works just like real money) compared to traditional cards where it takes a few days. However that also applies to holds (e.g. from hotels). I would advise they have another card for such purposes.
Also, I wouldn't suggest keeping your money in a currency that you have no connection with simply because of the forex risk.
You might also want to take a look at Revolut https://revolut.com It's not a bank account but a very useful card with very good exchange rates.
Thanks a lot for that Revolut link, it looks like exactly what I need. Have you used it?
Regarding currency: I'm currently in the eurozone but I travel a lot. I was in sweden until recently for a year, not long enough to bother with a bank account. If I did I would actually have lost a fair bit of money, seeing how the GBP and SEK evolved in that year.
Yes, they offer the best rates out of any card I have ever seen. I use them for travel outside the Eurozone. They allow to keep money in EUR, USD and GBP at the same time.
Note that it's classified as electronic money under British law so much worse fund protection than a bank account if any. I wouldn't keep much money there.
They say that they will Charge fees after the first year of using it but haven't said how it will look like yet. Until now they haven't charged anything. They have planned some new features for tommorrow but I don't know what to except.
I got myself a Revolut account, talked to support and they say they make money as part of a deal with Mastercard, IIUC they get a % off the merchant fee.
Presumably they get the interchange fee (1-2% in the US and capped to 0.2% in the EU now). I suppose they operate at a loss at the moment but which business we talk about on this site doesn't?
I've been left wondering how the Mondo/Mastercard rate actually works: yes they pick some rate based on X, Y and Z, but how does this interact with the market described in the post?
I suspect not very much at all, at least for major currencies, as Mastercard has people buying $ for £ in the UK, and £ for $ in the US, so they only need to go onto the market for the imbalance, allowing an "incredibly good" rate, when they're not exchanging much on the open market at all...
There doesn't seem to be much information publicly available regarding how payment networks manage transactional FX risk exposure, but I did find this:
MasterCard enters into transactions in derivative financial instruments, typically in the form of foreign currency forward contracts, to manage risk associated with anticipated receipts and disbursements which are either transacted in a non-functional currency or valued based on a currency other than its functional currencies. MasterCard also enters into foreign currency forward contracts to offset possible changes in value of assets and liabilities denominated in foreign currencies due to foreign exchange rate fluctuations. MasterCard does not engage in proprietary trading of derivatives. Its objective for entering into transactions in derivative financial instruments is to reduce exposure to transaction gains and losses resulting from fluctuations of foreign currencies against its functional currencies. MasterCard engages in derivatives transactions solely and exclusively for the purpose of hedging foreign currency exchange risk incurred in the operation of its business.
As noted above, MasterCard has approximately 20,000 customers, and processes payment card transactions from more than 210 countries and territories. MasterCard derives approximately 60% of its revenue from outside of the United States. Given the global reach of our company, we are deeply impacted by fluctuations in foreign currency exchange rates in the operation of our business. MasterCard generates revenues and incurs expenses that are either transacted in, or valued based on, currencies other than the U.S. Dollar. For example, MasterCard charges its customers assessment fees for various services it provides to its customers, including the use of the MasterCard brand globally. These assessment fees are typically a percentage charge on a customer's total volume of transactions incurred on MasterCard-branded cards. Because of MasterCard's global presence, transactions effected in foreign currencies are converted into U.S. Dollars and the percentage charge (i.e., assessment fee) is calculated on this converted U.S. Dollar volume. Hence, fluctuations in foreign exchange rates impact the amount of U.S. Dollar assessment revenue MasterCard collects. Similarly, given our global footprint, we make significant expenditures and incur significant contractual obligations to make future expenditures in countries around the world for commercial activities, such as marketing, advertising, payroll and operations. These expenditures and obligations may be denominated in currencies other than the U.S. Dollar. This exposes MasterCard to fluctuations in foreign exchange rates. In addition to our transactional exposures, we also hedge balance sheet assets and liabilities denominated in foreign currencies. From time to time, MasterCard is also exposed to foreign exchange risks arising from overseas acquisitions.
Is private forex trading as lucrative as it seems? People online seem to be making consistent, solid returns on relatively small investments (you can start out with < $100k)
Currencies do often seem to have long-term trends. Trading on them works well until it doesn't. Since currencies move slowly, brokers can allow you to borrow much more than your capital to leverage it. It really is gambling, though, since it is zero-sum. At least with your money in stocks, you can hope for a long-term upward trend to balance out short-term fluctuations.
Typical news stories:
1. Amateur currency traders in Japan, making a fortune until they don't.
> Most of these accounts involve margin trading, in which investors place a cash deposit with a brokerage that allows them to borrow up to 20 or even 100 times their holdings for trading.
2. A similar story in Europe, when the Swiss dropped their currency peg
> Europe has no caps in place, in contrast to other jurisdictions, such as the US, Hong Kong and Singapore. Clients deposit money with trading venues and use this as collateral to borrow a much larger amount and magnify their trading positions. In London it is usually 100-200 times the amount deposited into a retail account, but can be upwards of 500 times.
It's lucrative for the brokers who are making wide retail spreads and getting most of the carry. the leverage available in this market is very high (as high as 100x-400x for retail investors) so the dispersion of individual returns is very high. my guess is that most people like a casino leave with zero in the end...
It's lucrative if you're a professional trader, otherwise, no. I've lost count of how many times I've read of someone blowing up their trade account because they thought it would be easy. Give someone who has no idea what they're doing a lot of leverage and yeah....
Yes, it would be more accurate to say that historically, currencies were priced against GBP, until the US Dollar took over that role when the US became the world's leading economy after WWII.
The article's mostly correct. Some assertions and definitions aren't quite right, as if the author doesn't have direct experience but is instead regurgitating their own research/reading.
For example, they define a "pip" as being equal to a basis point but that's not the case. In fact, the reason they're called "pips" instead of "bips" (market slang for basis points) is because they're not the same thing.[1]
Also, the article kind of glosses over the fact that the wholesale (or interbank) FX market (the article uses the term "Spot Market" which is more commonly used to refer to the subset of the interbank market for spot deals) operates at large scale (e.g. a minimum deal size of $100,000). You can only get the tight spreads (<= 1 pip) available in the interbank market if you're willing to deal in large sizes.
In the same way that the per-unit price for buying several container-loads of cans of beans direct from Heinz will be lower than if you buy a single can from your local retail store, a retail customer looking to exchange $300 can't expect to get the interbank rate.
Typically C++, Java or C#, although the technology in the currencies trading world has generally lagged behind say, US cash equities where exchanges are catering more to electronic customers (a substantial portion of the currency trading user base is still trading manually).
Reuters changed over to a more modern platform around 2013, but prior to that for electronic trading they would basically designate a Windows host for you that ran their GUI application plus a server, which you could connect to and would just forward your requests via COM to the UI.
54 comments
[ 4.4 ms ] story [ 101 ms ] threadhttp://kc.my-junk.info/hft-books/
Of particular note if you are interested in the mechanics of exchanges is "Trading And Exchanges" By Harris. It is a little old at this point (and thus doesn't deal with RegNMS which is of particular importance to HFT) but a very good book on the basics.
"Created by Ray Dalio this simple but not simplistic and easy to follow 30 minute, animated video answers the question, "How does the economy really work?" Based on Dalio's practical template for understanding the economy, which he developed over the course of his career, the video breaks down economic concepts like credit, deficits and interest rates, allowing viewers to learn the basic driving forces behind the economy, how economic policies work and why economic cycles occur."
https://www.youtube.com/watch?v=PHe0bXAIuk0
There is not topic that I get more cold calls on than this. This suggests to me, this means it must be fairly profitable for those companies offering it, and that profit likely would come out of my pockets, but I haven't done the analysis.
That said, I know my bank has pretty shitty exchange rates:
http://www.rbcroyalbank.com/cgi-bin/travel/currency-converte...
All the normal British banks offered very poor exchange rates. Traditional money exchange sites, which seemed to target people making large foreign purchases (houses etc) or people looking to invest in foreign currency were better, but as soon as I signed up on the website I received calls from their staff, which annoyed me.
In any case, the rates were still beaten by http://www.TransferWise.com/ (London startup). Transfers with TransferWise aren't instant, they wait until there's a transfer in the opposite direction. But I wanted a relatively obscure European currency, and my transaction was only in the queue for about 45 minutes.
Do note that if the market moves a long way while they are waiting they will cancel the entire transaction.
This is a very different product to the one offered by your bank. Your bank takes some risk (and they charge a huge premium which more than covers it); TransferWise makes you keep the market risk.
Most days this makes no difference. On a day when everybody is trying to move money in the same direction, you will notice.
For example: Natwest charge you something like £30 to send money within the EU urgently within 1 to 2 business days. Their slow one take 2 to 4 days and still costs £10. By contrast TransferWise charged me £2.50 last time I sent £450. Presently TransferWise offer a GBP to EUR rate of £1 to € 1.3404, by contrast Natwest offers £1 to €1.3077.
TransferWise have a well-buried FAQ item: https://transferwise.com/support/customer/en/portal/articles...
The downside is you need to own the account you send money to, due to AML laws.
I tried to find brokerage accounts, but either the rates were bad, or the minimum amounts too high.
It could be useful next year though, if I buy a house here.
Nationwide offer some of the best rates, before that I used to use Norwich Peterborough which actually allowed fee free withdrawals abroad at spot rate.
I just used TransferWise to transfer some EUR back to GBP and I must say it's been the easiest, most painless forex transaction I've ever undertaken (also completed a lot of GBP to AUD back and forth over the years). The website UI and process flow was straightforward and intuitive. Obviously the money hasn't arrived in my UK account yet, so one must reserve final judgement.
Thanks for raising my awareness of this service.
The typical "catch" in most FX services is a hidden 2.5% - 5% fee in the exchange rate itself. You might be offered free, better rates than your bank! and will still be paying 2%.
The likes of CF or TW have got this fee down to well under 1%, although TF certainly give every impression of skimming off the rate for amounts under $1,000.
(at least, that's the impression the rate on their website calculator gives; I've only used larger transfer than that, and can't say anything from experience)
Sometimes this fee is larger than local banks. In Canada for example I can wire money for $13.50 CAD ($9.50 US) up to $2500 CAD to almost anywhere in the world. CurrencyFair wrongly estimates Canadian bank fees at $35.00 CAD.
They also only have bank accounts in certain jurisdictions. For example they ask customers in Canada to wire money to their bank in New York rather than say by Interac which would cost Canadian a lot customers nothing.
I also find it strange they ignore what I would have thought was the largest market for remittance. Namely India and the Philippines. They also don't support the US because of the state licensing mess that the US requires for money transfer services [1].
[1] - https://www.paypal.com/webapps/mpp/licenses
It's been a while since I last accepted a payment from a US client - maybe a year? - into CF's US account, and I didn't have any issues then.
Do you know how recently this changed?
>I live in the US can I still use you?
>Unfortunately at this time we are not licensed to receive business from United States residents. We do hope this will change in the future but for now we are unable to provide a timeline as to when this might happen.
Mondo is looking like an interesting bank. I've had my eyes on both them and Simple for a while; unfortunately, I'm not in the UK anymore nor in the US so I went with Number 26 instead. Anyone have any experience with either?
Any specific questions?
Have you been disappointed by anything yet?
Have you tried them outside the UK / withdrawing euros?
How's their human support?
There are a few issues. One is a tradeoff which can't really be fixed - all transactions are "online", allowing them to do push notifications and live fraud checks. For some card machines, particularly when using contactless, this can substantially increase the time it takes for the card machine to process the payment.
Most of the issues though seem be caused by their card issuer - rather than interfacing with the card networks directly, they currently go via a company called "GPS" (pretty sure it's http://www.globalprocessing.ae). This seems to add notable latency to some transactions, as well as causing a couple of limitations on how you start using the card. I expect all of these problems will be resolved once they issue cards directly.
I haven't used the card physically outside the UK, but I have done a number of non-GBP transactions online and they all worked fine - with good conversion rates. A number of people on the discourse forum have used it outside the UK and it looks as though they didn't have any problems.
Support is good - generally very quick responses in-app (they use Intercom), and they're very active when it comes to the extended discussion in the discourse forum. A few of the blog posts came about as a result of those discussions.
One cool thing is that almost every single screen of the app allows you to give feedback in various ways - flagging merchant details as incorrect, providing suggestions, and letting them know how urgent upcoming features are.
Having good APIs is pretty important to me also - although I haven't used them yet. The app keeps detailed logs of the internal APIs which I like to regularly dump onto my laptop for reference too!
Guess what? Their Android app can only be downloaded through Google's Play Store. I'm running CyanogenMod on my phone without gapps installed, so there was no way forward for me.
Number 26 even sent me a debit card in the post, which I couldn't activate.
I think these things can be fixed though, and I'm willing to take one-time signup pains for a continuous pleasant experience. I'm still waiting on my card, looking forward to actually trying them out day to day.
Far better than HSBC in any case. What a joke. I could write a few paragraphs on how atrocious everything about them is...
Unlike other banks they don't refund ATM charges. Also, according to internet forum users those tend to be a bit higher compared to other MasterCard cards for some reason. Additionally multiple users reported problems using at card at some South-East Asian POS Locations. But having a backup card is never a bad idea.
It's very convient that they immediatly deduct money from your account as soon as the charge is authorized (which makes it easier to model in my mind as it works just like real money) compared to traditional cards where it takes a few days. However that also applies to holds (e.g. from hotels). I would advise they have another card for such purposes.
Also, I wouldn't suggest keeping your money in a currency that you have no connection with simply because of the forex risk.
You might also want to take a look at Revolut https://revolut.com It's not a bank account but a very useful card with very good exchange rates.
Regarding currency: I'm currently in the eurozone but I travel a lot. I was in sweden until recently for a year, not long enough to bother with a bank account. If I did I would actually have lost a fair bit of money, seeing how the GBP and SEK evolved in that year.
Note that it's classified as electronic money under British law so much worse fund protection than a bank account if any. I wouldn't keep much money there.
They say that they will Charge fees after the first year of using it but haven't said how it will look like yet. Until now they haven't charged anything. They have planned some new features for tommorrow but I don't know what to except.
I've been using a Halifax Clarity card for years. I've not paid any ATM or purchase charges in ~20 countries.
I now have a Revolut card, since I recently left the UK, but haven't used it yet.
[1] http://www.moneysavingexpert.com/credit-cards/travel-credit-...
I suspect not very much at all, at least for major currencies, as Mastercard has people buying $ for £ in the UK, and £ for $ in the US, so they only need to go onto the market for the imbalance, allowing an "incredibly good" rate, when they're not exchanging much on the open market at all...
MasterCard enters into transactions in derivative financial instruments, typically in the form of foreign currency forward contracts, to manage risk associated with anticipated receipts and disbursements which are either transacted in a non-functional currency or valued based on a currency other than its functional currencies. MasterCard also enters into foreign currency forward contracts to offset possible changes in value of assets and liabilities denominated in foreign currencies due to foreign exchange rate fluctuations. MasterCard does not engage in proprietary trading of derivatives. Its objective for entering into transactions in derivative financial instruments is to reduce exposure to transaction gains and losses resulting from fluctuations of foreign currencies against its functional currencies. MasterCard engages in derivatives transactions solely and exclusively for the purpose of hedging foreign currency exchange risk incurred in the operation of its business.
As noted above, MasterCard has approximately 20,000 customers, and processes payment card transactions from more than 210 countries and territories. MasterCard derives approximately 60% of its revenue from outside of the United States. Given the global reach of our company, we are deeply impacted by fluctuations in foreign currency exchange rates in the operation of our business. MasterCard generates revenues and incurs expenses that are either transacted in, or valued based on, currencies other than the U.S. Dollar. For example, MasterCard charges its customers assessment fees for various services it provides to its customers, including the use of the MasterCard brand globally. These assessment fees are typically a percentage charge on a customer's total volume of transactions incurred on MasterCard-branded cards. Because of MasterCard's global presence, transactions effected in foreign currencies are converted into U.S. Dollars and the percentage charge (i.e., assessment fee) is calculated on this converted U.S. Dollar volume. Hence, fluctuations in foreign exchange rates impact the amount of U.S. Dollar assessment revenue MasterCard collects. Similarly, given our global footprint, we make significant expenditures and incur significant contractual obligations to make future expenditures in countries around the world for commercial activities, such as marketing, advertising, payroll and operations. These expenditures and obligations may be denominated in currencies other than the U.S. Dollar. This exposes MasterCard to fluctuations in foreign exchange rates. In addition to our transactional exposures, we also hedge balance sheet assets and liabilities denominated in foreign currencies. From time to time, MasterCard is also exposed to foreign exchange risks arising from overseas acquisitions.
Source: https://www.fdic.gov/regulations/laws/federal/2011/11c89ad79...
I seriously doubt that. Realistically, Forex trading is gambling [1], and gamblers tend to be loud about their gains and silent about their losses.
[1] Note that this doesn't necessarily mean that it's random chance – Poker is also gambling and depends partially on skill, not only luck.
Typical news stories:
1. Amateur currency traders in Japan, making a fortune until they don't.
> Most of these accounts involve margin trading, in which investors place a cash deposit with a brokerage that allows them to borrow up to 20 or even 100 times their holdings for trading.
http://www.nytimes.com/2007/09/16/business/worldbusiness/16h...
2. A similar story in Europe, when the Swiss dropped their currency peg
> Europe has no caps in place, in contrast to other jurisdictions, such as the US, Hong Kong and Singapore. Clients deposit money with trading venues and use this as collateral to borrow a much larger amount and magnify their trading positions. In London it is usually 100-200 times the amount deposited into a retail account, but can be upwards of 500 times.
http://www.ft.com/cms/s/0/8676c6c6-9d97-11e4-8946-00144feabd...
The fact that there are so many 'get rich quick' schemes and 'guides' on forex makes me think that it's a fast way to lose your money.
Foreign exchange precedes the _existence_ of the US Dollar, so wtf.
https://en.wikipedia.org/wiki/Bretton_Woods_system
The article's mostly correct. Some assertions and definitions aren't quite right, as if the author doesn't have direct experience but is instead regurgitating their own research/reading.
For example, they define a "pip" as being equal to a basis point but that's not the case. In fact, the reason they're called "pips" instead of "bips" (market slang for basis points) is because they're not the same thing.[1]
Also, the article kind of glosses over the fact that the wholesale (or interbank) FX market (the article uses the term "Spot Market" which is more commonly used to refer to the subset of the interbank market for spot deals) operates at large scale (e.g. a minimum deal size of $100,000). You can only get the tight spreads (<= 1 pip) available in the interbank market if you're willing to deal in large sizes.
In the same way that the per-unit price for buying several container-loads of cans of beans direct from Heinz will be lower than if you buy a single can from your local retail store, a retail customer looking to exchange $300 can't expect to get the interbank rate.
1: This page - http://www.londonfx.co.uk/trading.html - (written by a friend and former colleague) gives a more accurate description of what a pip is.
Does anyone know what language these systems are typically built with? Or have examples of their implementation?
Reuters changed over to a more modern platform around 2013, but prior to that for electronic trading they would basically designate a Windows host for you that ran their GUI application plus a server, which you could connect to and would just forward your requests via COM to the UI.