Can It Be Assured Whether Insider Trading Exist In The Foreign Currency Market
Posted Dec 27 2012 2:42am
Everybody knows about the “games people play” in the stock market. This is the way certain big time hedge funds, company professionals and also company insiders at times make trades on non-public data to get an advantage and earn an income for their firm. It’s termed Insider Trading, and is also precisely what led to The Galleon Group, that was once on the list of leading hedgies on Wall Street, to shutter its business and send its founder to jail. Okay, this particular criminal exercise doesn’t truly exist in the foreign exchange market and in the realm of trading fx. Though not completely a level playing field with regards to the leverage as well as effect of the huge global banks or perhaps large hedge funds, it's a lot more level when compared to the stock market where insider trading and market manipulation runs rampant - which in itself, is refreshing.
What if you had an old colleague who now works for a formidable international hedge fund, who thinks he is in the know, mention to you that the European Central Bank is about to raise interest rates by a quarter of a percent, and he is incredibly confident of it. So you plan to take a risk - since that is what you’re actually accomplishing - and go and lever up to buy lots of Euros with the hope to earn a return. Get this - no-one will do anything about it, nor could they really take action. This particular sector is so huge and the type of economic data regarding interest rate vacillations is so often leaked days before central bank conferences, that it does not make any difference. In time, you can start to determine what some of these central bankers will do. If you study the path of major financial indicators, like the employment numbers, consumer spending and in recent history, the housing industry, and add this with the tendencies of just what central bankers do in certain fiscal environments, you can have a great idea of where they will move rates.
Something else to bear in mind is that there are a fair number of individuals and establishments who trade by using an expert advisor or forex EA. The interesting thing about FX trading software is that you can set it to trade on its own with an actual account or give you trading recommendations. A forex EA is an incredibly adaptable software program which takes any information into account and trade according to these details. There are many of these software products available, so finding effective currency trading software systems would only help. Those who use EA’s trade depending on aspects such as maximum drawdown, income factor, expectancy and efficiency. Insider trading doesn’t work when considering these factors. One more reason that traders make use of forex EA’s is mainly because they have amazingly fast response times because they react to price movements and perform a trade in just a few seconds, which gives you a benefit - yet again, this type of method is not dependent upon insider information. Sadly insider information is definitely part of the equity markets - however not so much in the large fx market. If you really like forex day trading, you’re not going to make money from insider trading and you're going to have to do more to generate trading profits.