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Welcome to the Blog!

Posted 12-18-2008 at 05:13 PM by Cableboy
OK, so I have been a casual reader of blogs for a time now, but after attending a webinar about blogs, at long last I have caught up with what is going on. Blogs are important and blogs are the future of the Internet.

This blog is about TraderMetrics, the Virtual Forex market and the forex market in general.

If you don't know, TraderMetrics is a piece of software that replicates the foreign exchange (forex) market. It was originally developed to help me teach young dealers in the emerging markets of Eastern Europe in the 1990's. In addition to teaching the theory of foreign exchange and money markets, I needed something to teach the practical aspects of trading.

That was a long time ago, but the model still holds, and TraderMetrics is a perfect replication of the Interbank forex market.

Now, dear reader, you are probably not an interbank trader; if you have traded forex at all, I guess you have done it as a private investor, or a spread better. In any case, you have traded 'on margin', and basically have been an 'end user'.

So, what would be the attraction of downloading and working with TraderMetrics?

Fun-if you are going to learn something, you may as well have some fun doing it! I also have the feeling that many 'traders' are actually only looking for thrills, which are normally satisfied, in a perverse kind of way, by giving their money away to forex brokers.

And what about today? I am running a 'shadow' virtual forex session, that is shadowing the cable (GBP/USD). The sort of movements that we are having these days reminds me very much of the 70s and 80s. The volatility is extreme. I had an errand to run this afternoon, and when I looked at the charts, I thought something had gone wrong with the Virtual Market.

But no! The British Pound had 'fallen out of bed'. After a flip-flop this morning, which led to a pre-lunch (London time) rally back to around 1.55, it dived down to around 1.49. 6 big figures, or 600 pips! Or nearly 4%!

Is this normal, you ask? What is normal today? The central banks, having tamed inflation in the 90s, put a damper on forex volatility. Ultimately, it is inflation, and thus the devaluation of a currency as a consequence, which ultimately moves exchange rates. Today, we have central banks fighting to reduce interest rates and suddenly inflation is not an issue! They have lost control of the forex market and it will take them many years to get it back.

In my opinion, this gives forex traders a tremendous opportunity. Especially those who wan to make a career of it. I foresee a demand for good foreign exchange dealers, because no one has been trained in recent years.

So, all you students of finance: Get your experience in the Virtual Forex Market
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