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The best master forex trader semarang extreme weight

the best master forex trader semarang extreme weight

Climate impacts challenge our status quo. The frequency of extreme events keeps increasing driven by climate change. The World Bank () indicates that the. ASEAN Investment Report. – Investing in Industry United Nations Conference on. Trade and Development. The ASEAN Secretariat. port products of almost any size and weight over any distance [10]. Road transport is best suited for small shipments and high-. MERCURY MUSIC AWARDS BETTING LINE

Fisheries were no exception. If the trawler ban did, indeed, form a significant rupture in Indonesian fisheries policy, then this rupture affected primarily small-scale fisheries, not the commercial ones that were ostensibly targeted.

Moreover, the trawler ban did not limit the reach of commercial principles, but accelerated its extension to small-scale fisheries. We substantiate this point below, and we show how small-scale fishers have adjusted to the new situation, again by describing the fate of the outgoing and the rising elites. Among the former were Haji Jajuri, Haji Ragum and other trawler owners; among the latter were enterprising people among the small-scale fishers who were willing to become what the government wanted them to become: maritime entrepreneurs in a market-oriented fishery.

Responses to the trawler ban on the Java north coast In response to the trawler ban, some ex-trawler owners on the north coast of Java and Sumatra turned to purse seining Bailey : 36; Potier and Sadhotomo : It was not a smooth exit path. The new purse seiners belonging to ex-trawler owners increased competition for labour in the already existing purse seine fishery.

In the early s, the government had developed Pekalongan into a national level fishing port, with a large fish auction hall and better road access to consumer markets in Jakarta and other cities in Java. Moreover, boat owners at Pekalongan were more willing to invest in the development of boats and equipment than Jajuri was or could afford to be.

Thus, the fleet at Pekalongan grew, Footnote 24 while purse seining in Batang went into decline. Making use of the education they had enjoyed, they exited the fishery and are now doctors, engineers and university lecturers. While the houses of former trawler and purse seiner owners and their families - that is, of those who originally gained their economic capital and cemented their social standing as leaders of fishing associations - are still present in the villages, they are inhabited and maintained by less successful relatives, often old people and perhaps children from the extended family.

The economically active and prominent members of those families have their centers of activity elsewhere, usually in towns. Small-scale fishers did not have the option of exiting the fishery, whether they lost their lucrative employment as trawl crew members or whether they were relieved by the expulsion of trawlers from their fishing grounds. It is worth recalling that members of both groups were found in the same villages and hamlets, often in the same families and households.

Those who had suffered losses in catches due to the operation of trawlers had supported the ban; those who lost their employment and incomes had opposed it. During the violent incidents that triggered the trawler ban, their lives were on the line, and after the trawler ban took effect, they had to return to more physically demanding work and lower incomes in local fisheries or elsewhere.

Pontius Batubara, a fishery observer at the time, estimated that the trawler ban would threaten the livelihoods of Nevertheless, the government did not differentiate between the winners and the losers of the ban among the small-scale fishers, but treated them all the same: as potential entrepreneurs who, with a little bit of start-up funding, would turn from subsistence fishers into independent, self-responsible market participants.

In the early s, small-scale fishers in Indonesia were given the opportunity to acquire a 5 GT boat with non-trawling gear through a low interest, small investment credit scheme KIK. Footnote 25 This scheme formed part of the promotion of micro-credit programmes, and of the financialization of village life and economies.

KIK-credits were promoted in the fishing villages through the--half dead--local fishing cooperatives. Thus, the measure reached only its members, those who were registered as boat owners including those who had abandoned their boats to work on trawlers.

Among the boat owners, the ones with the closest relations with the managers of the cooperatives stood the best chances of receiving a loan. This accounts for the fact that both in Pekalongan and in Batang, the KIK-recipients were clustered in certain fishing villages and hamlets, while other hamlets were left out Damayanti First, fishers in areas with well-developed infrastructure, such as a port, auction halls and feeder roads, and with ready access to urban fish markets were in a better position to benefit.

Where these conditions were not given, for instance in the northern part of Jepara regency, small-scale fishing predominates up until today. Second, for being able to benefit from the funding made available through the KIK-scheme, fishers needed capital of their own.

KIK-boats tended to come in a poor state of repair. Moreover, they came equipped with gill nets that proved unproductive, at least for fishers in Batang and Pekalongan. After a few months of trial and error, they replaced their gill nets with a trammel nets that provided them with a good income during the shrimp season, from December to February.

However, around , shrimp catches became increasingly poor. Those fishers who had saved or could access capital by borrowing from kin started experimenting with various gear types, including longlines and cantrang. Those without capital at their disposal shifted to a small-scale trawl called arad that could be run on a small boat with just one person. They knew that arad fell under the trawler ban, but switching to a legal but more costly fishing gear was beyond their means.

The government was aware of this and occasionally conducted operations to confiscate prohibited gear, but because the fishers lacked a viable alternative, this did not resolve the problem. Footnote 26 In the late s, an unprecedented opportunity presented itself to those KIK-recipients who happened to be using bottom long-liners by then.

Their incomes rose when the rupiah prices of expensive species for export rose at the time of the Asian financial crisis. This gave the owners of bottom long-liners additional capital to enlarge their businesses. At Batang, they equipped their boats with cantrang nets.

Footnote 27 In the s, cantrang nets were predominantly used as a secondary gear to obtain bait fish for the bottom longlines, although some smaller boats used it as their primary gear. Footnote 28 But by the late s, owners of larger boats were shifting to the cantrang as a primary gear, encouraged by enterprising fish traders.

The cantrang was ideally suited for meeting the demand for both large and small, expensive and cheap demersal fish in expanding urban markets. In conjunction with the growth of these markets, a new fishery emerged, the cantrang fishery Fauda et al.

The fishing elites of the early twenty-first century: the cantrang owners The detailed business histories of 20 boat owners that we collected at Batang indicate a significant growth of the local cantrang fleet since the late s, and especially since the early s. At the turn of the century, those twenty owners owned 15 boats between them; in , the total number of their boats had risen to Several of these boat owners estimated that the number of boats active in the port in — was around —, while a decade earlier, about boats would have operated out of this port.

Furthermore, the cantrang boats grew in size, as becomes apparent from the business history of one of them, whom others regard as a role model. In , after shifting from bottom long-liners, he owned his first cantrang of 25GT, in he built one of 53GT, in one 83GT, in and one of GT each. The first, already mentioned above, was strong demand for their catch and the expansion of markets, especially for the small, cheap demersal species that form about half of their catch in volume not in value.

Footnote 29 In the s, they were used as bait fish for bottom long-liners. The owners of the first cantrang in the s treated them as bycatch. In , an enterprising trader set up the first local processing plant for scraping the small fish and sending the flesh to buyers in Sumatra. By , about twelve processing plants were employing between 70 and women from fishing households each, as well as ten to twenty men each who were responsible for packaging the fish and loading the trucks.

Footnote 30 By December , we counted fourteen processing plants, and many of our acquaintances were hoping to set up their own in the near future. The second factor that facilitated the growth of the cantrang fleet was the high vertical mobility that it offered fishers, and that retained them in the sector even as educational opportunities increased. Even simple crew members could rise to being a boat owner.

Some made this transition within the local fishery, first to the specialist role of engineer and then to that of captain. More common, however, was another route to ownership, maritime labour migration. Some migration channels date back to the s, but many emerged more recently, some for women, but most for men.

Fishers from cantrang ports were commonly hired on tuna boats based in Bali or Jakarta, but also on Taiwanese or Japanese fleets and on boats travelling under different flags and operating as far away as Panama, West Africa, New Zealand or the Central Pacific.

In the s, a vocational school was set up in Batang that actively channelled youth from fishing hamlets into maritime migrant labour. At those schools, their fishing background was an advantage rather than a stigma. Out of 15 owners at Batang who were active before , only two mentioned that they relied on bank loans for financing their boats during those years.

Footnote 31 The others acquired their capital from incomes as crew and captains on the local fleet or on Jakarta-based or foreign fleets, or they borrowed from family and friends. Footnote 32 Some owners had debts with multiple banks adding up to more than a billion rupiah. Rigid repayment schedules sat uneasily with fluctuating incomes in the fishery, as all of them confirmed. The more boats an owner had in operation, the easier it was to even out losses from one with profits for the other, and the larger the sums that owners considered safe to borrow.

On the one hand, boat owners did not use bank loans exclusively for business investments, but also for buying land and building houses which, in turn, served as collateral for future loans , for emergencies and sometimes for household consumption. These sources of capital included rotating credit schemes arisan within hamlets and professional groups; credit extended by fish traders or equipment stores toward operating costs; individual loans from moneylenders, and the pawning of mobile assets to pawnshops in urban centers.

Footnote 34 The spectrum of these arrangements is broad, but in general, interest was negotiable, repayment schedules were adjustable to fluctuating catches, and appeal to creditors on the basis of compassion and social trust were acceptable. Moreover, most arrangements, donors and creditors were both aware of their mutual interdependence.

When fishers first took out bank loans, they considered them less important and less binding than such arrangements. They stated calmly that they would repay their bank loans sak legane when I get the chance , after fulfilling their various social obligations Semedi : By now, this order has been reversed. People procure larger portions of their capital through bank loans than through these various other arrangements; they feel bound to repay their bank loans first, before attending to other obligations, and finally, the principles of the banking system - above all, self-responsible, punctual repayment - are increasingly applied to diverse types of borrowing and lending arrangements.

Those who fail to repay their debts on time suffer shame and social stigma. This would have been different in the s or s, when the values of the banking system were not yet internalized and generalized to other types of financial relations. Thus, the enclosure of fisheries that has been achieved in North America by the mechanism of individual transferable quotas e.

Pinkerton , Pinkerton and Davis ; Knott and Neis ; Edwards and Pinkerton has been achieved on the Java north coast by means of small-scale and micro-credit schemes Adam and Lestari While Pomeroy et al. Footnote 35 As we will show below, the cantrang ban did not interrupt, but provided a further occasion for the extension of bank loans and indebtedness see e.

Bank Indonesia , this time ostensibly to help fishers transition to new gear. They perceived as an opportunity what we, as ethnographers, perceived of as the forceful inclusion of fishery in the market through the mechanism of debt see McCarthy They wanted to become rich fast.

The cantrang was perfectly suited to this end, because it could be used year round and targeted a broad range of demersal species, large and small, for which demand was high. In addition to this motive, however, we suggest that a second one is equally or more important.

Fishers, who had long been socially, culturally and politically marginal in predominantly agrarian Java, wanted to engage as full citizens in the modern nation state. They wanted to be able to come and go in urban office buildings, and to get to know people and opportunities beyond the world of the fishing hamlets.

Their cooperation with the banks offered them this opportunity, just as the fishing organisations had to their grandfathers in the early twentieth century. But while their grandfathers had accessed these opportunities by becoming clients of a paternalistic state, the condition for fishers to enjoy them now was that they become proper market subjects. They had to behave as calculating individuals, self-responsible for repaying their debts on time.

Their efforts were frustrated when in , the government intervened in the rapid growth of the fleet and announced that the use of the cantrang and related gear types would be prohibited. The cantrang ban and the transition period The reasons cited for this intervention - the third we discuss in this paper - were environmental Ambari ; Lelono and Bintoro Stock assessments suggested that demersal stocks of the Java Sea were being over-fished. They explained to fishers that the cantrang were not environmentally friendly tidak ramah lingkungan.

Specifically, they highlighted three problems with their gear, from the perspective of the government: First, because of their fine mesh size, fish and not only fish of all sorts and sizes got caught in their nets; second, the use of the net had destructive effects on the seafloor, and third, the fish stocks in the Java Sea were already declining because of overproduction. They were expecting attempts to enforce fishing zones or similar kinds of action, but they were not expecting a total ban on the use of their gear, among others.

They were especially disappointed in the Minister of Marine Affairs of Fisheries, Susi Pudjiastuti, who had started her career as a fish trader. They had not imagined that she would turn against them with equally radical measures. The announcement of the ban on January 9, came during the west monsoon, when most boats were in port because of bad weather.

It granted all fishers a transition period of three months, during which to exchange their newly prohibited gear with a more environmentally friendly gear type. The cantrang boats—the main target of the measure—were to be re-registered and re-measured. Cantrang fishers at Batang were incredulous. They accused the Minister of Marine Affairs and Fisheries of trying to sharpen her political profile at the cost of fishers, whose livelihoods were on the line.

On 25th January and 3rd March, they blocked the Java north coast. In other ports along the Java north coast, more affluent boat owners sought legal aid, and from those ports, especially from Rembang, news about an emergent national campaign travelled to the cantrang fishers at our field site at Batang.

The campaign took a three-pronged approach. After several provisional renewals of the transition period, the period was eventually extended by decree in October to last until December GoI, Minister of Marine Affair Circular Letter No. Credit schemes for the owners of small boats below 10GT began in ; in early , the Central Javanese governor broke the news to fishers at Batang that local governments would set up a further credit scheme to assist fishers in changing their gear.

Footnote 37 Further negotiations at the presidential palace in July led to further concessions, among others, credit opportunities for owners of boats above 30GT. The condition of re-measuring all boats remained, however, and the government announced that no new permits for cantrang would be issued.

Besides crew members, captains and boat owners, large numbers of people working in fish trading, processing and auxiliary industries were affected. Many households of ordinary crew members in the fishing hamlets lost two or more incomes, as the men worked on the boats and the women in the processing industry.

Inner-household relations became strained as a result, as well. Boat owners, though ostensibly with much more money to spare, were stuck in debts and with boats whose price dropped precipitously after the announcement of the ban. Footnote 38 Nevertheless, fishers in Batang were less visible in fisher activism at the national level than cantrang fishers at other ports.

In , many of them joined the early demonstrations at their port, on the Java north coast road and in Jakarta. However, they quickly distanced themselves from the physical violence at some demonstrations. Restoring the cantrang fishery was, to be sure, the stated wish and demand of the vast majority of fishers at Batang, too. However, the actual responses of boat owners to the ban suggest that most were busy, one by one rather than collectively, to find a way out of a fishery that many knew was only viable under conditions of maximal neglect by the government.

To run cantrang boats profitably, as these fishers knew very well, was not possible within existing regulations pertaining to fishing zones and specifications for obtaining permits for boats. In the following section, we present some ethnographic details to support this conclusion, which is ours and not that of fishers themselves.

Responses of the cantrang elite Based on our conversations with boat owners at Batang and our observations of their business activities since , we distinguish between three categories of owners, differentiated by the size and number of their boats and their non-maritime assets. These factors made different lines of action available and attractive to them after the announcement of the ban. Not all owners within a particular category pursued those options.

If, how fast and how vigorously they took them up, depended on personal networks, experiences and inclinations. The first category of boat owners is small but influential. It consists of six extremely well-to-do owners out of a total of perhaps Three of them are sons, and another is a son-in-law of a single successful beneficiary of the s KIK-scheme.

The other two later arrivals who had benefited from the profitability of the cantrang. Their households were economically secure. They owned rice-land or fruit orchards and urban real estate in addition to their boats. Besides owning several large cantrang boats, two of them also owned one large purse seiner, and one of them owned two purse seiners. Those purse seiners were operating in Eastern Indonesian waters and sold their catches either at sea or at the port of Pekalongan. They were more profitable for their owners than the cantrang boats, and their gear was deemed environmentally friendly.

The only reason why so few people owned large purse seiners at Batang was that the original investment required was very high, because they required freezers. Footnote 39 Those among the top six owners who had transitioned to purse seining before were relatively mildly affected by the cantrang ban. They suffered losses, but their businesses were viable even without their cantrang boats. For the ones who did not own purse seiners yet, the priority after the ban was to speed up the transition, which was usually a matter of negotiating with the banks.

One of them also invested in a gill net. Unlike purse seiners, gill netters could operate in the Java Sea, legally and profitably, but there were no captains and crew at Batang who knew how to operate them. Thus, Batang owners hired captains and crew members from Indramayu West Java , where gill netting was common. Their negotiating position, both vis-a-vis their initial contacts and agents at Indramayu and against captains and crew was very weak.

The first gill net owner from Batang stood by helplessly as his crew from Indramayu abandoned the boat after what was supposed to be half of its time at sea, carrying the supplies fuel, food etc. They argued that the catch was too poor for them to complete the trip.

For this group of owners, the gains of the national campaign with respect to financial support for fishers with boats above 30GT in size were helpful but, according to our knowledge, not essential. This group of owners, most of whom had been among the first to adopt the cantrang, had already moved on. The one exception among the six was an owner known for his ambition to become a prominent, influential community leader among the fishers.

Lacking support from other owners, who did not trust him because, unlike them, he had the necessary assets that would allow him to opt out if necessary, the organisation remained a one-man show until early Unlike the top six owners, boat owners in the second category could not move on so easily, because they were heavily invested in the cantrang fishery.

They were living well, many of them in new, comparatively large houses and with one or more cars. However, they relied for their income exclusively or almost exclusively on their large or medium-size cantrang boats, often complemented by boat building or cantrang-dependent processing businesses.

Many of these owners had experienced precarious ups and downs in their businesses before the cantrang ban, and most were heavily indebted. When the Minister of Marine Affairs and Fisheries banned the use of their boats, their businesses stalled. It is not surprising that many vocal opponents of the ban, including some of the few who actively supported the national campaign came from this category of owners.

The campaign met their goals: extending the transition period, making funding available, but finally, not transitioning to another gear type but keeping their cantrang boats running. They presented themselves as small-scale fishers who had done exactly what was expected of them: to develop the entrepreneurial visions and skills to set up and run productive businesses.

These cantrang owners argued that the government, when it blamed the cantrang boats for damaging the seafloor, were mistaking cantrang boats for trawlers, in environmental terms but also socially. With respect to the environmental dimension, they echoed and further specified demands of the national campaign for the government to prove that the cantrang was indeed environmentally harmful.

They suggested that the government had failed to take into consideration the technical differences between cantrang laid out in a semi-circle on the sea floor and then lifted and trawl dragged along the sea floor. They added that, should the cantrang indeed prove environmentally harmful, then they would be willing to give it up, but only if the government could suggest a viable alternative.

Less publicly, they complained that the government was mistaking their options as cantrang owners with those of the trawler owners of the past. Here, the ethnic stereotypes were revived again that the government itself had promoted in the s. Cantrang owners suggested that the trawler owners of the past could easily shift their capital because they were Chinese and therefore did not face the same capital constraints as Javanese small-scale fishers; they themselves, by contrast, did not have these options.

They had taken great risks in building their fleet with the help of bank loans; why would the government now punish them by rendering their boats not only unproductive but also worthless? The day-to-day activities of these owners were consistent with their political pronouncements in favour of rehabilitating the cantrang, of their ambivalence toward a coalition led by the biggest owners and of their own financial hardships. They were busy re-negotiating bank loans, selling one or several cars, and selling unproductive boats if they could find buyers.

Their immediate concern, from onward, was to have their boats pass the compulsory re-measurement to make sure that all boats were below 30GT. Most boats were, in fact, larger, and their owners had to find creative solutions. One owner nailed the two storage rooms in the back of his boat shut; because of the peculiar shape of his boat, the officials did not notice and his 50GT boat, until then running on a 23GT permit, passed for 32GT and was permitted to continue running.

Another way around the problem of re-measurement, risky but common, was to acquire legal permits for boats that would not pass the re-measurement process, and keep them in operation on those permits. A lively trade in permits for sale or lease set in. Many owners, however, also suffered stress and boredom as their boats were grounded.

One man whom we had known as an active and enthusiastic owner of two boats and builder of many others spent his days on the beach, angling. Another started breeding fighting fish ikan cupang, Betta sp. Yet others among the male owners involved themselves in the businesses of their wives, some of whom ran small stores from their homes or online. Footnote 40 Our conversations with boat owners from this group suggest that many of them were becoming increasingly aware during the transition period that with or without the ban, the cantrang fishery was facing serious problems.

There were technical limitations that could not easily be overcome. Boat owners were aware that they could only significantly expand their range or operation, access rich fishing grounds and increase their income by equipping their boats with cold storage units, which required a major investment. There was no obvious solution to these technical problems, and owners whose capital was bound up in their now unproductive boats and with bank loans to repay did not see themselves in a position to experiment.

Many of them switched back and forth during those years between gloominess and demands for a solution, expressed sometimes calmly, sometimes furiously. Yet more acutely aware of those underlying problems of the cantrang fishery, and of the impossibility not just of expansion but also of running cantrang boats within the limits of what was currently legal were owners of a third category. For several years, they had experienced not only highly uncertain catches, but also declining returns from their boats.

Because their boats could not travel far, they knew that near-shore fish stocks were already depleted. Unlike the owners of larger boats that travelled further, they had evidence of this, along with evidence of the declining returns from their boats, black on white. They knew already before the ban that their businesses had reached a dead end. A few owners from this category were already actively seeking a way out of the fishery in , when we began fieldwork in the cantrang villages.

One of these actively diversifying owners was the daughter of a small-scale fisherman and a fish trader, now 39 years in age, who had fought hard to complete vocational school and learn accounting. At the same time, she took out a bank loan for diversifying her business.

A friend in Jakarta supervised the truck, and they shared the profits. The income was low, and so she kept searching for other options. Online, she read stories of small investors like her who had profited from recycling plastic, and in , she set up her own recycling business.

Together with her husband, she hired people to collect bottles in the fishing villages, rented a workspace to sort the plastic, taught herself the relevant categories, qualities and market prices and negotiated with a recycling plant that was willing to buy her bottles.

She gave up on this business in because the sellers and buyers of bottles took advantage of her inexperience. Laughing, she commented that she knew all about fish, from the time when she was small, but plastic was a whole new world in which she had to start out with baby steps. This owner, along with a few others like her, perceived the cantrang ban at least as much as an opportunity as a threat.

When the government announced funding for cantrang owners willing to convert their boats into gill nets, she stepped forward. She took out a loan of million about However, she encountered the same problem as the large-scale gill net owner: agents, captain and crew from Indramayu whom she depended on for running this boat turned out unreliable. She tried to run the boat with half its crew from Indramayu and the other half from Batang, but the two parts of the crew started arguing at sea, broke off the trip, returned to shore and carried the supplies home.

After two fishing trips, it turned out that a both of 30 gross ton with a relatively small gill net could not compete with the larger gill nets for income, and thus also for labour that was scarce in this fishery, too. She lacked a source of income and suffered serious symptoms of stress. When, in , the government finally decided to exempt the ports on the Java north coast from the ban on the cantrang, she felt let down.

Conclusion To summarize our key findings, one point of contrast between the cantrang ban and previous interventions concerns the social, political and economic position of the established elites and their ability to transfer their capital out of the fishery; another is the readiness of new elites to assume their role as local bearers of a new governance principle.

In , the established elite targeted by the intervention were predominantly Chinese entrepreneurs. Historical sources consistently emphasize their ethnic difference, and so do the fishers in our field sites. The intervention was successful insofar as the Chinese entrepreneurs did indeed withdraw from their formal role as local patrons and creditors to fishers. But neither these elites nor the reliance on personalized patronage disappeared from the fishery entirely.

Chinese entrepreneurs remained active as traders; for better understanding their recent history, ethnographic research along their trade routes, beyond the fishing villages in which we have worked so far is required. Fishers, in the meantime, developed relations of personalized patronage with members of the new elites, whom the government had identified and installed in formal leadership positions in the fisheries organisations and whom it continued to support.

In their official positions as organisation managers, the latter represented the new governance principle of state-sponsored protection of the state. However, personalized relations were required for fishers to access these sources of state funding and protection. Thus, the implementation of the new governance principle was neither complete nor even across locations and specific social circles in the villages.

In , the New Order government successfully framed what was effectively the removal of state protection for small-scale producers as an act of support for ethnically Javanese small-scale fishers against Chinese investors in the commercial trawler fishery. As our analysis shows, this is a highly selective portrayal of the situation, although it may have lent legitimacy to the intervention. Based on our ethnographic data, Javanese trawler owners who lived in the fishing villages in Batang and Pekalongan switched to purse seining, although this turned out to be a temporary solution.

Moreover, both the general political climate and their physical and social proximity to small-scale fishers who welcomed the ban would have made it difficult for them to openly oppose the ban. By the time purse seining became unprofitable in the mids Batang to mids Pekalongan , these owners were able to exit the fishery without a decline in status, thanks to the opportunities that their children had acquired through education.

In fact, the social standing of their families increased as a result, since the white-collar and civil servant jobs that their children acquired had a cultural value that surpassed even that of a successful fishing business. Put differently, rather than a renewed commitment to the protection of small-scale fishers, the trawler ban accelerated the extension of market principles to small-scale producers, and for making economic development based on market principles the key governance principle for small-scale fisheries.

Following the trawler ban, the installation of new elites, who impersonated the new principle of un- regulating small-scale fisheries by linking them directly with financial, fish and maritime labour markets, took time.

From our perspective, the new fisher-entrepreneurs only became firmly established thanks to the capital influx during the monetary crisis of the late s. They thrived in the early s, but by the s, their economic success was perceived as a problem by fisheries officials. The cantrang ban lacked the ethnic dimension of earlier government interventions. In this case, the elites that were being pushed out of the fishery were unmistakably Javanese fishers who described themselves as small-scale, despite the size and productivity of their boats.

They were ordinary people who had achieved their elite position precisely by re-fashioning themselves as entrepreneurs in a market-oriented governance system, as the previous government demanded of them after the trawler ban. When the new government turned against them, reasoning that their gear was not environmentally friendly, these established elites occupied the moral high ground, and the government had to fear an electoral backlash if it carried through with the ban in its political heartland.

Moreover, and in contrast to previous interventions, only very few cantrang owners had the assets and capital necessary to exit the fishery. The majority of the cantrang elite was literally tied to their boats and tied to the fishery by their high levels of indebtedness. Their children were still in school, they had heavy bank loans to repay and lacked contacts, knowledge or skills that would have facilitated their transfer to another sector.

Being asked to exit the fisheries without having a viable exit road except for registering bankruptcy , they resisted, and the political conditions at the time allowed them to do so openly. A second set of contrasts between the cantrang ban and earlier interventions concerns the role of rising elites, or local allies who would become the bearers of the new governance principle. This was, of course, consistent with the new principle of market-based growth.

True to this principle, the government provided support in the form of infrastructure to local trawler and purse seiner owners in order to build their purse seining businesses. At the same time, it offered loans to small-scale fishers who were to become the new, entrepreneurial elites. After this initial support, these new elites were expected to assert themselves in the market, as indeed they did, though they only became firmly established after the Asian financial crisis. This raises the question, then, what would have been appropriate measures to support to members of a new elite who would implement the governance principle of sustainability.

Furthermore, one might ask if such measures were in evidence yet by Most owners were reticent. Besides general mistrust of the government because of its zigzag course between and , our observations suggest that there were translation problems concerning the new governance principle, sustainability. The government kept insisting that the cantrang were harming the sea floor, a point that few cantrang fishers were willing to cede.

Unfortunately, it appears that the consultation processes that were carried out before the cantrang ban was announced were insufficient to make these fishers visible, and to convey their concerns and awareness of existing limitations of their fishery to the government. To the contrary, with the complete ban of the cantrang and its reasoning about sustainability, the government alienated those owners. When finally, the credits offered after the ban for changing gear were made available only slowly and were apparently inadequate, as our example above has shown, the government lost whatever mostly tacit support it had for the cantrang ban in the fishing villages.

By , no prospective elites who would become the bearers of the new governance principle of sustainability had stepped forward in our field sites yet. If and by what means this will be achieved, and if it will even be attempted under a new fisheries minister, remains an open question at this point in time. Notes Cantrang is a seine shaped into a sack, with a pair of wings on its sides. Each wing is connected with a pulling rope of up to m. The size of cantrang seine itself is small. After seven months of battles, Majapahit forces defeated the Balinese king and captured the Balinese capital of Bedulu in Arya Kenceng led his brothers to govern Bali under Majapahit suzerainty, and he would become the progenitor of the Balinese kings of the Tabanan and Badung royal houses.

Through this campaign, Majapahit planted a vassal dynasty that would rule the Bali Kingdom in the following centuries. Tribhuwana ruled Majapahit until the death of her mother in She abdicated the throne in favour of her son, Hayam Wuruk. Reign of Hayam Wuruk and Gajah Mada's conquest[ edit ] Rough estimations of Majapahit's conquest of the Indonesian archipelago Nusantara in the 13th century, its decline and its eventual fall in the early 16th century to Demak Sultanate.

The existing historical records from several sources [note 5] only partially describe the years listed and thus are subject to revisions. Hayam Wuruk , also known as Rajasanagara, ruled Majapahit in — During this period, Majapahit attained its peak with the help of the prime minister Gajah Mada. Under Gajah Mada's command — , Majapahit conquered more territories and became the regional power.

It is considered a commercial trading empire in the civilisation of Asia. The terracotta figure popularly believed by Mohammad Yamin as the portrait of Gajah Mada , collection of Trowulan Museum. His claim, however, is not backed by historical background. Multiple battles happened with the first battle in April ; [35] killed Majapahit soldiers were burned in Tambak Wasi.

Nansarunai captain Jamuhala was also killed in this battle. While prince Jarang and prince Idong hid in Man near Tabalong-kiwa river. Nansarunai soldiers were concentrated in Pulau Kadap before the second battle happened in December Casualties from this second battle were buried in Tambak in Bayu Hinrang. While surviving Javanese, Dayak, Madurese, and Bugis soldiers, sailors, metalsmiths of this war settled in Amuntai, Alabio, and Nagara. Hayam Wuruk decided, probably for political reasons, to take princess Citra Rashmi Dyah Pitaloka of neighbouring Sunda Kingdom as his consort.

In the Sunda king and his royal family came to Majapahit to accompany and marry his daughter to Hayam Wuruk. The skirmish between the Sunda royal family and the Majapahit troops on Bubat square was inevitable. Despite courageous resistance, the royal family were overwhelmed and decimated. Almost the whole of the Sundanese royal party was killed. The Nagarakretagama, written in , depicts a sophisticated court with refined taste in art and literature and a complex system of religious rituals.

Local traditions in many parts of Indonesia retain accounts of 14th-century Majapahit's power in more or less legendary form. The direct administration of Majapahit did not extend beyond east Java and Bali , but challenges to Majapahit's claim to overlordship in outer islands drew forceful responses.

He invited China to resume the tributary system, just like Srivijaya did several centuries earlier. Learning this diplomatic manoeuvre, immediately King Hayam Wuruk sent an envoy to Nanking, convinced the emperor that Malayu was their vassal, and was not an independent country.

Gajah Mada's other renowned general was Adityawarman , known for his conquest in Minangkabau. The nature of the Majapahit empire and its extent is subject to debate. It may have had limited or entirely notional influence over some of the tributary states , including Sumatra, the Malay Peninsula, Kalimantan , and eastern Indonesia, over which authority was claimed in the Nagarakretagama. About the time Majapahit was founded, Muslim traders and proselytisers began entering the area.

Experts suggest that the cemetery was used between and CE, which means Muslim traders had resided in the capital as early as the midth century during the reign of Hayam Wuruk. The close proximity of the site with the kraton means there were Muslim people in close relation with the court. Hayam Wuruk also had a son from his previous marriage, the crown prince Wirabhumi , who also claimed the throne.

By the time of Hayam Wuruk's death, Majapahit has lost its grip on its vassal states in the northern coasts of Sumatra and Malay peninsula, the latter which according to Chinese sources, would become a tributary state of the Ayutthaya Kingdom until the rise of Malacca Sultanate , supported by the Ming Dynasty. Singapura was finally sacked by Majapahit in , [50] [51] [52] after approximately 1 month long siege by jong and , men.

Main article: Regreg War A war of succession, called the Regreg War , is thought to have occurred from to Wikramawardhana was victorious. Wirabhumi was caught and decapitated. However the civil war drained financial resources, exhausted the kingdom, and weakened Majapahit's grip on its outer vassals and colonies. During the reign of Wikramawardhana, a series of Ming armada naval expeditions led by Zheng He , [26] : — a Muslim Chinese admiral, arrived in Java several times spanning the period from to These Chinese voyages visited numbers of ports in Asia as far as Africa, including Majapahit ports.

It was said that Zheng He has paid a visit to the Majapahit court in Java. These massive Chinese voyages were not merely a naval exploration, but also a show of power and a display of geopolitical reach. The Chinese Ming dynasty had recently overthrown the Mongol-led Yuan dynasty, and was eager to establish their hegemony in the world, which changed the geopolitical balance in Asia.

However, perhaps the most significant Chinese intervention was its support for the newly established Sultanate of Malacca as a rival and counter-weight to the Majapahit influence of Java. The Hindu Majapahit was the most powerful maritime power in Southeast Asian seas that time and were opposed to Chinese expansion into their sphere of influence. The Ming's support for Malacca and the spread of Islam propagated by both Malacca and Zheng He's treasure fleet has weakened Majapahit maritime influence in Sumatra, which caused the northern part of the island to increasingly converting to Islam and gained independence from Majapahit, leaving Indragiri , Jambi and Palembang , remnants of the old Srivijaya , the only suzerainty under Majapahit in Sumatra, [note 7] bordering Pagaruyung Kingdom on the west and independent Muslim kingdoms on the north.

This Ming dynasty voyages are extremely important for Majapahit historiography, since Zheng He's translator Ma Huan wrote Yingya Shenglan , a detailed description of Majapahit, [19] which provides valuable insight on the culture, customs, and also various social and economic aspects of Java during Majapahit period.

Malacca actively encouraged the conversion to Islam in the region, while the Ming fleet actively established Chinese-Malay Muslim community in coastal northern Java, thus created a permanent opposition to the Hindus of Java. By , the expeditions had established Muslim Chinese, Arab and Malay communities in northern ports of Java such as Semarang , Demak , Tuban , and Ampel ; thus Islam began to gain a foothold on the northern coast of Java. Malacca prospered under Chinese Ming protection, while the Majapahit were steadily pushed back.

Wikramawardhana ruled until and was succeeded by his daughter Suhita , [26] : who ruled from to She was the second child of Wikramawardhana by a concubine who was the daughter of Wirabhumi. Both of them had a daughter together and he stayed with her in Java. Kelantan was ruled by his brother, Sultan Sadik Muhammad Shah, until his death in The reign of Suhita was the second time Majapahit was reigned by a queen regnant after her great grandmother Tribhuwana Wijayatunggadewi.

Her reign is immortalized in Javanese legend of Damarwulan , as it involves a maiden queen named Prabu Kenya in the story, and during Suhita's reign there was a war with Blambangan as stated in the legend. After Kertawijaya died, Bhre Pamotan became a king with formal name Rajasawardhana.

He died in A three-year kingless period was possibly the result of a succession crisis. Girisawardhana , son of Kertawijaya, came to power in He died in and was succeeded by Singhawikramawardhana. The divide[ edit ] In Prince Kertabhumi rebelled against Singhawikramawardhana, promoting himself as the king of Majapahit. Deposed Singhawikramawardhana retreated upstream of Brantas River, moved the kingdom's capital further inland to Daha the former capital of Kediri kingdom , effectively splitting Majapahit, under Bhre Kertabumi in Trowulan and Singhawikramawardhana in Daha.

Singhawikramawardhana continued his rule until he was succeeded by his son Girindrawardhana Ranawijaya in And in between this period of the dividing court of Majapahit, the kingdom found itself unable to control its western part of the already crumbling empire.

The rising power of the Sultanate of Malacca began to gain effective control of the Malacca Strait in the midth century and expanding its influence to Sumatra. And amidst these events, Indragiri and Siantan, according to Malay Annals were given to Malacca as a dowry for the marriage of a Majapahit princess and the sultan of Malacca , [61] further weakening Majapahit's influence on the western part of the archipelago. Kertabhumi managed to stabilize this situation by allying with Muslim merchants, giving them trading rights on the north coast of Java, with Demak as its centre and in return asked for their loyalty to Majapahit.

This policy boosted the Majapahit treasury and power but weakened Hindu-Buddhism as its main religion because Islamic proselytizing spread faster, especially in Javanese coastal principalities. Hindu-Buddhist followers' grievances later paved the way for Ranawijaya to defeat Kertabumi. Dates for the end of the Majapahit Empire range from , traditionally described in sinengkalan or chandrasengkala chronogram Sirna ilang kertaning bhumi that is correspond to Saka , [note 8] the ends of centuries being considered a time when changes of dynasty or courts normally ended to Demak sent reinforcements under Sunan Ngudung , who later died in battle and was replaced by Sunan Kudus , but they came too late to save Kertabumi although they managed to repel the Ranawijaya army.

This event is mentioned in Trailokyapuri Jiyu and Petak inscription, where Ranawijaya claimed that he already defeated Kertabhumi and reunited Majapahit as one Kingdom. This event led to the war between the Sultanate of Demak and Daha since Demak rulers were descendants of Kertabhumi.

During this period of Majapahit's retreat to the inland Daha and war in Java, Demak , being the dominant ruler of the Javanese coastal lands and Java as a whole, seized the region of Jambi and Palembang in Sumatra from Majapahit. In , there was a turning point when Girindrawardhana was deposed by his vice-regent, Udara. After this coup, the war between Demak and Daha receded, since Raden Patah , Sultan of Demak, left Daha alone like his father had done before, some source said Udara agreed to become a vassal of Demak, even marrying Raden Patah's youngest daughter.

Meanwhile, in the west, Malacca was captured by Portuguese in The delicate balance between Demak and Daha ended when Udara, seeing an opportunity to eliminate Demak, asked for Portuguese help in Malacca, forcing Demak to attack both Malacca and Daha under Adipati Yunus to end this alliance.

The refugees fled to the east to avoid Demak retribution for their support for Ranawijaya against Kertabhumi. Demak came under the leadership of Raden later crowned as Sultan Patah, who was acknowledged as the legitimate successor of Majapahit. Another argument supports Demak as the successor of Majapahit; the rising Demak sultanate was easily accepted as the nominal regional ruler, as Demak was the former Majapahit vassal and located near the former Majapahit realm in eastern Java.

Demak established itself as the regional power and the first Islamic sultanate in Java. After the fall of Majapahit, the Hindu kingdoms in Java only remained in Pasuruan , Panarukan , and Blambangan [70] : 7 on the eastern edge and Sunda Kingdom Pajajaran in the western part. Gradually Hindu communities began to retreat to the mountain ranges in East Java and also to the neighbouring island of Bali. A small enclave of Hindu communities remain in the Tengger mountain range.

Military[ edit ] The army of Majapahit is divided into 2 main types, namely prajurit professional soldier and levy taken up from peasants. The main weapon was spears. A double-barrelled cetbang on a carriage, with swivel yoke, ca. Gunpowder technology entered Java in the Mongol invasion of Java A.

Majapahit under Mahapatih prime minister Gajah Mada utilized gunpowder technology obtained from the Yuan dynasty for use in the naval fleet. Early cetbang also called eastern-style cetbang resembled Chinese cannons and hand cannons. Eastern-style cetbangs were mostly made of bronze and were front-loaded cannons. It fires arrow-like projectiles, but round bullets and co-viative projectiles [note 10] can also be used.

These arrows can be solid-tipped without explosives, or with explosives and incendiary materials placed behind the tip. Near the rear, there is a combustion chamber or room, which refers to the bulging part near the rear of the gun, where the gunpowder is placed. The cetbang is mounted on a fixed mount, or as a hand cannon mounted on the end of a pole. There is a tube-like section on the back of the cannon.

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Naked intervention, or unsterilized intervention, refers to the sole foreign exchange activity All that takes place is the intervention itself, in which the Federal Reserve either buys or sells U S dollars against a foreign currency In addition to the impact on the foreign exchange market, there is also a monetary effect on the money supply If the money supply is impacted, then consequent adjustments must be made in interest rates, in prices, and at all levels of the economy Therefore, a naked foreign exchange intervention has a long-term effect.

Sterilized intervention neutralizes its impact on the money supply As there are rather few central banks that want the impact of their intervention in the foreign exchange markets to affect all corners of their economy, sterilized interventions have been the tool of choice This holds tr ue for the Federal Reserve as well. The sterilized intervention involves an additional step to the original currency transaction This step consists of a sale of government securities that offsets the reserve addition that occurs due to the intervention It may be easier to visualize it if you think that the central bank will finance the sale of a currency through the sale of a number of government securities.

Because a sterilized intervention only generates an impact on the supply and demand of a certain currency, its impact will tend to have a short-to medium-term effect. In the wake of World War II, both Germany and Japan were helped to develop new financial systems Both countries created central banks that were fundamentally similar to the Federal Reserve Along the line, their scope was customized to their domestic needs and they diverged from their model.

The European Central Bank was set up on June 1, to oversee the ascent of the euro D uring the transition to the third stage of economic and monetary union introduction of the single currency on January 1, , it was responsible for carrying out the Community s monetary policy The ECB, which is an independent entity, supervises the activity of individual member European central banks, such as Deutsche Bundesbank, Banque de France, and Ufficio Italiano dei Cambi The ECB s decision-making bodies run a European System of Central Banks whose task is to manage the money in circulation, conduct foreign exchange operations, hold and manage the Member States official foreign reserves, and promote the smooth operation of payment systems The ECB is the successor to the European Monetary Institute EMI.

The German central bank, widely known as the Bundesbank, was the model for the ECB The Bundesbank was a very independent entity, dedicated to a stable currency, low inflation, and a controlled money supply The hyperinflation that developed in Germany after World War I created a f ertile economic and political scenario for the rise of an extremist political party and for the start of World War II The Bundesbank s chapter obligated it to avoid any such economic chaos.

The Tankan s findings are not automatic triggers of monetary policy changes Generally, the lack of independence of a central bank signals inflation This is not the case in Japan, and it is yet another example of how different fiscal or economic policies can have opposite effects in separate environments.

The Bank of England may be characterized as a less independent central bank, because the government may overrule its decision The BOE has not had an easy tenure Despite the fact that British inflation was high through , reaching double-digit rates in the late s, the Bank of England did a marvelous job of proving to the world that it was able to maneuver the pound into mirroring the.

Exchange Rate Mechanism. After joining the ERM late in , the BOE was instrumental in keeping the pound within its 6 percent allowed range against the deutsche mark, but the pound had a short stay in the Exchange Rate Mechanism The divergence between the artificially high interest rates linked to ERM commitments and Britain s weak domestic economy triggered a massive sell-off of the pound in September The Bank of France has joint responsibility, with the Ministry of Finance, to conduct domestic monetary policy Their main goals are non-inflationary growth and external account equilibrium France has become a major player in the foreign exchange markets since the ravages of the ERM crisis of July , when the French franc fell victim to the foreign exchange markets.

The Bank of Canada is an independent central bank that has a tight rein on its currency Due to its complex economic relations with the United States, the Canadian dollar has a strong connection to the U S dollar The BOC intervenes more frequently than the other G7 central banks to shore up the fluctuations of its Canadian dollar The central bank changed its intervention policy in after admitting that its previous mechanical policy, of intervening in increments of only 50 million at a set price based on the previous closing, was not work ing.

Kinds Of Foreign. Exchange Market. Currency spot trading is the most popular foreign currency instrument around the world, making up 37 percent of the total activity See Figure 3 1 57 5 1 37 1 2 3 4 Figure market share of the foreign exchange instruments as of 1- spot 2 options 3 futures 4 forwards and swaps. The fast-paced spot market is not for the fainthearted, as it features high volatility and quick profits and losses A spot deal consists of a bilateral contract whereby a party delivers a specified amount of a given currency against receipt of a specified amount of another currency from a counterparty, based on an agreed exchange rate, within two business days of the deal date The exception is the Canadian dollar, in which the spot delivery is executed next business day.

The name spot does not mean that the currency exchange occurs the same business day the deal is executed Currency transactions that require same-day delivery are called cash transactions The t wo-day spot delivery for currencies was developed long before technological breakthroughs in information processing.

This time period was necessary to check out all transactions details among counterparties Although technologically feasible, the contemporary markets did not find it necessary to reduce the time to make payments. Human errors still occur and they need to be fixed before delivery When currency deliveries are made to the wrong party, fines are imposed.

In terms of volume, currencies around the world are traded mostly against the U S dollar, because the U S dollar is the currency of reference The other major currencies are the euro, followed by the Japanese yen, the British pound, and the Swiss franc Other currencies with significant spot market shares are the Canadian dollar and the Australian dollar. In addition, a significant share of trading takes place in the currencies crosses, a non-dollar instrument whereby foreign currencies are quoted against other foreign currencies, such as euro against Japanese yen.

There are several reasons for the popularity of currency spot trading Profits or losses are realized quickly in the spot market, due to market volatility In addition, since spot deals mature in only two business days, the time exposure to credit risk is limited Turnover in the spot market has been increasing dramatically, thanks to the combination of inherent profitability and reduced credit risk The spot market is characterized by high liquidity and high volatility Volatility is the degree to which the price of currency tends to fluctuate within a certain period of time Free-floating currencies, such as the euro or the Japanese yen, tend to be volatile against the U S dollar.

In an active global trading day 24 hours , the euro dollar exchange rate may change its value 18, times An exchange rate may fly pips in a matter of seconds if the market gets wind of a significant event On the other hand, the exchange rate may remain quite static for exte nded periods of time, even in excess of an hour, when one market is almost fi nished trading and waiting for the next market to take over This is a common occurrence toward the end of the New York trading day Since California failed in the late s to provide the link between the New York and Tokyo markets, there is a technical trading gap between around 4 30 pm and 6 pm EDT In the United States spot market, the majority of deals are executed between 8 am and noon, when the New York and European markets overlap See Figure 3 2.

The activity drops sharply in the afternoon, over 50 percent in fact, when New York loses the international trading support Overnight trading is limited, as very few banks have overnight desks Most of the banks FOREX On-line Manual For Successful Trading 25 send their overnight orders to branches or other banks that operate in the active time zones 29 66 5 1 2 3 Figure 3 2 Distribution of the trading activity in the United States spot market in time 1 transactio ns volume between 12 p m and 4 p m 2 between 4 p m and 8 p m 3 between 8 a m and 12 p m.

The major traders in the spot market are the commercial banks and the investment banks, followed by hedge funds and corporate customers In the interbank market, the majority of the deals are international, reflecting worldwide exchange rate competition and advanced telecommunication systems However, corporate customers tend to focus their foreign exchange activity domestically, or to trade through foreign banks operating in the same time zone Although the hedge funds and corporate customers business in foreign exchange has been growing, banks remain the predominant trading force.

The bottom line is important in all financial markets, but in currency spot trading the antes always seem to be higher as a result of the demand from all around the world The profit and loss can be either realized or unrealized The realized profit and loss is a certain amount of money netted when a position is closed. The u nrealized profit and loss consists of an uncertain amount of money that an outstanding position would roughly generate if it were closed at the current rate The unrealized profit and loss changes continuously in tandem with the exchange rate.

The forward currency market consists of two instruments forward outright deals and swaps A swap deal is unusual among the rest of the foreign exchange instruments in the fact that it consists of two deals, or legs. All the other transactions consist of single deals In its original form, a swap deal is a combination of a spot deal and a forward outright deal Generally, this market includes only cash transactions Therefore, currency futures contracts, although a special breed of forward outright transactions, are analyzed separately.

According to figures published by the Bank for International Settlements, the percentage share of the forward market was 57 percent in See Figure 3 1 Translated into U S dollars, out of an estimated daily gross turnover of US 1 49 trillion, the total forward market represents US billion.

In the forward market there is no norm with regard to the settlement dates, which range from 3 days to 3 years Volume in currency swaps longer than one year tends to be light but, technically, there is no impediment to making these deals Any date past the spot date and within the above range may be a forward settlement, provided that it is a valid business day for both currencies The forward markets are decentralized markets, with players around the world entering into a variety of deals either on a one-on-one basis or through brokers In contrast, the currency futures market is a centralized market, in which all the deals are executed on trading floors provided by different exchanges.

Whereas in the futures market only a handful of foreign currencies may be traded in multiples of standardized amounts, the forward markets are open to any currencies in any amount The forward price consists of two significant parts the spot exchange rate and the forward spread The spot rate is the main building block The forward price is derived from the spot price by adjusting the spot price with the forward spread, so it follows that both forward outright and swap deals are derivative instruments The forward spread is also known as the forward points or the forward pips.

The forward spread is necessary for adjusting the spot rate for specific settlement dates different from the spot date It holds, then, that the maturity date is another determining factor of the forward price Just as in the case of the spot market, the left side of the quote is the bid side, and the right side is the offer side.

Currency futures are specific types of forward outright deals which occupy in general a small part of the Forex market See Figure 3 1 Because they are derived from the spot price, they are derivative instruments They are specific with regard to the expiration date and the size of the trade amount Whereas, generally, forward outright deals those that mature pa st the spot delivery date will mature on any valid date in the two countries whose currencies are being traded, standardized amounts of foreign currency futures mature only on the third Wednesday of March, June, September, and December.

There is a row of characteristics of currency futures, which make them attractive It is open to all market participants, individuals included This is different from the spot market, which is virtually closed to individuals - except high net-worth individuals because of the size of the currency amounts traded It is a central market, just as efficient as the cash market, and whereas the cash market is a very decentralized market, futures trading takes place under one roof It eliminates the credit risk because the Chicago Mercantile Exchange Clearinghouse acts as the buyer for every seller, and vice versa In turn, the Clearinghouse minimizes its own exposure by requiring traders wh o maintain a non-profitable position to post margins equal in size to their losses.

Moreover, currency futures provide several benefits for traders because futures are special types of forward outright contracts, corporations can use them for hedging purposes Although the futures and spot markets trade closely together, certain divergences between the two occur, generating arbitraging opportunities Gaps, volume, and open interest are significant technical analysis tools solely available in the futures market.

Yet their significance extrapolates to the spot market as well Because of these benefits, currency futures trading volume has steadily attracted a large variety of players For traders outside the exchange, the prices are available from on-line monitors The most popular pages are found on Bridge, Telerate, Reuters, and Bloomberg Telerate presents the currency futures on composite pages, while Reuters and Bloomberg display currency futures on individual pages shows the convergence bet ween the futures and spot prices.

A currency option is a contract between a buyer and a seller that gives the buyer the right, but not the obligation, to trade a specific amount of currency at a predetermined price and within a predetermined period of time, regardless of the market price of the currency and gives the seller, or writer, the obligation to deliver the currency under the predetermined terms, if and when the buyer wants to exercise the option.

Currency options are unique trading instruments, equally fit for speculation and hedging Options allow for a comprehensive customization of each individual strategy, a quality of vital importance for the sophisticated investor More factors affect the option price relative to the prices of other foreign currency instruments Unlike spot or forwards, both high and low volatility may generate a profit in the options market For some, options are a cheaper vehicle for currency trading For others, options mean added securi ty and exact stop-loss order execution.

Currency options constitute the fastest-growing segment of the foreign exchange market As of April , options represented 5 percent of the foreign exchange market See Figure 3 1 The biggest options trading center is the United States, followed by the United Kingdom and Japan. Options prices are based on, or derived from, the cash instruments Therefore, an option is a derivative instrument Options are usually mentioned vis-a-vis insurance and hedging strategies Often, however, traders have misconceptions regarding both the difficulty and simplicity of using options.

There are also misconceptions regarding the capabilities of options In the currency markets, options are available on either cash or futures It follows, then, that they are traded either over-the-counter OTC or on the centralized futures markets. The majority of currency options, around 81 percent, are traded overthe - counter See Figure 3 3 The over-the-counter market is similar to the spot or swap market Corporations may call banks and banks will trade with each other either directly or in the brokers market This type of dealing allows for maximum flexibility any amount, any currency, any odd expiration date, any time The currency amounts may be even or odd.

The amounts may be quoted in either U S dollars or foreign currencies Any currency may be traded as an option, not only the ones available as futures contracts Therefore, traders may quote on any exotic currency, as required, including any cross currencies Figure 3 3 Distribution of the options trading between over-the-counter OTC and the organized exchange market 1 the share of OTC 2 the share of organized exchanges.

The expiration date may be quoted anywhere from several hours to several years, although the bulk of dates are concentrated around the even dates one week, one month, two months, and so on The cash market never closes, so options may be traded literally around the clock Trading an option on currency futures will entitle the buyer to the right, but not the obligation, to take physical possession of the currency future Unlike the currency futures, buying currency options does not require an initiation margin The option premium, or price, paid by the buyer to the seller, or writer, reflects the buyer s total risk.

However, upon taking physical possession of the currency future by exercising the option, a trader will have to deposit a margin Seven major factors have an impact on the option price. The currency price is the central building block, as all the other factors are compared and analyzed against it It is the currency price behavior that both generates the need for options and impacts on the profitability of options The impact of the currency price on the option premium is measured by delta, the first of the Greek letters used to describe aspects of the theoretical pricing models in this discussion of factors determining the option price.

Delta, or commonly A, is the first derivative of the option-pricing model Delta may be viewed in three respects. Traders may be unable to secure prices in the spot, forward outright, or futures market, temporarily leaving the position delta unhedged In order to avoid the high cost of hedging and the risk of unusually high volatility, traders may hedge their original options positions with other options This method of risk neutralization is called gamma or vega hedging.

Gamma is also known as the curvature of the option It is the second derivative of the option-pricing model and is the rate of change of an option s delta, or the sensitivity of the delta For instance, an option with delta 0 5 and gamma 0 05 is expected to have a delta 0 55 if the currency rises by 1 point, or a delta 0 45 if the currency decreases by 1 point.

Gamma ranges between 0 percent and percent The higher the gamma, the higher the sensitivity of the delta It may therefore be useful to think of gamma as the acceleration of the option relative to the movement of the currency. Vega gauges volatility impact on the option premium Vega is the sensitivity of the theoretical value of an option to a change in volatility For instance, a vega of 0 2 will generate a 0 2 percent increase in the premium for each percentage increase in the volatility estimate, and a 0 2 percent decrease in the premium for each percentage decrease in the volatility estimate.

The option is traded for a predetermined period of time, and when this time expires, there is a delivery date known as the expiration date A buyer who intends to exercise the option must inform the writer on or before expiration The buyer s failure to inform the writer about exercising the option frees the writer of any legal obligation An option cannot be exercised past the expiration date. Theta T , also known as time decay, occurs as the very slow or nonexistent movement of the currency triggers losses in the option s theoretical value For instance , a theta of 0 02 will generate a loss of 0 02 in th e premium for each day that the currency price is flat Intrinsic value is not affected by time, but extrinsic value is Time decay accelerates as the option approaches expiration, since the number of possible outcomes is continuously reduced as the time passes.

Time has its maximum impact on at-the-money options and its minimum effect on in-the-money options Time s effect on out-of-the-money options occurs somewhere within that range. Bid-offer spreads in the market may make it too expensive to sell the option and trade forward out rights If the option shifts deeply into the money, the interest rate differential gained by early exercise may exceed the value of the option If the option amount is small or the expiration is close and the option value only consists of the intrinsic value, it may be better to use the early exercise.

Due to the complexity of its determining factors, option pricing is difficult In the absence of option pricing models, option trading is nothing but inefficient gambling The one idea to make option pricing is that the option of buying the domestic currency with a foreign currency at a certain price x is equivalent to the option of selling the foreign currency with the domestic currency at the same price x Therefore, the call option in the domestic currency becomes the put option in the other, and vice versa.

Fundamental Analysis. Two types of analysis are used for the market movements forecasting. Theories of Exchange Rate Determination Fundamentals may be classified into economic factors, financial factors, political factors, and crises Economic factors differ from the other three factors in terms of the certainty o f their release The dates and times of economic data release are known well in advance, at least among the industrialized nations Below are given briefly several known theories of exchange rate determination.

Purchasing Power Parity. Purchasing power parity states that the price of a good in one country should equal the price of the same good in another country, exchanged at the current rate the law of one price There are two versions of the purchasing power parity theory the absolute version and the relative version Under the absolute version, the exchange rate simply equals the ratio of the two countries general price levels, which is the weighted average of all goods produced in a country However, this version works only if it is possible to find two countries, which produce or consume the same goods.

Moreover, the absolute version assumes that transportation costs and trade barriers are insignificant In reality, transportation costs are significant and dissimilar around the world. Trad e barriers are still alive and well, sometimes obvious and sometimes hidden, and they influence costs and goods distribution Finally, this version disregards the importance of brand names For example, cars are chosen not only based on the best price for the same type of car, but also on the basis of the name You are what you drive.

Under the relative version, the percentage change in the exchange rate from a given base period must equal the difference between the percentage change in the domestic price level and the percentage change in the foreign price level The relative version of the PPP is also not free of problems it is difficult or arbitrary to define the base period, trade restrictions remain a real and thorny issue, just as with the absolute version, different price index weighting and the inclusion of different products in the indexes make the comparison difficult and in the long term, countries internal price ratios may change, causing the exchange ra te to move away from the relative PPP.

In conclusion, the spot exchange rate moves independently of relative domestic and foreign prices In the short run, the exchange rate is influenced by financial and not by commodity market conditions. Theory of Elasticities. The theory of elasticities holds that the exchange rate is simply the price of foreign exchange that maintains the balance of payments in equilibrium For instance, if the imports of country A are strong, then the trade balance is weak Consequently, the exchange rate rises, leading to the growth of country A s exports, and triggers in turn a rise in its domestic income, along with a decrease in its foreign income Whereas a rise in the domestic income in country A will trigger an increase in the domestic consumption of both domestic and foreign goods and, therefore, more demand for foreign currencies, a decrease in the foreign income in country B will trigger a decrease in the domestic consumption of both country B s domestic and f oreign goods, and therefore less demand for its own currency.

The elasticities approach is not problem-free because in the short term the exchange rate is more inelastic than it is in the long term and the additional exchange rate variables arise continuously, changing the rules of the game.

Modern Monetary Theories on Short-Term Exchange Rate Volatility The modern monetary theories on short-term exchange rate volatility take into consideration the short-term capital markets role and the long-term impact of the commodity markets on foreign exchange These theories hold that the divergence between the exchange rate and the purchasing power parity is due to the supply and demand for financial assets and the international capability.

One of the modern monetary theories states that exchange rate volatility is triggered by a one-time domestic money supply increase, because this is assumed to raise expectations of higher future monetary growth The purchasing power parity theory is extended to in clude the capital markets If, in both countries whose currencies are exchanged, the demand for money is determined by the level of domestic income and domestic interest rates, then a higher income increases demand for transactions balances while a higher interest rate increases the opportunity cost of holding money, reducing the demand for money.

Under a second approach, the exchange rate adjusts instantaneously to maintain continuous interest rate parity, but only in the long run to maintain PPP Volatility occurs because the commodity markets adjust more slowly than the financial markets This version is known as the dynamic monetary approach. The Portfolio-Balance Approach. The portfolio-balance approach holds that currency demand is triggered by the demand for financial assets, rather than the demand for the currency per se Synthesis of Traditional and Modern Monetary Views In order to better suit the previous theories to the realities of the market, some of the more stringent condition s were adjusted into a synthesis of the traditional and modern monetary theories.

A short-term capital outflow induced by a monetary shock creates a payments imbalance that requires an exchange rate change to maintain balance of payments equilibrium Speculative forces, commodity markets disturbances, and the existence of short-term capital mobility trigger the exchange rate volatility The degree of change in the exchange rate is a function of consumers elasticity of demand. Because the financial markets adjust faster than the commodities markets, the exchange rate tends to be affected in the short term by capital market changes, and in the long term by commodities changes.

Economic indicators occur in a steady stream, at certain times, and a little more often than changes in interest rates, governments, or natural activity such as earthquakes etc Economic data is generally except of the Gross Domestic Product and the Employment Cost Index, which are released quarte rly released on a monthly basis.

All economic indicators are released in pairs The first number reflects the latest period The second number is the revised figure for the month prior to the latest period For instance, in July, economic data is released for the month of June, the latest period In addition, the release includes the revision of the same economic indicator figure for the month of May The reason for the revision is that the department in charge of the economic statistics compilation is in a better position to gather more information in a month s time.

This feature is important for traders If the figure for an economic indicator is better than expected by 0 4 percent for the past month, but the previous month s number is revised lower by 0 4 percent, then traders are likely to ignore the overall release of that specific economic data Economic indicators are released at different times In the United States, economic data is generally released at 8 30 and 10 am ET It is importan t to remember that the most significant data for foreign exchange is released at 8 30 am ET In order to allow time for last-minute adjustments, the United States currency futures markets open at 8 20 am ET.

Information on upcoming economic indicators is published in all leading newspapers, such as the Wall Street Journal, the Financial Times, and the New York Times and business magazines, such as Business Week More often than not, traders use the monitor sources Bridge Information Systems, Reuters, or Bloomberg to gather information both from news publications and from the sources own up-to-date information The Gross National Product GNP The Gross National Product measures the economic performance of the whole economy.

This indicator consists, at macro scale, of the sum of consumption spending, investment spending, government spending, and net trade The gross national product refers to the sum of all goods and services produced by United States residents, either in the United States or a broad The Gross Domestic Product GDP The Gross Domestic Product GDP refers to the sum of all goods and services produced in the United States, either by domestic or foreign companies The differences between the two are nominal in the case of the economy of the United States GDP figures are more popular outside the United States In order to make it easier to compare the performances of different economies, the United States also releases GDP figures.

Consumption is made possible by personal income and discretionary income The decision by consumers to spend or to save is psychological in nature Consumer confidence is also measured as an important indicator of the propensity of consumers who have discretionary income to switch from saving to buying. Investment or gross private domestic spending - consists of fixed investment and inventories Government Spending Government spending is very influential in terms of both sheer size and its impact on other economic indicators, due to special expe nditures For instance, United States military expenditures had a significant role in total U S employment until The defense cuts that occurred at the time increased unemployment figures in the short run trade is another major component of the GNP Worldwide internationalization and the economic and political developments since have had a sharp impact on the United States ability to compete overseas The U S trade deficit of the past decades has slowed down the overall GNP GNP can be approached in two ways flow of product and flow of cost.

Industrial production consists of the total output of a nation s plants, utilities, and mines From a fundamental point of view, it is an important economic indicator that reflects the strength of the economy, and by extrapolation, the strength of a specific currency Therefore, foreign exchange traders use this economic indicator as a potential trading signal. Capacity utilization consists of total industrial output divided by total production ca pability The term refers to the maximum level of output a plant can generate under normal business conditions In general, capacity utilization is not a major economic indicator for the foreign exchange market However, there are instances when its economic implications are useful for fundamental analysis A normal figure for a steady economy is 81 5 percent If the figure reads 85 percent or more, the data suggests that the industrial production is overheating, that the economy is close to full capacity.

High capacity utilization rates precede inflation, and expectation in the foreign exchange market is that the central bank will raise interest rates in order to avoid or fight inflation. Factory orders refer to the total of durable and nondurable goods orders Nondurable goods consist of food, clothing, light industrial products, and products designed for the maintenance of durable goods Durable goods orders are discussed separately The factory orders indicator has limited significance for f oreign exchange traders.

Durable Goods Orders. Durable goods orders consist of products with a life span of more than three years Examples of durable goods are autos, appliances, furniture, jewelry, and toys They are divided into four major categories primary metals, machinery, electrical machinery, and transportation In order to eliminate the volatility pertinent to large military orders, the indicator includes a breakdown of the orders between defense and nondefense.

This data is fairly important to foreign exchange markets because it gives a good indication of consumer confidence Because durable goods cost more than nondurables, a high number in this indicator shows consumers propensity to spend Therefore, a good figure is generally bullish for the domestic currency.

Business inventories consist of items produced and held for future sale The compilation of this information is facile and holds little surprise for the market Moreover, financial management and computerization help control business inventories in unprecedented ways Therefore, the importance of this indicator for foreign exchange traders is limited. Construction indicators constitute significant economic indicators that are included in the calculation of the GDP of the United States Moreover, housing has traditionally been the engine that pulled the U S economy out of recessions after World War II These indicators are classified into three major categories.

Private housing is classified based on the number of units one, two, three, four, five, or more region Northeast, West, Midwest, and South and inside or outside metropolitan statistical areas Figure 4 1 Diagram of construction of private housing Construction indicators are cyclical and very sensitive to the level of interest rates and consequently mortgage rates and th e level of disposa ble income Low interest rates alone may not be able to generate a high demand for housing, though As the situation in the early s demonstrated, despite historically low mortgage rates in the United States, housing increased only marginally, as a result of the lack of job security in a weak economy.

Housing starts between one and a half and two million units reflect a strong economy, whereas a figure of approximately one million units suggests that the economy is in recession. The rate of inflation is the widespread rise in prices Therefore, gauging inflation is a vital macroeconomic task Traders watch the development of inflation closely, because the method of choice for fighting inflation is raising the interest rates, and higher interest rates tend to support the local currency Moreover, the inflation rate is used to deflate nominal interest rates and the GNP or GDP to their real values in order to achieve a more accurate measure of the data.

The values of the real interest rates or real GNP and GDP are of the utmost importance to the money managers and traders of international financial instruments, allowing them to accurately compare opportunities worldwide. To measure inflation traders use following economic tools. GNP Deflator. GDP Deflator. The first four are strictly economic indicators they are released at specific intervals The commodity indexes provide information on inflation quickly and continuously Other economic data that measure inflation are unemployment, consumer prices, and capacity utilization.

Producer price index is compiled from most sectors of the economy, such as manufacturing, mining, and agriculture The sample used to calculate the index contains about commodities The weights used for the calculation of the index for some of the most important groups are food - 24 percent fuel - 7 percent autos - 7 percent and clothing - 6 percent Unlike the CPI, the PPI does not include imported goods, services, or taxes.

Consumer price index reflects the average change in retail prices for a fixed market basket of goods and services The CPI data is compiled from a sample of prices for food, shelter, clothing, fuel, transportation, and medical services that people purchase on daily basis The weights attached for the calculation of the index to the most important groups are housing - 38 percent food - 19 percent fuel - 8 percent and autos - 7 percent.

The two indexes, PPI and CPI, are instrumental in helping traders measure inflationary activity, although the Federal Reserve takes the position that the indexes overstate the strength of inflation. Gross National Product Implicit Deflator. The preponderance of food commodities makes the CRB Index less reliable in terms of general inflation Nevertheless, the inde x is a popular tool that has proved quite reliable since the late s.

The Journal of commerce industrial price index consists of the prices of 18 industrial materials and supplies processed in the initial stages of manufacturing, building, and energy production It is more sensitive than other indexes, as it was designed to signal changes in inflation prior to the other price indexes.

Merchandise Trade Balance is one of the most important economic indicators Its value may trigger long-lasting changes in monetary and foreign policies The trade balance consists of the net difference between the exports and imports of a certain economy. The data includes six categories. The employment rate is an economic indicator with significance in multiple areas The rate of employment, naturally, measures the soundness of an economy See Figure 4 2 The unemployment rate is a lagging economic indicator It is an important feature to remember, especially in times of economic recession Whereas people focus on the health and recovery of the job sector, employment is the last economic indicator to rebound.

When economic contraction causes jobs to be cut, it takes time to generate psychological confidence in economic recovery at the managerial level before new positions are added At individual levels, the improvement of the job outlook may be clouded when new positions are added in small companies and thus not fully reflected in the data The employment reports are significant to the financial markets in general and to foreign exchange in particular In foreign exchange, the data is truly affective in periods of economic transition recovery and contraction The reason for the indicators importance in extreme economic situations lies in the picture they paint of the health of the economy and in the degree of maturity of a business cycle.

A d ecreasing unemployment figure signals a maturing cycle, whereas the opposite is true for an increasing unemployment indicator Figure 4 2 The U S unemployment rate. Employment cost index measures wages and inflation and provides the most comprehensive analysis of worker compensation, including wages, salaries, and fringe benefits The ECI is one of the Fed s favorite quarterly economic statistics.

Consumer Spending Indicators. Retail sales is a significant consumer spending indicator for foreign exchange traders, as it shows the strength of consumer demand as well as consumer confidence component in the calculation of other economic indicators, such as GNP and GDP.

Generally, the most commonly used employment figure is not the monthly unemployment rate, which is released as a percentage, but the nonfarm payroll rate The rate figure is calculated as the ratio of the difference between the total labor force and the employed labor force, divided by the total labor forc e The data is more complex, though, and it generates more information In foreign exchange, the standard indicators monitored by traders are the unemployment rate, manufacturing payrolls, nonfarm payrolls, average earnings, and average workweek Generally, the most significant employment data are manufacturing and nonfarm payrolls, followed by the unemployment rate.

Despite the importance of the auto industry in terms of both production and sales, the level of auto sales is not an economic indicator widely followed by foreign exchange traders The American automakers experienced a long, steady market share loss, only to start rebounding in the early s But car manufacturing has become increasingly internationalized, with American cars being assembled outside the United States and Japanese and German cars assembled within the United States Because of their confusing nature, auto sales figures cannot easily be used in foreign exchange analysis.

The leading indicators consist of the followi ng economic indicators. Personal Income is the income received by individuals, nonprofit institutions, and private trust funds Components of this indicator include wages and salaries, rental income, dividends, interest earnings, and transfer payments Social Security, state unemployment insurance, and veterans benefits The wages and salaries reflect the underlying economic conditions.

This indicator is vital for the sales sector Without an adequate personal income and a propensity to purchase, consumer purchases of durable and nondurable goods are limited For the Forex traders, personal income is not significant 4 3 Financial and Sociopolitical Factors. The Role of Financial Factors. Financial factors are vital to fundamental analysis Changes in a government s monetary or fiscal policies are bound to generate changes in the economy, and these will be reflected in the exchange rates Financial factors should be triggered only by economic factors When governments focus on different aspects of the economy or have additional international responsibilities, financial factors may have priority over economic factors.

This was painfully true in the case of the European Monetary System in the early s The realities of the marketplace revealed the underlying artificiality of this approach Using the interest rates independently from the real economic environment translated into a very expensive strategy Because foreign exchange, by definition, consists of simultaneous transactions in two currencies, then it follows that the market must focus on two respective i nterest rates as well This is the interest rate differential, a basic factor in the markets Traders react when the interest rate differential changes, not simply when the interest rates themselves change For example, if all the G-5 countries decided to simultaneously lower their interest rates by 0 5 percent, the move would be neutral for foreign exchange, because the interest rate differentials would also be neutral.

Of course, most of the time the discount rates are cut unilaterally, a move that generates changes in both the interest differential and the exchange rate Traders approach the interest rates like any other factor, trading on expectations and facts For example, if rumor says that a discount rate will be cut, the respective currency will be sold before the fact Once the cut occurs, it is quite possible that the currency will be bought back, or the other way around An unexpected change in interest rates is likely to trigger a sharp currency move Buy on the rumor, sell on the fact.

Other factors affecting the trading decision are the time lag between the rumor and the fact, the reasons behind the interest rate change, and the perceived importance of the change The market generally prices in a discount rate change that was delayed Since it is a fait accompli, it is neutral to the market If the discount rate was changed for political rather than economic reasons, what is a common practice in the European Monetary System, the markets are likely to go against the central banks, sticking to the real fundamentals rather than the political ones This happened in both September and the summer of , when the European central banks lost unprecedented amounts of money trying to prop up their currencies, despite having high interest rates The market perceived those interest rates as artificially high and, therefore, aggressively sold the respective currencies Finally, traders deal on the perceived importance of a change in the interest rate differential.

Political Events and Crises. Political events generally take place over a period of time, but political crises strike suddenly They are almost always, by definition, unexpected Currency traders have a knack for responding to crises Speed is essential shooting from the hip is the only fighting option The traders reflexes take over Without fast action, traders can be left out in the cold There is no time for analysis, and only a split second, at best, to act As volume drops dramatically, trading is hindered by a crisis Prices dry out quickly, and sometimes the spreads between bid and offer jump from 5 pips to pips Getting back to the market is difficult.

Technical Analysis. Technical analysis is appointed to analyze market movement the movement of prices, volumes and open interests using the information obtained for a past time Mainly, it is the chart study of past behavior of currencies prices in order to forecast their future performance It is one of the most significant tools available for the forecasting of financial markets Such analysis has been an increasingly utilized forecasting tool over the last two centuries.

The main strength of technical analysis is the flexibility with regard to the underlying instrument, regarding the markets and regarding the time frame A trader who deals several currencies but specializes in one may easily apply the same technical expertise to trading another currency A trader who specializes in spot trading can make a smooth transition to dealing currency futures by using chart studies, because the same technical principles apply over and over again, regardless of the market Finally, different players have different trading styles, objectives, and time frames Technical analysis is easy to compute what is important while the technical services are becoming increasingly sophisticated and reasonably priced.

Prior to this historic open market intervention, technical analysis provided ample selling signal s Price The Fundamental Principles of Technical Analysis are based on the Dow Theory with the following main thesis. The price is a comprehensive reflection of all the market forces At any given time, all market information and forces are reflected in the currency prices.

Price movements are historically repetitive. Price movements are trend followers. The market has three trends primary, secondary, and minor The primary trend has three phases accumulation, run-up run-down, and distribution In the accumulation phase the shrewdest traders enter new positions In the run-up run-down phase, the majority of the market finally sees the move and jumps on the bandwagon Finally, in the distribution phase, the keenest traders take their profits and close their positions while the general trading interest slows down in an overshooting market The secondary trend is a correction to the primary trend and may retrace onethird, one-half or two-thirds from the primary trend.

Volume must confirm the trend. Tr ends exist until their reversals are confirmed Figure 5 1 shows example of reversals in a bearish currency market The buying signals occur at points A and B when the currency exceeds the previous highs Figure 5 1 A reversal of bearish currency. Cycles of currency price change are the propensity for events to repeat themselves at roughly the same time and are an important ground to justify the Dow Theory.

Cycle identification is a powerful tool that can be used in both the long and the short term The longer the term, the more significance a cycle has Figure 5 2 shows a series of three cycles The top of the cycle C is called the crest and the bottom T is known as trough Analysts measure cycles from trough to trough.

Cycles are gauged in terms of amplitude, period, and phase The amplitude shows the height of the cycle, the period shows the length of thecycle, the phase shows the location of a wave trough Figure 5 2 The structure of cycles Figure 5 3 The two gauging measures of a cycle period and phase. Volume and Open Interest. Volume consists of the total amount of currency traded within a period of time, usually one day For example, by year , the total foreign currency daily trading volume was 1 4 trillion But traders are naturally more interested in the volume of specific instruments for specific trading periods, because large trading volume suggests that there is interest and liquidity in a certain market, and low volume warns the trader to veer away from that market.

The risks of a low-volume market are usually very difficult to quantify or hedge In addition, certain chart formations require heavy trading volume for successful development An example is the head-and-shoulder formation. Therefore, despite its obvious importance, volume is not easy to quantify in all foreign exchange markets.

One method to estimate volume is to extrapolate the figures from the futures market Another is feeling the size of volume based on the number of calls on the dealing systems or phon es, and the noise from the brokers market. Open interest is the total exposure, or outstanding position, in a certain instrument The same problems that affect volume are also present here As it was already mentioned, figures for volume and open interest are available for currency futures If you have access to printed or electronic charts on futures, you will be able to see these numbers plotted at the bottom of the futures charts.

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