Futures Market

Currency futures are specific types of forward outright deals which occupy in general a small part of the Forex market (See Figure 3.1). Becausethey 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 past 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 who 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 between the futures and spot prices.

Forward Market

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 1998 (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$900 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 rangmay 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.

Spot Market

Currency spot trading is the most popular foreign currency instrument around the world, making up 37 percent of the total activity.

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 two-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 18,000 times. An exchange rate may "fly" 200 pipsin 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 extended periods of time, even in excess of an hour, when one market is almost finished 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 1980s 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. Overnighttrading is limited, as very few banks have overnight desks. Most of the banks send their overnight orders to branches or other banks that operate in the active time zones.

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 unrealized 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.

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The Federal Reserve System of the USA and Central Banks of the Other G-7 Countries

The Federal Reserve System of the USA

Like the other central banks, the Federal Reserve of the USA affects the foreign exchange markets in three general areas:

• the discount rate;
• the money market instruments;
• foreign exchange operations.

For the foreign exchange operations most significant are repurchase agreements to sell the same security back at the same price at a predetermined date in the future (usually within 15 days), and at a specific rate of interest. This arrangement amounts to a temporary injection of reserves into the banking system. The impact on the foreign exchange market is that the dollar should weaken. The repurchase agreements may be either customer repos or system repos.

Matched sale-purchase agreements are just the opposite of repurchase agreements. When executing a matched sale-purchase agreement, the Fed sells a security for immediate delivery to a dealer or a foreign central bank, with the agreement to buy back the same security at the same price at a predetermined time in the future (generally within 7 days). This arrangement amounts to a temporary drain of reserves. The impact on the foreign exchange market is that the dollar should strengthen.

The major central banks are involved in foreign exchange operations in more ways than intervening in the open market. Their operations include payments among central banks or to international agencies. In addition, the Federal Reserve has entered a series of currency swap arrangements with other central banks since 1962. For instance, to help the allied war effort against Iraq's invasion of Kuwait in 1990-1991, payments were executed by the Bundesbank and Bank of Japan to the Federal Reserve. Also, payments to the World bank or the United Nations are executed through central banks.

Intervention in the United States foreign exchange markets by the U.S. Treasury and the Federal Reserve is geared toward restoring orderly conditions in the market or influencing the exchange rates. It is not geared toward affecting the reserves.

There are two types of foreign exchange interventions: naked intervention and sterilized intervention.

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 true 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.

The Central Banks of the Other G-7 Countries

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, 1998 to oversee the ascent of the euro. During the transition to the third stage of economic and monetary union (introduction of the single currency on January 1, 1999), 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 fertile 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 Bank of Japan has deviated from the Federal Reserve model in terms of independence. Although its Policy Board is still fully in charge of monetary policy, changes are still subject to the approval of the Ministry of Finance (MOF). The BOJ targets the M2 aggregate. On a quarterly basis, the BOJ releases its Tankan economic survey. Tankan is the Japanese equivalent of the
American tan book, which presents the state of the economy. 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 1991, reaching double-digit rates in the late 1980s, 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 1990, 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 1992.

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 1993, when the French franc fell victim to the foreign exchange markets.

The Bank of Italy is in charge of the monetary policy, financial intermediaries, and foreign exchange. Like the other former European Monetary System central banks, BOI's responsibilities shifted domestically following the ERM crisis. Along with the Bundesbank and Bank of France, the Bank of Italy is now part of the European System of Central Banks (ESCB).

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 1999 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 working.

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Kinds of Exchange Systems

Trading with Brokers

Foreign exchange brokers, unlike equity brokers, do not take positions for themselves; they only service banks. Their roles are:

• bringing together buyers and sellers in the market;
• optimizing the price they show to their customers;
• quickly, accurately, and faithfully executing the traders' orders.

The majority of the foreign exchange brokers execute business via phone. The phone lines between brokers and banks are dedicated, or direct, and are usually in-stalled free of charge by the broker. A foreign exchange brokerage firm has direct lines to banks around the world. Most foreign exchange is executed through an open box system—a microphone in front of the broker that continuously transmits everything he or she says on the direct phone lines to the speaker boxes in the banks. This way, all banks can hear all the deals being executed. Because of the open box system used by brokers, a trader is able to hear all prices quoted; whether the bid was hit or the offer taken; and the following price. What the trader will not be able to hear is the amounts of particular bids and offers and the names of the banks showing the prices. Prices are anonymous the anonymity of the banks that are trading in the market ensures the market's efficiency, as all banks have a fair chance to trade.

Brokers charge a commission that is paid equally by the buyer and the seller. The fees are negotiated on an individual basis by the bank and the brokerage firm.

Brokers show their customers the prices made by other customers either two-way (bid and offer) prices or one way (bid or offer) prices from his or her customers. Traders show different prices because they "read" the market differently; they have different expectations and different interests. A broker who has more than one price on one or both sides will automatically optimize the price. In other words, the broker will always show the highest bid and the lowest offer. Therefore, the market has access to the narrowest spread possible. Fundamental and technical analyses are used for forecasting the future direction of the currency. A trader might test the market by hitting a bid for a small amount to see if there is any reaction.

Brokers cannot be forced into taking a principal's role if the name switch takes longer than anticipated.

Another advantage of the brokers' market is that brokers might provide a broader selection of banks to their customers. Some European and Asian banks have overnight desks so their orders are usually placed with brokers who can deal with the American banks, adding to the liquidity of the market.

Direct Dealing

Direct dealing is based on trading reciprocity. A market maker—the bank making or quoting a price—expects the bank that is calling to reciprocate with respect to making a price when called upon. Direct dealing provides more trading discretion, as compared to dealing in the brokers' market. Sometimes traders take advantage of this characteristic.

Direct dealing used to be conducted mostly on the phone. Dealing errors were difficult to prove and even more difficult to settle. In order to increase dealing safety, most banks tapped the phone lines on which trading was conducted. This measure was helpful in recording all the transaction details and enabling the dealers to allocate the responsibility for errors fairly. But tape recorders were unable to prevent trading errors. Direct dealing was forever changed in the mid - 1980s, by the introduction of dealing systems.

Dealing Systems

Dealing systems are on-line computers that link the contributing banks around the world on a one-on-one basis. The performance of dealing systems is characterized by speed, reliability, and safety. Accessing a bank through a dealing system is much faster than making a phone call. Dealing systems are continuously being improved in order to offer maximum support to the dealer's main function: trading. The software is very reliable in picking up the big figure of the exchange rates and the standard value dates. In addition, it is extremely precise and fast in contacting other parties, switching among conversations, and accessing the database. The trader is in continuous visual contact with the information exchanged on the monitor. It is easier to see than hear this information, especially when switching among conversations.

Most banks use a combination of brokers and direct dealing systems. Both approaches reach the same banks, but not the same parties, because corporations, for instance, cannot deal in the brokers' market. Traders develop personal relationships with both brokers and traders in the markets, but select their trading medium based on price quality, not on personal feelings. The market share between dealing systems and brokers fluctuates based on market conditions. Fast market conditions are beneficial to dealing systems, whereas regular market conditions are more beneficial to brokers.

Matching Systems

Unlike dealing systems, on which trading is not anonymous and is conducted on a one-on-one basis, matching systems are anonymous and individual traders deal against the rest of the market, similar to dealing in the brokers' market. However, unlike the brokers' market, there are no individuals to bring the prices to the market, and liquidity may be limited at times. Matching systems are well-suited for trading smaller amounts as well.

The dealing systems characteristics of speed, reliability, and safety are replicated in the matching systems. In addition, credit lines are automatically managed by the systems. Traders input the total credit line for each counter party. When the credit line has been reached, the system automatically disallows dealing with the particular party by displaying credit restrictions, or shows the trader only the price made by banks that have open lines of credit. As soon as the credit line is restored, the system allows the bank to deal again. In the interbank market, traders deal directly with dealing systems, matching systems, and brokers in a complementary fashion.

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What is major currencies?

definition and meaning

The U.S. Dollar

The United States dollar is the world's main currency. All currencies are generally quoted in U.S. dollar terms. Under conditions of international economic and political unrest, the U.S. dollar is the main safe-haven currency which was  proven particularly well during the Southeast Asian crisis of 1997-1998.

The U.S. dollar became the leading currency toward the end of the Second World War and was at the center of the Bretton Woods Accord, as the  other currencies were virtually pegged against it. The introduction of the euro in 1999 reduced the dollar's importance only marginally.
The major currencies traded against the U.S. dollar are the euro, Japanese yen, British pound, and Swiss franc.

The Euro

The euro was designed to become the premier currency in trading by simply being quoted in American terms. Like the U.S. dollar, the euro has a strong international presence stemming from members of the European Monetary Union. The currency remains plagued by unequal growth, high unemployment, and government resistance to structural changes. The pair was
also weighed in 1999 and 2000 by outflows from foreign investors, particularly Japanese, who were forced to liquidate their losing investments in eurodenominated assets. Moreover, European money managers rebalanced their portfolios and reduced their euro exposure as their needs for hedging currency risk in Europe declined.

The Japanese Yen

The Japanese yen is the third most traded currency in the world; it has a much smaller international presence than the U.S. dollar or the euro. The yen is very liquid around the world, practically around the clock. The natural demand to trade the yen concentrated mostly among the Japanese keiretsu, the economic and financial conglomerates. The yen is much more sensitive to the fortunes of the Nikkei index, the Japanese stock market, and the real estate market. The attempt of the Bank of Japan to deflate the double bubble in these two markets had a negative effect on the Japanese yen, although the impact was short-lived

The British Pound

Until the end of World War II, the pound was the currency of reference. Its nickname, cable, is derived from the telex machine, which was used to trade it in its heyday. The currency is heavily traded against the euro and the U.S. dollar, but has a spotty presence against other currencies. The two-year bout with the Exchange Rate Mechanism, between 1990 and 1992, had a soothing effect on the British pound, as it generally had to follow the deutsche mark's fluctuations, but the crisis conditions that precipitated the pound's withdrawal from the ERM had a psychological effect on the currency. Prior to the introduction of the euro, both the pound benefited from any doubts about the currency convergence. After the introduction of the euro, Bank of England is attempting to bring the high U.K. rates closer to the lower rates in the euro zone. The pound could join the euro in the early 2000s, provided that the U.K. referendum is positive.

The Swiss Franc

The Swiss franc is the only currency of a major European country that belongs neither to the European Monetary Union nor to the G-7 countries. Although the Swiss economy is relatively small, the Swiss franc is one of the four major currencies, closely resembling the strength and quality of the Swiss economy and finance. Switzerland has a very close economic relationship with Germany, and thus to the euro zone. Therefore, in terms of political uncertainty in the East, the Swiss franc is favored generally over the euro. Typically, it is believed that the Swiss franc is a stable currency. Actually, from a foreign exchange point of view, the Swiss franc closely resembles the patterns of the euro, but lacks its liquidity. As the demand for it exceeds supply, the Swiss franc can be more volatile than the euro.

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how Factors Caused Foreign Exchange Volume Growth?

Foreign exchange trading is generally conducted in a decentralized manner, with the exceptions of currency futures and options. Foreign exchange has experienced spectacular growth in volume ever since currencies were allowed to float freely against each other. While the daily turnover in 1977 was U.S. $5 billion, it increased to U.S. $600 billion in 1987, reached the U.S. $1 trillion mark in September 1992, and stabilized at around $1,5 trillion by the year 2000.

Main factors influence on this spectacular growth in volume are indicated below.

For foreign exchange, currency volatility is a prime factor in the growth of volume. In fact, volatility is a sine qua non condition for trading. The only instruments that may be profitable under conditions of low volatility are currency options.

Business Internationalization

In recent decades the business world the competition has intensified, triggering a worldwide hunt for more markets and cheaper raw materials and labor. The pace of economic internationalization picked up even more in the 1990s, due to the fall of Communism in Europe and to up-and-down economic and financial development in both Southeast Asia and South America. These changes have been positive toward foreign exchange, since more transactional layers were added.

Interest Rate Volatility

Economic internationalization generated a significant impact on interest rates as well. Economics became much more interrelated and that exacerbated the need to change interest rates faster. Interest rates are generally changed in order to adjust the growth in the economy, and interest rate differentials have a substantial impact on exchange rates..

Increasing of Traders Sophistication

Advances in technology, computer software, and telecommunications and increased experience have increased the level of traders' sophistication. This enhanced traders' confidence in their ability to both generate profits and properly handle the exchange risks. Therefore, trading sophistication led toward volume increase.

 

Increasing of Corporate Interest

A successful performance of a product or service overseas may be pulled down from the profit point of view by adverse foreign exchange conditions and vice versa. An accurate handling of the foreign exchange may enhance the overall international performance of a product or service. Proper handling of foreign exchange generally adds substantially to the rate of return. Therefore, interest in foreign exchange has increased in the past decade. Many corporations are using currencies not only for hedging, but also for capitalizing on opportunities that exist solely in the currency markets

Computer and Programming development

Computers play a significant role at many stages of conducting foreign exchange. In addition to the dealing systems, matching systems simultaneously connect all traders around the world, electronically duplicating the brokers' market. The new office systems provide full accounting coverage, ticket writing, back office processing, and risk management implementation at a fraction of their previous cost. Advanced software makes it possible to generate all types of charts, augment them with sophisticated technical studies, and put them at traders' fingertips on a continuous basis at a rather limited cost. 

Developments in Telecommunications

The introduction of automated dealing systems in the 1980s, of matching systems in the early 1990s, and of Internet trading in the late 1990s completely altered the way foreign exchange was conducted. The dealing systems are online computer systems that link banks on a one-to-one basis, while matching systems are electronic brokers. They are reliable and much faster, allowing traders to conduct more simultaneous trades. They are also safer, as traders are able to see the deals that they execute. The dealing systems had a major role in expanding the foreign exchange business due to their reliability, speed, and safety.

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Main Stages of Recent Foreign Exchange Development

The main phases of the further development of the Forex in modern
times were:

• signing of the Bretton Woods Accord;
• constitution of the international monetary fund (IMF);
• emergency of the free-floating foreign exchange markets;
• creation of currency reserves;
• constitution of the European Monetary Union and the European Monetary Cooperation Fund;
• introduction of the Euro as a currency.

The Bretton Woods Accord was signed in July 1944 by the United States, Great Britain, and France which agreed to make the currency market stable, particularly due to governmental controls on currency values. In order to implement it, two major goals were: emphasized: to provide the pegging (backing of prices) of currencies and to organize the International Monetary Fund (IMF).

In accordance to the Bretton Woods Accord, the major trading currencies were pegged to the U.S. dollar in the sense that they were allowed to fluctuate only one percent on either side of that rate. When a currency exceeded this range, marked by intervention points, the central bank in charge had to buy it or sell it, and thus bring it back into range. In turn, the U.S. dollar was pegged to gold at $35 per ounce. Thus, the U.S. dollar became the world's reserve currency.

The purpose of IMF is to consult with one another to maintain a stable system of buying and selling the currencies, so that payments in foreign money can take place between countries smoothly and timely.

The IMF lends money to members who have trouble meeting financial obligations to other members, on the condition that they undertake economic reforms to eliminate these difficulties for their own good and the good of the entire membership. In total the main tasks of the IMF are:

• to promote international cooperation by providing the means for members to consult and collaborate on international monetary issues;
• to facilitate the growth of international trade and thus contribute to high levels of employment and real income among member nations;
• to promote stability of exchange rates and orderly exchange agreements, and [to] discourage competitive currency depreciation;
• to foster a multilateral system of international payments, and to seek the elimination of exchange restrictions that hinder the growth of world trade;
• to make financial resources available to members, on a temporary basis and with adequate safeguards, to permit them to correct payments imbalances without resorting to measures destructive to national and international prosperity.

To execute these goals the IMF uses such instruments as Reserve tranche which allows a member to draw on its own reserve asset quota at the time of payment, Credit tranche drawings and stand-by arrangements are the standard form of IMF loans, the compensatory financing facility extends financial help to countries with temporary problems generated by reductions in export revenues, the buffer stock financing facility which is geared toward assisting the stocking up on primary commodities in order to ensure price stability in a specific commodity and the extended facility designed to assist members with financial problems in amounts or for periods exceeding the scope of the other facilities.

Since 1978 free-floating of currencies were officially mandated by the International Monetary Fund. That is the currency may be traded by anybody and its value is a function of the current supply and demand forces in the market, and there are no specific intervention points that have to be observed. Of course, the Federal Reserve Bank irregularly intervenes to change the value of the U.S. dollar, but no specific levels are ever imposed. Naturally, free-floatingcurrencies are in the heaviest trading demand. Free-floating is not the sine qua non condition for trading. Liquidity is also an indispensable condition.

A tool for people and corporations to protect investments in times of economic or political instability is currency reserves for international transactions. Immediately after the World War II the reserve currency worldwide was the U.S. dollar. Currently there are other reserve currencies: the euro and the Japanese yen. The portfolio of reserve currencies may change depending on specific international conditions, for instance it may include the Swiss franc.

The creation of the European Monetary Union was the result of a long and continuous series of post-World War II efforts aimed at creating closer economic cooperation among the capitalist European countries. The European Community (EC) commission's officially stated goals were to improve the inter-European economic cooperation, create a regional area of monetary stability, and act as "a pole of stability in world currency markets."

The first steps in this rebuilding were taken in 1950, when the European Payment Union was instituted to facilitate the inter-European settlements of international trade transactions. The purpose of the community was to promote inter-European trade in general, and to eliminate restrictions on the trade of coal and raw steel in particular.

In 1957, the Treaty of Rome established the European Economic Community, with the same signatories as the European Coal and Steel Community. The stated goal of the European Economic Community was to eliminate customs duties and any barriers against the transit of capital, services, and people among the member nations. The EC also started to raise common tariff barriers against outsiders.

The European Community consists of four executive and legislative bodies:

1. The European Commission. The executive body in charge of making and observing the enforcement of the policies. Since it lacks an enforcement arm, the commission must rely on individual governments to enforce the policies. There are 23 departments, such as foreign affairs, competition policy, and agriculture. Each country selects its own representatives for four-year terms. The commission is based in Brussels and consists of 17 members.
2. The Council of Ministers. Makes the major policy decisions. It is composed of ministers from the 12 member nations. The presidency is held for six months by each of the members, in alphabetical order. The meetings take place in Brussels or in the capital of the nation holding the presidency.
3. The European Parliament. Reviews and amends legislative proposals and has the power to adopt or reject budget proposals. It consists of 518 elected members. It is based in Luxembourg, but the sessions take place in Strasbourg or Brussels.
4. The European Court of Justice. Settles disputes between the EC and the member nations. It consists of 13 members and is based in Luxembourg.

In 1963, the French-West German Treaty of Cooperation was signed. This pact was designed not only to end centuries of bellicose rivalry, but also to settle the postwar reconciliation between two major foes. The treat stipulated that West Germany would lead economically through the cold war, and France, the former diplomatic powerhouse, would provide the political leadership. The premise of this treaty was obviously correct in an environment defined by a foreseeable long-term continuing cold war and a divided Germany. Later in this chapter, we discuss the implications for the modern era of this enormously expensive pact.

A conference of national leaders in 1969 set the objective of establishing a monetary union within the European Community. This goal was supposed to be implemented by 1980, when a common currency was planned to be used in Europe. The reasons for the proposed common currency unit were to stimulate inter-European trade and to weld together the individual member economies in order to compete successfully with the economies of the United States and Japan.

In 1978, the nine members of the European Community ratified a new plan for stability—the European Monetary System. The new system was practically established in 1979. Seven countries were then full members—West Germany, France, the Netherlands, Belgium, Luxembourg, Denmark, and Ireland. Great Britain did not participate in all of the arrangements and Italy joined under special conditions. Greece joined in 1981, Spain and Portugal in 1986. Great Britain joined the Exchange Rate Mechanism in 1990.

The European Monetary Cooperation Fund was established to manage the EMS' credit arrangements. In order to increase the acceptance of the ECU, countries that hold more ECU deposits, or accept as loan repayment more than their share of ECU, receive interest on the excess ECU deposits, and vice versa. The interest rate is the weighted average of all the EMS members' discount rates.

In 1998 the Euro was introduced as an all-European currency. Here are the official locking rates of the 11 participating European currencies in the euro (EUR). The rates were proposed by the EU Commission and approved by EU finance ministers on December 31, 1998, ahead of the launch of the euro at midnight, January 1, 1999.

The real starting date was Monday, January 4, 1999. The conversion rates are:

1 EUR = 40.3399 BEF    1 EUR = 1.95583 DEM
1 EUR = 166.386 ESP     1 EUR = 6.55957 FRF
1 EUR = 0.787564 IEP    1 EUR = 1936.27 ITL
1 EUR = 40.3399 LUF     1 EUR = 2.20371 NLG
1 EUR = 13.7603 ATS     1 EUR = 200.482 PTE
1 EUR = 5.94573 FIM

The euro bills are issued in denominations of 5, 10, 20, 50, 100, 200, and 500 euros. Coins are issued in denominations of 1 and 2 euros, and 50, 20,10, 5, 2, and 1 cent.

 Copyright (c)Tooklook.net and  FOREX. On-line Manual For Successful Trading

Foreign Exchange in a Historical Perspective let me explain

Currency trading has a long history and can be traced back to the ancient Middle East and Middle Ages when foreign exchange started to take shape after the international merchant bankers devised bills of exchange, which were transferable third-party payments that allowed flexibility and growth in foreign exchange dealings.

The modern foreign exchange market characterized by the consequent periods of increased volatility and relative stability formed itself in the twentieth century. By the mid-1930s London became to be the leading center for foreign exchange and the British pound served as the currency to trade and to keep as a reserve currency. Because in the old times foreign exchange was traded on the telex machines, or cable, the pound has generally the nickname “cable”. In 1930, the Bank for International Settlements was established in Basel, Switzerland, to oversee the financial efforts of the newly independent countries, emerged after the World War I, and to provide monetary relief to countries experiencing temporary balance of payments difficulties.

After the World War II, where the British economy was destroyed and the
United States was the only country unscarred by war, U.S. dollar became the
prominent currency of the entire globe. Nowadays, currencies all over the world
are generally quoted against the U.S. dollar.

 Copyright (c)Tooklook.net and  FOREX. On-line Manual For Successful Trading

Foreign Exchange as a Financial Market let me show you

Currency exchange is very attractive for both the corporate and individual
traders who make money on the Forex - a special financial market assigned for
the foreign exchange. The following features make this market different in
compare to all other sectors of the world financial system:

• heightened sensibility to a large and continuously changing number of factors;
• accessibility to all traders in the major currencies;
• guaranteed quantity and liquidity of the major currencies;
• increased consideration for several currencies, round-the clock business hours which enable traders to deal after normal hours or during national holidays in their country finding markets abroad open and
• extremely high efficiency relative to other financial markets.

 

This goal of this manual is to introduce beginning traders to all the essential aspects of foreign exchange in a practical manner and to be a source of best answers on the typical questions as why are currencies being traded, who are the traders, what currencies do they trade, what makes rates move, what instruments are used for the trade, how a currency behavior can be forecasted and where the pertinent information may be obtained from. Mastering the content of
an appropriate section the user will be able to make his/her own decisions, test them, and ultimately use recommended tools and approaches for his/her own benefit.

 Copyright (c)Tooklook.net and  FOREX. On-line Manual For Successful Trading

CONCLUSION For Candlesticks

By using real-body support and resistance levels, we can try to improve our trading and analysis on several levels. In the short term, we can derive important counteraction trading points and improved longer-term entry levels. In the longer term, we can use real-body support and resistance to get a jump on market breakouts in a trend-trading strategy.

Let me reiterate: Candlestick charting should not be used in a vacuum. That applies to the real-body support and resistance levels as well. You should, however, take the time to try out this methodology. I'm sure you'll find it worthwhile, and a beneficial addition to your technical toolbox. It just goes to show that by keeping our eyes open, we just might be able to discover new techniques.

John Forman is a currency analyst for Technical Data, a provider of real-time and day-end market commentary and trading advice over the Telerate system. He writes mostly from a technical perspective and also has experience in trading US and Canadian government cash and futures issues, equities and the energy markets.

 Copyright (c) Technical Analysis Inc.

A REAL- life EXAMPLE for Candlesticks lol

Figure 3, which shows the sterling/Deutschemark cross-rate, contains several excellent examples. You can see how many times prices either approached or penetrated real-body support and resistance points but were unable to sustain those levels. Time after time, an attentive trader could have entered positions counter to the prevailing market action and would have done well. There are two noticeable exceptions, however.

FIGURE 3: STERLING/DEUTSCHEMARK CROSS-RATE. The sterling/Deutschemark cross-rate contains several excellent examples. You can see how many times prices either approached or penetrated real-body support and resistance points but were unable to sustain those levels. Time after time, an attentive trader could have entered positions counter to the prevailing market action and would have done well.

The first came in late December 1994, when the market finally broke down out of its range. Two things should have been noted that might have kept you out of a trade. One is the double top, or tweezers pattern in the candlestick vernacular, which took place about 10 days prior to the breakdown. That would have been your first indication that the trend was probably toward lower prices. The second indication came two days before the breakdown in the form of a shooting-star pattern, followed by a large negative real-body candlestick. This was another signal of lower prices.

The second exception was in January 1995, when the market again broke down after a consolidation. This, too, probably could have been avoided. All indications were signaling a bearish trend. That should have kept the careful trader from trading the doji day just prior to the breakdown. The doji, however, might have caused some confusion.

In addition, look at how taking those positions against the prevailing action is a great way to enter a new longer-term position. One glaring example of this took place early in January 1995, just before the second breakdown. After rallying for three days, the market approached, but never broke, real-body resistance. Prices did not stop falling until they were about 600 points lower, less than a week later.

 Copyright (c) Technical Analysis Inc.

How to MINIMIZING THE RISKS in forex?

There is no way around the risks inherent in trading counter to the prevailing market action. All we can do is reduce the risks as much as possible by using the tools available. Happily, there are ways to do this.

First, always be aware of the longer-term picture. If the market you are planning to trade is in the middle of a strong trend, going against that action is probably one of the quickest ways to lose money. Wait until the momentum starts to ease; this will reduce your chances of getting caught on the wrong side of a breakout.

Further, this is a good time to mention a candlestick caveat: Beware of reversal patterns signaled by candlesticks in a trending market. The bond market is especially notorious for throwing out countertrend candlestick signals during major trends, and I've seen the same in other markets as well. Never look at candles in a vacuum.

So what should we look at in conjunction with candlesticks to lower our risk in the countertrend trades I am suggesting? For one, there's John Bollinger's band width indicator (BWI) as a trend indicator, which can be used by monitoring the area between the upper and lower bands. (I outlined this technique in the November 1994 STOCKS & COMMODITIES.) I like to use the BWI as an indicator of a weakening trend; I want to jump in when the slope of the BWI line starts to decrease. This is the first signal that the trend is petering out, and that at this point countertrend trades are reasonably safe.

There are, of course, other technicals that you can use. Bollinger bands themselves can be helpful, among others. Select the tool or tools that make you most comfortable.

More important than any additional indicator you could use, however, is your money management strategy. There are many ways you could trade using this methodology, and each has its own advantages and limitations. Cash or futures trading exposes you to the potential for theoretically unlimited risk, requiring tight stops and quick executions. Options could limit your risk, but probably at the cost of requiring larger moves to make them worthwhile. Of course, you may be able to tailor a combination of instruments to suit your needs.

An important factor in determining your risk exposure, and as a result how you trade, is the point at which you cut your losses. Often, there is no second support or resistance level nearby to provide a good stop-loss point, which means you'll have to use your own instinct as a guide. I find it useful to use whatever candlestick shadows there are as a rough guide to how far the market might go against me, thus letting me set reasonably good stops.

One last thing to consider: Where you're going to get out. I use a combination of techniques. Fibonacci retracement levels work fairly well, as do moving averages. I prefer to determine another support or resistance point using real bodies. Unfortunately, there are times when a significant level is not available nearby, forcing me to use other techniques.

 Copyright (c) Technical Analysis Inc.

TRADING APPLICATIONS

One of the first uses that many technicians see for this technique is in terms of breakouts, much like in using bars. The advantage in using real-body highs and lows for support and resistance is that ranges are tighter, allowing entry into a trading position earlier than might otherwise have been the case.

Perhaps the most intriguing part of this new methodology, however, is its usefulness for day trading. Most technicians use candlesticks as a day-end indicator, but this technique gives us a greater degree of depth than is necessary for day trading. Real-body support and resistance allow us to take our analysis into the shorter time frames, which in turn allows us to get better entry points for our longer-term trades.

In my own analysis, I favor trading counter to the prevailing market action when a nearby real-body support or resistance level has been crossed intraday. This means that I recommend selling when the market has broken through very recent real-body resistance, and buying when recent real-body support has been breached. This is my strategy for trading against levels that are only a few days old, and one I recommend mostly for a very short-term position (say, day trading).

Longer-term levels require trading against the approach of a level. Often, in such cases, prices have come from a relatively long way off, and just reaching those key levels is a major achievement. Waiting for a break of support or resistance may mean missing a trade. Positions set under these circumstances can be held for longer time frames,perhaps as long as a week.

In candlestick charting, as in bar charting, the more times a level is touched, the more significant the level becomes. This is, however, a double-edged sword; if a resistance point is touched or penetrated slightly several times, it becomes more likely that a real breakout is in the offing. The wrong side of a breakout is not where we want to be. At the same time, however, the more times that a resistance point is touched, the larger the eventual decline is likely to be if the market falls instead of rallying.

 Copyright (c) Technical Analysis Inc.

DETERMINING SUPPORT AND RESISTANCE

When a chartist looks at a bar graph, accumulations of highs and lows are often seen as key market levels. Breaking. through these points signals important changes in the expected direction of prices. Candlestick real bodies, however, may turn out to be better for this task. Much like highs and lows are on bar charts, an accumulation of real-body highs or lows at a given level is significant.

An example of real-body resistance levels can be seen in Figure 2. The real-body high from the first day provides the initial resistance point. Note how the second day's action takes prices above that resistance, even to a new high, but the market ends lower on the day. The situation is similar after the fourth day. Twice the market rallies above real-body resistance, only to fall back. Real-body support levels would work in a similar, but opposite, manner.

FIGURE 2: CANDLESTICK REAL-BODY RESISTANCE. Here's an example of real-body resistance levels. The real-body high from the first day provides the initial resistance point. Note how the second day's action takes prices above that resistance, even to a new high, but the market ends lower on the day. The situation is similar after the fourth day. Twice the market rallies above real-body resistance, only to fall back. Real-body support levels would work in a similar, but opposite, manner. The last candlestick is what would be considered a breakout. In effect, there must be a real-body penetration of the support or resistance point before we can consider the action to be significant
.

The last candlestick on the chart is what would be considered a breakout. For the sake of our definition, a breakout of real-body support or resistance is official only if it is on a closing basis. In effect, there must be a real-body penetration of the support or resistance point before we can consider the action to be significant.

 Copyright (c) Technical Analysis Inc.

Observation is the best friend of the technical analyst.

Observation is the best friend of the technical analyst. By watching the markets, I noticed something interesting about candlestick charts, which I use extensively. I realized the real bodies used in candlestick charting can be used to determine significant support and resistance points, a strategy I had never seen before. Take a look at how it can be done.

Although they have only recently become popular in the Western Hemisphere, Japanese traders have been using the candlestick charting technique for hundreds of years. Candlestick charts, much like the bar chart equivalent, utilize the open, high, low and close activity to plot a period (usually a day). In candlestick charting, unlike bar charting where the highs and lows tend to be the focus, the opens and closes are the most significant.

A candlestick is composed of two features, as shown in Figure 1. The real body is a rectangle encompassing the area between the open and close and is what gives candlestick graphs their distinctive appearance. The real bodies are blacked in if the open is above the close and white if the close is above the open. A session in which the open and close are the same is commonly referred to as a doji session and is represented by a single horizontal line at that price.

FIGURE 1: CANDLESTICKS. A candlestick is composed of two features. The first is the real body, which is the rectangle between the open and close and is what gives candlestick graphs their distinctive appearance; this area is blacked in if the open is above the close and white if the close is above the open. A session in which the open and close are the same is commonly referred to as a doji session and is represented by a single horizontal line at that price. The second distinctive feature is the shadows of a candle, which are drawn in the area above and below the real body and the extremes. It is possible to have one, two or no shadows. When a  shadow is absent, the result is referred to as a shaved candle

The shadows of a candle - which give the appearance of being wicks - are drawn in the area above and below the real body. The upper shadow is the area between the high and the top of the real body, while the lower shadow is the area between the bottom of the real body and the low. It is possible to have one, two or no shadows. When a shadow is absent, the result is often referred to as a shaved candle.

Much of candlestick analysis revolves around the search for, and identifying, reversal patterns. Many of the distinctive terms associated with candlestick charting come into use with reversal patterns. This is where the real difference between candlestick charting and bar charting comes into play. However, candlestick analysis can offer more than you think. Most technicians use highs and lows for support and resistance points as part of their basic charting techniques. But in keeping with the candlestick emphasis on opens and closes, let's change the way we look at the market. Instead of the usual highs and lows, let's use real-body highs and lows.

Copyright (c) Technical Analysis Inc.

9 Building Blocks to Double Your Sales Archive

9 Building Blocks to Double Your Sales

Chapter 1-The Building Blocks

Chapter 2- The “Secret” to Small Business Success

Chapter 3- Supercharge Your Website

Chapter 4-Fill the Funnel

Chapter 5- Convert Your Funnel

Chapter 6- Win Lifelong Customers 

Chapter 7- Flip Your Funnel 

Chapter 8- Sell Stuff Online

Chapter 9- Collect the Cash 

Chapter 10- Grow Through Partners 

Chapter 11- Measure and Tweak

Conclusion

 © 2008 By Clate Mask

Conclusion: 9 Building Blocks to Double Your Sales

Time to Get Started

Many of the most fascinating people I have ever met are small business owners. They are those

individuals that decided they want to do something more with their lives. They want to share
their talents, skills, and interests with the world. I admire them. Many of these entrepreneurs
are my closest friends. I listen to their stories, I see their strength, and I can’t help but feel
more ambitious myself because of what I see resonating from them.

Business ownership is not simple, but I and my entire company are on a mission to make it more so. That is why we’ve done thousands of hours of study. We’ve read the books by all the experts, heard the complaints of small business owners, tested different techniques on our own company, and resolved that the 9 building blocks and our powerful secret I shared with you are the most significant in boosting sales.

Now that the knowledge of the 9 building blocks is in your hands, I hope that you’ll do more
than just think, “Hmm. That’s interesting. I think he had a few good points.” My hope is that you
will go on from this day, finding easier, faster, more effective ways to generate leads, turn prospects to customers, turn customers into raving fans, and sell more than you’ve ever sold before.

Take the time. Reread this book if you need to, but ingrain these concepts in your head, and you
will soon be seeing massive improvements to your small business ownership. Take this knowledge and stretch as far as you can reach.

Goals are the limits we set ourselves. Why not shoot for the impossible? You have courage, strength, and enviable skills. Take what you have, take what I have offered you and run with it.

---------------------------------
At first I had intended to throw in another story or two. Stories that would inspire you. I could
tell you one success story after another. I could relate all the details of small businesses that
made a big impact or became corporate giants. But I don’t want to do that. I don’t want you to
rely on the confidence or success of others. I would rather not hear small business owners say,
“That person did it, I can do it, too.” What I want to hear is the small business owner that says,
“I am doing what I love and I will succeed because I can! Because I have the tools to do so.”

What I want to hear, following the reading of this book, is small business owners saying, “I did
it. I finally made it out of my office. I doubled my sales. I found the passion I once had for my
company. And I gained the success that was so elusive for so long.””

Now, whether or not you do that is up to you. What you do with the information I handed you
in this book is your decision. I can’t change your company for you. But I sincerely hope you
do something with this. If you can only change a single aspect of your company, do it. Nobody
should experience the “pains” of small business ownership that I, and so many like me had to.

If you will take the time to work on and improve the “secret” and 9 building blocks, you can avoid so many of the horrible circumstances my company went through. Furthermore, and perhaps more importantly, you are well on your way to doubling your sales and making your company better than it has ever been! You will experience true small business success!

Note: One last thing. Several times throughout this book, I mentioned the use of technology to
automate business management processes. The software we provided to the man with “pain”
eventually evolved into our signature product…Infusionsoft. This man wanted the building blocks
I’ve provided for you. But he wanted each step to be automated. That is what Infusionsoft does
for the small business owner. It liberates and empowers small business owners by putting their
sales, marketing, and management systems on autopilot.

 © 2008 By Clate Mask

to get the best results in your in business Test and Test Again

If you want to get the best results in the shortest time possible, test and test again. Those who have been in business for a while have a fairly good understanding of their customers. However, if you’re just starting out, you don’t have the luxury of getting to know anybody. You need to sell, and you need to sell now. So you need to know what messages are going to work.

In actuality, whether you have been in business for a while or not, this is a good idea. When
you test and measure, you’re bringing marketing to a scientific level. You don’t have to rely on instinct or hope. You have the proof in your hand of whether or not this campaign is going to work. You know the anticipated success rate of getting an email dropped in the inbox. In other words, testing allows you to speed up the “Measure and Tweak” process. And this helps you achieve better than just “good” results.

get the best results in your in business Test and Test Again

Think about the difference a single word might make. Think about the time, effort, and testing that goes into major corporation slogans. I’m sure Nike didn’t present their “Just Do It” motto to the world before they tried it out. And would the motto have gained as much popularity as it did had the phrase actually been, “Just go ahead and do it.?”

Let me give you a another example. “Got Milk?” What a marketing phenomenon. If you
drive down the street for any more than five minutes, you will see a twist on this marketing message. Around the area I live, I’ve seen: got sand, got plumbers, got dirt, got real estate,
and even got marketing. Releasing that message onto the consumer market was no
accident. I’m sure a test group told milk to go ahead and run that campaign.

Got questions?

And that is what testing the marketing message can do for small business owners. It measures
your marketing before you spend extra time and money on sending it out.
Got questions?

The pattern is simple. Put together a marketing campaign. Try it out. Measure the results. If you don’t get a good response, tweak the message, and try again.

If you want to double your sales, you have to send the message that gets people to buy. If your
message isn’t quite good enough yet, keep trying. You’ll get there. But, you won’t get there until
you know what works and what doesn’t. Knowledge is the key to not only “good” but great results!

 © 2008 By Clate Mask

Move Forward with Confidence let me show you

When small business owners are in control, when they have the power of measurement, their
campaigns become more specific, targeted, and by extension more effective. You cannot guess
100% of the time what words, phrases, offers, or bonuses a consumer is going to respond to.
However, at least with certain information under your belt, you have the ability to act with confidence.

When you track and measure your marketing messages, your ability to communicate better with your customer or prospect improves. Your messages are more specific and targeted, and you can begin budgeting for them right type of marketing, rather than throwing your money out the window on something that may or may not work.

Do I know my clients? Absolutely. I can tell you right now that graphically, they don’t care for
the cartoon looks. In the copy, they want cold, hard facts. In the product, they want something
to make running a small business easier and more effective. As a result, our marketing tends
to be no nonsense, straight to the point messages that logically and emotionally appeal to the
customers. Our marketing isn’t always perfect. We’ve thrown out entire campaigns. However, within the last few years our marketing has become more specific, targeted and less expensive. Our ROI on our marketing pieces has significantly increased as we tweak and improve our messages.

 © 2008 By Clate Mask

Get a System that permits instant feedback

With simple, easy to use systems, measuring results is a piece of cake. (Once again, you have
to love technology.) When you measure your marketing efforts, you’re going to start benefiting
from your marketing faster and with greater results than you ever imagined.

When you are measuring your data, you are going to have the edge on marketing techniques.
Think for a minute about what instantaneous access to customer responses are going to do for
your marketing campaigns. If you were to set up an entire campaign around a particular theme,
and the first two steps of the campaign produced no interest in your products or services, would
you continue with the other steps--just because you had already planned to send them? No.
That would be wasteful. Being able to measure results is going to save you time and money by
preventing repeated mistakes.

When you have a system that permits instant feedback, you won’t have to rely on random surveys, or wait for your customers to let you know what’s working. You get the knowledge instantly and with each marketing piece  you release, your message becomes more powerful. If it doesn’t, it’s time to step back and try again.

 © 2008 By Clate Mask

Double Your Sales with a Doubled Marketing Effort

Marketing is a fast, efficient way of pushing the message from your head and implanting it in
the hearts of your consumers. If you choose to be the door-to-door salesman fine. But I do want you to understand the ease and speed with which the “right” marketing message can reach your
potential customers.

When you take the time to measure your marketing efforts and then make the appropriate
changes, you are going to see the results in the increased number of sales. Sales are your best
indication that your message is being heard loud and clear. But even with a stellar marketing
campaign, there is always room for improvement. Measuring your results gives you the chance to keep getting better, and bringing in more and more sales.

A Shot in the Dark

Double Your Sales with a Doubled Marketing Effort

I’m going to be a little audacious and
say the vast majority of small business marketing dollars are wasted. Some of the reasons include those in previous chapters: follow-up is inconsistent and business owners don’t know what type of message to send. But most or all of those problems can be solved if the business owner is able to see one little thing…what is working and what is not. More and more companies are shying away from radio, television, and billboard ads. There are two reasons for this action. One, these advertising methods are not targeted. And two, there is no way to know if it’s working. When a multi-million dollar ad runs on television, millions of viewers are watching it. If sales go up for a company, it would logically be explained by the television ad. However, that isn’t necessarily true. There could be dozens of other factors that affect consumer choices.

Have you ever seen an online survey site? These sites provide some sort of compensation for
twenty minutes of your time. During that twenty minutes, you might answer as many as fifty
questions, and the vast majority of them are related to marketing efforts. You get questions
like, “Of the following popcorn brands, which ones have you heard about?” And, from there, the
questions get even more specific.

Why are businesses willing to pay consumers as much as $5 a piece to get their opinion? Because they need to know what marketing messages have an impact, and which are a waste of their money.

When uncertainty rules, marketing campaigns are nothing more than a shot in the
dark.

marketing messages

Simple changes can make a world of difference, but without a way of measuring, businesses
don’t know what that change is. At Infusionsoft, we sent out an email blast that produced a poor
response. The blast just didn’t work. Without the tools to measure the response, we may have paid for that email to go out again and again. This was not a cheap email. We paid a significant
amount of money to be able to blast a particular website’s contacts. Can you imagine the waste of repetitively sending the same “wrong” message?

As it was, we tweaked our email and landing page. Gave it a new message and new graphics.
When we sent it out again, the response improved dramatically.

 © 2008 By Clate Mask

what do I mean by “Measure and Tweak?

Measure and Tweak

We’ve come to the last building block. As I mentioned earlier, none of the building blocks are in order. You may be thinking, Why is “Measure and Tweak” all the way at the end? It wasn’t some organizational mismanagement. The blocks are just all reliant upon one another for helping small business owners double their sales and achieve success.

But this block, like all the others is critical to success. It holds as much importance as each
of the previous chapters. So, what do I mean
by “Measure and Tweak?” Like several of the
other titles, it would seem like a self-explanatory phrase. Once again, though, there are a lot of aspects of measuring and tweaking that are included in this description.

The first thing I am referring to is the ability to accurately track marketing efforts. Marketing,
when done right, is an exceptionally powerful tool. But, when you start throwing money at
marketing efforts, you better be able to view your successes or failures. Otherwise, you’re
efforts could be useless, ineffective, and in some instances working against you.

 

Next, this building block is going to cover the “tweaking” aspect of marketing campaigns. Once you are aware of your marketing successes and failures, changing your marketing tactics is practically effortless.

Finally, this building block must include the power of analysis. “Measuring” of course denotes an
ability to scale. In this case, I want to focus on producing a marketing ROI. When you are able
to pull reports, showing the number of leads and sales from your marketing efforts, you’re in a
position of strength. You have control over your target audience, and not the other way around.

 © 2008 By Clate Mask