Selecting Your Swiss Broker - Be A Wise Trader

Many people are familiar with the process of Forex trading. With its rapidly increasing popularity, several people across the world are eager to participate in the seemingly lucrative currencies trade. Just as a reminder or if you are new to the business, foreign exchange or the Forex trading is the business of speculating major world currency prices. The word Forex is derived from foreign exchange. There are many players in the Forex market which is basically constituted by traders and brokers. The role of a Forex broker is to provide the needed Forex trading platform. This is what you need to participate in the Forex trading.

The world presents different Forex brokers in the market. In the market you will find different Forex brokers from different countries and location ready and willing to get you on board. Most of these Forex brokers come from European and North American countries. Swiss brokers are one of the many Forex brokerage firms you will find in the market. Just as the name suggest, Swiss brokers originate and majorly operate from Switzerland. Through the internet, you are able to find a good number of Swiss brokers that you choose. Most Forex brokers from Switzerland are known for their exemplary services. This has made them dominate the Forex trading market.

However, there are certain considerations that you must make when selecting a Swiss broker to trust with your money. Not all Forex brokers from Switzerland operate in the same way. There are ways in which they differ in terms of their operations and relationship with you. The first thing you need to give serious attention is communication. The kind of communication between you and the Forex broker you select will determine whether you become successful or fail in the Forex market. As you know, Switzerland is an English-speaking nation. Therefore, you must have a good grasp of English because almost all Swiss brokers use English as the preferred method of communication.

Another factor that you may need to consider when selecting a Swiss broker is their trading background. Every brokerage has its own background which significantly differs from each other. Some might have good trading history while others are not. In this case, get advice from people who have previously worked with these brokers. They are able to give you their first-hand experience working with the broker. This is helpful in enabling you to easily eliminate the rogue ones out when selecting a Swiss broker. You can consider different factors like how the broker dealt with its past clients, how they address complaints issues, the customer support etc.

It is a good idea to use Swiss brokers that have tie ups with local Swiss banks. As you already know, Forex brokers need to be regulated. This is no exemption to Swiss brokers. The regulation is a mandatory requirement for every Forex broker. You should use this as an eliminating factor when selecting a Forex broker from Switzerland. A good idea is to use a Forex broker that is duly regulated by a local Swiss bank. This ensures that the broker gives you very competitive and updated rates from these financial institutions.

In conclusion, it is a good idea to select a Swiss broker because they are known to offer some of the best rates in the market. However, this must be done wisely so that you don't end up getting a broker that would only make your Forex trading journey a hell of problems. The criteria provided are just some of the few factors that you should consider when selecting a Swiss broker. There are many other factors such as the security of your investment, dedicated support among others that you should consider too.

Placing your fund in a Swiss broker is recommended for your fund safety. Read the details of an established Swiss broker that also a licensed Swiss bank at Dukascopy review. There are countless scam brokers out there, but Forex trading itself isn't a scam. Read forex scam to read the solid reasons.

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Swiss Franc is the Only Safe Haven Currency

According to conventional market wisdom, there are three safe haven currencies: the Swiss Franc, Japanese Yen, and US Dollar. It is to these currencies that investors flock whenever there is a crisis, or merely an outbreak of uncertainty, and for much of the period following the collapse of Lehman Brothers, the three were closely correlated. As you can see from the chart below, however, one of these currencies has begun to distinguish itself from the other two, leading some to argue that there is now only one true safe haven currency: the Swiss Franc.

What’s not to like about the Franc? It boasts a strong economy, low inflation, and low unemployment. Unlike the US and Japan, Switzerland is not plagued by a high national debt and perennial budget deficits. Its monetary policy has been extremely conservative: no quantitative easing, asset-purchases, or any other money printing programs with euphemistic names.
Ironically, the only thing that makes investors nervous about the franc is that it has already risen so much. Remember when it reached the milestone of parity against the dollar in 2010? Since then, it has appreciated by an additional 20%, and seems to breach a new record on an almost weekly basis. The same goes for the CHF/EUR and CHF/JPY. The President of Switzerland’s export association is expecting further gains: “Parity is a realistic scenario. Given the indebtedness of the eurozone and the strong attraction of the franc, the euro is likely to continue to lose value.”

Given that Swiss exports have surged in spite of (or even because of) the rising Franc, however, he has very little to worry about at the moment. As you can see fromt he graphic below (courtesy of the Financial Times), the balance of trade continues to expand, and has exploded in a handful of key sectors. To be sure, economists expect that this situation will eventually correct itself and are already moving to revise downward 2011 and 2012 GDP growth estimates. Then again, they made the same erroneous predictions in 2010.

The main variable in the Swiss Franc is the Swiss National Bank (SNB). Having booked a loss of CHF 20 Billion from failed intervention in 2010, the SNB is not in a position to make the same mistake again. In fact, SNB President Philipp Hildebrand has not even stooped to verbal intervention this time around, undoubtedly cognizant of the fact that he has very little credibility in forex markets.
At the same time, the SNB is not in any hurry to raise interest rates, lest it stoke further speculative interest in the Franc. Its June meeting came and went without any indication of when it might tighten. Interest rate futures currently reflect an expectation that the first rate hike won’t come until March 2012. Thus, the downside of holding the Franc is that it will continue to pay a negative real interest rate. The only upside, then, is the possibility of further appreciation. Fortunately, the SNB is unlikely to stop the Franc from rising, since it serves the same monetary end as higher interest rates. In other words, a more valuable Franc serves as a direct check on inflation because it lowers the cost of commodity imports and should (eventually) soften demand for Swiss exports.
It is possible that the Swiss Franc will suffer a correction at some point, if only because it rose by such a large margin in such a short period of time. On the other hand, given that its economy has proved its ability to withstand the Franc’s appreciation, it’s no wonder that investors continue to bet on its rise.

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