Randomly Noted

Retail investors are often looked on as the unsophisticated types who move slowly and late and rarely have a short-term affect on financial markets.  They broke from that mold in Japan, where retail FX traders  (known as Mrs. Watanabe) contributed to a surge in the Japanese yen this week when they began to unwind a popular strategy called the carry trade.  Many of these investors had shorted the yen and gone long currencies that offer higher yields (the so-called carry trade). Concerned about the effects of the horrible earthquake in Japan on its economy, these investors unwound these trades – meaning they bought the yen en masse and sold the other side of the trade, often the Australian dollar.

Is it possible that the retail investor could move the currency of the world’s third-largest economy this way? Sure thing, because Japanese retail trading of the yen can account for nearly 30% of all trading on any given day.

Continue reading…

The FX market is hot. About $4 trillion of currencies are traded every day – a number seen hitting $10 trillion in 10 years. Banks around the world are bulking up their trading desks. And Mrs. Watanabe (the proverbial Japanese housewife who day trades while her husband is at work) continues to do more business than ever all over the world.

So, it is with that backdrop that two of the platforms that cater to the retail investor are looking to go public. Gain Capital, which runs the Forex.com website, is hoping to sell 11 million shares for a maximum $190 million, while FXCM is hoping to sell 15 million shares from $13 to $15.

And while there is no question that FX is hot, investors may approach these IPOs with a little caution.

Continue reading…