Expatriates Forums in Azerbaijan

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dutchjobs — Sun Nov 30, 2008 7:33 pm

Author: dutchjobs

Posted: Sun Nov 30, 2008 7:33 pm

Dear reader,

In these times of economic and financial crisis, there are alway great opportunities for making a very good return on investment capital.

Were are looking for serious members to expand our investment community within Eastern Europe and the rest of the world.

Want to know more?

Just send us an email if you would like to have more information or give us a call if you wish to make an appointment.
0032 497 545587

Kind regards,
Bodhi
independent Bridge member

looking out for jewellery manufacturers

rups — Fri Nov 02, 2007 7:50 pm

Author: rups

Posted: Fri Nov 02, 2007 7:50 pm

Hi guys and gals my name is rups i am from india doing business of diamond jewellery ,i am looking out for information on jewellery manufacturing in azerbaijan coz am planning to start buyin stuff from there ,statistics say there are some 800 odd workshops in baku and ganja ,so if anyone has any information or some kind of jewellery manufacturers association address or something where i can get some sort of information than pls do reply me ....actually i tried to find a lot but could not find ....would be waiting for ur alls precious information

"Eliminates your financial problems"

irpullwan — Wed Oct 10, 2007 2:40 pm

Author: irpullwan

Posted: Wed Oct 10, 2007 2:40 pm

“Eliminate your financial worries... Afford yourself the luxury of more time with your family, the freedom to be your own boss, make your own business decisions, create your own hours and best of all make all the money you’re capable of! But the best part of all; fire your boss and get out of the rat race! ...”

Dear friends,

I began building my future in mind. I thought of involving myself in an internet business. When I became frustrated and under appreciated at my job. I was fed up with the nonsense and political battles fought each day and knew there had to be a better way.

I could see that an internet home based business held huge potential, so I began researching and reading everything I could. In 2006 my research paid off, I quit my job and haven’t look back. Knowing that it would be short journey with hardship and that’s the price has to pay for my financial independence.

Before getting started, it’s important that you realize one thing. Anyone can make money with e-commerce but having a convince mindset and the belief in you, will help you make more than just money, you’ll have the ability to create a substantial income forever.

There’s a difference.

Those who realize the difference and aspire to become powerful C2C (customers to customers) business owners. There are no get rich quick schemes here and starting a C2C business for free simply won’t happen. Spending $25 might get you a sale or two but having invest a fewer hundred dollars to put into your business will get you there faster, help you avoid a lot of the frustrations and you’ll be on your way to create a lifelong income.

My goal is to offer only legitimate powerful business concept and share with you how to become successful.

If you really WANT to become successful, you're COMMITTED, PERSISTENT and willing to devote TIME, EFFORT and modest RESOURCES to get there, you WILL be successful.

WORK IN AZERBAIJAN / AZERBAIJAN EMPLOYMENT GUIDE

Azerbaijan Info — Mon May 07, 2007 9:53 am

Author: Azerbaijan Info

Posted: Mon May 07, 2007 9:53 am

WORK IN AZERBAIJAN

Foreign nationals wishing to work in Azerbaijan are required to register at their place of residence and obtain a work permit. Work permits are issued by the Ministry of Labour and Social Protection. Heads of representative offices and branches of foreign legal entities (and their deputies) are not required to obtain a work permit in Azerbaijan.

Foreign employees who are employed by enterprises (affiliates or representative offices) operating in Azerbaijan are subject to Azerbaijani labour law, except for those working in enterprises, branches or representative offices located in Azerbaijan under employment contracts concluded in the foreign state where the employer is located.

There is a great deal of work to be done in Azerbaijan from teaching and NGO work to work in the oil and tourism sectors.

DOING BUSINESS IN AZERBAIJAN / AZERBAIJAN BUSINESS GUIDE

Azerbaijan Info — Mon May 07, 2007 9:37 am

Author: Azerbaijan Info

Posted: Mon May 07, 2007 9:37 am

DOING BUSINESS IN AZERBAIJAN

STARTING A BUSINESS

STANDARDIZED COMPANY
Legal Form: Limited Liability Company (LLC)
Minimum Capital Requirement: 0
City: Baku

Registration Requirements:

Procedure 1. A notary notarises sample signature of a "legal representative" and the registration documents

Time to complete: 1 day

Cost to complete: AZM 150,000

Comment: It is not legally required to hire a lawyer to register the LLC. The LLC, however, needs to have a legal representative for the purposes of the registration with the State registering authority (the Ministry of Justice or its divisions). Although there is no stated requirement that this legal representative be a legal professional, he must be able to confirm correctness of the facts and documents submitted to the Ministry of Justice.

The costs are: AZM 22,000 for the notarization of the foundation agreement; AZM 1,100 for the notarisation of copies of the documents (in practice, the Ministry of Justice requires the submission of one notarised original copy of the company's foundation agreement, 2 notarised original copies of the charter); AZM 1,100 (approx. 0.25 USD) for the notarisation of signatures on the documents.

Procedure 2. Obtain a confirmation on the legal address of the company from the proposed lessor

Time to complete: 1 day

Cost to complete: no charge

Comment: Normally, the document confirming the legal address is the document evidencing the right of the LLC to use the premises (normally, a lease agreement) where the LLC's permanent governing body will be located. Before the LLC has been registered, a guarantee letter from the proposed lessor along with a notarised copy of the ownership certificate for the premises is also acceptable as an evidence of the LLC's legal addres

Procedure 3. Deposit the charter capital in a bank and obtain a receipt; pay the state registration fee and get a proof

Time to complete: 1 day

Cost to complete: AZM 75,000

Comment: Most of banks require payment of fee for the opening of an account, e.g. in International Bank of Azerbaijan it is AZM 100,000. A state fee is paid at to the special account of the treasury of Azerbaijani government maintained at the special account of the National Bank of Azerbaijan. The LLC's charter capital is usually paid in cash and obtained payment slip is accepted by the Ministry of Justice as a valid proof. The state fee can be also paid by bank transfer to the special account of the Ministry of Justice. The bank account is open, in escrow, upon submission of a copy of charter to the bank and transfer (or deposit) of 100% of the charter capital. The payment of the charter capital may also be evidenced by an extract from the bank account which would be acceptable by the Ministry of Justice as an evidence of the payment of the charter capital. Thereafter, the bank will issue a letter addressed to the Ministry of Justice and confirming payment of the charter capital. The bank account cannot be used for other purposes until tax authority consent is received following registration.

Procedure 4. Prepare a design of the official stamp/seal of the LLC

Time to complete: 1 day

Cost to complete: nominal, varies depending on the arrangement made.

Procedure 5. File documents with the company registrar, Ministry of Justice

Time to complete: 18 days

Cost to complete: AZM 100,000

Comment: Pursuant to the Law on Changes and Amendments to the Law on State Registration and State Register of Legal Entities of June 28, 2005 and changes to the Civil Code of June 24, 2005 the requirement to produce signature samples of legal representatives of legal entities was eliminated. The Law on Changes and Amendments to the Law on State Registration and State Register of Legal Entities of June 28, 2005 also eliminated possibility of requesting documents which are not required under the Law on State Registration and State Register of Legal Entities.

New statutory time limits of registration were introduced by the Law on Changes and Amendments to the Law on State Registration and State Register of Legal Entities dated June 28, 2005 (effective as of September 4, 2005). Pursuant to these changes, registration of commercial legal entities shall be completed within 5 working days, A provision allowing extension of review of documents for further 30 working days period was repealed. From January 2004 the statutory time limit on processing the registration application is extended from 10 days to 30 working days. However, in practice this term may be prolonged for further 30 working days period for the purposes of additional review of documents. No later than 10 working days after the review (or after making the necessary corrections) the Ministry is required to issue a state registration certificate or issue a written refusal to an applicant. If no certificate or refusal is issued within the prescribed period, then the company is supposed to be considered to be registered and the Ministry is required to issue a state registration certificate for such company within 105 working days. Nonetheless, in practice registration still takes 2-3 weeks. Seal/stamp sketch shall be submitted to the Ministry of Justice together with the registration documents. It shall be returned to the applicant together with the registration documents after the registration and bear stamp of the Ministry together with a letter of the Ministry to a stamp maker (any anonymous stamp manufacturer) authorizing such stamp manufacturer to produce the seal/stamp as per the submitted sketch approved by the Ministry.

Procedure 6. Obtain an official seal

Time to complete: 1 day

Cost to complete: AZM 100,000

Comment: No state duty. The cost of the stamp depends on the price of the private contractor and varies between AZM 20,000 - 200,000 . The order for the production of a seal can only be accepted upon production of a copy of the certificate of state registration and originals of permission for producing a seal and a seal design approved by the Ministry of Justice. Usually, permission and approved design are issued to the applicant along with the certificate of state registration. There are various companies producing seals and the law does not restrict a company to any particular producer.

Procedure 7. Register with the Statistical Committee to obtain a permanent statistics code

Time to complete: up to 7 days

Cost to complete: no charge

Procedure 8. Obtain a "Control Book"

Time to complete: 1 day

Cost to complete: AZM 10,000

Comment: An LLC may wish to obtain the Control Book which is used for the purposes of recording the LLC's audits by various state agencies. Since 2003 Control Books are to be obtained from the Ministry of Economic Development (rather than the Statistical Committee).

Procedure 9. Register with the local Tax Inspectorate to obtain a tax code

Time to complete: 2 days

Cost to complete: no charge

Comment: There are two time limits involved:

(1) the first is the deadline for the submission of documents to the tax office after the registration with the Ministry of Justice has been completed, which is 30 calendar days after the date of such registration (but not from the date of issuance of the Registration certificate, although tax offices take this date into account) and

(2) the second is the term within which the tax office must register an applicant (the company in this case) and issue the Tax Payers ID number, which in 2004 was reduced from 10 to 2 calendar days. According to the new registration law, the silent is consent rule applies and the Justice Ministry automatically issues a certificate after 2 days.

In 2004, list of required foundation documents for tax registration was simplified and is now limited to the company charter. Tax registration forms can be downloaded from the Azeri Tax Ministry's website.

Due to new internal rules of the tax authorities, the foreign representative of a registering company should either have a residence card or should appoint a tax agent (resident in Azerbaijan). The residence card is obtained by appearing in person before the police authorities. For this, a lease agreement giving the residential address, passport and 2 passport photos must be provided.

Procedure 10. Register with the Social Protection Fund and obtain registration number.

Time to complete: up to 10 days

Cost to complete: no charge

Comment: Documents should be submitted prior to the opening bank accounts and no later than one month after the registration with the Ministry of Justice. It takes up to 10 days after the Notification-Duplicates referred to in Proc. 12 below are submitted to the Fund's local office after the opening the bank accounts.

Procedure 11*. Register with employment centres

Time to complete: 2 days (simultaneous with procedure 10)

Cost to complete: no charge

Comment: The procedure can be started as soon as registration with registry (maintained by the Ministry of Justice) and with the State Statistics Committee is completed and tax payer's identification number is obtained from the Ministry of Taxes. Registration with the employment centre can be obtained simultaneously with the registration with the State Social Protection Fund.

Procedure 12. Register for VAT purposes

Time to complete: 7 days

Cost to complete: no charge

Comment: Under the Azeri Tax Code, VAT payers are a legal entities or individual entrepreneurs whose taxable turnover within the last three-(calendar)-month period exceeds the amount equivalent to 22,500 times the conditional financial unit. (AZM 5,500). These entities must register as VAT payers. Any other entity may register for VAT voluntarily. An application for VAT registration must be filed with the tax authorities within ten days upon expiration of the three-month period.

Procedure 13. Open a permanent bank account

Time to complete: 1 day

Cost to complete: AZM 150,000 (depending on banks)

Comment: This requires the issuance by the local tax authority (where the LLC is registered) and the local department of the Social Security Fund of a special authorisation form called the notification duplicate addressed to a bank where the LLC's account is to be opened. The LLC must open its permanent bank account within 10 days after the notification duplicate is issued. Each bank account requires two notification duplicates: one from the tax office and one from the social Protection Fund department.

Generally, LLCs open two bank accounts, one US Dollar account and one Azeri Manat account, and therefore obtain 4 notification duplicates, i.e 1 notification duplicate from each involved agency for each bank account. The bank must fill in the required information and return the portions of the notification duplicates to the tax office and the State Social Protection Fund's local department.

Procedure 14. Return the Notification-Duplicate(s) to the tax office and the Social Protection Fund

Time to complete: 1 day

Cost to complete: no charge

Procedure 15. Obtain workbooks for employees from the Ministry of Labour

Time to complete: 1 day

Cost to complete: nominal

Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).

FORMS OF BUSINESS ORGANISATION

Sole proprietorship

Number of partners/shareholders:
1 person.

Minimum and/or maximum capital:
No minimum capital.

Liability:
The owner is liable for debts of the company on his personal assets.

Release of financial documents:
No

Private Limited Company

Number of partners/shareholders:
No minimum.

Minimum and/or maximum capital:
No minimum capital.

Liability:
Liability is limited to the amount contributed.

Release of financial documents:
No

Public Limited Company

Number of partners/shareholders:
Minimum 3 partners.

Minimum and/or maximum capital:
No minimum capital.

Liability:
Liability is limited to the amount contributed.

Release of financial documents:
Yes

Limited partnership

Number of partners/shareholders:
Two types of partners: active partners and sleeping partners.

Minimum and/or maximum capital:
No minimum capital.

Liability:
Liability of active partners is unlimited.
Liability of sleeping partners is limited to the amount contributed.

Release of financial documents:
No

TAXATION

Corporate tax
Tax on enterprises: 22% (effective from January 1st 2006)

Taxation occurs at the national and municipal levels. Residents are taxed on their worldwide income, with a credit for foreign tax. Most Azerbaijan-source income of non-residents is taxed. The rate of corporate tax has been decreased from 24% to 22% from January 1st 2006 in accordance with the adoption of the Law on Changes and Amendments to the Tax Code of Azerbaijan on December 17th 2005. The authorities are empowered to impose a minimum tax, taking into account the circumstances of each specific business sector. A 10% withholding tax applies to repatriated profits of foreign companies.

Individual tax
Progressive rates up to 35%

Resident individuals pay tax on worldwide income; non-residents pay tax on Azerbaijan-source income only. A person is resident if present in the country for 183 days in a calendar year. The progressive rates to 35% apply to employment income. Entrepreneurs are taxed at progressive rates to 35%.

Capital gains
Taxed as income

Capital gains are generally taxed as part of income.

Indirect tax
Standard rate: 18%

Value-added tax (VAT) applies to most transactions. Exempt items include exports, subway transport, financial services (banking, leasing, etc), mass media (except for advertising), insurance services, and oil and gas companies working under the Production Sharing Agreement taxation regime.

Tax administration and compliance
Tax year: Corporations: calendar year; Individuals: calendar year

Enterprises pay corporate income and assets taxes quarterly in advance. VAT is paid and reported on a monthly basis. All enterprises must submit their annual corporate income-tax returns to the tax authorities before March 31st of the year following the relevant tax year. Payroll taxes are withheld and remitted monthly by employers on behalf of their employees.

Additional tax information

Withholding taxes: Dividends 10%, Interest 10%, Royalties 14%.

Tax treaties: Azerbaijan has concluded more than 15 tax treaties. There is no tax treaty with the US.

Dividends: Dividends are taxed by withholding at 10%.

Revenue protection: There is no transfer-pricing or anti-haven (CFC) legislation.

Groups: There is no provision for group taxation.

Incentives: Taxation under the Production Sharing Agreement regime in the oil and gas sector (removed from January 1st 2006).

Other taxes: Mining tax, Property taxes, Excise taxes, Customs duties, Land taxes, State duty, Road taxes.

Financial Advisors services, Offshore Fund - Know More

admin — Mon Feb 05, 2007 4:42 am

Author: admin

Posted: Mon Feb 05, 2007 4:42 am

Financial Advisors services, Offshore Fund - Know

More

Dear members & guests

Due to the continuous marketing approach

of our expatriate community by multiple financial planners services company, Allo' Expat has decided to

provided you with some usefull imformation on the Expat Offshore Banking issue. Hope you'll invest

wisely..... in the future

Financial Advisors - who are

they?

Q1 - How do I get the best offshore

financial advice?

The best offshore financial advice is probably given by

Independent Financial Advisors. Independent financial advisors (or IFA's, as they are sometimes called)

advise their clients on savings, investments and pensions. They may also provide Savings Plans for

offshore investing to their clients.

When counselling a client, the best offshore financial

advisors should complete the following steps:

* Step 1 - collect detailed information about a

client's financial circumstances and requirements ? be they for retirement planning, retirement income,

expat investment, or another purpose.

* Step 2 - check all the offshore tax havens for the best

offshore plans.

* Step 3 - provide impartial advice as to which plan(s) best meet their

client's needs (in the form of a written report).

* Step 4 - arrange for a client to buy the

chosen offshore plan(s) on the best terms available.

You may want to complete your own research to

ensure you know the right questions to ask your advisor.

When all these stages are completed, you

can be confident you have received the best offshore financial advice.

Q2 - What is a

Certified Financial Advisor?

Financial advisors may need a license to practice,

issued by the Financial Services Regulator in their Country. Only these advisors may be called 'Certified

Financial Advisors'.

It may be a condition that prospective certified financial advisors show

their Regulator that they are:

* competent to advise

* impartial in their

advice

* independent of Providers

* covered by professional indemnity

insurance.

So it is important to check that your financial advisor is listed under:

*

Certified Financial Advisors, licensed to advise in the Country where you live and

*

Independent Financial Advisors - advising on a wide range of offshore plans from a full list of

providers.

Now you should feel confident you are receiving the best offshore financial

advice.

Q3 - How are offshore financial advisors

paid?

Independent financial advisors (IFA's) earn their living from commissions

they receive from plan providers. This is their income for the offshore financial advice they

give.

The commission that advisors (IFAs) receive from offshore financial advice cases may range

from hundreds to thousands of dollars.

Good offshore financial advisors should not be influenced by

the amount of commission they receive.

Some clients prefer to pay fees to their financial advisors

for advice to ensure impartiality. When this occurs offshore financial advisors refund commission received

from a plan provider either in cash or as an increased allocation of contributions

invested.

Q4 -How do I find a list of Independent Financial Advisors

(IFAs)?

Search the web! Try searching using the search words independent financial

advisors or certified financial advisors PLUS the name of the Country in which you live.

Personal

recommendations are always helpful - ask your friends if they would recommend their offshore financial

advisors. Always check that a recommended advisor is both certified and

independent.

Offshore Investing - What do that

mean

Q1 - What is Offshore Investing or

Offshore Investment?

When we talk about Offshore investing plan opportunities it is

like the savings plans available in many countries, except these plans:

* Are registered in tax

havens and are regulated by their Financial Services Authorities.

* Can be used for investing

by non-residents of the tax havens.

* Are sometimes more tax efficient than or have other

advantages over domestic savings plans.

Q2 - Why would expatriates choose offshore

investing?

Expatriate investment in the savings plans catalogued here and offering

offshore investing opprotunities might be appropriate when:

* No local or Home Country tax free

regular savings plans are available.

* No local or Home Country tax free lump sum investment

plans are available.

* An expatriate is planning to retire to a third country.

If you

fit any of these categories of expatriates you should investigate the offshore plans researched by

Offshore Boffin and consult your Financial Advisor.

Q3 - Are there other people who

might benefit from Offshore Invesment?

Yes. People who are not living abroad might

find offshore investment attractive in the following circumstances:

* They have more cash

available for savings than can be invested tax free in their resident countries' investment plans

(perhaps because the amount they can invest each year is capped).

* They may live in countries

which do not have domestic tax free savings plans.

* They live in countries which are not

suitable long-term investment environments for political or economic reasons.

* They wish to

limit the effects of inheritance tac on their estates.

Q4 - Is there safe

offshore investing?

The answer is that All investors should remember that the value

of ALL their investments can go down as well as up!

Safe offshore investing is more likely by

choosing plans:

* From politically stable tax havens - the quality of tax havens varies.

* From well-regulated tax havens - the tax havens whose savings plans are catalogued here all

regulate their financial services companies to avoid 'fly-by-night' companies.

* From

reputable investment management and life assurance companies - whilst past performance is not always a

guide to the future, the companies whose savings plans are listed here are all well-known names.

* Investing in 'mutual' or 'collective' funds. these funds are based on a simple idea. If a large

number of investors pool their savings in - for example - an equity fund, the larger fund can be invested

in shares in many companies, spreading each individual's risk.

For

expat investment - and others - to be successful the best offshore investment opportunities must be found.

For that you'll need a good Financial Advisors.

FX Currency Trading / FX Forex Trading Online - Know

admin — Mon Feb 05, 2007 4:40 am

Author: admin

Posted: Mon Feb 05, 2007 4:40 am

Forex Trading / FX Trading

Foreign Exchange
This short introduction explains the basics of trading Forex online, a brief explanation of the markets and the major benefits of trading Forex online. There are also two scenarios describing the implications of trading in a bear as well as bull market to better acquaint you with some of the risks and opportunities in the largest and most liquid market in the world.

As an additional aid for those who are new to Forex, there is also a glossary at the bottom of this text which explains some of the terms used in connection with currency trading.

Overview
Foreign exchange , forex or just Forex are all terms used to describe the trading of the world's many currencies. The forex market is the largest market in the world, with trades amounting to more than $1.5 trillion every day. This is more than one hundred times the daily trading on the NYSE (New York Stock Exchange) . Most forex trading is speculative , with only a few percent of market activity representing governments' and companies' fundamental currency conversion needs.

Unlike trading on the stock market, the forex market is not carried out by a central exchange, but on the "interbank" market , which is thought of as an OTC (over the counter ) market. Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world. The main centres for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres means that the forex market is a 24-hour market.

Trading Forex
A currency trade is the simultaneous buying of one currency and selling of another one. The currency combination used in the trade is called a cross (for example, the Euro/US Dollar, or the GB Pound/Japanese Yen.). The most commonly traded currencies are the so-called "majors" - EURUSD, USDJPY, USDCHF and GBPUSD.

The most important forex market is the spot market as it has the largest volume. The market is called the spot market because trades are settled "immediately" or on the spot. In practice this means within two banking days.

Trading on Margin
Trading on margin means that you can buy and sell assets that represent more value than the capital in your account. Forex trading is usually done with relatively little margin since currency exchange rate fluctuations tend to be less than one or two percent on any given day. To take an example, a margin of 2.0% means you can trade up to $500,000 even though you only have $10,000 in your account. In terms of leverage this corresponds to 50:1, because 50 times $10,000 is $500,000, or put another way, $10,000 is 2.0% of $500.000. Using this much leverage gives you the possibility to make profits very quickly, but there is also a greater risk of incurring large losses and even being completely wiped out. Therefore, it is inadvisable to maximise your leveraging as the risks can be very high. For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary.

Why trade Forex?

24 hour trading
One of the major advantages of trading forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). This gives you a unique opportunity to react instantly to breaking news that is affecting the markets.
Superior liquidity
The forex market is so liquid that there are always buyers and sellers to trade with. The liquidity of this market, especially that of the major currencies, helps ensure price stability and low spreads . The liquidity comes mainly from large and smaller banks that provide liquidity to investors, companies, institutions and other currency market players.
No commissions
The fact that forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis. Trading the "majors" is also cheaper than trading other crosss because of the high level of liquidity. For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary.
50:1 Leverage
With a minimum account of USD 10,000, for example, you can trade up to USD 500,000. The USD 10,000 is posted on margin as a guarantee for the future performance of your position.
Profit potential in falling markets
Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. If the EURUSD declines, for example, it is because the U.S. dollar gets stronger against the Euro and vice versa. So, if you think the EURUSD will decline (that is, that the Euro will weaken versus the dollar), you would sell EUR now and then later you buy Euro back at a lower price and take your profits. The opposite trading scenario would occur if the EURUSD appreciates .

Important Forex Trading Terms

Spread
The spread is the difference between the price that you can sell currency at ( Bid ) and the price you can buy currency at ( Ask ). The spread on majors is usually 5 pips under normal market conditions. For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary.
Pips
A pip is the smallest unit by which a cross price quote changes. When trading forex you will often hear that there is a 5-pip spread when you trade the majors. This spread is revealed when you compare the bid and the ask price, for example EURUSD is quoted at a bid price of 0.9875 and an ask price of 0.9880. The difference is USD 0.0005, which is equal to 5 "pips". On a contract or position, the value of a pip can easily be calculated. You know that the EURUSD is quoted with four decimals, so all you have to do is the cancel-out the four zeros on the amount you trade and you will have one pip. Thus, on a EURUSD 100,000 contract, one pip is USD 10. On a USDJPY 100,000 contract, one pip is equal to 1000 yen, because USDJPY is quoted with only two decimals.

Trading Scenario - Trading Rising Prices
If you believe that the Euro will strengthen against the dollar you'll want to buy Euro now and sell it back later at a higher price.

You buy Euro	We quote EURUSD at Bid 0.9875 and Ask 0.9880, which means that you can sell 1 Euro for 0.9875 USD or buy 1 Euro for 0.9880 USD. In this example you buy Euro 100,000, at the quote price of 0.9880 (ask price) per Euro.
The market turns	Later the market turns in favour of the Euro and the EURUSD is now quoted at Bid 0.9894 and Ask 0.9899.
Now you want to sell your Euro and get the profit	You sell Euro at a Bid price of 0.9894.
The profit is calculated as follows:	Sell price-buy price x size of trade (0.9894 minus 0.9880) multiplied by 100.000 = $140 Profit (Note that the profit or loss is always expressed in the secondary currency )

Trading Scenario - Trading Falling Prices
If, on the other hand, you believe that the Euro will weaken against the dollar, you'll want to sell EURUSD.

You sell Euro	We quote EURUSD at a Bid price of 0.9875 and Ask price of 0.9880 and you decide to sellEuro 100,000 at a Bid price of 0.9875.
The market moves in your favour	The Euro weakens against the dollar and the EURUSD is now quoted at bid 0.9744 and ask 0.9749.
Now you buy back your Euro	You buy EUR at an ask price of 0.9749.
Your Profit/loss is then	Sell price-buy price x size of trade (0.9875 minus 0.9749) multiplied by 100.000 = $ 1260 Profit

Remember that trading EUR 100,000 as we have done in our examples, does not mean that you have to put up Euro 100,000 yourself. It means that you have to deposit 2.0% of Euro 100,000, which is Euro 2,000 on margin as a guarantee for the future performance of your position.

Further Reading
To see how you can trade the forex market and benefit from our toolbox of information and live quotes, please proceed to our Forex Quick Start found under the Trading menu on the toolbar, under Forex.

Glossary

Appreciation	Anincrease in the value of a currency.
Ask	Theprice at which you can buy. Traders also speak of an ask price,the price requested. This usually indicates the lowest price aseller will accept.
Basecurrency	Thecurrency that the investor buys or sells (i.e. EUR in EURUSD).
Bear	Someonewho believes prices are heading down. A bear market is one inwhich there is a sustained fall in prices and which does not looklike it will recover quickly.
Bid	Theprice at which you can sell. Traders also speak of a bid price,the price offered. This usually indicates the top price apurchaser will pay.
Bid/Ask	TheBid rate is the rate at which you sell. The Ask (or offer) rate isthe rate at which you can buy.
Bull	Someonewho is optimistic about the market. A bull market is characterisedby enthusiastic and sustained buying.
cross	Whentrading currencies, the investor buys one currency againstanother. These two currencies form the cross: for example, EURUSD.
Crossrate	Anexchange rate that is calculated from two other exchange rates.
Depreciation/decline	Afall in the value of a currency.
Exchangerate	Whatone currency is worth in terms of another, for example the $Amight be worth 58 US cents or 70 yen. Currencies traded freely onforeign-exchange markets have a spot rate (applying to tradessettled 'spot', ie, two working days hence) and a forward rate.Countries can determine their exchange rates in a variety of ways:a floating exchange rate system where the currency finds its ownlevel in the market; a crawling or flexible peg system which is acombination of an officially fixed rate and frequent smalladjustments which in theory work against a build-up of speculationabout a revaluation or devaluation; a fixed exchange-rate systemwhere the value of the currency is set by the government and/orthe central bank.
EURUSD	Meansthat you trade EUR against dollars. If you buy Euro you pay indollars and if you sell Euro you receive dollars.
FX,Forex, Foreign Exchange	Allnames for the transaction of one currency for another, e.g. youbuy �100.00 with $150.25 or sell $150.25 for �100.00.
Interbank	Short-term(often overnight) borrowing and lending between banks, as distinctfrom banks' business with their corporate clients or otherfinancial institutions.
Interestrate differential	Theyield spread between two otherwise comparable debt instrumentsdenominated in different currencies.
Leverage(gearing)	Inthis case leverage means that the investor only funds part of theamount traded.
Long	Tobuy.
Longposition	Aposition that increases its value if market prices increase.
Liquid(-ity)	Thecapacity to be converted easily and with minimum loss into cash.Ultra-short-dated treasury notes are an example of a liquidinvestment. A liquid market is one in which there is enoughactivity to satisfy both buyers and sellers.
Margin	Theinitial amount or deposit required when entering into a position.Margin is a guarantee for future performance.
NYSE	Acomputerised system providing brokers with the prices of sharesand securities traded on the New York stock exchange and over thecounter. The quotes are published in real-time.
Openposition	Aposition in a currency that has not yet been offset. For example,if you have bought 100,000 USDJPY, you have an open position inUSDJPY until you offset it by selling 100,000 USDJPY.
"Overthe counter"	Whentrading takes place directly between two parties, rather than onan exchange.
Pips	Apip is the smallest unit by which a cross price quote changes. Soif EURUSD bid is now quoted at 0.9767 and it moves up 2 pips, itwill now be quoted at 0.9769.
Position	Money-market,futures, foreign-exchange and sharemarket traders talk of 'takinga position' which simply means buying or selling one currencycross. 'Position' can also refer to a trader'scash/securities/currencies balance, whether he or she is short ofcash, has money to lend, is overbought or oversold in a currency,etc.
Risk	Tryingto control outcomes to a known or predictable range of gains orlosses. Risk management involves a set of steps which begin with asound understanding of one's business and the exposures or risksthat have to be covered to protect the value of that business.Then an assessment should be made of the types of variables thatcan affect the business and how best to protect against unwelcomeoutcomes. Consideration must also be given to the preferred riskprofile - whether one is risk- averse or fairly aggressive inapproach. This also involves deciding which instruments to use tomanage risk, and whether a natural hedge exists that can be used.Once undertaken, a risk-management strategy should be continuallyassessed for effectiveness and cost.
Secondarycurrency (variable currency or counter currency)	Thecurrency that the investor trades the base currency against (i.e.USD in EURUSD).
Shortposition	Aposition that benefits from a decline in market prices.
Short	Tosell.
Speculative	Buyingand selling in the hope of making a profit, rather than doing sofor some fundamental business-related need.
Spot	ASpot rate is the current market price of an asset.
Spotmarket	Thepart of the market calling for spot settlement of transactions.The precise meaning of 'spot' will depend on local custom for acommodity, security or currency. In the UK, US and Australianforeign-exchange markets, 'spot' means delivery two working dayshence.
Spread	Thedifference between the bid and the ask rate.

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