Sunday, May 13, 2007

Google AdSense


Google AdSense is a fast and easy way for website publishers of all sizes to display relevant Google ads on their website's content pages and earn money. Because the ads are related to what your visitors are looking for on your site — or matched to the characteristics and interests of the visitors your content attracts — you'll finally have a way to both monetize and enhance your content pages.

It's also a way for website publishers to provide Google web and site search to their visitors, and to earn money by displaying Google ads on the search results pages.

Why Your First Online Business Should Be Google Adsense

The Adsense program is a big revenue generator for Google, too. The company earned some $2.7 billion in Adsense revenues last year. If you're thinking of making money online here are some reasons why your first online business should be Google Adsense :

Google Adsense is FREE and EASY
You first need to apply to join the Adsense program via an online form. Once you've been accepted into the program, you will be given a snippet of code containing your unique ID to paste into your website to enable the ads to appear. It's that simple to start making money with Adsense.

With Google Adsense Everybody can make money
With Google Adsense, it doesn't matter if your website is big or small. The amount of money you make is generally proportional to the traffic that your website attracts. No site is too small to make money. Even if you could make an extra ten dollars a day (which is really very achievable) by just pasting a snippet of code into your web pages, I'd call that a great way to make money!

No worries about finding advertisers
Finding the right advertisers and the right place to advertise can be a tricky business for both publishers and advertisers.Google, by their sheer size is a magnet that attracts advertisers and publishers for all sorts of products and services. They become the broker between publishers and advertisers. All you need to do is concentrate on your website.

Great for beginners

The majority of newbies who try to make money on the Internet call it quits within twelve months, not because they want to, but because they get lost in the jungle of online money-making. This leads to frustration and disappointment and eventually, defeat. Google Adsense cuts a clear and simple path for everyone to follow – join the program, paste the code, improve your website content and get paid when people click on the ads.

Google is great
Google is on the cutting edge of search engine and pay-per-click technology. Even as Adsense became the spectacular success that it is today, Google never stopped developing and refining ways to help regular people with regular websites monetize their traffic. They have some of the best brains working for them.

Making money while you sleep

I can honestly say that I make money while I sleep. Round the clock, every click earns me anywhere from 5 cents to a couple of dollars. Since joining the Adsense program, my day starts off bright and cheery with a visit to my reports page that tells me how much I earned while sleeping!

Earnings grow with your website.
While Adsense does generate more income on certain types of websies than other less popular niche sites, the general consensus is that as long as you continue to build on your website's popularity and add good, useful content, your Adsense income WILL continue to grow. More traffic logically equals more clicks and more money.

Small change for some, BIG money for others
Perhaps the ones who are reaping the greatest benefit from the Adsense program are the publishers from the developing world. While a US100 dollar check may not mean very much to a webmaster in New York, it can mean a couple months salary to someone in Africa. Stories abound in Adsense-related websites and forums of how this program has changed the lives of thousands of people. Many have been able to make a comfortable living solely on the income derived from the Adsense program.

Earning money with Google Adsense gives new website owners hope and a clear sense of direction. Even if you earn 50 cents a day at first, it opens your eyes to the possibilities that Google Adsense presents. It's a straightforward way to make money compared to the often complex path of affiliate marketing. There's every reason to believe that Google Adsense can only get bigger and better, so it makes perfect sense that every newcomer to online money making should give the Adsense program a try.

10 Steps to Creating Your Internet Marketing Plan

If you have a business plan or vision that is written, you only need to integrate this Internet marketing piece into that existing plan. However, if you are like many of my clients, you carry your business and marketing plans in your head without bothering to commit anything to paper.

Here are ten considerations you need to make as you complete your Internet marketing plan:

1. Objective of Internet Marketing Plan:

What do you want to accomplish by using Internet marketing? To find new clients? Provide services and info to existing clients? Sell services or products? Educate your target market or your staff about your product or service? Create an online community for your target market? How much money to have to spend each month on this Internet marketing plan? Having a goal and budget in mind will make your marketing more effective.

2. Marketing Funnel:The most successful online business owners have a marketing funnel (think of it as an upside down triangle) through which they "funnel" clients. The process begins from the wide top of the funnel, representing low-cost products or free give-aways, and moving clients down through the funnel to the narrower portions which represent gradually increasing investments from the clients from your higher-priced products and services. What products and services do you currently offer? Are they at varied price points that would create a funnel effect? What plans do you have to increase your product or service line? Will those new offerings plug gaps in your marketing funnel?

3. Your Competition:
Knowing and understanding where you stand among your competitors can you help you strengthen your marketing message. Do a keyword search for the terms someone might use to find your business online. Write down the URL's of your top 5 competitors. How popular and relevant are their sites? You can check their traffic ranking with Alexa, http://www.alexa.com/#traffic, as well as see what other sites link to them. Does your competition offer something unique? Where are the gaps in the service or product offerings?

4. Target Market:
Instead of trying to marketing to everyone (the shotgun marketing approach), find a clearly definable target market that you can easily describe and locate. Are they male or female? What age group? What industry? What socio-economic group? Where do they hang out on- and off-line? What do they read? To what groups and associations (real and virtual, personal and professional) do they belong? How much money do they make? Can they easily afford your product or service? What keywords are they using to search for businesses like yours online? (Note--you can do keyword research with free downloadable software, http://www.GoodKeywords.com).

5. Solution to a Problem:
The reason that someone will buy your product or hire to you to provide a service is to solve a particular problem that they have. What problems and issues plague your target market? How does your product or service solve that problem? How does your solution differ from that of your competitors? What makes you uniquely qualified to provide the solution to their problem?

6. Branding Your Business:
Your domain name can either help you be memorable or cast you into a sea of "brandless" solutions. At a minimum, you'll want to buy both your personal name as well as the name of your business in the .com version, if it's available. Then buy the .com versions of your product names and program names. If you use a full-featured domain registrar, you'll be able to point and mask these domains to internal pages of your web site, or use them as stand-alone sales letter pages.

You may also think of problems faced by your target market or solutions that you provide and buy domain names in the .com version of those as well. Internet marketer Dean Jackson brands his ebook on how to stop a divorce by owning the domain name, StopYourDivorce.com, This is a compelling solution to his target market -- men who have been ignoring their wives' complaints of marital dissatisfaction and come home one day to an empty house and a note telling him that she's filing for divorce.

7. Assess your website.
Your web site should be visually appealing, with one primary font for the text and a simple primary color scheme, along with an easy-to-navigate layout, and readily identifiable buttons to link to other pages in the site. Your content should focus on and address the problems of your visitors and how your product or service can help solve their problems. Rather than listing the features of your product or service, detail the benefits they'll gain from purchasing your product or service. People rarely buy features -- they buy benefits. Don't depend on your web site designer to write your content -- that is best done by you, as you know your business and your target market better than anyone.

Present a clear call to action that is clearly shown on every page of your site. In an online business, your primary call to action should be getting the visitor's name and primary email address by asking him subscribe to your ezine or by giving him access to a free ecourse, special report, audio recording, or ebook. Lastly, provide an abundace of readily available information to demonstrate your expertise (articles, blog posts, free downloads, giveaways, contests). Your visitor is always asking WIIFM (What's In It For Me) -- make your web site about your visitor, not about you.

8. Online Business Management Technology:
Do you have access to the appropriate services and technology that will help you sell your product or service online? At a minimum you'll need a merchant account (permits you to take credit card payments) that includes a virtual gateway (enables you to process transactions online) and a full-featured shopping cart that will permit you to sell both physical and electronic products and create a series of autoresponders to follow up with buyers and non-buyers alike. Depending on your marketing plan, you may also want to investigate email newsletter distribution services, online appointment setting services, stand-alone autoresponders, blogging software, article submission sites, online press release distribution services, website content management services, and links exchange management services and software.

9. Internet Marketing Strategies:
How will you create traffic to your website? There are countless ways to do this, including: pay-per-click purchases (in which you buy a keyword at a search engine and pay for placement on that search engine for that keyword and pay for each visitor who clicks on that link and is sent to your site); organic search engine listing ranking (in which your site comes up at the top of the non-sponsored listings on a search engine by having keyword rich descriptions in the page title and page desciption meta tags and then optimizing each page for no more than 3 keywords in the first 250 words on a page); well-written email newsletter that is published on a regular basis; submission of articles on topics related to your target market to article submission directories; regularly post entries to a blog aimed at your target market, full of content discussing issues related to that target market; series of podcasts containing interview with experts of interest to your target market; ongoing series of teleconferences containing value-added content for your target market; submission of online press releases with new tips information for your target market; exchange relevant links with others in different industries with the same target market;

10. Building a Team:
You'll never be able to do this all alone. The most successful business owners don't even try. You need to add experts to your team who are great at what they do so that you've got the time and energy to go out and do what you do best -- selling your products and services to your target market. Some great experts to add to your team include a virtual assistant or online business manager, an online business coach, a web site designer, a graphic designer, a writing expert (editor, ghost writer, proof reader or copy writer), a bookkeeper, and intellectual property attorney, to name a few.

To conduct a successful Internet marketing campaign, you need to integrate your plan into the overall marketing plan/business vision that you have for your service business. Some businesses will thrive off Internet marketing alone; however, for most, Internet marketing simply complements and enhances your offline marketing strategies.

The Death of Google

What happened?

First, Google made a change in its Adsense program, letting advertisers choose between putting their ads in the search results or on the content pages of Adsense publishers. Search won out and started to receive the higher bids. Search results convert better than content ads.


Next, Google has cracked down on Junk Adsense sites, like they should. These sites consisted mainly of software generated re-hashed search engine links and were totally annoying to say the least. But Google also cracked down on 'squeeze pages' or 'affilíate landing pages' - a lucrative source of income for many online marketers, mainly because these pages helped marketers build an opt-ín list or use permission based email.

The results of these changes produced an Adsense meltdown for many online marketers.

Some Internet marketers are speculating recent changes could even mean the death of Adsense. One online marketer, Scott Boulch even published a free report entitled 'The Death of Adsense".

Many affilíate marketers would agree with Boulch on some of his points, especially the obvious fact that using Adsense on your web content is starting on the bottom rung of the online marketing ladder. Instead of receiving pennies per clíck with Adsense, alert marketers and webmasters have already discovered that by using CPA (Cost-Per-Action) and direct affilíate links, they can produce significantly more revenue from their web pages. Why eärn pennies per clíck when you can eärn $5, $10 or OVER $100 per clíck?

But the fine people at Google are catching on...

In the past Google has made its own swing to the Cost-Per-Action direction with its referral system for the Firefox Browser and giving webmasters credít for signing up Adwords and Adsense accounts.

Many online marketers believe Google needs to expand on these baby steps and open their Adsense affilíate program up to third party products/advertisers. In a recent company statement Google offered some hope: "We're always looking for new ways to provide effective and useful features to advertisers, publishers, and users," the company stated "As part of these efforts we are currently testing a cost-per-action (CPA) pricing model to give advertisers more flexibility and provide publishers another way to eärn revenue through AdSense." Basically, in cost-per-action, advertisers pay for leads, purchases or customer acquisition. It would help with the clíck fraud issue and the monetary returns could potentially make Adsense's revenues pale in comparison.

As more and more commerce goes online... acquiring customers for such diverse services as ínsurance, real estate, telephone, marketing, web hostíng, travel, mörtgage loans, cable TV, banking... you name it, almost any service or product sold in the marketplace is now turning to the Internet for customers and lifelong clients.

Enormous sums of monëy will change hands. Perhaps, the most lucrative of these is customer acquisition. Advertisers are turning to the Internet and webmasters/marketers for acquiring these lifelong customers for their respective services and products. Businesses and companies are quickly realizing paying an attractive lead generating fee/commission is smart business. They quickly build a client base for their services or products and quickly recoup their expenses - realizing in the long run these leads will generate huge profíts.

It can also mean huge profíts for the CPA networks like ValueClick's Commission Junction and Rakuten's LinkShare who supply the advertisers with publishers and website marketers to harvest these leads. It can be a lucrative venture for all involved, especially for those online marketers who have cornered the search engines for lucrative niche markets in big ticket items. Even small ticket items pay quite well for those marketers who know how to market online.

Contextual advertising is fine, but CPA (Cost-Per-Action) will offer much better returns for the website owner. Making any profitable site much more profitable. It will and is opening up a whole area of marketing opportunities that nevër existed before we had the Internet. Creating a complex structure of advertisers, publishers and the Affilíate/CPA companies that connect the two.

Of course, cutting out the middle man has always been even a more profitable venture for most marketers. As more and more webmasters realize they can make much more with dealing directly with companies, rather than going through a middle process like Google Adsense or the countless other affilíate/CPA networks ... online marketers can reap even bigger rewards.

For an online marketer when you get a telephone call or email from the CEO or the affilíate manager with a company or service you're promoting with your website - you know you have made it! Dealing directly with a company usually means bigger commissions and special exclusive deals just for you or your sites.

Only fly in the ointment, all that extra paperwork and business wheeling and dealing. Many marketers and website owners like the idea of someone else handling all the tracking, collecting payments, promotional materials... they just like to sit back and build more websites and content. It gives the affilíate marketer a lifestyle that they are looking for on the web. They just like to market and promote with their sites and let someone else worry about the details. Therefore, there will always be a place for contextual ads like Google Adsense... "Rumors of my demise have been greatly exaggerated."

However, could CPA be a better alternative for the current Adsense contextual ads?

Google would be the natural choice for a middleman if there ever was one. Besides, many savvy marketers know the Google brand name is trusted online, any product/service promoted through Google would be an easy sell. Many argue Google already dominates the web, why should it not be the one to handle these CPA transactions through its Adsense program.

On the flip side, over countless updates and changes to its indexing, many webmasters have experienced more than a few negative dealings with Google. Many have won, many have lost in this Google Age, but all have realized riding the Google Search Engine is like running with the bulls at Pamplona, totally thrilling unless you're one of the unfortunate few who get trampled in the process.

Saturday, May 12, 2007

Computer

For the IEEE magazine see Computer (magazine).

The NASA Columbia Supercomputer.A computer is a machine for manipulating data according to a list of instructions.

Computers take numerous physical forms. Early electronic computers were the size of a large room, consuming as much power as several hundred modern personal computers. [1] Today, computers can be made small enough to fit into a wrist watch and be powered from a watch battery. Society has come to recognize personal computers and their portable equivalent, the laptop computer, as icons of the information age; they are what most people think of as "a computer". However, the most common form of computer in use today is by far the embedded computer. Embedded computers are small, simple devices that are often used to control other devices—for example, they may be found in machines ranging from fighter aircraft to industrial robots, digital cameras, and even children's toys.


A computer in a wristwatch.The ability to store and execute programs makes computers extremely versatile and distinguishes them from calculators. The Church–Turing thesis is a mathematical statement of this versatility: Any computer with a certain minimum capability is, in principle, capable of performing the same tasks that any other computer can perform. Therefore, computers with capability and complexity ranging from that of a personal digital assistant to a supercomputer are all able to perform the same computational tasks as long as time and storage capacity are not considerations.

Contents [hide]
1 History of computing
2 Stored program architecture
2.1 Programs
2.2 Example
3 How computers work
3.1 Control unit
3.2 Arithmetic/logic unit (ALU)
3.3 Memory
3.4 Input/output (I/O)
3.5 Multitasking
3.6 Multiprocessing
3.7 Networking and the Internet
4 Further topics
4.1 Hardware
4.2 Software
4.3 Programming languages
4.4 Professions and organizations
5 See also
6 Notes
7 References



History of computing
Main article: History of computing

The Jacquard loom was one of the first programmable devices.It is difficult to define any one device as the earliest computer. The very definition of a computer has changed and it is therefore impossible to identify the first computer. Many devices once called "computers" would no longer qualify as such by today's standards.

Originally, the term "computer" referred to a person who performed numerical calculations (a human computer), often with the aid of a mechanical calculating device. Examples of early mechanical computing devices included the abacus, the slide rule and arguably the astrolabe and the Antikythera mechanism (which dates from about 150-100 BC). The end of the Middle Ages saw a re-invigoration of European mathematics and engineering, and Wilhelm Schickard's 1623 device was the first of a number of mechanical calculators constructed by European engineers.

However, none of those devices fit the modern definition of a computer because they could not be programmed. In 1801, Joseph Marie Jacquard made an improvement to the textile loom that used a series of punched paper cards as a template to allow his loom to weave intricate patterns automatically. The resulting Jacquard loom was an important step in the development of computers because the use of punched cards to define woven patterns can be viewed as an early, albeit limited, form of programmability.

In 1837, Charles Babbage was the first to conceptualize and design a fully programmable mechanical computer that he called "The Analytical Engine".[2] Due to limited finance, and an inability to resist tinkering with the design, Babbage never actually built his Analytical Engine.

Large-scale automated data processing of punched cards was performed for the US Census in 1890 by tabulating machines designed by Herman Hollerith and manufactured by the Computing Tabulating Recording Corporation, which later became IBM. By the end of the 19th century a number of technologies that would later prove useful in the realization of practical computers had begun to appear: the punched card, boolean algebra, the vacuum tube (thermionic valve) and the teleprinter.

During the first half of the 20th century, many scientific computing needs were met by increasingly sophisticated analog computers, which used a direct mechanical or electrical model of the problem as a basis for computation. However, these were not programmable and generally lacked the versatility and accuracy of modern digital computers.

Defining characteristics of five first operative digital computers Computer Shown working Binary Electronic Programmable Turing complete
Zuse Z3 May 1941 Yes No By punched film stock Yes (1998)
Atanasoff-Berry Computer Summer 1941 Yes Yes No No
Colossus December 1943 / January 1944 Yes Yes Partially, by rewiring No
Harvard Mark I/IBM ASCC 1944 No No By punched paper tape No
ENIAC 1944 No Yes Partially, by rewiring Yes
1948 No Yes By Function Table ROM Yes




A succession of steadily more powerful and flexible computing devices were constructed in the 1930s and 1940s, gradually adding the key features that are seen in modern computers. The use of digital electronics (largely invented by Claude Shannon in 1937) and more flexible programmability were vitally important steps, but defining one point along this road as "the first digital electronic computer" is difficult (Shannon 1940). Notable achievements include:


EDSAC was one of the first computers to implement the stored program (von Neumann) architecture.Konrad Zuse's electromechanical "Z machines". The Z3 (1941) was the first working machine featuring binary arithmetic, including floating point arithmetic and a measure of programmability. In 1998 the Z3 was proved to be Turing complete, therefore being the world's first operational computer.
The Atanasoff-Berry Computer (1941) which used vacuum tube based computation, binary numbers, and regenerative capacitor memory.
The secret British Colossus computer (1944), which had limited programmability but demonstrated that a device using thousands of tubes could be reasonably reliable and electronically reprogrammable. It was used for breaking German wartime codes.
The Harvard Mark I (1944), a large-scale electromechanical computer with limited programmability.
The US Army's Ballistics Research Laboratory ENIAC (1946), which used decimal arithmetic and was the first general purpose electronic computer, although it initially had an inflexible architecture which essentially required rewiring to change its programming.
Several developers of ENIAC, recognizing its flaws, came up with a far more flexible and elegant design, which came to be known as the stored program architecture or von Neumann architecture. This design was first formally described by John von Neumann in the paper "First Draft of a Report on the EDVAC", published in 1945. A number of projects to develop computers based on the stored program architecture commenced around this time, the first of these being completed in Great Britain. The first to be demonstrated working was the Manchester Small-Scale Experimental Machine (SSEM) or "Baby". However, the EDSAC, completed a year after SSEM, was perhaps the first practical implementation of the stored program design. Shortly thereafter, the machine originally described by von Neumann's paper—EDVAC—was completed but didn't see full-time use for an additional two years.

Nearly all modern computers implement some form of the stored program architecture, making it the single trait by which the word "computer" is now defined. By this standard, many earlier devices would no longer be called computers by today's definition, but are usually referred to as such in their historical context. While the technologies used in computers have changed dramatically since the first electronic, general-purpose computers of the 1940s, most still use the von Neumann architecture. The design made the universal computer a practical reality.


Microprocessors are miniaturized devices that often implement stored program CPUs.Vacuum tube-based computers were in use throughout the 1950s, but were largely replaced in the 1960s by transistor-based devices, which were smaller, faster, cheaper, used less power and were more reliable. These factors allowed computers to be produced on an unprecedented commercial scale. By the 1970s, the adoption of integrated circuit technology and the subsequent creation of microprocessors such as the Intel 4004 caused another leap in size, speed, cost and reliability. By the 1980s, computers had become sufficiently small and cheap to replace simple mechanical controls in domestic appliances such as washing machines. Around the same time, computers became widely accessible for personal use by individuals in the form of home computers and the now ubiquitous personal computer. In conjunction with the widespread growth of the Internet since the 1990s, personal computers are becoming as common as the television and the telephone and almost all modern electronic devices contain a computer of some kind.



Stored program architecture
Main articles: Computer program and Computer programming
The defining feature of modern computers which distinguishes them from all other machines is that they can be programmed. That is to say that a list of instructions (the program) can be given to the computer and it will store them and carry them out at some time in the future.

In most cases, computer instructions are simple: add one number to another, move some data from one location to another, send a message to some external device, etc. These instructions are read from the computer's memory and are generally carried out (executed) in the order they were given. However, there are usually specialized instructions to tell the computer to jump ahead or backwards to some other place in the program and to carry on executing from there. These are called "jump" instructions (or branches). Furthermore, jump instructions may be made to happen conditionally so that different sequences of instructions may be used depending on the result of some previous calculation or some external event. Many computers directly support subroutines by providing a type of jump that "remembers" the location it jumped from and another instruction to return to that point.

Program execution might be likened to reading a book. While a person will normally read each word and line in sequence, they may at times jump back to an earlier place in the text or skip sections that are not of interest. Similarly, a computer may sometimes go back and repeat the instructions in some section of the program over and over again until some internal condition is met. This is called the flow of control within the program and it is what allows the computer to perform tasks repeatedly without human intervention.

Comparatively, a person using a pocket calculator can perform a basic arithmetic operation such as adding two numbers with just a few button presses. But to add together all of the numbers from 1 to 1,000 would take thousands of button presses and a lot of time—with a near certainty of making a mistake. On the other hand, a computer may be programmed to do this with just a few simple instructions. For example:

mov #0,sum ; set sum to 0
mov #1,num ; set num to 1
loop: add num,sum ; add num to sum
add #1,num ; add 1 to num
cmp num,#1000 ; compare num to 1000
ble loop ; if num <= 1000, go back to 'loop'
halt ; end of program. stop running
Once told to run this program, the computer will perform the repetitive addition task without further human intervention. It will almost never make a mistake and a modern PC can complete the task in about a millionth of a second.[3]

However, computers cannot "think" for themselves in the sense that they only solve problems in exactly the way they are programmed to. An intelligent human faced with the above addition task might soon realize that instead of actually adding up all the numbers one can simply use the equation


and arrive at the correct answer (500,500) with little work. [4] In other words, a computer programmed to add up the numbers one by one as in the example above would do exactly that without regard to efficiency or alternative solutions.


Programs

A 1970s punched card containing one line from a FORTRAN program. The card reads: "Z(1) = Y + W(1)" and is labelled "PROJ039" for identification purposes.In practical terms, a computer program might include anywhere from a dozen instructions to many millions of instructions for something like a word processor or a web browser. A typical modern computer can execute billions of instructions every second and nearly never make a mistake over years of operation.

Large computer programs may take teams of computer programmers years to write and the probability of the entire program having been written completely in the manner intended is unlikely. Errors in computer programs are called bugs. Sometimes bugs are benign and do not affect the usefulness of the program, in other cases they might cause the program to completely fail (crash), in yet other cases there may be subtle problems. Sometimes otherwise benign bugs may be used for malicious intent, creating a security exploit. Bugs are usually not the fault of the computer. Since computers merely execute the instructions they are given, bugs are nearly always the result of programmer error or an oversight made in the program's design. [5]

In most computers, individual instructions are stored as machine code with each instruction being given a unique number (its operation code or opcode for short). The command to add two numbers together would have one opcode, the command to multiply them would have a different opcode and so on. The simplest computers are able to perform any of a handful of different instructions, the more complex computers have several hundred to choose from—each with a unique numerical code. Since the computer's memory is able to store numbers, it can also store the instruction codes. This leads to the important fact that entire programs (which are just lists of instructions) can be represented as lists of numbers and can themselves be manipulated inside the computer just as if they were numeric data. The fundamental concept of storing programs in the computer's memory alongside the data they operate on is the crux of the von Neumann, or stored program, architecture. In some cases, a computer might store some or all of its program in memory that is kept separate from the data it operates on. This is called the Harvard architecture after the Harvard Mark I computer. Modern von Neumann computers display some traits of the Harvard architecture in their designs, such as in CPU caches.

While it is possible to write computer programs as long lists of numbers (machine language) and this technique was used with many early computers,[6] it is extremely tedious to do so in practice, especially for complicated programs. Instead, each basic instruction can be given a short name that is indicative of its function and easy to remember—a mnemonic such as ADD, SUB, MULT or JUMP. These mnemonics are collectively known as a computer's assembly language. Converting programs written in assembly language into something the computer can actually understand (machine language) is usually done by a computer program called an assembler. Machine languages and the assembly languages that represent them (collectively termed low-level programming languages) tend to be unique to a particular type of computer. This means that an ARM architecture computer (such as may be found in a PDA or a hand-held videogame) cannot understand the machine language of an Intel Pentium or the AMD Athlon 64 computer that might be in a PC.[7]

Though considerably easier than in machine language, writing long programs in assembly language is often difficult and error prone. Therefore, most complicated programs are written in more abstract high-level programming languages that are able to express the needs of the computer programmer more conveniently (and thereby help reduce programmer error). High level languages are usually "compiled" into machine language (or sometimes into assembly language and then into machine language) using another computer program called a compiler.[8] Since high level languages are more abstract than assembly language, it is possible to use different compilers to translate the same high level language program into the machine language of many different types of computer. This is part of the means by which software like video games may be made available for different computer architectures such as personal computers and various video game consoles.

The task of developing large software systems is an immense intellectual effort. It has proven, historically, to be very difficult to produce software with an acceptably high reliability, on a predictable schedule and budget. The academic and professional discipline of software engineering concentrates specifically on this problem.


Example

A traffic light showing red.Suppose a computer is being employed to drive a traffic light. A simple stored program might say:

Turn off all of the lights
Turn on the red light
Wait for sixty seconds
Turn off the red light
Turn on the green light
Wait for sixty seconds
Turn off the green light
Turn on the yellow light
Wait for two seconds
Turn off the yellow light
Jump to instruction number (2)
With this set of instructions, the computer would cycle the light continually through red, green, yellow and back to red again until told to stop running the program.

However, suppose there is a simple on/off switch connected to the computer that is intended be used to make the light flash red while some maintenance operation is being performed. The program might then instruct the computer to:

Turn off all of the lights
Turn on the red light
Wait for sixty seconds
Turn off the red light
Turn on the green light
Wait for sixty seconds
Turn off the green light
Turn on the yellow light
Wait for two seconds
Turn off the yellow light
If the maintenance switch is NOT turned on then jump to instruction number 2
Turn on the red light
Wait for one second
Turn off the red light
Wait for one second
Jump to instruction number 11
In this manner, the computer is either running the instructions from number (2) to (11) over and over or it's running the instructions from (11) down to (16) over and over, depending on the position of the switch.[9]


How computers work
Main articles: Central processing unit and Microprocessor
A general purpose computer has four main sections: the arithmetic and logic unit (ALU), the control unit, the memory, and the input and output devices (collectively termed I/O). These parts are interconnected by busses, often made of groups of wires.

The control unit, ALU, registers, and basic I/O (and often other hardware closely linked with these) are collectively known as a central processing unit (CPU). Early CPUs were comprised of many separate components but since the mid-1970s CPUs have typically been constructed on a single integrated circuit called a microprocessor.


Control unit
Main articles: CPU design and Control unit
The control unit (often called a control system or central controller) directs the various components of a computer. It reads and interprets (decodes) instructions in the program one by one. The control system decodes each instruction and turns it into a series of control signals that operate the other parts of the computer.[10] Control systems in advanced computers may change the order of some instructions so as to improve performance.

A key component common to all CPUs is the program counter, a special memory cell (a register) that keeps track of which location in memory the next instruction is to be read from.[11]


Diagram showing how a particular MIPS architecture instruction would be decoded by the control system.The control system's function is as follows—note that this is a simplified description and some of these steps may be performed concurrently or in a different order depending on the type of CPU:

Read the code for the next instruction from the cell indicated by the program counter.
Decode the numerical code for the instruction into a set of commands or signals for each of the other systems.
Increment the program counter so it points to the next instruction.
Read whatever data the instruction requires from cells in memory (or perhaps from an input device). The location of this required data is typically stored within the instruction code.
Provide the necessary data to an ALU or register.
If the instruction requires an ALU or specialized hardware to complete, instruct the hardware to perform the requested operation.
Write the result from the ALU back to a memory location or to a register or perhaps an output device.
Jump back to step (1).
Since the program counter is (conceptually) just another set of memory cells, it can be changed by calculations done in the ALU. Adding 100 to the program counter would cause the next instruction to be read from a place 100 locations further down the program. Instructions that modify the program counter are often known as "jumps" and allow for loops (instructions that are repeated by the computer) and often conditional instruction execution (both examples of control flow).

It is noticeable that the sequence of operations that the control unit goes through to process an instruction is in itself like a short computer program - and indeed, in some more complex CPU designs, there is another yet smaller computer called a microsequencer that runs a microcode program that causes all of these events to happen.


Arithmetic/logic unit (ALU)
Main article: Arithmetic logic unit
The ALU is capable of performing two classes of operations: arithmetic and logic.

The set of arithmetic operations that a particular ALU supports may be limited to adding and subtracting or might include multiplying or dividing, trigonometry functions (sine, cosine, etc) and square roots. Some can only operate on whole numbers (integers) whilst others use floating point to represent real numbers—albeit with limited precision. However, any computer that is capable of performing just the simplest operations can be programmed to break down the more complex operations into simple steps that it can perform. Therefore, any computer can be programmed to perform any arithmetic operation—although it will take more time to do so if its ALU does not directly support the operation. An ALU may also compare numbers and return boolean truth values (true or false) depending on whether one is equal to, greater than or less than the other ("is 64 greater than 65?").

Logic operations involve boolean logic: AND, OR, XOR and NOT. These can be useful both for creating complicated conditional statements and processing boolean logic.

Superscalar computers contain multiple ALUs so that they can process several instructions at the same time. Graphics processors and computers with SIMD and MIMD features often provide ALUs that can perform arithmetic on vectors and matrices.


Memory
Main article: Computer storage

Magnetic core memory was popular main memory for computers through the 1960s until it was completely replaced by semiconductor memory.A computer's memory may be viewed as a list of cells into which numbers may be placed or read. Each cell has a numbered "address" and can store a single number. The computer may be instructed to "put the number 123 into the cell numbered 1357" or to "add the number that is in cell 1357 to the number that is in cell 2468 and put the answer into cell 1595". The information stored in memory may represent practically anything. Letters, numbers, even computer instructions may be placed into memory with equal ease. Since the CPU does not differentiate between different types of information, it is up to the software to give significance to what the memory sees as nothing but a series of numbers.

In almost all modern computers, each memory cell is set up to store binary numbers in groups of eight bits (called a byte). Each byte is able to represent 256 different numbers; either from 0 to 255 or -128 to +127. To store larger numbers, several consecutive bytes may be used (typically, two, four or eight). When negative numbers are required, they are usually stored in two's complement notation. Other arrangements are possible, but are usually not seen outside of specialized applications or historical contexts. A computer may store any kind of information in memory as long as it can be somehow represented in numerical form. Modern computers have billions or even trillions of bytes of memory.

The CPU contains a special set of memory cells called registers that can be read and written to much more rapidly than the main memory area. There are typically between two and one hundred registers depending on the type of CPU. Registers are used for the most frequently needed data items to avoid having to access main memory every time data is needed. Since data is constantly being worked on, reducing the need to access main memory (which is often slow compared to the ALU and control units) greatly increases the computer's speed.

Computer main memory comes in two principal varieties: random access memory or RAM and read-only memory or ROM. RAM can be read and written to anytime the CPU commands it, but ROM is pre-loaded with data and software that never changes, so the CPU can only read from it. ROM is typically used to store the computer's initial start-up instructions. In general, the contents of RAM is erased when the power to the computer is turned off while ROM retains its data indefinitely. In a PC, the ROM contains a specialized program called the BIOS that orchestrates loading the computer's operating system from the hard disk drive into RAM whenever the computer is turned on or reset. In embedded computers, which frequently do not have disk drives, all of the software required to perform the task may be stored in ROM. Software that is stored in ROM is often called firmware because it is notionally more like hardware than software. Flash memory blurs the distinction between ROM and RAM by retaining data when turned off but being rewritable like RAM. However, flash memory is typically much slower than conventional ROM and RAM so its use is restricted to applications where high speeds are not required. [12]

In more sophisticated computers there may be one or more RAM cache memories which are slower than registers but faster than main memory. Generally computers with this sort of cache are designed to move frequently needed data into the cache automatically, often without the need for any intervention on the programmer's part.


Input/output (I/O)
Main article: Input/output

Hard disks are common I/O devices used with computers.I/O is the means by which a computer receives information from the outside world and sends results back. Devices that provide input or output to the computer are called peripherals. On a typical personal computer, peripherals include inputs like the keyboard and mouse, and outputs such as the display and printer. Hard disks, floppy disks and optical discs serve as both inputs and outputs. Computer networking is another form of I/O.

Practically any device that can be made to interface digitally may be used as I/O. The computer in the Engine Control Unit of a modern automobile might read the position of the pedals and steering wheel, the output of the oxygen sensor and devices that monitor the speed of each wheel. The output devices include the various lights and gauges that the driver sees as well as the engine controls such as the spark ignition circuits and fuel injection systems. In a digital wristwatch, the computer reads the buttons and causes numbers and symbols to be shown on the liquid crystal display.

Often, I/O devices are complex computers in their own right with their own CPU and memory. A graphics processing unit might contain fifty or more tiny computers that perform the calculations necessary to display 3D graphics. Modern desktop computers contain many smaller computers that assist the main CPU in performing I/O.


Multitasking
Main article: Computer multitasking
While a computer may be viewed as running one gigantic program stored in its main memory, in some systems it is necessary to give the appearance of running several programs simultaneously. This is achieved by having the computer switch rapidly between running each program in turn. One means by which this is done is with a special signal called an interrupt which can periodically cause the computer to stop executing instructions where it was and do something else instead. By remembering where it was executing prior to the interrupt, the computer may return to that task later. If several programs are running "at the same time", then the interrupt generator may be causing several hundred interrupts per second, causing a program switch each time. Since modern computers typically execute instructions several orders of magnitude faster than human perception, many programs may seem to be running at the same time even though only one is ever executing in any given instant. This method of multitasking is sometimes termed "time-sharing" since each program is allocated a "slice" of time in turn.

Before the era of cheap computers, the principle use for multitasking was to allow many people to share the same computer.

Seemingly, multitasking would cause a computer that is switching between several programs to run more slowly - in direct proportion to the number of programs it is running. However, most programs spend much of their time waiting for slow input/output devices to complete their tasks. If a program is waiting for the user to click on the mouse or press a key on the keyboard, then it will not take a "time slice" until the event it is waiting for has occurred. This frees up time for other programs to execute so that many programs may be run at the same time without unacceptable speed loss.


Multiprocessing
Main article: Multiprocessing

Cray designed many supercomputers that used multiprocessing heavily.Some computers may divide their work between one or more separate CPUs, creating a multiprocessing configuration. Traditionally, this technique was utilized only in large and powerful computers such as supercomputers, mainframe computers and servers. However, multiprocessor and multi-core (multiple CPUs on a single integrated circuit) personal and laptop computers have become widely available and are beginning to see increased usage in lower-end markets as a result.

Supercomputers in particular often have highly unique architectures that differ significantly from the basic stored-program architecture and from general purpose computers.[13] They often feature thousands of CPUs, customized high-speed interconnects, and specialized computing hardware. Such designs tend to be useful only for specialized tasks due to the large scale of program organization required to successfully utilize most of a the available resources at once. Supercomputers usually see usage in large-scale simulation, graphics rendering, and cryptography applications, as well as with other so-called "embarrassingly parallel" tasks.


Networking and the Internet
Main articles: Computer networking and Internet

Visualization of a portion of the routes on the Internet.

--------------------------------------------------------------------------------
The image above is proposed for deletion. See images and media for deletion to help reach a consensus on what to do.Computers have been used to coordinate information in multiple locations since the 1950s, with the US military's SAGE system the first large-scale example of such a system, which led to a number of special-purpose commercial systems like Sabre.

In the 1970s, computer engineers at research institutions throughout the US began to link their computers together using telecommunications technology. This effort was funded by ARPA (now DARPA), and the computer network that it produced was called the ARPANET. The technologies that made the Arpanet possible spread and evolved. In time, the network spread beyond academic and military institutions and became known as the Internet. The emergence of networking involved a redefinition of the nature and boundaries of the computer. Computer operating systems and applications were modified to include the ability to define and access the resources of other computers on the network, such as peripheral devices, stored information, and the like, as extensions of the resources of an individual computer. Initially these facilities were available primarily to people working in high-tech environments, but in the 1990s the spread of applications like e-mail and the World Wide Web, combined with the development of cheap, fast networking technologies like Ethernet and ADSL saw computer networking become ubiquitous almost everywhere. In fact, the number of computers that are networked is growing phenomenally. A very large proportion of personal computers regularly connect to the Internet to communicate and receive information. "Wireless" networking, often utilizing mobile phone networks, has meant networking is becoming increasingly ubiquitous even in mobile computing environments.


Further topics

Hardware
The term hardware covers all of those parts of a computer that are tangible objects. Circuits, displays, power supplies, cables, keyboards, printers and mice are all hardware.

History of computing hardware First Generation (Mechanical/Electromechanical) Calculators Antikythera mechanism, Difference Engine, Norden bombsight
Programmable Devices Jacquard loom, Analytical Engine, Harvard Mark I, Z3
Second Generation (Vacuum Tubes) Calculators Atanasoff-Berry Computer
Programmable Devices ENIAC, EDSAC, EDVAC, UNIVAC I
Third Generation (Discrete transistors and SSI, MSI, LSI Integrated circuits) Mainframes System/360, BUNCH
Minicomputer PDP-8, PDP-11, System/32, System/36
Fourth Generation (VLSI integrated circuits) Minicomputer VAX, AS/400
4-bit microcomputer Intel 4004, Intel 4040
8-bit microcomputer Intel 8008, Intel 8080, Motorola 6800, Motorola 6809, MOS Technology 6502, Zilog Z80
16-bit microcomputer 8088, Zilog Z8000, WDC 65816/65802
32-bit microcomputer 80386, Pentium, 68000, ARM architecture
64-bit microcomputer [14] x86-64, PowerPC, MIPS, SPARC
Embedded computer 8048, 8051
Personal computer Desktop computer, Home computer, Laptop computer, Personal digital assistant (PDA), Portable computer, Tablet computer, Wearable computer
Server class computer
Theoretical/experimental Quantum computer
Chemical computer
DNA computing
Optical computer
Other Hardware Topics Peripheral device (Input/output) Input Mouse, Keyboard, Joystick, Image scanner
Output Monitor, Printer
Both Floppy disk drive, Hard disk, Optical disc drive, Teleprinter
Computer busses Short range RS-232, SCSI, PCI, USB
Long range (Computer networking) Ethernet, ATM, FDDI


Software
Software refers to parts of the computer that have no material form; programs, data, protocols, etc are all software. When software is stored in hardware that cannot easily be modified (such as BIOS ROM in an IBM PC compatible), it is sometimes termed firmware to indicate that it falls into an area of uncertainty between hardware and software.

Computer software Operating system Unix/BSD UNIX System V, AIX, HP-UX, Solaris (SunOS), FreeBSD, NetBSD, IRIX
GNU/Linux List of Linux distributions, Comparison of Linux distributions
Microsoft Windows Windows 9x, Windows NT, Windows CE
DOS QDOS, PC-DOS, MS-DOS, FreeDOS
Mac OS Mac OS classic, Mac OS X
Embedded and real-time List of embedded operating systems
Experimental Amoeba, Oberon/Bluebottle, Plan 9 from Bell Labs
Library Multimedia DirectX, OpenGL, OpenAL
Programming library C standard library
Data Protocol TCP/IP, Kermit, FTP, HTTP, SMTP
File format HTML, XML, JPEG, MPEG, PNG
User interface Graphical user interface (WIMP) Microsoft Windows, GNOME, QNX Photon, CDE, GEM
Text user interface Command line interface, shells
Other
Application Office suite Word processing, Desktop publishing, Presentation program, Database management system, Scheduling & Time management, Spreadsheet, Accounting software
Internet Access Browser, E-mail client, Web server, Mail transfer agent, Instant messaging
Design and manufacturing Computer-aided design, Computer-aided manufacturing, Plant management, Robotic manufacturing, Supply chain management
Graphics Raster graphics editor, Vector graphics editor, 3D modeler, Animation editor, 3D computer graphics, Video editing, Image processing
Audio Digital audio editor, Audio playback, Mixing, Audio synthesis, Computer music
Software Engineering Compiler, Assembler, Interpreter, Debugger, Text Editor, Integrated development environment, Performance analysis, Revision control, Software configuration management
Educational Edutainment, Educational game, Serious game, Flight simulator
Games Strategy, Arcade, Puzzle, Simulation, First-person shooter, Platform, Massively multiplayer, Interactive fiction
Misc Artificial intelligence, Antivirus software, Malware scanner, Installer/Package management systems, File manager


Programming languages
Programming languages provide various ways of specifying programs for computers to run. Unlike natural languages, programming languages are designed to permit no ambiguity and to be concise. They are purely written languages and are often difficult to read aloud. They are generally either translated into machine language by a compiler or an assembler before being run, or translated directly at run time by an interpreter. Sometimes programs are executed by a hybrid method of the two techniques. There are thousands of different programming languages—some intended to be general purpose, others useful only for highly specialized applications.

Programming Languages Lists of programming languages Timeline of programming languages, Categorical list of programming languages, Generational list of programming languages, Alphabetical list of programming languages, Non-English-based programming languages
Commonly used Assembly languages ARM, MIPS, x86
Commonly used High level languages BASIC, C, C++, C#, COBOL, Fortran, Java, Lisp, Pascal
Commonly used Scripting languages JavaScript, Python, Ruby, PHP, Perl


Professions and organizations
As the use of computers has spread throughout society, there are an increasing number of careers involving computers. Following the theme of hardware, software and firmware, the brains of people who work in the industry are sometimes known irreverently as wetware or "meatware".

Computer-related professions Hardware-related Electrical engineering, Electronics engineering, Computer engineering, Telecommunications engineering, Optical engineering, Nanoscale engineering
Software-related Human-computer interaction, Information technology, Software engineering, Scientific computing, Web design, Desktop publishing, Sound recording and reproduction

The need for computers to work well together and to be able to exchange information has spawned the need for many standards organizations, clubs and societies of both a formal and informal nature.

Organizations Standards groups ANSI, IEC, IEEE, IETF, ISO, W3C
Professional Societies ACM, ACM Special Interest Groups, IET, IFIP
Free/Open source software groups Free Software Foundation, Mozilla Foundation, Apache Software Foundation


See also
Look up Computer in
Wiktionary, the free dictionary.Wikiquote has a collection of quotations related to:
ComputersWikimedia Commons has media related to:
ComputerComputability theory
Computer science
Computing
Computers in fiction
Computer security and Computer insecurity
List of computer term etymologies
Virtualization

Notes
^ In 1946, ENIAC consumed an estimated 174 kW. By comparison, a typical personal computer may use around 400 W; over four hundred times less. (Kempf 1961)
^ The Analytical Engine should not be confused with Babbage's difference engine which was a non-programmable mechanical calculator.
^ This program was designed for the PDP-11 minicomputer and shows some typical things a computer can do. All the text after the semicolons are comments for the benefit of human readers. These have no significance to the computer and are ignored. (Digital Equipment Corporation 1972)
^ Attempts are often made to create programs that can overcome this fundamental limitation of computers. Software that mimics learning and adaptation is part of artificial intelligence.
^ It is not universally true that bugs are solely due to programmer oversight. Computer hardware may fail or may itself have a fundamental problem that produces unexpected results in certain situations. For instance, the Pentium FDIV bug caused some Intel microprocessors in the early 1990s to produce inaccurate results for certain floating point division operations. This was caused by a flaw in the microprocessor design and resulted in a partial recall of the affected devices.
^ Even some later computers were commonly programmed directly in machine code. Some minicomputers like the DEC PDP-8 could be programmed directly from a panel of switches. However, this method was usually used only as part of the booting process. Most modern computers boot entirely automatically by reading a boot program from some non-volatile memory.
^ However, there is sometimes some form of machine language compatibility between different computers. An x86-64 compatible microprocessor like the AMD Athlon 64 is able to run most of the same programs that an Intel Core 2 microprocessor can, as well as programs designed for earlier microprocessors like the Intel Pentiums and Intel 80486. This contrasts with very early commercial computers, which were often one-of-a-kind and totally incompatible with other computers.
^ High level languages are also often interpreted rather than compiled. Interpreted languages are translated into machine code on the fly by another program called an interpreter.
^ Although this is a simple program, it contains a software bug. If the traffic signal is showing red when someone switches the "flash red" switch, it will cycle through green once more before starting to flash red as instructed. This bug is quite easy to fix by changing the program to repeatedly test the switch throughout each "wait" period—but writing large programs that have no bugs is exceedingly difficult.
^ The control unit's rule in interpreting instructions has varied somewhat in the past. While the control unit is solely responsible for instruction interpretation in most modern computers, this is not always the case. Many computers include some instructions that may only be partially interpreted by the control system and partially interpreted by another device. This is especially the case with specialized computing hardware that may be partially self-contained. For example, EDVAC, the first modern stored program computer to be designed, used a central control unit that only interpreted four instructions. All of the arithmetic-related instructions were passed on to its arithmetic unit and further decoded there.
^ Instructions often occupy more than one memory address, so the program counters usually increases by the number of memory locations required to store one instruction.
^ Flash memory also may only be rewritten a limited number of times before wearing out, making it less useful for heavy random access usage. (Verma 1988)
^ However, it is also very common to construct supercomputers out of many pieces of cheap commodity hardware; usually individual computers connected by networks. These so-called computer clusters can often provide supercomputer performance at a much lower cost than customized designs. While custom architectures are still used for most of the most powerful supercomputers, there has been a proliferation of cluster computers in recent years. (TOP500 2006)
^ Most major 64-bit instruction set architectures are extensions of earlier designs. All of the architectures listed in this table existed in 32-bit forms before their 64-bit incarnations were introduced.

References
a Kempf, Karl (1961). "Historical Monograph: Electronic Computers Within the Ordnance Corps". Aberdeen Proving Ground (United States Army).
a Phillips, Tony (2000). The Antikythera Mechanism I. American Mathematical Society. Retrieved on 2006-04-05.
a Shannon, Claude Elwood (1940). "A symbolic analysis of relay and switching circuits". Massachusetts Institute of Technology.
a Digital Equipment Corporation (1972). PDP-11/40 Processor Handbook (PDF), Maynard, MA: Digital Equipment Corporation.
a Verma, G.; Mielke, N. (1988). "Reliability performance of ETOX based flash memories". IEEE International Reliability Physics Symposium.
a Meuer, Hans; Strohmaier, Erich; Simon, Horst; Dongarra, Jack (2006-11-13). Architectures Share Over Time. TOP500. Retrieved on 2006-11-27.
Stokes, Jon (2007). Inside the Machine: An Illustrated Introduction to Microprocessors and Computer Architecture. San Francisco: No Starch Press. ISBN 978-1-59327-104-6.

Tuesday, May 8, 2007

What is FOREX?

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely. In its present condition FOREX was launched in the 1970s, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from supply and demand.
As far as the freedom from any external control and free competition are concerned, FOREX is a perfect market. It is also the biggest liquid financial market. According to various assessments, money masses in the market constitute from 1 to 1.5 trillion US dollars a day. (It is impossible to determine an absolutely exact number because trading is not centralized on an exchange.) Transactions are conducted all over the world via telecommunications 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. Practically in every time zone (that is, in Frankfurt-on-Main, London, New York, Tokyo, Hong Kong, etc.) there are dealers who will quote currencies.
FOREX is a more objective market, because if some of its participants would like to change prices, for some manipulative purpose, they would have to operate with tens of billions dollars. That is why any influence by a single participants in the market is practically out of the question. The superior liquidity allows the traders to open and/or close positions within a few seconds. The time of keeping a position is arbitrary and has no limits: from several seconds to many years. It depends only on your trading strategies. Although the daily fluctuations of currencies are rather insignificant, you may use the credit lines, that are accessible even to currency speculators with small capitals ($ 1,000 - 5,000), where the profit may be impressive. (You can learn more about it in the section: The main principles of trading.)
The idea of marginal trading stems from the fact that in FOREX speculative interests can be satisfied without a real money supply. This decreases overhead expenses for transferring money and gives an opportunity to open positions with a small account in US dollars, buying and selling a lot of other currencies. That is, on can conduct transactions very quickly, getting a big profit, when the exchange rates go up or down. Many speculative transactions in the international financial markets are made on the principles of marginal trading.
Margin trading is trading with a borrowed capital. Marginal trading in an exchange market uses lots. 1 lot equals approximately $100,000, but to open it it is necessary to have only from 0.5% to 4% of the sum.
For example, you have analyzed the situation in the market and come to the conclusion that the pound will go up against the dollar. You open 1 lot for buying the pound (GBP) with the margin 1% (1:1000 leverage) at the price of 1.49889 and wait for the exchange rate to go up. Some time later your expectations become true. You close the position at 1.5050 and earn 61 pips (about $ 405). For the calculation of 1 pip click here.
Everyday fluctuations of currencies constitute about 100 to 150 pips, giving FX traders an opportunity to make money on these changes.
In FOREX, it's not obligatory to buy some currency first in order to sell it later. It's possible to open positions for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit such as $ 2000, for working in the FOREX market, and grant a leverage of 1:100. That is, opening the position at $100,000, a trader invests $1,000 and receives $99.000 as a credit. The major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD).
In order to assess the situation in the market a trader has to be able to use fundamental and/or technical analysis, as well as to make decisions in the constantly changing current of information about political and economic character. Most small and medium players in financial markets use technical analysis. Technical analysis presupposes that all the information about the market and its further fluctuations is contained in the price chain. Any factor, that has some influence on the price, be it economic, political or psychological, has already been considered by the market and included in the price. The initial data for a technical analysis are prices: the highest and the lowest prices, the price of opening and closing within a certain period of time, and the volume of transactions.A technical analysis is founded on three suppositions:
Movement of the market considers everything;
Movement of prices is purposeful;
History repeats itself. That is, technical analysis is a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.
A number of technical indicators have been installed into the PRO-CHARTS trading system. Analyzing the indicators one can come to the conclusion about further movements of the quoted currencies. For a more detailed description of the indicators, analyzing price charts and volumes of trading, click here.
Fundamental analysis is an analysis of current situations in the country of the currency, such as its economy, political events, and rumors. The country's economy depends on the rate of inflation and unemployment, on the interest rate of its Central Bank, and on tax policy. Political stability also influences the exchange rate. Policy of the Central Bank has a special role, as concentrated interventions or refusal from them greatly influence the exchange rate.
At the same time one should not consider fundamental analysis just as an analysis of the economic situation in the country itself. A far bigger role in the FOREX market belongs to the expectations of the market participants and their assessment of these expectations. Various prognoses and bulletins, issued by the participants, have a strong influence on the expectations. Very often an effect of the so-called self-filfilling prophecy occurs when market players raise or lower the exchange rates according to the prognosis. But a deep and thorough fundamental analysis is available only for big banks with a staff of professional analysts and constant access to a wide field of information.
In spite of these different approaches, both forms of analyses complement one another. Traders who act on the basis of a fundamental analysis, have to consider some technical characteristics of the market (the main rates of support, such as resistance and resale), and supporters of the technical approach to the market must track the main news (interest rates, important political events).The main merits of the FOREX market are:
The biggest number of participants and the largest volumes of transactions;
Superior liquidity and speed of the market: transactions are conducted within a few seconds according to online quotes;
The market works 24 hours a day, every working days;
A trader can open a position for any period of time he wants;
No fees, except for the difference between buying and selling prices;
An opportunity to get a bigger profit that the invested sum;
Qualified work in the FOREX market can become your main professional activity;
You can make deals any time you like.