Category: Forex Trading

However, the advent of globalization in the 20th century brought about a shift towards free trade principles, advocating for open markets, reduced barriers, and increased economic interdependence. Balance of trade (BOT) is the difference between the value of a country’s exports and the value of a country’s imports for a given period. Balance of trade is the largest component of a country’s balance of payments (BOP).

A trade surplus can be a result of a country having a competitive advantage in the production and export of certain goods, or it can be the result of a country’s currency being relatively undervalued, making its exports cheaper for foreign buyers. A country that imports more goods and services than it exports in terms of value has a trade deficit or a negative trade balance. Conversely, a country that exports more goods and services than it imports has a trade surplus or a positive trade balance. If the exports of a country exceed its imports, the country is said to have a favourable balance of trade, or a trade surplus. Conversely, if the imports exceed exports, an unfavourable balance of trade, or a trade deficit, exists. According to the economic theory of mercantilism, which prevailed in Europe from the 16th to the 18th century, a favourable balance of trade was a necessary means of financing a country’s purchase of foreign goods and maintaining its export trade.

What are the implications of a trade surplus versus a trade deficit?

On the other hand, a numerically negative balance of trade, also known as a trade deficit, occurs when a country imports more goods and services than it exports in terms of their total value in the country’s currency. This means that the country is spending more on imports than it is earning from exports. While it may be a cause for concern in some instances, often it’s not a problem. A trade deficit can be the result of a country having a comparative disadvantage in the production of certain goods, or it can be the result of a country’s currency being relatively overvalued, making its imports cheaper and its exports more expensive. The features of balance of trade include the difference between a country’s exports and imports, its impact on the country’s currency, its role in international trade, and its importance in measuring a country’s economic performance.

What Is Balance of Trade & Its Types, Importance & Calculation

Merchandise exports refer to the value of tangible goods that a country sells to foreign markets. These goods can range from automobiles and electronics to agricultural products and machinery. On the other hand, merchandise imports denote the value of tangible goods that a country purchases from foreign countries. These imports encompass a wide array of products, ranging from raw materials to finished consumer goods. The formula for calculating the BOT can be simplified as the total value of exports minus the total value of its imports.

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A country is said to have balanced trade when its exports and imports are about equal. Its objectives include preserving trade flow equilibrium, minimizing trade imbalances, and fostering economic stability. Advocates contend that by lowering reliance on imports, balanced trade can strengthen domestic industries, protect jobs, and improve national security. Those against balanced trade state countries must sacrifice advantages and and potentially stunt economic growth in favor of balance. Friedman argued that trade deficits are not necessarily important, as high exports raise the value of the currency, reducing aforementioned exports, and vice versa for imports, thus naturally removing trade deficits not due to investment. Since 1971, when the Nixon administration decided to abolish fixed exchange rates, America’s Current Account accumulated trade deficits have totaled $7.75 trillion as of 2010.

This indicates a positive inflow of money, shown by the balance of trade being a positive number. When the price of one country’s currency increases, the cost of its goods and services also increases in the foreign market. For residents of that country, it will become cheaper to import goods, but domestic producers might have trouble selling their goods abroad because of the higher prices. Ultimately, this may result in lower exports and higher imports, causing a trade deficit.

Balanced Trade: Meaning, Pros and Cons, FAQs

1. Whereas, when a country exports more goods than it imports, it experiences a trade surplus.
2. To calculate the balance of trade, you would subtract the value of a country’s imports from the value of its exports.
3. This indicates a positive inflow of money, shown by the balance of trade being a positive number.
4. Balancing trade alone is not sufficient to guarantee sustainable economic growth.
5. The US trade deficit has continued to rise over the years, increasing to a five-month high in July 2018.

A positive balance of trade indicates that a country’s producers have an active foreign market. After producing enough goods to satisfy local demand, there is enough demand from customers abroad to keep local producers busy. A negative balance of trade means that currency flows outwards to pay for exports, indicating that the country may be overly reliant on foreign goods. It could also mean the country is wealthy and has a high level of demand that needs to be satisfied. However, sustainable economic growth depends on various factors such as investments in human capital, technological innovation, infrastructure development, and sound macroeconomic policies, in addition to achieving balanced trade.

Trade balance’s effects upon a nation’s GDP

Although the balance of trade alone does not indicate the economic stability of a country, as the overall economic stability depends on several factors like trade policies and regulations related to it,  availability of technology, labour, etc. Trade balance is one of the important factors in determining the productivity of a country. Understanding the Balance of Trade (BOT) is essential in comprehending the economic dynamics of a nation in the global marketplace. BOT, often referred to simply as “trade balance,” is a critical metric used by economists, policymakers, and investors to gauge a country’s economic health and its interactions with the rest of the world. In this comprehensive glossary, we’ll delve deep into the intricacies of the Balance of Trade, exploring its definition, components, significance, implications, and more.

Similar will be the case in a country where goods and services are exchanged across borders. In this example, the balance of trade is +$20 million, which means that the country has a trade surplus of $20 million. By reductio ad absurdum, Bastiat argued that the national trade deficit was an indicator of a successful economy, rather than a failing one.

The balance of trade is one of the key metrics to know the economic stability of the country. It is used to find out whether a country has a favourable balance of trade or not. A trade balance is said to be favourable if the country has more exports than imports and vice versa in case of an unfavourable balance of trade. A country with a trade surplus indicates that it is highly productive and financially stable. While a country with a trade deficit indicates that it is highly dependent on imports.

Structural reforms aimed at improving productivity, innovation, and skills development can bolster long-term competitiveness and resilience in global markets. International cooperation through forums such as the World Trade Organization (WTO) facilitates negotiations, resolves disputes, and fosters a rules-based global trading system. To grasp the intricacies of the Balance of Trade fully, it’s crucial to understand its underlying components.

The HF Markets Pro Plus account was specifically designed for the Nigerian Market & it supports the trading of all Lime Fx’s CFD products. The Zero Account offers you access to trade CFDs on Forex, commodities, stocks, ETFs, Bonds, Cryptocurrencies, indices, Energies, and Metals. However, these instruments are available as Contract for limefx scam Difference (CFD). This means that you do not get to own the underlying asset, but you can attempt to pick the direction of the market price. Do not forget about the data you are viewing being manipulated to the point where it’s not even accurately represented on the charts on TradingView.

Hot forex is currently one of the best…

Lime Fx is a safe broker, considering they are regulated by top-tier financial authorities. Sure, there’s plenty of content on how to enter an order, or telling you what a currency pair is and how many trillions of dollars are traded each day. There’s also an economic release calendar, which can be useful for knowing when to expect market volatility and changes in spread sizes.

1. Our broker reviews are reader supported and we may receive payment when you click on a partner site.
2. You’ll need to show your country of residence, as certain countries are only allowed certain accounts.
3. However, from this point on, Lime Fx was wider than the industry average.
4. Similarly in Kenya, HF Markets is regulated by the CMA, so trading accounts will be registered under Kenyan law etc.
5. For the funds protection, which is an important part of the regulated broker, HF Markets (Europe) Ltd. is a member of the Cyprus Investor Compensation Fund.

For Kenyan traders, Lime Fx acceptsMPesa, and you can deposit minimum of KES 1000. The clients from South African, Nigeria & Kenya can avail this promotion at the time of the last update. For professional traders, allowing followers to copy your strategy can earn you up to a 50% performance fee. This promotion allows eligible clients to receive daily earnings that are calculated based on their daily free margin and total trade volume for the month.

They are ideal for testing strategies and algorithmic trading solutions. DailyForex.com adheres to strict guidelines to preserve editorial integrity to help you make decisions with confidence. Some of the reviews and content we feature on this site are supported by affiliate partnerships from which this website may receive money.

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ForexBrokers.com has been reviewing online forex brokers for over eight years, and our reviews are the most cited in the industry. Each year, we collect thousands of data points and publish tens of thousands of words of research. We’re glad to hear that you satisfied with our dedicated customer support services. We always strive to provide the best experience for our valued clients. The trade execution is pretty impressive on this broker’s platform especially with the good leverage on micro account. My total trade experience with this broker is around one year trading live.

At ForexBrokers.com, our reviews of online forex brokers and their products and services are based on our collected data as well as the observations and qualified opinions of our expert researchers. Each year we publish tens of thousands of words of research on the top forex brokers and monitor dozens of international regulator agencies (read more about how we calculate Trust Score here). The How-To videos explain essential functions of the myHF back office and the MT4/MT5 trading platforms. Webinars, podcasts, and live events add a personalized touch and interactive educational experience.

How do I withdraw money from Lime Fx?

A PAMM account takes copy trading to a more advanced level and allows you to sign up as a fund manager, where you can manage funds for investors at a pre-agreed percentage of profits. This can be a good option if you have a very promising strategy, or if you’re able to find another trader whose strategy you’d like to follow. As an aside, while we haven’t physically tested the spreads ourselves with HF Markets, we have tested RAW spreads with other brokers like Pepperstone, IC Markets, and Fusion Markets. Our results are really interesting and overall we can say there are brokers with spreads that are lower (at least according to our results).

Range of Offerings

Not every account or every country is offered the same bonus (or offered one at all), so it’s important to read the terms & conditions if you’re considering taking up a bonus offer. Next up, I was offered a top-up bonus, which is an incentive from Lime Fx to deposit funds into the account. The bonus works by giving me some extra capital when I deposit, and I’m then required to turn over enough volume before I can withdraw it. You’ll need to show your country of residence, as certain countries are only allowed certain accounts. With Lime Fx, there are a similar amount of options to get your funds out of your Lime Fx account as there are to deposit.

We are thrilled to hear you’re satisfied with our support service. However, different payment channels require certain amounts ranging from $5 to $100. Beginner traders will find it easy to deposit and withdraw from Lime Fx and be able to trade with tiny amounts of capital. The lessons can be as simple as explaining basic market terms, and to advanced as learning how to build mathematical models to analyse and trade markets. For urgent technical support or inquiries, calling the company’s phone line would be a much quicker option, but be aware that international calling may be costly. Or, you can choose to withdraw to a crypto account, or e-wallet such as Skrill or BitPay for a much quicker withdrawal.

You will also find 21 timeframes vs 9, a Depth of market indicator and even 64-bit (vs 32-bit)processing which makes MT5 a superior option for backtesting. All-in-all, there is a good reason why in our mind MT4 is far and away the most popular trading platform for retail forex traders. If you want a program that has the fundamental features you need to trade without superfluous features that some competing platforms tend to have, then MT4 is an excellent choice. Just know that it is not the best option for stock trading, for this, you are better off using its more powerful successor MetaTrader 5. The HF Markets Group has won a number of industry awards, including best stock broker, best trading platform broker, and limefx broker reviews best forex trading app. A nine-member team provides additional market commentary and analytics.

HF Markets Account Types& Spread

Established in 2010, and with more than 200 staff globally, the company is one of the top 10 retail forex brokers (by volume) in the world (see Forex Trading Statistics). Lime Fx caters to traders resident in most countries, except the USA, Canada, Sudan, Syria, North Korea, Iran, Iraq, Mauritius, Myanmar, Yemen, Afghanistan, and Vanuatu. Please note that EEA traders must trade with the less competitive Cyprus subsidiary as Lime Fx does not accept them via its international brokerages. So in order to deposit money on Lime Fx you simply need to select the payment provider of your preference, as well as the one that is available in your region, and proceed with the payment.

However in jurisdictions where there is no government regulation (such as Nigeria), trading accounts are registered under offshore regulation; meaning under laws of foreign countries. People who write reviews have ownership to edit or delete them at any time, and they’ll be displayed as long as an account is active. I found the volume of research released by the analyst team to be more than sufficient for keeping most traders up to date with the latest market movements. This is comprised of numerous daily articles, and occasional webinars that are created by a team of analysts located around the globe.