Sunday, 20 March 2016

Made in India, XBRL: Fundamentals and Forex Trading


Theoretical and Informative!
 
-> Made in India
 
 Image source: www.indiaexam.in
 
The State of Maharashtra welcomes the world to the “Make in India Week Mumbai” from 13th to 18th February 2016. And I, on my part, would want to highlight a few out of the many inventions and discoveries in India from the history i.e. Made in India.
 
v  Inventions:
  • Chaturanga: The precursor of chess originated in India during the Gupta dynasty (c. 280-550 CE). Both the Persians and Arabs ascribe the origins of the game of Chess to the Indians. The words for "chess" in Old Persian and Arabic are chatrang and shatranj respectively — terms derived from caturaá¹…ga in Sanskrit, which literally means an army of four divisions or four corps. Chess spread throughout the world and many variants of the game soon began taking shape.
 
  • Kabaddi: The game of kabaddi originated in India during prehistory. Suggestions on how it evolved into the modern form range from wrestling exercises, military drills, and collective self-defense but most authorities agree that the game existed in some form or the other in India during the period between 1500 and 400 BCE.
  •  
  • Ludo: Pachisi originated in India by the 6th century. The earliest evidence of this game in India is the depiction of boards on the caves of Ajanta.
 
  • Snakes and ladders: Snakes and ladders originated in India as a game based on morality.
 
  • Suits game: Kridapatram is an early suits game, made of painted rags, invented in Ancient India. The term kridapatram literally means "painted rags for playing. Paper playing cards first appeared in East Asia during the 9th century. The medieval Indian game of ganjifa, or playing cards, is first recorded in the 16th century.
 
  • Crescograph: The crescograph, a device for measuring growth in plants, was invented in the early 20th century by the Bengali scientist Sir Jagadish Chandra Bose.
 
  • Radio: The first public demonstration of the use of radio waves for communication was made by Jagadish Chandra Bose, who first demonstrated the use of the radio in Calcutta, in 1895, two years before a similar demonstration by Marconi in England. Bose's revolutionary demonstration forms the foundation of the technology used in mobile telephony, radars, satellite communication, radios, television broadcast, WiFi, remote controls and countless other applications.
v  Discoveries in Agriculture: Cashmere wool, Cotton cultivation, Indigo dye, Jute cultivation, Sugar refinement and many more.
 
v  Discoveries in Mathematics: Abbreviations, Zero, symbol, Law of signs in multiplication, and many more.

v  Discoveries in Medicine: Ayurvedic and Siddha medicine, Cataract surgery, Cure for Leprosy, Plastic surgery, Lithiasis treatment and many more.

v  Discoveries in Mining: Diamond mining and diamond tools, Zinc mining and medicinal zinc, etc.
 
v  Discoveries in Science: Ammonium nitrite, synthesis in pure form, Bhabha scattering, Chandrasekhar limit and Chandrasekhar number, etc.
 
Source: https://en.wikipedia.org/wiki/List_of_Indian_inventions_and_discoveries
 
 
 
-> XBRL: Fundamentals
 
The target audiences are non-technical (IT) and non-accounting people who would like to understand both a bit of XBRL code and some of the problems that are tackled in order to allow computers to process and communicate accounting data meaningfully.
If you have questions of a more generic nature, such as "How did it all start?", "Who owns XBRL?" or "What are the benefits?", please visit the XBRL International Website.
XBRL stands for eXtensible Business Reporting Language. It is an XML (eXtensible Mark-up Language) dialect developed for business reporting purposes.
In XBRL, financial data is tagged so that it can be easily understood and processed by computers, for example< Asset>1000</Asset>. The word Asset together with brackets "<" and ">" is called a tag.

Of course, thousands of hours spent on developing XBRL were not devoted to only tell computers what an Asset is. In accountancy there are many concepts that could be described using XBRL. Moreover, there are different regulations concerning financial reporting which means that the definition of an Asset under IFRSs (International Financial Reporting Standards) could be different to the one provided by some national GAAPs (Generally Accepted Accounting Practices/Principles).
Therefore, there is a need to describe interactions between financial concepts for each regulation of GAAP. This is to define whether or not there is any relation between Assets and for example Receivables and if there is, how it looks it terms of accounting knowledge and create references for elements to express to which accounting act they apply to. To do that, XBRL uses technology called XML Linking (XLink).



















The following sections discuss each of the elements of the diagram briefly:

Taxonomy

In XBRL, a taxonomy consists of the core part which is a schema (or more schemas) and linkbases. If you compared it to the physique of a crab, the schema would be its head and trunk (where all the major organs are situated) and the linkbases would be its limbs. Of course, a schema could exist without linkbases in the same way as that a crab could theoretically live without limbs but in order for crab to survive and for the taxonomy to be optimal both parts of the body are necessary.

Schema
An XBRL schema stores information about taxonomy elements (their names, ids and other characteristics). It can be regarded as a container where an unstructured list of elements and references to linkbase files are described.
From the technical point of view the XBRL Schema is an XML Schema tailored to particular business and financial reporting needs. The schema itself represents a set of unrelated elements. Schemas are created using XML Schema technology and their physical form is a file with an extension .xsd. Together with linkbases it creates an XBRL taxonomy.
The root element (the most general one) of all schemas is <schema>. It opens (<schema>) and closes (</schema>) every schema document. It contains some attributes describing it.

Element
An element is a business concept (such as Assets, Liabilities, Income…) presented to a computer in a way that it could learn its main characteristics. To achieve this, definitions of elements that appear in schemas are constructed according to a specific set of rules.
To help computers know how to treat it, XBRL developers decided to use (with small adjustments) XML built-in types. By doing so, computers can check the validity of data entered according to the type as well as make calculations. The most common types that appear in financial statements are monetaryItemType, stringItemType and decimalItemType.

Linkbase
As described in the taxonomy section, linkbases (often referred to as 'layers') are the components of a taxonomy that provide information about relationships between elements and link them with specified external resources. Linkbases provide descriptions of connections between elements by localizing them and defining the type of relationships (utilizing arcrole attribute). Each of the five linkbases (layers): presentation, calculation, definition, reference and label contains definitions of different types of relations.

Taxonomy Extensions
Public taxonomies, such as IFRS, define elements and relationships between them according to particular legislation or standards, for example “International Accounting Standards” (IAS) or “International Financial Reporting Standards” (IFRS). These XBRL-described concepts allow companies to create financial statements that are valid and compliant with the requirements of regulators.
Taxonomy extensions are built for different purposes mainly by regulators, local authorities or simply by reporting companies.
There are several rules that have to be obeyed while building an extension taxonomy. The most important one states that the extension should not physically modify the content of any of the files of the base taxonomy. This is usually made impossible by locating the base taxonomies on their website which prevents other users from making changes to the files.

DTS
DTS stands for Discoverable Taxonomy Set. It contains one or more taxonomies i.e. a number of schemas together with linkbases related to them. This term was developed as taxonomies became more complicated and more closely related to each other.

Instance Document
An XBRL instance document is a business report in an electronic format created according to the rules of XBRL. It contains facts that are defined by the elements in the taxonomy it refers to together with their values and an explanation of the context in which they are placed.
The instance document assigns it a value and provides additional information about the currency in which it is disclosed and defines a period and the entity that it refers to.

Footnote

Footnotes appear on instance documents and provide additional information for some of the elements. If for example, in a business report, several concepts refer to the statement “For more information see Disclosures on Assets”, it is possible to create linkages between them and a footnote element containing this block of text.
The element footnote contains the text of a footnote and the footnoteLink connects the element with this reference.
 

 

Source: http://www.ifrs.org/XBRL/Resources/Pages/Fundamentals.aspx

 
 
-> Foreign Exchange Trading
 
Terms used in Forex trading:
The foreign exchange market is global, and it is conducted over-the-counter (OTC) through the use of electronic trading platforms, or by telephone through trading desks. Some shorten the term to “forex” or “FX”.
Futures and futures options on different currencies can be traded on centralized boards of trade, or exchanges. The spot/cash/OTC/off-exchange forex market is not a market in the traditional sense, because there is no central trading location, or exchange. Rather, it is an interconnected telephone and electronic network of bank traders, dealers, brokers and fund managers for electronic transfers of money from one account into another account.
The interbank market is one in which huge banks, insurance companies, corporations and other financial institutions manage the risks associated with fluctuations in currency rates by trading in large quantities.
The secondary market – the OTC market – has developed more recently, permitting retail (smaller) investors to participate in forex markets. The OTC market has many of the same characteristics of the interbank market but it doesn’t provide the same prices, as the size of trades, and the volumes, are much smaller.
Trading forex is buying one currency while at the same time selling a different currency.
Some companies who do business in other countries use forex markets to convert profits from foreign sales into their domestic currency. Other reasons for trading forex include speculation for profit, or to hedge against currency fluctuations.
 
The majors:
Seven currencies are the most actively traded of the world’s monies, and they are called the majors.  







Image source: www.nerdwallet.com

 Here they are listed with their symbols:
Euro (EUR)
U.S. dollar (USD)
Japanese yen (JPY)
Swiss franc (CHF)
British pound (GBP)
Canadian dollar (CAD)
Australian dollar (AUD
There are hundreds more which can also be traded.
 
How currencies are quoted:
Each currency is given a three-letter code which is used in forex quotes. Currencies trade in pairs, and that is how they are quoted. For instance, the Euro versus the U.S. dollar (EUR/USD). Or the U.S. dollar versus the Japanese yen (USD/JPY). A currency can never be traded by itself, it must be compared with another currency.
In example, to “go long” (or, to buy) the Euro versus the U.S. dollar, the trader simultaneously buys the Euro (EUR) and sells the dollar (USD). The first currency referred to in the pair is the base currency, while the second is the counter (or “quote”) currency.
The pair is quoted in units of the counter currency needed to get one unit of the base currency. So, if the quote EUR/USD is 1.285, it means that 1.285 U.S. dollars are needed to purchase one Euro. Currency rates are carried out 4 decimal places in most cases. The last decimal place is called a “pip” or a “point”.
In trading terms, currency pairs are often quoted as bid-ask spreads. This first part of the quote is the amount of the quote currency you will get in exchange for one unit of the base currency – the bid price. The second part of the quote is the amount of the quote currency you must spend for one unit of the base currency – the ask, or “offer” – price.
In the sample above, if the pair was quoted as a EUR/USD spread of 1.2850/1.2852, it means you can sell one Euro for $1.2850 and buy one Euro for $1.2852.
The full exchange rate might not be quoted for both sides of the spread – it would generally be quoted as 1.2850/52. The only number that is not the same for both sides of the spread is the last number.
Unlike in the stock market, there is no restriction on short selling in the forex market (no “uptick rule”) when the market happens to be moving lower. Since forex trading involves buying one currency and selling another, traders have the same ability to trade in a rising market as in a falling market.
 
What to know before you trade:
Only regulated entities, such as banks, broker-dealers or Futures Commission Merchants (FCMs) and affiliates of regulated entities may enter into off-exchange forex trades with retail customers. You should ask your broker or firm how they are regulated and check with that regulator to verify registration status and background.
Your relationship with your firm is governed by your forex account agreement. Don’t establish an account without reading and understanding it.
Retail, off-exchange forex trades are not guaranteed by a clearing organization.
You will be required to deposit an amount of money – a “security deposit” or “margin” deposit, as a good faith deposit put on hold at your dealer to cover losses. This must occur before you can buy or sell an off-exchange forex contract. A relatively small amount of money can enable you to hold a forex position worth many times the account value. This is known as leverage. Since leverage allows you to control a much larger amount of currency that the amount of money you have on deposit, it magnifies the percentage amount of your profits and losses. A margin call is an involuntary liquidation of your positions if the account equity falls below the amount of margin set aside by your dealer. Other firms may charge you for losses that accrue that are greater than the amount on deposit. You should check your agreement with your firm to see if the agreement limits your losses.
To learn more, or to get started, contact your broker.
 
Source: www.pfgbest.com
 
 
Thank you for reading!
 
Hope, this write-up was helpful!
 
Contact for feedback: aashishjain488@gmail.com; ca_aashishjain@outlook.com
 

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