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The merger of The Royal Bank of Scotland (RBS) and National Westminster Bank (Nat West) as well as other major British banks including Barclays and Woolwich Building Society has created major economical and social interest boasting scholarly debate (Papers4you.com, 2006). It is important to understand why such mergers take place and the potential gains of doing so. The RBS and Nat West merger was formed in delivering Nat West from inefficiencies of poor services originally formulated from the merger bid proposed by the Bank of Scotland. Nat West will benefit from the forward thinking impact present at the RBS Group.

The entrepreneurial spirit will help the bank as well as the whole merger to move forwards in a highly competitive market simultaneously maximising customer satisfaction - a major key to survival in this industry. Impact on shareholders during the merger or discussion process can vary bringing about instability and lack of confidence. Following the completion of the RBS 20.8 billion bid; share yields rose in price to an attractive level in line with the UK economy thereby portraying the strength of the merger. In essence the driving force behind the success of the RBS bid over the Royal Bank of Scotland was in fact the higher share price expectations offering the perfect icing.

There are many foreseeable benefits of merging to create a larger customer base, maintaining market power and ultimately reducing risk (Papers4you.com, 2006). However, in the reshuffling process redundancies and unemployment are highly evident. A BBC News article revealed that the RBS hopes to achieve efficient operation by cutting costs by 1 billion thereby threatening 18,000 Nat West Employees (Friday, 11 February, 2000). Nevertheless, employee downsizing moves with the financial services market where the shift from branch based services to E-commerce in terms of internet and telephone banking services.

Henceforth, new areas of employment are created accommodating an advancing system thereby giving scope to major economies of scale. Thus the merger boasts upon innovation and development where further employees will be trained to the highest standards to deliver customer services and knowledge of products achieving greater efficiency. Today the RBS and Nat West group are growing from strength to strength with worldwide status and second largest market capitalisation within Europe. The rise of this super bank portrays the positive impact of combating competition and placing the consumer at the heart of merger proposals.

References

Anderton, A (2001) Economics Third Edition, Causeway Press BBC News Articles; Thursday, 27 January, 2000, Bank of Scotland: bold move by UK's oldest bank http://news.bbc.co.uk/1/hi/business/621123.sm Friday, 11 February, 2000, Nat West merger's mixed fortunes http://news.bbc.co.uk/1/hi/business/639201.stm Monday, 7 February, 2000, Banking on size to compete http://news.bbc.co.uk/1/hi/business/the_company_file/456551.stm Papers For You (2006) "P/F/125. Master's Dissertation. UK Banks' Merger: Evidence from 1995-2001 Period", Available from http://www.coursework4you.co.uk/sprtfina33.htm [17/06/2006] Papers For You (2006) "P/F/73. Synergy from the Mergers and Acquisitions: cases of two real mergers (Royal Bank of Scotland and NatWest; Barclays Bank and the Woolwich)", Available from http://www.coursework4you.co.uk/sprtfina33.htm [18/06/2006]

Copyright 2006 Verena Veneeva. Professional Writer working for http://www.coursework4you.co.uk

Standard deviation is a concept all Forex traders should understand as part of their Forex education. In fact if you dont understand it and know how to factor it into your trading strategy you are unlikely to win long term. Lets look at it.

Standard deviation is logical, easy to understand and will help you time entries better and define targets for trades, as well as spotting important trend reversals.

Its a simple and powerful concept and all forex traders should know how it works and how to take advantage of it.

The real problem that traders have to overcome when trading forex is overcoming volatile price moves that can stop them out to soon or with losses if you learn how to deal with standard deviation, you will enter with better risk reward and get stopped out less often.

What is standard deviation?

Standard deviation is a statistical term that refers to and shows the volatility of price in any currency. In essence standard deviation measures how widely values are dispersed from the mean or average.

Dispersion is effectively the difference between the actual closing value price and the average value or mean closing price.

The larger the difference between the closing prices from the average price, the higher the standard deviation and volatility of the currency is. On the other hand - the closer the closing prices are to the average mean price, the lower the standard deviation or volatility of the currency is.

Technical Calculation

Here is the technical bit dont worry if you find it a little complicated we will simplify things in a minute here is the calculation:

Standard deviation the square root of the variance, and the average of the squared deviations from the mean.

High Standard Deviation is present when the price of the currency studied is changing volatile and has large daily ranges. On the other hand, low Standard Deviation values take places when currencies are range trading or in consolidation i.e. when prices are more stable and less volatile.

Spotting Big Contrary trades

Major tops and bottoms and important trend changes are accompanied by high volatility as prices reflect the psychology of the participants and greed and fear push prices away from the fundamentals.

If you look at any forex chart you will see price spikes caused by human emotion and they are not sustainable and prices tend to return to more realistic levels after periods of high volatility you will often here the term blow off top or bottom where prices make one last volatile surge and reverse.

3 Important Ways to Use Standard Deviation

So how can you incorporate standard deviation in your forex trading? The answer is it is useful for:

1. Picking important market tops or bottoms i.e look for highly volatile prices that have spiked to far from the mean.

2. Targeting entries within trends - if for example, prices spike away from the mean to far, they will fall back to the average eventually. If the trend is strong you can target entry at the mean price.

3. If prices are trading in a narrow range and suddenly high standard deviation pushes prices away from the mean, you can trade with the break.

If you want an easy tool to apply to help you apply standard deviation in your trading - looking no further than the Bollinger band. Most major chart services plot it and its easy to use we dont have time to explain it all here so see our other articles.

The Real Enemy for Traders

Is not picking trend direction, its entering with the best risk reward and dealing with volatility if you have understanding of standard deviation you will be able to deal with the enemy of volatility, harness and control it, and use it to achieve currency trading success.

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