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Thread: Forex Market

  1. #1
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    Default Forex Market

    Forex Market

    The global marketplace has changed dramatically over the past several years. New investment strategies are becoming more important in order to minimize risk, as well as to maintain high portfolio returns. Among the most rewarding of the markets opening up to traders is the Foreign Exchange market. Why?

    Money or currency is the ultimate commodity. Every time a company or government buys or sells products and services in a foreign country, they are subject to a foreign currency trade; the exchanging of one currency for another. Many individuals and organizations also trade currencies for speculative purposes. In contrast to the world’s stock markets, foreign exchange is traded without the constraints of a central physical exchange. Transactions are instead conducted via telephone or online. With this transaction structure as its foundation, the Foreign Exchange Market has become by far the largest marketplace in the world. With all of these currency transactions going on daily, it is no wonder that the foreign currency exchange market, also known as "forex" or "fx" market, is the largest financial market in the world. It is much bigger than all of the U.S. stock markets combined, with a daily trading volume larger than that of all the world's stock markets. In addition, it is also the least regulated market providing the greatest liquidity to investors.

    Trillions of dollars of foreign exchange activity takes place every day. From 1997 to the end of 2000, daily forex trading volume surged from US$5 billion to US$3.0 trillion in 2007. The forex market continues to grow at a phenomenal rate. This high volume is advantageous from a trading standpoint because transactions can be executed quickly and with low transaction costs (i.e., a small bid/ask spread).

    Before the internet came along, only corporations and wealthy individuals could trade currencies in the forex market through the use of the proprietary trading systems of banks. These systems required as much as US$1 million to open an account. Thanks to advancements in online technology. Self-directed investors with only a few thousand dollars and smaller financial firms can have access to the forex market 24 hours a day today with the same liquidity as larger market participants.

    For traders, forex trading provides an alternative to stock market trading. While there are thousands of stocks to choose from, there are only a few major currencies to trade (the Dollar, Yen, British Pound, Swiss Franc, and the Euro are the most popular). Forex trading also provides a lot more leverage than stock trading, and the minimum investment to get started is a lot lower. Add to that the ability to choose flexible trading hours (forex trading goes on 24 hours a day), identifiable trading patterns, as well as comparatively low margin requirements, have rewarding trading opportunities for many and you have the reason why so many stock traders have flocked to day trade currencies. As a result, foreign exchange trading has long been recognized as a superior investment opportunity by central banks, major banks, multinational corporations, individual investors and speculators, and other institutional funds and hedge funds.

    Trading, or speculation, makes up 95% of the daily volume. The other 5% of daily volume consists of governments and commercial companies converting one currency into another from buying and selling goods and services.

    Spot foreign exchange (Forex) is always traded as one currency in relation to another - currency pair. One currency is bought and the other sold. For example, you buy Euro with Dollar, anticipating, the Euro to increase in value relative to the Dollar. Vice versa, a trader who believes that the dollar will rise in relation to the Euro, would sell EUR/USD.



    The following list a guide for quoting conventions:

    Symbol Currency Pair Trading Terminology Commonly
    Traded Pairs
    GBP/USD British Pound / US Dollar Cable Yes
    EUR/USD Euro / US Dollar Euro Yes
    USD/JPY US Dollar / Japanese Yen Dollar Yen Yes
    USD/CHF US Dollar / Swiss Franc Dollar Swiss or Swissy Yes
    USD/CAD US Dollar / Canadian Dollar Dollar Canada or Loonie
    AUD/USD Australian Dollar / US Dollar Aussie Dollar Yes
    EUR/GBP Euro / British Pound Euro Sterling
    EUR/JPY Euro / Japanese Yen Euro Yen
    EUR/CHF Euro / Swiss Franc Euro Swiss
    GBP/CHF British Pound / Swiss Franc Sterling Swiss
    GBP/JPY British Pound / Japanese Yen Sterling Yen
    CHF/JPY Swiss Franc / Japanese Yen Swiss Yen
    NZD/USD New Zealand Dollar / US Dollar New Zealand Dollar or Kiwi
    USD/ZAR US Dollar / South African Rand Dollar Zar or South African Rand
    GLD/USD Spot Gold Gold
    When quoting currency pairs, the first currency is referred to as the base currency and the second, the counter or quote currency. The base currency is always equal to 1 monetary unit of exchange, for example, 1 Dollar, 1 Pound, 1 Euro. The dominant base currencies . When a currency is quoted against the US Dollar it is called a direct rate. Any currency not against the US Dollar is referred to as a cross rate. Example shows that 1 EUR equals to 1.0120/1.0126 US dollars. We will explain why 1 EUR equals to the two numbers (1.0120/1.0126) later. Forex Market-forexqt1-jpg

    There are four dominant currency pairs:

    EUR/USD – the Euro
    USD/JPY – the Yen
    GRP/USD – the British pound
    USD/CHF – the Swiss franc
    Almost 85% of the world currency are transacted using the above four pairs

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    These days trading Forex is very easy and we don't need much capital like any other investment term capital requirement. Trading is an easy thing to do but making profits from the tradings is the hardest part. Forex involves some risk and to gain we need so many hard work than any other business. But hard work can only be done by mind and most of the terms are like mind challenges

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    the market is open for 24 hours with 5 working days so that forex trading is a business that is very flexible. we can trade anytime. so that the forex market is very profitable to invest

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    the forex market is the largest market, will be a lot of benefits we can get from the forex market. Every day billions of profits made by this market, so the market is the most profitable market.

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    Forex is a good business and risky as well if you have no knowledge and skills so always learn the basics of forex and try to make good money in Forex.

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    Quote Originally Posted by Neil100 View Post
    Forex is a good business and risky as well if you have no knowledge and skills so always learn the basics of forex and try to make good money in Forex.
    It's a risky business but we could minimize them, by learning risk management and money management.

  7. #7

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    Quote Originally Posted by Neil100 View Post
    Forex is a good business and risky as well if you have no knowledge and skills so always learn the basics of forex and try to make good money in Forex.
    Yes there is no doubt forex can be a good job opportunity for any one, but along with that its true that its very risky too and that is why a trader has to be very cautious about trading in the market.

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    Quote Originally Posted by vic84 View Post
    Yes there is no doubt forex can be a good job opportunity for any one, but along with that its true that its very risky too and that is why a trader has to be very cautious about trading in the market.
    yes, forex is a business that has a huge opportunity but the risks are also very large and therefore we need to be careful with forex that will allow us to trade with the maximum. we need to have the preparation to start trading well before the start of trading in forex

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