Pivot Points in Forex – What They Are and How to Use Them
Pivot points are one of the commonly used triggers for trading systems. If you’re new to the forex market, though, you may be foggy on exactly what pivot points are and what they can mean to your trading.
In a nutshell, pivot points are exactly what they sound like – the point at which the market is expected to turn – if it’s been going down, a pivot point is the value at which it will reverse the trend and begin to climb. If it’s been rising, then the pivot point is where the sentiment of the traders will turn and begin a downward trend. Obviously, being able to predict major movements in the money market is a valuable skill, since it hints at the where the market is moving and whether or not this is the time to trade or stick.
Pivot point trading is an especially popular method of mapping out a trading strategy. It was originally used by floor traders in the stock market who liked it because it allowed them to gauge where the market was heading with just a few simple bits of information and calculations. By knowing the high, low, opening and closing points from the previous day, they could calculate a point at which the market had ‘turned’ to head upward or downward. Pivot points can help predict where the market is going – and coupled with the resistance and support points, give you an idea how far in that direction it will go.
There are a number of ways to calculate the pivot points for the day, but the most common – and easiest – is to average the opening, closing and high points for the last day’s trading. There are other pivot points that can be calculated from those numbers as well. Before we talk about how to calculate them and what they mean, let’s define a few terms:
Pivot point – the point where the market reverses a current trend.
Resistance – A high point in a market chart that recurs regularly. Generally, it’s the point where the market (or currency) will begin a downturn.
Support – A low point in the market chart that recurs regularly. Generally, it’s the point where the market (or currency) will begin to climb back up.
Traditionally, support and resistance points are difficult to break through. Most of the time as the numbers approach that level; there will be a slight rebound in the other direction. An interesting phenomenon is that once a resistance or support point is broken, it tends to switch sides – a broken resistance will often become a support for prices on the other side of the line.
The most common calculation for arriving at a pivot point is:
Pivot: (High + Close + Low)/3
Resistance: 2 * Pivot – Low
Support : 2 * Pivot – High
USD/EUR Date:02/03/06 14:40 O=0.83174 H=0.83188 L=0.83167 C=0.83188
Given this data for Feb 3, 2006, the pivot points for Feb 4, 2006 would look like this:
Pivot: 0.83180
Resistance: 0.83193
Support: 0.83172
Those numbers give me some points on which to base my strategy for the day. If the market opens above the pivot point, it’s a bull market, and most advisors would go for long trades, since the direction of the market is up. If it opens below pivot, it’s time to favor short trades and quick sales.
There are two common sales strategies using pivot, resistance and support points.
Breakout Trade: When a currency pair breaks through a resistance or support point, there’s usually a surge of activity around it. Buy if the charts show a break through a resistance, sell if the rate drops below a support point.
Pullback Trade: When the exchange rate drops back from a high, most traders will buy, based on other information that’s available. It’s a tricky move, though, since the pullback could just be a temporary pause in the upward momentum, or the beginning of a downward rebound.
Using pivot points to inform your strategy in day trading is a complex subject. You’ll find a great deal written about it by various gurus and experts. These basics can help you understand what you’re reading from them.
For more in-dept information visit Professional trader and author Peter Bain's Video Forex Course that demonstrates simple yet powerful Pivot Currency trading systems used by professional traders.
Tuesday, December 15, 2009
Monday, December 7, 2009
Dubai crisis rings bells of prudent investment
Untill last month, Dubai was acclaimed worldwide as an exotic Manhattan on the sea, with huge skyscrapers towering in desert sands alongside golden beaches crowded with stunning hotels and upscale shopping malls.
Unsurprisingly, news of the financial collapse of the emirate's key construction firms came as a shock to many, but as far as regional economists were concerned, the Dubai bubble had been ready to burst for some time.
It is an experience that no country wants to see repeated within its borders. Israeli economists stressed over the weekend that lessons must be learned from the crisis, among which are modesty and caution.
SYMPTOMS
The prevailing view in Israel is that Dubai was simply putting all of its eggs in one basket. Its failure to diversify meant that a meltdown was likely to occur at one point or another.
Diversification of an economy is so important," said Yishay Yafeh, an expert in financial systems at the Hebrew University of Jerusalem.
"You can't base an entire economy on one sector," said Dan Catarivas, director of international relations at the Federation of Israeli Economic Organizations.
Dubai had a bold vision. It took a pearl-fishing village on the edge of the Arabian Desert and transformed it within a matter of a lifetime. Israeli economists told Xinhua they believe that while the dream of Dubai's founder was ambitious and praiseworthy, it was converted over the years by his successors to something that became unsustainable.
Massive investments in real estate led to an overheated economy, and despite government involvement in all the major development companies.
The economy also lacked an export base. In 2006, Dubai's imports totalled some 60 billion U.S. dollars, while exports stood at 5 billion dollars.
"The lesson is that they went too far. It's as simple as that," said Arie Melnik, a professor of economics at the University of Haifa, adding that he believes the "hubris" of the Dubai leaders was at the center of the crisis.
PREVENTION
Catarivas said Israel has got the mix just about right, which is why the country survived the international financial crisis better than most.
Noting that Israel, like Dubai, has virtually no raw materials, local experts said Israel's success is based on human capital.
Meanwhile, they said that Dubai's decision to move the economy in the direction of luxury villas lacked forethought and long-term feasibility.
In Israel, the high-tech industry may be a major force in the economy, recognized as a world leader, but it is not the only basket. Medical supplies, diamond polishing, agriculture and water technologies all rank high.
In Dubai, it was a very different case. "They thought they could do all this even if they couldn't see money at the end of the tunnel. Every small-time builder knows there is one simple rule, you don't begin building if you don't have buyers," said Melnik.
An economy must be diversified, it should be transparent, and a country's leaders should not plan too ambitiously and thus can avoid overextension, said the leading Israeli economists who spoke to Xinhua over the last few days, among other suggestions they offered to ensure no repeat of the Dubai crisis.
"It's about modesty and caution. There, the bubble was behavioral," suggested Moshe Justman, a professor of economics at Ben-Gurion University of the Negev in southern Israel.
FOREVER BURSTING BUBBLES
The Israeli analysts are of the opinion that the Dubai crash will have limited impact on the global stage. However, they cautioned that other crises may be around the corner.
The trouble is how to predict them. "I wanted to call this a million-dollar question, but of course it's worth much more," said Yafeh.
One needs to examine a state's investment portfolio to check whether it is diversified. Then there are the sums involved, said Justman.
There have been bubbles throughout recorded human history, said Yafeh, noting that similar hard times have been occurring for centuries, including the dotcom bubble in recent years.
However, nations tend to survive these difficult moments. The United States may have taken a beating over the last 18 months with the sub-prime crash, but its economy is resilient and large enough to have survived.
Israel and Australia may have growing bubbles right now, but their central banks are playing the game right by adjusting their lending rates accordingly, said Melnik.
At the end of the day, people will view Dubai's financial crisis as nothing more than "a curiosity," according to Yoram Landskroner, an expert on international debt at the Hebrew University of Jerusalem. "Dubai has nothing that links it to any group of nations. It's neither a developed state nor an emerging market."
As a result, little can be applied to other countries from the Dubai experience, other than to say that sometimes caution is the better part of valor.
However, in consideration of previous financial crises in emerging economies, it is safe to predict that some potential investors will no longer put their cash in high-risk, low-rated markets and will return to the days when making a small prudent profit was regarded as far more sensible than a rash gamble on a chancy but exotic option.
David Harris
http://news.xinhuanet.com/english/2009-12/07/content_12601713.htm
Unsurprisingly, news of the financial collapse of the emirate's key construction firms came as a shock to many, but as far as regional economists were concerned, the Dubai bubble had been ready to burst for some time.
It is an experience that no country wants to see repeated within its borders. Israeli economists stressed over the weekend that lessons must be learned from the crisis, among which are modesty and caution.
SYMPTOMS
The prevailing view in Israel is that Dubai was simply putting all of its eggs in one basket. Its failure to diversify meant that a meltdown was likely to occur at one point or another.
Diversification of an economy is so important," said Yishay Yafeh, an expert in financial systems at the Hebrew University of Jerusalem.
"You can't base an entire economy on one sector," said Dan Catarivas, director of international relations at the Federation of Israeli Economic Organizations.
Dubai had a bold vision. It took a pearl-fishing village on the edge of the Arabian Desert and transformed it within a matter of a lifetime. Israeli economists told Xinhua they believe that while the dream of Dubai's founder was ambitious and praiseworthy, it was converted over the years by his successors to something that became unsustainable.
Massive investments in real estate led to an overheated economy, and despite government involvement in all the major development companies.
The economy also lacked an export base. In 2006, Dubai's imports totalled some 60 billion U.S. dollars, while exports stood at 5 billion dollars.
"The lesson is that they went too far. It's as simple as that," said Arie Melnik, a professor of economics at the University of Haifa, adding that he believes the "hubris" of the Dubai leaders was at the center of the crisis.
PREVENTION
Catarivas said Israel has got the mix just about right, which is why the country survived the international financial crisis better than most.
Noting that Israel, like Dubai, has virtually no raw materials, local experts said Israel's success is based on human capital.
Meanwhile, they said that Dubai's decision to move the economy in the direction of luxury villas lacked forethought and long-term feasibility.
In Israel, the high-tech industry may be a major force in the economy, recognized as a world leader, but it is not the only basket. Medical supplies, diamond polishing, agriculture and water technologies all rank high.
In Dubai, it was a very different case. "They thought they could do all this even if they couldn't see money at the end of the tunnel. Every small-time builder knows there is one simple rule, you don't begin building if you don't have buyers," said Melnik.
An economy must be diversified, it should be transparent, and a country's leaders should not plan too ambitiously and thus can avoid overextension, said the leading Israeli economists who spoke to Xinhua over the last few days, among other suggestions they offered to ensure no repeat of the Dubai crisis.
"It's about modesty and caution. There, the bubble was behavioral," suggested Moshe Justman, a professor of economics at Ben-Gurion University of the Negev in southern Israel.
FOREVER BURSTING BUBBLES
The Israeli analysts are of the opinion that the Dubai crash will have limited impact on the global stage. However, they cautioned that other crises may be around the corner.
The trouble is how to predict them. "I wanted to call this a million-dollar question, but of course it's worth much more," said Yafeh.
One needs to examine a state's investment portfolio to check whether it is diversified. Then there are the sums involved, said Justman.
There have been bubbles throughout recorded human history, said Yafeh, noting that similar hard times have been occurring for centuries, including the dotcom bubble in recent years.
However, nations tend to survive these difficult moments. The United States may have taken a beating over the last 18 months with the sub-prime crash, but its economy is resilient and large enough to have survived.
Israel and Australia may have growing bubbles right now, but their central banks are playing the game right by adjusting their lending rates accordingly, said Melnik.
At the end of the day, people will view Dubai's financial crisis as nothing more than "a curiosity," according to Yoram Landskroner, an expert on international debt at the Hebrew University of Jerusalem. "Dubai has nothing that links it to any group of nations. It's neither a developed state nor an emerging market."
As a result, little can be applied to other countries from the Dubai experience, other than to say that sometimes caution is the better part of valor.
However, in consideration of previous financial crises in emerging economies, it is safe to predict that some potential investors will no longer put their cash in high-risk, low-rated markets and will return to the days when making a small prudent profit was regarded as far more sensible than a rash gamble on a chancy but exotic option.
David Harris
http://news.xinhuanet.com/english/2009-12/07/content_12601713.htm
Mediatory Services in Forex Currency Trading
Foreign exchange market (Forex) is the prime financial market in the globe. The overall funds in trade comprise of nearly trillions of US dollars in trade, which is a lot more than the entire amount of stock options and duties of the United States of America.
Forex is a non-stock exchange market that has no physical place. Forex is a banking network consisting of companies, forex brokers, private investors, integrated by one organization of information exchange.
As the Forex exchange trading does not rely on physical place, they trade internationally, all around the clock, with the exception of weekends for the time zone of the country dealing with it.
Foreign exchange covers up markets of most nations with universal platforms for foreign currency exchange trading functions in London, Tokyo and New York.
Major groups of Forex currency trading are:
Insurers – The major group is exporting and importing companies and some of the companies which consist of the few functions in foreign currency. For these partakers in forex, the main objective is to ensure loss minimization in a way keeping away from risks.
Speculators – Personal traders and corporations who are intended to trade foreign currency making profit from foreign currency exchange rates and short-term functions go to this category.
Arbiters – Investors of online forex trading who trade with big amounts of cash to invest and function on two or more markets at the similar time and generally they tend to make profit on the basis of foreign exchange rates.
Forex broker – These are brokers, banking establishments, currency dealers and companies who provide with electronic access to trading platforms and giving mediatory services in currency exchange deals.
Forex is a non-stock exchange market that has no physical place. Forex is a banking network consisting of companies, forex brokers, private investors, integrated by one organization of information exchange.
As the Forex exchange trading does not rely on physical place, they trade internationally, all around the clock, with the exception of weekends for the time zone of the country dealing with it.
Foreign exchange covers up markets of most nations with universal platforms for foreign currency exchange trading functions in London, Tokyo and New York.
Major groups of Forex currency trading are:
Insurers – The major group is exporting and importing companies and some of the companies which consist of the few functions in foreign currency. For these partakers in forex, the main objective is to ensure loss minimization in a way keeping away from risks.
Speculators – Personal traders and corporations who are intended to trade foreign currency making profit from foreign currency exchange rates and short-term functions go to this category.
Arbiters – Investors of online forex trading who trade with big amounts of cash to invest and function on two or more markets at the similar time and generally they tend to make profit on the basis of foreign exchange rates.
Forex broker – These are brokers, banking establishments, currency dealers and companies who provide with electronic access to trading platforms and giving mediatory services in currency exchange deals.
PROLOGUE TO FOREX
Forex rates is the most important aspect that a trader should know. It is better to know the basics of forex before jumping into the trading. Forex has the biggest market world wide when compared to others generating about US$4 trillion trade every day.
Forex is operating worldwide round the clock with governments, national and central banks, hedge funds, corporate companies, various financial institutions, brokers, and currency speculators all participate in the forex trading to make money and upheld their economy. The forex market is closed only during the weekends and opened in all the weekdays. Forex plays an important role in foreign trade and foreign exchange rates.
Forex is also referred as Forex exchange trading or as FX and this involves only the buying and selling of one currency, according to its established value against another currency. Example, a trader buys the US dollars with the euro currency when the US dollar value is weak and sells the US dollars when its value is high against the euro currency. By this a trader can make profits.
Knowing the foreign exchange rate forms the cornerstone factor to predict forex trends and online forex brokers should essentially know this to efficiently practice their skill.
The established value of one currency to another is called exchange rate, which can rise or fall anytime owing to many factors like the stability of the government, stability of the economy, security of the country, etc. However market is also affected by market psychology, political factors, and economic factors like house prices and employment figures etc.
A forex trader will be able to benefit in this forex trading only when he does it in high volumes because the profit margin is always small and when high volumes of forex trading is done in the forex markets, then only the forex trader will be able to amass huge profits.
Forex is operating worldwide round the clock with governments, national and central banks, hedge funds, corporate companies, various financial institutions, brokers, and currency speculators all participate in the forex trading to make money and upheld their economy. The forex market is closed only during the weekends and opened in all the weekdays. Forex plays an important role in foreign trade and foreign exchange rates.
Forex is also referred as Forex exchange trading or as FX and this involves only the buying and selling of one currency, according to its established value against another currency. Example, a trader buys the US dollars with the euro currency when the US dollar value is weak and sells the US dollars when its value is high against the euro currency. By this a trader can make profits.
Knowing the foreign exchange rate forms the cornerstone factor to predict forex trends and online forex brokers should essentially know this to efficiently practice their skill.
The established value of one currency to another is called exchange rate, which can rise or fall anytime owing to many factors like the stability of the government, stability of the economy, security of the country, etc. However market is also affected by market psychology, political factors, and economic factors like house prices and employment figures etc.
A forex trader will be able to benefit in this forex trading only when he does it in high volumes because the profit margin is always small and when high volumes of forex trading is done in the forex markets, then only the forex trader will be able to amass huge profits.
Saturday, November 14, 2009
Information About Margin In Forex Trade
Several forex traders are doubtful while applying the margin. But after that, they have small option and the majority of them have to employ the margin to do foreign trade.
One single lot includes 100,000 units of a currency in a normal account. One lot in Mini account may possibly include 10,000 units of a particular currency. This, as most of you would optimistically have the same opinion, is important cash to keep in an account. As well, the majority of people have been look to trade above one lot at a time.
And nearly all Forex trading firms need traders to have admission to margin funds. All in all there is just no options which will aid us turn clear of applying the margin in currency trading.
Significant aspect for a forex trader to bear in mind is that there are reasonable ways to employ the margin gainfully in addition to sensibly.
Margin is customizable: Margin is bendable and can be applied till the level at which the trader is comfy and thinks the requirement to exercise it. If the trader desires to play it protected, 5% to 10% of margin is measured comfy. For a trader who is start to taking a few risks, 40% to 50% percent of margin is measured standard or strong.
Therefore, the margin sum for every trade can be customized opening from zero to 100 percent. A person has to think every trade independently and has to create it a division of his long term forex currency trading strategy and create a well-versed verdict about how lot the margin is most appropriate for him.
One single lot includes 100,000 units of a currency in a normal account. One lot in Mini account may possibly include 10,000 units of a particular currency. This, as most of you would optimistically have the same opinion, is important cash to keep in an account. As well, the majority of people have been look to trade above one lot at a time.
And nearly all Forex trading firms need traders to have admission to margin funds. All in all there is just no options which will aid us turn clear of applying the margin in currency trading.
Significant aspect for a forex trader to bear in mind is that there are reasonable ways to employ the margin gainfully in addition to sensibly.
Margin is customizable: Margin is bendable and can be applied till the level at which the trader is comfy and thinks the requirement to exercise it. If the trader desires to play it protected, 5% to 10% of margin is measured comfy. For a trader who is start to taking a few risks, 40% to 50% percent of margin is measured standard or strong.
Therefore, the margin sum for every trade can be customized opening from zero to 100 percent. A person has to think every trade independently and has to create it a division of his long term forex currency trading strategy and create a well-versed verdict about how lot the margin is most appropriate for him.
Monday, October 26, 2009
STARTING FOREX TRADING
The best and most efficient way for the traders to make money is through the internet in the Forex Trading by using the online forex trading system. The forex market is the most liquid trading market and an unpredictable market in the world. But still this forex market is the best for expert traders to amass huge profits. But it doesn’t mean that a trader should be an expert to make profits in the forex markets, it is enough if he knows the basics of forex trading and a little common sense along with the knowledge of the present economy of the countries world wide. Getting started with forex has become easy, due to the advances in technology.
1. The first and foremost aspect is that a person who wants to do forex trading should choose a good Forex Broker, the forex broker should help the forex trader to have a practice account, great customer support, good charting packages and news feeds. To analyze the forex brokers, there is a report called CFD FX REPORT which reviews forex brokers and give its rankings.
2. The second aspect is that, the forex trader must fund and deposit money in his newly acquired account. Due to modernity, these days many Forex Broker Platforms make it very easy for transactions, the trader can deposit via Credit Card, direct debit, check. It is always recommended by most advisors to start with only little amount of money and after a little experiences the forex trader can increase his leverage rates later.
3. The third step is the forex broker should help to move in the right direction that suits the trader’s trading style. There are several quality Free forex charts available to indicate the trend and also there are many sites that update the Fx Rates everyday. It is important to use them regularly.
1. The first and foremost aspect is that a person who wants to do forex trading should choose a good Forex Broker, the forex broker should help the forex trader to have a practice account, great customer support, good charting packages and news feeds. To analyze the forex brokers, there is a report called CFD FX REPORT which reviews forex brokers and give its rankings.
2. The second aspect is that, the forex trader must fund and deposit money in his newly acquired account. Due to modernity, these days many Forex Broker Platforms make it very easy for transactions, the trader can deposit via Credit Card, direct debit, check. It is always recommended by most advisors to start with only little amount of money and after a little experiences the forex trader can increase his leverage rates later.
3. The third step is the forex broker should help to move in the right direction that suits the trader’s trading style. There are several quality Free forex charts available to indicate the trend and also there are many sites that update the Fx Rates everyday. It is important to use them regularly.
Use Of Forex Trading System
While several novel forex trading systems are dependent on difficult mathematical market analysis forms, a few of the most successful forex trading strategies are as well the simplest. One of these easy and very much successful strategies is trend trading, where you just observe which way the forex market is trending in and next you trade in that trend.
If you were trading the euro to dollar currency pair, the method that you could recognize the course of the trend is to start up the daily forex charts and cover an easy moving average on the chart. If the way of the moving average is high, next the pair is placed in an uptrend; if the moving average line is downward, there is a downtrend; and if the line is horizontal next there may possibly be no trend.
Trend trading is a verified method to make profits in the forex market as it is a recognized truth supported by decades of market investigation that currency pairs go in trends.
If the trend is on high next it creates logic to purchase, if the trend is downward next it creates logic to sell, and if there is no trend after that it may possibly not be a best time to trade. The most excellent method to obtain an exact sense of the on the whole trend is to glance at a long-term price chart like a daily, weekly, or monthly chart and observe which way the moving average line is pointing.
Non-bank Foreign Exchange Companies
Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account. Send Money Home offer an in-depth comparison into the services offered by all the major non-bank foreign exchange companies.
It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.
It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.
Types of financial markets
Capital markets which consist of:
Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.
Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
Commodity markets, which facilitate the trading of commodities.
Money markets, which provide short term debt financing and investment.
Derivatives markets, which provide instruments for the management of financial risk.
Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.
Insurance markets, which facilitate the redistribution of various risks.
Foreign exchange markets, which facilitate the trading of foreign exchange.
The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.
Trend Analysis
The world of investment is flooded with excellent ideas of growing your money, but you are required to make use of geometrical patterns, diagrams, statistical analysis and other similar tools to reach a definite conclusion for efficient investments. The hugest trading market called forex is also not spared from in-depth study of market trends to earn profits and avert losses. Forex trend lines serve the purpose, as these patterns help to extract most rewarding information and plan your course of action for investing in various currencies.
Usefulness of Forex Trend Lines
The forex trend lines are helpful in introducing the most vital entity required by an investor and this entity is called information. How can one expect to make worthy investment, without adjudging the highs and lows existing in the market? Here is the list of most prominent benefits of forex trend lines:
- These lines help to depict the support and resistance levels, which are of great importance in deciding the sale or purchase of various investments.
- The trend lines help the investors to decide their entry and exit points to the forex trading market.
- These patterns make you familiar about nature of forex market; the sharp turns taken by trends and unwarned movements of different investments.
- In a nutshell, these lines fuel technical analysis of this investment market, which is certainly the most appreciable tool for making an investment.
Important Types of Forex Trend Lines
The forex trend lines are available in different popular forms, as summarized below:
- Simple trend lines consist of straight lines drawn vertically, horizontally as well as diagonally.
- Fibonacci trend lines have gained popularity in recent times and are excellent tools of understanding current market trends in forex trading. There are different variations of these lines in the form of Fibonacci Arc, Fibonacci Fan and Fibonacci Retracement.
- Pivot trend lines are drawn on the basis of fluctuations in the market during previous time frames.
- Speed trend lines are similar to Fibonacci trend lines, with the only replacement of Fibonacci numbers with calculations by thirds.
Drawing and Studying Forex Trend Lines
As you grow old in terms of experience of dealing with forex trading, you are able to play with forex trend lines. But, at the very onset of your investments in the forex market, you are required to seek the guidance of forex market experts in drawing as well as interpreting information from the trend lines. For instance, you must be capable of identifying the situation in advance, if the forex market is expected to move in an opposite direction. It could be a sudden turn and you must catch the signals generated by forex trend lines for this behavior of the market. Thus, initial understanding of these trend lines can provide benefit to an investor for rest of his age of investment.
It is the simplest and most convenient in all the technical analysis to draw a trend line on the forex chart. Upward trend:
Downward trend:
Sideways trend:
The market trend is consisted of three stages:
The first is the initial stage where the market trend is shaped up.
The second one is the developing stage where the trend is strongly kept as it is.
The last one is final stage where the forex market begins to suggest the next new trend on a certain turning point.
You can find the clear trend nearing to the final stage as long as you make use of the moving average, because it is coming later than the market movement. It might be fear that you would buy at the highest or sell at the lowest if you missed capturing the market trend accurately.
Forex Trend Lines Tools
There are many online websites, dedicated to introduce automated tools for drawing forex trend lines. These tools are part of automated software systems, available in large quantity over internet. You must evaluate all these systems on the basis of various factors and finally take a decision of choosing one of these tools. Make sure that you choose a reputed resource for accessing these tools.
For becoming a good player of the game of forex trading, you must consider trend patterns as right game gears. Also, keep your knowledge updated about various methods of drawing forex trend lines and switch over to a new system, if you find it more suitable. At a later stage, you will definitely experience the building up of your knowledgebase for forex trading trends and trend lines.
Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.
Currency Risk
A form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
For example, if you are a U.S. investor and you have stocks in Canada, the return that you will realize is affected by both the change in the price of the stocks and the change in the value of the Canadian dollar against the U.S. dollar. So, if you realize a 15% return in your Canadian stocks but the Canadian dollar depreciates 15% against the U.S. dollar, this will amount to no gain at all.
Academic studies of currency risk suggest - although without absolute certainty - that investors bearing currency risk are not compensated with higher potential returns, meaning it is essentially a needless risk to bear.
For example, if you are a U.S. investor and you have stocks in Canada, the return that you will realize is affected by both the change in the price of the stocks and the change in the value of the Canadian dollar against the U.S. dollar. So, if you realize a 15% return in your Canadian stocks but the Canadian dollar depreciates 15% against the U.S. dollar, this will amount to no gain at all.
Academic studies of currency risk suggest - although without absolute certainty - that investors bearing currency risk are not compensated with higher potential returns, meaning it is essentially a needless risk to bear.
Forex - FX
The market in which currencies are traded. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world.
There is no central marketplace for currency exchange; trade is conducted over the counter. The forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
The forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market
There is no central marketplace for currency exchange; trade is conducted over the counter. The forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
The forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market
Learning Forex!!
Calculating Profit and Loss
For ease of use, most online trading platforms automatically calculate the P&L of a traders' open positions. However, it is useful to understand how this calculation is formulated:
 | ||
 | To illustrate an FX trade, consider the following two examples.Let's say that the current bid/ask for EUR/USD is 1.46160/190, meaning you can buy 1 euro for 1.46190 or sell 1 euro for 1.46160. | |
Tuesday, October 6, 2009
Currency Trading Pips and Ticks
A pip is the smallest change of price for any Foreign Currency. The currency quotes appear as numbers with either two or four decimal places. This means that if the Foreign Currency moves up or down, the smallest move is called a "pip". When you trade in Forex, you monitor how the pips rise and drop and this is what determines your investment.
An example of this is if you buy EUR/USD. This pair is quoted four decimal numbers after the point. A pip here is ten thousandth of a Dollar, or 0.0001 of a dollar, meaning 1/100 of a cent. The pip is an abbreviation of "Price Interest Point", and this is why another name used for pips is points.
Even though a pip is only a small amount of money, because your foreign currency trading is usually a leveraged investment, a few pips can mean serious cash fluctuations. Each serious trader needs to know how to calculate the change from pips the actual sums invested, and some online Foreign currency trading agents offer such calculators in their account. You should consider these and other advanced functions when selecting the broker you want to use. Pip value can vary, and is usually $1 in mini accounts or $10 in regular accounts.
An important concept that concerns pips is called The Spread. This is the pip difference between the bid price and the ask price done for the currency trading sum. When you buy Foreign Currency it costs you more than to sell it and this is the spread.
Ticks are the smallest amounts of time that exist between two currency trades. This time frame can be a short time period of a fraction of a second for major currencies, or can also be a time frame of a few hours for less popular currencies. Ticks do not happen in constant intervals, even though the charts used for technical analysis do use specific time rates such as 4 hours of 15 minutes.
Currency Trading Leverage and the Margin
Leverage is when your invested cash is used to buy or sell foreign currencies that are worth far more that the investment. Simply put, leverage gets you more currency than you pay for.
When you buy\sell a leveraged currency, the sum you invest is called the Margin. The margin is used by your broker as a deposit for the currency you buy or sell.
A Leverage investment works as the following example:
- You buy/sell foreign currencies for $100
- You receive a leverage with a ratio of 100 to 1
- Your investment is now worth $10,000
Foreign currency trading companies have various criterions for opening a margin trading account, and there are different margin accounts availablefor you. usually moving from one to two thousand dollars deposit for each trading day. Upon opening an account the trader gains overwhelming leverage – up to 0.5%! In example - in order to execute a 200,000 dollar transaction you'll need only 1000 dollars in your margin trading account, thus minimizing the personal funds invested in every transaction.
With leverage you not only win big, but lose big - It's very important to remember that a margin account can enlarge your profits as well as your losses. So while you are upscaling your currency trading profits, any losses will also become greater for leveraged foreign currency. If you get a margin call, it means you've lost 75% of your initial investment, and you need to invest more to continue having the leveraged currency.
Leverage allows more people to trade - As a result of the size of the forex market (more than 1.9 trillion dollars each day), most of the trade is being made in $10,000 lots. This could have blocked the small forex traders, who are reluctant to risk such sums, out of the forex market. Fortunately the forex market provides extensive leveraging options that are far better than you can find in any other financial market.
The initial margin requirement is the minimum investment you need to make in a foreign currency trading action. Your margin account is very much like your regular bank, where you can deposit and withdraw your capital. All of the margins accounts are closed at the end of the trading day and all gains and losses are assessed into the end balance. This is called the Rollover.
Understanding Foreign Currency Trading Quotes
Foreign currency trading quotes always show up in pairs of two currencies. This means a currency quote is made of two pairs of currencies. An example of this is the quote EUR/USD. With this example the first currency is called the Base Currency, and the second currency is called the Pricing Currency.
When trading foreign currencies, you are always buying and selling the base currency. Let's say you buy one unit of USD/JPY. This means you are buying 1 dollar and selling at the same time 118.42 JPY (the current Yen value).
The US dollar is usually the base currency, meaning the standard currency which is used when evaluating other currencies. For most major currency the first to appear, the base currency, is the USD. Examples of the currency trading quotes of the "major" currencies will then be USD/CAD (Canadian Dollar), USD/JPY (Japanese Yen) or USD/CHF (Swiss Mark).
In all the previous currency trading quotes you see that a currency is measured against the US dollar. The Euro, British pound and Australian dollar are exceptions. So the EUR, GBP and the AUD are shown before the dollar, and are considered base currencies. In this case you will see a currency trading quote such as GBP/USD or AUD/USD, meaning the base currency for them is not the USD.
The major currency trading quotes are presented like so:
- USD/CHF (Swiss Franc)
- USD/JPY (Japanese Yen)
- USD/CAD (Canadian Dollar)
- EUR/USD (Euro)
- GBP/USD (British Pound)
- AUD/USD (Australian Dollar)
- NZD/USD(New-Zealand Dollar)
Here are some examples of foreign currency trading quotes:
- In currency trading quote of USD/CHF 1.4566, you buy 1.4566 Swiss Marks with 1 Dollar.
- A quote of GBP/USD 1.784, means you buy 1.784 dollars with 1 British pound.
While you trade foreign currencies you will hear the terms rising quote orweakening quote quite a lot. A rising currency trading quote means that the base currency has appreciated, as you can buy more currency with it. A weakening quote means the exact opposite. So while the direction of the rising quote is up, the direction of the weakening quote is down.
Currency trading quotes that do not involve the dollar are referred to as cross currencies. You might also see a double quote, one marked as 'ask' and the other as 'bid'. The 'bid' quote represents the price you can sell the base currency for and the 'ask price' represents the price you can sell the base currency.
Cyborg Automated Forex Trading System
This part human - part machine currency trading strategy trades a dozen different Forex strategies with the parameters set by us each and every day! It's very hard to create an automated Forex trading system as markets constantly change so we tell it everyday at what zones to LOOK for Forex currency buys & sells and WHEN to look for counter trend trades!
A computer can not do multi time frame Forex analysis as well as a professional trader can and that's why so many Automated Forex Systems fail miserably as online Forex markets are constantly changing. They just can't adapt, but our Cyborg FX System automatically adapts each day as we read the market and make changes to it!
Forex Software Example #2: Heat Map Currency Trend Intensity Indicator
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro is compared to the Pound, Swiss Franc, Japanese Yen and Canadian Dollar. Underneath the Chandelier Stop Trend Direction tool we show how strong or weak the US Dollar is compared to all the main currencies. This tool allows you to adjust the colors to see how the strength or weakness of the US Dollar affects the Euro. For example when the US Dollar is strong the Euro / Dollar will fall. To keep things simple we simply reverse the colors so that its super simple to know which way to trade the Euro !
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro When the Euro is weaker than the Pound, Swiss, Yen and Canadian Dollar and the US Dollar is strong (We color code it red on the chart to show it will cause the Euro to fall) you have a VERY high probability of shorting and making a lot of pips!
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro The last heat map on the chart shows you Gold's impact on the currency. Gold is a leading indicator and when Gold is going up the US Dollar falls causing the Euro to go up. When Gold is falling the US Dollar gains strength and the Euro will fall!
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro> To Recap this tool show you
- Which Currencies to trade (Buy the strongest ones, short the weakest ones)
- Strength or Weakness of US Dollar and its impact on each currency you trade!
- Strength or Weakness of leading indicator Gold and its impact on each currency you trade
- Know how much profit to take - Dark Green / Red can lead to HUGE moves while light colors show mild trends
- Know when your trade will turn into a loser and get out with much smaller loss! When you are long and see some red coming into the market you should immediately exit your trade and minimize your loss. We teach taking small 3 to 10 pip maximum losses.
Sunday, September 13, 2009
US Dollar hits nine month low against Euro
LONDON (UK): The dollar fell to the lowest levels for months against the euro and the yen on Friday as upbeat economic data reduced demand for the safe-haven greenback, dealers said.
The euro rose to a near nine-month high of 1.4627 dollars in early London trading. The dollar dropped to 90.98 yen - the lowest level since mid-February.
In later London trade, the European single currency stood at 1.4591 dollars compared with 1.4583 dollars in New York late on Thursday.
Against the Japanese currency, the dollar fell to 91.04 yen from 91.74 yen on Thursday.
Gold headed back towards 1,000 dollars an ounce as the weak US unit made the metal cheaper for buyers holding rival currencies, pushing up demand, dealers said.
"The dollar continues to move lower setting a new low for the year against the euro... while the dollar has fallen more sharply against the yen," said Derek Halpenny, European head of global currency research at The Bank of Tokyo-Mitsubishi UFJ in London.
"Risk appetite has been supported by mostly positive economic data from China," he added.
Chinese economic numbers fuelled dollar weakness on Friday and investor risk appetite, underlining hopes of a global economic recovery, said Rabobank International economist Jeremy Stretch.
China said industrial activity expanded by 12.3 percent last month and retail sales jumped 15.4 percent, while urban fixed asset investment rose 33 percent in January-August due to massive government spending on construction.
Traders snapped up the currencies of countries exporting commodities to the Asian powerhouse, notably the Australian dollar.
In contrast to the upbeat Chinese data, Japan revised down its estimate of second-quarter growth to 0.6 percent, from an initial estimate of 0.9 percent.
Most analysts meanwhile expect the dollar to weaken further amid a growing sense that recovery from the worst global economic crisis in decades is taking root. With the economic outlook brightening, traders tend to shun the dollar in favor of riskier currencies that appeared more profitable, like the euro.
Elsewhere, the British pound strengthened after the Bank of England on Thursday left its monetary policy unchanged, holding its key lending rate at a record low 0.5 percent and maintaining emergency stimulus measures to prevent the economy from sliding deeper into recession.
In London on Friday, the euro was changing hands at 1.4591 dollars against 1.4583 dollars late on Thursday, at 132.89 yen (133.81), 0.8747 pounds (0.8756) and 1.5148 Swiss francs (1.5141).
The dollar stood at 91.04 yen (91.74) and 1.0380 Swiss francs (1.0381).
The pound was at 1.6687 dollars (1.6651).
On the London Bullion Market, the price of gold jumped to 998.88 dollars an ounce from 990.75 dollars an ounce late on Thursday.
Monday, September 7, 2009
WHY FOREX TRADING ?
There are some huge advantages in trading the forex markets vs. futures or stock markets. First, with the forex you get 24 hour liquidity, and as noted above, these are the most liquid markets available anywhere.
Second, with most trading platforms you get free real time quotes and charts. Also, because there is no centralized market location or exchange such as with stocks or futures, there are no exchange fees to pay.
Another very comforting advantage that forex trading has over futures and stocks is that there is no debit risk. That's because if a client were to be in an open loss position that exceeded his margin requirement, the trading platform will automatically liquidate the position.
If there was a catastrophic event, you can never lose more money that what you have in your account.
And how about this - if you choose to trade the forex markets on your own, there are no commission charges! There is just the bid and ask spread (as in any market) for the market makers, with the difference being that in the forex markets these bid/ask spreads are very small.
Something to also consider is that in trading with most broker dealers, you get more consistent pricing options. Not so in either the stock or futures markets, where the slippage can be substantial. Furthermore, please note that in the forex markets, we can sell short the market just as easily as buying. It makes absolutely no difference - they're both executed at just the click of a button. Because the margin requirements are extremely small, tremendous leverage is available. These 2 factors of leverage and easy risk control are what make the forex markets such a great opportunity. Please remember that without proper risk management, this high degree of leverage can lead to large losses as well as gains.
If you've every had any experience trading stocks or commodities, you know that these above-noted differences are very, very significant.
The above information should give you a good idea as to what the forex markets are. However to trade profitably, you need to learn how to properly analyze the markets so that you can achieve consistent success. In my opinion, the Peter Bain ForexMentor course is second to none and is definitely worth the time to explore further.
Second, with most trading platforms you get free real time quotes and charts. Also, because there is no centralized market location or exchange such as with stocks or futures, there are no exchange fees to pay.
Another very comforting advantage that forex trading has over futures and stocks is that there is no debit risk. That's because if a client were to be in an open loss position that exceeded his margin requirement, the trading platform will automatically liquidate the position.
If there was a catastrophic event, you can never lose more money that what you have in your account.
And how about this - if you choose to trade the forex markets on your own, there are no commission charges! There is just the bid and ask spread (as in any market) for the market makers, with the difference being that in the forex markets these bid/ask spreads are very small.
Something to also consider is that in trading with most broker dealers, you get more consistent pricing options. Not so in either the stock or futures markets, where the slippage can be substantial. Furthermore, please note that in the forex markets, we can sell short the market just as easily as buying. It makes absolutely no difference - they're both executed at just the click of a button. Because the margin requirements are extremely small, tremendous leverage is available. These 2 factors of leverage and easy risk control are what make the forex markets such a great opportunity. Please remember that without proper risk management, this high degree of leverage can lead to large losses as well as gains.
If you've every had any experience trading stocks or commodities, you know that these above-noted differences are very, very significant.
The above information should give you a good idea as to what the forex markets are. However to trade profitably, you need to learn how to properly analyze the markets so that you can achieve consistent success. In my opinion, the Peter Bain ForexMentor course is second to none and is definitely worth the time to explore further.
USD Drifts Lower on Mixed Data
The major currencies were mixed in the Thursday session as US equities edged up marginally into positive territory, following a sharp rebound in the Shanghai Composite – which rallied by 4.52% overnight. The dollar eased lower against the euro and pound but largely remained confined within its recent range while the yen also relinquished some of its recent strength.
The Philadelphia Fed manufacturing index improved by more than forecast in August, expanding to a reading of 4.2 and beating estimates for an improvement to -2.0 from -7.0 in July. Meanwhile, the leading economic indicators index fell short of consensus forecasts for an unchanged monthly reading at 0.7%, instead slipping to 0.6%. Weekly jobless claims were also slightly higher than the prior week, edging up to 576k from 558k previously.
The economic calendar for Friday is light, with just the release of existing home sales due out at 8:30 AM. Existing home sales are seen increasing by 2.3% to 4.99 million units in July, versus 4.89 million units a month earlier.
The Philadelphia Fed manufacturing index improved by more than forecast in August, expanding to a reading of 4.2 and beating estimates for an improvement to -2.0 from -7.0 in July. Meanwhile, the leading economic indicators index fell short of consensus forecasts for an unchanged monthly reading at 0.7%, instead slipping to 0.6%. Weekly jobless claims were also slightly higher than the prior week, edging up to 576k from 558k previously.
The economic calendar for Friday is light, with just the release of existing home sales due out at 8:30 AM. Existing home sales are seen increasing by 2.3% to 4.99 million units in July, versus 4.89 million units a month earlier.
Sunday, September 6, 2009
FOREX History
On FOREX markets buying and selling currency is made on a speculative basis by most traders. It is the same like stock market, when traders buy (stocks) currencies holding to get stronger and sell when will get weaker. Most of this trading is doing by investment companies, hedge fund, banks and brokerages. In last couple years the currency trading became open for individual investor with small financial steak. Companies use the currency market for purchasing some amount of foreign currency for there obligations and commitments with other international companies.
The short retrospective for foreign exchange market life will be:
Currency markets were relatively quite until World War 1. Speculation ever made was unknown and was with negative sentiment by institutions. After war ending foreign exchange markets became volatile and shows the first signs of speculative activity, but any further changes and progress was interrupt with great depression. The forex markets were quiet and stable during World War II, when the market started with many important changes and improvements.Popular pairs in Forex
Without a doubt the EUR/USD and GBP/USD, as currency pairs, receive a great deal of attention by online Forex traders.
Each provides tradable patterns almost every day. Why some traders prefer trading one of these pairs versus the other is almost a matter of personal preference. Both pairs will reflect global sentiment regarding the dollar. As a result, it is usually the case that they will share the same trend patterns.
If world reaction to economic news is positive for the US economy, as a general rule, both the Euro and the GBP will tend to weaken. The chart below, for example, shows how the EUR/USD and the GBP have moved on the 1 hour pattern. Notice how similar the patterns are. The hour charts below show that both pairs provided a similar reaction to the Nov 4th economic release of the non-farm payroll report.
Clearly, it is hard to develop an argument of which pair is better to trade. But there is more that the online Forex trader can do with these pairs. online Forex traders can generate totally new trading opportunities by dropping the US dollar component of the pair and, thereby, creating a Cross-pair known as the EUR/GBP Before we take a look at the EUR/GBP chart, let’s try to understand what makes this pair a good source of trades, particularly, in the coming year.
The best way to understanding this Cross-pair is to realize that it generates a picture of the battle between two different economies- the EU vs. the British economy.
The EU countries experience different levels of economic growth and expectations of growth than that of Great Britain.
As a result, there is a constant flow back and forth of capital between these regions and this flow results in frequent range like behavior and price swings as can be seen in the day chart below.
STARTING FOREX TRADING
The best and most efficient way for the traders to make money is through the internet in the Forex Trading by using the online forex trading system. The forex market is the most liquid trading market and an unpredictable market in the world. But still this forex market is the best for expert traders to amass huge profits. But it doesn’t mean that a trader should be an expert to make profits in the forex markets, it is enough if he knows the basics of forex trading and a little common sense along with the knowledge of the present economy of the countries world wide. Getting started with forex has become easy, due to the advances in technology.
1. The first and foremost aspect is that a person who wants to do forex trading should choose a good Forex Broker, the forex broker should help the forex trader to have a practice account, great customer support, good charting packages and news feeds. To analyze the forex brokers, there is a report called CFD FX REPORT which reviews forex brokers and give its rankings.
2. The second aspect is that, the forex trader must fund and deposit money in his newly acquired account. Due to modernity, these days many Forex Broker Platforms make it very easy for transactions, the trader can deposit via Credit Card, direct debit, check. It is always recommended by most advisors to start with only little amount of money and after a little experiences the forex trader can increase his leverage rates later.
3. The third step is the forex broker should help to move in the right direction that suits the trader’s trading style. There are several quality Free forex charts available to indicate the trend and also there are many sites that update the Fx Rates everyday. It is important to use them regularly.
1. The first and foremost aspect is that a person who wants to do forex trading should choose a good Forex Broker, the forex broker should help the forex trader to have a practice account, great customer support, good charting packages and news feeds. To analyze the forex brokers, there is a report called CFD FX REPORT which reviews forex brokers and give its rankings.
2. The second aspect is that, the forex trader must fund and deposit money in his newly acquired account. Due to modernity, these days many Forex Broker Platforms make it very easy for transactions, the trader can deposit via Credit Card, direct debit, check. It is always recommended by most advisors to start with only little amount of money and after a little experiences the forex trader can increase his leverage rates later.
3. The third step is the forex broker should help to move in the right direction that suits the trader’s trading style. There are several quality Free forex charts available to indicate the trend and also there are many sites that update the Fx Rates everyday. It is important to use them regularly.
U.S. DOLLAR: WILL THE G20 MEETING SPARK FIREWORKS?
The better than expected non-farm payrolls report lived up to its reputation of triggering sharp volatility in the foreign exchange market. The U.S. dollar initially sold when traders saw the sharp increase in the unemployment rate but then recovered aggressively when everyone realized that the smaller drop in payrolls made the overall report more positive than negative. When the U.S. equity market opened an hour later, dollar strength began to fade as risk appetite took over. When the dust settled, the improvement in the NFP report proved to be more risk positive than dollar positive and eventually drove the AUD/USD 
above 85 cents to a new yearly high.
above 85 cents to a new yearly high.
Saturday, September 5, 2009
Introduction to Trading Forex
Foreign Exchange
This short introduction explains the basics of trading Forex online, a brief explanation of the markets and the major benefits of trading Forexonline. There are also two scenarios describing the implications of trading in a bear as well as a bull market to better acquaint you with some of the risksand opportunities of the largest and most liquid market in the world.
As an additional aid for those who are new to Forex, there is also a glossary at the bottom of this text which explains some of the terms used in connection with currency trading.
Overview
Foreign exchange, Forex or just FX are all terms used to describe the trading of the world's many currencies. The Forex market is the largest market in the world, with trades amounting to more than USD 3 trillion every day. Most Forex trading is speculative, with only a low percentage of market activity representing governments' and companies' fundamental currency conversion needs.Unlike trading on the stock market, the Forex market is not conducted by a central exchange, but on the “interbank” market, which is thought of as an OTC (over the counter) market. Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world. The main centres for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres means that the Forex market is a 24-hour market.
Trading Forex
A currency trade is the simultaneous buying of one currency and selling of another one. The currency combination used in the trade is called a cross (for example, the euro/US dollar, or the GB pound/Japanese yen.). The most commonly traded currencies are the so-called “majors” – EURUSD, USDJPY, USDCHF and GBPUSD.
The most important Forex market is the spot market as it has the largest volume. The market is called the spot market because trades are settled immediately, or “on the spot”. In practice this means two banking days.
Subscribe to:
Posts (Atom)
