Forex Exchange Blog

Dave Markel asked:


reign Exchange market, also referred to as the “FOREX” or “FX” market is the largest financial market in the world, with a daily average turnover of US$1.9 trillion - thirty times larger than the combined volume of all the United States equity markets. The FOREX website defines Foreign exchange as “the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY)”.

The FOREX market was launched in the 1970s, when free exchange rates were introduced. Only the participants of the market determine the price currencies against one another. This depends on proceedings from supply and demand. Influence by a single participant in the market is practically out of the question. This is because FOREX is more of an objective market. If some of its participants would like to change prices for some manipulative purpose, they would have to operate with tens of billions dollars.

FOREX is part of the bank-to-bank currency market known as the 24-hour Interbank market. The Interbank market literally follows the sun around the world, moving from major banking centers of the United States to Australia, New Zealand to the Far East, to Europe then back to the United States.

Speculations on the FOREX exchange market give the biggest profit of all legal types of transactions. Everyday fluctuations of currencies allow FOREX traders an opportunity to make money on these changes. It is the world’s biggest liquid financial market. Transactions are conducted all over the world via telecommunications 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. In every time zone across the world there are dealers who will quote currencies. The major currencies traded in FOREX, are Euro (EUR), Japanese Yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD).

There are many advantages to trading in the FOREX market. These include: • The biggest number of participants and the largest volumes of transactions • Superior liquidity and speed of the market: transactions are conducted within a few seconds according to online quotes • The market works twenty four hours a day, five working days a week • A trader can open or close an account for any amount of time he wants • No restrictions as accounts with very low account balances. • There are no fees. The only payment is the difference between buying and selling prices. • Opportunities exist to achieve a larger profit from an investment • It is possible to turn FOREX trading into a professional and qualified activity. • It is possible to make deals any time at the convenience of ones home • It is not obligatory to buy some currency first in order to sell it later. • It is possible to open positions for buying and selling any currency without actually having it, usually involving established Internet brokers. • The superior liquidity allows the traders to open and/or close positions within a few seconds. • The time of keeping a position is arbitrary and has no limits - from several seconds to many years • FOREX speculative interests can be satisfied without a real money supply, which in turn decreases overhead costs for money transfers. • It gives an opportunity to open positions with a small account in US dollars, buying and selling a lot of other currencies. • Most transactions must continue, since currency exchange is a required mechanism needed to facilitate world commerce.

BUSHORN

Й†ćĶ asked:


the forex exchange and the stock markets , or is it only tales that we hear about people making money out of this ?! i am not actualy after making a fortune, i just want to make a living out of it, is that possible? please advise.

KIRCHHOFF

Groshan Fabiola asked:


The term FOREX is an acronym for Foreign Exchange, and denotes the international exchange market for buying and selling currencies. The history of the FOREX trading system goes back to the 1970s, when free exchange rates and floating currencies were introduced, meaning that the price of one currency against the others is strictly determined by supply and demand.

The FOREX market has the largest liquidity a market could have, and it is impossible to manipulate, due to its lack of external controls. Both marginal traders and long-term traders can be found in this market, making it an interesting environment for a wide range of investors.

In the FOREX trading system, transactions take place all over the world by means of telecommunications, meaning there is no central FOREX exchange to handle all trading. Trading starts on Monday at 00:00 GMT and ends on Friday at 10:00 pm GMT. FOREX traders operate literally all over the world, buying and selling major currencies.

Margin trading is very common in the FOREX trading system, meaning that investors obtain a credit line and speculate on currency prices. By doing so they increase their potential for huge gains, although the same potential exists for losses. Marginal trading specifically refers to trading with borrowed capital. The fact that big positions in the market can be established without large amounts of actual money makes this market very appealing, as well as easy to enter into.

FOREX trading can seem particularly difficult for beginners, especially in their first months on the job. It is a stressful job, because the perspective of losing huge amounts of money that you do not possess can be overwhelming. Then there’s the actual time spent in front of the screen watching dozens of price fluctuations, in order to decide what your next move is going to be.

There are certain aspects that are specific to the FOREX trading system, and that must be familiar to all traders involved in these operations. This market is somewhat different from the other equity markets. For one, when it comes to buying and selling currency, it is important to note that all trades represent the purchase of a certain currency and the sale of another, simultaneously, because currencies are priced in pairs. This means that a successful operation is when the currency that was bought increased in value by comparison to the one that was sold.

Another feature of the FOREX trading system is the way in which the currencies are quoted, which every FOREX trader must be familiar with as well. Out of the two currencies in a pair, the first one is considered the base currency, while the second is referred to as the counter-currency or quote currency.

All these, and a lot more, are thoroughly presented and explained in a FOREX course. It is very important for traders on this market to start out with the advantage of having learned from the success of other traders. The authors of any FOREX course should be traders with considerable experience in this market. The most important skill that a FOREX course can teach a newcomer to this job is how to avoid beginner mistakes, which can be extremely costly.

For more resources about a Forex trading system, or even about a Forex course, or for more forex related subjects visit this link http://www.RapidForex.org



ANDRES

Timothy Stevens asked:


In the late 90’s, many financial company dominated the Forex Exchange Market. In the past several years the Forex Exchange Market has show a dramatic development. Nowadays private company are offering access to the Forex Market via internet data feed trading platform.

Private investors are going into Forex Market, with access to the same market data and tools used by bank, hedge funds company and professional traders.

Below here is 9 reason on why you must trade Forex.

1. Round the clock trading

The forex market is unique in that it is open 24 hours nearly 7 days a week. The market opens when the New Zealand and Australia markets open and closes when the US market closes. Due to the difference in time zone, it would seem that the forex markets are opened always.

2. No need to choose from too many counters

Unlike equities, in forex you would only need to understand the minimum of 1 pair of currencies and concentrate on it. Whereas for stocks and shares, before you can start understanding the equity you would have to sieve through thousands of companies before you can start to concentrate on trading them.

3. Liquidity

As the forex market is the biggest around, it is very liquid. Average daily turnover rose to $3.2 trillion in April 2007. Given its size, buyers and sellers can easily get their orders matched swiftly and easily. Whereas in the equity markets, one would have to wait for their orders to be matched especially if it concerns a stock that is not very well traded.

4. Good Leverage

In forex, you are able to obtain leverage up to 200:1 or even more depending on the broker. This means a minimum deposit of USD 500 can allow a trader to open a position size of 100,000 to trade. No other markets give you this advantage. However, do note that leverage can be a double-edged sword too.

Stay tune to the Forex Options Trading - 9 Reasons on Why You Must Trade Forex (Part 2 of 2)



BLITCH

Steve Welker asked:


Though many people will try to convince you otherwise FOREX is not risk free. The majority of the people trying to convince you that it is risk free have some FOREX product that they want you to buy. When you trade you are dealing with substantial amounts of money and there is always the possibility that a trade will go against you. You can minimize your risk, there are many trading tools available that will help you trade successfully and profitably while minimizing your losses.

A few years ago the FOREX market abounded with scams, currently the industry has cleaned up significantly but there is still a risk of being scammed. You will need to use some common sense and exercise some caution when you sign up with a broker. Take your time and be sure to investigate a broker before you sign up with them. A reputable broker will be associated with some sort of large financial institution such as an insurance company or a bank. They will also be registered with the proper government agencies. Here in the US they will be with the Commodities Futures Trading Commission or they may be a member of the National Futures Association.

Even once you find a reputable dealer to work with there are still some risks involved in the FOREX exchange. All trades are susceptible to sudden rate changes, radical political events and market changes.

Exchange Rate Risks: This is the fluctuation of currency prices during the time of the trade. Prices can fall suddenly which can lead to unexpected losses, stop loss orders can be used to help mitigate this risk. Stop loss orders are used to close a trade if the currency passes below a set price level. By using stop loss orders in conjunction with limit orders you can greatly automate the process of FOREX trading. Limit orders are used to open a trade when it falls to a certain price or close it when it rises to a specified price or profit level.

Interest Rate Risk: This can result from differences in the interest rates in the two countries involved in the currency trade. This can cause differences in the expected profit or loss level of a trade.

Credit Risk: This is possibility that one of the parties will not honor their debt when the trade is closed. This is usually only an issue when a financial institution declares bankruptcy. You can greatly reduce this risk by only dealing with regulated exchanges that monitor the credit worthiness of the members.

Country Risk: This refers to when the government in a country becomes involved in the currency exchange by limiting the availability of the currency in the market. This is a greater risk when involved with the more exotic currency than if you stick to the major currencies that allow their currency to be freely traded.

This outlines some of the most common risks in currency trading. All of these risks can be reduced to manageable levels even though they cannot be completely eliminated.



SEELIGER

Steve Welker asked:


Once you have decided that you have the proper mindset and are ready to start investing on the FOREX exchange you are ready for the next step. That step is to select the type of FOREX account you want to open. You should make this decision before you pick a broker to work with. Some brokerage companies specialize in one type of account or another. The type of account you choose could affect your broker choice.

You will find that most brokers offer several types of accounts. The primary differences between the account types will be margin requirements, minimum deposit and lot sizes. You will need to consider your trading strategy and financial resources to select the right account. The three most common accounts are mini accounts, standard accounts and managed accounts.

The most popular account with new investors is the mini account. One of the factors that make the mini account so popular with beginners is that it has the lowest minimum deposit requirements. The minimum deposit requirements for a mini account are dependent on the broker, some will allow you to open an account with only a $100 deposit. Most mini accounts will deal with lot sizes as small as 10 thousand currency units. Mini accounts may provide as much as a 200 to 1 margin rate and only require $50 per lot to trade. This means that with $50 you will be able to control $10,000 worth of currency.

Most mini accounts have a built in safeguard because they are aimed at beginning investors. This is usually referred to as “Guaranteed Limited Risk”; this guarantees that you will never lose more than your initial investment in a trade. In the case where the currency drops and the broker would need to make a margin call to keep your position open they automatically close the trade. This will cause you to lose the money you invested into this trade but you will not end up owing the broker money. The downside to this is that if the currency rebounds you will no longer have a position that you could profit from.

A standard account is another common account that has higher deposit requirements than a mini account. The usual investment to open a standard account with most brokers is $2,000. These accounts usually trade in lots of 100,000 units. With a standard account you will still usually have a margin ration of 200 to 1. To purchase a normal lot of 100,000 thousand units then will require a deposit of $500 from you. It is still pretty common with a standard account to have the “Guaranteed Limited Risk” safeguard included.

Some brokers will also offer what is called a “Managed Account”. With a managed account you will not be actively trading. A professional trader will be assigned to your account and will use your money to make trades. This requires a much lower investment of time and knowledge from you. Managed accounts usually have a higher minimum requirement amount, often of $10,000 or more.

You will want to consider your knowledge, financial situation and risk tolerance when deciding which account type will work best for you.



POGUE

Justin Stewart asked:


Well, you already know that the word “currency” refers to the monetary unit used in countries to buy goods and services (or pay taxes like in the USA). And we are also aware of the fact that “trading” refers to the purchasing and selling of these currencies. To say that there are nearly as many currencies in the world as there are countries is a fairly safe assumption. But when it comes to discussing currency futures versus the Forex market, the most targeted currencies for investment purposes are:

* United States dollar

* British Pound (sterling)

* The Euro

* Japanese Yen

Since the currency markets have become extremely popular with investors, and since they are predominantly a day-trade oriented market, they exhibit an extremely high volume of trading (contracts) and equally high amount of liquidity. The factors of high volume and liquidity entice the participation of all types of traders such as:

* Banks

* Financial and non-financial companies

* Governments

* Individual day traders

There are a number of ways in which to trade currencies but even non-traders are familiar with the most obvious one, namely trading your currency for that of the country that you are vacationing in. Usually, travelers will use a currency broker, in this case one of the country’s banks, to exchange their currency. When the transaction is done, it is considered to be part of the currency exchange market. Where the serious investor or professional trader is concerned, this form of currency exchange is not acceptable.

Forex (FOReign EXchange)

The Forex Exchange is one of the most popular and highly trafficked venues of trading the actual exchange rates of two currencies in the industry, and the Euro to United States dollar gets a lot of attention in the Forex market. The exchange is usually listed as EUR/USD, which means trading the value of one Euro in US dollars. The five other most popular currency trades are:

* AUD/USD - The Australian Dollar to US Dollar

* CAD/USD - The Canadian Dollar to US Dollar

* EUR/CHF - The Euro to Swiss Franc

* EUR/GBP - The Euro to British Pound

* GBP/USD - The British Pound (Sterling) to US Dollar

In the Forex market, currencies are traded directly rather than in contracts. “Lot” is the terminology that is used to describe the minimum amount that can be traded, which is characteristically $25,000 USD.

Currency Futures

The currency futures market is based on the currency exchange market. Trades use futures contracts that are a reflection of the exchange rates of two different currencies. The Euro futures market is currently the most popular market of the bunch and is based upon the EUR/USD exchange rate. The Chicago Mercantile Exchange, or CME, provides the most popular currency futures.

An exchange provides the currency futures since it is a futures market, meaning that it employs centralized pricing, as well as clearing, and therefore ensures that market prices remain constant regardless of which brokerage is being used. Contract specifications include the value of the contract, the “tick size” (minimum price change), and the “tick value” (price change value).



ERBE

trinidadhall asked:


Need more information about their products

PAYETTE

Abhishek Agarwal asked:


If you are about to start doing it yourself and get into foreign exchange, make sure you have the right system to succeed.

Making money is fairly easy if you get the timing right. The right currency trading system helps you get the right timing. By definition, a trading system is well known for its use to invest money so you can make more money. The Forex exchange to be precise is all about investing money for a different currency, to make money and profits.

Forex is dependent only on the success of the stock markets.Using a Forex trading system can give you many advantages

1) in which you could invest in your own currency rates,

2) your money can be changed to another currency, and

3) can invest with a foreign company right from your own country.

So that you know, a currency Forex system was initiated by world-renowned investors, multinational corporations, and worldwide currencies.

Currency exchange Forex online system may have the same results as in a currency offline Forex trading system. However in a trading system online, access is definitely faster and you can see trade changes faster than offline systems. Also, in an online system, you could invest, trade, move investments and withdraw money faster. In addition, systems currency swap Forex can build wealth to potential investors willing to learn about their investments and whom to trust as their brokers to have other decisions.

However, making up your mind on the kind of Forex system to trust can be a decisive factor for your company. Typically in the treatment of any type of investment, whatever you want to meet other traders have met at another time. Thus, when the currency Forex trading system agent cant be contacted in person, by telephone, e-mail or fax, it is possible that you are working with a false company. A society that currently uses Forex trading systems currencies and offers many opportunities for global investments should contact you at different times ofthe trade.

Also, having to invest and work with a currency system Forex company that puts your money first and listens to whatever you need is a good thing. However, if they call you with suggestions opposing your decisions at regular intervals, it can get irritating. So it is advised to avoid doing business with such a currency system Forex business. Always remember that to cope with any type of investment, you should understand that you need time to learn the ropes before you get in.

Sometimes, a currency trading system Forex agency will call and ask you for money, because it could help you get involved in the scene, and here you have to be careful. Any good agent will give you time to make decisions without pressure. So look for one you are comfortable with investing.

Lastly, when you are sure you have a good agent, you will be able to work relaxed and feel your money is secure.



RASO

Frosty Z asked:


If i forcast a drop in Euro dollars in the near future ie. within 5 years, what stocks should i buy in the stock market instead of going to the forex exchange market

DAUGHDRILL