Mar 1 2010
FOREX general overview
FOREX (Foreign Exchange Market) is a sum of international currencies sales and purchases operations and loans provided by certain conditions (amount, exchange rate, period) to certain date. The main FOREX participants are: commercial banks, currency exchanges, central banks, international trade companies, investment funds, broker’s companies and private investors.
US dollar - USD, Euro - EUR, Japanese yen - JPY, Swiss franc - CHF and English pound - GPB are the main FOREX currencies that are being traded the most. In April 1998 the daily FOREX cash flow amounted to $1.982 trillion. The London exchange had about 32% of cash flow, US exchange – about 18% and German exchange – 10%. USD operations are 70% of all FOREX operations and electronic brokers have 11% of FOREX cash flow.
The daily operations of biggest banks (Deutsche Bank, Barclays Bank, Union Bank of Switzerland, CityBank, Chase Manhattan Bank and Standard Chartered Bank) amount to $1 billion. The spot operations or conversion operations are purchases and sales that are being executed on the second working day from order placement. In 1998 about 40% of all FOREX activities were the Spot-market operations.
The typical amount of deals for interbank trading equals to $10 million. Though, marginal trade systems makes FOREX available for private investors as the brokers provide them with credit levers 40-100 times more than their actual deposits. The clients only suffer the loss risks and deposits are the brokers’ securing provisions.
FOREX participants
FOREX participants are the big commercial banks that perform their operations by orders of international traders, investment institutions, security and retirement funds and private investors. These banks also perform operations at their own capitals to get profited. Some banks have millions of dollars daily operations and some of them have the main profit from only speculative currencies operations. Also the broker’s houses that act as agents of banks, foundations, dealing centers, etc. are the active FOREX players. Commercial banks and brokers houses not only buy or sell currencies at the provided prices but also set their own prices. This way they influence exchange rates and are called the market makers.
In contrast to active participants the passive participants are not able to set their own prices and just buy or sell currencies at the given prices. The passive participants usually pay for international trade contracts, invest in foreign production, open branches overseas or create joint-stock companies, speculate on the market, hedge currencies risks, etc.
The central banks usually enter FOREX not to profit but to verify or make corrections to their national currencies rates. Sometimes these banks perform interventions masked through the commercial banks not to suffer losses.
If active participants operate millions of dollars than passive participants use margin trade to operate at the market and profit with even small amounts of own money.
The list of FOREX participants indicates it is used by serious business for serious reasons as rapid changes of exchange rates affect the whole business society. So, learning the FOREX operations is a component of successful business.
The selection of a
foreign currency trading service is not an easy task. And one shouldn't dash to make a decision on such a service.
It is very important that you follow a final piece of advice - today the online technologies give you a truly unique chance to choose what you want at the best terms which are available on the market. Funny, but most of the people don't use this chance. In real practice it means that you should use all the tools of today to get any
foreign currency trading information that you need.
Search Google or other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and join the discussion. All this will help you to create a true vision of this market. Thus, giving you a real opportunity to make a smart and nicely balanced decision.
P.S. And also sign up to the RSS feed on this blog, because we will everything possible to keep updating this blog with new publications about the topic of
foreign currency trading for dummies and important trends on the currency exchange market.
Mar 1 2010
FOREX and its possibilities
Foreign Exchange Market (FOREX) is the system of regional currency markets interacting by modern informational technologies means. FOREX is basically a sum of operations on foreign currencies sales and purchases. The currency market comprises 2 parts: broker’s board market and not broker’s board market (interbank market) that has the major part of FOREX operations.
FOREX is the youngest and most growing financial market in the world. It was originated in 1973 when the currencies fixed rates were switched to floating ones being formed by supply and demand. Now FOREX is the biggest exchange market with over $1 trillion cash flow daily. It is possible because FOREX now is not only serving an international trading but also international currency flows and is a spot for currency speculations. The marker share of operations increased several times in past 10 years for following reasons. First, the trading operations are performed 24 hours a day following the sun movement from South-East Asia to Europe then to America. Second, the market itself is highly liquid for there is always supply and demand. Finally, the mean exchange rates ripples of basic currencies are 1-2% a day allowing successful players to earn a lot. FOREX today attracts more and more potential investors leaving the stock market behind.
The main participants of FOREX besides big banks that practically form the exchange rates are the financial and broker’s companies, investments, retirement and other funds. These actually “rule” the market. Besides, in past years the central banks started to play one of the leading roles as they are responsible for national currencies exchange rates regulation, trade and payments balances support and so on. Finally, the market is also operated by small and midlevel investors that just earn on exchange rates. Their participation was made possible thanks to dealing companies for in many countries such investors enter the market operating amounts over $10 000. See, the dealing company provides its client with credit line (“dealing lever”) that is times more than deposit. For instance, your deposit is $25 000 but the dealer gives you 40 times more so you are able to operate $1 million now. In other words own capitals of such investors are just 2-5% of their operations amounts. This trading got the name of “marginal trading”.
Marginal trading is available for the masses. No one would argue that US National Reserve security loans are the most trustworthy and stable but having such a big price they provide low earning yields (6% annually) and are the long-term investments. The shares have higher earning yields but amount of dividends is determined by shareholders solely. Purchasing shares to raise their rates is more interesting but still demands large investments. The marginal trade is never limited by that. You may sell and buy up to your expectations and to do these operations you have to have just 2-5% of operations amounts.
See, FOREX investors have lots of opportunities to increase the invested capital. But remember the bigger profits involve the bigger risks. So, later we will speak of practical aspects of profiting from your investments.
The choice of a
foreign currency trading service is not an easy task. And one shouldn't hurry up to make a decision on such a service.
It is very important that you follow some general tips - today the web technologies give you a truly unique chance to choose exactly what you want at the best terms which are available on the market. Strange, but most of the people don't use this opportunity. In real life it means that you should use all the tools of today to get any
foreign currency trading info that you need.
Search Google or other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and join the discussion. All this will help you to create a true vision of this market. Thus, giving you a real opportunity to make a smart and nicely balanced decision.
P.S. And also sign up to the RSS on this blog, because we will everything possible to keep this blog tuned up to the day with new publications about the topic of
learn foreign currency trading and important trends on the currency exchange market.
Mar 1 2010
If you are disorientated in a large amount of complexities of Forex trading, ask for information you need. There are many nuances. Here we’ll give you one of classifications of orders.
This classification is usually used in the cases, when the trader trades through the dealer of dealing company, instead of gaining access to the contractor directly. These are modifications of orders, created to preclude the possibility of wrong interpretation of trader’s request and to facilitate his work.
1. GTC
GTC orders (Good Till Canceled) are orders to buy or sell at given price and at a certain value, which can be worse and better than the market price.
It can be used both for opening a new, and for closing an old position.
2. Take-Profit
Take-profit orders (or Limit-profit) are the orders to buy or sell currency at the price, which is always better than the market price, linked to the concrete open or opening position.
Generally, these orders are used for fixing a profit from favorable change of price.
It happens, that Take-profit order is given not for closing the open position with the profit, but with the purpose of minimization of losses.
3. Stop-Loss
Stop-Loss orders are the orders to buy or sell currency always at a worse price than the market price, linked to the concrete opened or opening position. Usually, these orders are used for limiting losses from unfavorable change of the price.
It happens that Stop-Loss is given not for limitation of losses, but also for non-admission of profit crunch.
Different brokers can execute stop orders differently.
The first variant: the order is executed precisely at the set rate, when it is reached in the market. The second variant: the order is executed at the quotation following the set in the order, this quotation can differ from the ordered by some points. This phenomenon is named Slippage.
Of course, the first variant is more favorable for a trader.
If the stop order is left for the weekend and there were serious events affecting rates of exchange, rates of market’s opening can strongly differ from the rates of closing, and stop order can be executed with big slippage.
It is necessary to remember that buy orders are executed, when offer, not bid, reaches the moment noted in the order.
You should also understand that the order has no direct link with an open position. For example, if the order was placed for closing a position, but then the position was closed manually, before execution of the order, it remains valid and if it is activated, new position will be opened. That’s why it is necessary to give due weight to placing the orders, to controlling its execution and to canceling the unnecessary orders in time.
The selection of a
foreign currency trading service is not an easy task. And one shouldn't dash to make a decision on such a service.
It is very important that you follow a final piece of advice - today the Internet technologies give you a truly unique chance to choose what you want for the best price on the market. Strange, but most of the people don't use this chance. In real life it means that you should use all the tools of today to get any
foreign currency trading information that you need.
Search Google or other search engines. Visit social networks and check the accounts that are relevant to your topic. Go to the niche forums and join the discussion. All this will help you to create a true vision of this market. Thus, giving you a real opportunity to make a smart and nicely balanced decision.
And also sign up to the RSS on this blog, because we will everything possible to keep this blog tuned up to the day with new publications about the topic of
how to trade foreign currency and important trends on the currency exchange market.
Mar 1 2010
A beginner always has a lot of questions, especially if he is an inexperienced trader. We’ll give you an answer to the question, what is the order. Forex order is a currency’s buy or selling instruction given to the dealer.
There are two types of orders (types of transactions):
1. Market orders.
They are the orders to buy or sell one currency for another at present market price. Dealer gives you an asking price, you agree or reject it. One type of orders have acquired popularity on the market recently, this is the so-called Quote order (Quote is a query about double quotation). "Quote" is an inquiry of trader to dealer simultaneously about both prices for buying and for selling (Ask and Bid), when a trader gets an answer, he can choose the operation (buying or selling) and close a transaction.
2. Suspended market orders.
Suspended market order is an instruction to sell or buy currency at stated price and only the stated volume. On Forex, as well as on other markets there are two types of suspended market orders – orders below the market and above the market.
2.1 Orders “below the market” or Stop-orders.
The order “below the market” means that you wish to buy more expensively, than a current level of prices in the market or to sell more cheaply, than a current price level in the market. The term "below the market" says that you give to the dealer the order to do an operation at the price, which will be worse for you, in comparison with the current price level in the market.
In a funny sort of way instead of buying cheaper, you buy more expensively, but many trading strategies use such orders. For example, it is considered that this accelerates movement.
There are two types of Stop-orders:
2.1.1 The first is a buy stop order. This is the order for buying above a current level of price in the market (sometimes say "above the market").
2.1.2 The second is a sell-stop order. This is an order for selling below a current level of price in the market.
2.2. The second type is Limit-order.
Limit-order is the order to buy more cheaply, than the current level of prices in the market is or to sell more expensively. You give to a dealer the order to buy or to sell at the most favourable price, in comparison with the current level of prices, which can be, as you predict, in the future.
So, there are also two types of Limit orders.
2.2.1. The sell limit-order is an order on selling at the price above the current level of prices in the market (selling more expensively, than now).
2.2.2. The buy limit-order is an order on buying at the price below the current level of prices in the market (buying cheaper, than now).
The choice of a
foreign currency trading service is not an easy task. And one shouldn't dash to make a decision on such a service.
It is very important that you follow a final piece of advice - today the web technologies give you a truly unique chance to choose exactly what you require at the best terms which are available on the market. Strange, but most of the people don't use this opportunity. In real practice it means that you must use all the tools of today to get any
foreign currency trading information that you need.
Search Google or other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and join the discussion. All this will help you to build up a true vision of this market. Thus, giving you a real opportunity to make a wise and nicely balanced decision.
And also sign up to the RSS feed on this blog, because we will do the best to keep updating this blog with new publications about the topic of
foreign currency trading companies and important trends on the currency exchange market.
Mar 1 2010
International currency market Forex seems to many people a phenomenon, which is absolutely incomprehensible and inaccessible for the person in the street. So, what is Forex and do you put your savings at so risky type of earning or not?
Forex is a large international stock exchange of currency. Mechanism of stock exchange consists in buying and selling of currency of different countries at the market rate. Don’t take the term "market" literally. Special feature of currency market Forex is the fact, that it is not the market sensu stricto. Forex does not have concrete place of trade, as, for example, a contract market has. Trade at currency stock exchange Forex is going on by means of computer terminals and phones simultaneously in many banks of the world. 24 hours a day biddings are open in Forex. It is necessary to remember about risk connected with this kind of earnings. Today you can win a great sum, and tomorrow you can lose everything. Normal functioning and development of the currency market Forex is impossible without risk. For earning something at a currency stock exchange it is necessary to spend a lot of money, time and nerves. Don’t forget that there is no easy money, believe in success, but don’t believe advertising showing great promise of becoming a millionaire for some days. Statistics shows that only 5 % of participants of the market get success, and other 95 %, unfortunately, fall between two stools. Successful traders, who earn much in the currency market, follow chosen strategy, designing of which can take years of persistent work.
We are fed up with advertising of the share market Forex, because it is everywhere. It is on television screens, in the posters with its promises of incalculable treasures. Certainly, Forex is an extremely interesting and perspective type of business, but how much money can an average person get? True sums of incomes are always hushed up, and it evokes suspicions and lack of self-confidence. So how much money can you get?
Firstly, just put out of your head the thought that one hundred rocks, which you deposited, will give you a possibility to keep the home fires burning and especially to buy private residences, cars and yachts. This can be only in advertising. Of course, you can receive the income in 200 – 300 % in a month. But it is impossible to always trade like this. Even if a trader has a good strategy of trading on Forex, he doesn’t always run a surplus. Losses are unavoidable. Even the best business tycoons take losses.
It is extremely difficult to divine profitability in Forex. Everything depends on skills of currency speculator and amount of finance which he has. Normal income is 10-30 % per annum from the permanent deposit.
The choice of a
foreign currency trading service is not an easy task. And one shouldn't dash to make a decision on such a service.
It is very important that you follow a final piece of advice - today the Internet technologies give you a truly unique chance to choose exactly what you need at the best terms which are available on the market. Funny, but most of the people don't use this chance. In real life it means that you should use all the tools of today to get any
foreign currency trading info that you need.
Search Google and other search engines. Visit social networks and check the accounts that are relevant to your topic. Go to the niche forums and participate in the online discussion. All this will help you to create a true vision of this market. Thus, giving you a real chance to make a wise and nicely balanced decision.
And also sign up to the RSS on this blog, because we will do the best to keep this blog tuned up to the day with new publications about the topic of
foreign currency trading companies and important trends on the currency exchange market.
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