Your Guide To Successful Forex Trading
Ted Rossio
The currencies of the world are on a floating exchange rate, and they are always traded in pairs Euro/Dollar, Dollar/Yen, etc. About 85 percent of all daily transactions involve trading of the major currencies.
Four major currency pairs are usually used for investment purposes. They are: Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc. Right now I will show you how they look in the trading market: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. As a note you should know that no dividends are paid on currencies.
If you think one currency will appreciate against another, you may exchange that second currency for the first one and be able to stay in it. In case everything goes as you plan it, eventually you may be able to make the opposite deal in that you may exchange this first currency back for that other and then collect profits from it.
Transactions on the FOREX market are performed by dealers at major banks or FOREX brokerage companies. FOREX is a necessary part of the world wide market, so when you are sleeping in the comfort of your bed, the dealers in Europe are trading currencies with their Japanese counterparts.
Therefore, it is reasonable for you to believe that the FOREX market is active 24 hours a day and dealers at major institutions are working 24/7 in three different shifts. Clients may place take-profit and stop-loss orders with brokers for overnight execution.
Price movements on the FOREX market are very smooth and without the gaps that you face almost every morning on the stock market. The daily turnover on the FOREX market is somewhere around $1.2 trillion, so a new investor can enter and exit positions without any problems.
The fact is that the FOREX market never stops, even on September 11, 2001 you could still get your hands on two-side quotes on currencies. The currency market is the largest and oldest financial market in the world. It is also called the foreign exchange market, FX market for short. It is the biggest and most liquid market in the world, and it is traded mostly through the 24 hour-a-day inter-bank currency market.
When you compare them, you will see that the currency futures market is only one per cent as big. Unlike the futures and stock markets, trading currencies is not centered on an exchange. Trading moves from major banking centers of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S. it is truly a full circle trading game.
In the past, the forex inter-bank market was not available to small speculators because of the large minimum transaction sizes and strict financial requirements.
Banks, major currency dealers and sometimes even very large speculator were the principal dealers. Only they were able to take advantage of the currency market's fantastic liquidity and strong trending nature of many of the world's primary currency exchange rates.
Today, foreign exchange market brokers are able to break down the larger sized inter-bank units, and offer small traders like you and me the opportunity to buy or sell any number of these smaller units. These brokers give any size trader, including individual speculators or smaller companies, the option to trade at the same rates and price movements as the big players who once dominated the market.
About the Author
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The latest information and news on Forex Trading:
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Yahoo! News Search Results for forex
Forex Strategy Outlook: US Dollar Rallies Look Promising (Daily FX via Yahoo!...
A strong US Dollar reversal has led our forex trading strategies to go heavily long the resurgent currency, and our bullish dollar bias calls for further gains in said trend-following systems.
Forex Trade Desk Thoughts (TheStreet.com)
Forex values seem less likely to be set on forward growth and interest rate numbers, and far more likely to feed off the risk tolerance/aversion shown each day in equity markets.
Short-Term Forex Technical Outlook: EUR/GBP (Daily FX via Yahoo! Finance)
The British pound continued to weaken against the euro as investors scaled backed expectations for a rate hike by the Bank of England, and the decline in the interest rate outlook may keep the EUR/GBP range-bound over the near-term as market participants weigh the outlook for future policy.
FOREX-Yen retreats as stocks offer risk trades respite (Reuters via Yahoo! Ph...
* Cross/yen rises led by investor short-covering
Short-Term Forex Technical Outlook: GBP/JPY (Daily FX via Yahoo! Finance)
The British pound weaken against the Japanese yen to retrace the advance from the end of July, and the GBP/JPY may continue to hold a broad range throughout the month as investors weigh the outlook for a global recovery.
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Yahoo! News Search Results for currencies
CURRENCIES: Dollar, Yen Rise As Stocks, Commodities Tumble (Nasdaq)
Both the U.S. dollar and the Japanese yen rose on Monday, as currency traders sought the safe-haven of low-yielding currencies after a slide in Chinese shares and a weaker-than-expected rebound in Japan's economy.
Currencies: Dollar, yen rise as stocks, commodities tumble (Market Watch)
Both the U.S. dollar and the Japanese yen rise as currency traders seek the safe-haven of low-yielding currencies after a slide in Chinese shares and a weaker-than-expected rebound in Japan's economy.
CURRENCIES: Dollar And Yen Rise As Equities, Commodities Drop (Nasdaq)
A weaker-than-expected rebound by the Japanese economy and a steep fall by Chinese shares translated into gains for the yen and the U.S. dollar, with both currencies enjoying safe-haven appeal as equity markets added to recent losses, strategists said.
CURRENCIES: Dollar And Yen Rise As Asian Stocks Plunge (Nasdaq)
The dollar and yen got a lift against major rivals in Asian trading Monday, as a regional sell-off led by Chinese shares sent investors into the perceived safety of lower-yielding currencies.
Asian Currencies: Ringgit Climbs on GDP Outlook, Peso Advances (Bloomberg)
Aug. 18 (Bloomberg) -- Malaysia?s ringgit led gains in Asia on speculation exporters sold the greenback after the local currency?s biggest slide in four months.