EUR USD JPY

Foreign currency exchange trading can be very rewarding, but can also be very intimidating to a beginner.  To get started, you will need to know some basics:

1. What is foreign currency exchange?
2. How is it traded?
3. What are the benefits?
4. What are the risks?
5. How can I get started?

What is Foreign Currency Exchange?

The Foreign currency exchange (FOREX) market is a cash (or “spot”) market for currency.  Unlike the stock exchange, the FOREX market is not located on a trading floor or centralized on an exchange.  Instead, it is entirely electronic within a network of banks and runs 24 hours per day Sunday evening (5:00 pm EST) through Friday evening (4:00 pm EST), excluding some holidays.  The fact that it is all electronic means that you can tap into it from your computer.

How is it traded?

FOREX is traded in currency pairs, for example EUR/USD is the Euro base currency and the US dollar counter (or quote) currency.  There are six major pairs: EUR/USD, GBP/USD (Great Britian pound vs. US dollar), USD/JPY (US dollar vs. Japanese yen), USD/CAD (US dollar vs. Canadian dollar), AUD/USD (Australian dollar vs. US dollar), and USD/CHF (US dollar vs. Swiss Franc).

Currencies are traded in dollar amounts called lots.  For a “standard” account, one lot (called a standard lot) is $1,000 and controls $100,000 in currency.  For example, when you place an order to buy one lot of EUR/USD, you are buying the EUR and simultaneously selling the USD.  The margin you must put up to place the order is $1000 (for a standard lot).  You are going long the EUR and expecting it to strengthen against the USD.  For every increase of $0.0001 in the EUR, you make one “pip” (price interest point) equivalent to $10 per lot traded.

Similarly, for a “mini-account” when you place an order to sell one mini-lot (one-tenth of a standard lot) of EUR/USD, you are selling the EUR and simultaneously buying the USD.  You are going short the EUR and expecting it to weaken against the USD.  The margin requirement is $100.00 per mini-lot.  For every decrease in the EUR of $0.0001 you make one pip equivalent to $1 per mini-lot traded.

Note that unlike trading stocks, there are absolutely no restrictions on short-selling in FOREX.  Short-selling is exactly like buying – except that you’re selling of course.

The pip value and amount per pip per lot differs when the USD is not the counter or quote currency.  For example, when buying the USD/JPY pair with a ask price of 109.00 (meaning 1 USD equals 109.00 yen), a change in the Japanese yen of 0.01 yen is equivalent to 1 pip or $9.17 per pip per lot traded ($9.17 = $100,000 x 0.01 / 109.00).

The broker makes money off the spread which is the difference in the quotation ask and bid prices.  You buy the base currency at the ask price and sell it at the bid price.  Generally, the major currency pairs have relatively low spreads.  The EUR/USD is commonly two to three pips and the GPD/USD is commonly four to five pips.  For example, the current bid/ask price for EUR/USD is quoted at 1.2322/1.2324.  This means that you can buy 1 EUR (the base currency) for $1.2324 USD (the counter-currency).  You buy at the ask price.  You can sell 1 EUR for $1.2322 USD (you sell at the bid price). You will pay the broker the spread or $1.2324 – $1.2322 = $0.0002 = 2 pips. For a standard lot, the broker fee (in this example) is $10 x 2 pips = $20 per standard lot for a roundtrip trade (1 buy and matching sell or 1 sell and matching buy).  For a mini-lot, the fee would be $1 x 2 pips = $2 per mini-lot for a roundtrip trade. The broker fee is automatically deducted from your account.

Obviously, if you buy (go long) a currency pair, you expect the base currency to increase in price.  Your objective is to sell later at a price higher than you purchased and make a profit.  On the flip side, if you sell (go short) a currency pair, you expect the base currency to decrease in price.  Your objective is to buy later at a price that is lower than the price you originally sold, and thus make a profit off the difference.

There’s more to it than can be explained in this overview, but you should get the basic idea.

What are the benefits?

1. With FOREX trading, there is no inventory, no employees, and no customers.  Your overhead can be as minimal as a home computer with internet access.

2. You can get started with a “mini-account” investing as little as $300.  

3. Currency prices tend to repeat in relatively predictable cycles creating strong trends. Once you learn how to trade properly, you can compound your money, and potentially turn a little into a lot.  

4. You can trade for a few hours per week, or much more if you want to. It’s all up to you.

5. The FOREX market is very liquid, with trillions of dollars traded every day.  On its slowest day, orders can usually be placed within a few seconds if you stay with the major currencies.  Instantaneous execution (1 to 2 seconds) is the norm during normal trade volume days (for the major currencies).

6. You can trade from just about anywhere as long as you have a computer with internet access to your account.

What are the risks?

1. The market can be very volatile, especially during times of major news releases, also known as “fundamental announcements.”  The time of these announcements is usually known in advance.  Many traders simply stay out of the market during these announcements and wait until market volatility has settled back down.

2. If you use too much margin or risk too much on any one trade, your account could suffer badly on a trade that doesn’t go your way.  Proper risk management, including sound placement of stops and not risking more than 2 percent of your account on any one trade, can alleviate this risk.  Do not risk more money than you can afford to lose.

3. A major world event could trigger a huge volatility swing that could wipe out your account (or even more).  However, some brokers limit the loss to the amount in your account.  (Of course, a major world event could also cause the trade to go your way.)

4. Trader psychology (fear and greed) can play a big role in your success or failure as a trader.  Trading education is one of the keys to overcoming these human flaws.

5. You could fail to place a stop loss with your order.  A change in price could force a liquidation of your trade if your account falls below the required margin maintenance.  To alleviate this risk, always set a stop loss when you place an order.

This list is not meant to be inclusive. There are other risks.  

How can I get started?

You can easily open an online account by selecting one from many available FOREX brokers.  You can, and should open a demo account to practice (and learn) for several months for free.  The practice account makes simulated trades using real-time data.  This is called “paper trading.” You should not trade your real account until you have proven to yourself that you can be profitable in your demo account.

Once you get started, you can trade currencies from just about anywhere.  About all you need is a computer with internet access to your trading account.  Many brokers also provide free charting software.

Single of the most recent Forex robots to approach on the prospect is the IvyBot. The trading robot was formed by the Ivy League’s students and alumnus. It has managed to secure an of great consequence place in the sphere of this aggressive industry and has managed to get hold of a following of enthusiastic traders.

Traders who depletion this instruct are claiming to be present reaping first-class profits from the instruct. Even a at the outset occasion trader is aimed to be present able to depletion this software. The instruct workings the same as if near was a live advisor chatting to you. You can maintain the help of this instruct everyday of the week. The instruct strength of character not application a daylight hours inedible or else call in the sphere of sick the same as a individual assistant might. Like many of the other robot programs formed in favor of the Forex marketplace, this robot is able to take in a row from the marketplace, evaluate it at present, and help you to get the gist trends. It is an consequentially instruct with the aim of can function on its own. Like other investors who depletion this logic, you strength of character not maintain to evaluate the marketplace by hand for the reason that this robot strength of character take worry of with the aim of wearisome bring about in favor of you. Even if you are with no every PC skills or else every experience of the Forex marketplace, the markers of the IvyBot receive with the aim of you can still execute well in the sphere of the marketplace place whilst using their robot.

The IvyBot is able to trade in the sphere of the following currencies (USD/CHF, EUR/USD, EUR/JPY and USD/JPY). These are the key currencies with the aim of traders are interested in the sphere of. This robot is like a expert trader following the trends and making the trade whilst the occasion is real to progress to the trade.

If it is on the cards, at all times try dazed the instruct with a tape explanation or else you set out to trade. Practice with the software to see to it that if it workings well or else by the side of smallest amount the same as first-class the same as you poverty it to bring about. You check to see to it that if a tape of the instruct is to be had with the aim of you can examine in favor of functionality. At all times compare a robot to others to see to it that which could be present better. Execute not reach with recently the at the outset single with the aim of you approach across. Rebuff carry some weight how notable the instruct could sound, it is your money on the line. Prevent investing money with the aim of you cannot afford to lose. While all these systems are aimed to be present first-class, remember with the aim of this is investing and near is rebuff instruct so first-class with the aim of you could not lose your money. Be present cautious with your investing.

IvyBot in the field of a new-found Expert Advisor so as to has time-honored much attention in the field of the preceding the minority days and has already had a few prodigious reviews from forex veterans.

At this time are no more than a few of the reasons on behalf of its popularity:

It’s the no more than automatic trading structure so as to has the faculty to upgrade itself according to the changes in the field of the FX sell. This sell moves up and down all the schedule and using a static algorithm is a indeed recipe on behalf of failure. The software has been automatic to react to each coins. In the field of actuality, for the duration of the fiscal catastrophe it has been updated additional than 50 era. It has a very impressive ancient performance. In the field of 2001 620.14%, in the field of 2002 490.32%, in the field of 2003 790.32%, in the field of 2004 721.97%, in the field of 2005 920.00%, in the field of 2006 475.89%, in the field of 2007 691.87%, in the field of 2008 745.11% and on behalf of the key 190 days of 2009 its return of investment is 523.98%. This robot is based on a unique algorithm so as to uses a special combination of the following variables: Technical cost patterns, to the fore projection scanning, sell liquidity, volatility, trend analysis and weighted cost act. This algorithm allows Ivy Bot to predict the yet to come trends with accuracy of 98%. It’s 100% automatic and can succeed non-stop 24 hours a daylight hours, 6 days a week devoid of your functional participation. This takes away all the possibilities of individual boo-boo. You don’t give birth to to be present an skilled trader and you don’t need to give birth to a few technical expertise, in the field of order to tell somebody to money. The size of your financial credit doesn’t carry some weight. You can start trading with at the same time as trifling at the same time as $50. IvyBot is not truly lone software, but 4 robots rolled into lone. Each robot is specifically designed to trade with both currency pair off (EUR/USD, USD/CHF, EUR/JPY and USD/JPY).

They offer the greatest customer support in the field of the industry and their organization answers very fast to all your questions.

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Have you heard about FOREX? How currencies are traded?

When you think about Forex, what do you think of first? Which aspects of Forex are important, which are essential, and which ones can you take or leave? You be the judge.

Let’s talk about FOREX and advantages of FOREX trading.

The good thing about FOREX is that the amount of money you need to place a trade (known as “margin”) is all that can be lost!

Of course, with the proper self-taught education you will win more than you will lose, but you should know  that despite the high leverage of FOREX trading (200:1 is possible, which means that when you put up $1 the trading vendor will allow you to trade it as if you have $200), it’s still  less risky than futures (commodities) trading. And when you trade stocks you can’t get this type of leverage.

Because of the FOREX market’s liquidity and twenty four hours continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed very quickly, without slippage. If you do your research and find good brokers, they will automatically close some or all of your open positions if your account’s equity falls below the level required to hold the positions. You’ll never lose more than you have in your FOREX account.

Currencies are traded in dollar amounts called *lots* — One lot is equal to $1,000, which controls $100,000 in currency.
This is the “margin” I talked about above. You can control $100,000 worth of currency for only 1,000 dollars.

Currencies are always traded in pairs. The most popular currencies and their symbols are:

USD – The US Dollar
EUR – The currency of the European Union “EURO”
GBP – The British Pound
JPN – The Japanese Yen
CHF – The Swiss Franc
AUD – The Australian Dollar
CAD – The Canadian Dollar

A currency can never be traded by itself, so you can’t trade a USD by itself. You always need to compare one currency with another currency to make a trade possible.

The most commonly traded currency pairs are:

EUR/USD   Euro / US Dollar
“Euro”

USD/JPY   US Dollar / Japanese Yen
“Dollar Yen”

GBP/USD   British Pound / US Dollar
“Cable”  

USD/CAD   US Dollar / Canadian Dollar
“Dollar Canada”

AUD/USD   Australian Dollar/US Dollar
“Aussie Dollar”

USD/CHF   US Dollar / Swiss Franc
“Swissy”  

EUR/JPY   Euro / Japanese Yen
“Euro Yen”

The currency on the left is called the base currency. The currency on the right is the counter currency. For example, when you place an order to buy EUR/USD pair, you are actually buying the EUR and you are selling the USD. When you place an order to sell EUR/USD you are selling the EUR and you are buying the USD. Buying or selling a currency PAIR means buying or selling the base currency, and doing the opposite with the counter currency.

It might seem a little confusing, but actually it is easier to treat the currency PAIR as one item. It means when you place trades you simply sell or buy the pair. The base/counter concept is only important for fundamental analysis.

To decide when to sell or buy you will need to learn technical analysis and/or fundamental analysis.

In currency trading you can make money both, when the currencies go up or down.

The FOREX currency trading is a great way to work from home in your free time. You can trade any time you want, from Monday to Friday. But you must know that you can lose money in FOREX. So, getting the proper education and trading before doing any real trades is a must. Fortunately you can first practice on a demo account, until you get to the point that you win 70% of your trades. Nobody wins 100%. But you can be in profit even with 50% wins.

There are plenty of books and courses to learn currency trading, but be careful with all those $1000+ courses. Usually you can find courses with the same content for much less.

If you want to learn more about FOREX go to: http://www.currencytradingmethod.com. You will get a free e-book “Forex Freedom”.

The IvyBot forex procedure is lately the chatter of the town in the sphere of the trading humankind and it seems with the aim of it yearn for turn into the subsequently gigantic factor in the sphere of the FX marketplace.

But, what did you say? Makes this software dissimilar with the aim of all the other robots banned near?

IvyBot is the just procedure with the aim of gives you 4 robots, 1 on behalf of each currency. It trades the following pairs: USD/CHF, EUR/USD, EUR/JPY and USD/JPY and each robot is rightly tailored to trade both currency brace. It has a spectacular times of yore performance. On behalf of the at the outset 190 days of 2009, its return of investment is 523.98% and in the sphere of prior years it was equally amazing. In the sphere of 2008 745.11%, in the sphere of 2007 691.87%, 2006 475.89%, 2005 920.00%, 2004 721.97%, 2003 790.32%, 2002 490.32%, and conclusively in the sphere of 2001 620.14%. The size of your explanation doesn’t be of importance. They let somebody have you a register of brokers with the aim of allow you to direct an explanation on behalf of just $50. It’s a dutiful plug & fool around procedure with the aim of does all the trading on behalf of you and workings non-stop 24 hours a generation, 6 days a week with no in the least soul intervention. It’s very user-friendly and comfortable to install. In the sphere of piece of evidence, you can download, install and start operating it in the sphere of 8 minutes and 20 seconds. The robot is updated on a weekly basis, so to the same degree to adapt itself to the changing marketplace conditions and its performance gets constantly improved. They give a heroic customer support. Their stick is eager to answer to in the least question and offer their help.

Ivy Bot is single of the very the minority Expert Advisors with the aim of can in point of fact return your investment in excess of a prolonged era of instant. The piece of evidence with the aim of it has been tested on behalf of 8 years (since 2001), income with the aim of its stability has been proven. However, in the sphere of container you don’t absence to take in the least risks you can try it on a tape explanation at the outset and test its effectiveness, ahead of using in the least real money.

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Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.

What is traded in the Forex market?

The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:

EUR/USD: Euro
GBP/USD: Pound
USD/CAD: Canadian dollar
USD/JPY: Yen
USD/CHF: Swiss franc
AUD/USD: Aussie

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.
Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.
If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

EUR/USD 1.2545/48 or 1.2545/8
The bid price is 1.2545
The ask price is 1.2548

A Pip

A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.

Margin Trading (leverage)

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.

The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.

Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term.

Margin Call

A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader “theoretically” with the maintenance margin.

Most of the time margin calls occur when money management is not properly applied.

How are the mechanics of a Forex trade?

The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us.

It’s very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.

Forex trade is a part of stock exchange market business that decides the fate of various industries. Given the amount of risk currency trading caries, it makes it an extremely volatile industry. However, if you are a novice who decides to jump into forex trade, make sure you are well versed in the intricacies of the stock exchange along with the trade policies in order to benefit with forex deals. In order to provide you the best forex strategy system, official-forex-trading-system mechanical trading algorithm that provides trading alerts for two denominations of currencies such as USD/EUR and USD/GBP in the West Economic region in the morning. In the night, the alerts are based upon JPY/USD and JPY/GBP according to Asian Economic region pairs. With the help of official-forex-trading-system, you can avail the facility of short and long day trading positions. Some of the highlights of forex trading signal include two alerts, along with news dives market action that reads and analyses the business forecast in an east way. You can trade the safest trading system according to the current market condition in consonance with the market as well as country news.

With official-forex-trading-system, you avail the day trading system where positions are opened and closed in the same day. Official-forex-trading-system gives you the option to choose from 3 kinds of accounts such as:

Mini account: As a novice trader, it is best to open such type of account where the leverage is higher in comparison to standard account where you deal with mini contracts. You can start off such an account with $250.

Standard account: If you already have an experience currency trading, you can go forth with Standard account where you trade full contacts. However, in such an account, the leverage is lower in comparison to deposit. You can start this account with $2500.

Demo account: This is a simulated account where you get virtual money of $25,000 to $1, 00,000. You get live quotes and bids that are part of real forex trade.

With official-forex-trading-system, you are saved from brokerage and commissions. In order to maximize your trade profits, it is better to use your risk funds or risk capitals. The advantage of such a mechanical system helps in advanced orders with profit target and stop loss. As a privileged member of official-forex-trading-system, you get daily forex alerts.

As a forex trading signal, official-forex-trading-system helps in boosting your trade in an easy and hassle free. Irrespective of being a novice or a seasoned forex trader, you can improve upon your forex trading with official-forex-trading-system. It is a fool proof system that helps clients from entry till exit with the help of encrypted and secure servers and database. Forex trading was never easy before with the arrival of official-forex-trading-system. This helps you in managing your forex business in a systematic way.     

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Knowing when to enter the market is crucial to exercising a good technical trading strategy.  There are many pitfalls that inexperienced traders experience because they are entering the market when the probability for making a successful trade is reduced.  So when is the best time to look for a trade and why?

The best time to look for a trade is when there is heavy volume in the currency markets.  Since the Forex market is open 24 hours per day, it’s best to find the times when multiple countries markets are trading at the same time.  Every Forex market in the world operates from 8 a.m. to 4 p.m. in their respective time zones.  In order to take advantage of the chance of many trades developing, one needs to look at when the Forex market times in different countries overlap.  In the overlapping times when multiple markets are open, generally there is the most volume and pip movement.

For instance, it is best to trade the EUR/USD, USD/CHF, or GBP/USD between 8am EST and 12pm EST because the US market is just opening at 8am EST while the European market is finishing up for the day. Another good time to trade is in the middle of the night from 1am EST to 3am EST as many trades develop as the Asian markets are closing and the European markets are opening.  The Australian and Asian Markets overlap between 7pm and 10pm EST as well which offer good opportunities.  Generally speaking, one can just shut off their computer and not bother looking for trades from 4pm-6pm EST as the US markets close and there are no overlapping markets in those times, so although there may be profitable trades one could enter, the volume is much lower and it is far less likely great trades will develop.   The Canadian market does not play a big role in affecting the markets so just trade along with the US market times when the European, Asian, or Australian markets are open.  

Many currency pairs tend to trend in the same direction (parallel) or opposite directions (inversely).  Traders can use this information to plan to trade more than one pair knowing that they have a high probability of moving in the same or inverse direction.  

The general rule is that these pairs listed below tend to trend in parallel relationships.  The Euro and Cable tend to move together the most.

EUR/USD and GBP/USD
USD/CHF and USD/JPY
AUD/USD and NZQ/USD

And, these pairs below tend to move inversely the most.  The Euro and the Swissy tend to move inversely the most.

EUR/USD and USD/CHF
GBP/USD and USD/JPY
AUD/USD and USD/CAD

Lastly, remember that when trading, Bulls and Bears make money, but pigs get slaughtered.  Don’t be too greedy.  Trade with proper equity management and never risk more than 2% of your trading account on a single trade.  Look for 10%-30% pip gains and move on to the next trades.  Building small consistent profits will add up to large long-term gains.  Trade during times when markets overlap, and use information on parallel and inverse relationships to determine whether or not to enter on trades on multiple currency pairs at the same time.

Wishing You Success!

There are many markets: markets for stocks, futures, options and currencies. These are probably the most accessible markets for everyday traders like you and I. People easily understand the basics of trading shares. I began trading shares first and then I moved on to trading currencies.

If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.

The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.

The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.

It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.

The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.

The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.

THE MAIN ‘PLAYERS’ IN THE FOREX MARKET

The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.

Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.

Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.

Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.

Large commercial and investment banks are the ‘price makers’. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.

Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.

Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy’s currency.

WHAT CURRENCIES TO TRADE IN THE FOREX MARKET

You can trade any country’s currency by exchanging it to another country’s currency, however the list below are the ones that are the most popular and are usually made available by most online brokers for you to trade.

AUD (A$): Australian Dollar a.k.a. ‘Aussie’ or ‘Oz’

CAD (Can$): Canadian Dollar

CHF (SwF):Switzerland Franc a.k.a ‘Swissi’

DKK (Dkr): Denmark Krone

EUR (€): European Dollar a.k.a ‘Euro’

GBP (£) : Great Britain Pound a.k.a ‘ Sterling ‘ or ‘Cable’

HKD (HK$ ): Hong Kong Dollar

JPY (¥): Japanese Yen

MXN (Mex$): Mexican Peso

NOK (NKr): Norway Krone

NZD (NZ$): New Zealand Dollar a.k.a ‘Kiwi’

PLN (z dashed l): Poland Zloty

SAR (SRls): Saudi Arabia Riyal

SEK (kr or Sk): Sweden Krona

SGD (S$): Singapore Dollar

THB (Bht or Bt): Thailand Bhat

USD ($): United States Dollar

ZAR (R): South Africa Rand

CURRENCY PAIRS

To trade the currencies above, you need to trade currency pairs. Think of these currency pairs as your trading instruments – instruments that you can buy or sell. Listed below are the most popular currency pairs that people trade:

AUD/JPY: Australian Dollar – Japanese Yen

AUD/USD: Australian Dollar – US Dollar

EUR/CHF: European Dollar – Switzerland Frank

EUR/GBP: European Dollar – Great Britain Pound

EUR/USD: European Dollar – US Dollar

EUR/JPY: European Dollar – Japanese Yen

GBP/CHF: Great Britain Pound – Switzerland Frank

GBP/USD: Great Britain Pound – US Dollar

USD/CAD: US Dollar – Canadian Dollar

USD/CHF: US Dollar – Switzerland Frank

The currencies on the left can be exchanged for the currencies on the right.

This is an excerpt, modified from the book: The Part-Time Currency Trader, featuring examples of how to trade these currency pairs.

END OF ARTICLE –

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Forex traders or FX traders trade currencies to make profits. They buy and sell currencies including both native and foreign currencies with respect to the changes in exchange rate of one currency to another. Forex traders buy a currency for lesser amount of one currency and sell that to earn greater amount of the currency. Forex trades are done in pairs known as “currency pairs”. Each nation’s currency carries a special triletter currency code like JPY for Japanese Yen and USD for United States Dollar. Each currency pair is represented as JPY/USD, which mean the trader start trading by buying USD spending JPY.

The calculation of profit or loss in forex trading exclusively depends on the increase or decrease in the exchange rate of the second currency (one first brought) to the first one in the currency pair. If the exchange rate increases the trader is profited, if that goes in opposite way then loss. In order to reduce the possible loss associated with any forex trade, the trader can place stop-loss orders and can configure alerts.

As a result of the high liquidity (the market stability) present in the market most forex brokers offer high leverages for trading currencies. Leverages enable traders to trade on margin that is trade in large amount with fewer amounts in the account. Most forex brokers offer leverage on or beyond 100:1 that is with $1 (or any other currency) in the account, the trader can borrow up to $100 from his broker for trading.

Today almost all forex trades by individual trades are carried out online using sophisticated trading systems. These trading systems include both web-based or broker-side forex trading systems and direct access or stand-alone forex trading systems. The choosing of the type of trading system solely depends on the trading necessities of the trader. If the trader is an infrequent trader or long-term trader then the web-based trading softwares are more useful; if he or she is an active trader or day trader then the direct access trading softwares is the best. Now a days, both types of systems are offered by forex brokers free of charge, some ask you to fulfill certain minimum requirements.

Unlike stock exchanges there is no actual exchange for trading currencies. Thus all the trades are executed in a more advanced and automated trading practice called OTC (Over The Counter) trading. This type of trading involves broker-dealer interactions and price negotiations. Traders directly or via brokers places their orders to market makers, whose automated software executes the trade by matching the ask and bid prices. This type of trading minimizes human requirements. All contracts traded in forex market are standardized for facilitate traders to do detailed analysis. There are mini and standard forex contracts available.