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The Cash Foreign Exchange Market Trading the Foreign Currency Market

What is FOREX FOREX? FOR = ( EX eign change market)

FOREX is an international foreign exchange market, where money is sold and bought freely. In its present condition FOREX was launched in the seventies, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from demand and supply.

What is FOREX? The forex market is not a physical place. The foreign exchange market, or FX market, is a network of financial institutions and brokers in which individuals, businesses, banks, and governments buy and exchange is The simplest definition of foreign sell the currencies of different countries. to another. the changing of one currency They do so in order to conduct international trade, invest in foreign countries, or speculate on currency price changes". (Federal Reserve Bank of New York)

The Foreign Exchange market is the largest financial market and most liquid in the world.
In September The Forex Wall Street Journal estimated 1992 The market is huge the trading volume at $1 trillion per day. In comparison to the daily trading volume averages Today, it is believed to have grown Theexcess of $1.5 trillion per day. : in Foreign Exchange market is According to the IMF, on the whole the volume is over 1 trillion 5 times a day, and on some days it reaches 3 trillions. the volume of the U.S. Treasury Bond market dollars ($300 billion/day) About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must and convert volume of the foreign currencies 150 times the profits made inentire U.S. equity market into their domestic currency. ($10 billion/day). The other 95% is trading for profit, or speculation.

All currencies are not created equal.


Every FX transaction involves a pair of currencies, (e.g. USD/CAD or EUR/USD). The four largest centres Only London (32%), 7 primary currencies US York USD, NewDollar(18%), Euro EUR, Tokyo (8%) and British Pound GBP, Singapore (7%) Japanese Yen JPY Swiss Franc, of total account for about two thirdsCHF FX trading Canadian Dollar CAD volumes. and Australian Dollar AUD. are heavily traded. Of these, the USD is the overwhelming leader, involved on one side or other of 87% of all transactions.

Superior Liquidity
With a daily trading volume that is 50x larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the FX markets. The liquidity of this market, especially that of the major currencies, helps ensure price stability. Traders can almost always open or close a position at a fair market price.

The working hours of the markets


Exchange markets work all the time. Their work in the calendar twenty-four-hour period is started in the Far East, in New Zealand (Wellington), passing the time zones in Sydney, Tokyo, Hong Kong, Singapore, Moscow, Frankfurt-on-Main, London, finishing the day in New York and Los Angeles

Participants of a foreign exchange market

The main participants of a foreign exchange market are:


Commercial banks yExchange markets yCentral banks yFirms that conduct foreign trade transactions yInvestment funds yBroker companies

What determines the value of a currency?


The simple answer is "supply and demand". But what influences supply and demand?
Interest rates Interest rate differentials between countries are one of the main factors that determine exchange rates. Inflation/money supply if the central bank prints more money inflation goes up and the exchange rate (the price of the currency) goes down. Balance of trade The more other countries want your exports, the stronger your exchange rate. The more you rely on imports, the weaker your exchange rate because you have to sell your currency to pay for someone elses goods. Government budget deficits/surpluses. If the government runs a deficit, it has to borrow money (by selling bonds). If it cant borrow it all from its own citizens, it must sell to foreign investors. That means selling more of its currency, driving the price down.

Forex Buying and selling of foreign currencies. Taking the advantage of fluctuating prices of the currencies of different countries. Few years back the forex business was in the hands of big Banks and big brokers. Now with the help of computer and internet and a small amount of mony any body can trade and earn profit Sitting in his home by spending even one hour Why is this an easy and ideal Business approach? Time saving. The currencies and other products can be buy or sell within five to ten seconds. Physically its not possible to have a deal within minutes even.

Cost effective. If you buy 10,000 Euro from a money exchanger and then sell. itll cost you 4500 to 8000 Rupees. But if you buy and then sell 10,000 Eur online itll cost you, 400 to 600 Rupees. Margin based transactions. On physical buying & selling you have to pay full price of the product. But in online trading, you have to pay just 1 % of the total amount of the product. 24Hours Market. The forex market dont stop for seconds even from Monday to Friday. While all other markets just, Open for 5 to 8 hours during day time. Great potential & Less efforts. No need for employees, office, furniture and fixture to start this business. Even if you want to wind up you will get all your current equity back with out any charges.

Free Practice. Practice make a man perfect. You can have the experience for free before investing Your real money. Using the demo trading account. Supporting tools. You can get a price history of several years in shape of graphs for any product and current news to support Your trading ideas. In physical markets you just have the price and dont know the reason and trend of the price. By looking at a graph you can easily determine where to buy (support) and where to sell (Resistance). Two way opportunities. In physical market you just need to buy a thing for further sale. But in the online forex trading in increasing price you can not only buy a product to sell it on a higher price but also in decreasing prices you can sell a product first to buy it at lower.

Highly effective Risk Management. All the risk management is in your own hand. You can put the limit orders to maximize the profit and minimize the losses. All the risks of losses can be fully minimized by using just three things. 1- Planned trade and strict stop loss and take profit. 2- Buying and selling the minimum in spite of great leverages. 3- Dont buy or sell just one product. Position into different products