Forex for a trader
Foreign currency exchange markets forex

Foreign currency exchange markets forexLearn To Trade Forex Market. 6 Characteristics of Foreign Currency Exchange Market. The Foreign Currency Exchange Market is the worldwide largest market asset class today with almost 5$ trillion in daily turnover volume. That decides the currency value of the global countries and allows to do international currency exchange or trading. It has unique characteristics that make it excel from the rest of the other financial markets. The characteristics that make the foreign currency exchange market a unique and good one are lower trading costs, 247 Trading Opportunity , superior liquidity, excellent transparency and Highly Leveraged Markets. As it is a fundamentally unorganised market, the forex market has a large number of operations centres around the world. Among the most important are London , Tokyo, Singapore, Hong Kong, Bahrein, Frankfurt, Sidney, Zurich, Chicago, New York and Toronto. 6 Characteristics of Foreign Currency Exchange Market. 1. Lower Trading Cost. In the forex market, the lower trading cost has made it possible for even small, individual investors to make the decent profits from trading. With lower costs, the possible losses are much lower. You will discover that forex trading has no commission fees unlike in other investments. The forex trading cost is limited to the spread or the difference between the buying and selling prices for a particular currency pair .

2. 24 Hour Trading Opportunity 5 Days a Week. You have plenty of opportunities to execute trades and sufficient time to make adjustments whenever and where ever such opportunities present themselves. Trading the foreign currency exchange market opening on Monday, 8 am Australian time (which is 5 pm Sunday New York time). It continues nonstop until Friday, 4 pm New York time. 3. Highly Leveraged Market. You are allowed to trade on margins or technically on borrowed money with forex. You get more value for your money as the returns can be magnified a hundredfold. However, always remember that there always two sides of the coin when it comes to leverage meaning it can also increase your losses. Click on B elow Video : Dangers of u sing h igh Leverage in Forex Trading. 4. Excellent Transparency. Forex trading is a transparent process because the forex trader has full access to market data and information that are necessary to achieve successful transactions. The excellent transparency that traders have more control over investments and decide what to do based on the available information. Click on B elow V ideo: United Kingdom’s Super Rich Billionaire Forex Traders. 5. Access Advantage in Forex.

You can access the foreign currency exchange market and your trading account from anywhere using internet connection without difficulty and trade from anywhere you may happen to be. With other financial markets, you need to be physically present to execute a trade. 6. Superior Liquidity. In a forex market, traders are free to buy and sell currencies of their choosing. The superior liquidity of the forex market allows traders to easily exchange currencies without affecting the prices of currencies being traded. Whether you trade a thousand dollars or millions, you can be assured of same currency prices during the time an order was placed and executed. The forex market’s superior liquidity allows you to get the profits you expect at the time you made the trade. Foreign Exchange Market. What is the 'Foreign Exchange Market' The foreign exchange market is the market in which participants are able to buy, sell, exchange and speculate on currencies. Foreign exchange markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. Currency Trading Platform. BREAKING DOWN 'Foreign Exchange Market' The foreign exchange market – also called forex, FX, or currency market – trades currencies. It is considered to be the largest financial market in the world. Aside from providing a floor for the buying, selling, exchanging and speculation of currencies, the forex market also enables currency conversion for international trade and investments.

The forex market has unique characteristics and properties that make it an attractive market for investors who want to optimize their profits. The forex market has enticed retail currency traders from all over the world because of its benefits. One of the benefits of trading currencies is its massive trading volume, which covers the largest asset class globally. This means that currency traders are provided with high liquidity. Open 24 Hours a Day, 5 Days a Week. In the forex market, as one major forex market closes, another market in a different part of the world opens for business. Unlike stocks, the forex market operates 24 hours daily except on weekends. Traders find this as one of the most compelling reasons to choose forex, since it provides convenient opportunities for those who are in school or work during regular work days and hours. The leverage given in the forex market is one of the highest forms of leverage that traders and investors can use. Leverage is a loan given to an investor by his broker. With this loan, investors are able to enhance profits and gains by increasing traders’ and investors’ control over the currencies they are trading. For example, investors who have a $1,000 forex market account can trade $100,000 worth of currency with a margin of 1 percent, with a 100:1 leverage. The Biggest in the World of Finance.

The foreign exchange market is unique for several reasons, mainly because of its size. Trading volume in the forex market is generally very large because of the number of people who participate, the ease of trading as well as accessibility to the market. As an example, trading in foreign exchange markets averaged $5.1 trillion per day in April 2016, according to the Bank for International Settlements, which is owned by 60 central banks, and is used to work in monetary and financial responsibility. Benefits of Using the Forex Market. There are some key factors that differentiate the forex market from others like the stock market. There are fewer rules, which means investors aren't held to strict standards or regulations as those in other markets. There are no clearing houses and no central bodies that oversee the forex market. Most investors won't have to pay the traditional fees or commissions that you would on another market. Because the market is open 24 hours a day, you can trade at any time of day, which means there's nocut off time to be able to participate in the market.

Finally, if you're worried about risk and reward, you can get in and out whenever you want and you can buy as much currency as you can afford. FOREX Currency Market News. U. S. Dollar Weakens as Fed’s Powell Hints End of Policy Tightening Cycle is Nearing. The U S Dollar went for a wild ride last week against a basket of major. + USDJPY Weekly Technical Perspective: Dollar Breakout Drives Higher to Test Resistance. DailyFX com Technical Forecast for the Japanese Yen Bearish Talking Points. + Dollar Fails to Launch Major Technical Breakout, Reversal Risk Rising Rapidly. DailyFX com Technical Forecast for US Dollar Bearish Talking Points DXY and. + Featured Online Brokers. The Dollar is BAAAAACK! What to Expect at Jackson Hole.

Dollar Steady as Market Powell-Ready. Greenback Marks Time Ahead of Powell. New Blockchain ETF To Begin Trading In September On Canadian Exchange. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages. Customize your NASDAQ. com experience. Please note that once you make your selection, it will apply to all future visits to NASDAQ. com. If, at any time, you are interested in reverting to our default settings, please select Default Setting above. If you have any questions or encounter any issues in changing your default settings, please email [email protected] com. Please confirm your selection: You have selected to change your default setting for the Quote Search. This will now be your default target page; unless you change your configuration again, or you delete your cookies. Are you sure you want to change your settings? Please disable your ad blocker (or update your settings to ensure that javascript and cookies are enabled), so that we can continue to provide you with the first-rate market news and data you've come to expect from us. TRADERS MAKING MONEY IS POSSIBLE BY TRADING IN FOREIGN EXCHANGE MARKETS. Success Trading Foreign Exchange Financial Markets.

Today is which date is a good time to start trading the forex futures markets for profit. Information on foreign exchange trading, foreign currency trading and foreign exchange rates. Currency exchange is very attractive for both the corporate and individual traders who make money on the Forex - a special financial market assigned for the foreign exchange. The following features make this market different in compare to all other sectors of the world financial markets: heightened sensibility to a large and continuously changing number of factors; accessibility to all traders in the major currencies; guaranteed quantity and liquidity of the major currencies; increased consideration for several currencies, round-the clock business hours which enable traders to deal after normal hours or during national holidays in their country finding markets abroad open and extremely high efficiency relative to other financial markets. This goal of this report is to introduce beginning traders to all the essential aspects of foreign exchange market trading in practical ways and be a source of best answers on the typical questions as why are currencies being traded, who are the traders, what currencies do they trade, what makes rates move, what instruments are used for the trade, how a currency behavior can be forecasted and where the pertinent information may be obtained from. Mastering the content of an appropriate section the user will be able to make hisher own decisions, test them, and ultimately use recommended tools and approaches for hisher own benefit. Currency trading has a long history and can be traced back to the ancient Middle East and Middle Ages when foreign exchange started to take shape after the international merchant bankers devised bills of exchange, which were transferable 3rd-party payments that allowed flexibility and growth in foreign "exchange market" trading and market deals. The modern foreign exchange market characterized by the consequent periods of increased volatility and relative stability formed itself in the twentieth century. By the mid-1930s London became to be the leading center for foreign exchange and the British pound served as the currency to trade and to keep as a reserve currency. Because in the old times foreign exchange was traded on the telex machines, or cable, the pound has generally the nickname “cable”. In 1930, the Bank for International Settlements was established in Basel, Switzerland, to oversee the financial efforts of the newly independent countries, emerged after the World War I, and to provide monetary relief to countries experiencing temporary balance of payments difficulties.

After the World War II, where the British economy was destroyed and the United States was the only country not scarred by war, U. S. dollar became the prominent currency of the entire globe. Nowadays, currencies all over the world are generally quoted against the U. S. dollar. Factors Caused Foreign Exchange Volume Growth. Foreign exchange trading is generally conducted in a decentralized manner, with the exceptions of currency futures and options. Foreign exchange trading has experienced spectacular growth in volume ever since currencies were allowed to float freely against each other.. Interest Rate Volatility. Economic internationalization generated a significant impact on interest rates as well. Economics became much more interrelated and that exacerbated the need to change interest rates faster. Interest rates are generally changed in order to adjust the growth in the economy, and interest rate differentials have a substantial impact on foreign exchange rates. Business Internationalization. In recent decades the business world the competition has intensified, triggering a worldwide hunt for more markets and cheaper raw materials and labor. The pace of economic internationalization picked up even more in the 1990s, due to the fall of Communism in Europe and to up-and-down economic and financial development in both Southeast Asia and South America. These changes have been positive toward foreign exchange, since more transactional layers were added. Increasing of Corporate Interest. A successful performance of a product or service overseas may be pulled down from the profit point of view by adverse foreign exchange conditions and vice versa.

An accurate handling of the foreign exchange may enhance the overall international performance of a product or service. Proper handling of foreign exchange generally adds substantially to the rate of return. Therefore, interest in foreign exchange has increased in the past decade. Many corporations are using currencies not only for hedging, but also for capitalizing on opportunities that exist solely in the currency markets. Click-here for Trading Tip of the Day. Increasing of Traders Sophistication. Advances in technology, computer software, and telecommunications and increased experience have increased the level of traders' sophistication. This FOREX. On-line Manual For Successful Trading enhanced traders' confidence in their ability to both generate profits and properly handle the exchange risks. Therefore, trading sophistication led toward volume increase.

Developments in Telecommunications. The introduction of automated dealing systems in the 1980s, of matching foreign exchange trading systems in the early 1990s, and of foreign currency trading in the late 1990s completely altered the way foreign exchange was conducted. The dealing systems are on - line computer systems that link banks on a one-to-one basis, while matching systems are electronic brokers. They are reliable and much faster, allowing traders to conduct more simultaneous foreign "exchange market" trades. They are also safer, as forex currencies traders are able to see the deals they execute. The dealing systems had a major role in expanding the foreign exchange business due to their reliability, speed, and safety. Computer and Programming Development. Computers play a significant role at many stages of conducting foreign exchange. In addition to the dealing systems, matching systems simultaneously connect all traders around the world, electronically duplicating the brokers' market. The new office systems provide full accounting coverage, ticket writing, back office processing, and risk management implementation at a fraction of their previous cost. Advanced software makes it possible to generate all types of charts, supplement the charts with technical studies, and put them at traders' fingertips on a continuous basis at a reasonable cost. USDEUR 24- , 25 2018 . 22:00 UTC @ USDEUR 24- . , 25 2018 . 22:00 UTC. OANDA , . USDEUR – .

OANDA's currency calculator tools use OANDA Rates ™ , the touchstone foreign exchange rates compiled from leading market data contributors. Our rates are trusted and used by major corporations, tax authorities, auditing firms, and individuals around the world. . OANDA , . . , 1990 : , 3- ISO . , , (*). , . ( .) © 1996–2017 OANDA Corporation. . OANDA, fxTrade fx OANDA Corporation. , , . . , . . , , . , . - . . « » . - OANDA Europe Ltd, . , 4 50:1 . , . OANDA Corporation — , ; , . № 0325821. . . OANDA (Canada) Corporation ULC . OANDA (Canada) Corporation ULC (IIROC), . cipf. ca. OANDA Europe Limited , 7110087, : Tower 42, Floor 9a, 25 Old Broad St, London EC2N 1HQ. , № 542574. OANDA Asia Pacific Pte Ltd (. № 200704926K) , , (IE Singapore).

OANDA Australia Pty Ltd (ASIC) (. ABN 26 152 088 349, . AFSL 412981). () , . (FSG), ('PDS'), OANDA. . OANDA Japan Co., Ltd. — Kanto Local Financial Bureau (Kin-sho), . № 2137; , . № 1571. What is Forex? What are rates of exchange? Start your basic Forex education from learning about what global Forex currency market is and who are its main participants. This chapter will cover the following questions: why Forex is not market in a direct meaning of this word, what is the reason of its popularity, what features make Forex different from other financial markets and how to benefit from the rates of exchange.

Forex (Foreign Exchange or FX) is an international currency exchange. Have you ever changed your domestic currency into a foreign one? Let's remember how it works: we buy some foreign currency, which price is suppose to grow in the nearest future. Then, when the price goes up, we change domestic currency back, thus we earn the difference in exchange rates and make this trade according to the best exchange rate found. The Forex market works in the same way. Although we do not have to wait for months till market exchange rate moves up, today rates change in minutes. As for market access, we need only computer with Metatrader software and an access to the Internet. Download MetaTrader 4 right now to plunge into the process. Forex is the financial market which was formed in the 1970s in the result of refusal from Bretton Woods system of fixed international currency rates. Rapid communications and computers development allowed banks to trade currencies "directly" in the electronic payment systems, without using special organizations - exchanges. Note: In July 1944, in the town of Bretton Woods, New Hampshire, USA 44 States conceived the International Monetary Fund (IMF). This international organization oversees the balance of payments of its member countries and exchange rates of their currencies. Those agreements were aimed to establish the system of fixed exchange rates (Fixed exchange rate regime).

This system was based on gold. One ounce of gold was equal to 35 U. S. dollars. Currencies of all other IMF member countries were tied to the dollar at a fixed rate. For example, the pound was worth $ 4.80, and the Japanese yen – 360 yen per $ 1. Though IMF established a system of fixed exchange rates for member countries, still there was an opportunity to correct national currency rate in case of emergency. For example, price of the pound changed twice: in September 1947 it was $ 2.80 and in November 1967 it was $ 2.40. Despite the fact that system worked well in the 50s-60s it began to falter in early 70s and in 1971 was canceled. Since then, systems of floating exchange rates (flexible exchange rate) and regulated rates (regulated exchange rate) started to be in use. As a result, rate of each currency started to be determined by market conditions, but firstly and mainly by level of economic condition of the country. Some currencies rates had dropped down, but some of them had increased. For example, in 1944 the U. S. dollar was equal to 360 Japanese yen and in April 2005 – 107 Japanese yen. In this regard, money became a popular instrument of international investment, like stocks and bonds. Thus, Forex is not a "market" in its traditional meaning. It does not have a certain center and a certain place to trade. All trading is conducted by global information networks that link different participants all over the world. Now let's look closer at the Forex market members: Central banks. Performing operations in foreign exchange market, central banks are responsible for foreign exchange reserves. Usually they are in market to regulate a national currency rate, which is called intervention. The system is easy: banks buy a currency to make it stronger and more expensive, and sell to make it weaker and cheaper.

Commercial and investment banks engaged in investment in foreign assets, hedge and investment funds, insurance companies and other entities that control attracted funds, are also members of the Forex market, acting with the aim of preservation of funds. Foreign trade companies , exporting or importing goods and services are forced to be regular participants of the Forex market in order to conduct mutual settlements and manage the risks. Other active market participants trade through brokerage companies as well as forex departments of banks so these organizations have the bulk of foreign exchange transactions. In this regard, the Forex market is often called interbank. Often these organizations conduct operations independently by means of either their own or attracted funds with the aim to gain profit. Traders (stock, market, commodity traders etc.) are the individuals, who conduct currency transactions to gain profit in their own. Open a trading account and fund it with the deposit to start making profit the same way. Now, when we know market structure, let's figure out, why this market has become so popular and attractive for both beginner and professional traders. Learn To Trade Forex Market. 6 Characteristics of Foreign Currency Exchange Market. The Foreign Currency Exchange Market is the worldwide largest market asset class today with almost 5$ trillion in daily turnover volume. That decides the currency value of the global countries and allows to do international currency exchange or trading. It has unique characteristics that make it excel from the rest of the other financial markets. The characteristics that make the foreign currency exchange market a unique and good one are lower trading costs, 247 Trading Opportunity , superior liquidity, excellent transparency and Highly Leveraged Markets. As it is a fundamentally unorganised market, the forex market has a large number of operations centres around the world. Among the most important are London , Tokyo, Singapore, Hong Kong, Bahrein, Frankfurt, Sidney, Zurich, Chicago, New York and Toronto.

6 Characteristics of Foreign Currency Exchange Market. 1. Lower Trading Cost. In the forex market, the lower trading cost has made it possible for even small, individual investors to make the decent profits from trading. With lower costs, the possible losses are much lower. You will discover that forex trading has no commission fees unlike in other investments. The forex trading cost is limited to the spread or the difference between the buying and selling prices for a particular currency pair . 2. 24 Hour Trading Opportunity 5 Days a Week. You have plenty of opportunities to execute trades and sufficient time to make adjustments whenever and where ever such opportunities present themselves. Trading the foreign currency exchange market opening on Monday, 8 am Australian time (which is 5 pm Sunday New York time). It continues nonstop until Friday, 4 pm New York time.

3. Highly Leveraged Market. You are allowed to trade on margins or technically on borrowed money with forex. You get more value for your money as the returns can be magnified a hundredfold. However, always remember that there always two sides of the coin when it comes to leverage meaning it can also increase your losses. Click on B elow Video : Dangers of u sing h igh Leverage in Forex Trading. 4. Excellent Transparency. Forex trading is a transparent process because the forex trader has full access to market data and information that are necessary to achieve successful transactions. The excellent transparency that traders have more control over investments and decide what to do based on the available information. Click on B elow V ideo: United Kingdom’s Super Rich Billionaire Forex Traders. 5. Access Advantage in Forex. You can access the foreign currency exchange market and your trading account from anywhere using internet connection without difficulty and trade from anywhere you may happen to be. With other financial markets, you need to be physically present to execute a trade. 6. Superior Liquidity. In a forex market, traders are free to buy and sell currencies of their choosing.

The superior liquidity of the forex market allows traders to easily exchange currencies without affecting the prices of currencies being traded. Whether you trade a thousand dollars or millions, you can be assured of same currency prices during the time an order was placed and executed. The forex market’s superior liquidity allows you to get the profits you expect at the time you made the trade. TRADERS MAKING MONEY IS POSSIBLE BY TRADING IN FOREIGN EXCHANGE MARKETS. Success Trading Foreign Exchange Financial Markets. Today is which date is a good time to start trading the forex futures markets for profit. Information on foreign exchange trading, foreign currency trading and foreign exchange rates. Currency exchange is very attractive for both the corporate and individual traders who make money on the Forex - a special financial market assigned for the foreign exchange. The following features make this market different in compare to all other sectors of the world financial markets: heightened sensibility to a large and continuously changing number of factors; accessibility to all traders in the major currencies; guaranteed quantity and liquidity of the major currencies; increased consideration for several currencies, round-the clock business hours which enable traders to deal after normal hours or during national holidays in their country finding markets abroad open and extremely high efficiency relative to other financial markets. This goal of this report is to introduce beginning traders to all the essential aspects of foreign exchange market trading in practical ways and be a source of best answers on the typical questions as why are currencies being traded, who are the traders, what currencies do they trade, what makes rates move, what instruments are used for the trade, how a currency behavior can be forecasted and where the pertinent information may be obtained from. Mastering the content of an appropriate section the user will be able to make hisher own decisions, test them, and ultimately use recommended tools and approaches for hisher own benefit. Currency trading has a long history and can be traced back to the ancient Middle East and Middle Ages when foreign exchange started to take shape after the international merchant bankers devised bills of exchange, which were transferable 3rd-party payments that allowed flexibility and growth in foreign "exchange market" trading and market deals. The modern foreign exchange market characterized by the consequent periods of increased volatility and relative stability formed itself in the twentieth century. By the mid-1930s London became to be the leading center for foreign exchange and the British pound served as the currency to trade and to keep as a reserve currency. Because in the old times foreign exchange was traded on the telex machines, or cable, the pound has generally the nickname “cable”.

In 1930, the Bank for International Settlements was established in Basel, Switzerland, to oversee the financial efforts of the newly independent countries, emerged after the World War I, and to provide monetary relief to countries experiencing temporary balance of payments difficulties. After the World War II, where the British economy was destroyed and the United States was the only country not scarred by war, U. S. dollar became the prominent currency of the entire globe. Nowadays, currencies all over the world are generally quoted against the U. S. dollar. Factors Caused Foreign Exchange Volume Growth. Foreign exchange trading is generally conducted in a decentralized manner, with the exceptions of currency futures and options. Foreign exchange trading has experienced spectacular growth in volume ever since currencies were allowed to float freely against each other.. Interest Rate Volatility. Economic internationalization generated a significant impact on interest rates as well. Economics became much more interrelated and that exacerbated the need to change interest rates faster.

Interest rates are generally changed in order to adjust the growth in the economy, and interest rate differentials have a substantial impact on foreign exchange rates. Business Internationalization. In recent decades the business world the competition has intensified, triggering a worldwide hunt for more markets and cheaper raw materials and labor. The pace of economic internationalization picked up even more in the 1990s, due to the fall of Communism in Europe and to up-and-down economic and financial development in both Southeast Asia and South America. These changes have been positive toward foreign exchange, since more transactional layers were added. Increasing of Corporate Interest. A successful performance of a product or service overseas may be pulled down from the profit point of view by adverse foreign exchange conditions and vice versa. An accurate handling of the foreign exchange may enhance the overall international performance of a product or service. Proper handling of foreign exchange generally adds substantially to the rate of return.

Therefore, interest in foreign exchange has increased in the past decade. Many corporations are using currencies not only for hedging, but also for capitalizing on opportunities that exist solely in the currency markets. Click-here for Trading Tip of the Day. Increasing of Traders Sophistication. Advances in technology, computer software, and telecommunications and increased experience have increased the level of traders' sophistication. This FOREX. On-line Manual For Successful Trading enhanced traders' confidence in their ability to both generate profits and properly handle the exchange risks. Therefore, trading sophistication led toward volume increase. Developments in Telecommunications. The introduction of automated dealing systems in the 1980s, of matching foreign exchange trading systems in the early 1990s, and of foreign currency trading in the late 1990s completely altered the way foreign exchange was conducted.

The dealing systems are on - line computer systems that link banks on a one-to-one basis, while matching systems are electronic brokers. They are reliable and much faster, allowing traders to conduct more simultaneous foreign "exchange market" trades. They are also safer, as forex currencies traders are able to see the deals they execute. The dealing systems had a major role in expanding the foreign exchange business due to their reliability, speed, and safety. Computer and Programming Development. Computers play a significant role at many stages of conducting foreign exchange. In addition to the dealing systems, matching systems simultaneously connect all traders around the world, electronically duplicating the brokers' market. The new office systems provide full accounting coverage, ticket writing, back office processing, and risk management implementation at a fraction of their previous cost. Advanced software makes it possible to generate all types of charts, supplement the charts with technical studies, and put them at traders' fingertips on a continuous basis at a reasonable cost. What is Forex?

What are rates of exchange? Start your basic Forex education from learning about what global Forex currency market is and who are its main participants. This chapter will cover the following questions: why Forex is not market in a direct meaning of this word, what is the reason of its popularity, what features make Forex different from other financial markets and how to benefit from the rates of exchange. Forex (Foreign Exchange or FX) is an international currency exchange. Have you ever changed your domestic currency into a foreign one? Let's remember how it works: we buy some foreign currency, which price is suppose to grow in the nearest future. Then, when the price goes up, we change domestic currency back, thus we earn the difference in exchange rates and make this trade according to the best exchange rate found. The Forex market works in the same way. Although we do not have to wait for months till market exchange rate moves up, today rates change in minutes. As for market access, we need only computer with Metatrader software and an access to the Internet. Download MetaTrader 4 right now to plunge into the process. Forex is the financial market which was formed in the 1970s in the result of refusal from Bretton Woods system of fixed international currency rates. Rapid communications and computers development allowed banks to trade currencies "directly" in the electronic payment systems, without using special organizations - exchanges.

Note: In July 1944, in the town of Bretton Woods, New Hampshire, USA 44 States conceived the International Monetary Fund (IMF). This international organization oversees the balance of payments of its member countries and exchange rates of their currencies. Those agreements were aimed to establish the system of fixed exchange rates (Fixed exchange rate regime). This system was based on gold. One ounce of gold was equal to 35 U. S. dollars. Currencies of all other IMF member countries were tied to the dollar at a fixed rate. For example, the pound was worth $ 4.80, and the Japanese yen – 360 yen per $ 1. Though IMF established a system of fixed exchange rates for member countries, still there was an opportunity to correct national currency rate in case of emergency. For example, price of the pound changed twice: in September 1947 it was $ 2.80 and in November 1967 it was $ 2.40. Despite the fact that system worked well in the 50s-60s it began to falter in early 70s and in 1971 was canceled. Since then, systems of floating exchange rates (flexible exchange rate) and regulated rates (regulated exchange rate) started to be in use. As a result, rate of each currency started to be determined by market conditions, but firstly and mainly by level of economic condition of the country. Some currencies rates had dropped down, but some of them had increased. For example, in 1944 the U. S. dollar was equal to 360 Japanese yen and in April 2005 – 107 Japanese yen. In this regard, money became a popular instrument of international investment, like stocks and bonds. Thus, Forex is not a "market" in its traditional meaning. It does not have a certain center and a certain place to trade.

All trading is conducted by global information networks that link different participants all over the world. Now let's look closer at the Forex market members: Central banks. Performing operations in foreign exchange market, central banks are responsible for foreign exchange reserves. Usually they are in market to regulate a national currency rate, which is called intervention. The system is easy: banks buy a currency to make it stronger and more expensive, and sell to make it weaker and cheaper. Commercial and investment banks engaged in investment in foreign assets, hedge and investment funds, insurance companies and other entities that control attracted funds, are also members of the Forex market, acting with the aim of preservation of funds. Foreign trade companies , exporting or importing goods and services are forced to be regular participants of the Forex market in order to conduct mutual settlements and manage the risks. Other active market participants trade through brokerage companies as well as forex departments of banks so these organizations have the bulk of foreign exchange transactions. In this regard, the Forex market is often called interbank. Often these organizations conduct operations independently by means of either their own or attracted funds with the aim to gain profit. Traders (stock, market, commodity traders etc.) are the individuals, who conduct currency transactions to gain profit in their own. Open a trading account and fund it with the deposit to start making profit the same way. Now, when we know market structure, let's figure out, why this market has become so popular and attractive for both beginner and professional traders.

Forex - Foreign Currency Transactions. Individual investors who are considering participating in the foreign currency exchange (or “forex”) market need to understand fully the market and its unique characteristics. Forex trading can be very risky and is not appropriate for all investors. It is common in most forex trading strategies to employ leverage. Leverage entails using a relatively small amount of capital to buy currency worth many times the value of that capital. Leverage magnifies minor fluctuations in currency markets in order to increase potential gains and losses. By using leverage to trade forex, you risk losing all of your initial capital and may lose even more money than the amount of your initial capital. You should carefully consider your own financial situation, consult a financial adviser knowledgeable in forex trading, and investigate any firms offering to trade forex for you before making any investment decisions. Background: Foreign Currency Exchange Rates, Quotes, and Pricing. A foreign currency exchange rate is a price that represents how much it costs to buy the currency of one country using the currency of another country. Currency traders buy and sell currencies through forex transactions based on how they expect currency exchange rates will fluctuate. When the value of one currency rises relative to another, traders will earn profits if they purchased the appreciating currency, or suffer losses if they sold the appreciating currency.

As discussed below, there are also other factors that can reduce a trader’s profits even if that trader “picked” the right currency. Currencies are identified by three-letter abbreviations. For example, USD is the designation for the U. S. dollar, EUR is the designation for the Euro, GBP is the designation for the British pound, and JPY is the designation for the Japanese yen. Forex transactions are quoted in pairs of currencies ( e. g. , GBPUSD) because you are purchasing one currency with another currency. Sometimes purchases and sales are done relative to the U. S. dollar, similar to the way that many stocks and bonds are priced in U. S. dollars. For example, you might buy Euros using U. S. dollars. In other types of forex transactions, one foreign currency might be purchased using another foreign currency. An example of this would be to buy Euros using British pounds - that is, trading both the Euro and the pound in a single transaction. For investors whose local currency is the U. S. dollar ( i. e. , investors who mostly hold assets denominated in U. S. dollars), the first example generally represents a single, positive bet on the Euro (an expectation that the Euro will rise in value), whereas the second example represents a positive bet on the Euro and a negative bet on the British pound (an expectation that the Euro will rise in value relative to the British pound). There are different quoting conventions for exchange rates depending on the currency, the market, and sometimes even the system that is displaying the quote. For some investors, these differences can be a source of confusion and might even lead to placing unintended trades. For example, it is often the case that the Euro exchange rates are quoted in terms of U. S. dollars. A quote for EUR of 1.4123 then means that 1,000 Euros can be bought for approximately 1,412 U. S. dollars. In contrast, Japanese yen are often quoted in terms of the number of yen that can be purchased with a single U. S. dollar. A quote for JPY of 79.1515 then means that 1,000 U. S. dollars can be bought for approximately 79,152 yen. In these examples, if you bought the Euro and the EUR quote increases from 1.4123 to 1.5123, you would be making money. But if you bought the yen and the JPY quote increases from 79.1515 to 89.1515, you would actually be losing money because, in this example, the yen would be depreciating relative to the U. S. dollar ( i. e. , it would take more yen to buy a single U. S. dollar).

Before you attempt to trade currencies, you should have a firm understanding of currency quoting conventions, how forex transactions are priced, and the mathematical formulae required to convert one currency into another. Currency exchange rates are usually quoted using a pair of prices representing a “bid” and an “ask.” Similar to the manner in which stocks might be quoted, the “ask” is a price that represents how much you will need to spend in order to purchase a currency, and the “bid” is a price that represents the (lower) amount that you will receive if you sell the currency. The difference between the bid and ask prices is known as the “bid-ask spread,” and it represents an inherent cost of trading - the wider the bid-ask spread, the more it costs to buy and sell a given currency, apart from any other commissions or transaction charges. Generally speaking, there are three ways to trade foreign currency exchange rates: On an exchange that is regulated by the Commodity Futures Trading Commission (CFTC). An example of such an exchange is the Chicago Mercantile Exchange, which offers currency futures and options on currency futures products. Exchange-traded currency futures and options provide traders with contracts of a set unit size, a fixed expiration date, and centralized clearing. In centralized clearing, a clearing corporation acts as single counterparty to every transaction and guarantees the completion and credit worthiness of all transactions. On an exchange that is regulated by the Securities and Exchange Commission (SEC). An example of such an exchange is the NASDAQ OMX PHLX (formerly the Philadelphia Stock Exchange), which offers options on currencies ( i. e. , the right but not the obligation to buy or sell a currency at a specific rate within a specified time). Exchange-traded options on currencies also provide investors with contracts of a set unit size, a fixed expiration date, and centralized clearing.

In the off-exchange market. In the off-exchange market (sometimes called the over-the-counter, or OTC, market), an individual investor trades directly with a counterparty, such as a forex broker or dealer; there is no exchange or central clearinghouse. Instead, the trading generally is conducted by telephone or through electronic communications networks (ECNs). In this case, the investor relies entirely on the counterparty to receive funds or to be able to trade out of a position. Risks of Forex Trading. The forex market is a large, global, and generally liquid financial market. Banks, insurance companies, and other financial institutions, as well as large corporations use the forex markets to manage the risks associated with fluctuations in currency rates. The risk of loss for individual investors who trade forex contracts can be substantial. The only funds that you should put at risk when speculating in foreign currency are those funds that you can afford to lose entirely, and you should always be aware that certain strategies may result in your losing even more money than the amount of your initial investment. Some of the key risks involved include: Quoting Conventions Are Not Uniform. While many currencies are typically quoted against the U. S. dollar (that is, one dollar purchases a specified amount of a foreign currency), there are no required uniform quoting conventions in the forex market. Both the Euro and the British pound, for example, may be quoted in the reverse, meaning that one British pound purchases a specified amount of U. S. dollars (GBPUSD) and one Euro purchases a specified amount of U. S. dollars (EURUSD).

Therefore, you need to pay special attention to a currency’s quoting convention and what an increase or decrease in a quote may mean for your trades. Transaction Costs May Not Be Clear. Before deciding to invest in the forex market, check with several different firms and compare their charges as well as their services. There are very limited rules addressing how a dealer charges an investor for the forex services the dealer provides or how much the dealer can charge. Some dealers charge a per-trade commission, while others charge a mark-up by widening the spread between the bid and ask prices that they quote to investors. When a dealer advertises a transaction as “commission-free,” you should not assume that the transaction will be executed without cost to you. Instead, the dealer’s commission may be built into a wider bid-ask spread, and it may not be clear how much of the spread is the dealer’s mark-up. In addition, some dealers may charge both a commission and a mark-up. They may also charge a different mark-up for buying a currency than selling it. Read your agreement with the dealer carefully and make sure you understand how the dealer will charge you for your trades. Transaction Costs Can Turn Profitable Trades into Losing Transactions. For certain currencies and currency pairs, transaction costs can be relatively large. If you are frequently trading in and out of a currency, these costs can in some circumstances turn what might have been profitable trades into losing transactions. You Could Lose Your Entire Investment or More. You will be required to deposit an amount of money (usually called a “security deposit” or “margin”) with a forex dealer in order to purchase or sell an off-exchange forex contract. A small sum may allow you to hold a forex contract worth many times the value of the initial deposit. This use of margin is the basis of “leverage” because an investor can use the deposit as a “lever” to support a much larger forex contract.

Because currency price movements can be small, many forex traders employ leverage as a means of amplifying their returns. The smaller the deposit is in relation to the underlying value of the contract, the greater the leverage will be. If the price moves in an unfavorable direction, then high leverage can produce large losses in relation to your initial deposit. With leverage, even a small move against your position could wipe out your entire investment. You may also be liable for additional losses beyond your initial deposit, depending on your agreement with the dealer. Trading Systems May Not Operate as Intended. Though it is possible to buy and hold a currency if you believe in its long-term appreciation, many trading strategies capitalize on small, rapid moves in the currency markets. For these strategies, it is common to use automated trading systems that provide buy and sell signals, or even automatic execution, across a wide range of currencies. The use of any such system requires specialized knowledge and comes with its own risks, including a misunderstanding of the system parameters, incorrect data that can lead to unintended trades, and the ability to trade at speeds greater than what can be monitored manually and checked. Fraud. Beware of get-rich-quick investment schemes that promise significant returns with minimal risk through forex trading.

The SEC and CFTC have brought actions alleging fraud in cases involving forex investment programs. Contact the appropriate federal regulator to check the membership status of particular firms and individuals. Special Risks of Off-Exchange Forex Trading. As described above, forex trading in general presents significant risks to individual investors that require careful consideration. Off-exchange forex trading poses additional risks, including: There Is No Central Marketplace. Unlike the regulated futures and options exchanges, there is no central marketplace in the retail off-exchange forex market. Instead, individual investors commonly access the forex market through individual financial institutions - or dealers - known as “market makers.” Market makers take the opposite side of any transaction; for example, they may be buying and selling the same foreign currency at the same time. In these cases, market makers are acting as principals for their own account and, as a result, may not provide the best price available in the market. Because individual investors often do not have access to pricing information, it can be difficult for them to determine whether an offered price is fair.

There Is No Central Clearing. When trading futures and options on regulated exchanges, a clearing organization can act as a central counter-party to all transactions in a way that may afford you some protection in the event of a default by your counterparty. This protection is not available in the off-exchange forex market, where there is no central clearing. Regulation of Off-Exchange Forex Trading. The Commodity Exchange Act permits persons regulated by a federal regulatory agency to engage in off-exchange forex transactions with individual investors only pursuant to rules of that federal regulatory agency. Keep in mind that there may be different requirements or treatment for forex transactions depending on which rules and regulations might apply in different circumstances (for example, with respect to bankruptcy protection or leverage limitations). You should also be aware that, for brokers and dealers, many of the rules and regulations that apply to securities transactions may not apply to forex transactions. The SEC is actively interested in business practices in this area and is currently studying whether additional rules and regulations would be appropriate.



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