Forex Made Easy for Everyone
Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. That is some figure to chew on. Forex is the commonly used term for foreign exchange. As a person who wants to invest in the forex market, one should understand the basics of how this currency market operates. Forex can be made easier for beginners to understand it and here's how.
Foreign exchange is the buying and the selling of foreign exchange in pairs of currencies. For example you buy US dollars and sell UK Sterling pounds or you sell German Marks and buy Japanese Yen. Why are currencies bought or sold? The answer is simple; Governments and Companies need foreign exchange for their purchase and payments for various commodities and services. This trade constitutes about 5% of all currency transactions, however the other 95% currency transactions are done for speculation and trade. In fact many companies will buy foreign currency when it is being traded at a lower rate to protect their financial investments. Another thing about foreign exchange market is that the rates are varying continuously and on daily basis. Therefore investors and financial managers track the forex rates and the forex market it on a daily basis.
Those who are involved in the forex trade know that almost 85% of the trading is done in only US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. This is because they are the most liquid of foreign currencies (can be easily bought and sold. In fact the US Dollar is most recognizable foreign currency even in countries like Afghanistan, Iraq, Vietnam etc).
Being a truly 24/7 market, the currency trading markets opens in the financial centers of Sydney, Tokyo, London and New York in that sequence. Investors and speculators alike respond to the ever-changing situations and can buy and sell simultaneously the currencies. In fact many operate in two or more currency market using arbitrage to gain profits (buying in one market and selling in another market or vice versa to take advantage of the prices and book profits).
While dealing in forex, one should have a margin account. Quite simply put if you have US$ 1,000 and have a forex margin account which leverages 100:1 then you can buy US$ 100,000 since you only need 1% of the US$100,000 or US$1,000. Therefore it means that with margin account you have US$ 100,000 worth of real purchasing power in your hand.
Since the foreign currency market is fluctuating on a continuous basis, one should be able to understand the factors that affect this currency market. This is done through Technical Analysis and Fundamental Analysis. These two tools of trade are used in a variety of other markets such as equity markets, stock markets, mutual funds markets etc. Technical Analysis refers to reading, summarizing and analyzing data based on the data that is generated by the market. While fundamental Analysis refers to the factors, which influence the market economy, and in turn how it would affect the currency trading. Of course there are other economic and non economic factors which can suddenly affect the trading of the forex markets such as the 9/11 tragedy etc. One needs to have a shrewd acumen and a few number crunching abilities to strike gold in the forex market.
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Latest News
Mexico probes possible currency trading violations International Herald Tribune, France - Mexican officials have blamed the peso's steep decline in the past week in large part on the trade in currency derivatives — buying a foreign currency by ... |
 BBC News | Iceland c.bank sets up temporary FX trading system Forbes, NY - REYKJAVIK, Oct 15 (Reuters) - Iceland's central bank said on Wednesday it had set up a temporary trading system to allow for international currency ... Iceland cuts interest rates in bid to revive economy Iceland Cuts Key Interest Rate to 12% From 15.5% (Update2) Drops policy rate to 12% from 15.5% after banking-sector collapse |
 Investment Markets | Nikkei Falls 9.6% on Economic Concerns Wall Street Journal - Growth is looking pretty dismal," said Bank of New Zealand Currency Strategist Danica Hampton in Wellington. Reflecting those concerns, base metal and crude ... Yen Gains as Recession Outlook Spurs Sales of High-Yield Assets Yen's upward trajectory is following familiar patterns as risk ... Forex Trading Conditions Improve After Coordinated Effort to Boost ... |
Dollar benefits as risk aversion saps rivals MarketWatch - It was buying 99.88 yen, down from 102.15 in North American trading late Tuesday. "The yen is showing its risk barometer colors again," wrote currency ... Dollar pares losses vs. euro, pound |
Stocks Fall in Early Trading After Gloomy Reports Washington Post, United States - The temporary surge in consumer spending last summer on tax rebate checks has come to an abrupt end, Michael Woolfolk, senior currency strategist for The ... |
FX Concepts Selects Deltix QuantOffice (TM) Product Suite for ... MarketWatch - The company currently has approximately $14 billion under management in currency overlay and absolute return programs for institutional clients worldwide. ... |
 BBC News | Cola profit tops view; shares rally guardian.co.uk, UK - Given the recent fluctuations in currency trading, Fayard said "it would be impractical" to say how currency would impact sales and profits in 2009. ... Coca-Cola Profit Rises on International Sales; Shares Climb Coca-Cola's 3Q profit up 14 percent Coca-Cola Q3 profit rises 14% on strong international growth, tops ... |
Currency Trading Signals Prove Accurate on Strong Market Volatility Daily FX, NY - ... Our breakout and momentum-oriented trading strategies continue to outperform through recent trade, and extremely elevated levels of currency options’ ... |
Brazilian stock trading suspended on 10 pc fall Economic Times, India - The Brazilian currency, the real, dropped more than four percent against the dollar, trading at 2.19 to the greenback. The South American nation has been ... Brazil Stocks Plunge on Lower Growth Prospects, Currency Losses |
 Telegraph.co.uk | Global Slowdown Shivers Overcome Bailout Bulls Forbes, NY - Worse than expected results at Posco and LG Display darkened the picture for equities and currency trading in South Korea. The benchmark KOSPI index headed ... Video: Asia Markets Mostly Up Monday Global Stock Markets Remain Vulnerable 3rd UPDATE: Asian Shares Mostly Higher; Some Caution Remains |
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