вторник, 21 августа 2012 г.

Forex Trading for Beginners

Forex trading takes place on the foreign exchange market, the largest financial market in the world. It is a trading platform dedicated to the buying and selling of foreign currencies. Those engaged in Forex trading include banks, financial institutions, governments, currency speculators and corporations.

The difference between Forex trading on the foreign exchange market and other financial markets besides its huge size is that it has no physical location and takes place 24 hours a day, excepting weekends, right across the globe.

Forex trading literally follows the sun around the world. Trading moves from major banking centres of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S.

That said, there is a Forex trading centre in London, which is the largest and others in New York, Tokyo, Singapore and Hong Kong. As London is the largest Forex trading centre, it accounts for the highest amount of trading at 34 percent.

Forex trading takes place for two reasons. First is the trading activity of governments and companies that buy or sell products and services in foreign countries accounts for about 5 percent of daily turnover.


Speculation accounts for the remaining 95 percent. This type of forex trading goes on between investors who aim to make a profit on the difference between high and poor performance currencies. However, as the name suggests this type of forex trading can be compared to guess work as there are so many factors affecting a currency’s exchange rate on a given day that profits are not guaranteed.

The top ten forex trading dealers include Deutsche Bank, Barclays Capital, Royal Bank of Scotland, JP Morgan, Goldman Sachs and Morgan Stanley. These traders are said to account for 77 percent of all Forex trading and they influence the buy and sell prices of currencies on the global market due to the quantities of currency they move.

They may influence exchange rates, but in effect, no one company, bank or corporation has control over forex trading rates as the market is so large and there are so many players involved.

More than 85 percent of all daily transactions involve trading of the following major currencies: Australian Dollar, British Pound, Canadian Dollar, Japanese Yen, Swiss Franc, and the U.S. Dollar.

Currencies are traded in pairs, meaning simply that one currency is traded for another. Each currency is given an ISO code which identifies that currency easily. For example, the euro is EUR; the US dollar is USD; the Japanese yen is JPY; the Swiss franc is CHF and so on.
Currency pairs will appear as follows and certain pairs have their own terminology or nick names:

EUR/USD = “Euro”
USD/JPY = “Dollar Yen”
GBP/USD = “Cable” or “Sterling”
USD/CHF = “Swissy”
USD/CAD = “Dollar Canada” (CAD referred to as the “Loonie”)
AUD/USD = “Aussie Dollar”
NZD/USD = “Kiwi”

The exchange rate is basically the value of one currency expressed in terms of another. The base currency is the first currency in the pair, while the second currency is known as the counter currency.

1 комментарий:

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