This information was provided by Easy Forex.
The Forex market is a non-stop cash market where currencies of nations
are traded, typically via brokers. Foreign currencies are constantly
and simultaneously bought and sold across local and global markets and
traders' investments increase or decrease in value based upon currency
movements. Foreign exchange market conditions can change at any time in
response to real-time events.
The main enticements of currency dealing to private investors and attractions for short-term Forex trading are:
* 24-hour trading, 5 days a week with non-stop access to global Forex dealers.
* An enormous liquid market making it easy to trade most currencies.
* Volatile markets offering profit opportunities.
* Standard instruments for controlling risk exposure.
* The ability to profit in rising or falling markets.
* Leveraged trading with low margin requirements.
* Many options for zero commission trading.
Forex trading
The investor's goal in Forex trading is to profit from foreign currency
movements. Forex trading or currency trading is always done in currency
pairs. For example, the exchange rate of EUR/USD on Aug 26th, 2003 was
1.0857. This number is also referred to as a "Forex rate" or just
"rate" for short. If the investor had bought 1000 euros on that date,
he would have paid 1085.70 U.S. dollars. One year later, the Forex rate
was 1.2083, which means that the value of the euro (the numerator of
the EUR/USD ratio) increased in relation to the U.S. dollar. The
investor could now sell the 1000 euros in order to receive 1208.30
dollars. Therefore, the investor would have USD 122.60 more than what
he had started one year earlier. However, to know if the investor made
a good investment, one needs to compare this investment option to
alternative investments. At the very minimum, the return on investment
(ROI) should be compared to the return on a "risk-free" investment. One
example of a risk-free investment is long-term U.S. government bonds
since there is practically no chance for a default, i.e. the U.S.
government going bankrupt or being unable or unwilling to pay its debt
obligation.
When trading currencies, trade only when you expect the currency you
are buying to increase in value relative to the currency you are
selling. If the currency you are buying does increase in value, you
must sell back the other currency in order to lock in a profit. An open
trade (also called an open position) is a trade in which a trader has
bought or sold a particular currency pair and has not yet sold or
bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the FX market is
speculative. In other words, the person or institution that bought or
sold the currency has no plan to actually take delivery of the currency
in the end; rather, they were solely speculating on the movement of
that particular currency.
This information was provided by PRO-FOREX
FOREX (FOReign EXchange market) is an international foreign exchange
market, where money is sold and bought freely. In its present condition
FOREX was launched in the 1970s, when free exchange rates were
introduced, and only the participants of the market determine the price
of one currency against the other proceeding from supply and demand.
As far as the freedom from any external control and free competition
are concerned, FOREX is a perfect market. It is also the biggest liquid
financial market. According to various assessments, money masses in the
market constitute from 1 to 1.5 trillion US dollars a day. (It is
impossible to determine an absolutely exact number because trading is
not centralized on an exchange.) Transactions are conducted all over
the world via telecommunications 24 hours a day from 00:00 GMT on
Monday to 10:00 pm GMT on Friday. Practically in every time zone (that
is, in Frankfurt-on-Main, London, New York, Tokyo, Hong Kong, etc.)
there are dealers who will quote currencies.
FOREX is a more objective market, because if some of its participants
would like to change prices, for some manipulative purpose, they would
have to operate with tens of billions dollars. That is why any
influence by a single participants in the market is practically out of
the question. The superior liquidity allows the traders to open and/or
close positions within a few seconds. The time of keeping a position is
arbitrary and has no limits: from several seconds to many years. It
depends only on your trading strategies. Although the daily
fluctuations of currencies are rather insignificant, you may use the
credit lines, that are accessible even to currency speculators with
small capitals ($ 1,000 - 5,000), where the profit may be impressive.
(You can learn more about it in the section: The main principles of
trading.)
The idea of marginal trading stems from the fact that in FOREX
speculative interests can be satisfied without a real money supply.
This decreases overhead expenses for transferring money and gives an
opportunity to open positions with a small account in US dollars,
buying and selling a lot of other currencies. That is, on can conduct
transactions very quickly, getting a big profit, when the exchange
rates go up or down. Many speculative transactions in the international
financial markets are made on the principles of marginal trading.
Margin trading is trading with a borrowed capital. Marginal trading in
an exchange market uses lots. 1 lot equals approximately $100,000, but
to open it it is necessary to have only from 0.5% to 4% of the sum.
For example, you have analyzed the situation in the market and come to
the conclusion that the pound will go up against the dollar. You open 1
lot for buying the pound (GBP) with the margin 1% (1:1000 leverage) at
the price of 1.49889 and wait for the exchange rate to go up. Some time
later your expectations become true. You close the position at 1.5050
and earn 61 pips (about $ 405). For the calculation of 1 pip click here.
Everyday fluctuations of currencies constitute about 100 to 150 pips,
giving FX traders an opportunity to make money on these changes.
In FOREX, it's not obligatory to buy some currency first in order to
sell it later. It's possible to open positions for buying and selling
any currency without actually having it. Usually Internet-brokers
establish the minimum deposit such as $ 2000, for working in the FOREX
market, and grant a leverage of 1:100. That is, opening the position at
$100,000, a trader invests $1,000 and receives $99.000 as a credit. The
major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY),
British Pound (GBP), and Swiss Franc (CHF). All of them are traded
against the US dollar (USD).
In order to assess the situation in the market a trader has to be able
to use fundamental and/or technical analysis, as well as to make
decisions in the constantly changing current of information about
political and economic character. Most small and medium players in
financial markets use technical analysis. Technical analysis
presupposes that all the information about the market and its further
fluctuations is contained in the price chain. Any factor, that has some
influence on the price, be it economic, political or psychological, has
already been considered by the market and included in the price. The
initial data for a technical analysis are prices: the highest and the
lowest prices, the price of opening and closing within a certain period
of time, and the volume of transactions.
A technical analysis is founded on three suppositions:
* Movement of the market considers everything;
* Movement of prices is purposeful;
* History repeats itself.
That is, technical analysis is a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.
A number of technical indicators have been installed into the
PRO-CHARTS trading system. Analyzing the indicators one can come to the
conclusion about further movements of the quoted currencies. For a more
detailed description of the indicators, analyzing price charts and
volumes of trading, click here.
Fundamental analysis is an analysis of current situations in the
country of the currency, such as its economy, political events, and
rumors. The country's economy depends on the rate of inflation and
unemployment, on the interest rate of its Central Bank, and on tax
policy. Political stability also influences the exchange rate. Policy
of the Central Bank has a special role, as concentrated interventions
or refusal from them greatly influence the exchange rate.
At the same time one should not consider fundamental analysis just as
an analysis of the economic situation in the country itself. A far
bigger role in the FOREX market belongs to the expectations of the
market participants and their assessment of these expectations. Various
prognoses and bulletins, issued by the participants, have a strong
influence on the expectations. Very often an effect of the so-called
self-filfilling prophecy occurs when market players raise or lower the
exchange rates according to the prognosis. But a deep and thorough
fundamental analysis is available only for big banks with a staff of
professional analysts and constant access to a wide field of
information.
In spite of these different approaches, both forms of analyses
complement one another. Traders who act on the basis of a fundamental
analysis, have to consider some technical characteristics of the market
(the main rates of support, such as resistance and resale), and
supporters of the technical approach to the market must track the main
news (interest rates, important political events).
The main merits of the FOREX market are:
* The biggest number of participants and the largest volumes of transactions;
* Superior liquidity and speed of the market: transactions are conducted within a few seconds according to online quotes;
* The market works 24 hours a day, every working days;
* A trader can open a position for any period of time he wants;
* No fees, except for the difference between buying and selling prices;
* An opportunity to get a bigger profit that the invested sum;
* Qualified work in the FOREX market can become your main professional activity;
* You can make deals any time you like.
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DISCLAIMER AND RISK WARNING
Trading foreign exchange on margin carries a high level of risk, and may not be
suitable for all investors. The high degree of leverage can work against you as
well as for you. Before deciding to invest in foreign exchange you should
carefully consider your investment objectives, level of experience, and risk
appetite. The possibility exists that you could sustain a loss of some or all of
your initial investment and therefore you should not invest money that you
cannot afford to lose. You should be aware of all the risks associated with
foreign exchange trading, and seek advice from an independent financial advisor
if you have any doubts
Forex trading has large potential rewards, but also large potential
risk. You must be aware of the risks and be willing to accept them in
order to invest in the forex market. Don't trade with money you can't
afford to lose. This ad/presentation is neither a solicitation nor an
offer to trade forex. No representation is being made that any account
will or is likely to achieve profits or losses similar to those
discussed on this ad/presentation. The past performance of any trading
system or methodology is not necessarily indicative of future results.
Trading foreign currencies is a challenging and potentially profitable
opportunity for educated and experienced investors. However, before
deciding to participate in the Forex market, you should carefully
consider your investment objectives, level of experience and risk
appetite. There is considerable exposure to risk in any foreign
exchange transaction. Any transaction involving currencies involves
risks including, but not limited to, the potential for changing
political and/or economic conditions that may substantially affect the
price or liquidity of a currency.
Moreover, the leveraged nature of FX trading means that any market
movement will have an equally proportional effect on your deposited
funds. This may work against you as well as for you. The possibility
exists that you could sustain a total loss of initial margin funds and
your position will be liquidated and you will be responsible for any
resulting losses. Investors are recommended to lower exposure to risk
by employing risk-reducing strategies such as 'stop-loss' or 'limit'
orders. Me and my products will not be held responsible for the
reliability or accuracy of the information available on this
ad/presentation. The content provided is put forward in good faith and
believed to be accurate, however, there are no explicit or implicit
warranties of accuracy or timeliness made by me and/or my products.
Hypothetical or simulated performance results have certain limitations.
Unlike an actual performance record, simulated results do not represent
actual trading. Also, since the trades have not been executed, the
results may have under-or-over compensated for the impact, if any, of
certain market factors, such as lack of liquidity. Simulated trading
programs in general are also subject to the fact that they are designed
with the benefit of hindsight. No representation is being made that any
account will or is likely to achieve profit or losses similar to those
shown.
© 2009 FOREX News Trader Indonesia News Trading FREE Forex Trading System Forex Strategy and Robot Expert Advisor EA at best Value Belajar Forex Panduan Forex
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