Forex is the 'Foreign Exchange' marketplace for trading currencies internationally. Hence, the name. The Forex market is in fact, the largest financial network in the world accounting for daily average turnover in the trillions of dollars. Forex trading takes place through major banks, market makers, and brokerage houses around the world, and is open 24/7, five days a week. It's also a rapidly expanding market, as traders migrate over to Forex Trading and away from stocks.
In its simplest form, trading forex involves two currencies traded simultaneously, called a 'pair'. As an this example, the EUR/USD pair, trade the Euro against the US Dollar. A buyer of the pair therefore would be buying the Euro and selling the US Dollar. Forex pairs are described in the following format: XXX/YYY. The first currency in the pair; XXX, is referred to as the 'base' currency. The second symbol in the pair, YYY is the 'counter' currency. Prices will always be expressed in terms of the counter currency.
Expanding on this example, if the current price of the EUR/USD pair is shown as 1.3667, this means that 1 Euro (the base currency) equals $ 1.3667 US Dollars. Most major pairs are priced to 4 decimals, or 1/100th of one percent. The exception is the Japanese Yen pair, which trades only to 2 decimals. That's because there are typically over 100 Yen to the dollar. For instance, let's say the US Dollar is the base currency, in the USD/JPY pair where prices here are expressed in Japanese Yen. If the current price is 108.02, that means the base currency, the US Dollar, equals 108.02 Japanese Yen.
Prices in Forex are expressed in something called 'pips'. A pip is simply the minimum increment that a currency pair price can change. All that means is if the EUR/USD price changes from 1.3790 to 1.3791, the price is said to have gone up by 1 pip. Quotes on Forex pairs are on a bid-ask basis. The bid; price the market is willing to pay a seller at a point in time for a specific currency pair, the ask; the price that the market is willing to sell to a buyer in the same manner. The difference between the bid and the ask is called the bid/ask spread just like in stocks.
These Forex prices are always listed as Bid price first, Ask price second. For example, a typical EUR/USD quote could be 1.3784 Bid // 1.3787 Ask in which case the quote price would have a spread of 3 pips. The spread is how market makers are compensated, as opposed to 'commissions' paid for trading stocks or options. The spread will often vary depending on a number of factors such as: Current market conditions, specific brokers/market makers, and currency pairs being traded, just to name a few. In the EUR/USD example above, price quotes would be expressed simply as 1.3784/1.3787 or 1.3784/87.
Finally, we know that Forex trades in 'Lots' similar in a way to stocks. These lots can be delineated as types of lots including: standard, mini and micro. Standard lots trade 100,000 units of a currency pair while Mini lots trade 10,000 units and the micro lots trade 1,000 units. To illustrate this consider for example, a standard lot purchase, if the EUR/USD quote was 1.3784/1.3787, then buying this pair would mean buying 100,000 Euro dollars and selling short 137,870 US Dollars.
Sunday, May 15, 2011
Can we do forex trading from home?
Proponents of the trading system again, Trading House , people say that there is money to the wonderful world of investing in the comfort of your own home use. When will you ever wondered what it would be an operator on the market to make money by buying and selling stocks, the spread of such programs are signs that the time to participate fascinating. It is easy for the services of Forex trading systems, such as Trading House to try to make money with proven business systems and investment ideas. You can decide how much money you spend each day.
One good thing about this is that never dies. A person can trade any time day or night. Once they reach their goals and leave the goals for that day can not. At the beginning of a person's current work and trade, after their regular work to keep. However, many people find this type of investment so profitable that eventually leave their regular jobs to the adventure of making money are on the Forex market easily enjoy full-time basis. This system should have a history of success and very easy to use. Just follow the directions and strategies of the system and the long term you could be earning money every day. Not necessarily take some time to make money with. Some jobs are so good that an extra day can be achieved within a few hours. Thus, investors can day of work a few hours before calling it last a day and spend their leisure time.
There are basically two things, the business house system designed to help people achieve. First, you can learn to negotiate and make money with Forex Trading at any time of day. You can learn the basics and negotiation skills for the benefit of easy to learn with this system. Second place receives concrete information and tuition to enable them build their business to a trader. All this information can be up to success for someone who wants a deal. Soon hope to make as much money as they want to be experts in the field of forex trading.
The necessary investment in the use of the system is relatively low as the start-up companies. Moreover, Trading House comes with a warranty to protect your investment. Of course, all investments carry some risk, and people should be encouraged to see the system before investing. But change for someone to do the things and start real money will, it could be a system under study.