Currency Trading

What is Forex trading?

The market has changed foreign exchange (Forex) market is critical, does not stop where it is traded currencies of all countries of the world through intermediaries. Is the purchase and sale of foreign currency permanently and synchronized across local and global markets and traders investments increase or decrease its value based on currency movements. And can change the conditions of the foreign exchange market at any time in reaction to the events of China.

Among the major incentives for currency trading by private investors and attractions for short-Trading - Forex-term effects on the following: trading 24 hours a day, 5 days a week, with the powers and uninterrupted access to global Forex dealers.

In addition to these incentives include:

* Market is characterized by the size of a huge liquidity, which makes most of the currency trading easy, "too.
* Advanced to changing market opportunities for profit.
* Forex standard tools to control the rate of exposure to risk.
* The ability to achieve profits in the high and low markets.
* Trading with leverage to promote borrowing with low margin requirements.
* Several options for trading with the commission percentage is zero.

Forex Trading

Profit is the goal of investors in the Forex trading through the movement of foreign currencies. Forex is trading or foreign exchange is always in pairs. For example, the exchange rate of EUR / USD on August 26, 2003 was 1.0857. Referred to this figure also what is known as the "Forex rate" or "average." If the investor bought 1000 euros on that date, it would have paid 1085.70 U.S. dollars. After years of this history, the average exchange rate was 1.2083, which means that the value of the euro (the numerical values of the ratio of exchange rate of EUR / USD) has increased in relation to the U.S. dollar investor can count on now is to sell the 1000 euros to receive 1208.30 dollars. Therefore, the investor will receive 122.60 U.S. dollars more than the amount which was started by a year ago. In any case in order to see whether the investor has good investment or not. We need to do this by comparing the investment options other investment alternatives. The minimum is a comparison of return on investment (ROI) return on investment "without risk". Example of a risk-free investment is long-term bonds to the U.S. government where there is no chance for error, such as the U.S. government going bankrupt or that can not or will not want to pay the obligations Maaleha creditor. (Please note that past performance is not a presumption of future performance)

When trading currencies you are trading only when you feel that the currency you are buying will increase value for the currency you are selling. If the increased value of the currency that you have purchased you must re-sell in order to secure access to your earnings. Open trading (also called open position) is trading where the trader may buy or sell a currency pair and has not to date the sale or purchase of the same value for the closure of this situation.

In general, it is estimated that between 70% and 90% of the FX market depend on intuition. We can formulate this in other words, saying that any person or institution have to purchase or sell currency they do not have a plan for delivery of currency at the end of the day, but once they had been forecast for the movement of such specified currency

Exchange rate

Where currencies are traded in pairs and are changed one versus the other when trading in which the rate of change is called the exchange rate. Most currencies are traded against the U.S. dollar (USD) over the next four currencies in the proportion of circulation is the euro (EUR) and Japanese Yen (JPY) and the pound sterling (GBP) and Swiss franc (CHF). They represent the majority of the five currency market and are called major currencies or "major". And includes some sources also the Australian dollar in the group of major currencies.

The first currency in the pair trading referred to as the base currency and the second currency is referred to counter or quote currency. For this reason, the counter or quote currency is the extension ratio and the base currency is the currency here. The value of the base currency (denominator) is always 1. Therefore, the exchange rate 'know how much the buyer must pay a coin counter, or offer to obtain one unit of the base currency. And know the exchange rate also how much the seller will receive a coin or counter offer when selling one unit of the base currency. For example, the exchange rate for EUR / USD of 1.2083 specifies to the buyer of euros that 1.2083 U.S. dollars must be paid to obtain 1 euro.

At any stage of the place or time, so if investor buys any currency and immediately sells it did not change in the exchange rate, that the investor will lose some money. The reason is that the offer price, which represents how much you will receive a coin counter, or offer when selling one unit of base currency is always less than the asking price, which represents how much must be paid from the coin counter, or offer to buy one unit of base currency. For example, the rates of price EUR / USD bid / ask at your bank may be 1.2015/1.3015 and represents a difference of 1000 points for the smallest rate of change (also called "points where 1 point smaller than the rate of change = 0.0001) and this rate is very high compared to an average price bid / ask currency that is found on the platform Forex investors such as direct 1.2015/1.2020 difference of 5 points for the smallest rate of change. In general, smaller differences are better for Forex investors since they are also asking for a smaller movement in exchange rates to profit from trading.

Most Forex traders and include ™ be compensated through the differences that are included in the exchange rate of currencies.

Margin - the amount risked by

Banks need and / or service providers on-line trading to ensure that confirms that the investor can pay in case of loss. This is called a security margin and is also known as minimum security in Forex markets. In practice, it is an amount deposited in the trader's account is intended to cover any currency trading losses in the future.

Margin can be private investors from trading in the markets have a high minimum units of trading by allowing traders to possession of the position of much greater than the value of their accounts. Trading volumes and the enhanced support loan rate of profit, but also potentially inflate the rate of losses and putting it on top of the risk the organization.

Finance financial leveraging

Leverage is the essence of the financing and the use of credit, such as trading using margin buying is common in forex. Loan / leverage in the account marginal content Biidaek principle. This may result in that you can control the amount of 100,000 dollars a few such as 1000 U.S. dollars and a relatively small movement in the market will have a greater impact on capital consistent with that money deposited or that you must deposit. This may work against you may also work to your advantage. May bear the loss of all Magmt deposited in the capital of margin and any additional funds you have deposited to maintain your position.

, There are five ways investors can trade in the Forex directly or indirectly:

* The spot market
* Deferred contracts and futures
* Options
* Contracts for difference
* Speculation in the difference

Immediate treatment

Immediate treatment is the process of direct exchange of one currency against another. Rate and spot rate is the current market price, also called the price of the image (the hallmark of the current moment). And online transactions do not require immediate settlement or payment of "at the same moment," the settlement date or maturity date is the second business day after the date of the transaction (or "trade date") on the basis of what was agreed upon in the treatment of each of the traders. The two-day period to confirm the agreement and arrange the liquidation of the necessary deposit or debit accounts in banks in several international locations.

Risk

Despite the fact that Forex trading can lead to very profitable results, there is some risk included. Rate risk traded price and the risk of interest rate and credit risks and risks related to the States, often lasting 80% of transactions across the board for a period of seven days or less while continuing to 40% of transactions for less than two days, taking into account the short life cycle of trading the typical, the technical indicators affect heavily on the decisions of entry and exit and the filing of applications.

For more information
For more information on the topics mentioned in the article above are please refer to daily circulation and enhanced borrowing and trading currency pairs to learn more about the tools offered by the Forex ™ Forex Account, please read on-line