Archives for August 2007

FOREX Glossary

Here are some of the most common terms used in FOREX trading.

Ask Price – Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote – e.g. EUR/USD 1.1965 / 68 – means that one euro can be bought for 1.1968 UD dollars.

Bar Chart – A type of chart used in Technical Analysis. Each time division on the chart is displayed as a vertical bar which show the following information – the top of the bar is the high price, the bottom of the bar is the low price, the horizontal line on the left of the bar shows the opening price and the horizontal line on the right of bar shows the closing price.

Base Currency – is the first currency in a currency pair. A quote shows how much the base currency is worth in the quote (second) currency. For example, in the quote – USD/JPY 112.13 – US dollars are the base currency, with 1 US dollar being worth 112.13 Japanese yen.

Bid Price – is the price a trader can sell currencies. The Bid Price is shown on the left side of a quote – e.g. EUR/USD 1.1965 / 68 – means that one euro can be sold for 1.1965 UD dollars.

Bid/Ask Spread – is the difference between the bid price and the ask price in any currency quotation. The spread represents the broker’s fee, and varies from broker to broker.

Broker – the intermediary between buyer and seller. Most FOREX brokers are associated with large financial institutions and earn money by setting a spread between bid and ask prices.

Candlestick Chart – A type of chart used in Technical Analysis. Each time division on the chart is displayed as a candlestick – a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising.

Cross Currency – A currency pair that does not include US dollars – e.g. EUR/GBP.

Currency Pair – Two currencies involved in a FOREX transaction – e.g. EUR/USD.

Economic Indicator – A statistical report issued by governments or academic institutions indicating economic conditions within a country.

First In First Out (FIFO) – refers to the order open orders are liquidated. The first orders to be liquidated are the first that were opened.

Foreign Exchange (FOREX, FX) – Simultaneously buying one currency and selling another.

Fundamental Analysis – Analysis of political and economic conditions that can affect currency prices.

Leverage or Margin – The ratio of the value of a transaction to the required deposit. A common margin for FOREX trading is 100:1 – you can trade currency worth 100 times the amount of your deposit.

Limit Order – An order to buy or sell when the price reaches a specified level.

Lot – The size of a FOREX transaction. Standard lots are worth about 100,000 US dollars.

Major Currency – The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.

Minor Currency – The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.

One Cancels the Other (OCO) – Two orders placed simultaneously with instructions to cancel the second order on execution of the first.

Open Position – An active trade that has not been closed.

Pips or Points – The smallest unit a currency can be traded in.

Quote Currency – The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.

Rollover – Extending the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate differentials.

Technical Analysis – Analysis of historical market data to predict future movements in the market.

Tick – The minimum change in price.

Transaction Cost – The cost of a FOREX transaction – typically the spread between bid and ask prices.

Volatility – A statistical measure indicating the tendency of sharp price movements within a period of time.

How Lucrative A Business Is Trading Forex?

Congratulations! You have stumbled upon this article because of your enterprising spirit, and perhaps, it is this very enterprising spirit that drives you to find great earning opportunities that can be carried out through online channels. You have most probably encountered the foreign exchange (forex) industry as well, and you’re wondering if this is an opportunity that is as good as promised. So the question that’s most probably in your mind is this: how lucrative a business is trading forex?

The answer to that question is an emphatic “very much,” dear friend.

1.5 trillion dollars are exchanged everyday in trading forex. Yes, you read that right. With that huge an amount, you could rest assured that the pie is big enough for a lot of people. But wait, there’s more! Trading forex is not a business that is known to the general public. And most of those who know about its existence are of the belief that trading forex is a rather inaccessible field. After all, trading is quite an intimidating subject in itself, what more when you add the fluctuating nature of currencies.

So currently, buyers outnumber forex traders by a ratio of 1,672:1. That’s 1,672 interested buyers for every seller! Imagine the earning possibilities that would be open for you if you decide to dabble in trading forex! You’d have 1,672 willing purchasers at any given time!

You could approach trading forex in two distinct ways. These are:

1. By highly investing on currency, and selling the same at the first sign of an increase in value.

2. By investing on currency and keeping it for quite some time until the peak of its potential increase in value is reached, then selling the same for profit. This is called hedge currency exchange investing.

Regardless of the two approaches you decide to pursue, you will stand to earn a lot from trading forex. If you have much money to use as investment, then you could take the short-term, high profit route. If you don’t have that much to spare, or if you want to be careful about your money, then hedge currency exchange investing is the only way to go.

When you decide to engage in trading forex, all the odds would be in your favor. But do bear in mind that even with overwhelming odds by your side, you would still need to muster enough commitment to jumpstart the necessary components and assure your success. Learn to love trading forex, and you would reap enormous rewards from the same.

?A Crash Course in Forex Education ??” What You Need to Know to Get Started

The Forex, or foreign currency exchange, is all about money. Money from all over the world is bought, sold and traded. On the Forex, anyone can buy and sell currency and with possibly come out ahead in the end. When dealing with the foreign currency exchange, it is possible to buy the currency of one country, sell it and make a profit. For example, a broker might buy a Japanese yen when the yen to dollar ratio increases, then sell the yens and buy back American dollars for a profit.

The Forex and the stock market have some similarities, in that it involves buying and selling to make a profit, but there are some differences. Unlike the stock market, the Forex has a much high liquidity. This means, much more money is changing hands everyday. Another key difference when comparing the Forex to the stock market is that the Forex has no place where it is exchanged and it never closes. The Forex involved trading between banks and brokers all over the world and provides twenty-four hour access during the business week.

Another difference between the stock market and the Forex is that Forex trading has much higher leverage that the stock market. When someone decides to invest in the Forex, they can expect much higher profits when they are experienced and understand how it works. There can also be the potential for losing much more money as well.

For those who are just getting started in the Forex, many brokers provide the service of trading using the mini-Forex system. This has a smaller minimum deposit, usually $100. This makes it easier for those learning how to trade on the Forex to have less of a chance of losing a lot of money and to learn how the system works.

There is a lot of terminology when dealing with the Forex. Learning to trade on the Forex can be somewhat complicated for the novice trader. When looking at the names used in the Forex, a symbol is composed of two parts. The first one that is used is one currency and the second half of the symbol is the second currency that is being used. The symbol “usdjpy” means “US dollars” and Japanese yen. It is important to learn what currency symbols mean when learning about the Forex. There are many books and websites dedicated on teaching traders about using the Forex.

For those using the Forex, a broker is usually a good idea. Brokers are professionals when it comes to trading on the Forex and their experience is invaluable, especially to the new trader. When it is time to find a broker, there are several factors to consider. One thing to look for when choosing a Forex broker is to go with someone that offers low spreads. The spread is calculated in pips, or the difference between the price at which currency can be purchased and the price it can be sold at any given time. Because Forex brokers do not charge a commission, they will make their money off of the spreads, or the difference. When choosing a broker, look at this information and compare that with other brokers.

Also, when looking at a Forex broker, look for one that is backed by a well known financial institution. Forex bankers are generally associated with large banks or other types of financial institutions. If a broker is not with a large bank, keep looking. In addition, find a broker that is registered with the Futures Commission Merchant (FCM) and that is regulated by the Commodity Futures Trading Commission (CFTC). Making sure that the broker is properly registered and backed by a large bank or institution ensures that you are getting a reliable broker that is experienced in trading on the Forex.

When looking for a broker, check to be certain that the broker has access to the latest research tools and data. It is important that brokers understand and have access to charts, graphs, news and data that are in real time. This will ensure that the broker is making wise decisions based on accurate Forex forecasting. Also, look for a broker that can offer a wide range of account options. They should offer mini-accounts with a smaller minimum deposits and a standard account. This will give anyone interested in the Forex the opportunity to trade at a level where they feel most comfortable.

?The Appeal of Forex Trading Versus the Stock Market

Forex trading is appealing to many more people than the stock market does and for many reasons. Among the reason is the chance of a much greater return. Foreign currency fluctuations of just one or two percent, occurring on a daily basis, have a chance of returning great rewards to an investor who catches a wave of change and properly plans his entrance and exist strategy. Many people also like the fact that more leverage is available with foreign currency exchange. For example, 10,000 dollars can be leveraged to purchase as much as 100,000 dollars through margins. This allows the chance of great returns, even at only one percent, with less risk than might otherwise be necessary.

Also the market is open 24 hours a day for forex trading while the stock market is only open during business hours. Also many people point out that most forex trading is done without paying commissions, which can amount to significant savings.

Many people who don’t understand forex and have some experience with the stock market immediately think that it is risky and has low profit margins, some would say tiny. They get this idea however because less information in available on forex than other types of trading. Forex requires a trader to education himself. Rather than just turning on CNN or CNBC, a forex trader needs to read newsletters and find other ways of self-education.

Being open 24 hours a day and simply being huge is a big benefit for forex trading. A forex trader can literally work 24 hours a day, moving from the Asian market to the European to the American. Couple this with the leverage opportunities then the chances of large profit with forex are phenomenal.

Of course stocks have their advantage in that a person can invest in the stock market without really knowing that much and probably do fine. If an investor buys blue chip stocks they are unlikely to go down in value. For long term savings stocks are fine, but the short term large gains are definitely to be found with forex.

Many people don’t realize how large the forex market is. It is so huge that no single investor can corner the market as has happened in the past with some stocks, and also with some precious metals and commodities.

Forex is considered by some people however to be risky. Pension funds rarely invest in forex. However for the smart investor who has time to become educated, forex can be the way to go. The billionaire George Soros is a prime example of someone who has done well with forex. He shorted the British pound sterling and made $2 billion in profit at one point. He also makes over 60% returns on the Quantum Fund, which he owns and has over $4 billion under management. Of course, Soros has also lost money, but he says “I simply make a lot of money when I am right…and lose as little money as possible when I am wrong.” Soros admits to being right only about half the time, but does very well when he is right. Soros’s philosophy is to look at a country and its stock market and see if current trends are wrong. If he believes that a current trend is overshot then he goes opposite it, and makes a killing.

In October 1987 the stock market crashed and Soros lost a staggering $200 million in just one day! His reply to this was stoic, “I made a very big mistake, because I expected the crash to come in Japan, and I was prepared for that, and it would have given me an opportunity to prepare for the falloff in this country, and actually it occurred in Wall Street and not in Japan. So I was wrong!” While this mistake cost him a great deal, it wasn’t the end of the world. Soros philosophy is if he is right, he makes a ton of cash, and if he is wrong he pays for his mistake and keeps on moving. A prime example of how good money can be made in forex by investors who are willing to study, learn, invest and take risks. While not for the timed, the chances of a good return from forex make it the place for daring entrepreneurs to try their hand.

Trade Forex

It is extremely easy to trade Forex and many day traders as well as investors are looking into Forex as a means to reach their investment goals. If you would like to trade Forex, here are some suggestions.

Investors that would like to trade Forex should know a few things before depositing money into their Forex account. Forex stands for foreign exchange market and Forex is the market that you go to when you would like to exchange and buy and sell currencies. Forex is the largest financial market in the world with almost 2 trillion dollars in trades each day.

You can trade Forex with relative ease because Forex doesn’t have a central market, so anyone in the world with a computer and access to a broker can trade Forex easily and in real time 24 hours a day on their computer.

Most brokers allow investors to trade Forex with as little as $250 in an account. Many brokers also offer you the option to leverage the money in your account to control almost 200 times worth your account balance.

For investors looking to trade Forex it is important to note that choosing a broker is very important because the broker you choose may have a unique interface, certain resources to find information and track trends, and different levels of customer service. If you are serious about trading Forex, understand the basics and do lots of research on the best Forex brokers. As with any investment, trading Forex is not without risk.

Currency Forex: The Online Business That No One Knows About

There are a lot of moneymaking opportunities online that offer great promises of monetary rewards. But most of them have become saturated, what with the many participants who struggle to get a piece of limited markets. But there is one magnificent opportunity that can be carried out through the Internet that not a lot of people know about. It’s called currency forex, and it can be your ticket to prosperity.

But what is currency forex?

Currency forex, or currency foreign exchange as it is formally called, is a business model that utilized the buy and sell model. Basically, this means that you should buy currencies when their values are low, and you sell them when the values increase. The difference, of course, would serve as your profit.

As with most ventures that using the buy and sell vehicle, speculation plays a great role in currency forex. Much like how speculation is the name of the game in predicting the rise and fall of stocks in stock exchange, or the increase and decrease of the worth of commodities in commodity trading, currency forex is a matter of predicting which currency would most probably experience a boost in value given the socio-political, economic, and cultural climates in the country wherein such currency is circulated.

This actually makes currency forex an exciting and fulfilling venture to pursue. It requires smarts as well as luck. You would need to make educated predictions about the currencies you’re eyeing. Will they be worth the investment or not? The answer to this does not lie on mere suppositions alone. Currency forex would need you to study the circumstances that affect the value of the currency and make a probable conclusion from the same.

If your dissertation reveals that the currency is bound to experience a spike in worth in the coming days, then buy as much as you could, or as much as a safe investment would allow. And when the increase is indeed experienced, sell what you have bought for some profit. This is how simple currency forex can be.

Currency forex is not the inaccessible online business opportunity that many people believe it to be. All you really need are a mind for the business, some money to spare, and good marketing skills. Aside from the financial demand, these things can be learned with ease, for as long as you have that passion to succeed.