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Forex Beginners Reading: Make Money In Foreign Currency Excahnge
By Mohammed Walji
I bet you are well aware of the existent of FOREX trading nowadays. FOREX market exists wherever one is traded for another. FOREX, or Foreign Exchange Market, is generally works as an international exchange market. Investors and speculators are allowed to trade currencies from all around the world thru FOREX trading. Major currencies traded nowadays are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.
FOREX is a very unique type of trading where traders are buying and selling ‘money’ in the same time. The trades are done in pairs, such as Euro/JPY, USD/CHF, and CAD/USD. It is the world largest trading market where an average of $1.9 trillion trades is done on a daily basis. The turnover rates in FOREX are nearly 30 times larger than the total volume of equity trades in United States.
Despite its large volume of trades done daily, FOREX is relative new to the publics nonetheless. It is only made available to publics in year 1998 where big sized inter-bank units are sliced into smaller pieces and offered to individual traders like you and me. Before that, FOREX is a game only for banks, multi national cooperation, and big dealers. Only those with large business size and strong financial background were permitted to trade foreign currencies.
As a matter of fact, large international banks are still the major traders in exchange market. Deutsche Bank is one of the top traders; along with other major banks like UBS, Citi Group, HSBC, Barclays, J. P. Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch; these banks are said to be responsible for more than 70% trades in market.
If you are new to FOREX trading, I bet the FOREX quotes will confuse you. USD/JPY 119.8, EUR/JPY 127.95, EUR/USD 1.2385/1.2390, and GBP/USD 1.7360/65 – these figures are just too complicated.
While FOREX quotes might looks like Greeks to the new comers, the concept behind of it is simple. quoted in pairs simply means the relative value compare to the other. Always remember, listed at first in a FOREX quote has a constant value of 1. If you see USD/JPY 119.8, this means 1 USD (the first listed has a constant value of 1) is equal to 119.8 Japanese Yens. The USD in our example is known as base currency; while we normally call the listed in the second as the counter.
When you are trading FOREX with dealer, the FOREX quotes might look a bit different from our previous example. Often, a two-sided quote, consisting of ‘bid’ and ‘ask’ price, is listed when dealing with brokers. For example, EUR/USD 1.2385/1.2390: 1.2385 is known as the ‘bid’ price while 1.2390 is commonly known as the ‘ask’ or ‘buy’ price. The 'bid' is the price at which you can sell the base currency; while the 'ask' is the price at which you can buy the base currency. As you study the numbers, you might realize that the two-sided price is quoted against you. Traders are forced to buy the in a higher price than the selling one. This is done because FOREX trades are done without any commission chargers. Thru quoting ‘bid & ask’ price
Forex: USD/CAD rises to 1.0480
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<a href="http://community.nasdaq.com/news/2010-09/forex-usdcad-rises-to-10480.aspx?storyid=35489" style="font-size:1.2em">Forex: USD/CAD rises to 1.0480</a>
<br> <span style="color:#888888;">NASDAQ</span> - <span style="white-space:nowrap">3 hours ago </span>
<div style="width:80%;">FXstreet.com (Córdoba) - The Canadian Dollar is falling sharply against Greenback on Tuesday and currently trades at the lowest levels since last Friday. USD/CAD holds near daily highs that lie at ...</div>
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Forex: USD/CAD rises to 1.0480rises
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<a href="http://www.fxstreet.com/news/forex-news/article.aspx?storyid=d6e82b30-0bb6-4103-b1e2-95bf8428ce47" style="font-size:1.2em">Forex: USD/CAD rises to 1.0480rises</a>
<br> <span style="color:#888888;">FXstreet.com The Forex Market</span> - <span style="white-space:nowrap">3 hours ago </span>
<div style="width:80%;">FXstreet.com (Córdoba) ? The Canadian Dollar is falling sharply against Greenback on Tuesday and currently trades at the lowest levels since last Friday. USD/CAD holds near daily highs that lie at ...</div>
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| EXCHANGE RATE
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<a href="http://www.dailynews.lk/2010/09/07/ExchangeRate.asp" style="font-size:1.2em">| EXCHANGE RATE</a>
<br> <span style="color:#888888;">Ceylon Daily News</span> - <span style="white-space:nowrap">Sep 6, 2010 </span>
<div style="width:80%;">Exchange Rates on 06.09.2010 (1) The average rates of the following currencies quoted by commercial banks in Colombo for Telegraphic Transfers (TT) at 9.30 am are as follows: Currency Buying Rate ...</div>
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Canadian Dollar Declines Against Most Majors
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<a href="http://www.rttnews.com/Content/CanadianNews.aspx?Node=B1&Id=1411136" style="font-size:1.2em">Canadian Dollar Declines Against Most Majors</a>
<br> <span style="color:#888888;">RTT News</span> - <span style="white-space:nowrap">Sep 6, 2010 </span>
<div style="width:80%;">(RTTNews) - The Canadian dollar traded lower against most major opponents during early New York morning deals on Tuesday. Against the US dollar, the loonie edged down in European and early New ...</div>
<a href="http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/09/07/bloomberg1376-L8DNFG1A1I4H01-1HKT7B01S7HGNTAPLMD9ROOAMV.DTL">Canadian Dollar Falls Most in 2 Weeks as Stocks, Crude Oil Drop</a> - <span style="color:#888888">San Francisco Chronicle</span><br>
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Canadian Dollar (CAD) Technical Major Currencies (2010-09-07)
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<a href="http://www.ibtimes.com/articles/60040/20100907/canadian-dollar-cad-technical-major-currencies-2010-09-07.htm" style="font-size:1.2em">Canadian Dollar (CAD) Technical Major Currencies (2010-09-07)</a>
<br> <span style="color:#888888;">International Business Times</span> - <span style="white-space:nowrap">Sep 6, 2010 </span>
<div style="width:80%;">The pair found support at 76.4% Fibonacci around 1.0345 rebounding to the upside due to support from the bullish trend appearing through momentum indicators; therefore, we expect the pair to ...</div>
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Forex - Canadian Dollar Looks to BoC Rate Decision for Next Moves
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<a href="http://www.forextv.com/forex-news-story/forex-canadian-dollar-looks-to-boc-rate-decision-for-next-moves" style="font-size:1.2em">Forex - Canadian Dollar Looks to BoC Rate Decision for Next Moves</a>
<br> <span style="color:#888888;">ForexTV.com</span> - <span style="white-space:nowrap">Sep 3, 2010 </span>
<div style="width:80%;">RISK DISCLAIMER: By using this web site you agree to its terms and conditions. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of ...</div>
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Canadian Dollar Looks to BoC Rate Decision for Next Moves
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<a href="http://www.dailyfx.com/forex/fundamental/forecast/weekly/cad/2010/09/03/TOF_903_cad.html" style="font-size:1.2em">Canadian Dollar Looks to BoC Rate Decision for Next Moves</a>
<br> <span style="color:#888888;">Daily FX</span> - <span style="white-space:nowrap">Sep 3, 2010 </span>
<div style="width:80%;">The Canadian dollar pushed higher against its US namesake last week, rising some 1.10 percent. Following a disappointing economic activity report for the second quarter, the USDCAD finds support ...</div>
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Forex: Dollar still under pressure against commodity currencies
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<a href="http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=b5591558-af3e-4081-909d-e51147530009" style="font-size:1.2em">Forex: Dollar still under pressure against commodity currencies</a>
<br> <span style="color:#888888;">FXstreet.com The Forex Market</span> - <span style="white-space:nowrap">Sep 3, 2010 </span>
<div style="width:80%;">FXstreet.com (Córdoba) ? Greenback is falling sharply on Friday against currencies tied to commodities weakened by risk aversion. AUD and NZD are approaching to daily highs together with main US ...</div>
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Forex: USD/CAD holds near 2-week lows
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<a href="http://www.fxstreet.com/news/forex-news/article.aspx?storyid=8cefaae1-d09f-47c0-bcdb-10ba5ac45fde" style="font-size:1.2em">Forex: USD/CAD holds near 2-week lows</a>
<br> <span style="color:#888888;">FXstreet.com The Forex Market</span> - <span style="white-space:nowrap">Sep 3, 2010 </span>
<div style="width:80%;">FXstreet.com (Córdoba) ? The Canadian Dollar is posting important gains against Greenback and is holding close to daily highs. USD/CAD plummeted after the US jobs report to 1.0398, the lowest ...</div>
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Saskatchewan Roughriders Centennial Canadian Dollar Coin Launched
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<a href="http://www.coinnews.net/2010/09/03/saskatchewan-roughriders-centennial-canadian-dollar-coin-launched/" style="font-size:1.2em">Saskatchewan Roughriders Centennial Canadian Dollar Coin Launched</a>
<br> <span style="color:#888888;">CoinNews.net</span> - <span style="white-space:nowrap">Sep 3, 2010 </span>
<div style="width:80%;">by Royal Canadian Mint on September 3, 2010 Rider pride was in full swing as the Royal Canadian Mint launched a new commemorative one-dollar circulation coin honouring the Saskatchewan Roughriders ...</div>
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differently in this way, the brokers are manage to make profit without charging their client commission fees directly.
Strategies in FOREX trading: Fundamental analysis and Technical analysis
Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. As in FOREX trading, government policies, bank policies, natural disasters, and speculators mood are some of the fundamentals considered to predict the market trends. Fundamental FOREX traders will review a country economy’s situation base on these fundamental elements and respond accordingly. To gain max, fundamentalists often apply precise method to convert study’s results into accurate entry/exit price indicator.
Instead of reviewing on the fundamental issues, traders from technical side define market movement according to data purely generated from the market. The term ‘Technical’ is applied in all trading fields, from commodity stocks exchange to option trading, from FOREX to futures.
Generally, the purpose of technical analysis is to find potential price reversal or pivotal points. These points basically refer the change of market trends, which then indicates when to enter or exit from the market. It is important to know that as with any other techniques in your trading system, these technical analysis indicators could be used alone or with other indicators. Traders are always recommended to learn more different technical methods to analyze different market data because none of these techniques are 100% accurate and 100% foolproof. Taking example of the ‘price’ data and the ‘time’ data, which are widely used by FOREX trader. There are some techniques consider solely on the ‘price’ factor, while some solely rely on the ‘time’ factor. The fact is if you know both technical methods, you can take both price and time into consideration during estimating market future trends. This will of course then reduce the risks of losing money in FOREX market. Also, it would be wise if traders combine both technical and fundamental techniques when trading FOREX, as a country value depends a lot on fundamental variables such as war, change of national leaders, terrorism attacks, as well as natural disasters.
Without a doubt, FOREX is gaining its popularity fast against other kind of trading. No limited market access, no liquidity issues-after market hours, zero commission fees, low capital requirements with high leverage rates, and no restrictions on short selling -- FOREX can be very beneficial to a variety of people. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your ‘wings’. Forex trading course, seminars, eBooks, Internet, papers, – all these are helpful to raise your confidence level before you trade with your real hard-earn dollars. Plan your investment wisely by investing first on yourself; you shall get your reward at the end of the road. Martin Leif Wear, experience Internet writer in Forex> www.pipforex.biz '>Forex trading. Learn> www.pipforex.biz '>Learn more on Forex at his new website: .> www.pipforex.biz .
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