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FOREX = Foreign Exchange Market
In short, what is the forex market?
What is traded on the forex market?
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Money of course. Currencies, to be precise. As explained above, forex trading is the buying of one currency and simultaneous selling of another. Currencies are always traded in pairs, through dealers or brokers.
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For a long time, the forex market was the exclusive domain of banks and large financial institutions and was thus considered an "interbank" market. However, with the rise of the Internet and other technologies, smaller participants have made their way in the market. These include large multinational firms, registered dealers, private speculators and brokerage firms like Finotec.
Is there a central exchange for forex trading?
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Unlike stock markets, the forex market has neither central exchange nor actual physical location. Since forex transactions are conducted over the phone or through electronic networks between two counterparts, the forex market is considered an "interbank" or "over-the-counter" (OTC) market.
What are the main currencies traded on the forex market?
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The most commonly traded currencies are those belonging to governments with a strong and stable economy. First comes the US dollar (USD), which is traded on one side of over 85% of all transactions, then comes the euro (EUR) with a 35% share, followed by the yen (JPY) with a 20% share. Major currencies also include the British Pound (GBP), the Swiss Franc (CHF), the Canadian Dollar (CAD) and the Australian Dollar (AUD). The table below displays the name of the major currencies, along with their symbol and nickname.
Country NameSymbol Nickname United States Dollar USD($) Buck Euro members Euro EUR €) Fiber Japan Yen JPY(¥) Yen Great Britain Pound GBP(£) Cable Switzerland Franc CHF Swissy Canada Dollar CAD Loonie Australia Dollar AUD Aussie
What determines the price of a currency?
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A number of political and economic factors, mainly inflation, interest rates, and political stability affect currencies. Sometimes government themselves enter the forex market to modify the value of their currencies. To do this, they either flood the market with the currency in order to try and lower price, or they buy as much currency as possible hoping to raise the price. They usually implement such policies through central banks. Although these factors, along with large market orders may cause volatility in currency prices, the size of the market makes it impossible for anyone to corner it.
When are currencies traded on the forex market?
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Forex is traded 24 hours a week, 5 days a week, from Sunday 5 pm EST to Friday afternoon 4 pm EST. Forex markets follow the sun: trading opens in Sidney, followed by Tokyo, London and New York. This continuity is due to the fact that there is an overlap of different time zones and that there is no physical central exchange that opens and closes at a particular time, since transactions are conducted over an electronic network. You can therefore trade day and night at whatever hour is best for you.
What is a Spot market?
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Spot markets refer to markets that deal in the current price of financials instruments.
How much does trading the forex market cost?
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At Finotec, you can open an account and start trading with as little as $200! And considering that you can execute margin trades with leverage up to 1:200, with an initial margin requirement of $200, you can execute trades of $40,000. You must however remember that while leverage trading allows for increased profit potential, it also entails a great potential for loss. The Mini Account is a great way to give forex a go without risking too much.
What is long/short?
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When you buy, (you buy the base currency and sell the quote currency), you do it in the hope that the base currency will rise in order for you to sell it a higher price and make profit. In forex lingo, this is called "taking a long position" or "going long."
When you sell, (you sell the base currency and buy the quote currency), you do it in the hope that the base currency will go down in order for you to buy it back a lower price and make profit. In forex lingo, this is called "taking a short position" or "going short." Remember long=buy, short=sell.
What is mergin trading
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n the world of forex, margin trading (or "buying on margin", or "trading on margin") means trading with short-term borrowed capital. Margin is thus a form of borrowed money or debt. This borrowed capital is used to buy much more currency that you’d be able to purchase ordinarily (unless you have hundreds of thousands of dollars available). In the forex market, currencies are usually traded in lots, with a standard lot being $100,000. (The forex market is a highly leveraged market.) The term “lot” refers to the minimum amount of currency that must be bought. To achieve this amount of currency, brokers offer a margin trading option. This means that through your margin account, you can execute deals with a small amount of initial capital. You can open $100,000 or $10,000 positions with as little as $50 or $1,000. In forex, trading small amounts makes no sense since profits can only be made through large amounts of currency.
Let's take an example of margin trading:Also, brokers use this forex margin as collateral to cover any losses incurred by the trader. Since in margin trading, nothing is actually sold or bought for delivery, the funds in your account serve as margin requirements. Those margin requirements vary depending on which brokerage firm you choose.
- Some market indicators are telling you that the Euro will strengthen against the US Dollar.
- You believe it's the right time to buy EUR/USD and you open a position of €100,000 (one lot) to buy Euros with a 1% margin at the price of 1.3520 hoping that the rate will rise. This means that you are holding 100,000 worth of Euros with an initial deposit of €1,000.
- The price does rise and reaches 1.3570
- You decide to sell and close your position. You gained $500 (50 pips x $10 per pip) equivalent to €368 (500$ / 1.3570), which constitutes a 37% return on your initial capital investment of €1,000.
- You now have €1370 in your account.
To match its traders' risk levels, Finotec offers low margin requirements - as low as 0.5%. However, we advise traders new in the forex industry to start trading with higher forex margin capacities to minimize the amount of risk involved in such transactions.
What Is a Margin Call?
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As you know, forex is a speculative activity, through which you can either win or lose money. When the market moves against your position, there is a risk that the capital in your account will fall below margin requirements. In this case, the broker will issue a margin call for you to add funds. If you fail to do so, your position(s) will be closed to prevent further losses.
How are Margin and Leverage connected?
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In forex trading, you use margin to create leverage. In other words, leverage is the process by which you reinvest the debt (margin) to make bigger profits. Leverage options are expressed either in terms of leverage ratio (for example 1:200) or in terms of margin percentage (for example 0.5%).
Leverage and margin are connected according to this simple relationship:
Margin percentage = 100 / leverage
Leverage = 100 / margin percentage
For example, Finotec offers a 1:200 leverage. What is the corresponding margin percentage? According to the ratio above, the margin percentage is: 100/200 = 0.5%
The Foreign Currency Exchange Market, also known as spot currency or Forex market, is the largest financial market in the world, consisting of over $3 trillion in transactions every day. It is a global market in operation 24 hours a day every week from Sunday at 5:00 pm EST to Friday at 4:00 pm EST.
The Forex Market does 10 times the average daily turnover of the global equity markets and over 35 times the average daily turnover of the NYSE.
It is different from other markets not only because of its tremendous volume but also because of its extreme leverage (100:1 leverage is standard*), and the fact that it is a decentralized 'Interbank' market.
The main participants in the Forex market include the central banks, commercial and investment banks, hedge funds, corporations and private speculators.
The Forex Market does 10 times the average daily turnover of the global equity markets and over 35 times the average daily turnover of the NYSE.
It is different from other markets not only because of its tremendous volume but also because of its extreme leverage (100:1 leverage is standard*), and the fact that it is a decentralized 'Interbank' market.
The main participants in the Forex market include the central banks, commercial and investment banks, hedge funds, corporations and private speculators.
Foreign currency trading on the retail level, where our managed program is traded, is based on speculation on changes in the exchange rate between two currencies. Changes in the exchange rate are due to changes in the value of each currency relative to the other in the pair and are measured in "percentage in points", or pips.
In every trade, one currency in the pair is borrowed in order to buy the other, typically in lots of 100,000 units each. Currencies and actions are chosen based on technical and fundamental analysis in expectation of a particular outcome.
There are many advantages to Forex trading over other types of investments. While regular stock markets are open during business hours the Forex market is open 24 hours a day.
Trading cycles run around the world as financial markets open, starting in Australia then Tokyo, London and New York.
The Forex market is a very liquid market. When trading Forex you have full control of your capital and it does not get tied up for long periods as it can with many other types of investments.
Forex traders can make a profit during uptrends and downtrends and profit in either bullish or bearish market conditions.
Since each market is one currency against another, when you buy one you are selling another. This way it doesn’t matter whether the market is moving up or down as long as you choose correctly.
Technical Analysis can be used to help see these trends and profit from them. Market transparency is another advantage in Forex trading. You can manage risk and execute orders within seconds. It is highly efficient and allows you to avoid unexpected surprises.
Forex trading involves substantial risk of loss and is not suitable for all investors. High leverage and low margin can magnify or lead to both substantial profits and losses.
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Wanna Open Forex trading account Click Hear You Will get 10000 $ virtual for Practise account and 5 $ Real for live trade . So Take Your chance
Need Coupon For registration ? email us virtuallifesolution@yahoo.com
** We Will give You a coupon with in short time.
Read Bangali Forex Tips & Pips Click Hear
Read Bangali Forex Tips & Pips Click Hear
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