Currency Trading

Currency trading involves the "majors" which are the British Pound (GBP), Euro (EUR), Japanese Yen (JPY), Swiss Franc (CHF) and the US Dollar (USD). The Canadian Dollar (CAD) and the Australian Dollar (AUD) are beginning to be added to the majors category by many traders.

Why are currencies trading in pairs?
The simple answer is, the currency on the right side of the pair (ie., EUR/USD) establishes the comparative value for the base currency (the currency on the left side of the pair). By pairing two currencies a fluctuating value can be established for the one versus the other. In other words, how is the Euro doing against the dollar or how many dollars does it take to buy one Euro.

Cross Currency Pairs
Cross Currency Pairs are any currency pairs that don't include the US dollar. Some cross currency pairs move very slowly and trend well which makes them ideal for the beginning Forex trader. However, some cross currency pairs move very quickly and are extremely volatile.

Traders might consider utilizing cross currency pairs as a way to diversify their portfolio. Many cross currency pairs offer greater return potential with enhanced interest (also referred to as swap, rollover interest or carry forward interest) that is paid on open positions. Swap is a credit or debit as a result of daily interest rates. A lot of the time cross currencies yield higher interest rates that the major currencies and are traded for the purpose of collecting the interest on the trade.

Forex Basic Information

If you’re looking for the best days of the week to trade try Tuesdays and Wednesdays because these are the busiest days for trading. What other amateur Forex traders fail you might want to remember is that not every single hour of the day is a good time to trade.

Most people are basically "guessing" which way the price will move. Some have more sophisticated methods of guessing, but it is still guessing. The average person who tries to guess which way the price will go usually gets frustrated and unfortunately, most of these traders will lose all of their money and quit trading in the Forex need. When you think about a pair, it consists of two things: a pair of shoes or a pair of tickets - two shoes or two tickets; with a currency pair, there are two currencies. The first currency listed is known as the base currency and the second one listed is called the counter or quote currency. When a country raises its interest rate, that country’s currency strengthens relative to other currencies.

You need to manage your account with the Forex broker you have choosen and watch the industry and trade at the right time. Before you sign up with any broker, check to see what extras your broker offers such as charting facilities and news updates. If you're going to be using a company's trading platform on a complete basis, then you need it to be easy and user-friendly in general so test drive the demo platform if they offer one.

Every Forex trader should have a reasonable understanding of interest rates, international trade and the economy in order to predict movements in the current marketplace. Because Forex is an Over The Counter (OTC) market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. Forex trading between parties occurs through computer terminals, exchanges and over telephones at thousands of locations worldwide.

Forex Trading Basics and Brokers

Forex Basics
In the Forex, there are six major currency pairs. With the advent of internet anybody can step into the foreign currency exchange market. There are economic indicators that can be used to evaluate the fundamentals of the Foreign exchange. Interest rate news has a direct impact on the international financial markets. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. The foreign exchange market is a cash interbank/interdealer demand. Generally, the more healthy and robust a country's economy, the better its currency will perform.

Forex Brokers
The Forex brokers benefit by helping their clients buy and sell currencies. You'll want to research the reputation of the broker that you will be investing with. Most of the online Forex brokers insist on investing a minimum if $1000. A good Foreign exchange brokerage firm should offer real-time charts, technical analysis tools, real-time trade alerts and website support. You need it make sure your broker’s trading platform is easy to use and user-friendly in general so test drive the demo platform before you start trading a live account. Your Forex broker must be registered with the Commodity Futures Trading Commission if you are trading in the US. Most large brokerage firms are in some way connected you might want to a bank or financial institution. A realistic trading strategy means knowing how much money you are willing you might want to risk.

Forex Trading
The New York marketplace is the second biggest trading period in terms of transaction volume. Basically, you can trade 24-hours a day in the biggest and most fluid marketplace in the world. Forex trading starts on Sunday at 5:00 p.m. Eastern Standard Time (EST) and closes on Fridays. Fridays, Sundays and holidays are not good days to trade. The best days to trade in the Forex market is Tuesdays and Wednesdays.

Forex Trading Basic Tips

Whether you plan to trade on the forex (Foreign exchange) market or in the stock market you will need to have some knowledge on two basic forms of analysis: fundamental analysis and technical analysis. Traders of foreign exchange commonly favor Forex trading systems. Interest rate news has a direct impact on the international financial markets. Forex trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001.

A market order is an order to buy or sell at the current marketplace price. Forex has no central market place for traders and no standard in foreign currency exchanges. Remember that economic indicators gauge a country’s economic state, changes in the conditions reported will directly affect the price and volume of a country’s currency. A country's economic fitness is directly measured by economic reports.

Economic reports such as those on unemployment numbers and housing statistics are used as fundamental indicators. It is recommended that traders who wish to trade in the Forex market only deal with authorized currency traders. There is little or no 'inside information' in the forex markets.

A Foreign exchange broker is paid according to the spread or the difference between the trader's bid for a currency, and the seller's asking price for that currency. A broker is any person or firm that charges a fee in exchange for executing trades for a trader. A Forex broker does not charge a commission for placing a buy or a sell order the way a real estate broker would charge a percentage fee of the total price of a sale. Different dealers offer very different deals to their customers. A good Forex brokerage firm should offer real-time charts, technical analysis tools, real-time trade alerts and website support.

The Forex can be broken up into three major trading sessions: the Tokyo Session, the London Session, and the U.S. Session. You can trade 24-hours a day in the largest and most liquid marketplace in the world.

Fundamental analysis in the Foreign exchange is the economic conditions and the affect those conditions have on a nation’s currency. When a country raises its interest rate, that country’s currency strengthens relative to other currencies. Interest rate news has a direct impact on the international financial markets.

Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. A currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.