Exchange rates respond directly to all sorts of events, both tangible and psychological
* Business cycles;
* Balance of payment statistics;
* Political developments;
* New tax laws;
* Stock market news;
* Inflationary expectations;
* International investment patterns;
* And government and central bank policies among others.
At the heart of this complex market are the same forces of demand and supply that determine the prices of goods and services in any free market. If at any given rate, the demand for a currency is greater than its supply, its price will rise. If supply exceeds demand, the price will fall.
The supply of a nation’s currency is influenced by that nation’s monetary authority, (usually its central bank), consistent with the amount of spending taking place in the economy. Government and central banks closely monitor economic activity to keep money supply at a level appropriate to achieve their economic goals.
Too much money è inflation è value of money declines è prices rise.
Too little money è sluggish economic growth è rising unemployment.
Monetary authorities must decide whether economic conditions call for a larger or smaller increase in the money supply.
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Showing posts with label Stock investing. Show all posts
Showing posts with label Stock investing. Show all posts
Thursday, August 13, 2009
Brokers
There are four types of market participants;
Banks, Brokers, Customers, Central banks.
* Banks and other financial institutions are the biggest participants. They earn profits by buying and selling currencies from and to each other. Roughly two-thirds of all FX transactions involve banks dealing directly with each other.
* Brokers act as intermediaries between banks. Dealers call them to find out where they can get the best price for currencies. Such arrangements are beneficial since they afford anonymity to the buyer/seller. Brokers earn profit by charging a commission on the transactions they arrange.
* Customers, mainly large companies, require foreign currency in the course of doing business or making investments. Some even have their own trading desks if their requirements are large. Other types of customers are individuals who buy foreign exchange to travel abroad or make purchases in foreign countries.
* Central banks, which act on behalf of their governments, sometimes participate in the FX market to influence the value of their currencies.
With more than $1.2 trillion changing hands every day, the activity of these participants affects the value of every dollar, pound, yen or euro.
The participants in the FX market trade for a variety of reasons:
* To earn short-term profits from fluctuations in exchange rates,
* To protect themselves from loss due to changes in exchange rates, and
* To acquire the foreign currency necessary to buy goods and services from other countries.
Banks, Brokers, Customers, Central banks.
* Banks and other financial institutions are the biggest participants. They earn profits by buying and selling currencies from and to each other. Roughly two-thirds of all FX transactions involve banks dealing directly with each other.
* Brokers act as intermediaries between banks. Dealers call them to find out where they can get the best price for currencies. Such arrangements are beneficial since they afford anonymity to the buyer/seller. Brokers earn profit by charging a commission on the transactions they arrange.
* Customers, mainly large companies, require foreign currency in the course of doing business or making investments. Some even have their own trading desks if their requirements are large. Other types of customers are individuals who buy foreign exchange to travel abroad or make purchases in foreign countries.
* Central banks, which act on behalf of their governments, sometimes participate in the FX market to influence the value of their currencies.
With more than $1.2 trillion changing hands every day, the activity of these participants affects the value of every dollar, pound, yen or euro.
The participants in the FX market trade for a variety of reasons:
* To earn short-term profits from fluctuations in exchange rates,
* To protect themselves from loss due to changes in exchange rates, and
* To acquire the foreign currency necessary to buy goods and services from other countries.
Thursday, August 6, 2009
Currency
Forex : Putting your money into other currencies
Forex trading is all about putting your money into other currencies, so you can gain the interest for the night, for time period or the difference in trading money all around. Forex trading does involve other assets along with money, but because you are investing in other countries and in other businesses that are dealing in other currencies the basis for the money you make or lose will be based on the trading of money.
Constant trading is done in the forex markets as time zones will vary and the markets will open in one country while another is near closing. What happens in one market will have an effect on the other countries forex markets, but it is not always bad or good, sometimes the margins of trading are near each other.
Forex trading is all about putting your money into other currencies, so you can gain the interest for the night, for time period or the difference in trading money all around. Forex trading does involve other assets along with money, but because you are investing in other countries and in other businesses that are dealing in other currencies the basis for the money you make or lose will be based on the trading of money.
Constant trading is done in the forex markets as time zones will vary and the markets will open in one country while another is near closing. What happens in one market will have an effect on the other countries forex markets, but it is not always bad or good, sometimes the margins of trading are near each other.
Sunday, August 2, 2009
Forex Trading
How to Begin Forex Trading
For the average newbie, the Forex market can be a very scary place. Taking the time to carefully learn about the different currencies can allow you to really maximize your efforts while you are investing. The best course of action that you can take is going to the effort to actually determine how the Forex market can be beneficial to you.
The benefits that the market has for some consumers and investors may not be the best benefits though for you, it is important to determine which you are most concerned with before you start investing in the market though so that you can keep a clear perspective on your investments.
What is the minimum deposit I need to begin trading?
You can start trading with regular Individual Account with a minimum deposit of $2,000, and with a Mini-account with as little as $500. Regular accounts trade in $100,000 lots, and Mini-accounts trade in $10,000 lots.
For the average newbie, the Forex market can be a very scary place. Taking the time to carefully learn about the different currencies can allow you to really maximize your efforts while you are investing. The best course of action that you can take is going to the effort to actually determine how the Forex market can be beneficial to you.
The benefits that the market has for some consumers and investors may not be the best benefits though for you, it is important to determine which you are most concerned with before you start investing in the market though so that you can keep a clear perspective on your investments.
What is the minimum deposit I need to begin trading?
You can start trading with regular Individual Account with a minimum deposit of $2,000, and with a Mini-account with as little as $500. Regular accounts trade in $100,000 lots, and Mini-accounts trade in $10,000 lots.
Wall Street
Advantages Forex Trading Has Over Stock Investing
Wall Street has shown us that corporate companies do not necessarily tell their investors everything and can 'simulate' growth while nothing is there. Have more control about the aspects that affect the market, and although Forex is affected by so many possibles in the world - at least you know about them.
Another thing of course is the liquidity of the market. Nobody can deny that a market as large in transaction volumes is liquid.Its very over the counter nature has made it so and this is why the Forex trade is so popular with the casual home user.
This means that investment decisions can be translated into action and profits or the avoidance of a disaster within a much shorter time that traditional markets like stock investing. Administrative procedures can be a killer - a few hours could mean the difference in points, which means you can lose money while you wait for your broker to clear your investments to be sold.
How does FX trading differ from stocks on Wall Street?
FX trades are opened then closed typically within days, sometimes within hours or minutes. A margin of only 1% is required to initiate a Forex trade with our managed accounts as opposed to 50% margin required for trading stocks. $10,000 would enable you to buy or sell $1 million worth of any currency (including US dollar).
When you sell a foreign currency against the dollar, you are buying the dollar equivalently in hopes that the dollar would rise in value and you can then cash in and close your position for a handsome profit.
Wall Street has shown us that corporate companies do not necessarily tell their investors everything and can 'simulate' growth while nothing is there. Have more control about the aspects that affect the market, and although Forex is affected by so many possibles in the world - at least you know about them.
Another thing of course is the liquidity of the market. Nobody can deny that a market as large in transaction volumes is liquid.Its very over the counter nature has made it so and this is why the Forex trade is so popular with the casual home user.
This means that investment decisions can be translated into action and profits or the avoidance of a disaster within a much shorter time that traditional markets like stock investing. Administrative procedures can be a killer - a few hours could mean the difference in points, which means you can lose money while you wait for your broker to clear your investments to be sold.
How does FX trading differ from stocks on Wall Street?
FX trades are opened then closed typically within days, sometimes within hours or minutes. A margin of only 1% is required to initiate a Forex trade with our managed accounts as opposed to 50% margin required for trading stocks. $10,000 would enable you to buy or sell $1 million worth of any currency (including US dollar).
When you sell a foreign currency against the dollar, you are buying the dollar equivalently in hopes that the dollar would rise in value and you can then cash in and close your position for a handsome profit.
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