Forex Foreign Exchange Rates

In foreign exchange market, the value of two currencies and how they relate to one another is known as the forex exchange rate. The foreign exchange rate between two currencies specifies how much one currency is worth in terms of the other.

The foreign exchange is one of the largest financial markets in the world. By some estimates, about 3 trillion USD worth of currency changes hands every day and the figure is rising everyday.

Forex trading involves transaction between large banks, speculators, corporations, governments, and other financial markets and institutions. Individuals constitute a small fraction and participate indirectly through brokers or banks.

FOREX Traders Fundamental Analysis

Fundamental analysis is like a road map for their entry and exit points into the FOREX market. If they have a broad overview of the market conditions they will entry the market in an appropriate moment. The laws of supply and demand have an effect on all prices, including currency. And they are influenced by the economic situation around them. The most important elements is how stable the economy is or what is its interest rate. Normally the interest rate, is the most important single indicator about what direction the FOREX will take. Higher interest means more people buying a currency.

The situation in a market is possible, analyzing carefully the indicators released in a country. Two very important are the international trade and, as said above, the interest rates. In international trade, a deficit balance is an unpositive indicator. This simply means that there are less exports than imports. It means that there is a higher flow of currency going out the country than coming into the country. This has a negative effect on the price of the currency. Of course, there are exceptions. This is only a pressure to the price of currency, not a natural law. Many countries operate on deficit balances with a stable currency. Some countries have more resources than other to keep its currency stable.

Balance Of Trade

Every country has to import and export goods and services.Import is the buying from foreign country and export refers to selling abroad.The difference between import and export bill of a nation during given period is know as balance of trade / balance of payment.

Balance of trade includes only flow of goods(visible item),ignoring services(invisible items) into or out of a country.

Balance of trade of a country will be positive or favorable if its exports exceed imports. The balance will be negative or unfavorable if its import bill is greater than export.

NOTE: According to some Indian and most Pakistani authors,balance of trade includes only goods but services are excluded from it.That is,only visible items are taken into account,and not invisible items,in determining balance of trade.But American and British economists and authors include both goods and services (visible and invisible item) in working out the balance of trade ignoring the term balance of payment.

Forex

Forex is a platform where traders can exchange different countries currencies at a rate determined by the market. There are two reasons why currencies are traded. One reason is for the payment of goods and services by international companies. The other reason is because traders speculate on the movement of the exchange rates and seek to gain profits from such fluctuations. Exchange rates fluctuate because the demand for a currency is always changing and this change is reflected in the differing rates. This explanation is actually an oversimplification of the Forex market, but its a good place to start.

FOREX: Starting your own trading

The presented article is intended for those who just turned their eyes toward Forex. Beginning traders who are still learning the basics of the foreign exchange market may also find something of interest here. While experienced traders won't gain anything worth their time reading this article.

Basically there are 4 steps which can be defined as "must do" for those who wish to start trading Forex. Though, their order is not particularly important, the more important part is their content, to which the great attention and responsibility must be paid.

First step is finding a right Forex broker which will be your main tool in trading. You can have a great strategy, good technical analysis skills or an outstanding intuition but you will eventually fail if you choose a bad broker. A good Forex broker is one that will not still your money, will be doing real trading with your positions, supports your preferred deposit/withdraw methods and has fast and helpful user support service. It is nice if a broker is registered with some sort of governmental financial commission. One of the most important aspects of the broker is it's trading platform — but for a new trader this part is not so important as for expert traders. Still you'll probably want to trade with some powerful and informative platform as a MetaTrader or its analogs. For new traders the more important is a demo account which can be used to trade virtual money while you are training your Forex skills. If you are new trader, start only with the demo account! Don't lose your money on your first mistakes!

Second step is learning the basics of Forex trading. If you already found your Forex broker, you will easily get all information from its website or user support. There are many articles and websites dedicated to Forex basics in the World Wide Web. All you need to do is just google for "forex trading basics" and you'll find everything you wanted and even more. This step shouldn't be underestimated, because trying to trade without even understanding how the market works is not only very risky, it will also become boring very soon.

Third step is about education. Forex trading education is not similar to any other education you probably have got in your life. Forex market is very chaotic, so is the education — there are no fixed rules and all time laws, it is unstable and dynamical. So, to be on the top you must learn new things about Forex regularly and constantly. Try to read as many books, articles other traders' opinions as you can. The more you learn, the more educated you will be. And with good Forex education you will be able to create very sophisticated and effective trading strategies.

Fourth step is a final one; at least I consider it to be a final one. To achieve the successful results in the Forex market you need to develop your own strategies. While you are learning you'll be satisfied with known strategies and probably even Forex signals. But true goal which leads to successful Forex trading is to develop your own strategies. Not one strategy, but to follow the market day by day, developing new strategies and improving those which began to fail. And this comes not only to the trading strategy (this part is obvious), but also to the money management strategy (this part is often underestimated). While you gain experience in trading you'll inevitably build such strategies that will fit your trading style, you character and your life as best as they can. And after that, trading will become a real pleasure, which will eventually lead to your financial freedom.

by Andrey Moraru

4 Elements Of Any Good Trading Market

The foreign exchange market (forex market or fx market) is the world’s largest market and consists largely of the forex spot market (spot foreign exchange market) and the currency futures market. Today however the majority of smaller traders tend to confine themselves to trading spot forex.

There are four elements which must be present in any good financial market, whether you are trading in the stock, bond, futures, currency market or any other market. These four elements are liquidity, transparency, low trading costs and market trends.

What is forex Trading

Foreign Exchange Market, or Forex as it is commonly called, is an international exchange market to buy and sell different currencies from around the world. An investor has the ability to buy and sell these currencies in order to create gains from small movements in the value of one currency over another. The forex market is open from Monday at 0:00 GMT until Friday at 10:00 GMT. For this reason Forex traders are not limited to the general time constraints of the New York Stock Exchange or NASDAQ.

Foreign Exchange Trading is simply the purchase and sales of currency based on the strength of the currency and the fluctuation in the value of that currency. For example, if one were to invest $1,000 against the British pound at 1.7999 with a 1% margin and anticipate the exchange rate to climb. If that occurs and you close the exchange rate at 1.8050 you would earn roughly $400. Forex is giving you a 40% return on your investment.

This versatility attracts many investors to become Forex traders. The liquidity of the Foreign Exchange Market is also very attractive for the Forex investor as trades range from 1 to 1.5 trillion dollars on a daily basis. These massive amounts of trades make it extremely difficult for any one trader to affect the market.

Forex offers the possibility of huge profits in relatively short periods of time. The stock exchange is very different in that positions are generally maintained over a longer period of time. Although there are day traders, Forex traders have much shorter hold times on positions. Similar to the stock market marginal accounts can be obtained in the Foreign Exchange Market as well.

Forex marginal accounts are very engaging as they allow Forex traders to take large positions without having to make a large deposit. In many circumstances one can fund a marginal account with .05% the necessary funds. In other words, $500 would allow a $100,000 position. In order to trade Forex effectively and profitably, one must have some type of method to follow. There are two methods used in determining what Foreign Exchange trades one should make. There are two methods, fundamental Forex analysis, and technical Forex analysis.

The fundamental Forex method takes into account all aspects of the country in which the currency is traded. Things such as the economy, the countries prime interest rates, war, poverty level, and other factors are taken into account. If there is a sharp rise in the prime interest rate a Forex trader may take a position based on that information.

Online Forex trading has the potential of being extremely lucrative. One can learn to trade by creating an online Forex Account and begin by using a learning account without real funds. This will help you to understand the Forex trading process and how currencies are affected by different things that are happening on a global scale.