Gross Domestic Product (GDP)
GDP Deflator
Trade balance
Unemployment rate
Non-Farm Payrolls (NFP)
Average hourly earnings
Consumer price index (CPI)
Producer price index (PPI)
Employment cost index
Tan Kan, BOJ (Bank of Japan report)
Business climate index (IFO)
Humphrey-Hawkins testimony
Consumer confidence
Industrial production index
Capacity utilisation
Durable goods orders
Factory orders
Leading indicators index
Productivity
Retail sales
Confederation of British Industries (CBI)
Money supply M1, M2, M3
Atlanta Fed index
Average Workweek
Beige book
Building permits
Business Inventories
Chicago PMI (Purchasing Managers Index)
Construction spending
Consumer credit
Current account (Balance of payments)
Existing home sales
Export prices
Help-Wanted Index
Housing starts
Import prices
Jobless claims
Michigan consumer sentiment index
ISM services index
New Home Sales
Personal income
Personal Spending, Consumption
Philadelphia Fed index
Real Earnings
Redbook
Unit Labour Cost
Wholesale inventories
NAPM or PMI (National Association of Purchasing Managers Index)
Macroeconomic performance characterises economic development, indicating economic growth or decline. Based on these measures, price shift trends may be predicted. Thus, it may be said with certainty that publishing of favourable data may lead to considerable and long-term shift in exchange rates. These performance indicators include Nonfarm Payrolls, GDP, Industrial Production, CPI, PPI and a number of other marcoeconomic performance indicators.
The date and time of a specific indicator being published are known in advance. There are so-called calendars of economic indicators and major events in the functioning of some countries (noting specific dates or approximate release time). The market prepares for such events. There are expectations and forecasts on the value of a given indicator and its interpretation.
The release of data may lead to sharp exchange rate fluctuations. Depending on how market participants interpret a given indicator, an exchange rate may swing either way. This swing may either reinforce or adjust an existing trend, or even start a new one. A given outcome depends on several factors: the market situation, the economic situation of countries hosting the currencies, prior expectations and attitudes, and, finally, the value of a given indicator.
Monday, October 29, 2012
Sunday, October 28, 2012
Forex strategies
Each beginner on the international currency market approaches their operations with utter seriousness. The very first day poses a very justified question: what is the way to play in order to at least avoid loss in the long term? Forex trading strategies will help.
Forex strategies: programmes for functioning on the market
By applying a specific algorithm applicable to a specific market situation, the Forex strategy determines a trader’s action on the market. On the internet, you will find a number of various Forex strategies invented by traders that will guarantee profit given a specific market state. Successful traders have their own Forex strategies which they will obviously never share with the public because this is their own income mechanism, honed over the course of months if not years.
Newbies and Forex strategies: is success guaranteed?
There is another obvious fact as well: not even the most loss-proof play methodology will bring a new user millions straight away. The market always changes, and newcomers simply cannot adjust to the new situation here in time. Forex strategies are based on success and failure, on chasing profits along a road that is known for its pitfalls.
What Forex strategies to use
There are a number of universal Forex trading strategies that allow you to stay afloat for a long time without going in the red. Overall, using some Forex strategy on the market is required, because random bets will not bring a positive result. This has been proven time and time again. Of course, sometimes this may turn into a very successful deal or two, but stable profit becomes impossibility over time.
The experience of professional traders shows that a personal Forex trading strategy is the most efficient and comfortable solution for a trader. You will no doubt agree that an active, risk-taking person and their more cautious, risk-aware colleague who scrutinises the situation before making a move are unlikely to use the same methods. Only by trying out new things will you be able to select a path that suits you the most. You will see that rules that clash with your own values are hard to follow.
Forex strategies: programmes for functioning on the market
By applying a specific algorithm applicable to a specific market situation, the Forex strategy determines a trader’s action on the market. On the internet, you will find a number of various Forex strategies invented by traders that will guarantee profit given a specific market state. Successful traders have their own Forex strategies which they will obviously never share with the public because this is their own income mechanism, honed over the course of months if not years.
Newbies and Forex strategies: is success guaranteed?
There is another obvious fact as well: not even the most loss-proof play methodology will bring a new user millions straight away. The market always changes, and newcomers simply cannot adjust to the new situation here in time. Forex strategies are based on success and failure, on chasing profits along a road that is known for its pitfalls.
What Forex strategies to use
There are a number of universal Forex trading strategies that allow you to stay afloat for a long time without going in the red. Overall, using some Forex strategy on the market is required, because random bets will not bring a positive result. This has been proven time and time again. Of course, sometimes this may turn into a very successful deal or two, but stable profit becomes impossibility over time.
The experience of professional traders shows that a personal Forex trading strategy is the most efficient and comfortable solution for a trader. You will no doubt agree that an active, risk-taking person and their more cautious, risk-aware colleague who scrutinises the situation before making a move are unlikely to use the same methods. Only by trying out new things will you be able to select a path that suits you the most. You will see that rules that clash with your own values are hard to follow.
Saturday, October 27, 2012
Central banks
Bank of Japan (BOJ)
European Central Bank (ECB)
Bank of England (BOE)
Federal Reserve System (FED)
Swiss National Bank (SNB)
Reserve Bank of Australia (RBA)
Bank of Canada (BOC)
Reserve Bank of New Zealand (RBNZ)
Central banks meeting dates
Interest rates
Central banks are the apex financial institutions of their respective countries. In some countries, central banks are known as Reserve Banks. In addition to overseeing the commercial banking system in a country, a central bank is also in charge of printing of a nation’s legal tender as well as exerting monetary policy controls on a nation’s economy. Examples of central banks are the Federal Reserve Bank (US), the European Central Bank (ECB), the Bank of Canada (BoC), the Bank of Japan (BoJ) and several others. Every nation in the world has a central bank.
Structure of a Central Bank
Generally speaking, a central bank has a head, known as the Governor or the Chairman, and a board of governors. They are responsible for the management of the bank. A central bank will also have several departments which are in charge of the various functions of the bank. So a central bank will have a division that conducts banking supervision and regulation of banks, another division for currency operations (printing, circulation and money supply controls), and another division for carrying out monetary policy functions. The exact structure of a central bank will differ from one country to another, according to the peculiarities of each nation’s financial sector.
Functions of the Central Bank
Monetary policy is the primary task of any central bank. Monetary policy refers to issues such as determining what currency a country will have, whether that currency will have a fixed or floating exchange rate, issues pertaining to determination of interest rates and foreign reserve maintenance policies.
The central bank is also in charge of printing and circulation of a nation’s legal tender, as well as the control of the supply of a nation’s currency.
A central bank is also in charge of maintaining a country’s foreign reserves, and in determining what currency a nation will hold reserves in.
Stability of a nation’s financial system is another function of the central bank. In this role, a central bank becomes a lender of last resort. We saw this function exerted by the Federal Reserve Bank in the US in providing $700 billion bailout for the US banking and automobile sector under the Troubled Assets Relief Program (TARP) following the collapse of several banks in the US during the global financial meltdown of 2008.
A central bank also serves as the bank for the host nation’s government and its agencies.
Central banks provide emergency lending to commercial banks by providing a lending window at the interest rate it has determined. This is another way of functioning as a banker of last resort.
European Central Bank (ECB)
Bank of England (BOE)
Federal Reserve System (FED)
Swiss National Bank (SNB)
Reserve Bank of Australia (RBA)
Bank of Canada (BOC)
Reserve Bank of New Zealand (RBNZ)
Central banks meeting dates
Interest rates
Central banks are the apex financial institutions of their respective countries. In some countries, central banks are known as Reserve Banks. In addition to overseeing the commercial banking system in a country, a central bank is also in charge of printing of a nation’s legal tender as well as exerting monetary policy controls on a nation’s economy. Examples of central banks are the Federal Reserve Bank (US), the European Central Bank (ECB), the Bank of Canada (BoC), the Bank of Japan (BoJ) and several others. Every nation in the world has a central bank.
Structure of a Central Bank
Generally speaking, a central bank has a head, known as the Governor or the Chairman, and a board of governors. They are responsible for the management of the bank. A central bank will also have several departments which are in charge of the various functions of the bank. So a central bank will have a division that conducts banking supervision and regulation of banks, another division for currency operations (printing, circulation and money supply controls), and another division for carrying out monetary policy functions. The exact structure of a central bank will differ from one country to another, according to the peculiarities of each nation’s financial sector.
Functions of the Central Bank
Monetary policy is the primary task of any central bank. Monetary policy refers to issues such as determining what currency a country will have, whether that currency will have a fixed or floating exchange rate, issues pertaining to determination of interest rates and foreign reserve maintenance policies.
The central bank is also in charge of printing and circulation of a nation’s legal tender, as well as the control of the supply of a nation’s currency.
A central bank is also in charge of maintaining a country’s foreign reserves, and in determining what currency a nation will hold reserves in.
Stability of a nation’s financial system is another function of the central bank. In this role, a central bank becomes a lender of last resort. We saw this function exerted by the Federal Reserve Bank in the US in providing $700 billion bailout for the US banking and automobile sector under the Troubled Assets Relief Program (TARP) following the collapse of several banks in the US during the global financial meltdown of 2008.
A central bank also serves as the bank for the host nation’s government and its agencies.
Central banks provide emergency lending to commercial banks by providing a lending window at the interest rate it has determined. This is another way of functioning as a banker of last resort.
Friday, October 26, 2012
Forex market participants
All operations on financial market are done via the system of special institutions: central banks, commercial banks, dealers and brokers. Every Forex participant has its own volume of deals on the currency market. For example, central banks have the biggest turnover that exceeding hundreds of millions US dollars a day. Commercial banks and dealers have smaller turnover. Daily turnover of brokers is considered to be about 25-30 millions of US dollars that makes 2% from the general volume of all Forex trading.
Central banks of countries
These banks regulate money and credit flows with instruments defined by law. The main functions of central banks are emission (issue) of money, carrying out of monetary and credit policy and national currency policy. For example if a bank carries out currency intervention it may lead to the rise or fall of the national currency rate.
Commercial banks
These are financial intermediaries that accept deposits from legal and private persons, take advantage of investing this money, return it to depositors, close and operate bank accounts. Every country has some big commercial banks that are able to influence currency rates. In 2006 the Deutsche Bank turnover was of 19.26% from the whole Forex market turnover
Brokers
Brokers are legal or private persons that represent agents or negotiators in trading who meet buyer and seller of securities or currency together. Broker works in the name, by order and at the expense of his client and may provide some additional services. Broker gets a commission bonus for fulfilling customer's orders.
Dealers
Dealers are companies or private persons that operate on the market at their own expense and in their own name, in other words they sell and buy currencies or any other assets with their own money.
Central banks of countries
These banks regulate money and credit flows with instruments defined by law. The main functions of central banks are emission (issue) of money, carrying out of monetary and credit policy and national currency policy. For example if a bank carries out currency intervention it may lead to the rise or fall of the national currency rate.
Commercial banks
These are financial intermediaries that accept deposits from legal and private persons, take advantage of investing this money, return it to depositors, close and operate bank accounts. Every country has some big commercial banks that are able to influence currency rates. In 2006 the Deutsche Bank turnover was of 19.26% from the whole Forex market turnover
Brokers
Brokers are legal or private persons that represent agents or negotiators in trading who meet buyer and seller of securities or currency together. Broker works in the name, by order and at the expense of his client and may provide some additional services. Broker gets a commission bonus for fulfilling customer's orders.
Dealers
Dealers are companies or private persons that operate on the market at their own expense and in their own name, in other words they sell and buy currencies or any other assets with their own money.
Thursday, October 25, 2012
Forex currencies
The history of currencies
USD
EUR
GBP
JPY
CHF
DEM
Currency codes
The word value comes from the Latin “valeo”, “I stand”.
Valuable currencies today are:
Monetary units of countries with indication of type (paper, gold, silver);
Monetary units of a number of foreign countries, including payment and credit documents expressed in such monetary units and usable for international accounts (cheques, bank bills etc.)
Basically, the Forex currency market is the sum of all transactions made by its participants (banks, exchanges, funds, investment, brokerage and external trading firms, as well as private persons, i.e. traders) to exchange some types of currency. Each second, the Forex market processes thousands of transactions, bringing profit to participants.
The Forex currency market has the following classification of currency types:
Freely convertible currencies have no limit on financial transactions of any kind, may be used by residents and non-residents of a country, and can be converted into any foreign currency;
Partially convertible currencies are usually those with a number of restrictions on use by non-residents and a specific range of allowed transactions. Thus, most Western European currencies are partially convertible; restrictions on use by non-residents were removed in 1958, and now any amount on an account in such currencies may be converted to a freely convertible equivalent;
Non-convertible currencies have restrictions for both residents and non-residents barring a number of financial transactions. They are not convertible and are used only inside their specific countries. For instance, non-convertible currencies are used in developing and dependent countries, and tied to the currency of a metropolitan country that sets exchange rates to give itself an advantage. Non-convertible currencies are not used on the Forex market.
The Forex currency market has two types of operations: buy and sell; each currency has demand and supply, allowing transactions with no real restrictions on volume or time. The Forex currency market also entails regulation of the exchange rates of various countries by balancing supply and demand.
The Forex currency market has a number of so-called primary currencies – most daily transactions are conducted in these:
USD – the U.S. dollar. No doubt the backbone of the Forex market. Traders often call the USD the buck, the greenback, the dolly.
EUR – the euro, common currency for the European space, second on Forex in terms of popularity. Before the euro, the DEM Deutschmark, Germany’s national currency, took its place.
GBP (Great Britain Pounds) – the pound sterling, Britain’s national currency. Financier slang also includes the names sterling, pound, and cable.
CHF – the Swiss franc. The slang term swissy is used alongside the official name.
JPY – the Japanese yen.
The Forex currency market also uses:
AUD – the Australian dollar, often referred to as the aussie by financiers.
СAD – the Canadian dollar.
NZD – the New Zealand dollar, also known as the kiwi among Forex currency market traders.
Another incredibly important concept on the currency market is the currency exchange, which is a key link in the chain of currency market trading services.
Essentially, the currency exchange is a place where transactions are made. In this case, the currency is in free trade, shaping the process of constant currency exchange fluctuations. The main characteristic of the currency exchange is that exchange rates are shaped and noted as part of its operation, through the effect of supply and demand on the selling and buying of currencies. This very process is the main objective of the Forex currency exchange: shaping the exchange rates based on objective effects of the economic factors of specific countries. The currency exchange essentially regulates exchange rates.
With the development of technology, more and more people today use the currency exchange online, trading in real time via an internet connection. The online currency exchange fulfils a number of functions besides affecting exchange rates: it lays the technical groundwork for free trade, creates and applies the rules for trading participants to enter (covering e.g. funds, business reputation), and creates the conditions and rules for making the transactions themselves. The obligation of monitoring observance of these conditions lies with the currency exchange as well.
The largest currency exchanges are in London, New York and Tokyo. Thus, the online currency exchange can cover practically the entire world and provide nearly equal conditions for all currency market participants. This has made the Forex currency exchange the largest exchange in the world, with a turnover of more than several trillion dollars per day.
USD
EUR
GBP
JPY
CHF
DEM
Currency codes
The word value comes from the Latin “valeo”, “I stand”.
Valuable currencies today are:
Monetary units of countries with indication of type (paper, gold, silver);
Monetary units of a number of foreign countries, including payment and credit documents expressed in such monetary units and usable for international accounts (cheques, bank bills etc.)
Basically, the Forex currency market is the sum of all transactions made by its participants (banks, exchanges, funds, investment, brokerage and external trading firms, as well as private persons, i.e. traders) to exchange some types of currency. Each second, the Forex market processes thousands of transactions, bringing profit to participants.
The Forex currency market has the following classification of currency types:
Freely convertible currencies have no limit on financial transactions of any kind, may be used by residents and non-residents of a country, and can be converted into any foreign currency;
Partially convertible currencies are usually those with a number of restrictions on use by non-residents and a specific range of allowed transactions. Thus, most Western European currencies are partially convertible; restrictions on use by non-residents were removed in 1958, and now any amount on an account in such currencies may be converted to a freely convertible equivalent;
Non-convertible currencies have restrictions for both residents and non-residents barring a number of financial transactions. They are not convertible and are used only inside their specific countries. For instance, non-convertible currencies are used in developing and dependent countries, and tied to the currency of a metropolitan country that sets exchange rates to give itself an advantage. Non-convertible currencies are not used on the Forex market.
The Forex currency market has two types of operations: buy and sell; each currency has demand and supply, allowing transactions with no real restrictions on volume or time. The Forex currency market also entails regulation of the exchange rates of various countries by balancing supply and demand.
The Forex currency market has a number of so-called primary currencies – most daily transactions are conducted in these:
USD – the U.S. dollar. No doubt the backbone of the Forex market. Traders often call the USD the buck, the greenback, the dolly.
EUR – the euro, common currency for the European space, second on Forex in terms of popularity. Before the euro, the DEM Deutschmark, Germany’s national currency, took its place.
GBP (Great Britain Pounds) – the pound sterling, Britain’s national currency. Financier slang also includes the names sterling, pound, and cable.
CHF – the Swiss franc. The slang term swissy is used alongside the official name.
JPY – the Japanese yen.
The Forex currency market also uses:
AUD – the Australian dollar, often referred to as the aussie by financiers.
СAD – the Canadian dollar.
NZD – the New Zealand dollar, also known as the kiwi among Forex currency market traders.
Another incredibly important concept on the currency market is the currency exchange, which is a key link in the chain of currency market trading services.
Essentially, the currency exchange is a place where transactions are made. In this case, the currency is in free trade, shaping the process of constant currency exchange fluctuations. The main characteristic of the currency exchange is that exchange rates are shaped and noted as part of its operation, through the effect of supply and demand on the selling and buying of currencies. This very process is the main objective of the Forex currency exchange: shaping the exchange rates based on objective effects of the economic factors of specific countries. The currency exchange essentially regulates exchange rates.
With the development of technology, more and more people today use the currency exchange online, trading in real time via an internet connection. The online currency exchange fulfils a number of functions besides affecting exchange rates: it lays the technical groundwork for free trade, creates and applies the rules for trading participants to enter (covering e.g. funds, business reputation), and creates the conditions and rules for making the transactions themselves. The obligation of monitoring observance of these conditions lies with the currency exchange as well.
The largest currency exchanges are in London, New York and Tokyo. Thus, the online currency exchange can cover practically the entire world and provide nearly equal conditions for all currency market participants. This has made the Forex currency exchange the largest exchange in the world, with a turnover of more than several trillion dollars per day.
Wednesday, October 24, 2012
Forex volumes
Become a forex trader, and buy and sell in the world's largest financial market!
Here are the key figures*:
Over $1.9 trillion dollars a day traded in 2004
That grew to $3.2 trillion by 2007 – a 70% increase
Daily volume is now nearly $4.0 trillion – and the market is still growing
Forex dwarfes other markets:
It has 11 times the daily volume of all other global exchanges combined
Its daily turnover is 40 times the New York Stock Exchange (NYSE)
$300 are traded every day for every person on the planet
A week's worth of forex trading is more than the annual United States GDP
The major forex trading centres are the United States, Great Britain and Japan. Market activity peaks when more than one is open.
Here are the key figures*:
Over $1.9 trillion dollars a day traded in 2004
That grew to $3.2 trillion by 2007 – a 70% increase
Daily volume is now nearly $4.0 trillion – and the market is still growing
Forex dwarfes other markets:
It has 11 times the daily volume of all other global exchanges combined
Its daily turnover is 40 times the New York Stock Exchange (NYSE)
$300 are traded every day for every person on the planet
A week's worth of forex trading is more than the annual United States GDP
The major forex trading centres are the United States, Great Britain and Japan. Market activity peaks when more than one is open.
Tuesday, October 23, 2012
How to make profit?
How to make profit?
One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.
Here are the answers!
How do you make money?
Let's take an example based on the graph below:
You open an Classic Account with €2,000
You think the Euro will go down against the US dollar
You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
There is no margin left in your account at this point
The Euros you sold are worth $257.000 US dollars
You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
The Euro ask price reaches 1.2750 US dollars and you buy
This costs $255,000 US dollars
You have now sold 200.000 Euros for $257.000 and bought them for $255,000
The difference is $2,000 US dollars or €1568 Euros
Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!
Here's another example:
This time you think the Euro will go up
You open a Cent Account with 20 US dollars
You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
It does and the cost is $1912.50
Because you have 1:100 margin this only costs you $19.12 – we provide the rest
The Euro then goes up to 1.2850 US dollars
You sell your 1500 Euros for $1927.50
Your profit is $15.00 – a 75% return on your $20 investment!
How do we make money?
You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?
Notice in the example above that we talked about bid prices and ask prices. These aren't the same:
The bid price is what you pay when you're buying currency
The ask price is what you get when you're selling - and is less than the bid price
The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.
Managing your risk
In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:
Change the default 1:100 margin for your account - 1:10 for low risk or 1:500 for high risk
Manage your money by spreading it over several investments
One of the most difficult things for forex beginners to understand is how you make profits trading currencies. At the same time, since we don't charge commissions, many people don't understand how we make money either.
Here are the answers!
How do you make money?
Let's take an example based on the graph below:
You open an Classic Account with €2,000
You think the Euro will go down against the US dollar
You decide to sell 200,000 Euros once the bid price reaches 1.2850 US dollars
Because you are on 1:100 margin, this costs €2,000 – we provide the other €198.000
There is no margin left in your account at this point
The Euros you sold are worth $257.000 US dollars
You decide to buy Euros once they go down to an ask price of 1.2750 US dollars
The Euro ask price reaches 1.2750 US dollars and you buy
This costs $255,000 US dollars
You have now sold 200.000 Euros for $257.000 and bought them for $255,000
The difference is $2,000 US dollars or €1568 Euros
Your profit for a €2,000 investment is €1568 Euros – a 74.43% return!
Here's another example:
This time you think the Euro will go up
You open a Cent Account with 20 US dollars
You decide to buy 1500 Euros when the Euro ask price goes down to $1.2750
It does and the cost is $1912.50
Because you have 1:100 margin this only costs you $19.12 – we provide the rest
The Euro then goes up to 1.2850 US dollars
You sell your 1500 Euros for $1927.50
Your profit is $15.00 – a 75% return on your $20 investment!
How do we make money?
You've made money trading Euros and dollars. We don't charge any commission, so how do we make money?
Notice in the example above that we talked about bid prices and ask prices. These aren't the same:
The bid price is what you pay when you're buying currency
The ask price is what you get when you're selling - and is less than the bid price
The difference between the two is known as the spread. This is where we make our profit. In the first example above, the spread is 0.0002 or two points, and so our profit is about $30 on $200,000.
Managing your risk
In the examples above, the dollar moved in the direction you expected. However, it could move in the opposite direction, and you could lose money. There are a number of things you can do to manage this risk:
Change the default 1:100 margin for your account - 1:10 for low risk or 1:500 for high risk
Manage your money by spreading it over several investments
Monday, October 22, 2012
Forex History
Forex history
The history of Forex
Back in prehistory, there was no concept of currency. A cow was a cow and a sheep was a sheep. People bartered goods for other goods. The problem was that when you traded ten sheep for five cows, you had to find somewhere to keep the cows. Cows are large; they don't fit in your pocket. Something had to change.
Mesopotamia
Urban societies started to emerge in Mesopotamia about 5300 BC. Wealth was based on agricultural products – primarily grain. Grain was stored in temple granaries, and when people made deposits, they needed receipts – the receipt came in the form of a piece of metal.
By 3000 BC, this evolved into the shekel, a measure of barley. Shekels could be converted into metals such as copper, silver and gold.
Then, around 1700 BC, the Code of Hammurabi established formal laws in Mesopotamia. This included rules around the use of money in Mesopotamian society.
Money was born.
Coins
The problem with most early money was that there wasn't any standard measure. A piece of gold could be small or large, so there was no way to place a consistent value on traded goods.
Coins solved this problem. They had a standard weight, and were stamped with symbols by the state to prove their authenticity. The first standardised metal coins appeared in Greece in the seventh century BC.
The gold standard
The value of a coin continued to be determined by its weight into the early 17th century; a Dutch Guilder had one weight and a French franc had another.
However, as trade grew, coins became more and more impractical. Banks started to issue money in large denominations, using cheap materials such as paper. Physical money no longer had an intrinsic value; instead it could be redeemed at banks for gold or other precious metals.
After the Napoleonic wars of 1803-1825, a number of nations fixed the value for their currencies against gold, and promise to redeem the notes directly. Currencies could now be exchanged based on their fixed values.
This was the gold standard.
The world at war
The gold standard continued until World War I. However, there were growing concerns about some countries' ability and willingness to redeem their banknotes.
The chaos of World War I put an end to the gold standard, and nothing replaced it until 1944.
Although the gold standard was dead, international financial institutions did start to emerge between the wars. The most important was the Bank or International Settlements (BIS), founded in Basel in 1930. Its charter was to support countries without mature financial systems, or those with balance of payments deficits.
1944
In 1944, delegates from 44 Allied nations met in the United States at Bretton Woods. Economic luminaries including John Maynard Keynes and Harry Dexter White worked to create a new global financial system, so that shattered countries could be rebuilt after the war.
The Bretton Woods Agreements were signed in July, 1944 with the following results:
The International Monetary Fund (IMF) was established
Countries who cooperated with the IMF could receive stabilisation loans
The US dollar and British pound were announced as international reserve currencies
Currency values were fixed against the US dollar - with only 1% deviation allowed
The value of the dollar was fixed against gold
Countries could only alter their exchange rates with IMF permission
Currencies became convertible
Governments were required to hold reserves and intervene in currency markets
Nations had to pay a fee in gold and national currency to join the IMF
1947
After World War II, the US became increasingly concerned with the ability of a war-ravaged Europe to resist Soviet communism. In 1947, it established the European Recovery Plan, popularly known as the Marshall Plan after the US Secretary of State, George Marshall.
Over four years, European countries received nearly $13 billion dollars under the Marshall Plan, allowing them to buy the goods and services they needed to rebuild.
1964
In 1964, Japan made the yen convertible. With all major currencies now convertible, it became clear that the US could no longer sustain a fixed dollar rate against gold.
US dollar inflation became a major issue, and the US administration took steps to control US dollar transactions through taxation of exchange differentials. Costs increased for foreign borrowers, leading to the creation of a new eurodollar market.
1967
The British balance of payments deteriorated through the 1960s, and their gold reserves declined from $18 billion to $11 billion. In 1967, the UK had to devalue the pound, striking Bretton Woods a crippling blow. At the same time, US debt continued to grow.
1970
In 1970, interest rates decreased sharply in the US. Investors moved their capital to Europe, where rates were higher. The worst dollar crisis to date ensued.
1971
Events accelerated in 1971:
In May, Germany and The Netherlands allowed open trading of their currencies
In August, the US balance of payments deficit reached crisis point and President Nixon responded by stopping conversion of US dollars into gold
In December, matters came to a head:
A last attempt was made to save Bretton Woods in a meeting at the Smithsonian Institute in Washington
Exchange rates were allowed to deviate up to 4.5% from their fixed values
Central banks made major interventions in the currency markets - including $5 billion from the Bundesbank
Exchange rates could not be controlled despite these interventions
Currency exchanges in Europe and Japan were closed temporarily
The US devalued the dollar by 10%
Developed countries floated their currencies – ending fixed exchange rates
1973 to 1974
Over this period, events continued to unfold:
The US dismantled the tax measures and other restrictions it had introduced in 1964
Central banks stopped intervening in the currency market
Speculators made enormous profits once interventions stopped
Two major banks - Bankhaus Herstatt and Franklin National Bank - went bankrupt
Speculation damaged many other banks
The Bretton Woods system ceased to exist
1976
Representatives of major nations met in Kingston, Jamaica, to create a new global currency system. This had the following results:
Gold was no longer used as the basis of currency valuation
International organisations were set up to control currency conversion
Currencies were used to buy other currencies
Commercial banks became the main mechanism for currency conversion
Exchange rates were floated – and were driven by market forces
The history of Forex
Back in prehistory, there was no concept of currency. A cow was a cow and a sheep was a sheep. People bartered goods for other goods. The problem was that when you traded ten sheep for five cows, you had to find somewhere to keep the cows. Cows are large; they don't fit in your pocket. Something had to change.
Mesopotamia
Urban societies started to emerge in Mesopotamia about 5300 BC. Wealth was based on agricultural products – primarily grain. Grain was stored in temple granaries, and when people made deposits, they needed receipts – the receipt came in the form of a piece of metal.
By 3000 BC, this evolved into the shekel, a measure of barley. Shekels could be converted into metals such as copper, silver and gold.
Then, around 1700 BC, the Code of Hammurabi established formal laws in Mesopotamia. This included rules around the use of money in Mesopotamian society.
Money was born.
Coins
The problem with most early money was that there wasn't any standard measure. A piece of gold could be small or large, so there was no way to place a consistent value on traded goods.
Coins solved this problem. They had a standard weight, and were stamped with symbols by the state to prove their authenticity. The first standardised metal coins appeared in Greece in the seventh century BC.
The gold standard
The value of a coin continued to be determined by its weight into the early 17th century; a Dutch Guilder had one weight and a French franc had another.
However, as trade grew, coins became more and more impractical. Banks started to issue money in large denominations, using cheap materials such as paper. Physical money no longer had an intrinsic value; instead it could be redeemed at banks for gold or other precious metals.
After the Napoleonic wars of 1803-1825, a number of nations fixed the value for their currencies against gold, and promise to redeem the notes directly. Currencies could now be exchanged based on their fixed values.
This was the gold standard.
The world at war
The gold standard continued until World War I. However, there were growing concerns about some countries' ability and willingness to redeem their banknotes.
The chaos of World War I put an end to the gold standard, and nothing replaced it until 1944.
Although the gold standard was dead, international financial institutions did start to emerge between the wars. The most important was the Bank or International Settlements (BIS), founded in Basel in 1930. Its charter was to support countries without mature financial systems, or those with balance of payments deficits.
1944
In 1944, delegates from 44 Allied nations met in the United States at Bretton Woods. Economic luminaries including John Maynard Keynes and Harry Dexter White worked to create a new global financial system, so that shattered countries could be rebuilt after the war.
The Bretton Woods Agreements were signed in July, 1944 with the following results:
The International Monetary Fund (IMF) was established
Countries who cooperated with the IMF could receive stabilisation loans
The US dollar and British pound were announced as international reserve currencies
Currency values were fixed against the US dollar - with only 1% deviation allowed
The value of the dollar was fixed against gold
Countries could only alter their exchange rates with IMF permission
Currencies became convertible
Governments were required to hold reserves and intervene in currency markets
Nations had to pay a fee in gold and national currency to join the IMF
1947
After World War II, the US became increasingly concerned with the ability of a war-ravaged Europe to resist Soviet communism. In 1947, it established the European Recovery Plan, popularly known as the Marshall Plan after the US Secretary of State, George Marshall.
Over four years, European countries received nearly $13 billion dollars under the Marshall Plan, allowing them to buy the goods and services they needed to rebuild.
1964
In 1964, Japan made the yen convertible. With all major currencies now convertible, it became clear that the US could no longer sustain a fixed dollar rate against gold.
US dollar inflation became a major issue, and the US administration took steps to control US dollar transactions through taxation of exchange differentials. Costs increased for foreign borrowers, leading to the creation of a new eurodollar market.
1967
The British balance of payments deteriorated through the 1960s, and their gold reserves declined from $18 billion to $11 billion. In 1967, the UK had to devalue the pound, striking Bretton Woods a crippling blow. At the same time, US debt continued to grow.
1970
In 1970, interest rates decreased sharply in the US. Investors moved their capital to Europe, where rates were higher. The worst dollar crisis to date ensued.
1971
Events accelerated in 1971:
In May, Germany and The Netherlands allowed open trading of their currencies
In August, the US balance of payments deficit reached crisis point and President Nixon responded by stopping conversion of US dollars into gold
In December, matters came to a head:
A last attempt was made to save Bretton Woods in a meeting at the Smithsonian Institute in Washington
Exchange rates were allowed to deviate up to 4.5% from their fixed values
Central banks made major interventions in the currency markets - including $5 billion from the Bundesbank
Exchange rates could not be controlled despite these interventions
Currency exchanges in Europe and Japan were closed temporarily
The US devalued the dollar by 10%
Developed countries floated their currencies – ending fixed exchange rates
1973 to 1974
Over this period, events continued to unfold:
The US dismantled the tax measures and other restrictions it had introduced in 1964
Central banks stopped intervening in the currency market
Speculators made enormous profits once interventions stopped
Two major banks - Bankhaus Herstatt and Franklin National Bank - went bankrupt
Speculation damaged many other banks
The Bretton Woods system ceased to exist
1976
Representatives of major nations met in Kingston, Jamaica, to create a new global currency system. This had the following results:
Gold was no longer used as the basis of currency valuation
International organisations were set up to control currency conversion
Currencies were used to buy other currencies
Commercial banks became the main mechanism for currency conversion
Exchange rates were floated – and were driven by market forces
Sunday, October 21, 2012
Forex trading
Start forex trading today and make money in the world’s largest financial market. Discover the benefits of fx trading with Forex4you:
Get access to fx trading tools designed for the forex trader
No commission
Low spreads save you money on fx trading
Free demo account to learn forex trading
Start trades with as little as 2 cents
You choose the level of forex trading leverage: 1:10 to 1:500
Get rewarded with lucrative fx trading bonuses
Trade all major currency pairs
Learn forex trading with a free demo account or open a live forex account and make trades beginning at just 2 cents. You'll pay no commission and earn attractive bonuses – the more fx trading you do, the more you earn!
We give you access to our daily fx trading tips, letting you stay on top of the market and learn forex trading as you do. When you trade with Forex4you you can achieve forex trading leverage of up to 1:500, so you only need $20 to trade $10,000.
At Forex4you, we're committed to offering the best forex trader services possible. Join today and see what we mean!
What is forex trading? How do people make money in the forex market?
When you go on vacation, you buy foreign currency. When you return, you change back the foreign currency that you have left. The problem is that you lose money, because you pay a high rate when you buy foreign currency and get a low rate when you sell. This is the spread, and it’s how the bureau de change makes a profit.
What if the spread were very small?
You buy $1,000 in London
The bureau de change is selling at 1.60 USD/GBP and buying at 1.62 USD/GBP
You pay £625 for $1000
You would lose £7.72 if you sold the $1,000 back right away – but you don’t
You wait two weeks and the dollar gets stronger
The bureau de change is now selling at 1.57 USD/GBP and buying at 1.59 USD/GBP
You sell your $1,000 and get £628.93
You’ve made £3.93 on forex trading
You can’t get small fx trading spreads from a bureau de change, but you can get them from a forex broker. You can also do fx trading on margin, so you only need to come up with 1% of the money if you have leverage of 1:100. That means you would only have to invest £6.25 to make the £3.93 profit above. Of course, your forex trading profits aren’t guaranteed; the dollar could go down as well as up.
Get access to fx trading tools designed for the forex trader
No commission
Low spreads save you money on fx trading
Free demo account to learn forex trading
Start trades with as little as 2 cents
You choose the level of forex trading leverage: 1:10 to 1:500
Get rewarded with lucrative fx trading bonuses
Trade all major currency pairs
Learn forex trading with a free demo account or open a live forex account and make trades beginning at just 2 cents. You'll pay no commission and earn attractive bonuses – the more fx trading you do, the more you earn!
We give you access to our daily fx trading tips, letting you stay on top of the market and learn forex trading as you do. When you trade with Forex4you you can achieve forex trading leverage of up to 1:500, so you only need $20 to trade $10,000.
At Forex4you, we're committed to offering the best forex trader services possible. Join today and see what we mean!
What is forex trading? How do people make money in the forex market?
When you go on vacation, you buy foreign currency. When you return, you change back the foreign currency that you have left. The problem is that you lose money, because you pay a high rate when you buy foreign currency and get a low rate when you sell. This is the spread, and it’s how the bureau de change makes a profit.
What if the spread were very small?
You buy $1,000 in London
The bureau de change is selling at 1.60 USD/GBP and buying at 1.62 USD/GBP
You pay £625 for $1000
You would lose £7.72 if you sold the $1,000 back right away – but you don’t
You wait two weeks and the dollar gets stronger
The bureau de change is now selling at 1.57 USD/GBP and buying at 1.59 USD/GBP
You sell your $1,000 and get £628.93
You’ve made £3.93 on forex trading
You can’t get small fx trading spreads from a bureau de change, but you can get them from a forex broker. You can also do fx trading on margin, so you only need to come up with 1% of the money if you have leverage of 1:100. That means you would only have to invest £6.25 to make the £3.93 profit above. Of course, your forex trading profits aren’t guaranteed; the dollar could go down as well as up.
Saturday, October 20, 2012
What is Forex?
One of the questions we get asked all the time is “What is forex trading?” When did it start? How big is it? Who are the major players? What makes currency rates change?
Here are the answers to all your questions!
About forex
Forex is the international market for the free trade of currencies. Traders place orders to buy one currency with another currency. For example, a trader may want to buy Euros with US dollars, and will use the forex market to do this.
The forex market is the world's largest financial market. Over $4 trillion dollars worth of currency are traded each day. The amount of money traded in a week is bigger than the entire annual GDP of the United States!
The main currency used for forex trading is the US dollar.
When did forex start?
As the world continued to tear itself apart in the Second World War, there was an urgent need for financial stability. International negotiators from 29 countries met in Bretton Woods and agreed to a new economic system where, amongst other things, exchange rates would be fixed.
The International Monetary Fund (IMF) was established under the Bretton Woods agreement, and started to operate in 1949. All exchange rates changes above 1% had to be approved by the IMF, which had the effect of freezing these rates.
By the late 1960's the fixed exchange rate system started to break down, due to a number of international political and economic factors. Finally, in 1971, President Nixon stopped the US dollar being converted directly to gold, as part of a set of measures designed to stem the collapse of the US economy. This was known as the Nixon shock, and lead to floating rate currency markets being established in early 1973. By 1976, all major currencies had floating exchange rates.
With floating rates, currencies could be traded freely, and the price changed based on market forces. The modern forex market was born.
Who trades on the forex market?
There are many different players in the forex market. Some trade to make profits, others trade to hedge their risks and others simply need foreign currency to pay for goods and services. The participants include the following:
Government central banks
Commercial banks
Investment banks
Brokers and dealers
Pension funds
Insurance companies
International corporations
Individuals
When is the forex market open?
Unlike stock exchanges, which have limited opening hours, the forex market is open 24 hours a day, five days a week. Banks need to buy and sell currency around the clock, and the forex market has to be open for them to do this.
What factors influence currency exchange rates?
As with any market, the forex market is driven by supply and demand:
If buyers exceed sellers, prices go up
If sellers outnumber buyers, prices go down
The following factors can influence exchange rates:
National economic performance
Central bank policy
Interest rates
Trade balances – imports and exports
Political factors – such as elections and policy changes
Market sentiment – expectations and rumours
Unforeseen events – terrorism and natural disasters
Despite all these factors, the global forex market is more stable than stock markets; exchange rates change slowly and by small amounts.
What are the advantages of the forex market?
The forex market has many advantages. These include the following:
It's already the world's largest market and it's still growing quickly
It makes extensive use of information technology – making it available to everyone
Traders can profit from both strong and weak economies
Trader can place very short-term orders – which are prohibited in some other markets
The market is not regulated
Brokerage commissions are very low or non-existent
The market is open 24 hours a day during weekdays
Here are the answers to all your questions!
About forex
Forex is the international market for the free trade of currencies. Traders place orders to buy one currency with another currency. For example, a trader may want to buy Euros with US dollars, and will use the forex market to do this.
The forex market is the world's largest financial market. Over $4 trillion dollars worth of currency are traded each day. The amount of money traded in a week is bigger than the entire annual GDP of the United States!
The main currency used for forex trading is the US dollar.
When did forex start?
As the world continued to tear itself apart in the Second World War, there was an urgent need for financial stability. International negotiators from 29 countries met in Bretton Woods and agreed to a new economic system where, amongst other things, exchange rates would be fixed.
The International Monetary Fund (IMF) was established under the Bretton Woods agreement, and started to operate in 1949. All exchange rates changes above 1% had to be approved by the IMF, which had the effect of freezing these rates.
By the late 1960's the fixed exchange rate system started to break down, due to a number of international political and economic factors. Finally, in 1971, President Nixon stopped the US dollar being converted directly to gold, as part of a set of measures designed to stem the collapse of the US economy. This was known as the Nixon shock, and lead to floating rate currency markets being established in early 1973. By 1976, all major currencies had floating exchange rates.
With floating rates, currencies could be traded freely, and the price changed based on market forces. The modern forex market was born.
Who trades on the forex market?
There are many different players in the forex market. Some trade to make profits, others trade to hedge their risks and others simply need foreign currency to pay for goods and services. The participants include the following:
Government central banks
Commercial banks
Investment banks
Brokers and dealers
Pension funds
Insurance companies
International corporations
Individuals
When is the forex market open?
Unlike stock exchanges, which have limited opening hours, the forex market is open 24 hours a day, five days a week. Banks need to buy and sell currency around the clock, and the forex market has to be open for them to do this.
What factors influence currency exchange rates?
As with any market, the forex market is driven by supply and demand:
If buyers exceed sellers, prices go up
If sellers outnumber buyers, prices go down
The following factors can influence exchange rates:
National economic performance
Central bank policy
Interest rates
Trade balances – imports and exports
Political factors – such as elections and policy changes
Market sentiment – expectations and rumours
Unforeseen events – terrorism and natural disasters
Despite all these factors, the global forex market is more stable than stock markets; exchange rates change slowly and by small amounts.
What are the advantages of the forex market?
The forex market has many advantages. These include the following:
It's already the world's largest market and it's still growing quickly
It makes extensive use of information technology – making it available to everyone
Traders can profit from both strong and weak economies
Trader can place very short-term orders – which are prohibited in some other markets
The market is not regulated
Brokerage commissions are very low or non-existent
The market is open 24 hours a day during weekdays
Sunday, September 23, 2012
Forex eToro Review
eToro - Practical examples of use
This is a brief summary of some of the functionality that the platform
eToro offers to their users. Some Forex trading examples that show how
easy is to trade foreign currencies with eToro are included, too. When
you enter the platform, you can choose between visual mode or so-called
expert mode. Since the last one seems to be a difficult thing, for
experts, let's explain it right now. You'll see immediately how easy and
intuitive are operations to buy or sell currency pair, with just a few
clicks.
Open position
The operations to do to open a position, indicated with red arrows and relative numbers, are described bellow.
- With a click of the mouse you select the line containing the currency pair you want to trade.
- In the field "Currency Pair" you choose to buy or to sell the pair.
In this example, the pair EUR/USD has been chosen to sell because is
considered that the price will drop.
- In the field "Trade Options" you choose the risk level, i.e. the
leverage, which ranges from 1 to 10 to 1 to 400. Than you choose the
amount to invest and you can also set the limits for "stop loss" and
"take profit". These limits may be set or changed at a later stage, as
we shall see in the next paragraph.
- When all the parameters are set, you should activate the exchange by
clicking on the green button "Open Trade". One window opens where you
should click "OK", to confirm the operation or click "Cancel" if you
change your mind and you don’t want to execute the trade.
Limits modification
Once the position is opened you can change one or both of the limits of
the same position: automatic closing of the position to limit the loss
(Stop Loss), if the trend is unfavorable to you, and / or self-closing
to take profit (Take Profit) when the price reaches desired level. The
picture above shows the procedure to change the limit "Take Profit". The
same would be a way to change "Stop Loss".
To change the value of "take profit" you must click on the relative
button (circled in red). One window will open where you can change the
value by changing the monetary amount of profit or by varying the rate
of closure. Of course, changing one of the two, the other value
automatically changes. Once you set the value to what you want, you must
press "OK" button to confirm the new limit.
Close the position manually
Having set the limits for the stop of the loss and the profit taking,
the position will close automatically if one of the limits is reached.
If for any reason you want to close the position manually, at any time
you can click with mouse on the button "Close" (circled in red) and then
click the button "OK" to confirm the closure on the new window that
will open. All closed position are moved in history field. To access the
history area, you must click the tab "History" (circled in yellow). You
can see the content of history field on the next image.
History
In the history area all closed positions are listed together with the
most relevant data of their performance. Reading from the left to the
right we have the number of operation, type of action (buy or sell) and
the currency pair involved, the opening and closing dates and times, the
amount invested and the capital managed with invested amount. Follow
the opening and closing rates, the spread and profits or loss achieved
with the percentage gain. The transactions are listed in chronological
order and higher listed are more recently executed. To return to the
previous screen click the tab "Open Trades", circled in yellow.
Examining better this window, as well as those listed before, you can
see tabs and buttons of other features that eToro offers to clients: the
online help with explanations about the meaning of the options, contact
the staff and access to the community and forum, where you can exchange
ideas and opinions with other users. You can also view the news in real
time from the world of finance and see the calendar of events important
for the evolution of the prices of currencies. The Forex tab are
relative to the currency pairs, while if you click Commodities tab you
can trade gold and silver. At the left of the lines with currency pairs,
there are buttons to access the charts that show evolution of the rate
of the currency pair we are interested in. It's circled in red the
button of the pair EUR / USD, and the relative graph you can see below.
Charts
The charts offer a range of options that allow you to adapt
representation to our personal taste. First of all, you can choose from a
basic chart or an advanced one. The last one is shown on the picture
below. As you can see, chart can be represented with traditional style
bar, lines or with the candles. You can choose the period of
representation from 1 minutes to 24 hours, various technical indicators
and you can also draw lines and curves. Among other things, the chart
can be saved on your personal computer for the future analysis. Moving
the mouse cursor over a candle you obtain all the characteristic values
for the relevant period; the rates of opening and closing, and the high
and low price of the pair.
The above chart also shows the high volatility of exchange rates in
certain periods. On the graph you can see the evolution of EUR / USD in
the day 27 July 2009, in periods of 15 minutes. Observe the difference
between the highest price on the chart of 1.4297 at 11:45 a.m. and the
lowest one of 1,4203 at 16:00 (4:00 p.m.). In about 4 hours, the price
was dropped by 94 pips. Exploiting this decrease would mean earning 94%
of invested capital, using the leverage 1 to 100, in just 4 hours and no
other exchange market may offer the opportunity to so high profit.
Visual mode
For completeness of presentation, let’s see briefly one of the five
visual modes that are available to the trader. After seeing how simple
is the use of the expert mode of the eToro platform, maybe wouldn’t be
correct to say that the visual mode is simpler. Indeed, it is just easy
as expert mode, but this mode is offered to meet the personal tastes and
to allow the user to choose the most suitable for him.
The window on the visual offers to client 5 different visual interfaces
called globe trader, forex trand, forex marathon, forex charts and forex
trade box. All interfaces are interactive, choosing one of the options
you pass the selection to another one. Since all is very simple and
intuitive, only the screenshot of the mode "forex trend" is shown here.
In the "forex trend", the image below, we
choose one of the currencies and the expected trend, rise or fall,
(column "currency direction"). For example, we have chosen the euro that
rise. The box that we chosen will indicate us, with an arrow, the next
column we must elaborate, in this case is "Against currency". Here we
indicate the currency that make pair with the euro: we indicate USD.
Having made this choice on the right we will see a series of boxes with
the amount to be invested and we choose one of those proposed. At the
end you can choose, at the bottom of the screen, the level of risk: 100,
200 and 400. Made all the choices we press the button "Open Trade" and
one window appears that allow us to confirm or to abandon the operation.
Really easy, isn’t it?
Once the position is opened you can change one or both of the limits of
the same position: automatic closing of the position to limit the loss
(Stop Loss), if the trend is unfavorable to you, and / or self-closing
to take profit (Take Profit) when the price reaches desired level. The
picture above shows the procedure to change the limit "Take Profit". The
same would be a way to change "Stop Loss".
To change the value of "take profit" you must click on the relative
button (circled in red). One window will open where you can change the
value by changing the monetary amount of profit or by varying the rate
of closure. Of course, changing one of the two, the other value
automatically changes. Once you set the value to what you want, you must
press "OK" button to confirm the new limit.
Close the position manually
Having set the limits for the stop of the loss and the profit taking,
the position will close automatically if one of the limits is reached.
If for any reason you want to close the position manually, at any time
you can click with mouse on the button "Close" (circled in red) and then
click the button "OK" to confirm the closure on the new window that
will open. All closed position are moved in history field. To access the
history area, you must click the tab "History" (circled in yellow). You
can see the content of history field on the next image.
History
In the history area all closed positions are listed together with the
most relevant data of their performance. Reading from the left to the
right we have the number of operation, type of action (buy or sell) and
the currency pair involved, the opening and closing dates and times, the
amount invested and the capital managed with invested amount. Follow
the opening and closing rates, the spread and profits or loss achieved
with the percentage gain. The transactions are listed in chronological
order and higher listed are more recently executed. To return to the
previous screen click the tab "Open Trades", circled in yellow.
Examining better this window, as well as those listed before, you can
see tabs and buttons of other features that eToro offers to clients: the
online help with explanations about the meaning of the options, contact
the staff and access to the community and forum, where you can exchange
ideas and opinions with other users. You can also view the news in real
time from the world of finance and see the calendar of events important
for the evolution of the prices of currencies. The Forex tab are
relative to the currency pairs, while if you click Commodities tab you
can trade gold and silver. At the left of the lines with currency pairs,
there are buttons to access the charts that show evolution of the rate
of the currency pair we are interested in. It's circled in red the
button of the pair EUR / USD, and the relative graph you can see below.
Charts
The charts offer a range of options that allow you to adapt
representation to our personal taste. First of all, you can choose from a
basic chart or an advanced one. The last one is shown on the picture
below. As you can see, chart can be represented with traditional style
bar, lines or with the candles. You can choose the period of
representation from 1 minutes to 24 hours, various technical indicators
and you can also draw lines and curves. Among other things, the chart
can be saved on your personal computer for the future analysis. Moving
the mouse cursor over a candle you obtain all the characteristic values
for the relevant period; the rates of opening and closing, and the high
and low price of the pair.
The above chart also shows the high volatility of exchange rates in
certain periods. On the graph you can see the evolution of EUR / USD in
the day 27 July 2009, in periods of 15 minutes. Observe the difference
between the highest price on the chart of 1.4297 at 11:45 a.m. and the
lowest one of 1,4203 at 16:00 (4:00 p.m.). In about 4 hours, the price
was dropped by 94 pips. Exploiting this decrease would mean earning 94%
of invested capital, using the leverage 1 to 100, in just 4 hours and no
other exchange market may offer the opportunity to so high profit.
Visual mode
For completeness of presentation, let’s see briefly one of the five
visual modes that are available to the trader. After seeing how simple
is the use of the expert mode of the eToro platform, maybe wouldn’t be
correct to say that the visual mode is simpler. Indeed, it is just easy
as expert mode, but this mode is offered to meet the personal tastes and
to allow the user to choose the most suitable for him.
The window on the visual offers to client 5 different visual interfaces
called globe trader, forex trand, forex marathon, forex charts and forex
trade box. All interfaces are interactive, choosing one of the options
you pass the selection to another one. Since all is very simple and
intuitive, only the screenshot of the mode "forex trend" is shown here.
In the "forex trend", the image below, we
choose one of the currencies and the expected trend, rise or fall,
(column "currency direction"). For example, we have chosen the euro that
rise. The box that we chosen will indicate us, with an arrow, the next
column we must elaborate, in this case is "Against currency". Here we
indicate the currency that make pair with the euro: we indicate USD.
Having made this choice on the right we will see a series of boxes with
the amount to be invested and we choose one of those proposed. At the
end you can choose, at the bottom of the screen, the level of risk: 100,
200 and 400. Made all the choices we press the button "Open Trade" and
one window appears that allow us to confirm or to abandon the operation.
Really easy, isn’t it?
In the history area all closed positions are listed together with the
most relevant data of their performance. Reading from the left to the
right we have the number of operation, type of action (buy or sell) and
the currency pair involved, the opening and closing dates and times, the
amount invested and the capital managed with invested amount. Follow
the opening and closing rates, the spread and profits or loss achieved
with the percentage gain. The transactions are listed in chronological
order and higher listed are more recently executed. To return to the
previous screen click the tab "Open Trades", circled in yellow.
Examining better this window, as well as those listed before, you can
see tabs and buttons of other features that eToro offers to clients: the
online help with explanations about the meaning of the options, contact
the staff and access to the community and forum, where you can exchange
ideas and opinions with other users. You can also view the news in real
time from the world of finance and see the calendar of events important
for the evolution of the prices of currencies. The Forex tab are
relative to the currency pairs, while if you click Commodities tab you
can trade gold and silver. At the left of the lines with currency pairs,
there are buttons to access the charts that show evolution of the rate
of the currency pair we are interested in. It's circled in red the
button of the pair EUR / USD, and the relative graph you can see below.
Charts
The charts offer a range of options that allow you to adapt
representation to our personal taste. First of all, you can choose from a
basic chart or an advanced one. The last one is shown on the picture
below. As you can see, chart can be represented with traditional style
bar, lines or with the candles. You can choose the period of
representation from 1 minutes to 24 hours, various technical indicators
and you can also draw lines and curves. Among other things, the chart
can be saved on your personal computer for the future analysis. Moving
the mouse cursor over a candle you obtain all the characteristic values
for the relevant period; the rates of opening and closing, and the high
and low price of the pair.
The above chart also shows the high volatility of exchange rates in
certain periods. On the graph you can see the evolution of EUR / USD in
the day 27 July 2009, in periods of 15 minutes. Observe the difference
between the highest price on the chart of 1.4297 at 11:45 a.m. and the
lowest one of 1,4203 at 16:00 (4:00 p.m.). In about 4 hours, the price
was dropped by 94 pips. Exploiting this decrease would mean earning 94%
of invested capital, using the leverage 1 to 100, in just 4 hours and no
other exchange market may offer the opportunity to so high profit.
Visual mode
For completeness of presentation, let’s see briefly one of the five
visual modes that are available to the trader. After seeing how simple
is the use of the expert mode of the eToro platform, maybe wouldn’t be
correct to say that the visual mode is simpler. Indeed, it is just easy
as expert mode, but this mode is offered to meet the personal tastes and
to allow the user to choose the most suitable for him.
The window on the visual offers to client 5 different visual interfaces
called globe trader, forex trand, forex marathon, forex charts and forex
trade box. All interfaces are interactive, choosing one of the options
you pass the selection to another one. Since all is very simple and
intuitive, only the screenshot of the mode "forex trend" is shown here.
In the "forex trend", the image below, we
choose one of the currencies and the expected trend, rise or fall,
(column "currency direction"). For example, we have chosen the euro that
rise. The box that we chosen will indicate us, with an arrow, the next
column we must elaborate, in this case is "Against currency". Here we
indicate the currency that make pair with the euro: we indicate USD.
Having made this choice on the right we will see a series of boxes with
the amount to be invested and we choose one of those proposed. At the
end you can choose, at the bottom of the screen, the level of risk: 100,
200 and 400. Made all the choices we press the button "Open Trade" and
one window appears that allow us to confirm or to abandon the operation.
Really easy, isn’t it?
Simple Forex Software
The majority of the people who trade on Forex have a passion for this,
they are not professionals of the field. Often, they are employers in
the firm and during the hours of work
they have no possibility (for obvious reasons) to make the trading.
Someone would gladly look at the market during the lunch time, in order
to see if some trend could be useful,
but often the employers don't have the possibility to do that. The
computers in the office are almost always connected on the firm's
network and many times the unavoidable firewall
does not permit access to Forex sites or it is not possible to install
the relative software because it would be necessary to have the
credentials of the net administrator.
The official platform software is limited and it doesn’t always permit
us to have a global vision of the course of currencies and the market,
it might be possible, but we must
open a tide of windows and arrange them in an ergonomic way, with some
personal criteria, for being able to see the necessary data.
In order to face both problems, several years ago a good friend of mine
created a small program. He is a very good software programmer and very
fair priced, but only for friends:
I took him out for dinner! That was all it cost me for his work. I
wanted an application that shows the global course, the trend of the
main currencies, all together and in a
simple manner. For this purpose software ForexTrend was created. It's a
gift from us. You can download and use it for free.
Installation
Let’s start with the installation and the necessary resources for proper
use of the application. Start by downloading the software to your
preferred folder. You can also place
it on the desktop so that you can easily access it. There is no need to
install the software. The application works under all versions of
Windows. You must be connected to the
Internet in order to read the values of the currency couples. If you
have an antivirus program you will probably have to set up a rule so
that the program can access the Internet.
What it does and how does it works
Start by clicking the Start button. The program read once in the minute
the medium value of 15 couples of the 6 main currencies. At this point I
want to give you two explanations.
Since I wanted to show the global pointers, I didn't want to make the
application more "heavy" by using buy and sell values, who are variable
between one platform and the other.
If you look well you will see two couples miss, GBP/AUD and AUD/CHF,
instead of which you will find two others: EUR/CAD and USD/CAD. These
last ones are those which I use sometimes,
while I never trade with the first two couples. It's only about my
personal tastes and I hope it goes well also to you. As it is seen on
the screen below, there are 8 couples on
the left and 7 on the right of the window. For every couple we have:
- Name of the currency couple to which the data refer.
- The first value read immediately after the start of the program, in the square brackets, and in the same line the last six read values.
- The linear diagram with the representation of the course of the price from the beginning of the program. In the right side of diagram are written minimums (in red) and maximum (green), occurred during the software activity.
Up in the window there are the timetables of the readings of the
relative values. The first timetable is always in the square brackets,
as it is refered to the
first price. The numeric values and diagrams are both colored:
- In green, if the price is increased,
- In red, if the price is decreased,
- In black, if the price has remained unchanged.
If for some reason the program can’t read the values, the place which
have to contain the data will be empty. If instead you see all diagrams
black and linear, than Forex marcet
is closed and you read the closing price.
Software limitations
The software can read until 30.000 data for every couple. Since the
reading interval is of 1 minute, the data can be accumulated for 500
hours, that means more than 20 days.
Once the maximum capacity is reached, the application is automatically
stopped, as if the user had pressed the Stop button.
The graphical space permits the presentation of a certain number of
points, not the maximum number which can be read by the program. When
this limit is reached, in the diagram
will be only present data for a minimum lack of time, every 2 minutes, 3
minutes and so on. In this case, the minimum and maximum values
indicated on the right side of diagram
are refer to the complete interval of the read data, while the same
diagram could not represent them.
You must also consider the fact that the prices are read in
discontinuous way, that means once in a minute, so the read price could
not be the maximum or the minim in that interval.
However, the aim was to see the global trend. Obviously, for the real
trading you will chose your favorite forex platform that will give you
the precise data.
Download : Forex Trend
Saturday, September 22, 2012
eToro Forex platform
eToro is in this moment probably the most modern and original Forex
platform on Internet. Thanks to the deepened studies of the needs and
the
habits of traders, and ergonomics, considering that people are
different among them, eToro provides that each operation could be done
in several
ways, different from each other therefore everyone surely find way to
work more closely to him. Everything is very intuitive and you will be
able
to start very easily, without even reading the instructions, which
however should be consulted.
Another feature, which the users will like a lot, is that in certain
periods eToro applies a spread of just 2 pips on the major currencies
and a
benefit like this isn’t so easy to find on the other platforms.
Moreover, a real account can be opened with a really small amount, only
50 dollars.
In this way, this platform tries to open the Forex market to people with
the modest financial resources.
But eToro doesn’t want to be another impersonal computer tool, so it
offers its users a great forum where you can exchange opinions, ideas
and
experiences with the other members, and a chat in real time with other
traders. In real time you can see trends followed by the other users,
namely
those who buy and sell (in percentages) the main currency pairs. And
even more, there are tournaments between traders with prizes: the winner
is
the trader that produces the hugest profit in certain period, and the
first prize is 10,000 U.S. dollars. So eToro is not only a Forex
platform,
but an authentic Forex community, too.
As the other good platform, eToro offers a demo account with 2000
dollars, obviously a virtual money, where you can achieve experience,
learning about the world
of the Forex and the use of the platform itself. Even using a demo
account you are participating in the tournament with the other traders
and
the top 10 traders are rewarded with the prizes ranging from 100 to 300
dollars. Various options are offered for funding your account and
withdrawing
from it, starting from the usual and inevitable credit card, through a
bank transfer, PayPal or convenient, or Western Union to transfer money.
Friday, September 21, 2012
Forex Web Platforms
Today, on Internet are present numerous sites that use various Forex
platforms, as usually are called applications, i.e. the software that
allow
us to sell and to buy currencies in the real time. The purpose of this
page is to supply to potential users useful information about some of
them, that
we use frequently and that we acquaint well. We hope that this can help
especially those that approach for the first time Forex trading, and
experienced users, too.
Our selection of Forex platforms are based on seriousness, reputation
and tradition of the companies that manage particular platform, security
of the platforms, simplicity and powerful at the same time of the
interface, and availability of training mode, so client can become
familiar
with platform, before he starts to operate with the real money. Surely,
very important elements for trading are applied spread, especially for
the majors,
the most traded, bonuses and prizes, security, simplicity and celerity
of the procedures of funds and withdrawals from your account, and of
course
assistance and support offered to the clients.
It’s essential to know well certain Forex platform before starting to
trade with the real money. This knowledge protect us from unpleasant
surprises
that we can have using non reliable platforms, or those not sufficiently
tested. One can have good information searching on Internet with search
engines,
looking for opinions and judgements of experienced users that often put
them in various forums and personal blogs.
eToro
eToro is a new Forex platform, founded in 2008, that uses latest
information technology in computer science, and ergonomics knowledge to
give to
a final user an innovative, visual interface, visually very pleasant and
modern, but more important, very intuitive and extremely easy to use.
Procedures
to open or to close one position can be done with only one click of the
mouse. Once the position is opened so quick, all the parameters,
such "stop loss" or "take profit" can be adjusted to suit your
necessities. The whole process, from the opening to the closing of the
position, is very
clear and transparent.
Like any good platform, eToro also offers real-time charts of the trends
of the currencies and the latest news in the world, but also the
possibility to
chat with other customers and to exchange ideas in one dedicated forum.
They organise for customers championships trading and customers who
have had
more success, that have made the biggest profits, are rewarded with
prizes in cash, credited to the account to the real account. So a job,
sometimes
very stressful, becomes also a pleasant online entertainment and a place
where you can meet other people with similar interests as yours.
Thursday, September 20, 2012
Forex Trading Examples
Here are two detailed examples of intraday trading: this means that you open and close the position within one Forex day.
Remember that the Forex day starts at 5:00 PM EST (10:00 PM GMT / 22:00), and ends a day after at the same time.
You decide to buy the pair at the following rates:
USD/JPY 110.00/110.03
EUR/JPY 160.00/160.03
NOTE: We will use the EUR/JPY rate to transform the trade currency into your euro account base currency.
When you sell the pair, the rates are:
USD/JPY 110.70/110.73
EUR/JPY 160.01/160.04
Step 1
When you buy the pair the rate is:
USD/JPY 110.00/110.03
When you sell the pair the rates is:
USD/JPY 110.70/110.73
You decide to sell the pair at the following rates:
USD/JPY 110.00/110.03
EUR/USD 1.4000/1.4003
NOTE: We will use the EUR/USD rate to transform the trade currency into your euro account base currency.
When you buy the pair, the rates are:
USD/JPY 109.20/109.23
EUR/USD 1.4006/1.4009
Step 1
When you sell the pair the rate is:
USD/JPY 110.00/110.03
When you buy the pair, the rate is:
USD/JPY 109.20/109.23
Long position example (buying position)
Detailed description
You have a EUR 1,000 account and would like to buy a full lot (100,000) of the pair USD/JPY.
Step 1You have a EUR 1,000 account and would like to buy a full lot (100,000) of the pair USD/JPY.
You decide to buy the pair at the following rates:
USD/JPY 110.00/110.03
EUR/JPY 160.00/160.03
NOTE: We will use the EUR/JPY rate to transform the trade currency into your euro account base currency.
To buy 100,000 USD with JPY, the broker provides you 100,000 USD x 110.03 (The ask price), which equals 11,003,000 JPY.
With 11,003,000 JPY, you buy 100,000 USD.
Having used 1:100 leverage, you are able to open this position with a
1,000 USD investment (110,030 JPY).
EUR 687.69 (110,030 JPY / 160.00) is used as margin to cover your
position. You are left with a EUR 312.31 balance in your account.
Now you have an open long position.
Step 2When you sell the pair, the rates are:
USD/JPY 110.70/110.73
EUR/JPY 160.01/160.04
You sell USD at 110.70 for a total of 11,070,000 JPY. Your profit is 67,000 JPY ( 11,070,000 - 11,003,000), i.e.
67,000 JPY / 160.04 (ask price) = 418.65 EUR.
This means that your account now contains 1,418.65 EUR (1,000.00 initial account's amount + 418.65 profit).
Using leverage to your advantage, you made a 61% (100 x 418.65 / 687.69)
profit in one day. Only in the Forex market can you make such huge
profits,
so quickly.
Long summaryStep 1
When you buy the pair the rate is:
USD/JPY 110.00/110.03
You buy 100,000 USD against JPY at 110.03.
Step 2When you sell the pair the rates is:
USD/JPY 110.70/110.73
The difference between the selling and buying price is 110,70 – 110,03 = 0.67 JPY: this is your profit for each USD invested,
for a total of 100,000 USD x 0.67 JPY = 67,000 JPY, or 418.65 EUR, as seen above.
Short position example (selling position)
Detailed description
Your basic account currency is EUR, with an amount of 1,000 EUR, and you would like to sell 100,000 (a full lot) of the pair USD/JPY (selling USD against JPY).
Step 1Your basic account currency is EUR, with an amount of 1,000 EUR, and you would like to sell 100,000 (a full lot) of the pair USD/JPY (selling USD against JPY).
You decide to sell the pair at the following rates:
USD/JPY 110.00/110.03
EUR/USD 1.4000/1.4003
NOTE: We will use the EUR/USD rate to transform the trade currency into your euro account base currency.
Using a leverage of 100:1, you are able to sell USD 100,000 USD/JPY,
selling USD 100,000 and buying JPY 11,000,000 (100,000 x 110.00).
The 1,000 USD translates into EUR 714.29 (1,000 USD / 1.4000), which is
margin to cover your position. You are left with a EUR 285.71
balance in your account. Now you have an open short position.
Step 2When you buy the pair, the rates are:
USD/JPY 109.20/109.23
EUR/USD 1.4006/1.4009
You buy USD at 109.23 (ask price), for a total of 100,704.93 USD (11,000,000 JPY / 109.23). Your profit is 704.93 USD
(= 100,704.93 - 100,000), i.e. 503.20 EUR (704.93 USD / 1.4009). Your account now contains 1,503.20 EUR (1,000.00 initial
account’s amount + 503.20 profit).
You made a 70% (100 x 503.20 / 714.29) profit in a day.
Short summaryStep 1
When you sell the pair the rate is:
USD/JPY 110.00/110.03
You sell 100,000 USD against JPY at 110.00.
Step 2When you buy the pair, the rate is:
USD/JPY 109.20/109.23
You buy USD at 109.23. The difference between the selling and buying
price is 110.00 – 109.23 = 0.77 JPY: this is your profit for each
USD invested, for a total of 100,000 USD x 0.77 JPY = 77,000 JPY, or
503.20 EUR, as explained above.
Wednesday, September 19, 2012
World Forex Hours
The Forex market is the only 24-hour market, opening Sunday 5 PM EST, and running continuously until Friday 5 PM EST.
The Forex day starts with the opening of Sydney’s (Australia) Forex market at 5:00 PM EST (10:00 PM GMT / 22:00),
and ends with the closing of New York’s market, a day after, at 5:00 PM EST (10:00 PM GMT / 22:00), immediately
reopening in Sydney restart trading.
Note: EST is an abbreviation for Eastern Standard Time (e.g. New York), while GMT is an abbreviation for Greenwich Mean Time (e.g. London).
Note: EST is an abbreviation for Eastern Standard Time (e.g. New York), while GMT is an abbreviation for Greenwich Mean Time (e.g. London).
The main Forex markets, in the order of their opening times, are: Sydney, Tokyo, Frankfurt, London and New York.
On the chart below, you can see the hourly course of the Forex-trading day.
Note: Tokyo’s market doesn’t start in the proper time zone due to the fact that it opens 1 hour
after the other markets (9:00 AM Local Time, while others open at 8:00 AM Local Time).
after the other markets (9:00 AM Local Time, while others open at 8:00 AM Local Time).
The following table illustrates the opening and closing local times for a Forex day and week, in function of time zones.
| Time Zone | Opening/Closing time* | Week starts | Week ends | |
|---|---|---|---|---|
| GMT+12 | 10:00 AM (10:00) | Monday 10:00 AM | Saturday 10:00 AM | Auckland |
| GMT+11 | 09:00 AM (09:00) | Monday 09:00 AM | Saturday 09:00 AM | |
| GMT+10 | 08:00 AM (08:00) | Monday 08:00 AM | Saturday 08:00 AM | Sydney |
| GMT+9 | 07:00 AM (07:00) | Monday 07:00 AM | Saturday 07:00 AM | Tokyo |
| GMT+8 | 06:00 AM (06:00) | Monday 06:00 AM | Saturday 06:00 AM | Hong Kong |
| GMT+7 | 05:00 AM (05:00) | Monday 05:00 AM | Saturday 05:00 AM | Bangkok |
| GMT+6 | 04:00 AM (04:00) | Monday 04:00 AM | Saturday 04:00 AM | Dhaka |
| GMT+5 | 03:00 AM (03:00) | Monday 03:00 AM | Saturday 03:00 AM | Karachi |
| GMT+4 | 02:00 AM (02:00) | Monday 02:00 AM | Saturday 02:00 AM | |
| GMT+3 | 01:00 AM (01:00) | Monday 01:00 AM | Saturday 01:00 AM | |
| GMT+2 | 00:00 AM (00:00) | Sunday 00:00 AM | Friday 00:00 AM | Cairo |
| GMT+1 | 11:00 PM (23:00) | Sunday 11:00 PM | Friday 11:00 PM | Frankfurt |
| GMT | 10:00 PM (22:00) | Sunday 10:00 PM | Friday 10:00 PM | London |
| GMT-1 | 09:00 PM (21:00) | Sunday 09:00 PM | Friday 09:00 PM | |
| GMT-2 | 08:00 PM (20:00) | Sunday 08:00 PM | Friday 08:00 PM | |
| GMT-3 | 07:00 PM (19:00) | Sunday 07:00 PM | Friday 07:00 PM | |
| GMT-4 | 06:00 PM (18:00) | Sunday 06:00 PM | Friday 06:00 PM | |
| GMT-5 | 05:00 PM (17:00) | Sunday 05:00 PM | Friday 05:00 PM | New York |
| GMT-6 | 04:00 PM (16:00) | Sunday 04:00 PM | Friday 04:00 PM | Chicago |
| GMT-7 | 03:00 PM (15:00) | Sunday 03:00 PM | Friday 03:00 PM | |
| GMT-8 | 02:00 PM (14:00) | Sunday 02:00 PM | Friday 02:00 PM | Los Angeles |
| GMT-9 | 01:00 PM (13:00) | Sunday 01:00 PM | Friday 01:00 PM | |
| GMT-10 | 00:00 PM (12:00) | Sunday 00:00 PM | Friday 00:00 PM | Hawaii |
| GMT-11 | 11:00 AM (11:00) | Sunday 11:00 AM | Friday 11:00 AM |
If you live in New York you can see from the table (GMT-5) that daily trade starts at 5:00 PM (17:00), and ends
at 5:00 PM (17:00) the day after. The weekly opening is at Sunday, while the weekly closing is Friday.
Familiarize yourself with your local opening and closing times, because this will impact when you must close your
day trades.
For example, if you live in London (GMT), the Forex day ends and restarts at 10:00 PM (22:00). If you open a position
at 9:30 PM (21:30), and close it at 10:30 AM (22:30), your trade goes from one to another Forex day and rollover/swap
are applied. If you open a position at 10:30 PM (22:30), and close it next day at 11:00 AM (11:00), your trade is
intraday (closed within the same Forex day), and no rollover/swap apply.
Important: A Forex day doesn’t correspond to a normal/calendar day.
Tuesday, September 18, 2012
Forex Terms
In this little glossary you can find explanations for some of the most used terms in Forex.
| Term | Explenation |
| Ask | The price at which a broker is willing to sell (same as Offer) a currency pair. This is the price the trader pays when buying a currency. If the quote for EUR/USD is 1.4000/1.4003, 1.4003 is the Ask price. |
| Bid | The price at which broker is willing to buy a currency pair. This is the price the trader receives when selling a currency. If the quote for EUR/USD is 1.4000/1.4003, 1.4000 is the Bid price. |
| Bid/Ask Spread | Or simply Spread. The spread is the difference between the Bid and Ask price. If the quote for EUR/USD is 1.4000/1.4003, the spread is 0.0003 USD (3 pips). |
| Broker | An individual or firm who handles trader's orders to sell or to buy currency, and charges the customer a commission for the service. |
| Closing rate | The rate of the last transaction completed of the considered period. |
| Currency Pairs | Foreign Exchange traders buy one currency while simultaneously selling another. Therefore, Foreign Exchange quotes are expressed in currency pairs. The four major currency pairs are the EUR/USD, GBP/USD, USD/CHF, and USD/JPY. The first currency in the currency pair is the "base currency", while the second is the "quote currency" or "counter currency". For example, in the pair EUR/USD the EUR is the base currency, and the USD is the quote currency. |
| Currency Pair Price |
The price of a currency pair is usually a five digit number, with four
digits to the right of the decimal point. In some instances, most
usually with the Japanese Yen, currency pairs have only four digits.
When, for example, EUR/USD is listed at 1.4000, it means that it takes 1.4000 units of the quote currency (USD) to buy a unit of the base currency (EUR). If the price of the currency pair rises to 1.4050, a trader with a long position (buying EUR against USD) makes a profit, while a trader with a short position (selling EUR against USD) takes a loss. |
| Day Trading | Refers to opening and closing the same position within same day. |
| Leverage | The ratios between the contract value and the deposit required from trader (margin) to trade. For example, if the trader must deposit $500 to have a $100,000 position (to buy a full Lot), the leverage is 200:1 ($100,000/$500). The inverse value is the percentage margin requirement: in this example 0.5% (0,005 = $500/$100,000). |
| Long | When a trader buys a currency pair it is called going long. The trader’s position will appreciate if the price of the currency pair increases. |
| Margin | The initial investment needed to open one position, used as collateral to cover the credit risk of the broker/dealer. The percentage of the required margin is inversely related to the leverage. |
| Opening rate | The rate of the first transaction completed of the considered period. |
| Pip | An abbreviatian of Percentage In Point. The smallest measure of price move that a given exchange rate can make in Forex trading. For most major currency pairs, one pip equals 1/100th of 1 percent (0.0001). A notable exception is the USD/JPY, in which each pip is 0.01. For instance, if pair EUR/USD moves from 1.4000 to 1.4007, the pair has appreciated seven pips. |
| Short | When a trader sells a currency pair it is called going short. The trader’s position will appreciate if the price of the currency pair decreases. |
Basic Forex Charts
Line Chart
The line chart is the simplest charting option.
Rate history is measured according to customizable time intervals, and the points, which illustrate the closing
rate at that particular time, are connected by a line.
The horizontal axis lists the time units (for example: 1 minute, 15 minutes, 1 hour, 1 day, etc.) and the vertical
axis illustrates the rate value.
For example, the graphic below details 100 intervals of 15 minutes on the horizontal axis, for a total of 1500
minutes (25 hours). This means that the closing rates are indicated at each 15 minute interval.
One of the problems with the line chart is that only the closing rate is shown for every time interval, and doesn’t
let us see changes that happened within this period. Using the OHLC bar chart, traders are able to see all price
changes occurring within each time interval. Using the OHLC bar chart, traders may identify the opening rate (O), the
highest rate (H), the lowest rate (L), and the closing rate (C), within each time interval, as shown on the graphic
below (note that the opening rate is on the left, while the closing rate is on the right of the bar).
An OHLC bar chart, using 10 intervals of 15 minutes, looks like this:
Candlestick Chart
The candlestick chart, based on an old Japanese method, is similar to the OHLC. The body of the candle is red
when the opening rate is higher than the closing rate. The body of the candle is green when the opening rate
is lower than the closing rate. When the candlestick is green the top of the body, the thick center of the
candlestick, represents the closing rate. When the candlestick is red the bottom of the body represents the
closing rate. The two lines extending from the bottom and top of the body illustrate the high and low of each
particular time interval.
A candlestick chart, using 11 intervals of 15 minutes, looks like this:
Monday, September 17, 2012
List of World's Currencies for Forex
The International Organization for Standardization (ISO) provided ISO 4217 standard
that define codes of three letter and relative three digits number for each currency. Here is a relative table.
| Code | Num | Currency | State |
| AED | 784 | United Arab Emirates dirham | United Arab Emirates |
| AFN | 971 | Afghani | Afghanistan |
| ALL | 008 | Lek | Albania |
| AMD | 051 | Armenian Dram | Armenia |
| ANG | 532 | Netherlands Antillian Guilder | Netherlands Antilles |
| AOA | 973 | Kwanza | Angola |
| ARS | 032 | Argentine Peso | Argentina |
| AUD | 036 | Australian Dollar | Australia |
| AWG | 533 | Aruban Guilder | Aruba |
| AZN | 944 | Azerbaijanian Manat | Azerbaijan |
| BAM | 977 | Convertible Marks | Bosnia and Herzegovina |
| BBD | 052 | Barbados Dollar | Barbados |
| BDT | 050 | Bangladeshi Taka | Bangladesh |
| BGN | 975 | Bulgarian Lev | Bulgaria |
| BHD | 048 | Bahraini Dinar | Bahrain |
| BIF | 108 | Burundian Franc | Burundi |
| BMD | 060 | Bermudian Dollar | Bermuda |
| BND | 096 | Brunei Dollar | Brunei |
| BOB | 068 | Boliviano | Bolivia |
| BRL | 986 | Brazilian Real | Brazil |
| BSD | 044 | Bahamian Dollar | Bahamas |
| BTN | 064 | Ngultrum | Bhutan |
| BWP | 072 | Pula | Botswana |
| BYR | 974 | Belarussian Ruble | Belarus |
| BZD | 084 | Belize Dollar | Belize |
| CAD | 124 | Canadian Dollar | Canada |
| CDF | 976 | Franc Congolais | Democratic Republic of Congo |
| CHF | 756 | Swiss Franc | Switzerland, Liechtenstein |
| CLP | 152 | Chilean Peso | Chile |
| CNY | 156 | Yuan Renminbi | Mainland China |
| COP | 170 | Colombian Peso | Colombia |
| CRC | 188 | Costa Rican Colon | Costa Rica |
| CUP | 192 | Cuban Peso | Cuba |
| CVE | 132 | Cape Verde Escudo | Cape Verde |
| CYP | 196 | Cyprus Pound | Cyprus |
| CZK | 203 | Czech Koruna | Czech Republic |
| DJF | 262 | Djibouti Franc | Djibouti |
| DKK | 208 | Danish Krone | Denmark |
| DOP | 214 | Dominican Peso | Dominican Republic |
| DZD | 012 | Algerian Dinar | Algeria |
| EEK | 233 | Kroon | Estonia |
| EGP | 818 | Egyptian Pound | Egypt |
| ERN | 232 | Nakfa | Eritrea |
| ETB | 230 | Ethiopian Birr | Ethiopia |
| EUR | 978 | Euro | Eurozone |
| FJD | 242 | Fiji Dollar | Fiji |
| FKP | 238 | Falkland Islands Pound | Falkland Islands |
| GBP | 826 | Pound Sterling | United Kingdom |
| GEL | 981 | Lari | Georgia |
| GHS | 288 | Cedi | Ghana |
| GIP | 292 | Gibraltar pound | Gibraltar |
| GMD | 270 | Dalasi | Gambia |
| GNF | 324 | Guinea Franc | Guinea |
| GTQ | 320 | Quetzal | Guatemala |
| GYD | 328 | Guyana Dollar | Guyana |
| HKD | 344 | Hong Kong Dollar | Hong Kong |
| HNL | 340 | Lempira | Honduras |
| HRK | 191 | Croatian Kuna | Croatia |
| HTG | 332 | Haiti Gourde | Haiti |
| HUF | 348 | Forint | Hungary |
| IDR | 360 | Rupiah | Indonesia |
| ILS | 376 | New Israeli Shekel | Israel |
| INR | 356 | Indian Rupee | India |
| IQD | 368 | Iraqi Dinar | Iraq |
| IRR | 364 | Iranian Rial | Iran |
| ISK | 352 | Iceland Krona | Iceland |
| JMD | 388 | Jamaican Dollar | Jamaica |
| JOD | 400 | Jordanian Dinar | Jordan |
| JPY | 392 | Japanese yen | Japan |
| KES | 404 | Kenyan Shilling | Kenya |
| KGS | 417 | Som | Kyrgyzstan |
| KHR | 116 | Riel | Cambodia |
| KMF | 174 | Comoro Franc | Comoros |
| KPW | 408 | North Korean Won | North Korea |
| KRW | 410 | South Korean Won | South Korea |
| KWD | 414 | Kuwaiti Dinar | Kuwait |
| KYD | 136 | Cayman Islands Dollar | Cayman Islands |
| KZT | 398 | Tenge | Kazakhstan |
| LAK | 418 | Kip | Laos |
| LBP | 422 | Lebanese Pound | Lebanon |
| LKR | 144 | Sri Lanka Rupee | Sri Lanka |
| LRD | 430 | Liberian Dollar | Liberia |
| LSL | 426 | Loti | Lesotho |
| LTL | 440 | Lithuanian Litas | Lithuania |
| LVL | 428 | Latvian Lats | Latvia |
| LYD | 434 | Libyan Dinar | Libya |
| MAD | 504 | Moroccan Dirham | Morocco |
| MDL | 498 | Moldovan Leu | Moldova |
| MGA | 969 | Malagasy Ariary | Madagascar |
| MKD | 807 | Denar | Former Yugoslav Republic of Macedonia |
| MMK | 104 | Kyat | Myanmar |
| MNT | 496 | Tugrik | Mongolia |
| MOP | 446 | Pataca | Macau |
| MRO | 478 | Ouguiya | Mauritania |
| MTL | 470 | Maltese Lira | Malta |
| MUR | 480 | Mauritius Rupee | Mauritius |
| MVR | 462 | Rufiyaa | Maldives |
| MWK | 454 | Kwacha | Malawi |
| MXN | 484 | Mexican Peso | Mexico |
| MYR | 458 | Malaysian Ringgit | Malaysia |
| MZN | 943 | Metical | Mozambique |
| NAD | 516 | Namibian Dollar | Namibia |
| NGN | 566 | Naira | Nigeria |
| NIO | 558 | Cordoba Oro | Nicaragua |
| NOK | 578 | Norwegian Krone | Norway |
| NPR | 524 | Nepalese Rupee | Nepal |
| NZD | 554 | New Zealand Dollar | New Zealand |
| OMR | 512 | Rial Omani | Oman |
| PAB | 590 | Balboa | Panama |
| PEN | 604 | Nuevo Sol | Peru |
| PGK | 598 | Kina | Papua New Guinea |
| PHP | 608 | Philippine Peso | Philippines |
| PKR | 586 | Pakistan Rupee | Pakistan |
| PLN | 985 | Zloty | Poland |
| PYG | 600 | Guarani | Paraguay |
| QAR | 634 | Qatari Rial | Qatar |
| RON | 946 | Romanian New Leu | Romania |
| RSD | 941 | Serbian Dinar | Serbia |
| RUB | 643 | Russian Ruble | Russia |
| RWF | 646 | Rwanda Franc | Rwanda |
| SAR | 682 | Saudi Riyal | Saudi Arabia |
| SBD | 090 | Solomon Islands Dollar | Solomon Islands |
| SCR | 690 | Seychelles Rupee | Seychelles |
| SDG | 938 | Sudanese Pound | Sudan |
| SEK | 752 | Swedish Krona | Sweden |
| SGD | 702 | Singapore Dollar | Singapore |
| SHP | 654 | Saint Helena Pound | Saint Helena |
| SKK | 703 | Slovak Koruna | Slovakia |
| SLL | 694 | Leone | Sierra Leone |
| SOS | 706 | Somali Shilling | Somalia |
| SRD | 968 | Surinam Dollar | Suriname |
| STD | 678 | Dobra | Sao Tome and Príncipe |
| SYP | 760 | Syrian Pound | Syria |
| SZL | 748 | Lilangeni | Swaziland |
| THB | 764 | Baht | Thailand |
| TJS | 972 | Somoni | Tajikistan |
| TMM | 795 | Manat | Turkmenistan |
| TND | 788 | Tunisian Dinar | Tunisia |
| TOP | 776 | Pa'anga | Tonga |
| TRY | 949 | New Turkish Lira | Turkey |
| TTD | 780 | Trinidad and Tobago Dollar | Trinidad and Tobago |
| TWD | 901 | New Taiwan Dollar | Taiwan |
| TZS | 834 | Tanzanian Shilling | Tanzania |
| UAH | 980 | Hryvnia | Ukraine |
| UGX | 800 | Uganda Shilling | Uganda |
| USD | 840 | US Dollar | United States of America |
| UYU | 858 | Peso Uruguayo | Uruguay |
| UZS | 860 | Uzbekistan Som | Uzbekistan |
| VEB | 862 | Venezuelan bolívar | Venezuela |
| VND | 704 | Vietnamese dong | Vietnam |
| VUV | 548 | Vatu | Vanuatu |
| WST | 882 | Samoan Tala | Samoa |
| XAF | 950 | CFA Franc BEAC | Cameroon, Central African Republic, Congo, Chad, Equatorial Guinea, Gabon |
| XAG | 961 | Silver (one Troy ounce) | |
| XAU | 959 | Gold (one Troy ounce) | |
| XOF | 952 | CFA Franc BCEAO | Benin, Burkina Faso, Cote d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, Togo |
| XPD | 964 | Palladium (one Troy ounce) | |
| XPF | 953 | CFP franc | French Polynesia, New Caledonia, Wallis and Futuna |
| XPT | 962 | Platinum (one Troy ounce) | |
| YER | 886 | Yemeni Rial | Yemen |
| ZAR | 710 | South African Rand | South Africa |
| ZMK | 894 | Kwacha | Zambia |
| ZWD | 716 | Zimbabwe Dollar | Zimbabwe |
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