HOW TO TRADE IN FOREX MARKET ?

INTRO

Foreign exchange trading is the trading of currencies. Most currencies can be traded. Huge amounts of currencies are traded 24 hours a day, 5 days a week. On average $1.9 trillion is traded a day. The most traded are United States Dollar, Japanese Yen, Euro, Canadian Dollar, British Pound Sterling, Australian Dollar and Swiss Franc.

ACCOUNT OPENING

Many brokers will let you open an account with a starting balance of just $250. Though that may seem small, remember you will be trading on margin. Your $250 investment may let you control $25,000. As with all investments there are risks so make sure you take the time to study the markets and your exposure before making your first trades. I highly recommend that you do some paper trades first to make sure you have understood how the markets work. No risk training, just write down the trades you would have done for real and chart the prices. Buy and sell and see if you have the right strategy before making real trades.

World's Central Banks

A Central Bank is a financial institution that controls country’s monetary policy, and usually has several mandates including, but not limited to issuing national currency, maintaining the value of the currency, ensuring financial system stability, controlling credit supply, serving as a last-resort lender to other banks and acting as government’s banker. The central bank might be or might not be independent the government. In theory independent central bank, will ensure there is no political influence over the central banks policy, however even with the so-called "independent central banks" that is not always the case.

The central (State) banks of the different countries with name of bank and flag of the country.

World's Currencies

The use of money evolved out of deeply rooted customs as is shown by the study of primitive forms of money, e.g. cattle, cowrie shells, whales teeth and manillas (ornamental jewellery). The clumsiness of barter was merely one factor in the development of money, and not the most important one. Banking was invented before coins and reached a high level of sophistication in the Egypt of the Ptolomies. Military conquests, such as those of Alexander the Great, spread the use of coins which became the most convenient means of payment.

The currencies of the world with country capital, flag and currency name and abbreviations.

Forex Overview

Introduction

The following facts and figures relate to the foreign exchange market. Most of the information comes from the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005. 52 central banks and monetary authorities participated in the survey, collecting information from approximately 1200 market participants.

Structure

Trading Guidance

In recent years, the foreign exchange market could favor more and more people, it becomes a favorite for the international investors, and this is strongly related to the characteristics of the Forex market. The main characteristics of the foreign exchange market are:

No trading field:

The finance industry in the western countries consist two sets of systems, namely the centralism business central operation and there is no fixed place for such business network.  

Forex and Internet

The explosion of the technology industry in the 1980’s also included the development of systems and protocols later known as the Internet. The Internet revolutionized global communication and banking and facilitated the establishment of online foreign exchange (forex) trading in 1994. Online forex trading has undergone major renovation to become the industry as we know it today.

Forex Terms

•  An option contract that can be exercised only on or near its expiration date is "European-style option" .

• An option contract that may be exercised at any time before it expires is " American-style option" .
• The quoted price at which a customer can buy a currency pair. Also referred to as the offer, ask price or ask rate  "Ask" .
•  For foreign exchange trading, currencies are quoted in terms of a currency pair. The first currency in the pair is the base currency. For example, in a CAD/JPY currency pair, the CAND dollar is the base currency. Also may be referred to as the primary currency is "Base Currency" .

Forex Schedule

Foreign Exchange Working Schedule:

Foreign exchange trading is the simultaneous buying of one currency and selling of another. The foreign exchange market (Forex or FX) is the largest financial market in the world with a daily turnover of over $1.9 trillion. Examples of currency trading pairs are Euro/US Dollar (EUR/USD) and US Dollar/Japanese Yen (USD/JPY). Most currency transactions involve the "Majors" - US Dollar, Euro, Japanese Yen, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.Unlike other financial markets, the foreign exchange market has no physical location and no central exchange. The Forex market operates 24 hours a day through an electronic network of banks, corporations and individual traders. Forex trading begins every day in Sydney, and then moves to Tokyo, followed by London and then New York. The major market makers, or dealers, consist of the commercial and investment banks; the exchange traded futures, and registered futures commission merchants such as FX Solutions.

Risk Reduction

Forex trading is a risky business but the trader can reduce the risk by following best trading strategy. They should know the right time to enter and exit the market. Forex is an easy and simple trading business. You can do this trading while sitting in your home. It requires a PC with Internet connection and a little time. 

Day Trading

Trading In Day Time’s Advantage:

Forex traders have the aim of using the small amount of one currency; say the US dollar, to purchase another currency like the British Pound. If supply of the pound lessens in a busy market, it will cost more dollars to buy pounds, and the forex trader hopes to sell their pounds at a higher than their purchase price. In many respects, this type of trading behavior is very similar to trading in stocks, where the aim of nearly all traders is to buy low and sell high.

Forex Trade Timings

Hurrah no timing or place required for foreign exchange trading.

Many of the trading markets around the world are situated in fixed locations and operate within strict trading hours, often limited to just five or six hours a day between Monday and Friday. The Forex market however is open 24 hours a day. This means that traders can not only take advantage of international events and react literally as they happen, but they also have the ability set their own trading hours.

Trading Tip

TIP For Trading (new) in Foreign Exchange:

The Forex market can be traded anytime, any where in the world. As long as you have access to a computer and internet, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money.

Historical Exchange Rates

Historical exchange rates (1970 - 2009):

US dollars exchange rates w.r.t. other seven currencies:
Euro(€), Japanese yen(¥), Pound sterling(£), Canadian dollar($), Mexican peso($), Renminbi Yuan(元), Singapore dollar($).

Forex History

The modern online Forex history begins in 1973. Even though currency has been around since the times of ancient Egypt,which at that time the market was extremely primitive, and there were no advance trading tools as today' fundamental analysis, for example.The first currency coins were used at the times of the pharos,and the first paper notes were then introduced by the Babylonians. Later on, the roman coin called aurous was used, which was followed by the denarius. Both coins had worldwide use, making them the first

global foreign currency coins.