Introduction
This
short write-up dwells on the several important points of forex
trading.
First, you
would learn about this specialized form of trading; secondly, it would point
out the differences between the ‘Forex trading’ and ‘Stock trading’; third,
you would also learn about the advantages of trading in Forex online.
Further, it
will equip you to tap on the opportunities by identifying the risks of the
world’s most liquid market. In other words, you would know which is the best
time to trade (the ‘bull’ phase) and when not to (the ‘bear’ phase).
A glossary
of the terms used in forex (currency) trading is also given at the end of
the write-up.
FOREX:
WHAT IS IT ?
Forex’ or
‘FX’ or ‘Foreign exchange’, are terms referring to the trading process of
the world’s different currencies.
FOREX
MARKET
This is the
world’s largest market. Its daily trade volume crosses the USD 1.5
trillion-mark -- 100 times more than that of the New York Stock Exchange
(NYSE).
SPECULATION & FOREX TRADING
Speculation
forms the major mode of trading in the forex market. As much as 99 per cent
of forex trading is speculative by nature. Approximately one per cent of its
market activity pertains to the fundamental currency conversion needs of
various governments and companies.
DIFFERENCE
BETWEEN THE FOREX MARKET & THE STOCK MARKET
There is a
major difference between the forex market and the stock market. The stock
market trading is monitored by a central or an apex exchange. However,
forex trading is directly conducted between the two parties concerned. It is
carried out either via the telephone or through electronic networks across
the globe.
HOW IS
FOREX TRADING DONE?
Forex
trading is done on the interbank a worldwide distribution of such trading
points. It is a 24-hour ‘Over the counter’ (OTC) market. It refers to the
process of simultaneous selling of one currency and buying of another. The primary
centres for forex trading are New York, London, Frankfurt, Tokyo, and
Sydney.
THE SPOT
MARKET
The ‘Spot
market’ conducts the largest volume in the forex sector. It is the most
important forex market also because the tradings are settled “on the spot”
or immediately. If done through the banks, these activities would take up
two normal days.
FOREX
CURRENCY COMBINATION BASKET
The
forex currency
combination is termed a ‘cross’. The combination basket is made up of the
Japanese Yen/GB Pound/ US Dollar/Euro. The most commonly traded currencies
are the ‘Majors’, viz., USDJPY , GBPUSD, EURUSD and USDCHF....
get more information from
