Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

adamsmiths

Basic Concepts About Forex Market

Recommended Posts

The forex market is the largest financial market in the world. One need not to do daily trading so as to participate in the market. A person exchanging currencies while travelling overseas is also a part of forex trading.

The forex market comprises of banks, commercial companies, central banks, investment management firms, hedge funds and retail forex brokers and investors. In a forex market, buying, selling, exchanging and speculation on currencies can be done by the participants.

One must be aware of some of the basic concepts of the forex market before trading in the market. Some of the basic concepts are discussed below:

1. Following eight major economies: In a forex market, the participants need to follow eight major economies in the world. The eight major power which dominate the forex market are:

• United States

• Eurozone ( Germany, France, Italy and Spain are the main)

• Japan

• United Kingdom

• Switzerland

• Canada

• Australia

• New Zealand

The economies of the eight major powers have the largest financial market. Daily economic data is released from these countries. This data helps in better assessing the economical health of each country and do the trading accordingly.

 

2. Yield and Return: Trading in the foreign exchange spot market involves buying and selling two underlying currencies. Quotation of currencies are done in pairs, e.g. if the EUR/USD pair is quoted as 1.3500, then it means that it takes $1.35 to purchase one euro.

Transaction in foreign exchange involves simultaneous buying of one currency and selling of another one. Moreover, there is an interest rate for every currency as has been set by the central bank of the respective country. The trader, on the one hand, has to pay the interest for the sold currency; while on the other hand, one gets the privilege of earning interest on the currency being bought.

 

3. Leveraging Returns: Leverage as high as 100:1 is offered by the forex market. But leverage should be used wisely as one can earn huge profits if he is correct, else he has to bear huge loss. Nevertheless using stops can cap the losses. Moreover, protection of margin watcher is offered by most of the brokers. Margin watcher is a type of software which keeps a watch on one’ position 24 hours a day and five days a week. Liquidation is automatically done by the software once margin requirements are contravened.

 

4. Carry Trades: The dynamic nature of currency values has led to the led to the evolution of one of the most sought-after trading strategies –carry trade. In this strategy, a currency with low interest rate is borrowed by the trader. The trader then utilises the fund o buy a different currency which is giving a higher interest rate.

 

This article is sponsored by fibo.

Share this post


Link to post
Share on other sites

The very most essential elements of any trading or doing is the basic or core matters. Knowledge is one of the most important things to become a successful trader. Even the experienced traders also have a need to get the knowledge.

Share this post


Link to post
Share on other sites

The aim of forex trading is simple. Just like any other form of speculation, you want to buy a currency at one price and sell it at higher price in order to make a profit.The forex market is the quiet giant of finance, dwarfing all other capital markets in its world.The stock market, where investors have thousands of stocks to choose from, in the currency market, you only need to follow eight major economies and then determine which will provide the best undervalued or overvalued opportunities. These following eight countries make up the majority of trade in the currency market:

  1. United States
  2. Eurozone (the ones to watch are Germany, France, Italy and Spain)
  3. Japan
  4. United Kingdom
  5. Switzerland
  6. Canada
  7. Australia
  8. New Zealand

Share this post


Link to post
Share on other sites

Forex stands for foreign exchange and refers to the buying or selling of one currency in exchange for another. It's the most heavily traded market in the world because people, businesses, and countries all participate in it, and it's an easy market to get into without much capital.

Share this post


Link to post
Share on other sites
On 3/5/2021 at 3:53 PM, CrazyCzarina said:

Forex stands for foreign exchange and refers to the buying or selling of one currency in exchange for another. It's the most heavily traded market in the world because people, businesses, and countries all participate in it, and it's an easy market to get into without much capital.

More than five trillion USD on average volume revolves across the globe daily.

Share this post


Link to post
Share on other sites
On 3/7/2016 at 4:07 PM, adamsmiths said:

The forex market is the largest financial market in the world. One need not to do daily trading so as to participate in the market. A person exchanging currencies while travelling overseas is also a part of forex trading.

The forex market comprises of banks, commercial companies, central banks, investment management firms, hedge funds and retail forex brokers and investors. In a forex market, buying, selling, exchanging and speculation on currencies can be done by the participants.

One must be aware of some of the basic concepts of the forex market before trading in the market. Some of the basic concepts are discussed below:

1. Following eight major economies: In a forex market, the participants need to follow eight major economies in the world. The eight major power which dominate the forex market are:

• United States

• Eurozone ( Germany, France, Italy and Spain are the main)

• Japan

• United Kingdom

• Switzerland

• Canada

• Australia

• New Zealand

The economies of the eight major powers have the largest financial market. Daily economic data is released from these countries. This data helps in better assessing the economical health of each country and do the trading accordingly.

 

2. Yield and Return: Trading in the foreign exchange spot market involves buying and selling two underlying currencies. Quotation of currencies are done in pairs, e.g. if the EUR/USD pair is quoted as 1.3500, then it means that it takes $1.35 to purchase one euro.

Transaction in foreign exchange involves simultaneous buying of one currency and selling of another one. Moreover, there is an interest rate for every currency as has been set by the central bank of the respective country. The trader, on the one hand, has to pay the interest for the sold currency; while on the other hand, one gets the privilege of earning interest on the currency being bought.

 

3. Leveraging Returns: Leverage as high as 100:1 is offered by the forex market. But leverage should be used wisely as one can earn huge profits if he is correct, else he has to bear huge loss. Nevertheless using stops can cap the losses. Moreover, protection of margin watcher is offered by most of the brokers. Margin watcher is a type of software which keeps a watch on one’ position 24 hours a day and five days a week. Liquidation is automatically done by the software once margin requirements are contravened.

 

4. Carry Trades: The dynamic nature of currency values has led to the led to the evolution of one of the most sought-after trading strategies –carry trade. In this strategy, a currency with low interest rate is borrowed by the trader. The trader then utilises the fund o buy a different currency which is giving a higher interest rate.

 

This article is sponsored by fibo.

Carry trading is great on USDRUB, I do it at Hotforex and reap good profits when the ruble falls a lot. It is a great opportunity to earn if you have patience.

Share this post


Link to post
Share on other sites
On 3/5/2021 at 1:53 PM, CrazyCzarina said:

Forex stands for foreign exchange and refers to the buying or selling of one currency in exchange for another. It's the most heavily traded market in the world because people, businesses, and countries all participate in it, and it's an easy market to get into without much capital.

I think this is the reason why it is the cheapest market to participate. High liquidity and competition reduce spreads, I trade with almost zero spreads on majors with Hotforex. 

Share this post


Link to post
Share on other sites

Almost we can start with smaller capital due to huge competition in this market and the broker usually take whatever amount we usually deposit with them.

Share this post


Link to post
Share on other sites
On 4/6/2023 at 4:23 AM, aimhi said:

Almost we can start with smaller capital due to huge competition in this market and the broker usually take whatever amount we usually deposit with them.

Yeah I started with just 10 USD on Hotforex and gradually increased my capital with additional investments also I used compounding to bring my equity faster to a comfortable level where I can set moderate profit targets and risk constraints. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date: 19th March 2024. Market Recap – It’s a classic ‘Buy the rumour, sell the fact.   Economic Indicators & Central Banks: The advent of Wednesday’s FOMC decision and the further slippage in Fed rate cut expectations extended selling pressures on Treasuries.   Corporate issuance and the risk-on trades into equities weighed too. BoJ delivers dovish hike: The BoJ ended its yield curve control, ETF buying and the 8 years of negative interest rates and ushered in the nation’s first policy tightening since 2007. Also the bank pledged to continue to buy long-term government bonds. There was little indication of additional hikes, which signalled that this is not the first step of a rapid tightening cycle. RBA drops tightening bias, as it keeps the policy rate at a 12-year-high. The RBA held the cash rate at 4.35% for another meeting, but removed any reference to possible further hikes from the statement. When asked if the RBA had indeed moved to a neutral stance, Bullock said the risks to the outlook are indeed “finely balanced now”. Today: The FOMC meets for 2 days, and will issue its post-meeting statement at 18:00 GMT on Wednesday. Expectations are for no policy change at this meeting, but verbiage will be closely monitored for hints regarding the rate path in the remainder of 2024. Market Trends:   Wall Street bounced but pared its early rally. It continued to shrug off the evolving Fed outlook and instead re-focused on tech enthusiasm. A Bloomberg report that Apple is in talks to build Google’s Gemini AI engine into the iPhone boosted risk appetite. The NASDAQ (US100) advanced 0.82%, after halving early gains. The S&P500 (US500) was up 0.63% and the Dow was 0.20% higher. Nikkei (JPN225) was choppy after the decision but closed 0.66% higher, while Japanese government bond yields fell. Financial Markets Performance:   The USDIndex firmed and held over the 103 mark. It rose to 103.45. The USDJPY lifted to 150.47, with the Yen paring recent gains, despite the hike, as Ueda made clear that the inflation target has not been reached yet. As interest rate differentials between Japan and the United States remain stark, Yen is likely to remain under pressure. Antipodeans: AUD and NZD slid to 2-week lows, i.e. 0.6515 and 0.6050 respectively. Gold eased to $2,153.95 and USOIL steadied at $82. Bitcoin drifted for a 4th day in a row, currently at $64,500, slightly above 20-DMA. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi Market Analyst HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • $PLTR Palantir stock attempting to move higher off the 23.47 support area , see https://stockconsultant.com/?PLTR
    • $DIS Walt Disney stock ascending triangle breakout watch , see https://stockconsultant.com/?DIS
    • $CTAS Cintas stock narrow range breakout watch above 637.64 , see https://stockconsultant.com/?CTAS
    • $BHC Bausch Health stock back to 9.15 support area with high trade quality , see https://stockconsultant.com/?BHC
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.