Showing posts with label Forex. Show all posts
Showing posts with label Forex. Show all posts

Thursday, March 17, 2011

> Introduction Forex

KNOW FOREX CLOSER

Forex trading is the trading of currencies from different countries with each other. Forex is an abbreviation of Foreign Exchange. For example, currency in circulation in Europe called Euro (EUR) and in the United States, the currency in circulation is called the U.S. Dollar (USD). An example of forex trading is to buy euros, while simultaneously selling the U.S. Dollar. This is called will be abbreviated as EUR / USD.

Meanwhile, whose name The Forex market is non-stop cash market where currencies are traded countries, usually through a broker. Foreign currencies are constantly and simultaneously bought and sold in local and global market then experienced 'increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time event.

The Forex market is often called the foreign exchange market, this is a huge market with growing financial and liquid (can deposit and liquidated at any time), which operates 24 hours a day. This is not a market in the traditional sense because there is no central trading location. Most trading is done through the electronic trading network. Foreign exchange market allows companies, banks and other financial institutions to buy and sell foreign currency, in large quantities.

The main market for the currency markets are "inter bank" where banks, large corporations and large financial institutions manage the risks associated with fluctuations in currency exchange rates.

MAJOR CURRENCIES

The following are the major currencies traded in the market:
U.S. Dollar (USD)
Japanese Yen (JPY)
Euro (EUR)
Canadian Dollar (CAD)
Australian Dollar (AUD)
Swiss Franc (CHF)
British Pound (GBP)

MARKET ACTORS
In general, forex Market Performer from various groups including:

    
Customer
    
Banks and Financial Institutions
    
Brokers
    
Government
    
Business Performer
    
Speculator


Customers, such as multinational corporations, to participate in the forex market because they need foreign currency for their trade in other countries. Like for example, a particular company based in the UK need to use the foreign exchange market to buy the currency they need to pay for their partner companies in other countries that sell heavy equipment.

Banks and financial institutions, is the most active participants in the forex market. They deal with other financial institutions to ask their foreign exchange and currency they can buy what they need in the forex market. In addition to central banks and governments, one of the biggest players in forex transactions are banks. Interbank market is a market where big bank2 transact among themselves and determine the currency price be seen by traders as a distinguished individual as we are on a computer screen.

Banks, in general, act as dealers who buy / sell currency at the bid / ask her. One way the banks make money is to sell the currency with a higher price than he bought to their customers. Because the forex market is not centralized alias decentralized, then the natural thing to see one bank with another bank had a little difference in the exchange rate

Brokers is a company with links computer software or phone lines to banks around the world. It is the job of forex broker to find out what bank has the highest level to buy the currency and what the bank has the lowest level to sell the currency.

Using a broker allows the bank to find the best deal available in the world. Forex brokerage firms, but is not associated with his own money but only a commission fee for their services.

Government, is the most influential actors forex, as well as the central bank. In many countries, the central bank is an arm of government and its policies run together with the government. However, some governments feel more independent. A central bank more effective in carrying out its duties to boost the economy. Regardless of how indipendennya a central bank, government representatives are regularly consulted by central bank representatives to discuss monetary policy. So, governments and central banks usually have a package in terms of monetary policy. Central banks often intervene in the market for a particular country's economic objectives.

Business Performer, is one of the biggest clients of these banks, those engaged in international transactions. Both businesses are selling goods to international clients or buy goods from international suppliers, they have to deal with the volatility of currency fluctuations. Uncertainty becomes thing hated by management and business owners. Faced with foreign exchange risk is a big problem for multinational companies. For example: a company in Germany ordered equipment from factories in Japan to be paid in yen a year from now. Because exchange rates can fluctuate wildly dg throughout the year, the German company will not know whether the Euro will be spend more or not at the time of delivery later. One way for businesses to reduce uncertainty due to foreign exchange risk is to go to the spot market and transact directly to foreign currency they need. But, unfortunately, a businessman may not have enough money on hand to make spot transactions or do not want to hold the amount of foreign currency which is very much for a long time. Hence business people often apply the hedging strategy to lock a specific currency at a certain price for a position in the future.

Speculators, they were instead to hedging so as not subject to price movements for reasons of international transactions, speculators are trying to earn money by taking advantage of price fluctuations. One of the most famous speculator George Soros possible. Billionaire who is known to decrease speculation in the British Pound generating 1.2 billion dollars less than a month! Some critics say that such people are responsible for the Asian financial crisis of the late '90s.
READ MORE - > Introduction Forex

> Differences Forex And Stock Trading

Equation
So also in stock, in forex trading, the main goal is to gain profit from the difference between the price movement. But there are several things which distinguish the two. Many people assume that forex is more 'sexy'. Let's see the comparison.

Comparison
Capitalization
No one is bigger than the forex market, in any market and any kind. Which remains the largest Forex. So we can say the forex market is very liquid. For comparison, if we look at the JSE stock market trading transaction is about 4-7 Trillion / Day. 're My world forex market is 3.5 Trillion Dollars (Remember in Dollars), which means 1000 x fold greater. You can try to calculate yourself how many zeros it:)

24 Hour Market and non-stop.
Forex market is 24-hours without limit. Broker open from Sunday at 14:00 ET until Friday at 16:00 ET with customer service available 24 / 7. With the ability to serve the U.S. market trade, Asian, and European markets, you can customize your own trading schedule. Compare this with the example of the local stock exchange (JSE), open only during weekdays (Monday till Friday) at 09:30 hours until 16:00. For those of you who work formally (office), surely this would clash with your schedule.

Commission-free
Most forex brokers do not impose additional costs (commissions or transaction costs). Brokers have taken services from the spread between the selling / buying. As for the shares (JSE) you must pay a fee of 0.15% s / d 0.3% of the selling / buying.

The speed of transaction / Order
You do not need to queue for as soon as possible on transactions / orders. Unlike stocks where you have to wait in line for your order to the realisasika. In the forex is not necessary, very large market which allows the number of buyers and sellers are not unlimited.
However keep in mind that the broker can serve your order as soon as possible with normal market note, a condition in which price movements are extreme (volatile), the broker may delay your order in a moment.

The potential advantage of two directions
Unlike with stocks or equity, in forex you can benefit both directions, both when the market goes up, down, or where prices / market will move. In the short term sell existing shares (aimed at a profit when the stock price falls), Yes indeed similar, but you can not do it on all stocks, only on certain stocks.

Complexity
There are about 4,500 stocks listed on the New York Stock Exchange. Another 3500 are listed on NASDAQ. About which stocks would you perdagankan / select? Have enough time to stay abreast on top of so many companies / stock?
In forex trading, there are dozens of currencies traded, but most of the trading market is on the 4 major pairs (USD, EURO, GBP, YEN). Is not four pairs much easier to control than thousands of stock?

Bandar free
You'll often with the word 'fried' in stocks, especially in the local stock market / JSE. Well, why a stock can be fried? Because there is a person / group of persons / financial institutions, with the fund market is relatively strong, constantly buying a stock. This makes as if a stock is rising, and many individual traders who are affected to the bandwagon to buy the shares. At the time the price had risen in accordance with the wishes of airports, airports as soon as possible to sell these shares (airports profit).
How about forex? Quite simply, kira2 how much capital needed to drive the market worth 3.5 Trillion Dollars, The point of money who is there that much.
Perhaps only in China because, according to information which could have four Trilyuan dollar reserves. But what would he risk to risk all that money just for 1 day of trading. :)

Rumors
In stock a rumor or gossip .. kecil2 an, will be able to move the price. Especially if the rumors are sometimes packaged in the form of distinguished professionals, such as stocks and guide TA performed on TV, radio, etc. .. Sometimes this can move the stock price. However, in the forex can be said is impossible. Is it possible to spread the rumor reached the ears of all traders in the world? You answered yourself:)

Will define
In forex trading, we are bound by a global / international financial markets around the world. When we play the local stock, then you should look is the Indonesian economy. And the local stock price movements (CSPI), will never be influential in the forex trade (such as the price of pair EUR / USD). But global conditions and sentiment is happening in the forex market, sometimes can affect up to local stocks or shares of certain countries. The reason is that today such as EUR / USD goes up (market / value of U.S. fall), it can be seen that the U.S. economy is down. Usually when the U.S. economy down U.S. stocks are also on the down, the next may be impacting the JSX.
READ MORE - > Differences Forex And Stock Trading