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»What is FOREX Currency Trading?

FOREX trading is simply the exchanging of one currency for another. Each Forex trade can theoretically be viewed as a 'spread ' trade where to buy one currency you must sell another. Convention dictates that currencies are measured in units per 1 USD. For example, 1 USD is worth approximately 125 JPY (Japanese Yen) or 1 USD is worth approximately 1.5000 CHF (Swiss Francs). As a result, when USD/JPY appreciates in value, it is the USD that has appreciated in value relative to the JPY and not vice-versa. Position-wise, to own or be 'Long' USDJPY means that you are long the USD and concurrently short the JPY. USD, therefore, is the default 'lead' currency.
 
»About Foreign Exchange Market:

The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of well over US$1 trillion 30 times larger than the combined volume of all U.S. equity markets. "Foreign Exchange" is the simultaneous buying of one currency and selling of another. There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation. For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. A true 24-hour market, Forex currency trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night. The FX market is considered an Over The Counter or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Forex Trading is not centralized on an exchange.

The forex currency market is not a "market" in the traditional sense. There is no centralized location for trading. Trading occurs worldwide. Currency Forex is also the world's largest and deepest market. Daily market turnover has skyrocketed from about 5 billion USD in 1977 to a staggering 1.5 trillion today; even more on an active day. Most forex activity consists of the spot business between the US dollar and the six major currencies (Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar) The FOREX market is so large and is controlled by so many participants that no one player can directly control the direction of the market, which is why the FOREX market is the most exciting market in the world. Central banks, private banks, international corporations, money managers and speculators all deal in FOREX trading.
 
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