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The main entry and exit positions (Buy and Sell levels) for the six main trading currency pairs: EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD. What exactly is Forex? Forex is an acronym for Foreign Exchange and is the worldwide currency inter bank or inter dealer market that uses a floating exchange rate system. Most people have little knowledge of Forex. Yet, it is the world's largest financial market with an estimated daily average of more than $1.5 to $2 TRILLION. Some estimate that it would take the New York Stock Exchange about 2-3 months of trading to equal one day in Forex! When does Forex trading occur? The first session, which is the Tokyo Session, begins each week on Monday morning in the Asia-Pacific region which is Sunday evening in the Americas. Trading continues non-stop moving into the London Session and on to the New York Session until all markets close on Friday afternoon. What are the primary currencies traded in Forex? For most online brokers, there are four main currency pairs that are heavily traded and that offer almost immediate liquidity:
What is margin? Margin is just that – collateral for a position. Your market maker broker will request additional funds by way of a "margin". If the market moves against your position. It will immediately close out your open positions. What are “long” or “short” positions? A long position is one in which you buy a currency at one price, with the expectation of selling it later on at a higher price. Obviously, you anticipate that the market will rise. A short position is one in which you sell a currency with the expectation of buying it back at a lower price. Here, you expect the market to fall. Every FX position you take automatically entails going long in one currency, and short the other. If you buy one, by default you are shorting the other. What is the difference between “intraday” and “overnight” positions? Intraday positions are those positions you would take during the 24-hour period, after themarket maker brokers normal trading hours open, but not hold after the close. Overnight positions are those of your positions that are still on at the end of normal trading hours. Your market maker broker rolls over your positions at competitive rates to the next day's price. What “drives” currency prices? Currency prices are affected by a variety of economic and political conditions – most importantly inflation, interest rates, large market orders, and political climate. Furthermore, government sometimes enter the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency to lower its price, or conversely by buying it to give it a boost. This is commonly called “central bank intervention.” Any of these factors can cause volatile currency prices. However, the sheer size and volume of the Forex market makes it virtually impossible for any one entity to "influence" the market for any length of time. What do the terms “bid/ask” and “spread” mean? Bid is the highest price that the seller is offering for a particular currency at the moment; ask is the lowest price acceptable to the buyer. Together, the two prices constitute a quotation; the difference between the two is called the spread. |
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