All About Forex Trading

Forex Fundamental Analysis – Euro Zone Crisis and Its Effects on Currencies

Forex Fundamental Analysis – Euro Zone Crisis and Its Effects on Currencies:

We have been continuously hearing about euro zone crises in recent days. This article will tell you all about eurozone crises, its impact and countries involved in it. We will also try to understand its impact on Foreign exchange trading.

European economy is undergoing severe turmoil since 1930s with continuous shrinking GDP. This Crisis has badly affected stock and bond markets, exchange rates, government budget, tax rates, etc. Preventive measures have been introduced to smoothen it but it will definitely take time due to the severity of the problem. European Economic Recovery Plan (EERP) was introduced in December 2008 to stabilize and restore the European financial sector. Read more…

Forex Fundamental Analysis – US Q3 2011 announcement and its effect on dollar

Forex Fundamental Analysis - US Q3 2010 announcement and its effect on dollar:

Speculations are being made about the outcome of Q3 announcements.  Everyone’s eye is on the result as U.S is undergoing severe financial crisis and everyone is expecting effective measures to uplift the dwindling economy.  Surveys are being conducted by U.S. government and other agencies to forecast the outcome.

As per SIFMA Quarterly Issuance Survey forecasts, $362.0 billion of Treasury bill, note and bonds will be issued in the third quarter of 2011, which is almost double of that issued in Q2. Read more…

Forex Basics – International Foreign Exchange Market

Forex Basics – International Foreign Exchange Market:

Foreign exchange market is financial market for trading currencies that involves the purchase and sale of national currencies. The relative values of different currencies are decided by foreign exchange market.  It helps conversion of one currency to another eg: USD into INR, EUR into GBP etc.

For eg. The euro is the single currency of the euro area. It has been adopted by 12 member states of the European Union.

Currencies are traded against one another. Each currency pair with another currency and thus constitutes an individual trading product and is noted XXXYYY or XXX/YYY, where XXX and YYY are the ISO 4217 international three-letter code of the currencies involved. The first currency (XXX) is the base currency. For instance, the quotation EURUSD (EUR/USD) 1.5465 is the price of the euro expressed in USD, meaning 1 euro = 1.5465 dollars.

Most of the transactions are done over the counter (OTC). It is very active market. It plays a major role in international trade and investment.  This leads to flow of currency from one country to another. Say if US has deficit, other countries must have surplus. There are many characteristics of FOREX market:

1. High liquidity – Due to huge trading volumes, forex trading has high liquidity.
2. Continuous operation – Forex trading operates 24 hours a day except weekends
3. The variety of factors that affect exchange rates.
4. Geographical dispersion Read more…

Commodities Basics – What Is Commodity Trading?

What Is Commodity Trading?

“The oil prices are rising.” “Wheat prices are sky rocketing.” “The gold market has crashed.”

Don’t we read and hear these statements too often in these days. Though we do understand that it all implies more money going out of our pocket, but who fixes the price for these commodities and how is what most of us don’t know.

Well through this article and in the next few articles I will introduce you to the world of commodities. Like, how are the commodities priced?? Answer is Simple..!! Demand and supply…i.e. when demand for a particular commodity rises (or supply reduces) its prices rise and when demand for a commodity falls (or supply rises) it prices fall.

Then naturally a question arises why the price of wheat (when demand is rising) doesn’t go to super high levels…. well that’s perhaps because we have regulatory bodies like COMEX, CME who enter into the market and through their regulatory mechanisms bring down the prices. Read more…

Forex Basics – Important Forex Lingo – Part 1

Forex Basics – Important Forex Lingo:

Friends, now it’s time to do some calculations & refresh our mathematical aptitude. Well, the article ahead is very important article from the point of view of money management. Do not even think about forex trading without knowing all these forex lingos. In next couple of articles we will focus on the most important forex lingos viz exchange rate or forex quote, spreads, pips and pipettes, Lots, leverage and last calculation of profit and loss. So far you have learned that in forex market, you buy or sell currencies denominated in pairs, in expectation of making profits.

Exchange Rate or forex quote:

When we give some numeric values to pair of currencies it becomes ‘exchange rate’ or ‘forex quote’. This numeric value is always expressed in ratio of one currency valued against another currency. Let’s take example of EUR/USD pair quoting at 1.4537. In every currency pair the first listed currency to the left of slash (“/”) is known as base currency and second currency to the right is called the quote or counter currency.

Read more…

Forex Basics – What Do You Trade In Forex

Forex Basics – What Do You Trade In Forex:

“Forex” means foreign exchange or in other words its ‘exchange of foreign currencies with each other’.

Let’s take an example to understand more. Mr. A is US citizen, he is about to travel to Japan. Now, to meet his expenditure in Japan he would need Japanese Yen (Japanese currency). So he would have to exchange or more specifically, buy Japanese Yen (Foreign currency) in lieu of US Dollars i.e. US currency (Domicile currency).

Mr. A now looks for a money exchanger who is giving him 100 Japanese Yen in lieu of 1 US Dollar. He bought 5,00,000 Japanese Yen by paying 5,000 US Dollars to the money exchanger. After, a week when he returned back to US, he was left with some 90,000 Japanese Yen, of course, which is of no use in US. So he again visited that exchanger and found that the same exchanger is now giving him back 1 US Dollar in lieu of 90 Japanese Yen.  So what he got back is full 1,000 US Dollars. Read more…

Forex Basics – How To Start Forex Trading

Forex Basics – How To Start Forex Trading:

It may be really difficult for a novice to start trading in currency market with no experience or rather very less experience. There are always chances of losing all your money in currency trading because of a wrong decisions or a poor start in this business. So what we need here is a good start and believe me unlike other financial markets forex market doesn’t require much from you. Please also read another article (‘forex-market-vs-stock-market’) to understand this difference in detail.

All you need is a computer, an internet connection and flair to learn and succeed. Oh, is it? I am not a finance geek, can i also learn and start? Yes, because it really doesn’t matter what your background is, science, maths, finance or others. World is full of examples where non-finance background traders, make big in currency trading.

By following some simple but most important rules before starting currency trading you can avoid all big blunders and pitfalls that most beginners or intermediate forex traders do.

Read more…

Forex Basic – How To Get Success In Forex Trading

Forex Basic – How To Get Success In Forex Trading:

“No horse gets anywhere until he is harnessed. No stream or gas drives anything until it is confined. No Niagara is ever turned into light and power until it is tunnelled. No life ever grows great until it is determined, dedicated, disciplined.”                                                                                                                                                                                                                                                                                                                                                   Harry Emerson Fosdick

A wonderful quote indeed!!! Wondering why am i getting poetic today?? You’ll find out why soon.

To be successful in any field only education is not enough. Success comes only when one is determined, dedicated and disciplined.  Sticking to our Alma matter i.e.  “Trading in markets” also needs an adequate blend of these 3 qualities. How? Let me explain.

Read more…

Forex Basics – How Does Greed Affect Your Investment Decisions

Forex Basics – How Does Greed Affect Your Investment/Trading Decisions:

Of the most recent developments in the capital markets is its quick access to retail public and investors. The exciting and lucrative business opportunity in the form of trading has definitely attracted the common man. The desire to mint easy money in short span of time lures people towards trading. We cannot deny the fact that market investment will remain a lucrative business opportunity whether people loose or earn. The desperate & hopeful heart of every trader says that he will make it really ‘BIG’ some day. But that BIG day comes into the life of only few lucky or rather smart traders.

This kind of euphoric desire is not for those who seriously wanted to make good fortune in trading. There are facts which clearly states that in any market only few people win in contrast to a large losing chain. If we consider the figures they say ‘95% lose money while only 5% win’.

Folks, this is not a small difference. Many of you may have neglected this fact and traded according to your personality traits and with Euphoria of earning quick money. Read more…

Forex Basics-Commission Free Trading

Commission Free Trading

Do you believe in the myth of commission-free trading?

You will find many brokers in the forex market who try to entice unsuspecting traders with offers of “commission free trading”. However this claim can be very misleading and it is essential to comprehend it in the right context so that you do not sustain a loss because of a gross misjudgment on how currency values are determined. When you make your foray into the foreign exchange market, it is inevitable that you would hire a broker who would levy a commission on all trades placed by you.

Commissions are the sole source of income for brokerages as they help in financing the resources that are essential for recurring market liquidity.

Then, what is commission free trading?

Hence the rhetoric of “commission free trading” does not imply that you are exempted from paying your broker a commission while conducting trade. What it means is that the broker’s commissions are paid through a different arrangement. In the foreign exchange market the cost incurred for trading a certain currency pair is often determined by the market volume and convertibility of that particular currency pair. The market volume of a currency pair is inversely proportional to its price. Hence, if the market volume of that particular currency pair is low, you would end up paying a higher amount for it and vice versa. Read more…