Posts Tagged ‘the Forex market’
The Most Traded pairs in Forex
December 23rd, 2009
As you know, The Forex Currency Market is based on the buying and selling of currencies of certain countries. It is based on the exchange rate; this means the purchase of one currency in exchange for the sale of another currency, simultaneously. For that reason Forex is always traded in pairs. Before trading in the foreign exchange market, it is important that you start to understand the basic terminology of the market and know how to interpret correctly the currency quotations.
What are pairs?
The Forex market trades by buying and selling currencies from different countries. A pair is the combination of two different currencies that are used to take a position. Usually the first currency is known as the base currency, as this is not moving and the second currency that will comply with the pair, is called counter currency. The base currency is also known as primary and base coin currency as currency trading. The base currency will always be = 1 and the value will vary depending on the pair base coin you choose and the value this has in the international market.
It is important that you know what are the main currencies traded in Forex and its acronym in English, since at the time of operation usually only use the acronym. Later we will tell you what the most used pairs are:
• AUD = Australian Dollar
• CAD = Canadian Dollar
• JPY = Japanese Yen
• EUR = Euro
• GBP = Great British Pond
• USD = U.S. Dollar
• CHF = Swiss Franc
• NZD = New Zealand Dollar
Following is an overview of important things to know about the most traded currencies in the market:
• The U.S. Dollar: USD
There are other major currencies to the dollar, as the Euro, Japanese Yen, the Pound Sterling and Swiss Franc moving against the U.S. currency. Still the dollar is known as the World’s currency. Most currencies are quoted in dollar terms and some of the currencies of other countries are closely linked to it. This currency became the leading one at the end of WWII, but today by the global economic crisis and recession in the U.S. has ceased to be.
• The Euro: EUR
The euro is the official currency of 16 of 27 member states of the European Union as of 2009. The states, known collectively as the Euro zone, are Austria, Belgium, Cyprus, Slovakia, Slovenia, Spain, Finland, France, Greece, Holland, Ireland, Italy, Luxembourg, Malta and Portugal. The currency is also used in five other European countries, both official and non-agreed form and thus is in daily use by about 327 million Europeans. After it’s appearance in December 1999, the Euro replaced the German mark and quickly became the second currency in the world and every day gains more acceptance. The Euro has a strong international presence, regardless of exposure to various political economic factors that may affect them.
• Japanese Yen: JPY
The yen was fixed to U.S. dollar exchange rate of 362 yen per dollar since April 25, 1949 to 1971. Then it has appreciated significantly. Currently the exchange rate is about 90 yen per dollar, or about 118 yen per euro. This is the third most used currency in the world for this kind of transaction, making the market very liquid 24 hours a day. The yen is quite sensitive to factors such as agricultural production in eastern and technological factors since much of the eastern economy moves according to Japan.
• The British Pound: GBP
The pound was originally the weight value of a pound of sterling silver (hence it’s called “sterling”). This was the reference currency to the beginning of World War II, most transactions take place in London today is the largest international market in the world despite its low volume during operation in the American sessions.
• The Swiss Franc: CHF
The Swiss franc is a legal currency in Switzerland and Liechtenstein. Although its weight in the global economy cannot be compared to the euro or the dollar, the stability of the country they belong to makes be taken into account as a “safe haven”, particularly after the assessment as to the European currency from April to September 2000. Its value is around two thirds of a euro. This is the other major European currency that is not part of the Euro but neither is part of the G-7, but in turn is favored in terms of political uncertainty that may involve the economic community. Therefore it can be said that the Swiss Franc, behaves quite similar to the Euro against the dollar.
How to know what pairs you should trade?
The best opportunities for a successful trade are those where you trade with currency pairs are usually more used on the market and that, therefore, are those that are highly liquid.
For example, you can buy Euros with Dollars, expecting and anticipating that the Euro will increase its value against the dollar. Once the euro rises against the dollar, you sell the position and make money.
Another more specific example, when trading with the following pair: USD / EUR = 1.5 and you purchase a pair; this means that for every 1.5 Euros that you sell, you get $ 1. However, if you sold the currency pair, you receive 1.5 Euros for every $ 1 you sell.
The four most widely used currency pairs in Forex trading are:
• U $ Dollar / Japanese Yen (USD / JPY)
• Euro / the U.S. Dollar (EUR / USD)
• Pound Sterling / U.S. $ Dollar (GBP / USD)
• U $ Dollar / Swiss franc (USD / CHF).
• The U $ Dollar / Canadian Dollar (USD / CAD)
• The Australian dollar / U.S. $ Dollar (AUD / USD)
28% of global transactions relate to the Euros / dollars pair, 18% against the dollar / yen and 14% with the pair Pound / dollar.
These are pairs that are advised to use due to high liquidity of use within the market. It is recommended that use be limited to only one or two different pairs at the same time for best results, for novice traders. When being a skilled trader you can take risks and experiment with different positions opening up several pairs.
For best results into trending markets it is suggested to trade the currencies of each session. Better yet if it is during first 2-3 hours of the opening and/or closing of each session.
Finally do not forget, you can become a successful trader if you receive specialized education and constant knowledge.
If you would like to have more information please click here: Forex Trading
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Is it possible to earn money in the Forex market?
November 22nd, 2009
You have for certain been looking into how the Forex market works and you have questions like if you can or not make money in Forex. Many web pages assure you that it is very easy to make money in the Forex market and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in the Forex market and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:}~Many web pages assure you that it is very easy to make money in the exchange market and tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in the Forex market and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:}~Many web pages assure you that it is very easy to make money in the exchange market and tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in the Forex market and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:}
Forex gives you hundreds of opportunities daily to make small and great amounts of money, but it can only be achieved if you are well instructed and you practice with a demo account before entering the market with real money. Just like any job you have in life, you must prepare in theory and in practice to reach success.
You can make a lot of money in Forex, if you apply strategies and do a technical analysis of every movement of the market, skills you acquire from a specialized education. Probably you ask yourself if you need to make a considerable investment to make money, which comes to you do not need a great amount of money; it all depends on your investment capacity, which allows you to open an account that better fits such capacity.
Types of Accounts:
1. Micro Account: Opens with less than $2000. You may trade mini and micro lots.
2. Mini Account: Opens with $2001 to $20000. You may trade mini and micro lots.
3. Standard Account: Opens with more than $20000. You may only operate full lots.
Forex allows you to open accounts and make money through leverage, which means that a broker, with solid finances, lends you money for you to trade in the market and this way get earnings from the differentials in the appreciation or depreciation of the operating currencies. Forex can become a risky activity when the leveraging takes novice traders to over leverage, because they get greedy and they want to make a fortune with little capital at hand. This way, from 2 or 3 operations that end up in losses, the trader loses all of his capital. This is why it is important to know how to manage every operation.
You may leverage from:
• 2:1 = give $1 you will get $2
• 10:1= give $1 you will get $10
• 100:1= give $1 you will get $100
• 200:1= give $1 you will get $200
• 400:1 = give $1 you will get $400
So, the amount of money that you can make depends on the number of pips you obtain and the size of the account that you opened. For this reason it is vital to be realistic on how much you can invest at first in relation with what you can earn.
Also, the amount to lose depends on the number of pips lost and the size of the account. Remember that from the time an trader enters into a position, he loses because of the spread or differential from the brokers in each pair. If you use good strategies and correct money and risk management techniques, this will not be a relevant factor.
It is even more important to be able to increase earnings in the winning operations and minimize the amount lost in those operations where we lose money. This should be clear. With good money and risk management, a Forex trader can make money even in a strategy where he loses 6 out of 10 times. How? In the remaining 4, his earnings are higher than his losses in the 6 operations that ended up in loss.
A trader could lose money even winning in 8 out of 10 operations, following the same logic, the same way.
For this reason you will notice the first time that you enter the demo account, that when you take a position in the market, immediately it will show a “loss” in your money, which really is not a loss, but rather it is the commission that your broker charges from that moment for each position that you take in the market. In the demo accounts they add this commission for you to always have this in mind when getting a real account.
It is important to realize that you must look for a trustworthy broker, since unfortunately there are people that try to take advantage of others. For this, we recommend you to examine the history of the broker. You may be able to select a broker from a variety of countries but you must make sure they are legally established. For example: in the USA, a broker must be registered with the CFTC (Commodities Futures Trading Commission), or be a member of the NFA (National Futures Association). You may also verify this with a Costumer Protection Office, depending on his country of origin and its IT laws.
To make money, it is important that you know it will not happen overnight, it will take a whole process for you to become an expert trader. In this money making market intervene probability and consistency. Success is measured with profitability, and it does not matter the amount of operations, but also perseverance to reach your set goals in this business. For example, constantly following a strategy and not searching every week or month a better strategy than the one before (a very common mistake among new traders).
You may also get long term or short term earnings, meaning that you may choose to make only 1 or 2 operations in a year to reach your goal, which is possible only if you use the correct strategies and receive constant education. You can make 10 operations or more a day, a week or a month, to reach the same goal and get earnings and vice versa.
The recommendation if you are new at this is to start with few operations, but strong ones, in longer periods of time, like daily.
You can make money in Forex if you:
• Receive the proper education and training.
• Learn to determine in the market when to enter into a position and more importantly when to leave, either with losses or earnings.
• Use the correct leverage offered by brokers and you are realist when thinking of earnings.
• Are patient. Patience to practice, as well as for waiting the correct settings to enter into a position, as well as waiting to see for the right time to reach your goal for earnings.
• Do not get obsessed with reaching your earnings goal in the first week.
• Accept losses as part of the “investment game”.
• Properly manage your emotions and the psychological aspect of investing.
The Forex University specializes in courses for beginners and more advanced traders, and teaches how to obtain earnings in a constant manner, managing it as a business. For more information, you may click the following link:
http://www.udeforex.com/Cursos/Cursos-de-Forex.html
In short, it is possible to make money in Forex, but do not forget it requires: consistency, discipline, constant growth of our account, effort, time and study. Of course you will not become rich overnight; you will only be able to make enough money in the long run to considerably improve your quality of life. Remember that the reliability that you obtain monthly from your capital, you may not be able to find in any other type of investment.
If you would like more information about Forex, please click here: The Forex Market
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