DETAILS ABOUT CURRENCY XCHANGE

Forex of FX or Foreign Exchange (Currency) market is the largest liquid financial market around the world. Here currency of a single country is exchanged with a different country through currency exchange rate scheme. Moreover it provides trading between central banks, large banks, currency speculators, government, multination corporations and many other financial institutes and markets. Trader’s or broker’s purpose is to get the revenue by the foreign exchanges buy and sale. From the latest estimation, FOREX trading average daily constitution is about 4 trillion US dollar.

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There are many companies which provide you Forex training. But there is a question is training is necessary for forex? The answer is always ‘yes’ because there are only 5% people who can earn profit from forex business. Most of them do not know the secret of this business. Technical and fundamental analysis as well as money management is very essential for Forex trade. In addition to say Money management is the key of a successful business. It assists to add to your income in a without stopping fashion. Moreover it provides you in curtailing with limiting your losses of this business. Forex training program includes all of these and other basic thing which is necessary to make profit in your trade.

Forex for Dummies: Trading characteristics

Most traded currencies Currency distribution of reported FX market turnover

There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currencies instruments are traded. This implies that there is not a single exchange rate but rather a number of different rates (prices), depending on what bank or market maker is trading, and where it is. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs instantaneously. Due to London’s dominance in the market, a particular currency’s quoted price is usually the London market price. A joint venture of the Chicago Mercantile Exchange and Reuters, called Fxmarketspace opened in 2007 and aspired but failed to the role of a central market clearing mechanism.

Intro to Forex Currency Trading

Forex, which is short for Foreign Exchange, is another term for currency trading. The goal of forex is try to profit by trading the ever-changing currency exchange rates, such as the Euro versus the U.S. Dollar.

Exchange Rate Example
One of the most popular currency pairs is the EUR/USD, which tracks the Euro against the U.S. Dollar. If the EUR/USD is at 1.5000, that means one Euro will get you 1.5000 U.S. Dollars. One thing that’s interesting about these exchange rates is that they are relative to two countries. If the Euro gets “stronger”, the rate goes up to 1.5785, for example, because you can buy more Dollars. If the Dollar gets stronger, the rate will drop because the Euro will buy fewer Dollars. However, if both the Euro and the Dollar get stronger (or weaker) by the same amount, the rate won’t really change!

Similar to Stock Trading
Currency trading actually has many similarities to stock trading. Many people are familiar with how stock trading works: find a price quote for a company using its symbol, then buy that symbol at a low price and sell it later at a higher price hopefully. Forex is actually very similar: get a quote for a symbol like EUR/USD, buy it at a lower rate like 1.4000 and then sell it at a higher rate like 1.4050.

Meet the Pip
Since the exchange rates change by such a small percentage, a term called the pip is used to describe changes in rates or profits. For example, if the GBP/CHF (British Pound versus Swiss Franc) goes from 1.7000 to 1.7001, it has increased by 1 pip, and an increase to 1.7100 would be 100 pips because for this pair one pip is 0.0001. However, for a rate like 95.00 for the USD/JPY, the pip represents 0.01, so 95.01 would be a 1-pip gain while 96.00 would be a 100-pip gain. This just describes the rate differences. To calculate your dollar gains, you need to factor in the lot size (see below).

The Spread instead of a Commission
Forex brokers make their profits not by charging a commission on each trade but by creating a small difference between the Bid (Sell) and Ask (Buy) prices. This is called the Spread and it is measured in pips. A typical spread might be between 1 and 10 pips. So if you bought and then sold right away, you would actually lose money by the amount of the spread. For example, buying EUR/USD at 1.5000 (the Ask) and selling at 1.4995 (the Bid) would be a loss of 5 pips.

Lots of Lots
Stock trading involves buying shares but forex trading involves buying lots. Depending on the account type, the lot size will be something like 1K, 10K, or 100K. Assuming your account has a 10K (10,000) lot size and you buy 8 lots, that would be a total contract size of 80K. It is important to realize that you must place your trades in increments of the lot size.

Margin and Leverage
Since currency rates change by such small amounts at a time, most forex brokers offer a large amount of leverage, such as 200 to 1. That means you only use $1 of your actual cash for every $200 of a currency pair that you purchase. For example, if you buy 10K of EUR/USD at 200:1 leverage, that would only require $50 of cash because 10,000 divided by 200 is 50. The purpose of the leverage is to amplify your profits but keep in mind it can just as easily amplify your losses. Many, many traders have lost all of their trading money because of leverage, so be careful!

Practice Trading
Many forex websites offer free demo programs that allow you to practice trading with virtual money, often for a limited time. Practicing with these demo programs is highly, highly recommended until you become comfortable with the trading process and the dangers of leverage.

Nicholas Swezey recently added real time forex quotes to his site HowTheMarketWorks.com.

Sources: articlespan.com

You might like these articles:

1. Currency Trading Report – What You Need To Know
2. Trading in the Retail Off-Exchange Foreign Currency Market – What Investors Need to Know
3. Trading in the Retail Off-Exchange Foreign Currency Market – What Investors Need to Know
4. Forex Trading – What Goes Into Currency Trading Values?
5. U.S. Dollar Inches Up Against Euro in Forex Trading

Forex - Foreign Exchange

Currency Markets

Foreign exchange transactions that are settled immediately are said to occur in the spot market, while transactions to be settled at a future date occur in either the forward or the futures market.

These markets are summarized below:

1. Spot Market:

This is the market for currencies for immediate delivery. The price of foreign exchange in the spot market is referred to as the spot exchange rate or simply the spot rate.

The spot FX market is unique to any other market in the world, as trading is available 24 hours a day.

Somewhere around the world, a financial center is open for business, where banks and other institutions exchange currencies, every hour of the day and night with generally only minor gaps on the weekend.

Essentially foreign exchange markets follow the sun around the world, giving traders the flexibility of determining their very own trading time.

2. Forward Market:

This market is for the exchange of foreign currencies at a future date. A forward contract usually represents a contract between a large money center bank and a well-known (to the bank) customer having a well-defined need to hedge exposure to fluctuations in exchange rates.

Although forward contracts usually call for the exchange to occur in either 30, 90 or 180 days, the contract can be customized to call for the exchange of any desired quantity of currency at any future date acceptable to both parties to the contract.

The price of foreign currency for future delivery is typically referred to as a forward exchange rate or simply a forward rate.

3. Futures Market:

Although the futures market trading is similar to forward market trading in that all transactions are to be settled at a future date, futures markets are actual physical locations where anonymous participants trade standard quantities of foreign currency (e.g., 200,000 EURO per contract) for delivery at standard future dates (e.g., March, June, September, and December).

Up until recently, only banks, hedge funds, and other large institutions have had access to currency trading in the spot market.

With an approximate volume of $2 trillion traded on a daily basis internationally, the individual trader looks for an opportunity to take advantage of the most liquid market in the world.

Day-traders are no longer confined to trading stocks and commodities, and now have the ability to trade all of the major currencies, including US Dollar, Yen, Euro, British Pound, Australian and Canadian Dollars, Swiss Frank and etc, 24 hours a day.

There is considerable exposure to risk in any Forex (FX) transaction.

Before deciding to participate in FX trading, you should carefully consider your objectives, level of experience and risk appetite ...

Foreign Exchange Option Details

Foreign Exchange Option

In finance, a foreign exchange option (commonly shortened to just FX option or currency option) is a derivative financial instrument where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date.

The FX options market is the deepest, largest and most liquid market for options of any kind in the world. Most of the FX option volume is traded OTC and is lightly regulated, but a fraction is traded on exchanges like the International Securities Exchange, Philadelphia Stock Exchange, or the Chicago Mercantile Exchange for options on futures contracts. The global market for exchange-traded currency options was notionally valued by the Bank for International Settlements at $158,300 billion in 2005

Example

For example a GBPUSD FX option might be specified by a contract giving the owner the right but not the obligation to sell £1,000,000 and buy $2,000,000 on December 31. In this case the pre-agreed exchange rate, or strike price, is 2.0000 USD per GBP (or 0.5000 GBP per USD) and the notionals are £1,000,000 and $2,000,000.

This type of contract is both a call on dollars and a put on sterling, and is often called a GBPUSD put by market participants, as it is a put on the exchange rate; it could equally be called a USDGBP call, but market convention is quote GBPUSD (USD per GBP).

If the rate is lower than 2.0000 come December 31 (say at 1.9000), meaning that the dollar is stronger and the pound is weaker, then the option will be exercised, allowing the owner to sell GBP at 2.0000 and immediately buy it back in the spot market at 1.9000, making a profit of (2.0000 GBPUSD - 1.9000 GBPUSD)*1,000,000 GBP = 100,000 USD in the process. If they immediately exchange their profit into GBP this amounts to 100,000/1.9000 = 52,631.58 GBP.

Terms

Generally in thinking about options, one assumes that one is buying an asset: for instance, you can have a call option on oil, which allows you to buy oil at a given price. One can consider this situation more symmetrically in FX, where one exchanges: a put on GBPUSD allows one to exchange GBP for USD: it is at once a put on GBP and a call on USD.

As a vivid example: people usually consider that in a fast food restaurant, one buys hamburgers and pays in dollars, but one can instead say that the restaurant buys dollars and pays in hamburgers.
There are a number of subtleties that follow from this symmetry.

Ratio of notionals

The ratio of the notionals in an FX option is the strike, not the current spot or forward. Notably, when constructing an option strategy from FX options, one must be careful to match the foreign currency notionals, not the local currency notionals, else the foreign currencies received and delivered don’t offset and one is left with residual risk.

Non-linear payoff

The payoff for a vanilla option is linear in the underlying, when one denominates the payout in a given numéraire. In the case of an FX option on a rate, one must be careful of which currency is the underlying and which is the numéraire: in the above example, an option on GBPUSD gives a USD value that is linear in GBPUSD (a move from 2.0000 to 1.9000 yields a .10 * $2,000,000 / 2.0000 = $100,000 profit), but has a non-linear GBP value. Conversely, the GBP value is linear in the USDGBP rate, while the USD value is non-linear. This is because inverting a rate has the effect of , which is non-linear.

Change of numéraire
The implied volatility of an FX option depends on the numéraire of the purchaser, again because of the non-linearity of .

Hedging with FX options

Corporations primarily use FX options to hedge uncertain future cash flows in a foreign currency. The general rule is to hedge certain foreign currency cash flows with forwards, and uncertain foreign cash flows with options.

Suppose a United Kingdom manufacturing firm is expecting to be paid US$100,000 for a piece of engineering equipment to be delivered in 90 days. If the GBP strengthens against the US$ over the next 90 days the UK firm will lose money, as it will receive less GBP when the US$100,000 is converted into GBP. However, if the GBP weaken against the US$, then the UK firm will gain additional money: the firm is exposed to FX risk. Assuming that the cash flow is certain, the firm can enter into a forward contract to deliver the US $100,000 in 90 days time, in exchange for GBP at the current forward rate. This forward contract is free, and, presuming the expected cash arrives, exactly matches the firm’s exposure, perfectly hedging their FX risk.

If the cash flow is uncertain, the firm will likely want to use options: if the firm enters a forward FX contract and the expected USD cash is not received, then the forward, instead of hedging, exposes the firm to FX risk in the opposite direction.

Using options, the UK firm can purchase a GBP call/USD put option (the right to sell part or all of their expected income for pounds sterling at a predetermined rate), which will:

protect the GBP value that the firm will receive in 90 day’s time (presuming the cash is received)
cost at most the option premium (unlike a forward, which can have unlimited losses)
yield a profit if the expected cash is not received but FX rates move in its favor

Valuing FX options: The Garman-Kohlhagen model

As in the Black-Scholes model for stock options and the Black model for certain interest rate options, the value of a European option on an FX rate is typically calculated by assuming that the rate follows a log-normal process.

In 1983 Garman and Kohlhagen extended the Black-Scholes model to cope with the presence of two interest rates (one for each currency). Suppose that rd is the risk-free interest rate to expiry of the domestic currency and rf is the foreign currency risk-free interest rate (where domestic currency is the currency in which we obtain the value of the option; the formula also requires that FX rates - both strike and current spot be quoted in terms of “units of domestic currency per unit of foreign currency”). Then the domestic currency value of a call option into the foreign currency is

The value of a put option has value

S0 is the current spot rate
K is the strike price
N is the cumulative normal distribution function
rd is domestic risk free simple interest rate
rf is foreign risk free simple interest rate
T is the time to maturity (calculated according to the appropriate day count convention)
and σ is the volatility of the FX rate.

Risk Management

Garman-Kohlhagen (GK) is the standard model used to calculate the price of an FX option, however there are a wide range of techniques in use for calculating the options risk exposure, or greeks. Although the price produced by every model will agree, the risk numbers calculated by different models can vary significantly depending on the assumptions used for the properties of the spot price movements, volatility surface and interest rate curves.

After GK, the most common models in use are SABR and local volatility, although when agreeing risk numbers with a counterparty (e.g. for exchanging delta, or calculating the strike on a 25 delta option) the Garman-Kohlhagen numbers are always used.

Euro at Critical Crossroads versus US Dollar

Fundamental Outlook for Euro This Week: Bearish

- Euro gains as PMI shows signs of “Second Derivative” Growth Improvement
- German IFO Business Confidence survey improves – Euro rallies
- Euro Bear Trend may nonetheless be in its infancy

The Euro finished the week marginally higher against the US Dollar, but it extremely choppy price action makes it difficult to anticipate continued gains through near term trade. Last week we forecasted that a turnaround in the US S&P 500 and other risky asset classes would lead to a similar pullback in the Euro. Yet an early-week decline quickly reversed and led to a similar bounce in the EUR/USD. The US S&P now stands an impressive 30 percent higher from multi-year lows and a mere 4.1 percent down on a year-to-date basis. The impressive recovery in risk appetite has had a noteworthy effect on the Euro, but we continue to question whether such financial market improvement is truly sustainable. Early-week market tumbles emphasize that equities and other key risk barometers remain extremely fragile, and it may be only a matter of time before we see large corrections in the S&P and major world equity indices.

Our outlook for the Euro/US dollar remains bearish, but the true litmus test may come at resistance near the 1.3400 mark. Said level represents an important multi-week high and the 61.8 percent Fibonacci retracement of the 1.3750-1.2880 move—a “line in the sand” for technical traders. Fundamental biases are far harder to establish due to the current economic climate. A busy week of European and US economic event risk may only exacerbate this point, and it will be critically important to watch for shifts in trader sentiment following a key number of data releases.

Likely highlights in the week ahead include German and broader Euro zone Consumer Confidence, CPI Inflation, and especially important Employment results. Recent German Ifo Business survey figures suggest that investor confidence has bottomed and many now expect business conditions to improve through the foreseeable future. This may amount to little, however, if Consumer Confidence does not show a commensurate improvement, and markets will likely respond to any surprises in German Gfk survey results. The very next day’s German Consumer Price Index inflation results could likewise spark volatility in the EUR/USD. Analysts predict that yearly price growth remained at a relatively robust 0.8 percent through April. This stands in stark contrast to a -0.1 percent rate in the United States and perhaps explains why the European Central Bank has thus far kept interest rates well-above their US counterpart. Uncertainty surrounding ECB monetary policy may make for especially large moves on big surprises.

Last but certainly not least, markets will pay close attention to Friday’s Unemployment stats out of Germany and the broader Euro zone. Labor market reports remain very politically important, and any especially noteworthy deterioration in jobless rates could put further pressure on domestic governments and the ECB. Though further fiscal stimulus packages seem unlikely, politicians continue to lean on the ECB—calling for Quantitative Easing measures in order to boost money supply. Any such announcement could easily derail the Euro’s recent bounce. - DR

Forex News : Japanese Yen Trades Must Gauge Risk and the Currency’s Relation to It

Currency’s Relation to It

Fundamental Outlook: Bearish

- G7 forecasts a ‘weak’ rebound later this year; though banks’ toxic assets still a serious problem
- Japanese trade balance marks it worst annualized deficit in 29 years
- Bank of Japan Governor Masaaki Shirakawa tells economists not to mistake a temporary rebound as a genuine recovery

There is an ongoing debate as to whether the yen is a sensible safe haven currency considering the financial and economic troubles Japan is suffering. This is argument that will carry over into next week – and just as the market’s tolerance for risk is put to the test through a wave of major fundamental catalysts. Therefore, traders will first have to assess the ever-fluctuating level of sentiment through G20 and IMF policy statements, a mooring US first quarter growth report and ongoing register of market health derived through earnings releases. Then, they will have discern the level of optimism or panic that is borne from this mix and judge whether the Japanese currency is a viable safe haven via the depth of its markets and sheer size of its economy. Anything less than borderline fear or a dour forecast for the markets will likely see the once sacrosanct safe haven / yen correlation drift apart.

First, in taking stock of the economic mines that could leverage panic and volatility; we can see that there is a lot to keep track of. This weekend, the spot light will fall on the various meetings scheduled for the world’s policy makers. The G7 meeting has already passed with little more than cheerleader optimism; and any G20 statement is likely to provide little more. What traders really crave is tangible policy steps with responsibility and consequence along the way that can truly put the world on track to correcting what is clearly a global problem. To the extent of its capabilities, the IMF’s semi-annual meeting will likely produce better results. However, while this group has been very blunt on the current state of affairs and what needs to be done to genuinely turn economic activity around; the organization doesn’t have the clout to push policy onto the world’s leading nations. Moving beyond the weekend, the risk barometer will find input from the change in sentiment derived from earnings. Better-than-expected revenues is not the same thing as profits that are expected to expand as the year progresses. Net profit, write downs, delinquencies and non-performing assets are components that will not be overlooked. Finally, in measuring the health of the financial markets; we first gauge the health of the economy that supports it. The first quarter reading for US GDP will fill this role nicely. Should the world’s largest nation report a slower pace of contraction as expected, it could interpreted as the first (meaningful) step towards a working recovery.

After assessing the ebb and flow of risk sentiment, the fundamental crowd then has to decide whether the yen is indeed the proper currency to represent safety. This leads us to examine the health of the island economy. Over the past few days, Japanese policy officials have painted a grim outlook for economic activity (even taken within the context of a global recession). Despite confirming the worst recession for the world’s second largest economy in over a quarter of a century through the fourth quarter, the Bank of Japan’s top economist predict worse over the opening months of this year. The same sentiment was shared by BoJ Shirakawa. Data is working hard to confirm such fears as well. This past week, the ministry reported the worst annual trade deficit in nearly three decades. This will be followed up by employment, spending, factory activity, and auto sales data in the days ahead. When measuring this economic fodder against sentiment, questions will only arise should pessimism reign. Otherwise, if sentiment is improving, there is no need for a safe haven and the bleak future for Japan means there is really no reason to buy yen. – JK

Information about Foreign Currency Exchange...

fluctuations over the course of the day - they go up and down depending on who’s buying, who’s selling and what rumors are floating around. In fact, day trading in the foreign currency market is probably the single segment of any type of stocks, currency or futures trading market most affected by rumors and real-time, real-world happenings. A savvy trader who is quick on his feet can roll up the profits by paying attention to what the current news is doing to the currency exchange rates.

The currency market, commonly referred to as the forex (short for Foreign Exchange), is the most liquid market in the world. The latest statistics say that daily trading on forex is in excess of $1.3 trillion U.S. dollars. That makes forex the world’s largest, most efficient market. A major part of the reason for the liquidity and volume of trade is the practice of day trading. The difference between day trading and other types of trading is in how long you hold your stocks (or in this case, your currency). In day trading, you hold nothing beyond the close of the day’s market. Think of it as a game in which the object is to keep trading cards back and forth, increasing the value of your cards - but have no cards in your hand at the end of the day.

Of course, since the currency market is a 24 hour market, there really IS no market closing - so the rules change slightly. The currency market is open from Sunday afternoon to Friday afternoon, with trading going on all the time, so you can pick your times to trade rather than being locked into the Stock Exchange timetable.

How You Make Money in Day Trading

People will tell you that the difference between a day trader and an investor is the length of time that each holds onto their stocks. That’s a superficial difference. The real difference is in the mindset of short-term vs. long-term and liquidity. An investor buys something that he believes will steadily increase in value, and holds onto it for the long haul. A day trader rides the minute fluctuations in the currency market minute by minute the way a surfer rides a wave. Because you’re trading in lots of 100,000, a tiny fluctuation can mean a big profit - or a huge loss.

Limiting Loss in Day Trading

One of the hardest concepts for new traders to grasp is that of limiting loss. Let’s say you make a trade for a currency that is heading down because you believe that it’s near its support point - the point where it will rebound and start heading back up. Instead, it breaks the point and keeps heading down - you’re losing money instead of making it. You have two choices - hold onto it because you KNOW it will start heading back up soon, or get rid of it and limit the amount of money you’re going to lose. In day trading, the name of the game is limiting your losses and maximizing your wins - decide ahead of time just how much you’ll allow each trade to lose before you sell it, and then STICK TO YOUR LIMIT. By the same token, decide how much profit you want to make, set a sell order for when the currency reaches that point - and sell when it hits the mark.

Know what you’re doing.

Day trading on the forex is like any other business. The people who make money are the ones who take the time to learn the market and understand the ins and outs of the trades that they make. Those who jump in feet first without learning the terms, rules and trends of the forex market are priming themselves to lose - and lose big. Remember, there’s no such thing as high profit potential without equivalent risk. Before you jump in, take a course in trading, or read read read all that you can.

Forex Converter-The Facts Behind the Numbers

Most Forex converters are pretty straightforward and easy to read. Currencies are usually traded in pairs and most Forex Converters give current quotes in pairs. Most also have the ability to convert specific amounts of one currency into another. But what are the factors that make one currency more valuable than another? What causes the value of a currency to rise and fall?

First, who determines currency value? Currency value is generally determined by central banks, investors and Forex traders, and the laws of supply and demand. Central banks and large banks account for most of the world’s trade in currencies. Central banks set monetary policy that affects the value of that nation’s currency.

• Euro Rises on Manufacturing Report Figures

  Posted on Saturday July 25th, 2009 at 01:58

  The euro posted the first climb versus the U.S. in four days as this Friday a report indicated that the European manufacturing and services contracted at a slower pace, and German business confidence improved. The Eurozone currency is ending the seco...

• Pound Slides on Quarterly Recession Numbers

  Posted on Saturday July 25th, 2009 at 01:58

  The pound posted losses today versus most of the 16 main traded currencies as today, gross domestic product figures released in the United Kingdom revealed that the quarterly recession in the European nation was more than double of what economists fo...

• Mexican Peso Posts Second Weekly Gain on Economic Optimism

  Posted on Saturday July 25th, 2009 at 01:57

  The Mexican currency posted another week of gains versus its main trading partner’s currency, the U.S. dollar, as emergent-market currencies profited on higher confidence among traders. Reports mainly in Europe this Friday indicating that the Germa...

• Canadian Dollar Ends Week High on Government Statement

  Posted on Saturday July 25th, 2009 at 01:57

  The Canadian dollar ended another day gaining versus its U.S. counterpart, as government officials affirmed that the country may be already getting out of recession. The loonie posted its sixth day of gains versus the greenback after Canadian governm...

• Dollar will stay as global reserve currency : Zoellick

  Posted on Sunday July 12th, 2009 at 02:21

  Commodity OnlineL’AQUILA: World Bank President Robert Zoellick said the dollar will stay as the world’s main reserve currency.Speaking to reporters on the sidelines of the G8 summit here he said, “The dollar is going to remain the primary reser...

• Aussie steady vs dollar at noon

  Posted on Sunday July 12th, 2009 at 02:13

  The Aussie was virtually unchanged Friday as investors sat on the sidelines in subdued trade.The Australian currency was trading at 78.21 cents, down slightly from Thursday's close of 78.20 cents.Receive $25 free with a Forex Micro accountDuring the ...

Factors Influencing Currency Exchange Rates - World & Money Foreign Exchange Mechanics

There are a number of participants comprising the currency exchange markets. The banks comprise the largest forces and consist of a combination of transactions to facilitate business between multinational corporations and proprietary traders who are predominantly speculative or hedging bank currency exposure. International central banks are also active in the markets. Retail traders comprise a very small volume of currency transactions.

The current currency exchange rates are influenced by the economic fundamentals that affect the country. Current Account Deficits, interest rate differentials, growth rates, employment and business activity all affect the demand and supply of the currency. When demand for resources is high, this puts upward pressure on commodity producing countries such as Australia and Canada. High interest rates in one country can also affect a countries currency exchange rates because it encourages capital inflow from international speculators who borrow in one country at a lower rate and seek to exploit the difference between interest rates. This is called the carry trade and has been facilitated by the Yen in recent years due to the low interest rates on offer in Japan. The US, who have enjoyed a strong currency exchange rate and the world's 'reserve currency status' for many years have had a distinct advantage over other countries due to the fact that crude oil is priced in US dollars. This has helped to keep the US rate artificially high.

If you are traveling and want to secure the best rate, it is best to carry currency in the major denominated currencies such as the US and Euro. Some countries do not readily carry foreign exchange for lesser known currencies and it can be difficult to do currency exchange conversions.

information of currency rates

Currency exchange rates are an important monetary unity of measure that indicates the relative value of one currency against another. Typically, world currency exchange rates are quoted on the basis of a base rate. For example, one unit of the Australian dollar may be worth 91 cents expressed in US dollar terms. These rates are offered by international currency conversion brokers or money converters and can vary depending on where you attempt to change your money. The current currency exchange rate offered reflects market forces of supply and demand as determined by the fundamental factors that influence the market.

Foreign currency trading takes places in what is essentially an over the counter market where brokers and dealers negotiate with each other. There is no central exchange per se and most of the trading takes place on the interbank market via the large international banks that quote prices on the basis of bid/ask spreads. The prices offered for retail transactions do not necessarily reflects these spreads. Retail customers are subject to bank mark ups. If you have ever tried to conduct money currency exchange you would notice that currency exchange rates can vary between exchangers. Usually, you get better rates at the banks themselves as the rates charged by money converters and exchange booths such as American Express reflect the base rates and any markup the provider is adding to these rates.

How Forex Trading Works - The Basics

Forex traders buy and sell currencies. The logic is simple, as with any investment activity your aim is to buy something that is going to increase in value - then sell it on at a profit. So that famous phrase "buy low now and sell high later" applies to the forex market as much as to other financial markets. In forex though, you can also "sell high now and buy low later". In forex it does not matter whether the price movement is upwards or downwards - any price movement provides a chance to take a profit.

So, the aim in forex is to exchange one currency for another having ascertained that there will be a price change in your favour In the forex market the exchange rates are always quoted in currency pairs and all currencies are identified by a three letter acronym. So the American dollar is 'USD', the Australian dollar is 'AUD', British pound is 'GBP', the Euro is 'EUR' and so forth. The first currency that is named in a currency pair is called the base currency and the second one (to the right of the slash) is called the counter (or sometimes quote) currency.

Eg : EUR/USD = 1.3885

When you enter a BUY trade, the exchange rate tells you how much you will pay in the counter currency to buy one unit of the base currency. So, EUR/USD = 1.3885 means that you would pay 1.3885 American dollars for one Euro.

Conversely, in a SELL trade, the rate tells you how much of the counter currency you will get for each unit of the base currency that you well. In this case, EUR/USD = 1.3885 means that you would receive 1.3885 dollars for one Euro.

The base currency is well named as it is the basis for either the buying or selling of a currency. When you are considering a trade you would open a BUY position if you think that the base currency will increase in value against the counter currency - and you would open a SELL position if you think that the base currency will decrease in value against the counter currency.

Of course, if you are not sure you would not open a position. As stated at the beginning of this article - trading logic is simple as are the mechanics of trading. But how you make a BUY or SELL decision is the true wisdom of forex trading.

It is very important for new traders to get to grips with the basics - how to read a currency quote and how to apply this to the trading platform. This is what a practice account is for – it is advisable to spend some time on your practice account and read as much advice and as many trading tips as you can before you switch to trading with real money.

To open a "practice account" and to later, when confident and you have gained some experience, do your own Forex trading, try the eToro online Forex Trading Platform.

More on Forex Trading

Forex Traders Provide Insights for US Stock Investors

Around $3 Trillion in foreign currency (forex) is traded every day, almost 10x the volume of US stocks. A lot of smart people trade forex. Every government, large financial institution, and business that buys or sells overseas trades forex to hedge their investments and production costs, as do hundreds of thousands of private professional speculators worldwide. Thus it's well worth heeding their opinion about the current rally.

A. Background: Different Currencies Have Different Risk/Reward Profiles

As a general rule, when US stock indices rise, the world currency markets feel more optimistic about the world economy, and show higher risk appetite. This in turn increases demand (at least in the short term) for currencies that carry higher risk of depreciating in bad times yet pay higher interest rates on deposits. When US stock indices are dropping, currency traders are often more pessimistic, and flee higher risk currencies into lower risk currencies.

Here's a brief quiz. Look at the table below (click to enlarge) showing central bank rates of the world's major currencies. Which do you think are considered the most risky? Which are considered the safest?

Answer: the Australian dollar is considered the riskiest. The Yen is considered the least risky, with the U.S. dollar considered the next safest. You may agree or disagree, but this IS the prevailing belief in the world currency markets.

B. Background: Currencies Trade in Pairs

Almost everything is priced in terms of a currency. So are currencies themselves. They are always traded in pairs. For example, what's the euro worth? It depends on what currency you value it in. Here are a few examples

Forex currency rates info about pakistan

the forex in paksitan This site is designed to provide you upto date forex rates in open market, inter bank & internatioal forex market. You will find historical forex rates, forex charts & graphs, forex articles & much more. Enjoy the site.

Disclaimer:Forex.com.pk provides forex rates for public benefit. It is neither a foreign exchange company nor its is affiliated with any currency dealer. Forex.com.pk doesn't buy, sell or transfer currency. Forex.com.pk tries its level best to provide you accurate forex rates from various authentic sources. However forex.com.pk is not responsible with respect to any transaction made on the basis of these forex rates

‘euro exchange rate’

EURO EXCHANGE information Understanding the Euro Rate Exchange In Europe, the Euro is the official currency of 13 countries. The current value of Euro rate is the exchange rate of the Euro itself. As a matter of fact, more than 320 million Europeans use the Euro, so knowing the Euro rate will help you to do business with those people. The value of the Euro rate is greater than that of the US dollar rate. The Euro rate ultimately affects a great deal of the foreign exchange, or forex, market. The economy of those 13 European countries serves as the main basis for the Euro rate. Negative factors such as war, drought and recession also affect the... read more >>

euro pound exchange rate Tips Forex Trading Strategies for Euro Exchange Rates Now for most US and European trading brokers current monetary policy allows them for free and open Euro exchange rates of currencies at market rate. In essence, by looking at the Euro exchange rate, and by prognosticating on foreign and international news, foreign Euro exchange rates traders are making gambles that currency valuation will change in the direction they’re anticipating in the future. A smaller scale foreign exchange rate currency trading strategy is to do positional buys. If oil prices rise, it’s likely that the dollar will drop against the... read more >>

Free Euro Exchange Rate Euro Exchange Rate Cuts. Foreign Exchange Analytics The positive reaction shown by the U.K. pound in relation to the Euro suggests a different outlook among foreign exchange investor. This is related to an act from both central banks reduced interest rates overnight. Among the major forex markets, the countries with higher interest rates garner more attention from investors because of the greater returns offered. The Euro was weaker against the pound, buying 0.806 sterling of late, compared with 0.812 sterling on Wednesday, after the Bank of England surprised observers with a 1.5-percentage point reduction in its key lending... read more >>

Understanding the Euro Rate

By forex futures trading

Excecutive Sumarry about Understanding the Euro Rate By Y. Tilden

Euro Exchange Rate

The Euro is the official currency of 13 countries in Europe. Finland, Italy, Austria, Belgium, Germany, Spain, Portugal, Slovenia, France, Greece, Ireland, Luxembourg and the Netherlands all use the Euro. There is approximately €610 billion Euros in circulation right now. That amounts to about $800 billion in USD. The Euro rate is the current value and exchange rate of the Euro. Whether you are a businessperson or you are just traveling or shopping, it is important to know the Euro rate when dealing financially with those 13 European countries.

More than 320 million Europeans use the Euro, so knowing the Euro rate will help you to do business with those people. The value of the Euro rate is greater than that of the US dollar rate. What that means is right now, one US dollar ($1) converts to only .69 Euros. The Euro rate ultimately affects a great deal of the foreign exchange, or forex, market. The economy of those 13 European countries serves as the main basis for the Euro rate. Negative factors such as war, drought and recession also affect the Euro rate. On the other hand, positive factors also affect the Euro rate. These positive factors can include an economic boom and lower interest rates.

Knowing the value of the Euro rate is vital if you are interested in or are planning to invest in the foreign exchange market. The foreign exchange market is the single most pervasive market in the world, and exists anywhere where people can exchange one nation’s currency for another nation’s currency. If you need more information on the Euro rate and the foreign exchange market, you can find a wealth of information on the Internet.

Forex Market size and liquidity

In order to understand the functioning of the forex or the foreign exchange trading markets, it is primarily necessary to comprehend what is meant by the term ‘relative value’. It can be substantiated as follows. Every country in the world has its own distinct currency and it is possible to compare the value of the currency of one country to that of the currency of another country by determining a secular value which is popularly referred to as the relative value. It is always necessary to keep in mind that the relative value will never be a regular value but rather it will continue to change across regular time intervals influenced by the alterations in the value of the currency in the financial markets.

Forex has often been referred to as the market closest to the perfect competition. According to the BIS, average daily turnover in traditional foreign exchange markets is estimated at $3.21 trillion. Daily averages in April for different years, in billions of US dollars, are presented on the chart below:

This $3.21 trillion in global foreign exchange market "traditional" turnover was broken down as follows:

• $1,005 billion in spot transactions
• $362 billion in outright forwards
• $1,714 billion in forex swaps
• $129 billion estimated gaps in reporting

In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.

Exchange-traded forex futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts. Forex futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).

Average daily global turnover in traditional foreign exchange market transactions totaled $2.7 trillion in April 2006 according to IFSL estimates based on semi-annual London, New York, Tokyo and Singapore Foreign Exchange Committee data. Overall turnover, including non-traditional foreign exchange derivatives and products traded on exchanges, averaged around $2.9 trillion a day.

US and European Rates Drop Further

LIBOR Falls

The cost of three month dollar loans between banks fell ahead of an anticipated rate cut by the US Federal Reserve. The interbank lending rate for 3 month dollar loans known as the London Interbank Offered Rate (LIBOR) fell to just over 1.87 percent according to the British Bankers Association. This move is expected to affect the interbank Forex market as bankers await the decision of the Federal Reserve.

Fed Expected to Cut Rates Further

The Fed is expected to cut its rate to 0.50, it’s lowest in history. At the same time the rate for 3 month loans in Euros known as the EURIBOR fell 0.04 percentage points to 3.25 percent. The equivalent rate for British Pounds fell 0.05 percentage points to around 3.13%

USD JPY Daily Forex Analysis for Day Traders

USD JPY Daily Forex Analysis for Day Traders

Rate falls back after a weak rally in Asia; traders note that stops were building in size under the 103.50 area with bids layered below to 103.00 area. Overnight low and action played out that scenario and the rate is set to rotate higher. That push higher needs to stall at the 103.80 area again to stay short and ADD to position. Stops said to be large enough to drive the rate through bids for a test of the 102.80 area but bids apparently were big enough on the first tryRead more

A Short Introduction To Global Forex Trading

Forex is the world largest and most liquid trading market. Many consider FOREX as the best home business you can ever venture in. Even though regular people have had the opportunity to take part in trading foreign currencies for profit since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings. Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities. But, still, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.

Introduction to How Exchange Rates Work

Maybe you've traveled to Mexico or Canada, and exchanged your American dollars for pesos or Canadian dollars. Or, perhaps you've traveled from England to Japan and exchanged your English pounds for yen. If so, you have experienced exchange rates in action. But, do you understand how they work?

You've probably heard the financial reporter on the nightly news say something like, "The dollar fell against the yen today." But, do you know what that means?

In this article, we'll tell you what exchange rates are and explain some of the factors that can affect the value of currency in countries around the world.

Currency Trading The Alternative Investment

Currency Trading the Alternative Investment is a perennial bull market with profit potential in both rising and falling currency trading markets. Currency Trading, also called fx, and forex trading can be very profitable. In particular, the cash/spot Fx markets possess certain unique attributes that offer the trader an unmatched potential for huge financial profits in any market condition or any stage of the business cycle.

On our website you will find all the information and resources you need to trade foreign currencies successfully, including posts and tips on currency, currency trading, currency exchange rates and forex trading software. Continue reading »

Forex Development History

Foreign exchange development history - exchange market evolution foreign exchange development history - exchange market evolution gold remittance system and Bretton woods agreement

In 1967, a Chicago bank rejected to provide pound loan to a professor named Milton Friedman, because his purposed was to use this fund to sell short the British pound. Mr. Friedman realized excessively that the price ratio from the British pound to US dollar at that time was high, he wanted first to sell the British pound, after the British pound fell he buys back the British pound to repay the bank again. This family bank rejects the loan offer based on the "Bretton woods Agreement" which was established 20 years ago. This agreement has fixed the various countries' currency to US dollar exchange rate, and the price ratio between the U.S dollar and the gold is also fixed to 35 US dollars to each ounce of gold.

The Bretton Woods Agreement was signed in 1944, the purposed was to prevent the currency to escape between countries, and also to limit the international speculation, thus to stabilize the international currency. Before this agreement was signed, the gold remittance standard system which was widely used since 1876 - was leading the international economy system until the First World War. In the gold remittance system, the currency was at the stable level under the support of the gold price. The gold remittance system has abolished the old time king and the ruler which depreciates the currency value unlawfully, which will lead to inflation.

But, the gold remittance standard system is certainly imperfect. Along with a country economic potentiality enhancement, it can import massive products from overseas, until it exhausts the gold reserve of certain country. It resulted the supply of the currency reduces, the interest rate raises, the economic activity will start to decline until it reaches the recession limit. Finally, the commodity price falls to the valley, gradually attracts other countries to stream in, massively rushes to purchase this country commodity. This will pour gold into this country, this will increase this country currency supplies quantity, and it will reduce the interest rate, and will create the wealth. This is so called the "the prosperity - decline” pattern and is the circulation of the gold remittance standard system, until the trade circulation and the gold freedom was broken by the First World War.

After several catastrophes wars, the Bretton Woods agreement has appeared. The countries which signed the treaty agreed to maintain the domestic currency to US dollar exchange rate, as well as the necessity of the corresponding ratio of the gold, and only allow a small fluctuation. Countries are prohibited to depreciate the currency value for the gain trade benefit, only allows the country to depreciate not more then 10%. Enters the 50's, the continuous growth of the international trade causes the fund large-scale shift which produces because of the postwar reconstruction, this causes Bretton Woods system which establishes the foreign exchange rate to lose stability.

This agreement was finally abolished in 1971, US dollar no longer could convert to gold. Until 1973, each major industrialized nation currency exchange rate fluctuation has been more freely, mainly regulates by the foreign exchange market through the currency supplies and demand quantity. The business volume, the transaction speed as well as the price variability, have achieved a comprehensive growth in the 1970's, come along with the emerge of price ratio fluctuation, the brand-new financial tool, then only the market liberalization and the trade liberalization could be achieved.

In the 1980s, along with the published of the computer and correlation technology, the international capital has flow rapidly, and strongly related the Asia, Europe and America market. Foreign exchange business volume from 80's rises daily from 70 billion US dollars to 150 billion US dollars after 20 years.


European market inflation
One of the reasons why the foreign exchange developed rapidly was the rapid development of the Euro dollar market. In a Euro dollar market, US dollar is stored beyond the border of America banks. Similarly, the European market is refers to property depositing outside the currency rightful owner country market. A Euro dollar market was formed at first in the 50's, at that time Russia deposited its petroleum income beyond the US border, avoid being freeze by the US government. This has formed a large offshore US dollar national treasury which is beyond the control of the US government. The American government has formulated a law to prohibited US dollar from lending money for the foreigner. Because the degree of freedom of the Euro dollar market is bigger and the rate of return is bigger, therefore it has large attraction. Starting from the 80's, the American company starts to borrow loan from the offshore market, they discovered that the European market is a wealth center which consists of large amount of floating capital which could provide short-term loan.

London once was (until now still is) one of the main offshore market. In the 80's, the Bank of England in order to maintain its global finance industry center dominant position, using US dollar as England pound substitution to make loan, thus to become a Euro dollar market center. London's convenient geographical position (is situated between Asian and Americas market) also helps to maintain the European market as the dominant position.

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Currency Exchange Rates Exchange Currency - Trading Foreign Currencies In the market of foreign exchange trading is always done in currency pairs, and Forex brokers around the world access money indices via currency converters and online platforms with rates given in real time. The value of major currencies changes continually, with investors hoping to make a profit from the purchase of stronger currencies. Trading between two non-dollar currencies occurs first by trading one against the US Dollar and then trading the US Dollar against the second non-dollar currency. Exchange rates are usually given as one unit of one currency to units of another...

What is Foreign Currency Exchange Rate? The existing exchange rate of a foreign currency is one of the most desired financial information by many - name it exporters, importers, investors, tourists or even ordinary. Even the ordinary citizens outside the United States hold on to their precious dollars hoping for an increase in the foreign currency exchange rate later on CURRENCY EXCHANGE RATE information Foreign currency exchange rate refers to the value of a certain currency based or compared to the rate of another country’s currency. A foreign currency exchange is said to be increasing its value if it is gaining strength against the.

Exchange rates infornation

The value of two currencies and the way they relate to each other is what we call Forex rate. Forex rate is the value of one currency that is needed to purchase a unit of another.

You need to use two currencies in order to use the Forex rate and this means both of these currencies are ‘two tier’ rates.

The instincts of a trader are important for keeping up with the market conditions and the strength of some currencies. They can change drastically from one day to the next, influencing the Forex rate. The first thing you should remember that when it comes to the Forex market is that Forex traders who are certified can access authorized quoted Forex Rate.

executive summary on Forex Rate by JB Mills

Understanding How a Forex Rate Works
Forex rate are referring to the relative value between two different currencies, or how does one currency compare to the other one.

The forex rate is the most critical thing to be considered for a forex trader because he needs to determine how that rate will change amongst the various world currencies. If you have the desire and motivation to be involved with forex trading, learning about forex rate is critical to your success.

To be successful with your forex trades, you will be looking at forex rate constantly during the day. One of your tasks is to thoroughly examine the various trends in the countries and predict how these factors will impact the value of the country’s currency.

The factors that influence the forex rate are just about any social, economic, or political event that is occurring in that country at a given time.

Your knowledge of forex rate and forex trading, combined with the experience you gain along the way will guide you to the incredibly profitable rewards that are associated with successful forex trading.

executive summary on Understanding How a Forex Rate Works by Jon Arnold

Receive a free demonstration version of our online currency trading software by submitting the form below. This software allows investors to view currency rates and charts in real-time over the internet. Since no money is actually at risk, this is an excellent way to evaluate our software and free currency market news feed.

• Live streaming prices in currencies, shares, indices, and commodities. Just click on the price to place a practice trade.

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The Exchange Rate Change

The exchange rate smallest change for the final figure (is 1 pip), for example:

The EUR/USD smallest change is 0.0001
USD/JPY smallest change is 0.01

Quoted Price

All quoted prices can be divided into direct quoted price and the indirect quoted price, for example:

The direct quoted price currency includes: EUR/USD, GBP/USD, AUD/USD, NZD/USD ......
The indirect quoted price currency includes: USD/JPY, USD/CHF, USD/CAD ....

For example, the EUR/USD quoted price is 1.2653, which means each euro could convert to 1.2653 US dollars, while the USD/JPY quoted price is 107.65, which means that each US dollar could convert to 107.65 Japanese Yen.

The buying price and the selling price of the foreign currency is decided by the bank or the broker house, customer decides only the buying trend. For example, the EUR/USD quoted price general demonstration is 1.2652/57, which means the broker house is willing to buy Euro dollar at the price of 1.2652, and sell at the price of 1.2657. At this time, the price difference between the buyer and the seller (pip difference) is 5 pips, for foreign exchange trading, the smaller the point means the trading cost is lower and the chance of profit making is much larger.

Forex foreign exchange trading is not suitable for all investors and traders. Forex markets are a volatile, complex, and risky business. However, traders have an amazing opportunity to make significant trade profits by successfully trading the forex currency markets. Nevertheless, before investing money and capital assets in forex trading, you should:

• Consider your financial experience, assets, personal or financial goals, and financial resources and know how much you can afford to lose above and beyond your initial account margin payment. Know who to contact if you have a trading problem or question.
  
  
• Understand forex trading currency markets and your obligations in entering into those forex foreign currency contracts.
  
  
• Completely understand your exposure to trade risk and other aspects of commodities futures trading by thoroughly reviewing the trading risk disclosure documents with a good commodity broker who will be happy to give you all the free trading information you need about futures trading, margin requirements and general trade help and assistance.
  
• We suggest you study as much as possible about the forex markets and commodities futures trading so We suggest you read a good forex trading guide to enhance you overall knowledge about forex, including the futures daytrading markets and trading the overnight 24-hour forex market.