A Look At Forex Markets

[Della Peters]

A Look At Forex Markets
Forex markets, which are also known as currency markets, are the most
active trading futures markets both in terms of volume and amount of
money. With a daily volume of over $2 trillion, trading Forex is done
mostly between central banks, commercial banks and large companies.
Forex markets are unique because then aren't traded at futures
exchanges; they are traded directly between investors in such trading
centers as London , New York and Tokyo . Some of the most popular
forex markets available are:
? USD / JPY - US dollar to Japanese yen exchange rate? CHF / USD - The
Swiss franc to US dollar exchange rate? AUD / USD - The Australian
dollar to US dollar exchange rate? CAD / USD - The Canadian dollar to
US dollar exchange rate? GBP / USD - The British pound to US dollar
exchange rate? EUR / GBP - The euro to British pound exchange rate?
EUR / USD - The euro to US dollar exchange rate? EUR / CHF - The euro
to Swiss franc exchange rate
Forex Brokers
Day trading allows you to access the Forex markets using the same
direct access brokerages that are used for other markets, except for
one difference. Trades in Forex markets are not handled by an
exchange; these transactions are made by a currency broker instead.
Currency brokers are allowed to establish their own markets which
means that investors using one broker may not get the same prices that
investors using another broker get. Unfortunately, some commodity
brokers are less than honorable and will actually trade against the
investors that use them, preventing them from getting the best prices
available in the Forex markets.
Additionally, it is typical that currency brokers not take a
commission on trades in the Forex market. They will, instead, charge a
portion of the spread for their futures trading services.
Currency Market Info
Trading symbols for the Forex market are made by combining the
abbreviations for the two currencies being traded. For example, the
currency trading symbol for euros to British pounds would be EUR/GBP.
Each currency market has a price change that it considers the minimum
for trading commodities ; this unit of measure is called a tick.
Currency or Forex markets have a minimum tick size (typically 0.0001)
as well as a minimum trading amount of approximately $25,000. In this
instance, the minimum price movement would equate to tick size x
minimum trading amount or 0.0001 x $25,000= $2.50. Due to leveraging,
even though the minimum trading amount is $25,000, the investor will
only have to have a portion of that in his or her trading account.
This is why it is important to be wise with your investments;
successful Forex traders know that it is possible to lose more than
your original investment due to the leverage factor
Rate Spreads
If you go on vacation in a foreign country, you will quickly become
aware that the buying and selling exchange rates are different. For
example, if you take $100 to the bank and exchange it for Mexican
pesos, then take the pesos you receive and exchange them again for
dollars, you will wind up with less than your original $100. This is a
direct result of the rate spreads and it is the same for commodity
trading. While the rate spread at the bank may be several cents on the
dollar, the difference in the Forex markets is usually only one tick.
Conclusion
Forex currency trading for beginners can seem very different from the
stock market. Forex markets have different regulations and terminology
but the same overall principles apply; perform your technical
analysis, stick to your trading plan and use Japanese Candlesticks to
help you find the trends. Forex markets have their differences but
they are very interesting and offer the possibility of excellent
profits for the savvy investor.

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