Understanding Concept Of Foreign Exchange Trading
Trading nothing: When you trade with currencies you are actually trading with nothing as there is no physical exchange with trade mainly conducted by means of computer entries and automatically netted depending on market price. This market type is used purely for buying and selling-no long term investing. The purpose of the market is to help conversion of currencies for international trading corporations who have to constantly trade currencies.
Main difference: The main difference between foreign currencies markets and other markets such as futures, options and stocks is that currencies are traded over-the-counter without strict regulation while futures, options and stocks are traded on very strictly regulated, formal exchanges. Trading members only make use of a mere credit agreement to bind members as no clearing houses used thus there are no guarantee of payment of delivery.
Top currency pairs: International liquid currency pairs are the preferred choice with some traders trading in exotic currency's such as Czech Koruna's just to be different and a little reckless. The most liquid and popular trade pairs are Dollar/Yen, Euro/US Dollar, US Dollar/Swiss Franc and British Pound/US Dollar. Variation pairs are also available such as New Zealand Dollar, Australian Dollar/US Dollar and US Dollar/Canadian Dollar.
Common gibberish: As with any profession a secret language is spoken by currency traders when referring to certain market items or occurrences such as Swissie referring to Swiss Franc, Yard is one billions units, Figure is round number such as 1000 and Sterling the other name for British Pound.
Smallest movements and times: The smallest movement in foreign currency pricing is known as a pip. In the determination of losses or gains, drops and rises in pips are used as indicators. Just a couple of pips can mean a huge fluctuation. Pip values are different for small and regularly sized accounts being US$ 1 and US$ 10 respectively. The pip difference between bid and asking price is known as spread. Small time lapses between two currencies are known as ticks. - 23159
Main difference: The main difference between foreign currencies markets and other markets such as futures, options and stocks is that currencies are traded over-the-counter without strict regulation while futures, options and stocks are traded on very strictly regulated, formal exchanges. Trading members only make use of a mere credit agreement to bind members as no clearing houses used thus there are no guarantee of payment of delivery.
Top currency pairs: International liquid currency pairs are the preferred choice with some traders trading in exotic currency's such as Czech Koruna's just to be different and a little reckless. The most liquid and popular trade pairs are Dollar/Yen, Euro/US Dollar, US Dollar/Swiss Franc and British Pound/US Dollar. Variation pairs are also available such as New Zealand Dollar, Australian Dollar/US Dollar and US Dollar/Canadian Dollar.
Common gibberish: As with any profession a secret language is spoken by currency traders when referring to certain market items or occurrences such as Swissie referring to Swiss Franc, Yard is one billions units, Figure is round number such as 1000 and Sterling the other name for British Pound.
Smallest movements and times: The smallest movement in foreign currency pricing is known as a pip. In the determination of losses or gains, drops and rises in pips are used as indicators. Just a couple of pips can mean a huge fluctuation. Pip values are different for small and regularly sized accounts being US$ 1 and US$ 10 respectively. The pip difference between bid and asking price is known as spread. Small time lapses between two currencies are known as ticks. - 23159
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posted by X - Men @ 2:57 AM
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