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Forex Beginners Reading - Make Money
In Foreign Currency Exchange

Mohammed Walji

Currency Trading Forex Information

Forex Beginners Reading - Make Money
In Foreign Currency Exchange

I bet you are well aware of the existent of FOREX trading nowadays. FOREX market exists wherever one currency is traded for another. FOREX, or Foreign Exchange Market, is generally works as an international currency exchange market. Investors and speculators are allowed to trade currencies from all around the world thru FOREX trading. Major currencies traded nowadays are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.

FOREX is a very unique type of trading where traders are buying and selling ‘money’ in the same time. The trades are done in pairs, such as Euro/JPY, USD/CHF, and CAD/USD. It is the world largest trading market where an average of $1.9 trillion trades is done on a daily basis. The turnover rates in FOREX are nearly 30 times larger than the total volume of equity trades in United States.

Despite its large volume of trades done daily, FOREX is relative new to the publics nonetheless. It is only made available to publics in year 1998 where big sized inter-bank units are sliced into smaller pieces and offered to individual traders like you and me. Before that, FOREX is a game only for banks, multi national cooperation, and big currency dealers. Only those with large business size and strong financial background were permitted to trade foreign currencies.

As a matter of fact, large international banks are still the major traders in currency exchange market. Deutsche Bank is one of the top currency traders; along with other major banks like UBS, Citi Group, HSBC, Barclays, J. P. Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch; these banks are said to be responsible for more than 70% trades in currency market.

If you are new to FOREX trading, I bet the FOREX quotes will confuse you. USD/JPY 119.8, EUR/JPY 127.95, EUR/USD 1.2385/1.2390, and GBP/USD 1.7360/65 – these figures are just too complicated.

While FOREX quotes might looks like Greeks to the new comers, the concept behind of it is simple. Currency quoted in pairs simply means the relative value compare to the other. Always remember, currency listed at first in a FOREX quote has a constant value of 1. If you see USD/JPY 119.8, this means 1 USD (the first currency listed has a constant value of 1) is equal to 119.8 Japanese Yens. The currency USD in our example is known as base currency; while we normally call the currency listed in the second as the counter.

When you are trading FOREX with currency dealer, the FOREX quotes might look a bit different from our previous example. Often, a two-sided quote, consisting of ‘bid’ and ‘ask’ price, is listed when dealing with currency brokers. For example, EUR/USD 1.2385/1.2390: 1.2385 is known as the ‘bid’ price while 1.2390 is commonly known as the ‘ask’ or ‘buy’ price. The 'bid' is the price at which you can sell the base currency; while the 'ask' is the price at which you can buy the base currency. As you study the numbers, you might realize that the two-sided currency price is quoted against you. Traders are forced to buy the currency in a higher price than the selling one. This is done because FOREX trades are done without any commission chargers. Thru quoting currency ‘bid & ask’ price differently in this way, the currency brokers are manage to make profit without charging their client commission fees directly.

Strategies in FOREX trading: Fundamental analysis and Technical analysis

Fundamental analysis refers to the study of the core underlying elements that influence the economy of a particular entity. As in FOREX trading, government policies, bank policies, natural disasters, and speculators mood are some of the fundamentals considered to predict the currency market trends. Fundamental FOREX traders will review a country economy’s situation base on these fundamental elements

Euro poll question revealed
Gordon Brown announces the publication of a bill that could pave the way to a possible UK referendum on joining the single currency.
Hain pushes euro case
Commons leader Peter Hain urges Tony Blair to keep the euro in his sights despite the continuing row over the death of Dr David Kelly.
Dollar falls to all-time euro low
The value of the dollar falls sharply amid fears of an American trade war with China and fraud arrests on Wall Street.
Euro blamed for job losses
The Anglesey economy is dealt another blow after 30 workers lose their jobs at a German company.
Euro forgeries soar
Europol steps up the search for fake euros after police see a sharp rise in the seizure of counterfeit notes.
Blair unveils pro-euro group
Tony Blair is to chair an inner group of Cabinet ministers tasked with overcoming obstacles to Britain joining the single currency.
UK 'not yet ready for the euro'
Gordon Brown rules out joining the euro immediately - but clears the way for a possible referendum next year.
No more Mr No-to-it-all?
Gordon Brown had them on their edge of their seats in the Commons, says the BBC's Nick Assinder.
Blair: Early euro poll 'possible'
Tony Blair and Gordon Brown make the pro-Europe case and say a euro vote may come within two years.
Action not words, say Lib Dems
Gordon Brown needs to match his warm words about the euro with action to prepare for joining, says the Lib Dems' Matthew Taylor.
Blair and Brown 'running scared'
Iain Duncan Smith says the government's pro-European campaign is an attempt to cover up its euro splits.
Brown's statement at-a-glance
At-a-glance details of chancellor's euro decision.
Q&A: What decision means
What are the economic and political implications of Gordon Brown's decision not to recommend the euro? BBC News Online explains.
The great euro debate
A potted guide to the key arguments over the euro.
Timeline: Possible poll dates
When could there be a referendum on the euro? BBC News Online checks out the possible dates.
Treasury issues euro entry plan
BBC News Online looks at the steps the government is taking to prepare in case the UK decides to go for the euro.
History of the euro
BBC News Online's guide to the history of the euro.
The UK's five tests
BBC News Online's basic guide to the five economic tests set by Chancellor Gordon Brown to assess the UK's readiness to join the euro and due to be ruled on by next June.
Business reaction to decision
Sterling keeps sliding following Chancellor Gordon Brown's rejection of euro entry, while opponents say he has not gone far enough.
Evan Davis: A confusing picture
As Gordon Brown postpones UK adoption of the euro, sifting the truth from the economic and political confusion is not easy.
What do the tests mean?
BBC economics correspondent Dharshini David explains for Panorama why joining the euro is far more complicated than simply meeting the government's five tests.
Housing worries bar euro entry
The UK's volatile housing market is one of the stumbling blocks to joining the single currency.
Business winners and losers
Who are the winners and losers from the government's decision to delay a referendum on possible euro entry?
Head-to-head: The business view
Alan Wood, chief executive of Siemens UK, and Wetherspoon pub boss Tim Martin put the case for and against euro entry.
Brown takes aim at housing market
How will Chancellor Gordon Brown's decision on the euro affect UK savers and homeowners?
Should Britain join the euro?
Do you think the UK should take the plunge and join the single currency - or keep the pound?
Notes and coins guide
Notes and coins guide
Proposals for EU's future
A guide to the EU draft constitution, explaining what it says, and why people are arguing about it.
EU enlargement
EU enlargement
History of currencies
History of currencies
The UK and Europe
The UK and Europe
Euro reaction: Key quotes
Reaction from the key campaigners to Chancellor Gordon Brown's 'not yet' verdict on British euro entry.
Papers plough through statement
For the Treasury groupie, the column inches devoted to Monday's Commons statement on the euro will be a delight.
EU leaders praise Brown
France's President Chirac and Germany's Chancellor Schroeder give a positive response to the UK euro delay.
European press review
European papers comment on a number of EU-related issues, including the British Government postponing its euro decision.
UK boost for Swedish sceptics
Britain's decision to delay entry to the single European currency may boost Swedish campaigners against the euro.
The euro and the EU's future
BBC News Online's guide to all the talk of referendums about the UK, the euro and the proposed European constitution.
The UK and referendums
Clement Attlee said referendums were alien to British traditions but the concept has fairly deep roots in UK politics.
How Europe splits the Tories
They were once the self-styled party of Europe but just look at the Conservatives now, writes political correspondent Nyta Mann.
Euro news conference key points
Key points from Tony Blair and Gordon Brown's news conference launching a pro-European campaign.
Labour's long Euro-conversion
The schism over Europe that helped keep Labour out of power for years is now broadly resolved.
Euro studies send pound lower
Sterling loses ground after a report seems to suggest the pound must weaken substantially before Britain can adopt the euro.
Euro hits all-time high
Europe's single currency reaches record levels, and is expected to continue to rise further.
Ireland to top expensive list
The Irish Republic is expected to become the most expensive country in the eurozone later this year.
Euro interest rate slashed
The European Central Bank responds to worries about deflation and euro strength by cutting eurozone interest rates to a record low of 2%.
Euro rules explained
Rules which limit budget deficits in eurozone countries are under fire for exacerbating the slowdown.
This soap opera will run and run
The BBC's Nick Assinder assesses the relationship between Tony Blair and his chancellor.

and respond accordingly. To gain max, fundamentalists often apply precise method to convert study’s results into accurate entry/exit price indicator.

Instead of reviewing on the fundamental issues, traders from technical side define market movement according to data purely generated from the market. The term ‘Technical’ is applied in all trading fields, from commodity stocks exchange to option trading, from FOREX to futures.

Generally, the purpose of technical analysis is to find potential price reversal or pivotal points. These points basically refer the change of market trends, which then indicates when to enter or exit from the market. It is important to know that as with any other techniques in your trading system, these technical analysis indicators could be used alone or with other indicators. Traders are always recommended to learn more different technical methods to analyze different market data because none of these techniques are 100% accurate and 100% foolproof. Taking example of the ‘price’ data and the ‘time’ data, which are widely used by FOREX trader. There are some techniques consider solely on the ‘price’ factor, while some solely rely on the ‘time’ factor. The fact is if you know both technical methods, you can take both price and time into consideration during estimating market future trends. This will of course then reduce the risks of losing money in FOREX market. Also, it would be wise if traders combine both technical and fundamental techniques when trading FOREX, as a country currency value depends a lot on fundamental variables such as war, change of national leaders, terrorism attacks, as well as natural disasters.

Without a doubt, FOREX is gaining its popularity fast against other kind of trading. No limited market access, no liquidity issues-after market hours, zero commission fees, low capital requirements with high leverage rates, and no restrictions on short selling - FOREX can be very beneficial to a variety of people. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your ‘wings’. Forex trading course, seminars, eBooks, Internet, papers, – all these are helpful to raise your confidence level before you trade with your real hard-earn dollars. Plan your investment wisely by investing first on yourself; you shall get your reward at the end of the road.

Martin Leif Wear at PipForex.biz, experience Internet writer in Forex and Forex trading. Learn more on Forex!

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