Beginners Guide to Forex

Traderji

Super Moderator
#1
Beginners Guide to Forex

What is Foreign Exchange?
The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

Where is the central location of the FX Market?
FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) or 'Interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.

Who are the participants in the FX Market?
The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.

When is the FX market open for trading?
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

What kind of trading strategy should I use?
Currency traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities, whereas fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumor. The most dramatic price movements however, occur when unexpected events happen. The event can range from a Central Bank raising domestic interest rates to the outcome of a political election or even an act of war. Nonetheless, more often it is the expectation of an event that drives the market rather than the event itself.
 

4candles

Well-Known Member
#3
Sir,

good to hear about FX trading. Can you provide information wheather an individual can trade in India in FX, who is providing the traging platform,etc.

Thanks,

4candles
 

sean

New Member
#4
4candles said:
Sir,

good to hear about FX trading. Can you provide information wheather an individual can trade in India in FX, who is providing the traging platform,etc.

Thanks,

4candles

Yes now even an individual can trade in forex, which is the biggest financial market on earth. Initially it was not possible in India, but now, with the RBI allowing individuals to invest upto $25000 in the currency or commodity derivatives in the overseas market, anyone can do it. There are many trading platforms available like REFCO/MAN FINANCIAL etc.

Regards,

Sean
 

SwamiNathan

Well-Known Member
#5
Dear Sean,
You have mentioned that we can invest upto $25000 in currency or commodity derivatives in over sean mkt. I wud like to know whether this 25000 is the exposure or margin money. (if this is margin than we can take position upto $200000?
 
#6
The $25000, as far as my knowledge goes, is the amount that you can use to trade in overseas markets. I dont think it matters as to how you use it... as margin money, or to buy the underlying stocks, or any other stocks. If you want to use it as margin money, so be it!!
 
#7
The FX markets offer a similar or greater leverage than the furtures markets - depending on your broker. Obviously it does not mean that it is good - just a question of how much risk you feel comfortable with. As traderji has pointed out it is truly a 24 hour global market and thus one can use 24 hour basis stop loss. A great advantage that will allow one peaceful sleep. Interbank FX market hardly ever gaps - beauty of a 24 hour market - unlike stock markets opening say 100 or 200 points lower.

Nautilus
 
A

amarnath

Guest
#8
Hi all,


I have been trading forex from more than 4+ yrs now . If need any info about forex contact me @ my YM - quasaramar :)
 
A

amarnath

Guest
#9
SwamiNathan said:
Dear Sean,
You have mentioned that we can invest upto $25000 in currency or commodity derivatives in over sean mkt. I wud like to know whether this 25000 is the exposure or margin money. (if this is margin than we can take position upto $200000?

Max leverage allowed on forex is as high as 400:1 i.e 25$ margin can be used to trade 10k $ lot size . so calculate max leverage of 25k ;) :D
 
A

amarnath

Guest
#10
altraderji said:
Wht the counterparty guarantee .......like in in F & O market (NSCCL)....... who takes care of tht in Forex? Wht abt settlement mechanism...like auctions,payout...in Stock mkts.
How can u sleep comfortably when mkt is open 24 hrs..???
No gaps sure.... but isn't it too much activity....

It is OTC type market which is decentralised market place :)
 

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