2006-09-27 02:20:56 · 6 answers · asked by satya k 2 in Business & Finance ➔ Investing
What is Foreign Exchange Market or FOREX MArket ?
The FOREX market is the largest financial market in the world.
Its daily average turnover = approximately US$ 1.2 trillion.
[One trillion has 18 zeros i.e 1 followed by 18 zeros.]
Foreign Exchange is the simultaneous buying of one currency and selling of another.
What do you do in this market ?
In this market you may buy or sell currencies.Always Currencies are quoted in pairs.
Example : EUR/USD : This means Euro to US dollars.This is called the currency pair.
Here the 1st currency - EUR : called the BASE currency
and the 2nd currency - USD : called the QUOTE currency.
HOw will u make a profit by trading in Forex market or How does this market function ?
Example :
EUR/USD = 0.9600 : This 0.9600 is called the exchange rate.i.e 1 euro = 0.9600 US dollars
Like this there would be many pairs WITH their exchage rates displayed
when you will trade over the net or via phone
Now you can either buy this currency pair or sell it ?
How do you decide that?
Simple : If you think that Euro(Base currency) is gonna be stronger i.e will go up relative
to US dollar(qoute currency) you "BUY the currency pair".
If you think the Euro (Base currency )is gonna be weaker i.e will go down relative to US dollar (quote currency)
you "SELL the currency pair"
Profit Making Example :
When the EUR/USD rate was 0.9600
A trader in year 2001 purchases 10000 euros and payment is made in dollars.
So his purchase price = $(No of euros * Exchange rate )
i.e 10000 * 0.9600 = $9600
So money went out = $9600 & Has 10000 euros with him
Then in year 2003 the exchng rate of EUR/USD was 1.1800
So the trader sold the 10000 euros that he had with him.
So now his selling price would be : $(No of euros * exchange rate )
i.e 10000 * 1.1800 = $11800
So money coming in = $11800
So TOTAL PROFIT MADE BY TRADER = MONEY COMIN IN - MONEY SPENT
= $11800 - $9600
= $2200
2006-09-27 03:05:20 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Foreign exchange or forex, is the trading of foreign currencies. Forex dealing services have gradually developed along with the internet during the 90s and have shown as a great gateway into more advanced trading systems. There are a number of reasons why currency trading appeals to investors. It has low correlation to equity and bond market returns which means forex is a useful source of diversification. It is highly liquid and is the most traded financial market in the world. The trading in forex is done 24 hours a day and is highly leveraged, which means investors have the opportunity to make large gains from modest outlays. The two sites underneath will help you A LOT when it comes to forex & sharetrading.
2006-09-27 18:06:31 · answer #2 · answered by Dreamer 3 · 0⤊ 0⤋
Forex is slang for the foreign exchange market. When the term "Forex" is used, it usually means the exchange of currency for investment purposes. There are many different firms that allow currency trading. Currency is traded in pairs, so you are simultaneously long one currency, and short another. Almost all currency transactions are traded on margin, and many firms allow 100 to 1 (or greater) margin. In other words, you can have $1,000 control $100,000. Because of the huge leveraged trades, forex can be very risky.
Do your homework before trading forex with real money.
2006-09-27 10:05:29 · answer #3 · answered by howardrourke 3 · 0⤊ 0⤋
Sure !
Forex Bulls - trade ONLY 5 hours a month - So one fine day I was just cursing my forex account for not giving me the ... I will explain how it works, and why it works - you will get to know the core. ...
2006-09-27 09:25:37 · answer #4 · answered by patrick4true 3 · 0⤊ 2⤋
I found some good info here.
2006-09-27 11:53:47 · answer #5 · answered by Anonymous · 0⤊ 0⤋
try these links hope u'll find it useful
http://www.lofinance.blogspot.com
good luck for your investments
2006-09-27 10:29:37 · answer #6 · answered by Axl Rose 2 · 0⤊ 0⤋