subject: Foreign Exchange Strategies: Proven Forex Trading Methods [print this page] Are you new in the world of foreign exchange? The term, foreign exchange alone is very intimidating and I could be more intimidating if you lack all the basic knowledge in the foreign exchange market. To have a smooth flowing business in the world of FOREX, market, one should start first with the basics. There are many proven forex trading methods that can help you know this field better.
The global FOREX market is considered as the biggest market in the world. Even if you combine all the US Dollar daily turnover, it is still no match with the combined daily turnover of all world stocks and bond markets. The reasons behind foreign exchange popularity are countless. But if we consider the most important ones, we will be pinpointing to the high liquidity that is present 24 hours a day, the leverage available and the relatively low dealing costs associated with trading.
The main reason why commercial organizations join participate in foreign exchange trading is for the exposure of currency created by their imports and export activities. However, a large part of the turnovers are accounted for financial institutions. The domain of big and professional players in the market (funds, banks and brokers) is on investing in foreign exchange. An investor with necessary knowledge of the functions of the fore market can greatly benefit from other advantages mentioned.
When venturing in the world of FOREX, one should know the margin trading. FOREX is basically traded on margin. To be able to trade the major currencies, Saxo Bank asks for a 1% margin deposit, meaning to be able to do a trade of one million dollars, one must need 10,000 US Dollars for security purposes. Other things you need to know to be successful in FOREX are the following:
Spot Market refers to the market where all the buying and selling currencies at the current market rate happens. Spot transactions are generally due for settlement within two business days. You need to learn some proven forex trading methods to go ahead in this field. Current pair is the two currencies that make up an exchange rate. Buying one of the currencies means selling the other one, and vice versa. Exchange Rate: This is the value of one currency expressed in relation to another. For example, if EUR/USD is 1.32, 1 Euro is worth USD 1.32.
Base currency is the first currency in the pair. This also refers to the currency your account is denominated in. Counter currency: The other pair is the counter currency. This is also known as the terms currency.
Futures Commission Merchant or FCM is an individual or organization licensed by the US Commodities Futures trading Commission (CFTC) to deal in futures products and accept money from clients to trade them. Dealing Desk: This provides pricing, liquidity and execution of trades. So, just follow simple proven forex trading methods and you are just going to be fine.
