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09:00 ~ 11:30 and 13:30 ~ 15:00
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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 well over US$1.8 trillion -- 70 times
larger than the volume of daily NYSE (New York Stock Exchange) trading.
"Foreign Exchange" is the simultaneous buying of one currency
and selling of another. Currencies are traded in pairs, for example
Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily
turnover is from companies and governments that buy or sell products
and services in a foreign country or must convert profits made in
foreign currencies into their domestic currency. The other 95% is
trading for profit, or speculation.
For speculators, the best trading opportunities are with the most
commonly traded (and therefore most liquid) currencies, called "the
Majors." Today, more than 85% of all daily transactions involve
trading of the Majors, which include the US Dollar, Japanese Yen,
Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
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, 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.
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. Trading
is not centralized on an exchange, as with the stock and futures markets.
Since the Forex is the world's largest and most liquid financial market,
companies, fund managers, and banks buy and sell foreign currencies
in varying amounts for profit, or speculation.
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The margin deposit is not a down payment on a purchase of equity,
as many perceive margins to be in the stock markets. Rather, the margin
is a performance bond, or good faith deposit, to ensure against trading
losses. The margin requirement allows traders to hold a position much
larger than the account value. Generally, FCMs have margin management
capabilities, which allow for this high leverage. Most lenient margin
requirement is 1%.
In the event that funds in the account fall below margin requirements,
the Dealing desk will close some or all open positions. This prevents
clients' accounts from falling into a negative balance, even in a
highly volatile, fast moving market. |
| First, the trader should determine
whether they want to buy or sell. If they want to enter a short order
? whereby they will profit if the exchange rate falls ? they simply
need to click on the SELL rate. The opposite holds true for traders
who enter buy orders: they can simply click on the BUY rate, and thus
will profit if the exchange rate goes up. |
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The spot FX market is unique to any other market in the world, as
trading is available 24-hours a day. Somewhere around the world, a
financial center is open for business, and banks and other institutions
exchange currencies, every hour of the day and night with generally
only minor gaps on the weekend. Essentially foreign exchange markets
follow the sun around the world, giving traders the flexibility of
determining their trading day. |
In this market you may buy or sell
currencies. The objective is to earn a profit from your position.
Placing a trade in the foreign exchange market is simple: the mechanics
of a trade are virtually identical to those found in other markets,
so the transition for many traders is often seamless.
For positions open at 5pm EST, there is a daily rollover interest
rate that a trader either pays or earns, depending on your established
margin and position in the market. If you do not want to earn or pay
interest on your positions, simply make sure it is closed at 5pm EST,
the established end of the market day. Since every currency trade
involves borrowing one currency to buy another, interest rollover
charges are an inherent part of FX trading. Interest is paid on the
currency that is borrowed, and earned on the one that is purchased.
If a client is buying a currency with a higher interest rate than
the one he/she is borrowing, the net differential will be positive
? and the client will earn funds as a result. |
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Futures Rankings |
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Nov. 22, 2008
