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Forex trading

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fahad anwar

on 8 December 2014

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Transcript of Forex trading

Forex trading
What is Foreign Exchange?
The Foreign Exchange market, also referred to as the "Forex" market, is one of the largest financial markets in the world, 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
How to open a foreign trading account
For trading in foreign exchange we must have a foreign trading account and to open this account we must follow the following steps
How to analyze market?
There are two methods of analyzing the market
1 technical
2 fundamental

General Information about foreign exchange
1:Physical delivery
2:How to get physical delivery
3:Why not physical possession
4:Margin and leverage
5:Turnover
6:Relationship of gold and dollar

Who are the participants in the FX Market?
The Forex market is called an 'Interbank' or 'Interdealer' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. 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 from Sunday 22:00 GMT to Friday 22:00 GMT, 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 are the most commonly traded currencies in the FX markets?
The most often traded or 'liquid' currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the US Dollar (USD), Japanese Yen (JPY), Euro (EUR), British Pound (GBP), Swiss Franc (CHF), Canadian Dollar (CAD), and the Australian Dollar (AUD).
What about terms like "bid/ask", "spread", and "rollover"?
Bid price is the price where investor would like to sell, "ask" is the price where investor can buy. Spread is the difference of prices between buying and selling. Rollover is the term used for, when your position is rolled over to the next day.
How are currency prices determined?
Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price
1: Foreign currency account
Open a foreign currency account in Pakistani bank which should have a minimum balance of us$5000
2: Documents for brokerage account
After opening foreign currency account we have to give copy of your ID card as well as foreign currency account bank statement to broker to open the foreign trading account
3: Segregated accounts
Now your broker will open your segregated account under customer name in his main company account which will be CMC (Currency Management Corporation) and standard wangerd investment
4
Now the cmc will open your account in net west bank England
5: Username and password
After all above steps now net west will send you your username and password for trading on your email id your account is open now and you are ready to trade in international market
How to use foreign trading account
1 Software which will be sent to you by your broker
2 By using this software you can bid (sale) ask (purchase) for trading

Some commodities which are traded in international market
Commodity Measurment unit
Gold Ounce
Wheat bushels
Oil barrel


How the prices of the commodities are determined
As other commodities the prices of the foreign exchange commodities are also determined by the international market supply and demand
Technical
Technical analysis of the financial market is analyzed through two factors
1:graphs
2:RSI (relative strength index)
2: Fundamental
Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, and considers factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management
1:Physical delivery
In foreign exchange there is no physical delivery of the commodities just online transactions are passed
2:How to get physical delivery
If you want physical delivery you can get you have to pay the full price of the commodity
3:Why not physical possession
1. To avoide taxes
2. Not to pay full amount
3. Should have huge amount

4:Margin and leverage
In foreign exchange there is 1% margin which is the real investment of the customer and rest of 99% is leverage which is the loan.
5:Turnover
daily average turnover is approximately US$1.9 to 5 trillion
6:Relationship of gold and dollar
It’s a myth which says if the dollar price will increase than gold price will also increase but in actual its inverse in relation which means when the price of the dollar will increase than the price of gold will decrease and vice versa
Full transcript