Etrade Market Trader
Introduction to the Forex Market
The Foreign Exchange market (Forex) is truly the largest exchange in the world. The amount of dollars traded on the Forex market on a daily basis is in the trillions. Most of this currency trading takes place between between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. However, individual traders are starting to get in the mix, using internet discount brokers such as Etrade to participate in the currency exchange market.
There is no central exchange or meeting place for the Forex. All trading is done over computer networks between traders in different parts of the world. Also, unlike the stock market, the foreign exchange market is open 24 hours per day, because it is a global market. A trader in Hong Kong may be exchanging currency with a trader in Australia while an American trader is sleeping.
There are several different markets within the Forex exchange system. First, there is the spot market. The spot market deals with trades that are based on the current values of currencies. One person trades a certain amount of currency with another trader in exchange for an equivalent amount of a different foreign currency. Spot trades take two days for settlement.
The other two types of foreign exchange markets are the forward and futures markets. In the forward market, the buyer and seller agree on an exchange rate and a transaction date is set for a specific time in the future, at which point the trade is executed regardless of what the rates are at that time. On the futures market, futures contracts are bought and sold based upon a standard contract size and maturity date. Futures trades take place on public commodities markets.
A currency quote is listed differently from a stock quote. Stocks are quoted in terms of price per share. Currency exchange prices are listed as either a direct quote or an indirect quote. A direct quote uses the domestic currency as the base and the foreign currency as the quote. An indirect quote works the exact opposite way. So, if you were to view a quote in an American newspaper that said USD/JPY = 75, that would be a direct quote and would mean that $1 of U.S. currency is equal to 75 Japanese yen. If that same quote appeared in that same American newspaper and was listed as JPY/USD = 0.013, that would be an example of an indirect quote.
As with stock prices, currency exchange prices have a bid and ask spread. The current bid is the amount of foreign currency that someone is willing to spend in order to buy $1 U.S. base currency. The ask is the amount of foreign currency that someone is demanding in order to be willing to sell $1 U.S. base currency.
The Forex markets are generally considered to be less volatile than then stock market because within the course of a trading day, it is highly unlikely for the value of a single currency to move all that much. With equities, it is not uncommon for a trader to buy a stock, and then a negative press release causes the stock to lose considerable value within a day or even a couple of hours. Sometimes, however, the Forex can be volatile. If there is a significant economic or political development with a certain country, the currency of that country can lose value quickly. There is a higher degree of liquidity on the currency exchange then there is on the stock exchange because the currency exchange is open 24 hours per day and because the very nature of currency exchange is to bet on when certain currencies will go up or down; so, it is easy to sell your position in a certain currency even when the value of that money is going down. A plummeting stock is more difficult to unload, but not impossible.
I hope this information has helped you to become familiar with foreign currency trading and the Forex markets. If you want to partake in this kind of trading, try to set aside some money and open up an account with an online broker. Start slowly, then as you get the hang of it, work your way up to larger trades and higher volume. However, do not gamble your nest egg on currency trading because inexperienced traders can lose everything they have rather quickly in spite of the relative safety of the Forex market.
About the Author
Jim Pretin is the owner of
http://www.forms4free.com
, a service that helps programmers make email forms.
|
|
The Incredibles (Two-Disc Collector’s Edition) $11.99 Disney Presents a Pixar Film, THE INCREDIBLES. From the Academy Award(R) winning creators of FINDING NEMO (2003 Best Animated Feature Film) comes the action-packed animated adventure about the mundane and incredible lives of a house full of superheroes. Bob Parr and his wife Helen used to be among the world’s greatest crime fighters, saving lives and battling evil on a daily basis. Fifteen years l… |
|
|
A Day Trader’s Little Instruction Book: Wit and Wisdom for the Online Investor $2.99 Trading in the stock market is not easy. It demands a major investment of hard work, focused intelligence, and capital. There is also, quite often, a significant “tuition” charge for your training period, before you begin making money: you should not be surprised to lose $50,000 or $100,000 during this training period, depending on what you are putting on the table. This little book may not make y… |
|
|
How To Trade! – (Make Money Trading, Trade, Indexes, Commodities, Gold, Silver and FX) Options, Forex Trades (Foreign Exchange), Currency Trading, Etrade – Learn to Trade Online $9.95 How To Trade will help you whether you’re a complete investing novice or have been trading for years. This guide to investing is an accessible guide to growing your money in a low risk conservative and easy way…. |
|
|
The Market Guys’ Five Points for Trading Success: Identify, Pinpoint, Strike, Protect and Act! $10.40 Praise for The Market Guys’ Five Points for Trading Success”E*TRADE is a strong advocate of investor education, understanding a knowledgeable investor is a successful investor. The Market Guys have been a key contributor to our worldwide educational efforts – delivering hundreds of seminars to our customers around the world. This book encapsulates their years of experience with traders and investo… |
|
|
Flea Market Trader $7.47 This book is in Good Used condition |
|
|
The Coffee Trader By Liss, David $19.31 In seventeenthcentury Amsterdam, Miguel Lienzo, a PortugueseJewish trader who has lost everything in the sugar market and is desperate to recover his fortune, enters into a partnership with seductive Geertruid Damhouder to introduce coffee to the city and must confront betrayal, greed, and a ruthless adversary to succeed. Readers Guide included. Reprint. Author: Liss, David Series Title: Ballantine Readers Circle Subtitle: A Novel Publication Date: 2004/01/01 Number of Pages: 402 Binding Type: Paperbound Language: English Depth: 1.00 Width: 5.25 Height: 8.00 |
|
|
Tom Baldwin (Trader) $103.56 High Quality Content by WIKIPEDIA articles Lucian Thomas Baldwin III is a bond trader investor and founder of the Baldwin Group of companies. He was described by the Wall Street Journal as the trader who can singlehandedly move the Treasury bond market. His preferred instrument to trade is the 30year bond in the pits of the Chicago Board of Trade.After receiving his Masters degree in agribusiness Baldwin worked as a meat packer in Ohio. He took advice from a friend and moved to Chicago with the knowledge about trading he had obtained from a few courses taken at graduate school. With the U.S. experiencing high inflation in the early 1980s treasury bonds became a preferred market for hedgers and speculators resulting in high volume and trading activity. These bonds became Baldwin s favourite instrument to trade and he leased a seat on the exchange. Author: Surhone, Lambert M./ Timpledon, Miriam T./ Marseken, Susan F. Binding Type: Paperback Number of Pages: 160 Publication Date: 2010/08/04 Language: English Dimensions: 6.00 x 9.02 x 0.37 inches |
