Glossary

Appreciation - A currency is said to ‘appreciate ‘ when it's price increases against a specific currency or group of currencies in response to market demand.

Arbitrage - The purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.

Around - Jargon used by dealers in quoting when the forward premium/discount is near parity. For example, “two-two around” would translate into 2 points to either side of the present spot price.

Ask Rate - The rate at which a financial instrument if offered for sale (as in bid/ask spread).

Asset Allocation - Division of funds among different markets, instruments or investments to diversify risk and/or create exposure to areas considered attractive, consistent with an investor’s objectives.

Back Office - The departments and processes related to the settlement of financial transactions.

Balance of Trade - The value of a country’s exports minus its imports

Base Currency - The base currency is usually the currency in which an investor or issuer maintains its book of accounts. In the FX markets, the US Dollar is normally considered the ‘base’ currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The main exceptions to this rule are the Sterling, the Euro and the Australian Dollar.

Bear Market - A market in which prices decline.

Bid Rate - The rate at which a trader is willing to buy a currency.

Bid/Ask Spread - The difference between the bid and offer price, and the most widely used measure of liquidity.

Big Figure - The first few digits of an exchange rate, as referred to by dealers for simplicity. These digits change relatively slowly, and are omitted in dealer quotes, especially in times of high market activity when time is tight. For example, a USD/Yen rate might be 107.30/107.35, but would be quoted verbally without the first three digits i.e. “30/35”.

Book - In a professional trading environment, the ‘book’ is the net positions of a dealing desk.

Broker - An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a ‘dealer’ commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade.

Bretton Woods Agreement of 1944 - The agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US$35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.

Bull Market - A market in which prices rise.

Bundesbank - Germany’s Central Bank.

Cable - Trader slang referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800s.

Candlestick Chart - A chart indicating the trading range for the period as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.

Central Bank - A government or quasi-governmental organization that manages a country’s monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.

Chartist - Someone who uses charts and graphs and interprets historical data to find trends to predict future movements. Also referred to as Technical Trader.

Clearing - The process of settling a trade.

Contagion - The tendency of an economic situation to spread from one market to another.

Collateral - Something given to secure a loan or as a guarantee of performance.

Commission – A transaction fee charged by a broker.

Confirmation - A document exchanged by the parties to a transaction that states the terms of said transaction.

Contract - The standard unit of trading.

Counterparty - A participant in a financial transaction.

Country Risk – Risk associated with an international transaction, including but not limited to legal and political conditions.

Cross Rate - The exchange rate between any two currencies that are considered non-standard in the country where the currency pair is quoted. For example, in the US, a GBP/JPY quote would be considered a cross rate, whereas in UK or Japan it would be one of the primary currency pairs traded.

Currency - Any form of money issued by a government or central bank and used as legal tender and a basis for trade.

Currency Risk - the likelihood of an adverse change in exchange rates.

Day Trading - Refers to taking positions which are opened and closed on the same trading day.

Dealer - Someone who acts as a principal or counterparty to a transaction, hoping to earn a spread (profit) by closing out the position in a subsequent trade. In contrast, a broker is an individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission.

Delivery - An FX trade where both sides make and take actual delivery of the currencies traded.
Depreciation - A fall in the value of a currency against another currency or group of currencies.

Derivative – A contract that changes in value in relation to the price movements of a related or underlying security, future or other physical instrument. An Option is the most common derivative instrument.

Devaluation - The deliberate downward adjustment of a currency’s price, normally by official announcement.

Economic Indicator - A government-issued statistic on the state of an economy, which might affect market prices. Common indicators include employment rates, Gross Domestic Product (GDP), inflation, retail sales, etc.

End Of Day Order (EOD) - An order to buy or sell at a specified price. This order remains open until the end of the trading day.

European Monetary Union (EMU) - The EMU created the single European currency called the Euro, which replaced the national currencies of the member EU countries in 2002. The current members of the EMU are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, italy, Spain and Portugal.

Euro - the currency of the European Monetary Union (EMU). A replacement for the European Currency Unit (ECU).

European Central Bank (ECB) - the Central Bank for the new European Monetary Union.

Federal Deposit Insurance Corporation (FDIC) - The regulatory agency responsible for administering bank depository insurance in the US.

Federal Reserve (Fed) - The Central Bank for the United States.

Flat/square - Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.

Foreign Exchange - (Forex, FX) – the simultaneous buying of one currency and selling of another.

Forward - The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

Forward points - The pips added to or subtracted from the current exchange rate to calculate a forward price.

Fundamental analysis - Analysis of economic and political information with the objective of determining future movements in a financial market.

Futures Contract - An obligation to exchange a good or instrument at a set price on a future date. The primary difference between a Future and a Forward is that Futures are typically traded over an exchange (Exchange- Traded Contacts – ETC), versus forwards, which are considered Over The Counter (OTC) contracts. An OTC is any contract NOT traded on an exchange.

Good ‘Til Cancelled Order (GTC) - An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.

Hedge - A position or combination of positions that reduces the risk of your primary position.

Inflation - An economic condition whereby prices for consumer goods rise, eroding purchasing power.

Initial margin - The initial deposit of collateral required to enter into a position as a guarantee on future performance.

Interbank rates - The Foreign Exchange rates at which large international banks quote other large international banks.

Leading Indicators - Statistics that are considered to predict future economic activity.

LIBOR - The London Inter-Bank Offered Rate. Banks use LIBOR when borrowing from another bank.

Limit order - An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 102.00/05, then a limit order to buy USD would be at a price below 102. (ie 101.50)

Liquidity - The ability of a market to accept large transaction with minimal to no impact on price stability.

Liquidation - The closing of an existing position through the execution of an offsetting transaction.

Long position - A position that appreciates in value if market prices increase.

Margin - The required equity that an investor must deposit to collateralize a position.

Margin call - A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.

Market Maker - A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.

Market Risk - Exposure to changes in market prices.

Mark-to-Market - Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

Maturity - The date for settlement or expiry of a financial instrument.

Offer - The rate at which a dealer is willing to sell a currency.

Offsetting transaction - A trade with which serves to cancel or offset some or all of the market risk of an open position.

One Cancels the Other Order (OCO) - A designation for two orders whereby one part of the two orders is executed the other is automatically cancelled.

Open order – An order that will be executed when a market moves to its designated price. Normally associated with Good ‘til Cancelled Orders.

Open position - A deal not yet reversed or settled with a physical payment.

Over the Counter (OTC) - Used to describe any transaction that is not conducted over an exchange.

Overnight - A trade that remains open until the next business day.

Pips - Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.
Political Risk - Exposure to changes in governmental policy which will have an adverse effect on an investor’s position.

Position - The netted total holdings of a given currency.

Premium - In the currency markets, describes the amount by which the forward or futures price exceed the spot price.

Price Transparency - Describes quotes to which every market participant has equal access.

Quote - An indicative market price, normally used for information purposes only.

Rate - The price of one currency in terms of another, typically used for dealing purposes.

Resistance - A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.

Revaluation - An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.

Risk - Exposure to uncertain change, most often used with a negative connotation of adverse change.

Risk Management – the employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.

Roll-Over - Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.

Settlement – The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.

Short Position - An investment position that benefits from a decline in market price.

Spot Price – The current market price. Settlement of spot transactions usually occurs within two business days.

Spread - The difference between the bid and offer prices.

Sterling – slang for British Pound.

Stop Loss Order - Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.

Support Levels – A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange rate will automatically correct itself. Opposite of resistance.

Swap - A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

Technical Analysis - An effort to forecast prices by analysing market data, i.e. historical price trends and averages, volumes, open interest, etc.

Tomorrow Next (Tom/Next) - Simultaneous buying and selling of a currency for delivery the following day.

Transaction Cost – the cost of buying or selling a financial instrument.

Transaction Date – The date on which a trade occurs.

Turnover - The total money value of all executed transactions in a given time period; volume.

Two-Way Price - When both a bid and offer rate is quoted for a FX transaction.

Uptick – a new price quote at a price higher than the preceding quote.

Uptick Rule – In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

US Prime Rate - The interest rate at which US banks will lend to their prime corporate customers

Value Date - The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.

Variation Margin - Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavourable price movements.

Volatility (Vol) - A statistical measure of a market’s price movements over time.

Whipsaw – slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Yard – Slang for a billion.

Participants

• Commercial Banks
• Central Banks
• Currency Exchanges
• Investment Funds
• Brokerage Houses/Individual

Participants of this market are, first of all, large commercial banks through which the basic operations under the instruction of exporters and importers, investment institutes are carried out, insurance and pension funds, hedge and individual investors. Also these banks operations and in the interests due to own means, thus at large banks volumes of daily operations reach billions dollars, and at some banks even the basic part of the profit is formed only due to speculative operations with currency.

Except for banks, as the active participant of the market the broker houses which are carrying out a role of the intermediary between a plenty of banks, funds, commission houses, dealing centers, etc. Commercial banks and brokerage houses not only make operations on sale and purchase of currency under the prices which are exposed by other active participants, but also offer the own prices. Thus, they actively influence process of pricing and a life of all market, therefore their name is Market - Makers.

As against active participants, passive participants of the market cannot expose own quotations and make purchase - sale of currency under the prices which are offered by active participants of the market. Passive participants of the market pursue usually following purposes: payment of export-import contracts, foreign industrial investments, opening of branches abroad or creation of joint ventures, tourism, hedging of currency risks, etc.

The central banks of the countries leave on FOREX, as a rule, not with the purpose of extraction of the profit, and with the purpose of check of stability or correction of an existing rate of national currency as last renders significant influence on a condition of a national economy. The central banks also leave on the currency market through commercial banks. Though the profit is not the basic purpose of these banks, unprofitable operations of them too do not involve, therefore interventions of the central banks mask usually and carried out through some commercial banks at once. The central banks of the different countries can carry out and the joint coordinated interventions.

If active participants make operations with the big sums of some millions dollars passive participants can use margin trade with the help of small insurance deposit they receive an opportunity temporarily to operate with the capital, in one hundred times exceeding this deposit. Such way of trade allows to take part in work of the currency market to fine investors with the small capital and thus to receive significant profit (According to leverage system). The structure of the basic participants of the market testifies that this market is actively used by " serious business " and for the serious purposes. That is far from being all participants of the market use FOREX in the speculative purposes.

As we already mentioned, change of exchange rates can lead to huge Profit/losses at export-import transactions. Attempts to be protected from currency risks force exporters and importers to apply for hedging those or other tools of the currency market: forward transactions, options, futures, etc. Moreover, even business which is not connected to export-import transactions, can have in loss at change of exchange rates. Therefore studying FOREX - an obligatory component of any successful business.

What Moves Forex

Foreign Exchange is affected by various economic and political factors. The largest fluctuations in currency prices usually occur during Central Bank intervention, when governments trade in huge amounts forex in an attempt to either raise or lower the value of their own currency. This, aswell as many other factors such as interest rate changes, economic figures, political instability and large lot transactions by hedge funds can move the market.

How can you predict the future fx moves?There are two major ways to analyze financial markets: fundamental analysis and technical analysis. Fundamental analysis is based upon underlying economic conditions, while technical analysis uses historical prices to predict future movements. There is an ongoing debate as to which methodology is more successful. Short-term traders prefer to use technical analysis, focusing their strategies primarily on price action, while fundamental traders focus their efforts on determining a currency's proper valuation, as well as future valuation. It is important to take into consideration both strategies, as fundamental analysis can explain technical analysis movements such as breakouts or trend reversals. Technical analysis can explain fundamental analysis, especially in quiet markets, causing resistance in trends or unexplainable movements.

Fundamental analysisFundamental analysis comprises the examination of macroeconomic indicators, asset markets and political considerations when evaluating a nation’s currency in terms of another. Macroeconomic indicators include figures such as growth rates; as measured by Gross Domestic Product, interest rates, inflation, unemployment, money supply, foreign exchange reserves and productivity. Asset markets comprise stocks, bonds and real estate. Political considerations impact the level of confidence in a nation’s government, the climate of stability and level of certainty.

Aside from technical analysis, another primary approach to analyzing currency market fluctuations is called fundamental analysis. Fundamental analysis is the examination of economic indicators, asset markets and political considerations when evaluating a nation's currency in terms of another. The key to fundamental analysis is to gather and interpret this information and act before the information is incorporated into the currency price. The lag time between an event and its resulting market response presents a trading opportunity for the fundamentalist.


Here some major fundamental factors that can affect currency prices:

• Decisions on interest rates made by central banks such as the US Federal Reserve or the European Central bank (ECB) monthly.
• Quarterly GDP figures. Only preliminary national GDP figures generally have the effect of changing market sentiment.
• Market sentiment data. Market expectations are formed from one week to two days before the event. Participants establish positions based on expectations, and realize the results after the figures are released.
• Political Events. National elections, the September 11th attacks, and the war in Iraq are examples of events that have affected currency values.
• Major indices. Inflation indices, Institute of Supply Management (ISM) in the US and the Purchasing Management Index (PMI) in Europe are also carefully followed by traders.
• National industrial production figures.
• US nonfarm payrolls (indicating new jobs created), Michigan sentiment figures in the US, the western German business climate or IFO index, and the Tankan quarterly survey in Japan.

Currency interventions have a notable and oftentimes temporary impact on forex markets. A central bank could undertake unilateral purchases/sales of its currency against another currency; or engage in concerted intervention in which it collaborates with other central banks for a much more pronounced effect. Alternatively, some countries can manage to move their currencies, merely by hinting, or threatening to intervene.

Technical AnalysisTechnical analysis examines past price and volume data to forecast future price movements. This type of analysis focuses on the formation of charts and formulae to capture major and minor trends, identify buying/selling opportunities assessing the extent of market turnarounds. Depending upon your time horizon, you could use technical analysis on an intraday basis (5- minute, 15 minute, hourly), weekly or monthly basis

Money managers, traders and investors who seek ways to outperform the market must also remain flexible and innovative. A method that works today does not mean it will work tomorrow.

The Beginning of Technical AnalysisAt the turn of the century, the Dow Theory laid the foundations for what was later to become modern technical analysis. Dow Theory was not presented as one complete amalgamation, but rather pieced together from the writings of Charles Dow over several years.

Technical analysts believe that the current price fully reflects all information. Because all information is already reflected in the price, it represents the fair value and should form the basis for analysis. After all, the market price reflects the sum knowledge of all participants, including traders, investors, portfolio managers, market strategist, technical analysts, fundamental analysts and many others. It would be folly to disagree with the price set by such an impressive array of people with impeccable credentials. Technical analysis utilizes the information captured by the price to interpret what the market is saying with the purpose of forming a view on the future.

A technician believes that it is possible to identify a trend, and market turning points, invest or trade based on the trend and make money as the trend, or turning points unfolds. Because technical analysis can be applied to many different timeframes, it may be possible to spot both short-term and long- term trends.

What is more important than Why?It's been said, "A technical analyst knows the price of everything, but the value of nothing". Technicians, as technical analysts as they are called, are only concerned with two things:

• What is the current price?
• What is the history of the price movement?

The price is the end result of the battle between the forces of supply and demand for any particular item. The objective of analysis is to forecast the direction of the future price. By focusing on price and only price, technical analysis represents a direct approach. Fundamentalists are concerned with 'why' the price is what it is. For technicians, the 'why' portion of the equation is too broad and many times the fundamental reasons given are highly suspect. Technicians believe it is best to concentrate on 'what' and never mind why. Why did the price go up? It is simple, more buyers (demand) than sellers (supply). After all, the value of any item is only what someone is willing to pay for it. Who needs to know why? You may never know why.

Many technicians employ a broad-based, longer term, macro, long-term analysis first. The larger parts are then broken down to base the final step on a more focused/micro short-term, perspective. Such an analysis might involve three steps:

• Broad market analysis through the major indices such as the S & P 500, Dow Industrials, NASDAQ and NYSE Composite, or Commodity Futures Index, or other broad indexes of various types.
• Group analysis to identify the strongest and weakest groups within the broader market groupings, i.e. Indexes, Meats, Grains, Currencies, Metals, Energies, etc.
• Individual analysis to identify the strongest and weakest within each group.

The beauty of technical analysis lies in its versatility. Because the principles of technical analysis are universally applicable, each of the analysis steps above can be performed using the same theoretical background. You don't need an economics degree to analyze a market index chart or commodity group. Charts are charts. It does not matter if the timeframe is 2 days or 2 years. It does not matter if it is a, market index, currency or commodity. The technical principles of support, resistance, trend, trading range and other aspects can be applied to any chart. While this may sound easy, technical analysis is by no means easy. Success requires serious study, dedication and an open mind. Technical analysis can be as complex or as simple as you want it.

Overall Trend:The first step is to identify the overall trend. "The trend is your friend". This can be accomplished with trend lines, or moving averages, or both. A Moving Average (MA) is an average of data for a certain number of time periods. It "moves" because for each calculation, we use the latest "x" number of time periods' data. As long as the price remains above its uptrend line, or selected moving average or previous lows, the trend should be considered bullish. The trend theory holds that an uptrend remains intact as long as each successive intermediate high is higher than those preceding it and each reaction low stops and holds at a higher point than did earlier reaction lows. Conversely, a downtrend prevails when each intermediate decline allows prices to fall below previous lows and rallies fall short of earlier rally highs.

Support and Resistance Areas: Support and resistance levels are unquestionably among the most important of all technical considerations. They are areas, which prices are expected to have difficulty moving above and beyond (resistance and support), and they therefore deserve especially careful considerations in buying and selling decisions. Support areas are areas of price congestion or previous lows, below the current price, which mark support levels. A break below support would be considered bearish. Resistance areas are areas of congestion or previous highs above the current price which mark resistance levels. A break above resistance would be considered bullish. The basic idea behind resistance and support theory is simply that price levels that were significant in the past will have significant impact on price action in the future.

Random Walk Theory: The basic "random walk premise" is that price movements are totally random. Prices move at random and adjust to new information as it comes available. The adjustment to this new information is so fast that it is virtually impossible to profit from it. Furthermore, news and events are also random and trying to predict these (fundamental analysis) is also a lesson in futility. While there are some good points to be gleaned from the random walk theory, it appears to be a bit dated and does not accurately reflect the current investment climate. Random walk theory was introduced over 25 years ago when institutions dominated the market. These institutions had superior access to resources and the individual was at the mercy of the large brokerage houses for quality research. With the advent of online trading, power and influence are shifting from the institutions to the individual. Resources are now widely available to all at minimal cost, if not free. Not only can individuals access information, but the internet ensures that everyone will receive it almost instantaneously. They also have access to real time data and can trade like the pros. With the availability of real time data and almost instant executions, individuals can act on information like never before.

General Chart Analysis:

What Are Charts?

A price chart is a sequence of prices plotted over a specific timeframe. In statistical terms, charts are referred to as time series plots, usually containing the open, high, low, and closing prices.

Chart Patterns:

Much of our understanding of chart patterns can be attributed to the work of Richard Schabacker. His 1932 classic, Technical Analysis and Stock Market Profits, laid the foundations for modern pattern analysis. In Technical Analysis of Stock Trends (1948), Edwards and Magee credit Schabacker for most of the concepts put forth in the first part of their book. We would also like to acknowledge Messrs. Schabacker, Edwards and Magee, and John Murphy as the driving forces behind our understanding of chart patterns.

Pattern analysis may seem straightforward, but it is by no means an easy task. Schabacker states: §The science of chart reading, however, is not as easy as the mere memorizing of certain patterns and pictures and recalling what they generally forecast. Any general chart is a combination of countless different patterns, some being continuation patterns and some reversal patterns, and its accurate analysis depends upon constant study, long experience and knowledge of all the fine points, both technical and fundamental, and, above all, the ability to weigh opposing indications against each other, to appraise the entire picture in the light of its most minute and composite details as well as in the recognition of any certain and memorized formula.

To name just a few there are; Double tops and bottoms, Head and Shoulder tops and bottoms, Wedges, Flags, Triangles, Channels, Gaps (four types), Key Reversals, Island reversals, and more. There are also Candlestick charts which provide a different way of looking at, and analyzing, the same basic price data, open, high, low, and close.

A few other tools used on charts are Trend Lines, Support and Resistance areas, percentage retracements, Fibonacci retracements, Time cycles, Elliot Wave Theory Analysis, Gann Analysis, and more. Technical Indicator Analysis:

There are many ways to crunch the numbers and endless combinations.

Here is a list of some of the more popular Technical Indicators:

• Accumulation Distribution
• Advance-Decline lines and ratios
• Arms Index (TRIN)
• Bollinger Bands
• Commodity Channel Index
• Moving Averages (of various types)
• Moving Average Convergence Divergence
• McClellan Osc
• Momentum
• On Balance Volume
• Parabolic SAR
• Relative Strength Index (RSI)
• Stochastic (fast and slow)
• Volatility

Advantages

Liquidity:
the market operates the enormous money supply and gives absolute freedom in opening or closing a position in the current market quotation. High liquidity is a powerful magnet for any investor, because it gives him or her the freedom to open or to close a position of any size whatever.

Promptness:
with a 24-hour work schedule, participants in the FOREX market need not wait to respond to any given event, as is the case in many markets.

Availability:
a possibility to trade round-the-clock; a market participant need not wait to respond to any given event.

Flexible regulation of the trade arrangement system:
a position may be opened for a pre-determined period of time in the FOREX market, at the investor’s discretion, which enables to plan the timing of one’s future activity in advance.

Value:
the Forex market has traditionally incurred no service charges, except for the natural bid/ask market spread between the supply and the demand price.

One-valued quotations:
with high market liquidity, most sales may be carried out at the uniform market price, thus enabling to avoid the instability problem existing with futures and other forex investments where limited quantities of currency only can be sold concurrently and at a specified price.

Market trend:
currency moves in a quite specific direction that can be tracked for rather a long period of time. Each particular currency demonstrates its own typical temporary changes, which presents investment managers with the opportunities to manipulate in the FOREX market.

Margin:
the credit “leverage” (margin) in the FOREX market is only determined by an agreement between a customer and the bank or the brokerage house that pushes it to the market and is normally equal to 1:100. That means that, upon making a $ 1,000 pledge, a customer can enter into transactions for an amount equivalent to $ 100,000. It is such extensive credit “leverages”, in conjunction with highly variable currency quotations, which makes this market highly profitable. but also highly risky.

What Is Forex?

Forex is an inter-bank market that took shape in 1971 when global trade shifted from fixed exchange rates to floating ones. This is a set of transactions among forex market agents involving exchange of specified sums of money in a currency unit of any given nation for currency of another nation at an agreed rate as of any specified date. During exchange, the exchange rate of one currency to another currency is determined simply: by supply and demand – exchange to which both parties agree.

The scope of transactions in the global currency market is constantly growing, which is due to development of international trade and abolition of currency restrictions in many nations. Global daily conversion transactions came to $1,982 billion in mid-1998 (the London market accounted for some 32% of daily turnover; the New York market exchanged approx. 18%, and the German market, 10%). Not only the scope of transactions but also the rates that mark the market development are impressive: in 1977, the daily turnover stood at five billion U.S. dollars; it grew to 600 billion U.S. dollars over ten years – to one trillion in 1992. Speculative transactions intended to derive profit from jobbing on the exchange rate differences make up nearly 80% of total transactions. Jobbing attracts numerous participants – both financial institutions and individual investors.

With the highest rates of information technology development in the last two decades, the market itself changed beyond recognition. Once surrounded with a halo of caste mystique, the foreign exchange dealer’s profession became almost grasroots. Forex transactions that used to be the privilege of the biggest monopolist banks not so long ago are now publicly accessible thanks to e-commerce systems. And the foremost banks themselves also often prefer trade in electronic systems over individual bilateral transactions. E-brokers now account for 11% of the forex market turnover. The daily scope of transactions of the biggest banks (Deutsche Bank, Barclays Bank, Union Bank of Switzerland, Citibank, Chase Manhattan Bank, Standard Chartered Bank) reaches billions of dollars.

The FOREX market as a place where to apply one’s personal financial, intellectual and psychic power is not designed for attempts at catching a bluebird there. Sometimes someone manages to do so but for a short time only. The key advantage of a forex market is that one can succeed there just by the strength of one’s intelligence.

Another essential feature of the FOREX market, no matter how strange it might seem, is its stability. Everybody knows that sudden falls are very typical of the financial market. However, unlike the stock market, the FOREX market never falls. If shares devalue it means a collapse. But if the dollar slumps, that only means that another currency gets stronger. For instance, the yen strengthened by a quarter against the dollar late in 1998. On some days dollar fell by dozens percentage points. However, the market did not collapse anywhere; trading continued in the usual manner. It is here that the market and the related business stability lie - currency is an absolutely liquid commodity and will be always traded in.

The FOREX market is a 24-hour market that does not depend on certain business hours of foreign exchanges; trade takes place among banks located in different corners of the globe. Exchange rates a`re so flexible that significant changes happen quite frequently, which enables to make several transactions every day. If we have an elaborate and reliable trade technology we can make a business, which no other business can match by efficiency. It is not without reason that the pivotal banks buy expensive electronic equipment and maintain the staffs of hundreds of traders operating in different sectors of the FOREX market.

The starting costs of joining this business are very low now. Actually, it costs several thousands of dollars to take a course of initial training, to buy a computer, to purchase an information service and to create a deposit; no real business can be established with this money. With excessive offers of services, finding a reliable broker is also quite a real thing. The rest depends on the trader himself or herself. Everything depends on you personally, as in no other area of business now.

The main thing the market will require for successful operations is not the quantity of money you will enter it with – the main thing is the ability to constantly focus on studying the market, understanding its mechanisms and participants’ interests; this is constant improvement of one’s trade approaches and their disciplined implementation. Nobody has achieved success in that market by forcing one’s way with one’s capital atilt. The market is stronger than anything else; it is even stronger than central banks with their huge foreign exchange reserves. George Soros, a national hero of the FOREX market, did not win the Bank of England at all, as many of us believe – he made the right guess that, with existing contradictions inherent in the European financial system, there were plenty of problems and interests that would not allow to hold the pound. That’s exactly what happened. The Bank of England, having spent nearly $20 billion to maintain the pound rate, jacked it up, by giving it in to the market. The market settled this problem, and Soros got his billion.

The global monetary system has gone a long way during thousands of years of the human history, but it is surely experiencing the most exciting and earlier unthinkable changes. The two main changes determine a new image of the global monetary system:

• the money is fully separated from any tangible media;
• powerful information and telecommunications technologies made it possible to consolidate monetary systems of different nations into the single global financial system that has no boundaries.

Big opportunity get money through the internet

In the world of global like in this time, anythings we can do to pass the internet. Maybe in the future, people do not have to work again in the office. People do not have to be busy again in roadway. Enough control a computer which connect to internet, all manageable work. Money even also immediately empty into our account.

This matter likely have come near to fact. In this time somebody enable to get addition earning only with the have interaction in front of the computer which connect to Internet. One of way of which can be exploited to add earning is by playing at foreign currency wisely.

If first, people recognize the transaction valas pass the conventional commerce by commuting for other;dissimilar state currency physical. In this time start the marak recognized by commerce valas with the modern system spot. All transaction valas done to by pass the internet during 24 clock and can be done just where and any time.

Play at the valas pass the internet of course need the broker within reason we commute for currency in the money changer. In this time a lot of broker valas exist in Internet, local broker and international broker. Of course by various excess and its insuffiency.

Some criterion which must be paid attention to in chosening online broker shall be as follows:

• Small Spread

Spread is difference between price sell and price buy from each commercialized currency couple. Spread represent the especial source advantage for broker. Smaller spread mean will progressively to the advantage of trader or client, because difference between price sell and buy also progressively small.

• Bonafide, downright, and trustworthy

To guarantee the bonafiditas of a broker, choose the broker owning formal permit or licenci, for example; international broker, or specially United States operating should have got the authentication from Commodity Futures Trading Commission ( CFTC) which can be seen in www.cftc.gov , while for the local broker from indonesia have to be enlisted in Body of Commerce Supervisor Expect and Commodity ( Bappebti) which can be seen in www.bappebti.go.id

• complete facility Trading platform

• choice Leverage which vary

If you own the finite capital better chosen the broker offering bigger leverage ratio.

• Minimum deposit

For you which have minimum capital, choose the broker offering early small deposit or use the account type; micro account or mini account

Following some of popular broker which writer have use and compatible for you, all beginner or which have minimum capital:

1. FXOPEN

service;

• Spread from 2 pips
• Leverage from 1:1 to 1:500
• Micro accounts from $1
• Standard or mini accounts from 25$
• A wide range of financial tools
• Trading terminal Metatrader 4
• Instant Execution – Quotation system
• 100$ bonus for standard or mini accounts
• 1$ bonus for micro accounts
• Online support 24 hours / 5 daysAccount opening within 5 minutes from any part of the world. Click here to open an account in fxopen.

2. MARKETIVA

service;

• Start trading with as little as $1
• It’s easy, takes only 5 minutes to open an account, and you even earn $5 cash reward. Click here to open an account in marketiva.

At this opportunity, writer also suggest you so that more learn what is forex? and how its strategy to reach for the continuous victory. You can learn through article on this blog and or other website. If you have determined where you place play at valas in internet, meaning real correct correctness us have ready to with all opportunity benefit and its loss risk. For that, wise in acting, because all depend on your calculation.