Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

adamsmiths

Basic Concepts About Forex Market

Recommended Posts

The forex market is the largest financial market in the world. One need not to do daily trading so as to participate in the market. A person exchanging currencies while travelling overseas is also a part of forex trading.

The forex market comprises of banks, commercial companies, central banks, investment management firms, hedge funds and retail forex brokers and investors. In a forex market, buying, selling, exchanging and speculation on currencies can be done by the participants.

One must be aware of some of the basic concepts of the forex market before trading in the market. Some of the basic concepts are discussed below:

1. Following eight major economies: In a forex market, the participants need to follow eight major economies in the world. The eight major power which dominate the forex market are:

• United States

• Eurozone ( Germany, France, Italy and Spain are the main)

• Japan

• United Kingdom

• Switzerland

• Canada

• Australia

• New Zealand

The economies of the eight major powers have the largest financial market. Daily economic data is released from these countries. This data helps in better assessing the economical health of each country and do the trading accordingly.

 

2. Yield and Return: Trading in the foreign exchange spot market involves buying and selling two underlying currencies. Quotation of currencies are done in pairs, e.g. if the EUR/USD pair is quoted as 1.3500, then it means that it takes $1.35 to purchase one euro.

Transaction in foreign exchange involves simultaneous buying of one currency and selling of another one. Moreover, there is an interest rate for every currency as has been set by the central bank of the respective country. The trader, on the one hand, has to pay the interest for the sold currency; while on the other hand, one gets the privilege of earning interest on the currency being bought.

 

3. Leveraging Returns: Leverage as high as 100:1 is offered by the forex market. But leverage should be used wisely as one can earn huge profits if he is correct, else he has to bear huge loss. Nevertheless using stops can cap the losses. Moreover, protection of margin watcher is offered by most of the brokers. Margin watcher is a type of software which keeps a watch on one’ position 24 hours a day and five days a week. Liquidation is automatically done by the software once margin requirements are contravened.

 

4. Carry Trades: The dynamic nature of currency values has led to the led to the evolution of one of the most sought-after trading strategies –carry trade. In this strategy, a currency with low interest rate is borrowed by the trader. The trader then utilises the fund o buy a different currency which is giving a higher interest rate.

 

This article is sponsored by fibo.

Share this post


Link to post
Share on other sites

The very most essential elements of any trading or doing is the basic or core matters. Knowledge is one of the most important things to become a successful trader. Even the experienced traders also have a need to get the knowledge.

Share this post


Link to post
Share on other sites

The aim of forex trading is simple. Just like any other form of speculation, you want to buy a currency at one price and sell it at higher price in order to make a profit.The forex market is the quiet giant of finance, dwarfing all other capital markets in its world.The stock market, where investors have thousands of stocks to choose from, in the currency market, you only need to follow eight major economies and then determine which will provide the best undervalued or overvalued opportunities. These following eight countries make up the majority of trade in the currency market:

  1. United States
  2. Eurozone (the ones to watch are Germany, France, Italy and Spain)
  3. Japan
  4. United Kingdom
  5. Switzerland
  6. Canada
  7. Australia
  8. New Zealand

Share this post


Link to post
Share on other sites

Forex stands for foreign exchange and refers to the buying or selling of one currency in exchange for another. It's the most heavily traded market in the world because people, businesses, and countries all participate in it, and it's an easy market to get into without much capital.

Share this post


Link to post
Share on other sites
On 3/5/2021 at 3:53 PM, CrazyCzarina said:

Forex stands for foreign exchange and refers to the buying or selling of one currency in exchange for another. It's the most heavily traded market in the world because people, businesses, and countries all participate in it, and it's an easy market to get into without much capital.

More than five trillion USD on average volume revolves across the globe daily.

Share this post


Link to post
Share on other sites
On 3/7/2016 at 4:07 PM, adamsmiths said:

The forex market is the largest financial market in the world. One need not to do daily trading so as to participate in the market. A person exchanging currencies while travelling overseas is also a part of forex trading.

The forex market comprises of banks, commercial companies, central banks, investment management firms, hedge funds and retail forex brokers and investors. In a forex market, buying, selling, exchanging and speculation on currencies can be done by the participants.

One must be aware of some of the basic concepts of the forex market before trading in the market. Some of the basic concepts are discussed below:

1. Following eight major economies: In a forex market, the participants need to follow eight major economies in the world. The eight major power which dominate the forex market are:

• United States

• Eurozone ( Germany, France, Italy and Spain are the main)

• Japan

• United Kingdom

• Switzerland

• Canada

• Australia

• New Zealand

The economies of the eight major powers have the largest financial market. Daily economic data is released from these countries. This data helps in better assessing the economical health of each country and do the trading accordingly.

 

2. Yield and Return: Trading in the foreign exchange spot market involves buying and selling two underlying currencies. Quotation of currencies are done in pairs, e.g. if the EUR/USD pair is quoted as 1.3500, then it means that it takes $1.35 to purchase one euro.

Transaction in foreign exchange involves simultaneous buying of one currency and selling of another one. Moreover, there is an interest rate for every currency as has been set by the central bank of the respective country. The trader, on the one hand, has to pay the interest for the sold currency; while on the other hand, one gets the privilege of earning interest on the currency being bought.

 

3. Leveraging Returns: Leverage as high as 100:1 is offered by the forex market. But leverage should be used wisely as one can earn huge profits if he is correct, else he has to bear huge loss. Nevertheless using stops can cap the losses. Moreover, protection of margin watcher is offered by most of the brokers. Margin watcher is a type of software which keeps a watch on one’ position 24 hours a day and five days a week. Liquidation is automatically done by the software once margin requirements are contravened.

 

4. Carry Trades: The dynamic nature of currency values has led to the led to the evolution of one of the most sought-after trading strategies –carry trade. In this strategy, a currency with low interest rate is borrowed by the trader. The trader then utilises the fund o buy a different currency which is giving a higher interest rate.

 

This article is sponsored by fibo.

Carry trading is great on USDRUB, I do it at Hotforex and reap good profits when the ruble falls a lot. It is a great opportunity to earn if you have patience.

Share this post


Link to post
Share on other sites
On 3/5/2021 at 1:53 PM, CrazyCzarina said:

Forex stands for foreign exchange and refers to the buying or selling of one currency in exchange for another. It's the most heavily traded market in the world because people, businesses, and countries all participate in it, and it's an easy market to get into without much capital.

I think this is the reason why it is the cheapest market to participate. High liquidity and competition reduce spreads, I trade with almost zero spreads on majors with Hotforex. 

Share this post


Link to post
Share on other sites

Almost we can start with smaller capital due to huge competition in this market and the broker usually take whatever amount we usually deposit with them.

Share this post


Link to post
Share on other sites
On 4/6/2023 at 4:23 AM, aimhi said:

Almost we can start with smaller capital due to huge competition in this market and the broker usually take whatever amount we usually deposit with them.

Yeah I started with just 10 USD on Hotforex and gradually increased my capital with additional investments also I used compounding to bring my equity faster to a comfortable level where I can set moderate profit targets and risk constraints. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • HLF Herbalife stock, watch for a bull flag breakout above 9.02 at https://stockconsultant.com/?HLF
    • Date: 1st April 2025.   Will Gold’s Rally Hold Strong as New Trade Tariffs Take Effect Tomorrow?   Gold continues to increase in value for a sixth consecutive day and is trading more than 17% higher in 2025. Amid fear of higher inflation, a recession and the tariffs war escalating investors continue to invest into Gold pushing demand higher. The trade policy from April 2nd onwards continues to be a key factor for the whole market. Can Gold maintain its upward trend? Trade Policy From Tomorrow Onwards Starting as soon as tomorrow, a 25% tariff will be imposed on all passenger cars imported into the United States. While this White House policy is anticipated to negatively affect European industrial performance, it will also lead to higher transportation and maintenance costs for everyday American taxpayers. The negative impact expected on both the EU and US is one of the reasons investors continue to buy Gold. Additionally, last month, President Donald Trump announced reciprocal sanctions against any trade partners that impose import restrictions on US goods. Furthermore, tariffs on products from Canada and the EU could increase even more if they attempt to coordinate a response. Overall, investors continue to worry that new trade barriers will prompt retaliatory measures, particularly from China, the Eurozone, and Japan. Any retaliation is likely to escalate the trade conflict and prompt another reaction from the US. Experts at Goldman Sachs and other investment banks warn that this will lead to rising inflation and unemployment. They also caution that it could effectively halt economic growth in the US.   XAUUSD 1-Hour Chart   The Weakness In The US Dollar Another factor which is allowing the price of XAUUSD to increase in value is the US Dollar which has been unable to maintain any bullish momentum. Despite last week’s Core PCE Price Index rising to its highest level since February 2024, the US Dollar has been unable to see any significant rise in value. Due to the US Dollar and Gold's inverse correlation, the price of Gold is benefiting from the Dollar weakness. Investors worry that new trade barriers will prompt retaliatory measures from China, the Eurozone, and Japan, potentially escalating the conflict. Experts at The Goldman Sachs Group Inc. believe that such actions by the US administration will drive rising inflation and unemployment while effectively halting economic growth in the country. Can Gold Maintain Momentum? When it comes to technical analysis, the price of Gold is not trading at a price where oscillators are indicating the instrument is overbought. The Relative Strength Index currently trades at 68.88, outside of the overbought area, since Gold’s price fell 0.65% during this morning’s session. However, even with this decline, the price still remains 0.40% higher than the day’s open price. In terms of fundamental analysis, there continues to be plenty of factors indicating the price could continue to rise. However, the price movement of the week will also partially depend on the employment data from the US. The US is due to release the JOLTS Job Vacancies for February this afternoon, the ADP Non-Farm Employment Change tomorrow, and the NFP Change and Unemployment Rate on Friday. If all data reads higher than expectations, investors may look to sell to lock in profits at the high price. Key Takeaway Points: Gold’s Rally Continues – Up 17% in 2025 as investors seek safety from inflation, recession fears, and trade tensions. Trade War Impact – New US tariffs and potential retaliation from China, the EU, and Japan drive uncertainty, boosting Gold demand. Weak US Dollar – The Dollar’s struggle supports Gold’s rise due to their inverse correlation. Gold’s Outlook – Uptrend may continue, but US jobs data could trigger profit-taking. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date: 31st March 2025.   Trump Confirms Tariffs on All Countries, Sending Stocks Lower.   The NASDAQ continues to trade lower due to the US confirming the latest tariffs will be on all countries. In addition to this, bearish volatility also is largely due to the higher inflation data from Friday. The NASDAQ declines to its lowest price since September 11th 2024. Core PCE Price Index - Inflation Increases Again! The PCE Price Index read 2.5% aligning with expert forecasts not triggering any alarm bells. However, the Core PCE Price Index rose from 0.3% to 0.4% MoM and from 2.7% to 2.8% YoY, signalling growing inflationary pressure. This increases the likelihood that the Federal Reserve will maintain elevated interest rates for an extended period. The NASDAQ fell 2.60% due to the higher inflation reading which is known to pressure the stock market due to pressure on consumer demand and a more hawkish Federal Reserve. Boston Fed President Susan Collins recently commented that tariffs could drive up inflation, though the long-term impact remains uncertain. She told journalists that a short-term spike is the most probable outcome but believes the current pause in monetary policy adjustments is appropriate given the prevailing uncertainties. Although, certain investment banks such as JP Morgan actually believe the Federal Reserve will be forced into cutting rates. This is due to expectations that the economy will struggle under the new trade policy. For example, JP Morgan expects the Federal Reserve to delay rate cuts but will quickly cut towards the end of 2025. Market Risk Appetite Takes a Hit! A big factor for the day is the drop in the risk appetite of investors. This can be seen from the VIX which is up almost 6%, Gold which is trading 1.30% higher and the Japanese Yen which is the day’s best performing currency. Most safe haven assets, bar the US Dollar, increase in value. It is also worth noting that all indices are decreasing in value during this morning's Asian session with the Nikkei225 and NASDAQ witnessing the strongest decline. Previously the stock market rose in value as investors heard rumours that tariffs would only be on certain countries. This bullish swing occurred between March 14th and 25th. Over the weekend, President Donald Trump indicated that the upcoming tariffs would apply to all countries, not just those with the largest trade imbalances with the US. NASDAQ - Technical Analysis In terms of technical analysis, the NASDAQ continues to obtain indications that sellers control the price action. The price opens on a bearish price gap measuring 0.30% and trades below all Moving Averages on all timeframes. The NASDAQ also trades below the VWAP and almost 100% of the most influential components (stocks) are declining in value.     The next significant support level is at $18,313, and the resistance level stands at $20,367.95. Key Takeaway Points: NASDAQ falls to its lowest since September 2024 as the US confirms tariffs on all countries, adding to inflation concerns. Core PCE inflation rises to 0.4% MoM and 2.8% YoY, increasing the likelihood of prolonged high interest rates. Investor risk appetite drops as VIX jumps 6%, gold gains 1.3%, and safe-haven assets outperform. NASDAQ shows strong bearish momentum, trading below key technical levels with support at $18,313 and resistance at $20,367.95. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • PM Philip Morris stock, top of range breakout at https://stockconsultant.com/?PM
    • EXC Exelon stock, nice range breakout at https://stockconsultant.com/?EXC
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.