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Get SURE SHOT FOREX TRADING SIGNALS FOR DAILY PROFIT
What is FOREX?
FOREX is an acronym for
Foreign Exchange. A further shortened form is FX. It is nothing but a relative
value of a particular form of currency.
Understanding the FOREX market
A FOREX market is a worldwide
market place where the currencies of different countries are traded directly
between two parties. Such a kind of trading is also called “off-exchange” or
“over-the-counter (OTC)” trading. By off-exchange, we mean that this kind of
trading does not utilize the medium of a stock market for its trading. The
existence of a FOREX market has made it possible for various companies and
entities to engage themselves in international
trade. It facilitates the ease of conversion of one currency to
another against standard (but regularly changing) rates of exchange of
currency. The international FOREX market has now completely switched over from
the traditional exchange rate system to something known as the floating
exchange rate system.
Whereas the traditional exchange rate system depended on
many factors of the country like its monetary policy, and the currency values
remained fixed more or less, a floating exchange rate system allows currencies
of various countries to fluctuate in their values in the foreign exchange
market.
The FOREX
market has its distinct features
Trading volumes are large
in scope. Billions of dollars are traded between traders and governments on a
regular basis. There is a high liquidity, which means that there is a smallest possible
amount of scope for loss of value. Not to be faulted and unremitting trading:
24 hours a day, but no more than on weekdays. This is quite unlike other
markets like the stock market where 24 hour business transactions are not achievable.
Margin of profit (along with loss) is tapered. Lower the risks lower the gain! Debt
Capital or Leverage is used as a supplement for equity
capital. It allows a particular country to buy goods or services and
pay in foreign currency. It has very low transaction processing costs. Unlike a
stock market which operates through an exchange and involves high transaction
processing costs (broker-to-broker costs, dealer costs, counter costs etc.),
the Foreign Exchange market has these costs significantly reduced or
eliminated.
Transaction
processing time
Transaction processing
time is also significantly less compared to stock markets. There is a facility
called Interest Rate Rollover. By using this facility, the FOREX trader can
earn overnight interests on the currencies held by him. But he is also liable
to pay interest on the currencies that he has borrowed. But of course there
will be, more often than not, a difference between these two interest rates. He
can work out the difference between these two interest rates to his advantage.
A few central banks are actively involved in the foreign exchange
business. This process is known as
intervention. Central banks try to influence FOREX rates by actively buying
and/or selling currencies in the market.
Timing: The
all-important factor in the FOREX Market!
Consider the fact that the
FOREX market is open 24 hours a day. This literally means that there is no time
to sleep! What Given the condition arises that the currency values suddenly
drop while you were sleeping? Here comes the need to rethink your strategy.
Look out and explore better times to trade. There certainly are better hours to
trade in the foreign exchange market. They are called “FOREX Hours”. Though
FOREX hours will vary for different types of traders, yet the best FOREX hours
are certainly those that overlap market timings for two or more foreign markets. But then again, market size
plays a significant role here. We will study that now.
Market Size:
Another important factor!
A particular market may
prove to be more rewarding to get involved in that a combination of two or more
markets. Given the condition arises that you come across such a market, it will
be natural for you to dedicate the majority of your time to this market. The
“overlapping market timings factor” will more or less get eliminated in this
case. We can safely assert that penny stock investing is by no means an
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These are the ways of risk free forex trading strategy.