About 'forex trading wiki'|Correlation table Diversification in Forex
The Foreign Exchange Market is a currency trading market. It is open 24 hours a day, 5.5 days a week. Facilitated by electronic trading the Foreign Exchange Market (forex for short) is used by businesses to convert currency for international trade. There are 164 total currencies traded, and 8 major ones. The major currencies are the U.S. Dollar, Japanese Yen, Euro, British Pound, and Swiss Frank. The Australian Dollar, Canadian Dollar, and New Zealand Dollar are popular as well. The forex market differs from the other financial markets for a few reason. The market is dispersed over multiple countries. A truly international market it operates 24 hours a day on weekdays. It's humongous trading volume and large liquidity is offset by the relatively low margins. Forex traders use leverage to compensate for the lower margins.Leverage is defined as the use of debt to supplement gains. (Wikipedia) The leverage on the Forex market is much higher than the stock market. Some brokers offer upwards of 250:1 leverage. This gives the trader an increase in profit as well as an increase in losses. Since the forex market is an international market the prices are affected by events all over the world. Economic determinants include national debt, political upheaval, GDP growth, and unemployment. (ForexProtege.com) The market can also be influenced by catastrophic events such as natural disasters and acts of war. Iceland's disruptive volcano is an excellent example. (Boston.com) Predicting the forex market is done in a number of ways. Traders that adhere to the fundamental school of analysis use economic determinants to predict the rise and fall in prices. Technical traders use charts to recognize chart patterns that reoccur throughout the years. Both groups have their strict adherents, however a successful forex trader incorporates both into his/her strategies. Next: Technical Analysis of the Forex Market |
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