What is Forex?
FX being abridged state of Forex is composed of words of Foreign and Exchange in English and proved that it has taken its place as essentials of finance markets. Because becoming the greatest and fastest developing financial market with its trading volume of daily 5,5 trillion dollar has undertaken an important role in approaching persons to forex market. It is foreign Exchange market where the Money of different countries are interchanged
Where is Forex market?
Unlike İMKB and New York Exchange Stock, a physical place or centre of Forex spot market is unavailable. Forex market is an Over-the-Counter –OTC or “interbank market”. All market participants are connected to each other with a network among banks and market is managed by computers completely.
Is only foreign currency trading performed in Forex market?
No. Except for foreign currency (parity), you can trade on oil in barrel, precious metals such as Gold, Silver in ounce and many commodities. Investment commodities traded are under the initiative of broker firm that you use its buy/sell platform.
What is trading volume of Forex market?
Forex market is the largest financial market of the world in terms of trading volume. Here daily trading volume is 5,5 trillion dollar. On the other hand, daily trading volume in New York stock Exchange, the biggest stock exchange in the world is around 20 billion Dollar.
What are advantages of Forex Market to other investment markets?
a. high leverage system not found in different investment markets is the greatest handicap of Forex (FX) market. Investor has the chance of launching big trading with small guarantees thanks to leverage advantage.
b. Investor determines his/her profit and loss, putting stop order or limit order to his/her open position in forex market.
c. even though your open trading subject to loss, you loss as much as margin price you have given system before. So your position in loss does not zero the money in your account or debit you by downing to minus (-) balance.
d. In other investment markets, trading is carried out in limited hours of day. In Forex, you can trade day/night in a market that closing is never made 5 days/ 24 hours.
e. the markets that traders and trading volume are low is manipulated easily. However, FX market can not be manipulated due to number of FX investors in the world and daily trading volume of 5,5 trillion Dollar.
f. Forex market is the most liquid market of the world.
What should I do to become successful in Forex markets?
Nearly all experts agree on minimum components required for success:
You should have a good technical tutorial and trading info. You should comprehend well of main reasons of market movements. You should know psychological aspect of trading well and have good psychological control and discipline.
Can manipulation be made in Forex?
Because of very high daily trading volume, manipulation of Forex market is impossible.
How can I monitor market?
You can monitor market via real time trading platform that your intermediary firm offers you.
In which days and hours are Forex Markets open?
24 hours of every weekday trading is carried out in Forex markets. After New Zealand market is opened midnight in Turkish local time, markets of Australia, Tokyo, Hong Kong, Singapore and Dubai are opened respectively. In hours near closing of markets of these countries in morning hours, European markets are opened in turn. Opening hour of USA market is 15.30 in Turkish local time. USA market is processed until night 11:00 in our local time. Afterwards, New Zealand market is opened. With closing of USA market at Friday night, Forex markets are closed.
Great majority of those which direct foreign exchange market comes from USA. Therefore, in general a movement occurs in markets following opening of USA market afternoon.
Main participants of Forex market are banks and intermediary companies. Individual or institutional players can trade in market through broker companies. Broker companies execute the buy/sell requests of their own customers. Banks themselves can also render brokering (intermediary firm) service for the customers having big deposits.
Which currency units are used for trading in Forex?
Most traded currency units, abridgments related to these and aliases utilized for these currency units are given below:
What is Quotation?
Quotation is price pair that market maker sates with respect to a foreign currency parity. First currency in currency pair stated in quotation is named as “base currency” the second one as “counter currency”.
let us think quotation is given for EUR/USD. In this case, base currency is Euro, counter currency is American Dollar.
Terms of “Buy Price”, “Sell Price”, “Bid”, “Ask” confuse me. Would you explain these terms?
These terms in Forex are explained according to intermediary firm realizing trading not to player making trading.
Buy price (Bid): the price that your intermediary firm has consent to buy. In other words, If we look at from your angle, it is the price that you can perform sale.
Sell price (Ask): the price that your intermediary firm gives consent to sell. Namely, it is the price you can buy.
What is Spread?
Player can not buy – sell currency pair over its market value. Two prices are given for currency pair. Sale (bid or sell) and buy (ask/ or buy). The difference between these two prices is called “spread” (currency difference/scissors).
The profit of your intermediary firm is the difference between buy and sell prices (spread). If we open a new position, we start trading with a loss as much as spread.
What is Lot?
LOT is used in trading unit in Forex markets. Size of Standard lot is 100.000 units. 100.000 unit is mostly shortened as 100K. Many intermediary firms make use a lot size of 10.000 units (10K) under mini lot title and lot size of 1.000 units (1K) under micro lot title. Some intermediary firms making use on-line trading give possibility of trading with lots in different sizes.
What is Pip?
Possible minimum change in prices given for a currency pair is named “pip”. Pip is abridged from first letters of words of “Price Interest Point”.
What is Leverage?
Leverage is a mechanism providing you to make financial trading more than principal you have.
As trading with leverage includes higher risk than those without leverage, Forex investors should be informed very well on leverage. Leverage and risk are interrelated. A high leverage ratio increases both your profit and loss amount. For each position you have opened in Forex market, some money is blocked until that position is closed. This money to be blocked is called “required margin and the money is called “used margin" after its blockage. This money blocked is not the one having risk of loss. You can see this money as a deposit. As long as your position is open, we do not use this money but when your position is closed, this money is released again. As leverage ratio gets higher, the money to be blocked decreases in that extent. As leverage ratio decreases, the money to be blocked becomes higher in that extent.
Who are Market Makers?
Market makers are banks specialized on this job or institutions authorized on this matter. Market makers take first degree duty in direction of market. Market makers which do not establish a personal relation with customers takes on their customers’ positions as a whole. The business they do is not portfolio management or intermediary too. They are in charge of realizing sell trading of their customers not directing it. They present bidirectional options as buy and sell to their customers and fulfil the one requested by customer. Market makers try to provide a supply-demand balance as per selections of their customers.
This content is fromwww.liderforex.com
