ABOUT FOREX

SEGMENTS AND INSTRUMENTS OF FOREX

The basic currency of this market is American dollar for which 40 per cent of all the world currencies are exchanged. In all, there are 5 segments in money-market — Spot (48 per cent of all FOREX)), Swaps (39 per cent), Forwards (7 per cent), Options (5 per cent), and Futures (1 per cent). At the principal and the largest of them at Spot FOREX where majority of traders operate, and an access to which you may get through our Company, a dollar is exchanged for basic world currencies — Japanese yen (JPY) Swiss frank (CHF), British pound sterling (GBP), Euro (EUR), Canadian dollar (CAD) and Australian dollar (AUD).

A currency trading without dollar participation named “cross rates” becomes more and more popular especially in Europe, and at our market you may trade in pound sterling against Euro and yen, as well as Euro against yen.

HOW DOES TRADING PROCESS TAKE PLACE?

The primary reasons influencing upon rates of exchange are the state of economics, political factors as well as psychological ones.

Fundamental economic reasons, the same as inflation, interest rates, level of unemployment and many others have been influencing on rates of exchange permanently and actively. Governmental actions influence upon rate of exchange too. Display of certitude in ability of Government to hold the rate of exchange is makes for its rise. Reduction of interests stimulates a demand for currency slowdown, thereby reducing its value when currencies exchange operations. Decision of Central bank of the country to purchase or to sell currency may fundamentally strengthen or undermine its rate.

Waiting for the change of economic conditions may result in a sudden and dramatic fluctuation in exchange. This is the key conception because in many cases the money-market is monitored by the premonition of changes of economic conditions but not the ones themselves.

Actions of professional currency managers especially for the sake of powerful financial corporations are another factor influencing upon the market. In many cases, professional managers may behave independently and consider the market to be a unique instrument to solve set by them problem of basic currencies ratio change, and majority of this managers if not all of them, have been less of all concerned in correspondence of the problem set to the important from technical point of view schedules at that.

However, while approaching the basic levels of support or resistance market behavior turns to be more and more technically oriented one, and the reactions of large group of traders are often predictable and similar. Such a market period may bring to sudden and dramatic instability of prices because considerable sums of capitals turn to be invested to like positions.

As we have already mentioned, another peculiarity of this market lies in the fact that its traders earn equal sums of money as when increase, so when fall in rate of exchange (but just as may lose). The economic state of the country like the one in the world slightly influence on the possibility to operate at this market. For instance, if in USA recession sets in, and Stock Market becomes “bear”, that is, have been permanently falling, then traders at FOREX are selling American dollar all the time purchasing currencies of the countries with better economical situation, and in the result American dollar would go down in price as to currencies of other countries, but the traders may not only lose because of this landslide of prices but raise money at the same way, because the process of one currency sale implies simultaneous purchasing of another one.

For instance, when selling dollar and purchasing yen accounting for further reduction of dollar price, we raise money if dollar has really gown down, and yen has taken a jump. That’s why at the end of trading we shall have yen consisting of more dollars then before, that is, we raise more dollars, because when trading, an automatic conversion of all the currencies into dollars takes place, and we have either benefit or loss only in dollars USA. Every day, actually without any exception, the prices of currencies at this market change in one direction approximately by 80 — 150 standard units or points (they also name them pips, i.e. principal interest points). A point being a tenth-thousandth of price (hundredth part for yen), is equal to $ 10 on average. If currency price was changed by 100 points and you have selected right market direction and have passed the price change in the same trend with the market, you have raised $ 1000 for some hours of trading (you may lose this sum in the same way, if incorrect determination of market trend and non-closing of this losing position in time)!

To understand trading process better, you’ve to open a free and unlimited practice account (demo). This unique practice instrument permits trader to try study selling and to develop vantage strategy which may be used in future when real money selling without own money losing.

The trader in conversant in main principles and ways of “self-preservation” at this market has be well aware of the fact that this market however, like any other one in the world gives his approximately equal opportunities to lose his money; but the users of our trading computer system always have efficacious technical instruments allowing drastically limit own losses by the sums you may venture upon to lose yourself. Though these instruments are simple, one must learn to utilize them.

THE INTEREST TO THIS MARKET

Liquidity. High liquidity is a strong attractive force for any investor because it provides for his ability freely to open and to close the position of any amount practically on to date existing market quotation. FOREX may take up such an amount of daily trade which greatly exceeds any other market capacity.

Continuous access. An essential attractive force for the market participants is its around-of-the clock routine of work. When at FOREX market, the participants needn’t to wait for a long time to respond to this or that event as it happens at many markets.

Flexible control. Any position at FOREX market may be opened in this definite period of time when a trader wants.

Value. FOREX market has no any commission expenses traditionally besides the natural market variation bid/ask.

Quotations. A good deal of sales may be done on a unique market price owing to high market liquidity. This permits to avoid the problem of fluctuation being present in futures and other currency investments where only limited currency sums may be sold in one time and at the definite price.