Forex

Capital)

Machine (PC, Laptop, Internet Connection)

Method (Trading System, Platform)

the Forex or FX market) is the largest financial market

in the world, with the equivalent of over $3.2 trillion changing hands daily; more than three times the aggregate amount of the US Equity and Treasury markets combined.

centralized location (i.e., the stock exchange), the worldwide Forex market

does not have a central location. It is a global electronic network of banks, financial institutions and individual Forex traders, all involved in the buying and selling of national currencies.

the Stock Market
Inter-bank Market
No one can corner the Market

that of Sydney, Tokyo, London, and New York. Therefore, traders

must consider which players are in the market, since in the modern interconnected financial world, events that occur at any hour, in any part of the globe, can affect some or all parts of the investment community.

actual stock exchange. Forex is an over-the-counter (OTC) or off-exchange

market.

commercial banks, money portfolio managers, money brokers, large corporations, and

very few private traders.

through the interaction of market forces dealing with supply and

demand.
The value of a currency, in the simplest explanation, is a reflection of the condition of that country's economy with respect to other major economies.

and demand are interest rates and the strength of the

originating country’s economy as a whole. Fundamental indicators, such as foreign investment, PPI, CPI, GDP, and the trade balance, echo the overall health of the economy, and alter the supply and demand for that currency.

European Currency Unit (€),
3. Japanese Yen (¥),
4. British Pound

Sterling (£),
5. Swiss Franc (Sf),
6. Canadian Dollar (Can$),
7. Australian
8. New Zealand Dollars.

USD/CHF ; EUR/USD

- first listed currency is the ‘

BASE’ currency – basis for buy or sell transaction.
- second listed currency is called the ‘Counter’ or ‘Quote’ currency.


E.g. A trader places a buy GBP/USD order. The action that takes place is the trader sell the USD and buy GBP.

keeping inflation low and steady by controlling money supply.

Restore the

order in the market in the event of excessive currency rate volatility.
.

amounts of speculative trading on a daily basis.
Bank trading are:
1.

On behalf of the bank customers.
2. Proprietary trading where bank dealers trade bank capital to make a profit.

broker facilitate interbank trading and matching for a fee. The

internet revolution has forced this business to move to electronic system.

Customer Brokers
- These are brokers that handle retail trades.
- They are the main driver for the increasing use of internet.
- The business is growing fast and very competitive, they provide
dealing services, analysis and advice to customers.

Commercial Companies
- Companies engaged in international trade they use currency market as a means of protecting themselves from unfavorable moves in the market.

of the FOREX daily volume is from investors and speculators.
A

decade ago, this group are only the big and well funded traders. Since internet revolution, the field has changed that small investors can participate and take advantage of the same tools as big traders.

the fund manager is authorized
to use derivative and borrowing with

the aim of having higher return. They are well known for aggressive currency speculation in the recent years.

Sell

Traders generate profits, or

losses, by speculating whether a currency will rise or fall in value in comparison to another currency.
A trader would buy the currency which is anticipated to gain in value, or sell the currency which is anticipated to lose value against another currency.

happen in a market
Factors involved in price analysis:
1. Supply

and demand 2. Seasonal cycles 3. Weather 4. Government policy

Technical analysis

Focuses on what actually happens in a market
Charts are based on market action involving:
1. Price 2. Volume 3. History

the goal of determining future movements in a financial market.

its inflation and interest rates, impact the price of the

nation's currency. Traders that use fundamental analysis can speculate on currency price movements by paying attention to the world news, economic reports, and indicators issued by the government.

and selling opportunities. Over long historical periods, currency behavior has

produced trends and patterns that are identifiable.

A complete transaction is the buying of one currency and

selling of another at the same time.