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The Seven Most Traded Currencies in FOREX

Currencies are traded in dollar amounts called �lots�. One lot is equal to $1,000, which controls $100,000 in currency. This is what is known as the "margin". You can control $100,000 worth of currency for only 1,000 dollars. This is what is called �High Leverage�.

Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.

Here are some of the common symbols used in the Forex:

USD - The US Dollar EUR - The currency of the European Union "EURO" GBP - The British Pound JPN - The Japanese Yen CHF - The Swiss Franc AUD - The Australian Dollar CAD - The Canadian Dollar

There are symbols for other currencies as well, but these are the most commonly traded ones.

A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.

Some of the common PAIRS are:

EUR/USD Euro / US Dollar "Euro"

USD/JPY US Dollar / Japanese Yen "Dollar Yen"

GBP/USD British Pound / US Dollar "Cable"

USD/CAD US Dollar / Canadian Dollar "Dollar Canada"

AUD/USD Australian Dollar/US Dollar "Aussie Dollar"

USD/CHF US Dollar / Swiss Franc "Swissy"

EUR/JPY Euro / Japanese Yen "Euro Yen"

The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.

If this seems confusing then you�re in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.

So why is it important to know about the base/counter currency? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions.

You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.

Omar Vargas
FOREX Trader and Freelance writer. http://www.1-forex.com

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The Tokyo Fix is where the FX rate is established for the day by the banks for their customers. So even though the FX rate may change during the day the customer gets the rate at the time of the fix. There is a fix in Tokyo, London and Toronto (more I am sure). Importers generally settle their accounts on the 5th, 10th, 15th, etc, of the month before and up until the fix ():50 GMT). Sometimes, if there is an "excess" dollar demand $/JPY will continue to climb slightly after the fix. $Bulls will also use this as a staging for extending a rally. $Bears (Yen Bulls) will use this to establish better shorts.
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DIFFERENT CENTERS
The first hour after opening in Tokyo tend to provide the best liquidity of the day and that is when most heavyweight players try to position their way without having much difficulty for the day. Sydney open is more often used as an ambush hour by certain players using the time window till Tokyo open. One rule of thumb is when Yen jumps at Tokyo open the chances are it will continue throughout the day and a few more days. On different point, learn to position trade Yen or any other currency if one is really going to make a big money one day. Fwiw.
One hour from Tokyo open, London open and NY open are the times where most liquidity of the market exist. And that is where market makers are busy setting the trend for the session or even the day. Your observation has a merit because most of the session or daily moves are started either in London open or Tokyo open or NY open. Especially London Open. Other markets are too thin for any good sized traders to make their market views felt. Good luck.
London is just a market place where all sorts of Forex folks flock to buy and sell. It does not have to be London folks. It could be anyone from anywhere in the world with deep pockets who start setting the market direction on a given day. Same goes for NY and Tokyo sessions markets. In any case, Tokyo and NY still relatively small markets when compared to London as far as Forex goes.

foreign exchange rates



Another thing to keep in mind is that just because you are trading with a minimum marginal deposit does not mean you should trade at levels above your portfolio. The myth that you can get away with this every time is not true. You should not over leverage yourself. By trading in small amounts, you will be able to make safe investments that will not result in huge losses. You will win some and lose some, especially when you are first starting out.
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Forex Knowledge
Assuming one has acquired enough market knowledge and acquired one?s proven trading system. This is the second most important element of success in trading, in fact. An edge in any system is based on the quality of info one has, charts being only an info of secondary quality not the best one.
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Euro is holding at support

Wed, 18 Oct 2006 06:53:00 GMT
Daily Currency report for Wednesday October 18 2006

This is only a guide.


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How To Identify The Major Economic Factors That Are Important In Forex Trading

By Greg Hall

Unlike other trading exchanges such as the NYSE, NASDAQ, and other major stock trading organizations, trading in the foreign exchange market can be extremely volatile on a day-to-day basis. It is crucial that anyone who is going to invest in the Forex market be as informed as possible on the global economic news of the day that influences the market. There are numerous economic factors that influence the movement of a particular currency. Unlike other trading exchanges such as the NYSE, NASDAQ, and other major stock trading organizations, trading in the foreign exchange market can be extremely volatile on a day-to-day basis. It is crucial that anyone who is going to invest in the Forex market be as informed as possible on the global economic news of the day that influences the market. There are numerous economic factors that influence the movement of a particular currency.

When you are considering investing in the foreign exchange market there are many economic indicators and factors that governments, as well as privately owned companies provide that can give an inside look at possible economic performance. When countries issue economic reports they not only show the country's particular policies and current events but also reveal the economic health of the country.

Many times a responsible and reputable broker can be a good source of economic news and give good advice on what particular trades may be good at a particular time. If you don't have the time to stay up on the most current reports, a good broker can be crucial to your Forex trading success by studying these reports and determining whether a particular country is in an economic decline or enjoying a major increase. The great thing about Forex is that you can make money either way.

News that is necessary for the Forex trader is of much greater detail than the typical investor is interested in or even cares to follow. When you are considering investing in a particular country's currency, a few of the main factors to look at include current events and the state of the economy in that given nation. Statistics such as housing, unemployment, inflation, budget deficits, and current political climate can all affect the value of the currency. As mentioned before, money can be made in positive as well as negative political climates. You can make money from countries that are experiencing tremendous political unrest and rampant inflation as easily as one that is fiscally responsible and experiencing great economic growth.

The Gross Domestic Product, known more commonly as the GDP, is another huge economic indicator that experienced traders look at intensely when considering trades. The GDP is the total market value of all goods and services that are normally produced within a particular country. Normally this figure is an annual one and is not given in shorter periods. Because of the volatility of the Forex market this is considered a lagging indicator that becomes more measurable after the particular country's economy has started to follow a unique trend.

Other important factors for Forex trading include retail sales reports, which are the total sales receipts of all the retail stores in the country, industrial production that includes factories, mines, utilities and more, and the CPI or consumer price index. The CPI is the measure of the change in the prices of consumer goods in 200 different categories. This report can show whether or not a country is making a profit or losing money on their products and services. The exports a country contributes is are very important when looking at this indicator because the amount of exports can reflect a currency's weakness or its strength.

As you can see there are a lot of factors that need to be considered when investing in foreign currencies. It can be fun and exhilarating, but doing your homework will always pay the largest dividends.

Gregg Hall is an author living in Navarre Beach, Florida. Find more about this as well as FX trading strategies at www.FXTradingStrategies.com

Some Forex Ideas

currency exchange rate



Higher the leverage, the lower the margin requirement thus the greater the potential for losses or profiting form forex trading. The margin percentages can vary from 1 percent to 10 percent. Profiting from forex can be great with low margin requirements when the trades are good but not great when you are wrong.
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Not only is it an accessible, easy and less capital-intensive business opportunity, but it is much more cost efficient too to invest in the Forex market, in terms of both commissions and transaction fees. Generally, commissions for stock trades range from a low of $7.95-$29.95 per trade with on-line brokers to over $100 per trade with traditional brokers. Opposite to that, typically stock commissions are directly related to the level of service offered by the broker. At the high end, traditional brokers offer full access to research, analyst stock recommendations, etc. In contrast, on-line Forex brokers charge significantly lower commission and transaction fees.
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Always leave the forecasting to the pros unless you are playing the Forex as a hobby and don't have a lot of money invested...Or like most people you will learn the hard way.

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Tokyo shares rebound

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Essential Elements of a Successful Trader

by Jimmy Young

EURUSDTrader

Courage Under Stressful Conditions When the Outcome is Uncertain

All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery �You gotta be in it to win it�. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue � you�re overconfident and not focused enough on the risk you're taking.

Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.

Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who�s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.

The difficulty doesn�t end with �pulling the trigger�. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like �what if news comes out and you wind up with a loss�. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).

So your fear is just a baseless annoyance. Don�t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld �Live in the now man�. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.

Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards � this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains � so why close it?

If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you�re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.

Patience to Gain Knowledge through Study and Focus

Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.

To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.

Jimme Young at http://www.eurusdtrader.com/

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Forex fx currency symbols are always three letters, where the first two letters identify the name of the currency and the third letter identifies the name of the country's currency.

forex chart



FAIR VALUE
The concept of fair value in any currency is largely that of CBers and economists and not much about trading. Almost always currencies overshoot from the fair value areas some 20-30% in their medium-term trend and what makes all hard currencies range in reasonable areas overtime since we had this floating regime in 1971 must the ability of relevant CBs to control the currency ranges and their real economy's weakness or strength to support those ranges. ECB folks were not joking when they said Eur/usd was some 25% undervalued from the fair value when Eur/Usd was below parity levels two years ago. Same goes for BOJ when they were saying Yen was some 10-20% overvalued when it was trading around 100 some three years ago too. That is how these folks view the markets and try to guide the market. Of course, when US Treasury folks say "Dollar is still strong" when it is falling, they are begging the market to sell more dollars
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I happen to believe if a child can learn to trade with some simple signals he will do better than most traders, most of the time, making a good living. But then again, movin market is more than just following the signals. Good trades to you.
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Forex Related News
Asian Morning Update 5th March 2008

Tue, 04 Mar 2008 18:17:23 -0500
Dollar resists the negative news...

European releases overnight:

Q4 Forecast Actual
Euro-zone GDP (QoQ) +0.4% +0.4%
Euro-zone GDP (YoY) +2.3% +2.2%

February
U.K. Construction PMI 52.8 52.4

Overnight saw fairly unremarkable numbers from Europe. Euro-zone GDP was much as expected. The good bit was the +0.8% capital expenditure while household consumption disappointed by dropping -0.1%.

It should be a surprise either that the recent decline in U.K. house prices has led to a pullback in construction with the future uncertain for developers.

Two comments from ECB members were of note.

Orphanides commented that the slowdown in the Euro-zone economy will help inflation lower. I’m not sure it will be that pronounced. While a slowdown should normally have that impact we are seeing businesses which have absorbed higher costs and these are getting squeezed now. Also the greater problem is the wider spreads that are having to be paid on borrowings may well lessen the impact of a slowdown. Will crude oil prices at current levels this also maintains inflationary pressures.

Quaden was the latest to demand that the U.S. reaffirms their position on a stronger Dollar. Words are words. Investors losing money is another situation. If this means anything then what he is asking is for the Fed to intervene to support the Dollar…

Kohn pointed out there was no quick solution for the market turmoil and this itself will drag in more and more at-risk companies who are hoping that a quick turn round can pull them back from the brink.

There may even be conflict now within the Fed as Fisher slam dunked with his comment “Containing inflation is the purpose of the ship I crew for. If a temporary economic slowdown is what we must endure while we achieve that purpose, then it is, in my opinion, a burden we must bear, however politically inconvenient.”

Another bad day for global equities. Even Citibank shares are at 9 years lows. A string of Fed officials made statements of more problems to be faced and may even understate if the comment from Mishkin on the likelihood of a “soft Q1” is taken as an example.

As for Bush’s words when chiding OPEC on holding output steady and maintaining a too-high level of prices. We have to remember from where the first jolt came…

In spite of all the extreme negativity the Dollar failed to break lower again yesterday and has recovered slightly towards the end of NY trading. It is difficult to justify any Dollar strength with all this commotion around except to say that if the market hasn’t taken advantage of the comments yesterday then it does suggest there is a possibility that the market is oversold right now and needs a clear out of short term positions.

Wait for breaks higher – and I’ll cover these in the next update – but just be aware that while the 1.5660 Euro, 1.000 Swissie and 100-101 Yen targets are still valid, this doesn’t mean they will be reached directly.

More later once the daily analysis has been done…

The following are economic releases from Asia due today:

Japan Q4 Capital Spending (QoQ) -2.5%
Japan Q4 Capital Spending Excl software (QoQ) -3.0%

Australian AiG February Performance of Service Index
Australian Q4 GDP (QoQ) +0.8%
Australian Q4 GDP (YoY) +3.8%

See Also

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