Faq

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The international market terminology, where people make a trade of currencies is recognised as FOREX. Here these traders place orders to buy or sell one currency with another currency. As an example, a trader from USA perhaps may want to buy Euros with USA currency will make use of the Forex market, to accomplish this activity. This foreign exchange trading of one currency for another currency is made possible through a broker or dealer; executed in currency pairs for example, the US dollar & USA Dollar (USD/INR) or the British pound and the USA Dollar (GBP/INR). The Foreign Exchange Market (FOREX) is the largest financial market in the world today, with a daily volume of over $4 trillion being traded. The volume of trading in Forex across the globe today is many times higher than that being done either for Equity [or Share] markets or those with Commodity. The amount of trading, which occurs per week [expected roughly between 25 to 28 trillion], is comparable with the entire annual GDP of USA. Forex is the foreign exchange market. The foreign exchange market is a virtual market where investors buy and sell currencies for other currencies. If you’ve traveled out of your home country before, you’ve interacted with the foreign exchange market and you didn’t even know it. If you were to travel from the USA to say Canada, UAE or Malaysia then you would trade your USA currency i.e. ‘Dollar’ for obtaining the Canadian dollars, or Emirati Dirham at a bank, airport teller, or any currency exchange service. In trading your USA Dollar for Canadian Dollars, Emirati dirham etc. you will actually participate in the global forex market.

 

In order to understand the World Monetary system, it is required that we take a brief snap shot during the earlier decades. During and immediately after the post World War era, the global economy was witnessing a stage of turmoil. Most nations, which had witnessed War during this period, had relied on internal resources for raising the expense; exhausting their economic prowess to deliver growth in the period following the World War. It was required that industries and business houses to trade with other nations, but where the currency rates of the respective trading nations would be govered and regulated. There was felt an urgency towards obtaining stability for economic growth, through financial stability. In order to incorporate this, the International Monitory Fund [IMF] was established late in 1949 followed after meeting at Bretton-Woods.

Post formation of IMF, a platform was established where nations could address concerns arising out-of trading that resumed for their respective industrial growth across the globe. During the period & until 1973, an adjustable Peg-exchange-rate system monitored by the IMF prevailed. Under this system, the US Dollar [$] which was linked to gold [at @35$ per ounce] served as the base currency. A special feature being of close control of the dollar against other currencies, where a fluctuation of only 1% was allowed around fixed exchange rate, monitored by the IMF.

The forex market has many advantages. These include the following:

  • It’s already the world’s largest market and it’s still growing quickly
  • Within India too, the Foreign Exchange / currency market within three years of being launched has grossed nearly half the volume of trading as compared to that of Equity or Shares
  • It makes extensive use of information technology – making it available to everyone
  • Traders can profit from both strong and weak economies
  • Trader can place very short-term orders – which are prohibited in some other markets
  • The market is not regulated
  • Brokerage commissions are very low, as compared to those of either Equity or in Commodity
  • The market is open for 5 days during the week in India, where the investors can actually get a feel of the world Forex that is open 24Hrs on all week days.

At  Forex education, we can facilitate an individual to learn the basics of Forex trading [although we do not provide or deal in trading]. The individual can make his /her decision on Forex market trading as available to other retail investors. Sign up today for learning the basics and advanced Forex Training, to benefit you.

As with any market, the forex market is driven by supply and demand:

  • If buyers exceed sellers, prices go up
  • If sellers outnumber buyers, prices go down

The following factors can influence the exchange rates:

  • National economic performance
  • Central bank policy
  • Interest rates
  • Trade balances – imports and exports
  • Political factors – such as elections and policy changes
  • Market sentiment – expectations and rumors
  • Unforeseen events – terrorism and natural disasters

Despite all these factors, the global forex market is more stable in comparison to the stock markets; the exchange rates change slowly and by small amounts.

If case you are interested or used to trading currencies online, you will find that the Forex market is significantly different from the equities market. The word “FOREX” is derived from the words Foreign Exchange and is the largest financial market in the world. Unlike many markets the FX market is open from 9:30 AM to 5pm – Monday to Friday in India [as against 24 hours per day globally] and has an estimated 50,000 Cr turnover daily in India [$1.2 Trillion in turnover every day globally]. The same is comparable to Rs.100, 000/- Cr turnover of shares being traded in India on an average day., when Equity markets in India have over a four decade history compared to just three years for Forex activity, since its beginning and permission from RBI & SEBI. This tremendous turnover is more than the combined turnover of the main worlds’ stock markets on any given day. This tends to lead to a very liquid market and thus a desirable market to trade.

Unlike many other securities (any financial instrument that can be traded) the FX market does not have a fixed exchange. It is primarily traded through banks, brokers, dealers, financial institutions and private individuals. Also Forex being done through virtual trading has a faster rate of growth. Initially traded as even today through phone, Forex is increasingly gaining popularity on Internet. It is only in the last few years that the smaller investor has been able to gain access to this market. Previously the large amounts of deposits required precluded the smaller investors. With the advent of the Internet and growing competition it is now easily within the reach of most investors.

Past Performance: Past performance is not a guarantee of future results. Please remember that technical analysis is only a tool for trading and even targeted analysis is no guarantee of profits. Forex trading carries a substantial risk of loss and only discretionary capital should be used in trading.

High Risk Warning: Forex is a High Risk Investment. Trading in the foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals unless they undertake basic training and repeat the same with advance training session on regular basis. The high degree of leverage offered in the Forex markets can work against you as well as for you. Before deciding to trade in the foreign exchange markets you should carefully consider your investment objectives, you level of experience, and your risk appetite. The possibility exists that you could sustain a loss of some or all of your equity and therefore you should not invest money that you cannot afford to lose. Only true excess disposable cash should be used in Forex trading. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor.

The majority of global foreign currency dealers and banks are compensated on the difference between the bid/ask spread in the currency price offered to participating traders and/or the ability to accumulate positions on a proprietary basis and assume the risk of the net open positions they carry. Futures exchanges and their clearing members and introducers are compensated by exchange, clearing, brokerage fees, electronic access fees, commissions, and quote fees. Like futures trading, trading in the foreign exchange markets involves the very significant risk of loss and individual traders should only use true discretionary capital for trading. The leverage offered in foreign exchange, which is typically much greater than that offered in the futures market, can work in the trader’s favour if the trader is right and can work significantly against the trader if the trader is wrong. Traders should be aware of all the risks associated with trading in the foreign exchange market before trading and should take the time to educate themselves on the risks associated with such trading. Since the foreign exchange market is a global dynamic market place traders must realize that there is no way to eliminate risk and learning how to take and manage risk is an essential part of trading. (High Risk Warning)

If case you are interested or used to trading currencies online, you will find that the Forex market is significantly different from the equities market. The word “FOREX” is derived from the words Foreign Exchange and is the largest financial market in the world. Unlike many markets the FX market is open from 9:30 AM to 5pm – Monday to Friday in India [as against 24 hours per day globally] and has an estimated 50,000 Cr turnover daily in India [$1.2 Trillion in turnover every day globally]. The same is comparable to Rs.100, 000/- Cr turnover of shares being traded in India on an average day., when Equity markets in India have over a four decade history compared to just three years for Forex activity, since its beginning and permission from RBI & SEBI. This tremendous turnover is more than the combined turnover of the main worlds’ stock markets on any given day. This tends to lead to a very liquid market and thus a desirable market to trade.

Unlike many other securities (any financial instrument that can be traded) the FX market does not have a fixed exchange. It is primarily traded through banks, brokers, dealers, financial institutions and private individuals. Also Forex being done through virtual trading has a faster rate of growth. Initially traded as even today through phone, Forex is increasingly gaining popularity on Internet. It is only in the last few years that the smaller investor has been able to gain access to this market. Previously the large amounts of deposits required precluded the smaller investors. With the advent of the Internet and growing competition it is now easily within the reach of most investors.

Past Performance: Past performance is not a guarantee of future results. Please remember that technical analysis is only a tool for trading and even targeted analysis is no guarantee of profits. Forex trading carries a substantial risk of loss and only discretionary capital should be used in trading.

High Risk Warning: Forex is a High Risk Investment. Trading in the foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals unless they undertake basic training and repeat the same with advance training session on regular basis. The high degree of leverage offered in the Forex markets can work against you as well as for you. Before deciding to trade in the foreign exchange markets you should carefully consider your investment objectives, you level of experience, and your risk appetite. The possibility exists that you could sustain a loss of some or all of your equity and therefore you should not invest money that you cannot afford to lose. Only true excess disposable cash should be used in Forex trading. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor.

The majority of global foreign currency dealers and banks are compensated on the difference between the bid/ask spread in the currency price offered to participating traders and/or the ability to accumulate positions on a proprietary basis and assume the risk of the net open positions they carry. Futures exchanges and their clearing members and introducers are compensated by exchange, clearing, brokerage fees, electronic access fees, commissions, and quote fees. Like futures trading, trading in the foreign exchange markets involves the very significant risk of loss and individual traders should only use true discretionary capital for trading. The leverage offered in foreign exchange, which is typically much greater than that offered in the futures market, can work in the trader’s favour if the trader is right and can work significantly against the trader if the trader is wrong. Traders should be aware of all the risks associated with trading in the foreign exchange market before trading and should take the time to educate themselves on the risks associated with such trading. Since the foreign exchange market is a global dynamic market place traders must realize that there is no way to eliminate risk and learning how to take and manage risk is an essential part of trading. (High Risk Warning)