Forex Currency Trading Alyssa Jardin
What is Forex Currency Trading? • Forex is an acronym for Foreign Exchange • It is trading between different currencies • It is the business of trading in different currencies in order to profit from exchange rate differentials • Forex currency trading takes place in the world’s largest market, the Forex Market.
What are the limits? • No physical trading of the currency takes place. Everything is done by computer. • Currency trading is based on the economy. It all depends on timing. When the economy is doing well there is a lot of trading. • Its very risky, there’s high potential for losses and earnings. • Short-term interest rates set by banks. • Choosing your forex broker to manage your investing.
Investing • Most investors are aggressive and risk takers. How do you make money? • Currencies are always traded in pairs. You buy one currency and sell the other. • Ex. You could sell the euro against the dollar (EUR/USD). In this case, you short the euro (you believe the euro will go down) but long the dollar (you believe the dollar will go up).
What is the economic climate? • When the US economy is down, the value of the dollar would be worth less. • When the US economy is down, people will most likely jump ship and buy a foreign currency. • When the US economy is up, more people will buy the dollar instead of switching over to a foreign currency.
Where can I purchase them? • Brokers • Banks • Investment Management Firms • Non-bank Foreign Exchange Companies
How much money do you need? • With $1,000 you control $100,000 of currency. • This is a leverage of 100:1 • No other market gives you so much liquidity and leverage at the same time. Risks • Trading is extremely risky if you don’t know what you’re doing. • High risk for potential earnings but also a high risk for potential losses.
Examples The chart above shows the progress of the US Dollar and Austalian Dollar currency pair for the past 6 months. The currency pair is doing rather okay. It is not at its highest but it is not down low.
The chart above shows the progress of the US Dollar and the Euro currency pair for the past 6 months. You can see that the currency is currently down.
Sources • http://www.gocurrency.com/currency-trading • http://www.collinsdictionary.com/dictionary/english/currency-trading • http://www.dailyfinance.com/2012/04/10/foreign-currency-exchange-make-money-selling-money-investing/