|Information about stocks is abundant, but so are the stocks. Finding a trade opportunity in the equities markets may mean sifting through data on thousands of stocks, while the forex trader has only six major currencies to research. Additionally, the vital information that moves equity markets, such as revenues and profits, is proprietary and private. In contrast, virtually all of the news that bears on the forex market is in publicly disseminated reports from governments or research institutions, and released to everybody at the same time.|
|We feel that the knowledge you've gained in analyzing stocks can easily be transferred to the forex market. Many of the economic indicators familiar to equity traders, such as payroll data and interest rates, affect the currency markets. And many technical traders have found the forex market to be particularly attractive, since currencies respond well to many of the common technical indicators, such as MACD, RSI, and Candlestick charting.|
|To learn more about transitioning from trading equity markets to trading in the Forex market, contact the FXCM staff today at 888-503-6739.|
The smallest price increment a currency can make. Also known as points. For example, 1 pip = 0.0001 for EUR/USD, or 0.01 for USD/JPY.
The value of a pip. Pip value can be fixed or variable depending on the currency pair and base currency of your account. e.g. The pip value for EURUSD is always $10 for standard lots and $1 for mini-lots. To calculate the pip value, divide 1 pip by the exchange rate and multiply it by the unit lot size to get the base currency pip value. To convert this back to your account currency, multiply it by the appropriate exchange rate. e.g. EURUSD = 0.0001 / 1.30000 * 100,000 = 7.69 Euro * 1.30000 = $10.00 pip value (fixed). USDJPY = 0.01 / 120.00 * 100,000 = $8.33 pip value (variable)
They normally have links to other brokers, banks and institutions and often become mini market makers themselves.
Because of the varied source of clients who use brokers it is quite common to find the best rates through a broker as opposed to a bank.
With a broker you can shop for the best rates in order to transact your business.
The broker makes his commission from either the difference between the buying and selling rate or as a flat fee per transaction
All of the three main groups will also speculate in the market, which is why the market has so much volume and liquidity.
- Sellers are asking for a high price.
- Buyers are Bidding at a lower price.
- Trading is an auction.
- Slippage occurs with most Market Orders.
- The diffrence between the ASK and the BID price is the spread.
A trader must understand what each order is, what it and what part it plays in capturing profit.
A FOREX Trader must use three types of orders: a Market Order, a Limit Order, and a Stop Order.
The two primary orders used for entering and exciting the market are a Limit Orders, and a Stop Orders. Once an order is placed your order to enter the market, there are two critical procedures: One-Cancels-the-Other( OCO ) and Cancel-and-Replace. Properly exectuing orders and understanding these procedures are a vital step to profitables trading.
The Federal Reserve Bank of New York is one of 12 regional Reserve Banks which, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Fed, as the system is commonly called, is an independent governmental entity created by Congress in 1913 to serve as the central bank of the United States. It is responsible for
- formulating and executing monetary policy,
- supervising and regulating depository institutions,
- providing an elastic currency,
- assisting the federal government's financing operations, and
- serving as the banker for the U.S. government.
In addition, the Federal Reserve System has important roles in operating the nation's payments systems, protecting consumers' rights in their dealings with banks and promoting community development and reinvestment.
The New York Fed oversees the Second Federal Reserve District, which includes New York state, the 12 northern counties of New Jersey, Fairfield County in Connecticut, Puerto Rico and the U.S. Virgin Islands. Though it serves a geographically small area compared with those of other Federal Reserve Banks, the New York Fed is the largest Reserve Bank in terms of assets and volume of activity.
The New York Fed employs about 2,700 officers and staff at the head office and the regional office in East Rutherford, New Jersey.In addition to responsibilities the New York Fed shares in common with the other Reserve Banks, the New York Fed has several unique responsibilities, including conducting open market operations, intervening in foreign exchange markets, and storing monetary gold for foreign central banks, governments and international agencies. Foremost among its functions is the implementation of monetary policy, one of the three missions of the New York Fed. The other two are supervision and regulation, and international operations
* Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.
* Speculation for profit (95%).
Most traders focus on the biggest, most liquid currency pairs, known as "The Majors". These include US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. In fact, more than 85% of daily forex trading happens in the major currency pairs.
Currencies trade in pairs, like the Euro-US Dollar (EUR/USD) or US Dollar / Japanese Yen (USD/JPY).
Forex trading is used to speculate on the relative strength of one currency against another. The foreign exchange market is an over-the-counter market, which means that it is a decentralised market with no central exchange.
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