Forex Digest

How hard is it to make money in the foreign exchange market? How high risk is it? What sort of commissions do brokers charge and what sort of success do they have? Any information you can provide will be much appreciated.

Trading foreign exchange online is no different than trading stocks, or other financial instrument. The learning curve in trading usually takes two years. During those 24 months, it is going to be a roller coaster ride for you. You might even lose all of your trading capital. Some get lucky and make huge returns in less time. But they are the exceptions.

What you can do is this.

Open a demo trading account with an online broker. This way, you will get to know that online broker, how they do business, how reliable they are. At the same time, while demo trading, you will define, develop and fine tune your trading method. You should be able to learn when to trade and when not to trade.

The downside with demo trading is that it is way too easy. Soon as you are showing profits three months in a row with your demo account, open a live trading account with only $10 (you can do so with oanda.com). This way, if you bust your account, you will only lose that $10.

Trade this $10 account using the methods you developed while demo trading. Trade only with small position size as you trade. I'd recommend you trade with one unit only and risk only maximum of 1% of total capital on each trade. If you are consistently methodical with your trading, this $10 will last you at least six months. Agian, when you are able to show profits three months in a row, add more funds to your account.

If you need more information on trading, you can visit trading forums like elitetrader.com, moneytec.com, trade2win.com. You will find more information about this business of trading in those forums than in yahoo answers.

Hope this helps.
Jim http://jsforex.blogspot.com

2008-06-24 10:45:35 by jessalynn

To determine the foreign exchange rate for different currencies, check the local paper for exchange rates, and pay attention to the inflation rate ...

Who are the participants in the market? How do global companies use the foreign exchange market to hedge against foreign exchange risks?

The primary function is to facilitate the buying and selling of money of different countries. If an American company wants to buy the products of a British company, it may have to buy British pounds so that it can pay for the product. Or if it pays in US dollars, the British company sells the dollars in exchange for British pounds.

Some of the participants in foreign exchange markets are speculators who buy one currency in the hope that its value will go up relative the the currency they are paying in exchange. Speculators keep the foreign exchange market very liquid, which makes it easier for non speculators to function in the market.

Businesses can use the foreign exchange market to hedge against the risk of a particular currency increasing or decreasing in value. For example, a Brazilian farmer has a contract to sell 1000 tons of wheat to a US flour mill at a specific price in dollars. If he gets the dollars now and uses them to buy the Brazilian currency, he will make a profit at the current exchange rate, but he has to wait to get paid when the wheat is delivered after it is harvested. By that time the value of the dollar may be lower and he would have a loss in the exchange. So he contracts to sell the dollars in the future at today's exchange rate assuring himself of a profit regardless of the value of dollars when the wheat is delivered. Someone else, possibly a speculator agrees to buy the dollars in the future at today's exchange rate in the hope that the value will be higher when the contract is ready for delivery.

Just as someone can agree to buy or sell wheat six months from now, they can agree to buy or sell dollars or pounds of franks or yen six months from now. In the foreign exchange market money of different countries is a commodity that can be traded.

2007-07-03 23:28:46 by qtpie34

I would like to enter the Foreign Exchange Market but I realy know very little about it. Does anyone know where I could get some accurate information (e.g.: websites)? Are there any good books I should take a look at? What about the Forex programs advertised on the television? Are they worth looking at or are they just a waste of money?

You'll want to get some education first. A few good books to look at include Mastering the Trade by John Carter and Visual Investor by John Murphy.

You'll need a good psychological and technical background to trade currencies as they move pretty fast and are highly leveraged. Once you're comfortable with that you can practice with most any forex broker.

FC stone is a really good brokerage that you might want to take a look at (fcstone.com).

That should get you started!

As for the programs on TV, some are good and some are junk. It all depends if you just want a system, or if you want to learn how to trade. I've evaluated a few of those so if you have some questions on them, I may be able to help answer more questions.

2006-08-15 16:19:01 by Kenyath

Explanations about how monetary policy affects Canada's aggregate demand are incomplete if we do not consider the effects of perfect capital mobility and the effects of net exports. These two effects are crucial for a small open economy like Canada.

Suppose the world interest rate is 4%, and Canada's interest rate is initially equal to 4%.

7.3. Suppose the Bank of Canada wants a fixed exchange rate against the U.S. dollar but also wants to reduce the money supply. Can the Bank of Canada sterilize its open-market operations with foreign exchange market operations?




A. Yes

B. No

B. No - because sterilization will be offset by initiated capital flows due to difference in interest rates.

P.S. I wouldn't call Canada "small open economy" (in perfect defenition) because of it's effect on world economy - It produces around 2.6% of world output.

2008-06-20 15:46:47 by lura

2. When the foreign exchange market determines the relative value of a currency, the country is adhering to a pegged exchange rate.

this is a true or false question

Ricky M, I found a website of US currency exchanges. http://www.whatisforextrading.com Try visiting one of them to see if they have a service representative that can help you.

2008-12-07 11:54:47 by Ricky M