The Forex market, like most investment markets, is often glued to economic reports that are published on a monthly or even quarterly basis.
Some of the more common economic reports or indicators that can influence and shape trade decisions in an investment market are the Consumer Price Index (CPI), the Gross Domestic Product (GDP), the Housing Price Index (HPI), and the Employment Situation Report. The Employment Situation Report is one of the most popular indicators around, where changes in the employment rate and hourly wage rates can influence overall currency rates.
Sunday, May 17, 2009
What exactly is the Employment Situation Report?
The Employment Situation Report, also commonly called the Labor Report, is an economic indicator that basically reports on the number of people out of work in the country, as well as on general wage rates, etc. The first part of the Employment Situation Report is called the household survey, which surveys approximately 60,000 households throughout the country about those out of work. From that number, the general unemployment rate is calculated. In other words, the household survey is a very powerful survey that helps determine the country’s overall unemployment rate.
The household survey is basically a lagging indicator, which means that any changes that occur in the number of people out of work usually happen after changes in an economy. If the economy is strong, the number of people out of work will generally soon decrease (positive effect on the currency rate), while if the economy slows down, the effect on the number of unemployed people might not be felt until a few months later (negative effect on currency rate).
The household survey is basically a lagging indicator, which means that any changes that occur in the number of people out of work usually happen after changes in an economy. If the economy is strong, the number of people out of work will generally soon decrease (positive effect on the currency rate), while if the economy slows down, the effect on the number of unemployed people might not be felt until a few months later (negative effect on currency rate).
Conclusions
You come to this article probably because of you are new to FOREX and were looking for some readings on the Internet.
To be frank, FOREX can be very profitable but the risk lie beneath is equally great. Remember to always trade with proper investment plan and strategy. Read books, attend courses, watch video seminars, read papers, or even practice first with a dealer’s demo account to get yourself ready. Trade smartly, and gain the maximum out of FOREX – good luck!
To be frank, FOREX can be very profitable but the risk lie beneath is equally great. Remember to always trade with proper investment plan and strategy. Read books, attend courses, watch video seminars, read papers, or even practice first with a dealer’s demo account to get yourself ready. Trade smartly, and gain the maximum out of FOREX – good luck!
Getting started in FOREX trading
You don’t need much to get started with FOREX trading. A computer with Internet access, a funded FOREX account with foreign currency exchange broker, and a trading system should be sufficient to get things started.
To reduce the risks of losing money, some basic charting knowledge is as well recommended before you start trading FOREX. FOREX charts assist the investor by providing a visual representation of exchange rate fluctuations. Many variables affect currency exchange rates, such as interest rates, bank policies, geopolitics, and even the time of day may affect exchange rates. As stated by expert FOREX trader Peter Bain, charting is an essential tool in FOREX trading.
In his newsletter, he reveals that daily charts, hourly charts, and 15-minute charts are used while trading in FOREX. As quoted from his informative newsletter -- “Daily chart will help you define the overall trend from a position trading point-of-view, and the hourly (one hour) chart will give you a feel for the intraday trend. The 15-minute chart is used for entry and exit – with assistance from the five-minute chart, where price is moving quickly, and you need to be closer to the action.”
Being one of the technical method, FOREX charting is based on the principal ‘history repeats itself’. FOREX traders who study charts predict the market future by evaluating past market performance. The time frame used for charting might differs for different traders, some analyze the past one week, some prefer six months analysis, and there are also traders who analyze the market for the past five to ten years before getting involved in a FOREX trade.
A huge variety of FOREX charts are available in the market. Some charting methods are very simple, using a few FOREX indicators to show trading direction; other charts may include up to forty indicators and those are mainly for advance traders that are more skillful. MACD Divergence, RSI, RSI range, and price are some of the well known indicators in charting.
To reduce the risks of losing money, some basic charting knowledge is as well recommended before you start trading FOREX. FOREX charts assist the investor by providing a visual representation of exchange rate fluctuations. Many variables affect currency exchange rates, such as interest rates, bank policies, geopolitics, and even the time of day may affect exchange rates. As stated by expert FOREX trader Peter Bain, charting is an essential tool in FOREX trading.
In his newsletter, he reveals that daily charts, hourly charts, and 15-minute charts are used while trading in FOREX. As quoted from his informative newsletter -- “Daily chart will help you define the overall trend from a position trading point-of-view, and the hourly (one hour) chart will give you a feel for the intraday trend. The 15-minute chart is used for entry and exit – with assistance from the five-minute chart, where price is moving quickly, and you need to be closer to the action.”
Being one of the technical method, FOREX charting is based on the principal ‘history repeats itself’. FOREX traders who study charts predict the market future by evaluating past market performance. The time frame used for charting might differs for different traders, some analyze the past one week, some prefer six months analysis, and there are also traders who analyze the market for the past five to ten years before getting involved in a FOREX trade.
A huge variety of FOREX charts are available in the market. Some charting methods are very simple, using a few FOREX indicators to show trading direction; other charts may include up to forty indicators and those are mainly for advance traders that are more skillful. MACD Divergence, RSI, RSI range, and price are some of the well known indicators in charting.
Facts about foreign currency exchange market
FOREX market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily and the figure is nearly 30 times larger than the total volume of equity trades in United States.
FOREX trading is very unique as the trades are done between two counterparts via electronic network or telephone connections. There is no centralized location as stocks or futures markets and trades are done around the clock. Everyday FOREX trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.
Although FOREX trading involves such a big volume of trades nowadays, it is not made available for the publics until year 1998. In the past, the FOREX market was not offered to small speculators or individual traders due to the large minimum business sizes and extremely strict financial requirements. At that time, only banks, big multi-national cooperation and major currency dealers were able to take advantage of the currency exchange market's extraordinary liquidity and strong trending nature of world's main currency exchange rates. Only until the late 90s (year 1998), FOREX brokers are allowed to break huge sized inter-bank units into smaller units and offer these units to individual traders like you and me.
Nowadays with the rapid growth of Internet and communications technology, FOREX trading has become one of the hottest make-money-at-home-businesses for those who wish to avoid conventional 9-5 day job.
As a fact in FOREX trading, FOREX is mainly traded in large international bank. According to Wall Street Journal Europe, 73% of the trade volume is covered by the major ten. Deutsche Bank, topping the table, had covered 17% of the total currency trades; followed by UBS in the second and Citi Group in third; taking 12.5% and 7.5% of the market.
FOREX trading is very unique as the trades are done between two counterparts via electronic network or telephone connections. There is no centralized location as stocks or futures markets and trades are done around the clock. Everyday FOREX trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.
Although FOREX trading involves such a big volume of trades nowadays, it is not made available for the publics until year 1998. In the past, the FOREX market was not offered to small speculators or individual traders due to the large minimum business sizes and extremely strict financial requirements. At that time, only banks, big multi-national cooperation and major currency dealers were able to take advantage of the currency exchange market's extraordinary liquidity and strong trending nature of world's main currency exchange rates. Only until the late 90s (year 1998), FOREX brokers are allowed to break huge sized inter-bank units into smaller units and offer these units to individual traders like you and me.
Nowadays with the rapid growth of Internet and communications technology, FOREX trading has become one of the hottest make-money-at-home-businesses for those who wish to avoid conventional 9-5 day job.
As a fact in FOREX trading, FOREX is mainly traded in large international bank. According to Wall Street Journal Europe, 73% of the trade volume is covered by the major ten. Deutsche Bank, topping the table, had covered 17% of the total currency trades; followed by UBS in the second and Citi Group in third; taking 12.5% and 7.5% of the market.
How do you start trading Forex?
Now you need to find a forex system that will help you along with your trading. You need to find the right system for you, so don’t ever tire of looking. You can find trading systems all over the market (the internet really) and they could and will help you make hundreds, if not thousands of times over any dime you pay up front.
You might think it’s difficult to get your trading system personalized or up and running in general, even if it’s standard. You might even find it hard to make a choice, but all it ever comes down to is knowledge, and that is what we are here for.
You can find the trading system for you if you just take into account 5 different pointers (that’s it, five!!) but before we get there, there are three things you have to know. So lets start there, and then we can move on to the pointers.
The first things you have to know is don’t fall into the gadget trap.
Just because it’s shiny doesn’t mean you need it. It’s actually, almost on the contrary. The simpler the system the better it will probably be for your forex needs, so stay away from the forex trading/cappuccino making/ironing/phone/camera combo. Stick to the basics and you will be fine. Another thing that should be obvious to you is that you, as your trading system, should be in the business of cutting losses and running with any profit possible.
You need a system that can identify possible profits and (ideally) instantly cut losses. This could save you a great deal of money, so don’t turn on your computer before you’re convinced that this is what your system does. The last of the three things you should know is that you need a system that can recognize long term trends. if your computer is only analyzing days when deciding to sell or buy, then you will never get more then pennies to your dollar, and that just isn’t enough when there are two trillion to be had.
You might think it’s difficult to get your trading system personalized or up and running in general, even if it’s standard. You might even find it hard to make a choice, but all it ever comes down to is knowledge, and that is what we are here for.
You can find the trading system for you if you just take into account 5 different pointers (that’s it, five!!) but before we get there, there are three things you have to know. So lets start there, and then we can move on to the pointers.
The first things you have to know is don’t fall into the gadget trap.
Just because it’s shiny doesn’t mean you need it. It’s actually, almost on the contrary. The simpler the system the better it will probably be for your forex needs, so stay away from the forex trading/cappuccino making/ironing/phone/camera combo. Stick to the basics and you will be fine. Another thing that should be obvious to you is that you, as your trading system, should be in the business of cutting losses and running with any profit possible.
You need a system that can identify possible profits and (ideally) instantly cut losses. This could save you a great deal of money, so don’t turn on your computer before you’re convinced that this is what your system does. The last of the three things you should know is that you need a system that can recognize long term trends. if your computer is only analyzing days when deciding to sell or buy, then you will never get more then pennies to your dollar, and that just isn’t enough when there are two trillion to be had.
Creating Profitable Forex Trading Systems in Five Easy Steps
There is an old saying that is loosely translated to 'if I don’t help myself, who will?’ now while this isnt very elloquent, it does convey what i want to tell you.
No entrepreneurship, no success, no money making scheme, is done if you don’t have a hand in it. So don’t rely on what other people can do for you, just get it done for yourself.
Now while this rule applies to everything, it’s specifically useful regarding the forex market (foreign exchange). The forex is the biggest, most liquid market on the planet. Basically it trades currencies and is estimated that over 2 trillion dollars pass hands each day. Just to give you perspective, the new your stock exchange (also a huge endeavor), 'only' processes about 50 billion dollars a day. Get the picture?
I bet I can guess your thoughts right about now. Well, maybe not the actual thought so much as the sentiment. You want some. 2 trillion is too much to be ignored and any person with a sturdy head on their shoulders would want a piece of the action. But in order to do that, you need to know at least the minimum for forex trading.
We understand that you can’t know or operate everything; you will need porters, or advisers or just plain friends to call when you’re in a bind, but don’t you want to be the one to make the call about whets best for you? The only way you can do that is if you learn, so make sure you understand whets going on before you take even a step into the world of forex trading.
No entrepreneurship, no success, no money making scheme, is done if you don’t have a hand in it. So don’t rely on what other people can do for you, just get it done for yourself.
Now while this rule applies to everything, it’s specifically useful regarding the forex market (foreign exchange). The forex is the biggest, most liquid market on the planet. Basically it trades currencies and is estimated that over 2 trillion dollars pass hands each day. Just to give you perspective, the new your stock exchange (also a huge endeavor), 'only' processes about 50 billion dollars a day. Get the picture?
I bet I can guess your thoughts right about now. Well, maybe not the actual thought so much as the sentiment. You want some. 2 trillion is too much to be ignored and any person with a sturdy head on their shoulders would want a piece of the action. But in order to do that, you need to know at least the minimum for forex trading.
We understand that you can’t know or operate everything; you will need porters, or advisers or just plain friends to call when you’re in a bind, but don’t you want to be the one to make the call about whets best for you? The only way you can do that is if you learn, so make sure you understand whets going on before you take even a step into the world of forex trading.
How does a faulty Forex dealer cheat your money?
Forex market is a non-centralized market. There is no common market place for Forex traders and there is no so-call ‘standard’ in foreign currency exchange price. Different Forex dealers offer very different deals to their customers.
As an individual FX trader, you depends solely on the dealer to make a transaction in your trades, thus picking up the right dealer is extremely crucial in your risk.
You may wonder how does a faulty dealer can cheat on your money as all investment call have to go thru your decisions.
Well, here's a typical example:
Often a bad dealer is not totally scams.
They are smart persons that trick money from traders that are not well-aware. These dealers, often known as retail market makers, will often encourage their clients to trade on margin and set stop loss orders, which allow the market makers to close out trades almost at will during busy markets at prices they have set. If the market maker does not offset the trader's position, the loss generated when a stop loss is triggered becomes the market maker's gain.
Trade prices are easily skewed one way or the other depending on the retail trader's position, which is known by the market maker.
Traders can be encouraged to take risky positions just before major economic announcements. If all else fails, the market maker can quote extreme prices (known as spiking) to trigger stop loss orders while the client is at work or asleep.
The vast majority of retail FX traders are not profitable. For those losing retail speculators, much of the funds they had on deposit will be, in some form or another, transferred to the market maker.
As an individual FX trader, you depends solely on the dealer to make a transaction in your trades, thus picking up the right dealer is extremely crucial in your risk.
You may wonder how does a faulty dealer can cheat on your money as all investment call have to go thru your decisions.
Well, here's a typical example:
Often a bad dealer is not totally scams.
They are smart persons that trick money from traders that are not well-aware. These dealers, often known as retail market makers, will often encourage their clients to trade on margin and set stop loss orders, which allow the market makers to close out trades almost at will during busy markets at prices they have set. If the market maker does not offset the trader's position, the loss generated when a stop loss is triggered becomes the market maker's gain.
Trade prices are easily skewed one way or the other depending on the retail trader's position, which is known by the market maker.
Traders can be encouraged to take risky positions just before major economic announcements. If all else fails, the market maker can quote extreme prices (known as spiking) to trigger stop loss orders while the client is at work or asleep.
The vast majority of retail FX traders are not profitable. For those losing retail speculators, much of the funds they had on deposit will be, in some form or another, transferred to the market maker.
Parabolic SAR in Forex trading
Parabolic SAR is a technical analysis method to predict entry and exit points in Forex Market. It's widely used in Forex trading market because of its accuracy during trending period. Parabolic SAR is a time/price system. It was first introduced by J.Welles Wilder in his acclaimed book "New Concepts in Technical Trading Systems" (1978). SAR stands for 'stop and reverse' and the term 'parabolic' comes from the shape of the curve (resembling a parabola) created on the technical chart.
Relative Strength Index (RSI) in Forex trading
The Relative Strength Index (RSI) is one of the popular Technical Indicators in oscillator charting methods. RSI is normally used to compare the currency strength and to predict currency price movements.
Mathematics calculations behind RSI charting: RSI= 100 - 100/(1+RS) where RS = sum of positive closing prices divide by sum of negative closing prices. RSI helps traders to predict price movements and to identify market turning points. Rising in RSI will normally followed by a rise in currency price; vise versa, downtrend RSI indicates that the currency price is more likely dropping.
Mathematics calculations behind RSI charting: RSI= 100 - 100/(1+RS) where RS = sum of positive closing prices divide by sum of negative closing prices. RSI helps traders to predict price movements and to identify market turning points. Rising in RSI will normally followed by a rise in currency price; vise versa, downtrend RSI indicates that the currency price is more likely dropping.
Usage of MACD divergence in Forex trading
The major usage (or benefit) of trading with MACD divergence is that the MACD chart has the ability to overshadow on trend change, which in turn trigger the sell off or buy in signal. Simply said, negative divergence indicates a change of bullish trend to bearish, while a positive divergence indicates a change of bearish trend to bullish. As MACD trading is taking a relative simple approach on the market, MACD is often used along with other technical analysis (stochastic oscillator for example).
MACD Indications
Here's how traders take MACD as trading indicators. From the maths of MACD,
MACD = EMA [12] - EMA[26]
Signal = EMA [9] of MACD
A bullish signal (buy in signal) is triggered whenever
A positive MACD (12-day EMA is trading above the 26-day EMA, EMA[12] > EMA[26])
Moving average positive crossover (MACD is trading above the EMA[9] of MACD)
Center line positive crossover (MACD=0 and MACD is trading above the EMA[9] of MACD)
A bearish signal (sell off signal) is triggered whenever
A negative MACD (12-day EMA is trading below the 26-day EMA, EMA[12] < EMA[26])
Moving average negative crossover (MACD is trading below the EMA[9] of MACD)
Center line negative crossover (MACD=0 and MACD is trading below the EMA[9] of MACD)
MACD is more than just about market momentum, it also gives the signal in the trend indication.
If MACD is positive and rising, then the gap between the 12-day EMA and the 26-day EMA will be widening. This indicates that the rate-of-change of the faster moving average is higher than the rate-of-change for the slower moving average. Positive momentum is increasing and this would be considered bullish. If MACD is negative and declining further, then the negative gap between the faster moving average and the slower moving average will be expanding. Downward momentum is accelerating and this would be considered bearish.
Often in reality, the Forex exchange price may drop to new selloff low but the MACD does not hit the new low, this maybe the sign of end of bearish. Or vise versa, the Forex exchange price may hit new high but the MACD might not be hitting on the new high point, this often indicates the change of trend from bullish to bearish.
MACD = EMA [12] - EMA[26]
Signal = EMA [9] of MACD
A bullish signal (buy in signal) is triggered whenever
A positive MACD (12-day EMA is trading above the 26-day EMA, EMA[12] > EMA[26])
Moving average positive crossover (MACD is trading above the EMA[9] of MACD)
Center line positive crossover (MACD=0 and MACD is trading above the EMA[9] of MACD)
A bearish signal (sell off signal) is triggered whenever
A negative MACD (12-day EMA is trading below the 26-day EMA, EMA[12] < EMA[26])
Moving average negative crossover (MACD is trading below the EMA[9] of MACD)
Center line negative crossover (MACD=0 and MACD is trading below the EMA[9] of MACD)
MACD is more than just about market momentum, it also gives the signal in the trend indication.
If MACD is positive and rising, then the gap between the 12-day EMA and the 26-day EMA will be widening. This indicates that the rate-of-change of the faster moving average is higher than the rate-of-change for the slower moving average. Positive momentum is increasing and this would be considered bullish. If MACD is negative and declining further, then the negative gap between the faster moving average and the slower moving average will be expanding. Downward momentum is accelerating and this would be considered bearish.
Often in reality, the Forex exchange price may drop to new selloff low but the MACD does not hit the new low, this maybe the sign of end of bearish. Or vise versa, the Forex exchange price may hit new high but the MACD might not be hitting on the new high point, this often indicates the change of trend from bullish to bearish.
Trading Forex in MACD: Moving Average Convergence/Divergence
MACD uses exponential moving averages (EMA), which are lagging indicators, to include some trend-following characteristics. These lagging indicators are turned into a momentum oscillator by subtracting the longer period of EMA from the shorter period of EMA. Translating the words into mathemathcis, this is how a MACD calculation looks like:
MACD = EMA [shorter period] - EMA[longer period]
The resulting plot forms a line that oscillates above and below zero (positive when EMA[shorter] > EMA[longer] and negative whenver EMA[shorter] < EMA[longer]), without any upper or lower limits. MACD is a centered oscillator and the guidelines for using centered oscillators apply. Besides the resulting plot, a standard signal line (or some call it trigger line) is added in the MACD graph for the indication. In maths form, this is how we get the signal line:
Signal = EMA [certain period] of MACD
Generally, a 12 day EMA is often userd as the EMA[shorter period]; 26 day EMA for the EMA[longer period]; and 9 day EMA of MACD is used as the signal line. These are the standard figures used by the creator of MACD, Gerald Appel, when the technical indicator first used in 1979. Another popular calculation periods in modern days is 7, 13, 5; where EMA[7] is used for the short period, EMA[13] is used for the long period, and 5 days for EMA of MACD (the signal line).
Again, translating words to maths presentation, this is how a standard MACD calculations looks like:
MACD = EMA [12] - EMA[26]
Signal = EMA [9] of MACD
MACD = EMA [shorter period] - EMA[longer period]
The resulting plot forms a line that oscillates above and below zero (positive when EMA[shorter] > EMA[longer] and negative whenver EMA[shorter] < EMA[longer]), without any upper or lower limits. MACD is a centered oscillator and the guidelines for using centered oscillators apply. Besides the resulting plot, a standard signal line (or some call it trigger line) is added in the MACD graph for the indication. In maths form, this is how we get the signal line:
Signal = EMA [certain period] of MACD
Generally, a 12 day EMA is often userd as the EMA[shorter period]; 26 day EMA for the EMA[longer period]; and 9 day EMA of MACD is used as the signal line. These are the standard figures used by the creator of MACD, Gerald Appel, when the technical indicator first used in 1979. Another popular calculation periods in modern days is 7, 13, 5; where EMA[7] is used for the short period, EMA[13] is used for the long period, and 5 days for EMA of MACD (the signal line).
Again, translating words to maths presentation, this is how a standard MACD calculations looks like:
MACD = EMA [12] - EMA[26]
Signal = EMA [9] of MACD
What's a pip?
A pip is the smallest value in a Forex quote. Take our example earlier on EUR/USD. If the exchange rate goes from 1.2385 to 1.2386; that's one pip. In mathematical definition, a pip means the last decimal place of a quotation.
Note that as each currency has its own value, the value of a pip is different from one another. Say USD/JPY rate at 120.75, a pip would be 0.01 (the second decimal place); while for EUR/USD 1.2385, a pip would be 0.0001 (the fourth decimal place).
Note that as each currency has its own value, the value of a pip is different from one another. Say USD/JPY rate at 120.75, a pip would be 0.01 (the second decimal place); while for EUR/USD 1.2385, a pip would be 0.0001 (the fourth decimal place).
FX Quoting: Bid/Ask and Spread
There are sometimes that you can only see one price but often currency exchange price are display in pairs with 'bid price and ask price'.
For example EUR/USD 1.2385/1.2390, 1.2385 is known as the bidding price, while 1.2390 is the asking price. Bidding price is the price that you sell the base currency (EUR in our case here); asking price is the price that you buy the base currency. The different of the bidding and the asking price is called 'spread'.
You might notice that bidding price is always lower than the asking price. Ever wonder why? The different of the bid-ask price (socall 'spread') is how currency brokers make profits without charging commissions to their clients (sell high and buy low in the same time.)
For example EUR/USD 1.2385/1.2390, 1.2385 is known as the bidding price, while 1.2390 is the asking price. Bidding price is the price that you sell the base currency (EUR in our case here); asking price is the price that you buy the base currency. The different of the bidding and the asking price is called 'spread'.
You might notice that bidding price is always lower than the asking price. Ever wonder why? The different of the bid-ask price (socall 'spread') is how currency brokers make profits without charging commissions to their clients (sell high and buy low in the same time.)
Simple Moving Average (SMA)
Simple Moving Average (SMA) is one of the easiest method in Technical Analysis. SMA indicates the average price (closing.opening) of a given time period, where each of the chosen periods carries the same weight for the average.
The maths behind SMA is simple. For example you are developing SMA chart for USD/JPY closing price in 5-day time frame. The first 5 days USD/JPY closing prices are 125.0, 124.0, 126.0, 123.0, 127.0 -- thus the first dots of your SMA graph will be 125.0 (average of the first 5 days USD/JPY closing price). Assume the USD/JPY closing price is 126.0 for day sixth, your second SMA point will be (124.0 + 126.0 + 123.0 + 127.0 + 126.0)/5= 125.2. The calculation goes on for the following dots and SMA chart is defined by joining these SMA dots.
SMA graph "moves" because for each calculation, we use the 'latest number of time periods' data and drop the oldest data.
The maths behind SMA is simple. For example you are developing SMA chart for USD/JPY closing price in 5-day time frame. The first 5 days USD/JPY closing prices are 125.0, 124.0, 126.0, 123.0, 127.0 -- thus the first dots of your SMA graph will be 125.0 (average of the first 5 days USD/JPY closing price). Assume the USD/JPY closing price is 126.0 for day sixth, your second SMA point will be (124.0 + 126.0 + 123.0 + 127.0 + 126.0)/5= 125.2. The calculation goes on for the following dots and SMA chart is defined by joining these SMA dots.
SMA graph "moves" because for each calculation, we use the 'latest number of time periods' data and drop the oldest data.
Japanese Yen (JPY)
The yen or en is the currency of Japan. It is also widely used as a reserve currency after the United States dollar, the euro and the pound sterling. The ISO 4217 codes for the yen are JPY and 392. The Latinised symbol is ¥ while in Japanese it is also written with the kanji 円.
While not a usage specific to currency, large quantities of yen are often counted in multiples of 10,000 in the same way as values in the United States are often quoted or rounded off to hundreds or thousands.
The yen was introduced by the Meiji government in 1870 as a system resembling those in Europe. The yen replaced the complex monetary system of the Edo period, based The New Currency Act of 1871 stipulated the adoption of the decimal accounting system of yen, sen, and rin, with the coins being round and cast as in the West.
The yen was legally defined as 0.78 troy ounces (24.26 g) of pure silver, or 1.5 grams of pure gold. The same amount of silver is worth about 1181 modern yen while the same amount of gold is worth about 3572 yen. The Act also moved Japan onto the gold standard. (The sen and the rin were eventually taken out of circulation at the end of 1953.)
While not a usage specific to currency, large quantities of yen are often counted in multiples of 10,000 in the same way as values in the United States are often quoted or rounded off to hundreds or thousands.
The yen was introduced by the Meiji government in 1870 as a system resembling those in Europe. The yen replaced the complex monetary system of the Edo period, based The New Currency Act of 1871 stipulated the adoption of the decimal accounting system of yen, sen, and rin, with the coins being round and cast as in the West.
The yen was legally defined as 0.78 troy ounces (24.26 g) of pure silver, or 1.5 grams of pure gold. The same amount of silver is worth about 1181 modern yen while the same amount of gold is worth about 3572 yen. The Act also moved Japan onto the gold standard. (The sen and the rin were eventually taken out of circulation at the end of 1953.)
Euro (EUR)
The euro (currency sign: €; banking code: EUR) is the official currency of the Eurozone (also known as the Euro Area), which consists of the European states of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, and Spain, and will extend to include Cyprus and Malta from 1 January 2008.
It is the single currency for more than 317 million Europeans. Including areas using currencies pegged to the euro, the euro directly affects more than 480 million people worldwide.
With more than €610 billion in circulation as of December 2006 (equivalent to US$802 billion at the exchange rates at the time), the euro surpasses the U.S. dollar in terms of combined value of cash in circulation.
While all European Union (EU) member states are eligible to join if they comply with certain monetary requirements, not all EU members have chosen to adopt the currency. All nations that have joined the EU since the 1993 implementation of the Maastricht Treaty have pledged to adopt the euro in due course. Maastricht obliged current members to join the euro; however, the United Kingdom and Denmark negotiated exemptions from that requirement for themselves. Sweden turned down the euro in a 2003 referendum, and has circumvented the requirement to join the euro area by not meeting the membership criteria.
Several small European states (The Vatican, Monaco, and San Marino), although not EU members, have adopted the euro due to currency unions with member states. Andorra, Montenegro, and Kosovo have adopted the euro unilaterally.
It is the single currency for more than 317 million Europeans. Including areas using currencies pegged to the euro, the euro directly affects more than 480 million people worldwide.
With more than €610 billion in circulation as of December 2006 (equivalent to US$802 billion at the exchange rates at the time), the euro surpasses the U.S. dollar in terms of combined value of cash in circulation.
While all European Union (EU) member states are eligible to join if they comply with certain monetary requirements, not all EU members have chosen to adopt the currency. All nations that have joined the EU since the 1993 implementation of the Maastricht Treaty have pledged to adopt the euro in due course. Maastricht obliged current members to join the euro; however, the United Kingdom and Denmark negotiated exemptions from that requirement for themselves. Sweden turned down the euro in a 2003 referendum, and has circumvented the requirement to join the euro area by not meeting the membership criteria.
Several small European states (The Vatican, Monaco, and San Marino), although not EU members, have adopted the euro due to currency unions with member states. Andorra, Montenegro, and Kosovo have adopted the euro unilaterally.
Pound Sterling (GBP)
The pound (symbol: £; ISO code: GBP), divided into 100 pence, is the official currency of the United Kingdom and the Crown dependencies.
The slang term "quid" is commonly used in place of "pound(s)". The official full name pound sterling (plural: pounds sterling) is used mainly in formal contexts and also when it is necessary to distinguish the currency used within the United Kingdom from others that have the same name.
The pound was originally the value of one pound Tower weight of sterling silver (hence "pound sterling"). The currency sign is the pound sign, originally ₤ with two cross-bars, then later more commonly £ with a single cross-bar. The pound sign derives from the black-letter "L", from the abbreviation LSD – librae, solidi, denarii – used for the pounds, shillings and pence of the original duodecimal currency system. Libra was the basic Roman unit of weight, which in turn derived from the Latin word for scales or balance.
The ISO 4217 currency code is GBP (Great Britain pound). Occasionally the abbreviation UKP is seen, but this is incorrect. The Crown dependencies use their own (non-ISO) codes. Stocks are often traded in pence, so traders may refer to Pence sterling, GBX (sometimes GBp), when listing stock prices.
The slang term "quid" is commonly used in place of "pound(s)". The official full name pound sterling (plural: pounds sterling) is used mainly in formal contexts and also when it is necessary to distinguish the currency used within the United Kingdom from others that have the same name.
The pound was originally the value of one pound Tower weight of sterling silver (hence "pound sterling"). The currency sign is the pound sign, originally ₤ with two cross-bars, then later more commonly £ with a single cross-bar. The pound sign derives from the black-letter "L", from the abbreviation LSD – librae, solidi, denarii – used for the pounds, shillings and pence of the original duodecimal currency system. Libra was the basic Roman unit of weight, which in turn derived from the Latin word for scales or balance.
The ISO 4217 currency code is GBP (Great Britain pound). Occasionally the abbreviation UKP is seen, but this is incorrect. The Crown dependencies use their own (non-ISO) codes. Stocks are often traded in pence, so traders may refer to Pence sterling, GBX (sometimes GBp), when listing stock prices.
United States Dollar (USD)
However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10¢, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices.
When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes (with the exception of gold, silver and platinum coins valued up to $100 as legal tender, but worth far more as bullion). (Both one-dollar coins and notes are produced today, although the note form is significantly more common.)
In the past, paper money was occasionally issued in denominations less than a dollar (fractional currency) and gold coins were issued for circulation up to the value of 20 dollars.
When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes (with the exception of gold, silver and platinum coins valued up to $100 as legal tender, but worth far more as bullion). (Both one-dollar coins and notes are produced today, although the note form is significantly more common.)
In the past, paper money was occasionally issued in denominations less than a dollar (fractional currency) and gold coins were issued for circulation up to the value of 20 dollars.
Major Currencies Traded in Forex Market
The most traded currency in Forex market (the major seven) are United States dollar, Eurozone Euro , Japanese Yen , British Pound Sterling, Swiss Franc, Australian dollar , and Canadian Dollars.
Forex market is much USD-centered, where United States currency is involved in more than 80% of the trades. Major traded pairs in FX market are EUR/USD, which yields 28% from total trades. USD/JPY and GBP/USD come second and third, with take up 17% and 14% from the global forex trading respectively.
Forex market is much USD-centered, where United States currency is involved in more than 80% of the trades. Major traded pairs in FX market are EUR/USD, which yields 28% from total trades. USD/JPY and GBP/USD come second and third, with take up 17% and 14% from the global forex trading respectively.
How high are the risk in Forex trading?
The risks of losing money in Forex trading is high, but it is controllable via proper education and trading system. Trading system is a must in Forex trading. Charts, graphs, or pivot points are handful to indicate the right time to enter or exit the market. An 'automated system', such as make your easierAs in any trade market, discipline, control of emotion, and money management are the traits needed to be succeed in Forex trading. Rewards in Forex trading can be very lucrative if traders manage their risk nicely. One benefit to using our recommended brokerage firm is that they guarantee fills at your Limit and Stop-Loss order prices with no slippage. This means you can have total control over the amount you risk on each trade. But remember, FOREX Trading is speculative and any capital used should be risk capital. In fact, we recommend that you trade on a demo account until you have shown profit for at least three consecutive months before trading real money.
How Forex trading works?
Forex is often traded in pairs, for example USD/Euro, USD/JPY, Euro/JPY, GBP/CHF, and CAD/USD. You get 'short' in one currency and you will get 'long' in the other one. Unlike conventional stocks market, Forex trading does not have a centralized trade market. It is considered as Over-the-Counter or Inter-bank as trades are done between two counterparts via electronic network or telephone connections. Forex works truly as a 24-hour market. Everyday Forex trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.
A very brief intro on Forex trading
Foreign currency exchange (Forex) market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily. The figure is nearly 30 times larger than the total volume of equity trades in United States.
Forex is a very unique market.
Trades are always done in pairs, traders are basically buying and selling money in the same time. Beside of trading in pairs, Forex is also very special as it has no centralized trade location and trades are done around the clock.
Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night.
Forex is a very unique market.
Trades are always done in pairs, traders are basically buying and selling money in the same time. Beside of trading in pairs, Forex is also very special as it has no centralized trade location and trades are done around the clock.
Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night.
Introducing Foreign Currency Exchange (Forex) Trading
Hello and welcome to Forex 101 Classroom.
So, you wanna make some bucks via Forex trading. Before you read further, let us warn you that 7 out of 10 traders keep losing money in Forex market; while the rest of the 30% work freely at home and earn millions annually.
What makes the difference is that the top 30% are either those with insider news, or those with skills and knowledge.
It is no secret that the foreign currency exchange (FOREX) market is a market full with crocodiles that you will lose your hard-earned money in a fraction of second. Yes, that's right! If you wanna make money in Forex trading, you either have to build up the network with so-call insiders (which seems a wasteful of time and energy to us); or, educate yourself well enough.
If you ever wish to get into this trading game, you better LEARN Forex trading before you start trading Forex. Forex market is definitely not a game for newbie and you need to brush up your skills before getting your hands wet.
So, you wanna make some bucks via Forex trading. Before you read further, let us warn you that 7 out of 10 traders keep losing money in Forex market; while the rest of the 30% work freely at home and earn millions annually.
What makes the difference is that the top 30% are either those with insider news, or those with skills and knowledge.
It is no secret that the foreign currency exchange (FOREX) market is a market full with crocodiles that you will lose your hard-earned money in a fraction of second. Yes, that's right! If you wanna make money in Forex trading, you either have to build up the network with so-call insiders (which seems a wasteful of time and energy to us); or, educate yourself well enough.
If you ever wish to get into this trading game, you better LEARN Forex trading before you start trading Forex. Forex market is definitely not a game for newbie and you need to brush up your skills before getting your hands wet.
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