Everything is relative in the forex market. The euro, by itself, is neither strong nor weak. The same holds true for the U.S. dollar. By itself, it is neither strong nor weak. Only when you compare two currencies together can you determine how strong or weak each currency is in relation to the other currency.
FOREX - FUNDAMENTALS MAKE CURRENCY PAIRS MOVE (1.3)Trading Floor
The key to making money in the Forex is understanding what makes currency pairs move. Ultimately, it is investors who make currency pairs move as they buy and sell different currencies, but these investors buy and sell for a reason. Either they see something happening fundamentally in the global economy that makes them believe a currency is going to get stronger or they see something happening fundamentally that makes them believe a currency is going to get weaker. In other words, they watch the fundamentals and make their decisions according to what they see
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The updated version of the highly popular "Forex basics & secrets in 15 minutes". This is the most effective and fun way to learn how to trade forex.
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- What influences the exchange rates
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I am very interested in anything related to the CAD or the Canadian dollar since I live in Canada. Not only do I hold a USD bank account but also hold a long position(s) in the USDCAD Forex pair buying on certain types of dips.
We’ve had a contraction in our economy since oil prices have tanked and Ontario, once a manufacturing powerhouse, has become the province of debt and increasing hydro rates.
When there is a contraction in the economy, the Fed Banks look to interest rates thinking that will spur the economy. Today, we had a BOC rate announcement and as many of us expected, the rate was cut for the second time in 2015. Cutting rates may have the effect the central bank thinks it will but there are also two cautions as well.
http://www.netpicks.com/story-of-the-usdcad-forex-chart/ - READ MORE
FOREX - FUNDAMENTALS MAKE CURRENCY PAIRS MOVE (1.3)Trading Floor
The key to making money in the Forex is understanding what makes currency pairs move. Ultimately, it is investors who make currency pairs move as they buy and sell different currencies, but these investors buy and sell for a reason. Either they see something happening fundamentally in the global economy that makes them believe a currency is going to get stronger or they see something happening fundamentally that makes them believe a currency is going to get weaker. In other words, they watch the fundamentals and make their decisions according to what they see
Do you want to learn the secret...
..How to...
predict currency rates like the Pros do?
>>> visit www.forexhero.eu and get the most popular forex learning app FOR FREE!
The updated version of the highly popular "Forex basics & secrets in 15 minutes". This is the most effective and fun way to learn how to trade forex.
You will learn:
- What are the best times for forex trading
- What influences the exchange rates
- Tips from pros
- **NEW** Most effective technical strategies
- How leverage works
- ....and much more.
http://www.netpicks.com/tjgiveaway1 - YOUR FREE TRADING SYSTEM
I am very interested in anything related to the CAD or the Canadian dollar since I live in Canada. Not only do I hold a USD bank account but also hold a long position(s) in the USDCAD Forex pair buying on certain types of dips.
We’ve had a contraction in our economy since oil prices have tanked and Ontario, once a manufacturing powerhouse, has become the province of debt and increasing hydro rates.
When there is a contraction in the economy, the Fed Banks look to interest rates thinking that will spur the economy. Today, we had a BOC rate announcement and as many of us expected, the rate was cut for the second time in 2015. Cutting rates may have the effect the central bank thinks it will but there are also two cautions as well.
http://www.netpicks.com/story-of-the-usdcad-forex-chart/ - READ MORE
Olivier Desbarres: FX Reserves - All Things Considered EqualOlivier Desbarres
There has been much scaremongering in the past year about on the one hand “currency wars” and on the other the decline in Emerging Market (EM) central bank FX reserves – the firepower policy-makers have to defend their currencies in the event of a sharp and/or prolonged sell-off.
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Another presentation from International Business. Robert Braden, Brian Deeb and I tackled the topic of exchange rates utilizing Sony as a tool. There is plenty of information included especially how the rise in the Japanese Yen affected Sony's financial outlook.
the truth is that investment and risk are inseparable. Even the safest investment types have some form of risk attached to them. In investment terms, risk is also defined as deviation from the expected outcome.
Olivier Desbarres: FX Reserves - All Things Considered EqualOlivier Desbarres
There has been much scaremongering in the past year about on the one hand “currency wars” and on the other the decline in Emerging Market (EM) central bank FX reserves – the firepower policy-makers have to defend their currencies in the event of a sharp and/or prolonged sell-off.
do you want to present a beautiful presentation about the parts of the newspaper?? I GOT YOU use this presentation for you to present the parts of it....
Another presentation from International Business. Robert Braden, Brian Deeb and I tackled the topic of exchange rates utilizing Sony as a tool. There is plenty of information included especially how the rise in the Japanese Yen affected Sony's financial outlook.
the truth is that investment and risk are inseparable. Even the safest investment types have some form of risk attached to them. In investment terms, risk is also defined as deviation from the expected outcome.
This presentation was prepared by my GMCS team during the GMCS 2 course at Mangalore Branch of SIRC of ICAI.
This presentation gives an overview regarding the Forex Market and how one can use the Forex instruments and thus be able to transact globally.
An approach to deal with Forex Instruments in order to have accurate decision making has been outlined. This approach explains as to how an investor may be able to use Purchase Power Parity and Interest Rate Parity Theorems in order to transact.
To explore the prospect of utilization of a part of Forex reserve to the infrastructure project and at the same time take care of the balance of payment aspect of the nation.
This presentation covers foreign exchange risk definition, types, management and measurement. Hedging tools and techniques; both internal and external are also discussed.
The euro and US dollar: EUR/USD.
The US dollar and Japanese yen: USD/JPY.
The British pound sterling and US dollar: GBP/USD.
The US dollar and Swiss franc: USD/CHF.
Major, Minor and Exotic Forex Trading Currency PairsViet Son
Foreign exchange, also known as Forex trading is a decentralized trading domain known worldwide for its immense profit prospective.
With a 24 hour market running 6 days a week, lucrative opportunities always present themselves to traders.
On paper, Forex is simple - you sell a currency when it sees a hike in value; practically, however, currency trading is much more nuanced.
To get started, it is important that traders be aware of the different currency pairs in Forex markets:
Major Pairs:
These currency pairs are the ones where the US Dollar is quoted against other currencies.
Of the various major pairs, the EUR/USD is the most popular one, making up for more than 20% of the global currency trading volume.
Here are some examples of major pairs:
• EUR/USD: Euro - US Dollar
• USD/JPY: US Dollar - Japanese Yen
• GBP/USD: British Pound - US Dollar
• USD/CHF: US Dollar - Swiss Franc
• USD/CAD: US Dollar - Canadian Dollar
• AUD/USD: Australian Dollar - US Dollar
• NZD/USD: New Zealand Dollar - US Dollar
Minor Pairs: Also known as cross-currency pairs, the pairs that don't have the USD are classified as minor pairs. Here are some examples:
• EUR/GBP: Euro - British Pound
• EUR/AUD: Euro - Australian Dollar
• GBP/JPY: British Pound - Japanese Yen
• NZD/JPY: New Zealand Dollar - Japanese Yen
• GBP/CAD: British Pound - Canadian Dollar
Exotic Pairs: Countries with developing economies see their currencies as a part of exotic pairs. Here are some examples of exotic currency pairs:
• EUR/TRY: Euro - Turkish Lira
• JPY/NOK: Japanese Yen - Norwegian Krone
• NZD/SGD: New Zealand Dollar - Singapore Dollar
• GBP/ZAR: British Pound - South African Rand
• AUD/MXN: Australian Dollar - Mexican Peso
Having a thorough knowledge of the different Forex trading pairs will allow you to diversify your approach and profit from multiple market scenarios.
Enhance your trades with WesternFX's unparalleled guidance; call us today to know more.
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Forex market is where banks, businesses, governments, investors and traders come to exchange and speculate on currencies. The Forex market is also referred to as the ‘Fx market’, ‘Currency market’, ‘Foreign exchange currency market’ or ‘Foreign currency market’, and it is largest and most liquid market in the world with an average daily turnover of $3.98 trillion.
FREE FOREX Trading System training from Novice to Professional.
Learn making Money through Forex Trading.
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: Enhancing Forex Trading Expertise with Baron Learning Pvt Ltdniteshbaronlearning
Baron Learning Pvt Ltd provides a comprehensive suite of educational services tailored to forex traders at all levels. Our programs are designed to help traders understand the fundamentals of forex trading, including market analysis, forex economics, risk management, and trading strategies.
Before diving into forex trading, educate yourself about the market, trading strategies, and risk management techniques. There are numerous online resources, courses, and books available for beginner traders.Selecting the right forex broker is crucial for your trading success. Look for a broker that is regulated, offers competitive spreads, provides a user-friendly trading platform, and offers educational resources and customer support.https://learningbaron.com
Before diving into forex trading, educate yourself about the market, trading strategies, and risk management techniques. There are numerous online resources, courses, and books available for beginner traders.Selecting the right forex broker is crucial for your trading success. Look for a broker that is regulated, offers competitive spreads, provides a user-friendly trading platform, and offers educational resources and customer support
Before diving into forex trading, educate yourself about the market, trading strategies, and risk management techniques. There are numerous online resources, courses, and books available for beginner tradersChoose a Reliable Broker: Selecting the right forex broker is crucial for your trading success. Look for a broker that is regulated, offers competitive spreads, provides a user-friendly trading platform, and offers educational resources and customer support.
Before diving into forex trading, educate yourself about the market, trading strategies, and risk management techniques. There are numerous online resources, courses, and books available for beginner tradersChoose a Reliable Broker: Selecting the right forex broker is crucial for your trading success. Look for a broker that is regulated, offers competitive spreads, provides a user-friendly trading platform, and offers educational resources and customer support.
Similar to FOREX - CURRENCIES COME IN PAIRS (1.2) (20)
Bonds included on the list are for inspirational purpose only and liquidity will vary. None of the suggested bonds constitute any form of trade recommendation to sell or buy.
Pricing source: Indicative prices from Bloomberg
Bonds included on the inspirational list are selected based on market liquidity. None of the suggested bonds constitute any form of trade recommendation to sell or buy.
Pricing source: Indicative prices from Bloomberg
Bonds included on the list are for inspirational purpose only and liquidity will vary. None of the suggested bonds constitute any form of trade recommendation to sell or buy.
Pricing source: Indicative prices from Bloomberg
Saxo Fundamental FX Portfolio for March 2011Trading Floor
This month the basis of the Saxo Fundamental FX Portfolio model, the proprietary macro strength indicators, have been revised to make them more comparable across economies. There is also a change to how funds are allocated in the portfolio model – from an absolute value to a percentage allocation, making the portfolio easier to use. Next month there will be an additional table detailing the changes to the portfolio allocation.
Back-test performance (December 1994 – February 2011)* EUR USD GBP
Stock market analysis: Apple, eBay INC,Google,Morgan Stanley,Western Digial Corp. and more. In the several sectors like finance, technology & basic materials. #stocktrading #stocks. By Saxo Bank's Tradingfloor.com team.
Global Value Equity Portfolio (March 2011)Trading Floor
This month we have adjusted our Global Value Equity Portfolio to include the reinvestment of gross dividends and introduced dynamic weights for the constituents. This reduces transaction costs, enhances excess return and makes the portfolio easier to replicate for investors.
Fibonacci analysis is the study of identifying potential support and resistance levels in the future based on past price trends and reversals. Fibonacci analysis is based on the mathematical discoveries of Leonardo Pisano—also known as Fibonacci. He is credited with discovering a sequence of numbers that now bears his name: the Fibonacci sequence.
Forex traders have to not only compete with other traders in the forex market but also with themselves. Oftentimes as a Forex trader, you will be your own worst enemy. We, as humans, are naturally emotional. Our egos want to be validated—we want to prove to ourselves that we know what we are doing and we are capable of taking care of ourselves. We also have a natural instinct to survive.
Traders vote with their pocketbooks. If they believe a currency pair is going to move higher, they will buy the currency pair. If they believe a currency pair is going to move lower, they will sell the currency pair. When their money is on the line, they will do whatever it takes to be profitable. Oftentimes the actions of these self-interested traders form price patterns on the chart.
FOREX - TECHNICAL ANALYSIS: TRENDS, SUPPORT AND RESISTANCE (1.4)Trading Floor
Charts, charts, charts. When most people think about trading Forex, they think about watching price movements flash by them on the charts and making money as they jump in and out of profitable trades. This is where traders show whether or not they have what it takes to be successful in Forex market.
Earnings Releases 21.February - 27. February 2011Trading Floor
Stock market analysis: Apple, eBay INC,Google,Morgan Stanley,Western Digial Corp. and more. In the several sectors like finance, technology & basic materials. #stocktrading #stocks. By Saxo Bank's Tradingfloor.com team.
Commodities on the radar - Weekly Commodity Update 1.2.11Trading Floor
* Wake-up Call
* Forex strategy
* Equity Strategy
* Futures strategy
* Trading Floor
* External analysis
* Strategy Team
* Live Prices
* Economic Calendar
* Analysis Disclaimer
* Forex Data Feeds
Weekly Commodity Update
Ole S. Hansen
Analysis by : Ole S. Hansen
Futures and Fixed Income Manager
Friday, Feb 18, 2011, 02:18
Gold higher but outshone by silver
Commodity prices rises on the back of strong global demand amid declining inventories.
Fundamental economic data continues to support the current economic recovery while global headline inflation rose again during January highlighting the risk of rising food and energy prices. The ongoing geopolitical tensions in the MENA region (Middle East and North Africa) is not far from the headlines either with hoarding of essential food commodities continuing to be a theme that drives the agricultural sector.
Earnings releases 7. February - 11.February 2011Trading Floor
Stock market analysis: Apple, eBay INC,Google,Morgan Stanley,Western Digial Corp. and more. In the several sectors like finance, technology & basic materials. #stocktrading #stocks. By Saxo Bank's Tradingfloor.com team.
Stock market analysis: Apple, eBay INC,Google,Morgan Stanley,Western Digial Corp. and more. In the several sectors like finance, technology & basic materials. #stocktrading #stocks. By Saxo Bank's Tradingfloor.com team.
Earnings releases 17. January - 23. January 2011Trading Floor
Stock market analysis: Apple, eBay INC,Google,Morgan Stanley,Western Digial Corp. and more. In the several sectors like finance, technology & basic materials. #stocktrading #stocks. By Saxo Bank's Tradingfloor.com team.
The Forex Portfolio remains firmly negative towards the USD and to a lesser extent towards the EUR though both net short positions have been reduced in January. The net short exposure to GBP is nearly negligible now
The Forex Portfolio remains firmly negative towards the USD and to a lesser extent towards the EUR. Both net short positions have not changed much in December, but the model has also turned quite bearish on the GBP
Saxo Asset Allocation for February 2011Trading Floor
Our Asset Allocation Model maintains its “Moderately Bullish” stance even though the
Global Business Cycle Momentum Indicator decelerated in January. The model suggests
big positions in equities and bonds
FX month(s) in review: Wild transition to the New Year.
Themes for 2011
Carry Trade Model – coming unhinged
Central Bank Watch: Expectations shifting higher
Saxo Bank G-10 FX Outlook
2. GETTING STARTED CURRENCIES COME IN PAIRS
You know the advantages of trading forex, and you are excited to start Everything is relative in the forex market. The euro, by itself, is neither
trading. Now you need to learn what this market is all about. How does strong nor weak. The same holds true for the U.S. dollar. By itself, it is
it work? What makes currency pairs move up and down? Most neither strong nor weak. Only when you compare two currencies
importantly, how can you make money trading forex? together can you determine how strong or weak each currency is in
relation to the other currency.
Every successful forex investor begins with a solid foundation of
knowledge upon which to build. Let’s start with currency pairs—the For example, the euro could be getting stronger compared to the U.S.
building blocks of the forex market—and how you will be using them dollar. However, the euro could also be getting weaker compared to
in your trading. the British pound at the same time.
In this first section, we will explain the following to get you ready to Currencies always trade in pairs. You never simply buy the euro or sell
place your first trade: the U.S. dollar. You trade them as a pair. If you believe the euro is
gaining strength compared to the U.S. dollar, you buy euros and sell
What a currency pair is U.S. dollars at the same time. If you believe the U.S. dollar is gaining
strength compared to the euro, you buy U.S. dollars and sell euros at
How you can trade a currency pair
the same time. You always buy the stronger currency and sell the
What happens when you trade a currency pair weaker currency.
Currency pairs are typically divided into the following three major
groups:
1
3. Major currency pairs
Exotic currency pairs EUR/USD (Euro / U.S. dollar)
Currency crosses GBP/USD (British pound / U.S. dollar)
USD/CHF (U.S. dollar / Swiss franc)
Major Currency Pairs USD/JPY (U.S. dollar / Japanese yen)
Most forex investors begin by investing in the major currency pairs, or
the majors. The majors are those currency pairs that are comprised of USD/CAD (U.S. dollar / Canadian dollar)
the most important currency in the global markets—the U.S. dollar
AUD/USD (Australian dollar / U.S. dollar)
(USD)—crossed with one of seven other globally significant
currencies—the euro (EUR), the Great British pound (GBP), the Swiss NZD/USD (New Zealand dollar / U.S. dollar)
franc (CHF), the Japanese yen (JPY), the Canadian dollar (CAD), the
Australian dollar (AUD) and the New Zealand dollar (NZD).
Take some time to learn the following major currency pairs because
you will most likely be using them extensively:
2
4. Exotic Currency Pairs
The exotic currency pairs, or the exotics, are the currency pairs that are
comprised of the most important currency in the global markets—the USD/SEK (U.S. dollar / Swedish krone)
U.S. dollar (USD)—crossed with any currency that is not considered a
major currency. Exotic currencies—like the Swedish krone (SEK), the USD/NOK (U.S. dollar / Norwegian krone)
South African rand (ZAR), or the Mexican peso (MXN)—are called
exotic because they are associated with illiquid currencies that might USD/DKK (U.S. dollar / Danish krone)
not be available in a standard trading account.
USD/HKD (U.S. dollar / Hong Kong dollar)
Exotic currencies are usually lightly traded and have large bid/ask
spreads. However, many so-called “exotic” currencies are becoming USD/ZAR (U.S. dollar / South African rand)
more popular and more and more investors are trading them.
USD/THB (U.S. dollar / Thai baht)
Take a look at the following list of exotic currency pairs because you
USD/SGD (U.S. dollar / Singapore dollar)
may be interested in diversifying your forex portfolio with a few
uncorrelated currency pairs: USD/MXN (U.S. dollar / Mexican peso)
3
5. Currency Crosses TRADING CURRENCY PAIRS
Investors, just like you, make money every day by trading currency
Currency crosses, or the crosses, are the currency pairs that are pairs. By determining what is going to happen to a currency pair in the
comprised of any two currencies—so long as neither of them is not the future, investors can act today to take advantage of coming price
U.S. dollar (USD). The euro (EUR) paired with the British pound (GBP) or movements.
the Australian dollar (AUD) paired with the Japanese yen (JPY) would
Currency pairs can do one of the following three things:
be considered currency crosses.
They can go up
They can go down
The following is a list of some of the more popular currency crosses: They can go sideways
GBP/JPY (British pound / Japanese yen)
Before you can determine if a currency pair is going to be going up,
EUR/GBP (Euro / British pound) down or sideways, however, you need to determine which currency in
the pair is getting stronger and which currency is getting weaker,
AUD/JPY (Australian dollar / Japanese yen) compared to the other currency. For instance, if you are looking at the
EUR/USD (euro / U.S. dollar) pair, you have to decide if the euro is
EUR/CAD (Euro / Canadian dollar) getting stronger than the U.S. dollar or if the U.S. dollar is getting
stronger than the euro.
CAD/JPY (Canadian dollar / Japanese yen)
Note: The first currency listed in the currency pair is called the base
currency and the second currency listed in the currency pair is called the
4
6. quote currency. When you look at the price of a currency pair, it tells
you how many of the quote currency it would take to buy one unit of
the base currency. You can buy the currency pair
You can sell the currency pair
If the base currency is strengthening against the quote currency, the You can do nothing
currency pair will be moving up. If the quote currency is strengthening
against the base currency, the currency pair will be moving down. If the
base currency and the quote currency are equally strong, the currency
Buying a Currency Pair
You can make money trading the forex if you buy a currency pair when
pair will be moving sideways.
the first currency in the currency pair (the base currency) is
The following is a quick reference to help you remember which way a strengthening compared to the second currency in the currency pair
currency pair will be moving: (the quote currency).
Entering the trade—Buying a currency pair is as simple as clicking the
“Buy” button in your trading station.
Base > Quote = Up
Base < Quote = Down
Base = Quote = Sideways
Once you have decided which way the currency pair is going to move,
you can place your trade. When trading forex, you can do one of the
following three things:
5
7. For example, if you buy the EUR/USD to enter the trade, you must sell
the EUR/USD to exit that trade.
Selling a Currency Pair
You can make money trading the forex if you sell a currency pair when
the second currency in the currency pair (the quote currency) is
strengthening compared to the first currency in the currency pair (the
base currency).
Entering the trade—Selling a currency pair is as simple as clicking the
While all you have to do is click a button, knowing what happens when
“Sell” button in your trading station.
you click that button is extremely important. However, you don’t have
to worry about the technicalities right now. You will learn what
happens behind the scenes shortly when you learn about trading on
margin.
Exiting the trade—Buying a currency pair is only the first step in the
trading process. To complete your trade and take your profits, or losses,
you have to exit your trade. To exit a trade, you simply have to do the
opposite of whatever you did to enter the trade. If you bought a
currency pair to enter the trade, you must sell that same currency pair
to exit the trade.
6
8. While all you have to do is click a button, knowing what happens when pair moves sideways, it is extremely difficult to make money by trying
you click that button is extremely important. However, you don’t have to buy or sell the currency pair.
to worry about the technicalities right now. You will learn what
happens behind the scenes shortly when you learn about trading on To make money when a currency pair is moving sideways, you need to
margin. use forex options. You’ll learn more about forex options—what they
are and how you can put them to work in your account—later on in
Exiting the trade—Selling a currency pair is only the first step in the your forex education. For now, focus on learning how to identify when
trading process. To complete your trade and take your profits, or losses, a currency pair is going up or down and how you can take advantage
you have to exit your trade. To exit a trade, you simply have to do the of those movements.
opposite of whatever you did to enter the trade. If you sold a currency
pair to enter the trade, you must buy back that same currency pair to
exit the trade. THE MECHANICS OF TRADING
For example, if you sell the EUR/USD to enter the trade, you must buy
the EUR/USD back to exit that trade.
CURRENCY PAIRS
The forex market shares many similarities with other markets you are
acquainted with in your life—like the super market or a car market—
where you can buy and sell items for a set value. However, you also
Doing Nothing with a Currency Pair enjoy a few unique benefits when you invest in the forex market. For
instance, when you trade in the forex market with Saxo Bank, you are
You cannot make money trading the forex by buying or selling a
able to control and profit from significant quantities of currency
currency pair when the first currency in the currency pair (the base
without having to pay for it all up front yourself.
currency) is not strengthening or weakening compared to the second
currency in the currency pair (the quote currency). When a currency
7
9. To fully utilize and appreciate the unique benefits you can enjoy by You can lever, or increase the investing power of, your forex accounts
investing in the forex market, you need to understand how each trade by using some of your own money to enter a trade and then borrowing
you enter works. In particular, you need to understand what each of the rest from your dealer. For example, the forex market allows you to
the following three concepts means: control $100,000 with as little as $1,000 of your own money. That
means you only have to pay for 1 percent of the position with your
Leverage own money. You can borrow the remaining 99 percent of the purchase
Margin
price from your dealer.
Spread
The leverage you enjoy in the forex market is determined by the margin
you are required to post for each trade.
Leverage
Leverage is probably the one characteristic of the forex market that
intrigues individual investors the most. Leverage is the ability to convert
a small amount of power into a larger amount through the use of a Margin
tool. Imagine you are asked to move a large boulder from the spot The forex market is an exciting market because your dealer is willing to
where it is currently resting. You could certainly try to push and move lend you money so you increase your profit-generating potential in all
the boulder with your bare hands, but your job will be much easier if of your trades. Before your dealer lets you borrow money, however,
you can use a tool—like a large pole—that you can place under the you have to show that you have some money to cover any losses you
boulder that will give you some leverage. may incur. Margin is the money you set aside with your dealer for safe
keeping to prove that you are able to cover your losses.
The same principle holds true when you are investing in the forex
market. You can make money by investing just your own money, but For example, if you buy the EUR/USD, you will be required to set aside
you can make much more money if you can use the tool of financial 1 percent of the position size as margin. That means if the position size
leverage by borrowing money from your dealer. is 100,000 euros, you will be required to set aside the equivalent of
8
10. 1,000 euros to prove to your dealer that you can cover losses of at least The Spread
1,000 euros should your trade move against you. The spread is the distance between the price at which you can buy a
currency pair and the price at which you can sell a currency pair at any
Different currency pairs have different margin requirements. Major
given moment.
currency pairs have lower margin requirements because their high
levels of liquidity make it easier to enter and exit your trades quickly— You cannot buy a currency pair and immediately turn around and sell it
which gives your dealer added confidence it will be able to close out at a lower price. The price at which you can buy a currency pair (the
your positions without incurring unexpected losses. Exotic currency “Ask” price), is always higher than the price at which you can sell a
pairs have higher margin requirements because their low levels of currency pair (the “Bid” price).
liquidity make it harder to enter and exit your trades quickly.
Whenever you enter a trade, you start out with a small loss because of
Many beginning forex traders get confused by thinking that the money the spread. You must overcome the spread—hold onto the trade long
they set aside as margin actually goes toward purchasing currencies. It enough for it to move through the spread—before you will be
does not. You borrow 100 percent of the purchase price from your profitable on your trade. It is a small hurdle to clear and a small price to
dealer. Your margin only shows your dealer you have money to cover pay for the leverage and liquidity Saxo Bank provides in the forex
any losses that you may incur. market.
When you buy a currency pair, you do not have to come up with the
cash on your own. Your broker loans you enough of one currency to
buy enough of the other currency in the pair. For example, if you click
on the “Buy” button to buy the EUR/USD pair at 100,000 units, your
dealer will loan you enough U.S. dollars (USD) to buy 100,000 euros
(EUR). If the EUR/USD exchange rate is 1.4000 at the time, your dealer
will loan you 140,000 U.S. dollars to buy 100,000 euros.
9
12. Disclaimer
None of the information contained herein constitutes an offer to purchase or sell a financial instrument or to make any investments.
Saxo Bank A/S and/or its affiliates and subsidiaries (hereinafter referred to as the “Saxo Bank Group”) do not take into account your
personal investment objectives or financial situation and make no representation, and assume no liability to the accuracy or
completeness of the information provided, nor for any loss arising from any investment based on a recommendation, forecast or other
information supplied from any employee of Saxo Bank, third party, or otherwise. Trades in accordance with the recommendations in an
analysis, especially, but not limited to, leveraged investments such as foreign exchange trading and investment in derivatives, can be
very speculative and may result in losses as well as profits. You should carefully consider your financial situation and consult your
financial advisor(s) in order to understand the risks involved and ensure the suitability of your situation prior to making any investment
or entering into any transactions. All expressions of opinion are subject to change without notice. Any opinions made may be personal
to the author and may not reflect the opinions of Saxo Bank.
Please furthermore refer to Saxo Bank's full General Disclaimer: http://www.saxobank.com/?id=193
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