It will help to understand what is Foreign Exchange Market. And Who are the Traders are present in market for stocks. It will also help to understand the nature of Foreign exchange.

1. Foreign
Exchange
Market
Presented By:-
Suresh Vaishnav

2. WHAT IS FOREIGN
EXCHANGE
Foreign exchange is the
mechanism by which the
currency of one country gets
converted into the currency of
another country.
The conversion of currency is
done by the banks who deal in
foreign exchange. These banks
maintain stocks of one
currencies in the form of
balances with banks.

3. Nature of foreign
exchange
Affected by demand and
supply.
Affected by rate of interest.
Affected by balance of
payment surplus.
Affected inflation rate.
Affected by the economic
stability of the country.
Affected by the fiscal policy of
the government.
Affected by the political
condition of the country.

4. Operation of foreign
exchange market:
Foreign exchange market
operates as:-
Spot Market: (Current Market)
Spot market for foreign exchange
is that market which handles only
spot transaction or current
transactions.
Principle characteristics:-
 Spot Market is of daily nature.
It does not trade in future
deliveries.
 Spot rate of exchange is that
rate which happens to prevail at
the time when transactions are
incurred.
Forward Market:
Forward Market for foreign exchange is that
market which handles such transaction of
foreign exchange as are meant for future
delivery.
Principles Characteristics:-
 It only caters to forward transaction.
 It determines forward exchange rate at
which forward transaction are to be honored.

5. Exchange Rate
►Fixed Exchange Rate
System
Fixed rates provide greater
certainty for exporters and
importers.
►Flexible Exchange Rate
System
Flexible exchange rate or
floating exchange rates
change freely and
determined by trading in
the market.

6. History of
Foreign
exchange
Foreign exchange history can
be viewed as a series of
solutions that allowed
countries to issue their own
currency and to conduct their
own monetary policy while
also allowing international
trade to be conducted by
providing a means of
exchanging one currency for
another according to the
exchange rate between them,
which was either agreed-upon
or set by the market.

7. Characteristics of foreign
exchange
☻ Its huge trading volume
representing the largest asset
class in the world leading to
high liquidity.
☻ Its geographical dispersion.
☻The use of leverage to
enhance profit and loss
margins and with respect to
account size.

8. FOREIGN EXCHANGE
MARKET STRUCTURE Market Segments
Foreign exchange market
activity takes place onshore
with
Many countries prohibiting
onshore entities from
undertaking the operations in
offshore markets for their
currencies. It is the central
bank, or professional dealers
association, which normally
issues the code of conduct. In
auction markets, an auctioneer
or auction mechanism
allocates foreign exchange by
matching supply and demand
orders.

9. Top 10 Currency Traders are :-

10. CURRENCY TRADING RULES
► PLAN YOUR TRADE AND
TRADE YOUR PLAN.
► THE TREND IS YOUR
FRIEND.
►FOCUS ON CAPITAL
PRESERVATION.
►KNOW WHEN TO CUT
LOSS.
►TAKE PROFIT WHEN THE
TRADE IS GOOD
►BE EMOTIONLESS.
►NOT TRADE BASED ON A
TIP FROM A FRIEND OR
BROKER.

11. Mistakes of
Foreign
exchange
Traders
►Having Unrealistic
Expectations.
►Taking Highly Correlated
Trades.
►Failing to Use a Stop.
►Taking Unnecessary Risks.
►Being Too Patient With
Losers and Not Patient
Enough With Winners.
►Being a “Possum Trader”.