Forex Dealing

A trader attempts to profit from buying or selling currencies by implementing Fundamental and Technical analysis to help decide which way a currency is likely to move. Countries having secure governments and world renowned banks with robust economies and low inflation are the ones whose currencies are most favoured and are most commonly referred to as the ‘major currencies’. A trader can trade Japanese Yen, European Euro and British Pound in any combination as they are the most common currencies traded along with U.S. Dollar. These currency pairs are known to be the most liquid as well. One can also trade the Canadian, Australian and New Zealand Dollars as well as the Swiss Franc making for 19 total trading instruments when accounting for all the cross pairs. Other smaller world currencies are not offered as they are too illiquid and difficult to trade.

Trading Currencies

Profit and loss can be realized by selling currencies that are vulnerable to drop in value against another other major currency. Similarly, buying currencies which have a tendency to rise in the market against any other major currency can enable a trader to again gain profit (loss).

When a trader buys a currency at a particular rate and intends to sell it at a higher rate this is called a ‘long’ position and when he/she sells at a rate and intends to buy when the rate falls is called a ‘short’ position.

The value of one currency with respect to any other currency shows the economic stability of that country. Trading currencies in respect to the change in political situation is reactive whereas trading with respect to anticipated occurrences is speculative. Generally, forex trading is carried out by sheer anticipation about the shifting of currency rates.

A trader can both opt for a conservative approach and liquidate positions quickly using limit and stop orders to control risks which benefit from the slightest price changes or go for a more risky approach. A trader places a limit order to make certain a position is established once a price level is attained in the market. (Under unpredictable circumstances in the market a limit or stop order might not be executed by the broker at the specified rate given by the trader but we attempt to honour up to 10 lots in size of limit and stop orders.)

To limit loss on a particular trade a stop order is placed to automatically liquidate a position at a chosen price level. A trader might profit hugely by even the slightest change in daily currency rates if he/she places orders in respect to resistance levels and technical support.

Effect of time factor on currency trading throughout the world affects traders

Financial Centers - London, Tokyo and New York City.

Forex is the most liquid international financial market which trades continuously 24/7. The time of day has an impact on liquidity of a particular currency. The only break that occurs in trading is during the weekends.

Traders must contemplate which factors are likely to be in play in the market when they decide to trade as even a slight occurrence anywhere in the world might have a major impact on investments globally.

The major time zones and trading hubs are that of Sydney, New York, Tokyo and London.

As the market remains operational 24/7, forex has a great attraction for traders wanting to trade at any time of the day.