Everything you need to know about Forex

FOREX. EXPLAINED. foreign * exchange → A VERY COOL INFOGRAPHIC ABOUT OUR INDUSTRY. what is the Forex Market HOLD The Forex Market is a network of buyers and sellers operating without a centralized exchange where one currency is transferred for another currency between participants at agreed upon prices. SELL FX BASICS Traders include: banks, central banks, institutional investors, currency speculators, corporations, governments, retail investors... Available 24/5.5 starting on Sunday at 5pm EST with the opening of the market in Sydney and Singapore continuing straight through to the New York close on Friday at 5pm EST. Largest and most liquid financial market in the world. FX market trades in 1 day what Wall St. trades in 1 month As of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion 7 major currency pairs to choose from, and many more second-tier or exotic currency pairs $€ ¥ £ MOST Traded Currencies US DOLLAR EURO JAPANESE YEN BRITISH POUND USD 84.9% MOST Traded OTHER 18.6% CURRENCIES Market % in 2010 NZD 1.6% SEK 2.2% HKD 2.4% CAD 5.3% EUR 39.1% CHF 6.4% AUD 7.6% GBP 12.9% JPY 19.0% MAIN Forex Trading Centers 1 LONDON NEW YORK HONG KONG TOKYO SINGAPORE 00:04 Stock Forex STOCK Market VS FOREX Market 8,000 publicly traded companies; enough to overwhelm any expert 7 major currency pairs to master Maximum leverage is 2:1 Can use up to 200:1 leverage' Brokerage fees, commissions, *Residents of Japan and the U.S. may not use more than 50:1 leverage Commission free trading clearing fees, etc. Most brokers are only open (brokers are compensated from the spread) The forex market is open continuously during normal business hours 24 hours a day, 5.5 days a week Leverage Disclaimer: Leverage may increase potential gains or losses on a given position. MECHANICS of the Market 1 Standard symbols for most commonly traded currencies: EUR - Euro JPY - Japanese yen USD - United States dollar AUD - Australian dollar CAD - Canadian dollar CHF - Swiss franc GBP - British pound NZD - New Zealand dollar SEK - Swedish krona HKD - Hong Kong dollar Currencies are traded in pairs GBP/USD or USD/JPY Base Currency Quote Currency - Base Currency Quote Currency 2 Currency pairs are often quoted as bid-ask spreads. EUR/USD quote of 1.4111/1.4113 EUR/USD Bid Ask 1.4111 1.4113 +price to sell spread price to buy - 2 Currencies are bought and sold in units called lots. 1 lot = 100,000 units of the base currency €1 (1 Euro) 1 lot of EUR/USD = 100,000 4, Just like any other investment, with Forex, you want to buy low and sell high, or sell high and buy low. If you buy EUR/USD at 1.4172 and then sell it when it goes up to 1.5172 you will make a profit. If you do it the other way around, you'll lose. So what makes the price of a currency pair go up or down? Supply and Demand! What makes demand for one currency increase? Increased Demand Demand Some examples: Supply 1. Higher Interest rates better return on savings 2. More national stability > safer and more attractive banking environment 3. Tourism People need the currency when travelling Qty When Demand Increases, Price Increases. PROFIT/LOSS Formula Price where you sell the currency Price where you buy the currency the transaction size profit I loss Example: You buy 1 lot of EUR/USD at $1.4180 and later sell 1 lot of EUR/USD at $1.4193. The transaction size is 1 lot (€100,000). To calculate your profit or loss: (1.4193 - 1.4180 = .0013 (13 pips) x 100,000 (1 lot) = $130 profit! This is an example of "going long" the EUR/USD. Of course, if you went short you would have lost $130! HOW to Start Trading Forex? Open a a Demo or Practice account. Brokers offer demo accounts where you can start trading using monopoly money to react and interpret real time prices in the market while you learn. START TRADING! CMSFOREX Presentation FOLLOW CMS FOREX twitter @cmsforex facebook. facebook.com/cmsfx Sources http://www.bis.org/publ/rpfx10.pdf http://www.federalreserve.gov/releases/h10/update/ http://stats.oecd.org/Index.aspx?Queryld=169 http://www.fxstreet.com/education/learning-center/unit-1/chapter-1/the-origins/ http://www.cmsfx.com/en/forex-education/online-forex-course/chapter-1-forex-basics/ This infographic is created by: CMS FX - Headquartered in New York, CMS Forex is truly a global company with offices in London, Boston, Tokyo, Bermuda, Saint Petersburg and Shanghai. As CMS Forex moves into the future, it remains committed to providing top Forex trading platforms, extensive Forex education and analysis materials and unparalleled client services. Risk Disclaimer: Online forex trading carries a high degree of risk to your capital and it is possible to lose your entire investment. Only speculate with money you can afford to lose. Forex trading may not be suitable for all investors, therefore ensure you fully understand the risks involved, and seek independent advice if necessary. LO