China has become the largest exporter of goods in the world. This has been a remarkable feat achieved by the Chinese given the fact that just a couple of decades back, their economy was in complete shambles. Part of this feat can be attributed to the world class infrastructure that China has built to enable low cost production. However, a significant part can also be attributed to the currency policy that has been followed by the Chinese. In this article, we will discuss about the currency policy of China in recent times and how it has affected the Forex markets:…
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When Do Central Banks Intervene in the Forex Market ? Central Banks do not intervene often in the Forex market. In fact, the intervention by Central Banks can be considered to be a sign of significant economic weakness in a currency. As a result, Central Bank intervention usually only happens when the currency is under some sort of crisis. This could be a genuine economic crisis like the 2008 crisis or the Euro crisis. Alternatively, it could also be a speculative attack that a country is facing. There are multiple ways in which Central Banks can intervene in the markets. Some…
The $4 trillion dollar Forex market witnesses a lot of market participants. However, all of these participants have different motives. An understanding of these motives is required to predict their behavior in the markets. Also, some of these participants have deeper pockets, better information and are more active than the others. Therefore, any student of Forex trading must be aware of the different kinds of participants that they are likely to come across when they trade in this market. This article lists down some important categories of market participants. Forex Dealers Forex dealers are amongst the biggest participants in the Forex…
The Importance of Major Pairs The Forex market is a place where trading happens in all currencies. However, the volume of trade that is conducted in different currencies is very different. Hence, even though there are hundreds of currencies in the world, about two thirds of the massive $4 trillion dollar Forex volume is transacted in just 4 currency pairs! These 4 pairs are referred to as the major currencies. The movement in these pairs is the most watched metric in the Forex market and is considered to be the overall barometer of the market. Therefore when currency experts talk about…
Advantages of Forex Market The biggest financial market in the world is the biggest market because it provides some advantages to its participants. Some of the major advantages offered are as follows: FlexibilityForex exchange markets provide traders with a lot of flexibility. This is because there is no restriction on the amount of money that can be used for trading. Also, there is almost no regulation of the markets. This combined with the fact that the market operates on a 24 by 7 basis creates a very flexible scenario for traders.People with regular jobs can also indulge in Forex trading…
Why Orders are Important in Forex Markets ? There is a need for some form of automation in the Forex markets. This is because the market runs 24 by 7. Therefore the value of investor holdings and therefore their net worth keep changing 24 by 7. Hence if an open position is not managed for a few days, its monetary value could drastically change. Also, it is not possible to actively manage the positions 24 by 7 manually until you are a big multinational corporation and can hire people to work around the clock. Therefore in such a scenario, market…
Forex quotations can be quite complex for the average person. It takes some training and knowledge to understand that these quotations can be provided in more than one way! Also, it takes a little getting used to before a person can quickly comprehend these quotes and take quick decisions based on the same. In this article, we will explain the two types of Forex quotations as well as the abbreviations which are used in them. Nomenclature Any Foreign exchange market quotation always uses the abbreviation of the currency under question. There are standard currency keys or currency codes that have…
The Foreign exchange market is far more complicated as compared to stock or bond markets. Predicting the foreign exchange rate includes predicting the performance of entire economies. There are a multitude of factors which come into play when exchange rates are being determined. This article lists down and explains some of the important factors which have a major influence on the exchange rates. Pricing In The Future Expectations Foreign Exchange markets are also financial markets. The price reflected in any financial market does not reflect the price of today. Rather, it reflects the expectations about the future based on the information…
The Foreign exchange market is far more complicated as compared to stock or bond markets. Predicting the foreign exchange rate includes predicting the performance of entire economies. There are a multitude of factors which come into play when exchange rates are being determined. This article lists down and explains some of the important factors which have a major influence on the exchange rates. Pricing In The Future Expectations Foreign Exchange markets are also financial markets. The price reflected in any financial market does not reflect the price of today. Rather, it reflects the expectations about the future based on the information…
Trend Is Your Friend Forex trading systems are what we often call “reactive systems”. There are many factors at work, and they cannot be quantified and measured to enable decision making. Forex traders, therefore, trade the trend. In other words, they try to time the market. Most successful Forex traders believe that the markets have a cycle. This cycle is the result of human behavior in the markets. As a result of this innate human behavior, trends seem to repeat in the market. If a trader can chart these trends and predict future movements, a fortune can be made! The critical…
