Trading foreign exchange is markedly different from trading other financial assets in the market. There are certain unique features of foreign exchange which make it so different. In this article we have listed down these features and explain how they influence an individual’s ability to trade the market. Currencies Come in Pairs The biggest difference between the stock market and other markets is that you do not have to choose whether you want to buy or sell. By default, you are always doing both simultaneously. In the Forex market whenever you make a trade, you are always buying one currency…
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Financial markets have their own terminologies. The Forex market has a number of terms which it shares with other financial markets but which mean different things in the Forex market. Also, there are some words which are completely unique to Forex. In this article, we have a closer look at Forex terms. These terms will be extensively used in other articles in this module. Base and Counter Currencies In stock and bond markets one can sell their security. This means that they can convert their security into money. However, in the Forex market, one is already buying and selling money.…
Advantages of Currency Pegs Currency pegs have become extremely popular in the post Bretton Woods monetary world. About one fourth of all countries in the world today have pegged their currencies to some other major currency like the dollar or the euro. This strategy has bankrupted certain nations like Argentina whereas it has caused other nations like China to reach economic success. Therefore, this strategy has certain advantages as well as certain disadvantages. In this article, we will list down both the advantages as well as disadvantages. Stable Basis for Planning: Currency pegs provide an extremely stable basis for financial planning to…
The transition of the world monetary system from gold standard to the modern Forex markets was anything but smooth. Governments from all over the world collaborated to make two pacts which would form the basis of the modern monetary system. However, both the arrangements failed. In this article, we will have a closer look at those arrangements. Bretton Woods Situation: The European countries were fighting World War-2. As such the economies of the world had been destroyed. Many countries had resorted to printing money to be able to finance the humungous war expenses. Therefore, there was a looming threat that as…
The term “Forex market” is used very frequently in the media as well as in day to day life. It conjures up an image of a huge historic building somewhere in Canary Wharf or on Wall Street. However, that is not how the Forex market works. This market is unique in many respects and to understand it, one first needs to understand its unique characteristics. The unique characteristics of the Forex market are as follows: No Physical Existence The stock markets and bond markets of the world have a physical existence. If you wanted to visit the New York Stock Exchange…
The word “money” has not always meant what it means today. Today when we use the word “money” we refer to “currency”. Both, money as well as currency used to mean very different things until about a couple of centuries ago. Prior to the monetary system that we have today, the world was on a monetary system which was called the “gold standard”. Therefore, to understand where we are today, we need to understand where we came from. This article will explain the gold standard and how it led to the modern world of freely floating currencies. The Old Times Trade…
BERLIN/BRUSSELS (Reuters) – The European Commission has proposed allowing the sale of new cars with internal combustion engines after 2035 if they only run only on climate-neutral e-fuels, a document showed on Tuesday. Yielding to German pressure, the commission suggested that such vehicles could be among those allowed from 2035 but their technology must be able to prevent them from driving if other fuels are used, the document outlining the Commission’s proposals to Germany’s Transport Ministry showed. The ministry was not immediately available for comment. On Monday, the ministry said talks with the Commission about the planned end of new…
Investing.com — European bank stocks climbed on Tuesday, as investor fears over the impact of UBS’ government-brokered rescue of Credit Suisse eased. By 04:42 EST (08:42 GMT), the Europe Stoxx Banks index, which has been on a wild ride in March, was higher by 2.66%, continuing a rebound from a sharp initial drop at the start of trading on Monday morning. Some of the region’s largest lenders, including Spain’s Banco Santander (BME:SAN) and Deutsche Bank (ETR:DBKGn) in Germany, were among the biggest gainers. Aiding sentiment around the banking sector was a recovery in Asia and Europe of Additional Tier 1 bonds, a riskier class of debt that became a…
By Scott Kanowsky Investing.com — Thyssenkrupp AG (ETR:TKAG) shares jumped on Tuesday on a report that private equity firm CVC Capital Partners is potentially interested in making an offer for the industrial group’s steel unit. CVC is eyeing a bid of only €1 for the division, business daily Handelsblatt reported, citing several people familiar with the matter. The Luxembourg-based financial investor would then make investment commitments and take on billions in pension liabilities, Handelsblatt added. The newspaper said Thyssenkrupp chief executive officer Martina Merz will outline plans for the steel unit at a special supervisory board meeting at the end of…
By Scott Kanowsky Investing.com — Thyssenkrupp AG (ETR:TKAG) shares jumped on Tuesday on a report that private equity firm CVC Capital Partners is potentially interested in making an offer for the industrial group’s steel unit. CVC is eyeing a bid of only €1 for the division, business daily Handelsblatt reported, citing several people familiar with the matter. The Luxembourg-based financial investor would then make investment commitments and take on billions in pension liabilities, Handelsblatt added. The newspaper said Thyssenkrupp chief executive officer Martina Merz will outline plans for the steel unit at a special supervisory board meeting at the end of…
