Some Advices before Entering Forex Trading - page 2

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Direct Quote vs. Indirect Quote

Direct Quote vs. Indirect Quote

There are two ways to quote a currency pair, either directly or indirectly. A direct quote is simply a currency pair in which the domestic currency is the base currency; while an indirect quote, is a currency pair where the domestic currency is the quoted currency. So if you were looking at the Canadian dollar as the domestic currency and U.S. dollar as the foreign currency, a direct quote would be CAD/USD, while an indirect quote would be USD/CAD. The direct quote varies the foreign currency, and the quoted, or domestic currency, remains fixed at one unit. In the indirect quote, on the other hand, the domestic currency is variable and the foreign currency is fixed at one unit.

For example, if Canada is the domestic currency, a direct quote would be 0.85 CAD/USD, which means with C$1, you can purchase US$0.85. The indirect quote for this would be the inverse (1/0.85), which is 1.18 USD/CAD and means that USD$1 will purchase C$1.18.

In the Forex spot market, most currencies are traded against the U.S. dollar, and the U.S. dollar is frequently the base currency in the currency pair. This would apply to the above USD/JPY currency pair, which indicates that US$1 is equal to 119.50 Japanese yen.

However, not all currencies have the U.S. dollar as the base. The Queen's currencies - those currencies that historically have had a tie with Britain, such as the British pound, Australian Dollar and New Zealand dollar - are all quoted as the base currency against the U.S. dollar. The Euro, which is relatively new, is quoted the same way as well. This is why the EUR/USD quote is given as 1.55, for example, because it means that one euro is the equivalent of 1.55 U.S. dollars.

Most currency exchange rates are quoted out to four digits after the decimal place, with the exception of the Japanese yen (JPY), which is quoted out to two decimal places.

 

Emerging Markets

Emerging Markets

Is referred to markets that have yet to reach the level of industrialized nations as the United States and Japan, and are defined according to certain characteristics as they are implementing reform programs and undergoing economic development. They contribute with a small portion to global growth and of examples are some South American and Asian nations yet they remain fragile as their markets are usually subject to political and economic uncertainties.

 

Short Selling Method

Short Selling:

Traders in the Forex market can benefit from both the rising market (Bull Market) and falling market (Bear Market). Forex offers the opportunity to profit in both rising and declining markets because with each trade, you are buying and selling simultaneously, and short-selling is, therefore, inherent in ...every transaction although some stocks have the same option, this is somehow limited to certain conditions. . For example, it is difficult to short-sell in the U.S. equities market because of strict rules and regulations regarding the process. This means that a crisis or falling market is not necessarily bad for the Forex trader, in fact it can be very profitable. But in a declining stock market, it is only with extreme ingenuity that an investor can make a profit.On the other hand, since the Forex market is so liquid, traders are not required to wait for an uptick before they are allowed to enter into a short position - as they are in the equities market.

 

Governments and Central Banks

Governments and Central Banks

Arguably, some of the most influential participants involved with currency exchange are the central banks and federal governments. In most countries, the central bank is an extension of the government and conducts its policy in tandem with the government. However, some governments feel that a more independent central bank would be more effective in balancing the goals of curbing inflation and keeping interest rates low, which tends to increase economic growth. Regardless of the degree of independence that a central bank possesses, government representatives typically have regular consultations with central bank representatives to discuss monetary policy. Thus, central banks and governments are usually on the same page when it comes to monetary policy.

Central banks are often involved in manipulating reserve volumes in order to meet certain economic goals. For example, ever since pegging its currency (the Yuan) to the U.S. dollar, China has been buying up millions of dollars worth of U.S. treasury bills in order to keep the Yuan at its target exchange rate. Central banks use the foreign exchange market to adjust their reserve volumes. With extremely deep pockets, they yield significant influence on the currency markets.

 

any insight into probability and statistical approach during normal trading days ?

 

Just 1 Advice For now

Well, i would just give 1 advice for now.. don't be afraid of loosing money cause you will either like it or not. Just more or less depending on your attitude

-guyver

 

Second Advice

First , i agree with the first advice

The second advice that u have to know there is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose.

 
 
 

Thank you

Just to be sure that My post go widely... and thanks for your notice

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