Some Advices before Entering Forex Trading - page 3
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Just to be sure that My post go widely... and thanks for your notice
At some point I have a feeling that admin will delete two of the three threads as it is all the same.
Spreads and Pips
Spreads and Pips
The difference between the bid price and the ask price is called a spread. If we were to look at the following quote: EUR/USD = 1.5500/04, the spread would be 0.0004 or 4 pips, also known as points. Although these movements may seem insignificant, even the smallest point change can result in thousands of dollars being made or lost due to leverage. Again, this is one of the reasons that speculators are so attracted to the Forex market; even the tiniest price movement can result in huge profit. The pip is the smallest amount a price can move in any currency quote. In the case of the U.S. dollar, euro, British pound or Swiss franc, one pip would be 0.0001. With the Japanese yen, one pip would be 0.01, because this currency is quoted to two decimal places. So, in a Forex quote of USD/CHF, the pip would be 0.0001 Swiss francs. Most currencies trade within a range of 100 to 150 pips a day.
Spots Markets
Spots Markets
More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards ongoing political situations (both locally and internationally), as well as the perception of the future performance of one currency against another. It is a bilateral transaction by which one party delivers an agreed-upon currency amount to the counter party and receives a specified amount of another currency at the agreed-upon exchange rate value.
Libor Rates
Libor Rates
Is the London Interbank Offered Rate released by the British Bank Association, those rates are calculated on a daily basis, those rates are referred from a 16 banks which are selected by the association based on private nominations, certain calculations are made to take the mean of the available rates. This reading is looked at by investors' to see the benchmark of the short term period borrowing; if the rates are high this means that there is a credit squeeze and banks are not lending each other, those days specifically markets are closely watching those rates.
The Monetary Policy:
The Monetary Policy:
is the second type of polices used in managing a certain economy, this type of policy is mainly controlled by central banks, meaning that they control the supply of money into the economy, by putting cost on the borrowing of these money with some thing called Interest Rates. Interest rates are defined as the percentage amount of money charged on borrowed or lent money, as it could be variable or fixed.
rule four
4) Be mentally prepared and avoid emotional trades. If you just had a loss in the market it is better to stay away for some time before resuming your trades; emotional trades are the first step in losing your money because you will not be thinking clear.
Hedgers
Hedgers
Some of the biggest clients of these banks are businesses that deal with international transactions. Whether a business is selling to an international client or buying from an international supplier, it will need to deal with the volatility of fluctuating currencies.If there is one thing that management (and shareholders) detests, it is uncertainty. Having to deal with foreign-exchange risk is a big problem for many multinationals. For example, suppose that a German company orders some equipment from a Japanese manufacturer to be paid in yen one year from now. Since the exchange rate can fluctuate wildly over an entire year, the German company has no way of knowing whether it will end up paying more Euros at the time of delivery.One choice that a business can make to reduce the uncertainty of foreign-exchange risk is to go into the spot market and make an immediate transaction for the foreign currency that they need.Unfortunately, businesses may not have enough cash on hand to make spot transactions or may not want to hold massive amounts of foreign currency for long periods of time. Therefore, businesses quite frequently employ hedging strategies in order to lock in a specific exchange rate for the future or to remove all sources of exchange-rate risk for that transaction. For example, if a European company wants to import steel from the U.S., it would have to pay in U.S. dollars. If the price of the euro falls against the dollar before payment is made, the European company will realize a financial loss. As such, it could enter into a contract that locked in the current exchange rate to eliminate the risk of dealing in U.S. dollars. These contracts could be either forwards or futures contracts.
Asset Allocation
Asset Allocation : Investment practice that divides funds among different markets to achieve diversification for risk management purposes and/or expected returns consistent with an investor's objectives.
Thank you
Thank you dear valued friend for the vaulable information ... keep it up we have to ensure that all forex information get to all traders just to be careful with their trades and money
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Thank you .. waiting your next info