| Before
1971, the Bretton Woods Agreement established a fixed
quotation for the dollar. After this year, when the
dollar begun to have a floating quotation with other
major currencies, appeared a market directed by the
offer and demand: Forex |
|
The
Volume |
| Today,
the Forex represents the biggest market with a daily
volume of 1.5 trillons dollars. If we compare this
volume with the daily 40 billions dollars of the NYSE
(New York Stock Exchange) we can have an idea of how
big the Forex is. |
|
The
Participants |
At the
very beginning, only the banks and big corporations
had access to this market. With the years, the advance
of telecomunications and technology made possible to
practically anyone to participate in Forex. This
participants get use of the market for different needs
or purposes:
- Consumers: Exchange to pay goods and
services when they travel or pay credit cards
statements for purchases in foreign countries.
- Companies: Exchange to pay goods and
services in imports and exports.
- Commercial Banks: Exchange to give
services to their customers.
- Central Banks: Exchange in order to their
monetary policy.
- Investors and Speculators: Exchange to
get advantage of price movement. This represents
the 90-95 % of the total volume.
|
|
The
Characteristics |
The
following are the characteristics that makes Forex an
attractive opportunity of investement:
- 24 hs: Forex is a market that opens in
Sydney on Sundays at 3:00 PM EST and closes on
Fridays in New York at 4:30 PM EST. As it is open
24 hs - 5 days a week, it gives you Accesibility
at any time. Forex has not a settled place with no
need to deliver what you buy or sell.
- Liquidity: The big volume and
accesibility gives the Forex a unique liquidity
over other markets. There always will be a financial
center in the world open to quote. In other words,
there always will be a buyer for a seller.
- Few Instruments: Few pairs of currencies
that represents the big volume, gives better
search and analysis of opportunity.
- Intraday Volatility: The combination of
big volume and few instruments gives big daily
volatility (movement of price over a time period)
which means taking profits even in short time.
- Low Spread: in Forex there are no
commisions to buy or sell. Only you pay a very low
spread between the bid price (the price to sell)
and ask price (the price to buy). In the EUR-USD
(euro-dollar) instrument you can pay as little as
3 pips (one pip is the smallest unit a price moves).
- Long - Short: As instruments are pairs of
currencies, in Forex you can enter the market long
(buy) or short (sell) taking advantage in both
directions.
- Leverage: Perhaps this is the most
attractive characteristic of Forex. It
permits to trade for more much money than a trader
can have, which means more profits with small
price movements. You can find leverage of 400:1.
In other words you can buy or sell with your
Capital x 400.
|
|
Important
Financial Centers |
The
following are the most important financial centers
that will be open to quote during their sessions:
- Sydney (+10 GMT)
- Tokyo (+9 GMT)
- Frankfourt (+2 GMT)
- London (+1 GMT)
- New York (- 4 GMT)
|
|
Main
Currencies |
The
following are the main currencies of the Forex market:
- EUR: Euro
- USD: American Dollar
- GBP: British Pound
- CHF: Swiss Franc
- JPY: Japanese Yen
- CAD: Canadian Dollar
- AUD: Australian Dollar
|
|
Main
Pairs of Currencies or Instruments |
The
following are the main pairs that quote in the Forex
Market:
- EUR-USD: Euro - American Dollar
- USD-CHF: American Dollar - Swiss Franc
- GBP-USD: British Pound - American Dollar
- USD-JPY: American Dollar - Japanese Yen
|
|
How can
you get into this market ? |
| You will
need to open an account with a broker (you can do it
online). There are a lot over the world. Select the
one that better fits your needs. Once you open an
account, you fund it (as little as USD 200 regarding
the broker) and you can begin to buy or sell
currencies online with the brokers platform (software)
just from your computer.
|
|
What do
you need to be a trader ? |
Remember
that Forex is a Sum Zero Game. It could be very
profitable as risky. From all traders, 10 % wins and
90 % loose. The difference between winners and looser
are the following things a trader must have and do:
- Discipline
- Equity between Greed and Fear
- Analisis
- Risk Management
- Strategy
- Entry and Exit Plan
|
|
How can
SITIOGLOBAL help you ? |
| We can
help you in two ways:
|
