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FOREIGN EXCHANGE RATES | SIGMAFOREX

  • Sep. 5th, 2008 at 4:30 AM




An exchange rate is the price of one country's money in terms of other country's money. When we say that exchange rate of Indian Rupee is 42.23 per US Dollar (22:13 IST), we mean that 42.23 Indian Rupees are required to purchase one US Dollar. When this exchange rate becomes 43 we say that the value of Indian Rupee depreciated against the US Dollar. On the other hand when the exchange rate becomes 42 we mean that Indian Rupee has appreciated against the US Dollar. Assuming that there are no exogenous factors restricting the changes in exchange rates, their movement can be traced to pure demand and supply. When Indian rupee depreciates against the US Dollar, it indicates that demand for later is more than its supply. Similarly when the supply of US Dollar is more than its demand, it declines in value against the Indian Rupee.


Currency of a country is used for transactions with foreigners. Each country in the world has its own currency. Theoretically, a country should transact with all foreign entities on a one-to-one basis, i.e. for all imports from a foreign country, the host country should be paid in its currency. But practically this is not possible because it involves keeping record of a multitude of exchange rates and associated payment problems. Therefore, most of the countries chose a common currency for trade amongst themselves. The U.S Dollar has emerged as the strongest currency for the past sixty years and as such is used as the payment medium for most of the world trade. In the European Union the Euro has established itself as the common currency of about 25 countries.

It is clear that the currency of a country is evaluated against a common currency for external transactions. In case of countries having dominant economic power, trade would be held in currency. Hence a country is required to trade in U.S Dollar or in other dominant currencies like Euro, Pound or the Japanese Yen. Account of a country's external trade is kept in the form of a balance of payments account which is a double book entry system. Receipts of foreign currencies are credited to this account while payments in foreign currency are debited to this account. The balance sheet in this account shows a positive or a negative figure depending upon whether the receipts of foreign currency are more or less than the payments.

Other things being equal, the presumption is that a country having a deficit balance of pavements position would have a weakening national currency and vice versa. A deficit in the balance of payment account results in more demand for foreign currencies.

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Foreign Exchange as a Financial Market With Sigma Forex

  • Aug. 25th, 2008 at 4:14 AM
 

 




Currency exchange is very gorgeous for both the corporate and individual traders who make money on the Forex - a special financial market assigned for the foreign exchange. The following features make this market different in compare to all other sectors of the world financial system:• heightened sensibility to a large and continuously changing number of factors;• Accessibility to all traders in the major currencies;• guaranteed quantity and liquidity of the major currencies;• increased consideration for several currencies, round-the clock business hours which enable traders to deal after normal hours or during national holidays in their country finding forex trading markets abroad open and extremely high efficiency relative to other financial markets.This goal of this manual is to introduce beginning traders to all the essential aspects of foreign exchange in a practical manner and to be a source of best answers on the typical questions as why are currencies being traded, who are the traders, what currencies do they trade, what makes rates move, what instruments are used for the trade, how a currency behavior can be forecasted and where the pertinent information may be obtained from. Mastering the content of an appropriate section the user will be able to make his/her own decisions, test them, and ultimately use recommended tools and approaches for his/her own benefit.
 

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Trading with Brokers - Forex Trading With Sigma Forex

  • Aug. 25th, 2008 at 4:13 AM
 

 




Foreign exchange brokers, unlike equity brokers, do not take positions for Themselves; they only service banks. Their roles are:• bringing together buyers and sellers in the market• optimizing the price they show to their customers• Quickly, accurately, and faithfully executing the traders' orders.The majority of the foreign exchange brokers execute business via phone. The phone lines between brokers and banks are dedicated, or direct, and are usually in-stalled free of charge by the broker. A foreign exchange brokerage firm has direct lines to banks around the world. Most foreign exchange is executed through an open box system a microphone in front of the broker that continuously transmits everything he or she says on the direct phone lines to the speaker boxes in the banks. This way, all banks can hear all the deals being executed. Because of the open box system used by brokers, a trader is able to hear all prices quoted; whether the bid was hit or the offer taken; and the following price. What the trader will not be able to hear is the amounts of particular bids and offers and the names of the banks showing the prices. Prices are anonymous the anonymity of the banks that are trading in the market ensures the market's efficiency, as all banks have a fair chance to trade. Brokers charge a commission that is paid equally by the buyer and the seller. The fees are negotiated on an individual basis by the bank and the brokerage firm.Brokers show their customers the prices made by other customers either two-way prices or one way prices from his or her customers. Traders show different prices because they "read" the market differently; they have different expectations and different interests. A broker who has more than one price on one or both sides will automatically optimize the price. In other words, the broker will always show the highest bid and the lowest offer. Therefore, the market has access to the narrowest spread possible. Fundamental and technical analyses are used for forecasting the future direction of the currency trading. A trader might test the market by hitting a bid for a small amount to see if there is any reaction. Brokers cannot be forced into taking a principal's role if the name switch takes longer than anticipated. Another advantage of the brokers' market is that brokers might provide a broader selection of banks to their customers. Some European and Asian banks have overnight desks so their orders are usually placed with brokers who can deal with the American banks, adding to the liquidity of the market.

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Online Currency Trading - Futures Market With Sigma Forex

  • Aug. 25th, 2008 at 4:11 AM

 




Currency futures are specific types of forward outright deals which occupy in general a small part of the forex trading market. Because they are derived from the spot price, they are derivative instruments. They are specific with regard to the expiration date and the size of the trade amount. Whereas, generally, forward outright deals those that mature past the spot delivery date will mature on any valid date in the two countries whose currencies are being traded, standardized amounts of foreign currency futures mature only on the third Wednesday of March, June, September, and December.Moreover, currency futures provide several benefits for traders because futures are special types of forward outright contracts, corporations can use them for hedging purposes. Although the futures and spot markets trade closely together, certain divergences between the two occur, generating arbitraging opportunities. Gaps, volume, and open interest are significant technical analysis tools solely available in the futures market. Yet their significance extrapolates to the spot market as well.For traders outside the exchange, the prices are available from on-line monitors. The most popular pages are found on Bridge, Telerate, Reuters, and Bloomberg. Telerate presents the currency futures on composite pages, while Reuters and Bloomberg display currency futures on individual pages shows the convergence between the futures and spot prices.

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Currency Market System With Sigma Forex

  • Aug. 25th, 2008 at 3:52 AM

 




Forex trading is derived from a combination of two words, foreign and exchange. More simply put it is the trading of foreign currencies and is often referred to as the FX market. If you are searching for excitement and profits this could be the market to trade. Forex trading has become extremely popular the world over and has people from all different countries and backgrounds trading like only the professional traders could do just a short time ago. Until recently Forex trading was performed mostly by major banks and large institutional traders. The technological advancements that have occurred of late have transformed Forex into the playground of average traders like you and me.It's easy to find an online FX trading system, platform or software that can make it easy and fun to trade the market. Simply browse the web and you will be inundated with many exciting offers and promotions. There are many firms that sell or even give away free training software, charts or other useful tools for your future in Forex trading. When you come across these currencies in the market you will see them written as a pair: USD/JPY (U S Dollar and Japanese Yen), EUR/USD (Euro and U S Dollar), USD/CHF (U S Dollar and Swiss Franc) and GBP/USD (British Pound and U S Dollar).The vast majority of all day trades of foreign currency involve these five major currencies. Your goal as a trader is to pick out which currency will appreciate against another. If you can find or develop a system that will allow you to choose the correct direction a currency will be taking it is possible to make good profits in the FX market. Most trades on the FX market are done by Forex brokers and dealers at major banking institutions across the globe. And since it is a world wide market that makes it a 24 hour a day market. The brokers or dealers work in different shifts so that major institutional traders can perform their trades 24 hours a day around the clock.

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