Currency Trading System
The Foreign Exchange market is also referred to as the forex market, "Cash" currency market and spot market, and is the largest financial market in the world, with a daily average turnover of well over US$3 trillion in currency trading -- 30 times larger than the combined volume of all U.S. equity markets. For purposes of this educational piece all references to forex will be referred to as “currency trading”
Currency trading is the simultaneous buying of one currency and selling of another. Currency trading is traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY) currency trading market.
For speculators, the best currency trading market trading opportunities are with the most commonly traded (and therefore most liquid) currency trading market currencies, called "the Majors." Today, more than 85% of all daily transactions involve currency trading market trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
The currency trading market is a 24 hour currency trading market and begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial currency trading market, investors can respond to the currency trading market fluctuations caused by economic, social and political events at the time they occur - day or night. The currency trading market does not sleep.
Currency Trading Market bid and Currency Trading Market Ask Prices
When trading the currency trading market you will often see a two-sided quote, consisting of a currency trading market 'bid' and currency trading market 'ask'. The ' currency trading market bid' is the price at which you can sell the base currency trading market currency (at the same time buying the counter currency trading market currency). The currency trading market 'ask' is the price at which you can buy the base currency trading market currency (at the same time selling the counter currency trading market currency).
What Every Currency System Trader Should Know
The currency trading market is one of the most popular markets for speculation due to its enormous size, currency trading market liquidity, and tendency for currency trading market currencies to move in strong trends using a developed system. An enticing aspect of trading currency trading market currencies is the high degree of leverage available. Currency Trading Edge allows positions to be leveraged up to 100:1. Without proper currency trading market risk management, this high degree of currency trading market leverage can lead to enormous swings between profit and loss. Knowing that even seasoned currency trading market traders suffer losses, speculation in the currency trading market should only be conducted with risk capital funds that if lost will not significantly affect one's personal financial well being.
Calculating Profit and Loss in the Currency Trading Market
For ease of use, our online currency trading market trading platform automatically calculates the profit and loss of your open currency trading market positions. However, it is useful to understand how this calculation is derived.
To illustrate a typical currency trading market trade, consider the following example. |
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The current bid/ask price for EUR/USD is 1.2320/23, meaning you can buy 1 currency trading Market euro with 1.2323 US dollars or sell 1 currency trading Market euro for 1.2320 US dollars. |
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Suppose you decide that the currency trading Market Euro is undervalued against the US dollar. To execute this strategy, you would buy currency trading Market Euros (simultaneously selling dollars), and then wait for the exchange rate to rise. |
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So you make the trade: to buy 100,000 euros you pay 123,230 dollars (100,000 x 1.2323). Remember, at 1% margin, your initial margin deposit would be $1,232 for this trading the currency trading market. |
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As you expected, currency trading Market Euro strengthens to 1.2395/98. Now, to realize your profits, you sell 100,000 euros at the current rate of 1.2395, and receive $123,950. |
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You bought 100 k currency trading Euros at 1.2323, paying $123,230. You sold 100k Euros at 1.2395, receiving $123,950. That’s a difference of 72 pips, or in dollar terms ($123,950 - $123,230 = $720). |
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Total profit = US $720 |
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(TIP: When trading your system in the EUR/USD Market or any Euro cross e.g. currency trading Market EUR/JPY, each pip is worth $10, per 100,000 trades in currency trading market ). |
Currency System Trading Market Summary
Initial Investment in currency trading market |
$1,000 |
Profit in currency trading market |
$708.82 |
Return on Investment currency trading market |
70.8% |
If you had executed this currency trading market trade without using leverage, your return on investment would be less than 1%.
