Foreign Exchange Trading Made Easy

Speculative nature: No physical exchange occurs during foreign currency trading. The trading is mainly conducted with computer entries and automated netting determined by prevalent market pricing. The market is purely speculative for investors with short term investing as goal. The market was established to assist currency conversions for International corporations trading with different foreign currencies on a constant basis.

What’s the difference?: Foreign exchange trading is different in that transacting is conducted over-the-counter with other members. No formal clearing is done by Clearing Houses and a simple credit agreement is used to secure payment and delivery of currencies. The market is actually very casual with little or no formalities and basic regulations. Options, Futures and stocks on the other hand are traded on regulated and formal exchanges.

Top currency pairs: International liquid currency pairs are the preferred choice with some traders trading in exotic currency’s such as Czech Koruna’s just to be different and a little reckless. The most liquid and popular trade pairs are Dollar/Yen, Euro/US Dollar, US Dollar/Swiss Franc and British Pound/US Dollar. Variation pairs are also available such as New Zealand Dollar, Australian Dollar/US Dollar and US Dollar/Canadian Dollar.

Common gibberish: As with any profession a secret language is spoken by currency traders when referring to certain market items or occurrences such as Swissie referring to Swiss Franc, Yard is one billions units, Figure is round number such as 1000 and Sterling the other name for British Pound.

Pips and Ticks: Pip refers to very small price movements for any foreign currency. During trading of currencies you will keep a close eye on rises and drops in pips to determine if your investments is gaining or losing. Just a couple of pips can mean a huge fluctuation. Pip value varies from US$1 for small accounts and US$10 for regularly sized accounts. Spreads refer to the pip difference between bid and asking price. Ticks refer to smallest amount of time between two currency transactions.

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