Foreign exchange market

Market size and liquidity

Presently, the foreign exchange market is one of the largest and most liquid financial markets in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. ^[2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.^[3]

Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%.^[4] In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.

Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.

Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—[1]; [2]) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.

FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).

Top 10 currency traders ^[5]
% of overall volume, May 2009

Rank	Name	Market Share
1	Deutsche Bank	20.96%
2	UBS AG	14.58%
3	Barclays Capital	10.45%
4	Royal Bank of Scotland	8.19%
5	Citi	7.32%
6	JPMorgan	5.43%
7	HSBC	4.09%
8	Goldman Sachs	3.35%
9	Credit Suisse	3.05%
10	BNP Paribas	2.26%

Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over US$50-60 billion (see retail trading platforms).^[6] Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey.^[3] These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually 0–3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100/1.2300 for transfers, or say 1.2000/1.2400 for banknotes or travelers' checks. Spot prices at market makers vary, but on EUR/USD are usually no more than 3 pips wide (i.e., 0.0003). Competition is greatly increased with larger transactions, and pip spreads shrink on the major pairs to as little as 1 to 2 pips.

Daily forex news

Daily forex news

Peter Rosenstreich , ACM Advanced Currency Markets

Published 09/11/2009 - 6:31 a.m. EST

ABOUT THE AUTHOR

Peter Rosenstreich Website: http://www.ac-markets.c... Email: support@ac-markets.com

Forex - China Lending Supports Risk Corrolated Trades

Forex News and Events:

Risk appetite remains firm, as Chinese data suggests that the real economy has good momentum. In particular, lending, the area of some concerns, was much better than the market expected printing at cny300bn. This reading clearly is a sign that the Chinese government is still encouraging credit growth and committed to loose monetarily policy. However, it’s important to note that trade figures were very weak at -23.4% y/y, casting a shadow on the health of external demand.

Overall, with China continuing to move in the right direction, risk favorable trend should continue. Asian equities were higher on the figures (Shanghai up 2.21%) and the positive momentum has carried over into the European session. We are currently seeing a slight pullback in the EURUSD from the 1.4628 highs, but expect this just a short term correction. Yesterday, the BoE held rates steady and left the amount of asset purchases unchanged. They also decided not to lower interest rates on bank reserves to encourage lending as markets had speculated.

The Sterling gained on the news, with GBPUSD penetrating the psychological 1.6700 level. Also helping risk correlated trades was US Treasury Secretary Geithner testimony before the Congressional Oversight Panel on TARP: "As we enter this new phase, we must begin winding down some of the extraordinary support we put in place for the financial system. We are now in a position to evolve our strategy as we move from crisis response to recovery, from rescuing the economy to repairing and rebuilding the foundation for future growth." He also noted that recovery might take more time to develop than originally anticipated.

The data from the US supported the theory that recovery was slowly entrenching itself, as the initial claims came in better than expected at 550k and continuing claims fell to 6088k. In Canada, the BoC held its policy rate steady and restated its commitment to hold the current policy rate until the end of Q2 2010. However, the central bank is clearly concerned over the recent appreciation of the CAD, stating that "persistent strength in the Canadian dollar remains a risk to growth and to the return of inflation to target. In its conduct of monetary policy at low interest rates, the Bank retains considerable flexibility…”. Today, markets will we watching some 2nd tier data form the US in Import Price Index, University of Michigan Confidence , wholesale inventories and the monthly budget statement.

Today's Key Issues (time in GMT):

07:30 SEK Final GDP, % q/q Q2 0.0 (-6.2) exp, 0.0 (-6.2) P
08:30 GBP Producer input prices, % m/m (y/y) Aug 0.6 (-8.7) exp, -1.4 (-12.2) prior
08:30 GBP Producer core output prices, % m/m (y/y) Aug 0.2 (0.7) exp, 0.5 (0.2) prior
08:30 GBP Producer output prices, % m/m (y/y) Aug 0.3 (-0.5) exp, 0.3 (-1.3) prior
12:00 GDP, % y/y Q2 -1.0 exp
12:30 USD Import prices, % m/m (y/y) Aug 1.0 (-16.0) exp, -07 ( -19.3) prior
12:30 USD Nonpetroleum import prices, % m/m (y/y) Aug) 0.0 (-6.9) exp
13:55 USD Michigan consumer sentiment, index Sep P 67.0 exp, 65.7 prior
14:00 USD Wholesale inventories, % m/m (y/y) Jul -1.0 (-11.6) exp
18:00 USD Budget balance, $ bn Aug -174.0 exp
19:30 MXN Industrial production, % y/y Jul -10.6 prior

The Risk Today:

EurUsd Looking at the 4 hour chart we can see that the pair is getting rather extended and we have still not seen a retest of the 1.4445 breakout level. The pair is currently congested around one of the medium term uptrend channels at 1.4600, just above the support at 1.4570, but the RSI has been moving sideways throughout this entire move suggesting that a pullback is long overdue. Expect 1.4445 and 1.4381 to attract a fair amount of short covering and fresh buying from the USD bears.

GbpUsd We have discussed a head and shoulders pattern a lot recently and today we have a key level of 1.6750 to stay below in order to maintain the formation. An almost perfect entry level today for those playing the head and shoulders with a potentially huge reward : risk ratio for the medium term. Those playing it safe will likely wait for the ten day uptrend to break at 1.6546.

UsdJpy Continued weakness in the pair has taken it to an extremely important support level at 90.86. The medium term uptrend channels are now completely wiped out so this support level will be the only thing for the long players to cling onto. A break here targets 88.60 which also coincides with one of the 2 year downtrend channels. Expect intraday short interest at 91.80 and 92.47

UsdChf The support at 1.0340 /70 is keeping the pair afloat this morning but the pair is on a one way train for now. Expect some intraday short covering around these levels but renewed short interest at 1.0452 and 1.0550. A break of this support targets 1.0264

Seasonal Factors in Forex Trading

Copyright © 2009 Jay Meisler

EasyPublish™ Published: Word count: 480 Viewed: 180 time(s)

The focus of this article is on the start of the New Year and start of post-summer forex trading. The thinnest time in terms of liquidity is generally the last two weeks of the year and the second thinnest time is the last two weeks preceding the U.S. Labor Day holiday. The start of post-summer trading is said to begin on the day after Labor Day. The goal of this article is to highlight a pattern I have seen in the currency market often at the start of these periods.

The reason this is important is that there are often sharp moves in the forex market during the first few days of the year and post-summer as forex trading slowly returns to full liquidity and traders set-up positions for the period ahead. It usually takes several days for the market to return to full liquidity and market moves can be exaggerated during these times. This follows a period where positions are often trimmed and risk is scaled back. My experience is that the first fee days of these periods are characterized by sharp trend moves followed by false starts and whipsaws. This is important because forex traders (and other markets as well) often get carried away with what appears to be rapidly developing trends and then are forced to run for cover when they quickly run out steam and reverse. This is not always what unfolds but something to keep in mind just in case.

An example is the current market where the dollar has come under sharp selling pressure out of the box at the start of post-summer forex trading. It is day three today following Monday’s Labor Day holiday and the currency market has broken out, sending the U.S. dollar to new lows for the year-to-date vs. several currency pairs, such as the eur/usd. While there appears to be legs to these currency moves as dollar weakness has been broad based, it remains to be seen whether this will turn out to be one of those quick trends that quickly aborts or one that follows through.

The point is history has shown a need to be cautious during the first few days of the New Year and start of post-summer forex trading. There is more than enough volatility in the first few days to keep a trader occupied but try not to get carried away with trends that often see a quick end. This does not suggest looking to fade or take the other side of an apparent trend move, but to be aware that they often do not follow through. While there are exceptions (the current post-summer forex moves may turn out to be one), my rule of thumb argues for some caution during these periods. Note, I am only speaking from personal experience and not using empirical data to support my view.

Jay Meisler is a co-founder of Global-View.com, the leading forex discussion site for more than a decade and where traders from around the globe come for the latest breaking news, flows, rumors and trading ideas =>http://www.global-view.com

Make Money Trading Forex

How You Make Money Trading Forex

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In the FX market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.

The object of Forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.

Example of making money by buying euros

Trader's Action	EUR	USD
You purchase 10,000 euros at the EUR/USD exchange rate of 1.18	+10,000	-11,800*
Two weeks later, you exchange your 10,000 euros back into US dollars at the exchange rate of 1.2500.	-10,000	+12,500**
You earn a profit of $700.	0	+700

*EUR 10,000 x 1.18 = US $11,800
** EUR 10,000 x 1.25 = US $12,500

An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

How to Read an FX Quote

Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:

GBP/USD = 1.7500

The first listed currency to the left of the slash ("/") is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar).

When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.7500 U.S. dollar to buy 1 British pound.

When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.7500 U.S. dollars when you sell 1 British pound.

The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency.

You would buy the pair if you believe the base currency will appreciate (go up) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (go down) relative to the quote currency.

Long/Short

First, you should determine whether you want to buy or sell.

If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position". Just remember: long = buy.

If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Short = sell.

Introduction to Forex Trading

FOREX is the world’s largest and most liquid trading market. In our opinion ,FOREX is one of the best home business you can ever venture in. Even though regular people have had the opportunity to take part in trading foreign currencies for speculations (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings.

Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading because of what they perceive as its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.

But, still, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.

So, in this article, it is my attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists.

Here's an explanation (one I feel you'll appreciate) of what FOREX is and how a bunch of traders, operate in this market

The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.

But, don't mistake FX as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time.

So, you're probably wondering where it's at ... or ... how to access the FX market?

The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Yes, if that's the first time you've heard about an all-electronic market, I know this may sound somewhat intriguing to you.

Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market:

Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what a FX trader is doing is simultaneously exchanging one countries currency for another. So, in actuality, they're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.

In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.

Example:

EUR/USD last trade 1.3680 - One Euro is worth $1.3680 US dollars.The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.

The FOREX has a DAILY trading volume of around $1.5 trillion dollars - 30 times larger than the combined volume of all U.S. equity markets.

The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollar.

There's plenty of opportunities using FOREX for plenty of traders that use the right trading techniques / tactics that will allow them enter this market.

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The goal of Forex4asia team is to provide Maximum exposure and Maximum Trading Oportimotoes in the Currency Market to our investor through opening individual accounts traded by professional of Forex4asia team's managers. We will only get 50% profit which we earn in your account on monthly basis. You can open an account from our web site to click Individual Account or Mini Accounts. We are ready to serve our investor/client in best manner.

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*“The Views and opinions represented in the provided website links and resources are not controlled by the introducer or the FCM. Further, the introducer and the FCM are not responsible for their availability, content, or delivery of services.”*

Note:- These profit/loss are not confirmed these can be increased and these can be convert into loss. Because this is very risky market. Forex4Asia is not responsible for any loss during trading client will loss.

*“The Views and opinions represented in the provided website links and resources are not controlled by the Referring Broker or the FCM. Further, the Reffering Broker and the FCM are not responsible for their availability, content, or delivery of services.”*

Learn Forex

FOREX (the Foreign Exchange market) is an international market where participants speculate on the value of different currencies, buying and selling dollars, pounds, euros, and other currencies.

There are only a few major currencies to follow, compared to hundreds of stocks in the equities market. In order to get started understanding Forex, sign up for a free practice account today and learn as you trade!

Trading risk free with a practice account is the best way to get familiar with this ever-growing market. And once you are signed up, CMS Forex will provide you with thorough educational resources to guide you along the way.

So don't wait, take this opportunity to get started trading Forex!

Forex trading involves a substantial risk of loss.

Forex Articles

Forex Articles

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4: What is a forex broker?

Have you ever felt intrigued by the many advertisements on high leverage and great profit potential involved in currency trading? The golden gate of the kingdom of money, we are told, is reached by the road of forex.

5: Techniques for Advanced Forex Trading

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