INTRODUCTION

Trading the foreign currency market, or the Forex Market, as it is commonly known, is the most developed financial market in the world. The Forex Market is not concentrated in any one exchange, rather the vast majority of forex trades are private deals between two parties in what is known as an ‘Over the Counter’ or OTC market. The currencies are traded and quoted in pairs such as Euro/U.S. Dollar or U.S. Dollar/Japanese Yen, where a deal is the combination of selling one currency while buying another currency at the same time.

THE RULE

The Rule says that the U.S. Dollar is the base currency against which all other currencies are quoted. In other words the exchange rate tells us how many units of the second currency are worth one dollar. For example, if the USD/CHF (U.S. Dollar/Swiss Franc) exchange rate is quoted as 1.2515, each dollar is worth 1.2515 Swiss Francs. The exceptions to the rule where the Dollar becomes the secondary currency in the currency pair and its pair the base currency are: Euro (EUR), Pound Sterling (GBP), Australian Dollar (AUD) and New Zealand Dollar (NZD).

QUOTES

The BID price is the price at which a client can sell a unit of the base currency (in return for buying the secondary currency) and the ASK/OFFER price is the price at which a client can buy a unit of the base currency. For example, if the quote for the exchange rate of the Euro/U.S. Dollar in the market is 1.2581/1.2585, this means that the client can pay $1.2585 in order to buy one Euro (the base currency) and will receive $1.2581 if one Euro is sold. The BID price is lower than the ASK price and the difference or ’spread’ between the two numbers is measured in ‘pips’ (4 pips in this case) and represents the profit of the dealing room.

TRADING HOURS

The major advantage of the Forex market, as opposed to the stock market or other financial markets stems from the fact that it is a continuous global market (trading 24 hours a day). Trading over three continents, Asia, Oceania, New Zealand, Europe, America, New York take it in turns to hold the baton, allows a trader to trade without being time-boutnd and to react immediately to events and new developments (the market opening on Sunday evening and the market closing Friday night).

Average daily Currency Trading volume in the Forex Market is estimated at 3 trillion dollars, several times larger than the combined voluem of all the U.S. stock markets. The vast majority of this volume is speculative, thanks to the huge liquidity available.

LEVERAGE / MARGIN

The Forex Market, characterized by the high liquidity and continuous trading, allows for unlimited position sizes. This allows the suppliers of liquidity to provide clients with financial leverage.  Leverage of 100:1 (ie. a deposit of $1,000 can be leveraged to a position of $100,000) is acceptable ratio in the market.

It is important to appreciate the fact that leveraging increases your risk, but while the stock market can have a daily volatility of 10% or more, the major currencies of the forex  market have typically volatility of less than 1%. Therefore, leverage can enable you to make large gains very quickly with the help of relatively low volatility.

COSTS AND COMMISSIONS

Huge turnover in the Forex market, electronic trading and competition have brough a reduction in the bid-offer spread (the equivalent of commissions). The spread coverst the risk of the market maker. The spread for the majors remain very low, but can increase as the liquity of a specific curreny drops. The Forex Market is considered to have the lowest overall commissions relative to trade size compared with other financial markets.

CONTINUOUS FINANCIAL INFORMATION

Exchange rates are supplied real-time by a number of international institutions. As a result of this, news and economic announcements can be transmitted efficiently and immediately. This way trading conditions can be indentical for all traders with no consideration of their trade size.

GEOGRAPHIC LOCATION

In contrast with exchange traded securities dependant on the exchanges trading hours, currencies are OTC (Over the Counter) instruments traded electronically at all times and at several locations around the globe at the same time, 24 hours a day, 5 days a week. The main trade centers around the world are Tokyo, London and New York, with no exchange situated at any of these locations.

FACTORS AFFECTING THE FOREX MARKET

The massive size of the market means that it is nearly impossible for any one speculator to affect the market. Even central bank activity brings limited volatility and for short periods of time only.

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Thank you for considering GFT Global Markets as your dealer for financial spread betting, CFDs, and forex trading. If you wish to speculate in alternative market derivatives, I’m sure you will find GFT Global Markets to be among the finest in the industry. As a member of the trading industry for more than 30 years, I know the importance of having a knowledgeable and experienced dealer.

GFT Global Markets is related to the U.S.-based currency dealer, Global Forex Trading, and we have built upon the same reliable and user-friendly software to deliver superior trading and order execution to GFT Global Markets customers. Our world-leading trading software, DealBook® 360, is capable of handling virtually any kind of order, and we offer a variety of superior tools to assist you along the way.

At GFT Global Markets, we leverage the latest in technology, software and market data to deliver real-time pricing to our worldwide network of customers and referring parties. We quote an extensive range of prices on the majority of the world’s major financial markets and deliver those through our dependable software.

Our customer service-oriented dealing desk and support staff is available 24 hours a day to assist you with any questions or issues you may have. Because we understand and appreciate the demands of global private investors, we’ve hired an experienced staff that is committed to providing you with the highest levels of customer care, technology, accountability, and above all, integrity.

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Ava group is one of the world’s leading on-line forex trading brokers, with over 100,000 registered customers worldwide and volumes of more than $20 billion a month. Founded in 2006 by a team of financial professionals and experts in Internet technology, Ava is dedicated to creating the ultimate on-line trading experience.

What makes Ava unique in the world of on-line trading is its user-oriented perspective. While many other trading sites are merely on-line extensions of banking institutions, Ava FX was designed by retail traders who understand the needs of this new and growing market sector. From our multi-lingual, 24-hour support center to our advanced interface design, Ava FX is built around the user. Our proprietary software includes Metatrader 4 platform, and leverages the power of the world’s leading banks and financial institutions while providing consumers with an easy-to-use yet functionally rich trading environment.

Ava FX is backed by a major financial institution with over $17 billion in assets under management and is rated “A+” by an S&P affiliated rating agency. Our company is dedicated to the highest standards of integrity and security and we spare no effort in protecting our customers’ funds, using a thorough understanding of Internet banking technology to do so.

The Ava Group ‘s 100% owned subsidiary, Ava Capital Markets Ltd located in the EU services EU customers .It is regulated to the highest and exacting standards of the EU by the Financial Regulator of Ireland.

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About Titan Stocks

Legend has it that Joseph Kennedy sold all the stock he owned the day before “Black Thursday,” the start of the catastrophic 1929 stock market crash. Many investors suffered enormous losses in the crash, which became one of the hallmarks of the Great Depression.

What made Kennedy sell? According to the story, he got a stock tip from a shoeshine boy. In the 1920s, the stock market was the realm of the rich and powerful. Kennedy thought that if a shoeshine boy could own stock, something must have gone terribly wrong.

Now, plenty of “common” people own stock. Online trading has given anyone who has a computer, enough money to open an account and a reasonably good financial history the ability to invest in the market. You don’t have to have a personal broker or a disposable fortune to do it, and most analysts agree that average people trading stock is no longer a sign of impending doom.

­The market has become more accessible, but that doesn’t mean you should take online trading lightly. In this article, we’ll look at the different types of online trading accounts, as well as how to choose an online brokerage, make trades and protect yourself from fraud.

Review of Stocks & Markets
Before we look at the world of online trading, let’s take a quick look at the basics of the stock market. If you’ve already read How Stocks and the Stock Market Work, you can go on to the next section.

A share of stock is basically a tiny piece of a corporation. Shareholders — people who buy stock — are investing in the future of a company for as long as they own their shares. The price of a share varies according to economic conditions, the performance of the company and investors’ attitudes. The first time a company offers its stock for public sale is called an initial public offering (IPO), also known as “going public.”

When a business makes a profit, it can share that money with its stockholders by issuing a dividend. A business can also save its profit or re-invest it by making improvements to the business or hiring new people. Stocks that issue frequent dividends are income stocks. Stocks in companies that re-invest their profits are growth stocks.

Brokers buy and sell stocks through an exchange, charging a commission to do so. A broker is simply a person who is licensed to trade stocks through the exchange. A broker can be on the trading floor or can make trades by phone or electronically.

illustration of buy and sell orders passing through the computer network/trading floor

An exchange is like a warehouse in which people buy and sell stocks. A person or computer must match each buy order to a sell order, and vice versa. Some exchanges work like auctions on an actual trading floor, and others match buyers to sellers electronically. Some examples of major stock exchanges are:

* The New York Stock Exchange, which trades stocks auction-style on a trading floor
* The NASDAQ, an electronic stock exchange
* The Tokyo Stock Exchange, a Japanese stock exchange

Worldwide Stock Exchanges has a list of major exchanges. Over-the-counter (OTC) stocks are not listed on a major exchange, and you can look up information on them at the OTC Bulletin Board or PinkSheets.

When you buy and sell stocks online, you’re using an online broker that largely takes the place of a human broker. You still use real money, but instead of talking to someone about investments, you decide which stocks to buy and sell, and you request your trades yourself. Some online brokerages offer advice from live brokers and broker-assisted trades as part of their service.

If you need a broker to help you with your trades, you’ll need to choose a firm that offers that service. We’ll look at other qualities to look for in an online brokerage next.

(Via money.howstuffworks.com)