One of many ways to profit in the buying and selling of financial instruments is trading in foreign currencies. Also called “foreign exchange” (or “forex” for short), currency trading can be as lucrative for the experienced day trader as trading in ordinary stocks.

To understand the foreign exchange market, consider this simple example. If I wanted to acquire 100 British pounds, it may cost me $200 to buy them. Later in the day, I might be able to sell those same 100 British pounds for $204 because the market for that currency rose during the day for obscure reasons.

Deducting my commission costs, perhaps I make a $2 profit that day. It doesn’t seem that much, but if I can repeat that 200 times during the year, I’ve used $200 to generate $400 in profits, or a 200% return on investment.
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The foreign exchange market, or Forex market, is an around-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always done in currency pairs. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from economic and political events. Using a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading.
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The forex market is a necessity for the businesses who trade around the globe. It is an opportunity for individuals to protect their finances against currency fluctuations & earn an extra income using their skills. Forex Trading has the chrismatic appeal for small investors, small businesses, as it offers better returns from investments in forex, compared to investments in stocks or bank instruments. But your ride through the forex markets is risky and you need to train yourself with skills to avoid losses, minimize your risks & maximize gains.

With more than $1.6 trillion dollars being traded every day, forex market is bigger than all the stock exchanges of USA & Europe combined. As in every business, you have to confirm the reliability of any broker, software before you invest your time & money on them Read the rest of this entry »

The currency market trading started in the 1970’s. Currencies that were historically tied to the price of gold, were allowed to float. Now the value of a currency is decided in the open free marketplace where banks, traders, corporates & governments buy & sell the currencies resulting in the ever changing currency exchange rates.

So instead of a dollar having a gold based value, it’s value is now determined by state of economy & the other currencies in the world. FOREX marketplace is a near perfect free trading market that free market ebthusiasts can think of. But over speculative trading is not good for the growth of forex marketplace. Almost anyone can invest in FOREX because it’s simply the exchanging one currency for another currency.
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Forex Trading takes place 24 hours 5 days a week. It starts from 23.00 (EST) Sunday and closes at 24.00 (EST) Friday (trading server time). The time zone in forex trading is referenced in terms of Eastern Standard Time (EST).

Currency trading involves global exchange of currencies all around the world. When forex trading stops in one part of the globe, it opens in another part.

Here trading time does not follow the same time as is the case in other trading markets like the stocks and commodities. If one part of the world goes to sleep, the other part awakens.
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LEAPs are traded just like shorter-term stock options. The only difference is the expiration date, which can be as far as three years. Because the price of the underlying stock can change a lot over such a long time frame, LEAPs are expensive to purchase and risky to sell.

For traders who do not enjoy micromanaging a portfolio, LEAPs are a good way to hedge a position. By purchasing a January 2010 put on one of your underlyings, you are ensured a hedge until then. If you purchase shorter term puts then they will expire worthless each period assuming your underlying does not decrease in price enough to necessitate exercising the put. Allowing a hedge to expire is like letting an insurance policy lapse, and if you forget to roll your hedge each expiry, you may be left at risk.
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