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What Is Forex Trading

Discussion in 'Forex Beginner Q&A' started by ironman2000, Feb 22, 2008.

  1. ironman2000

    ironman2000 New Member

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    Occupation:
    Affiliate Manager
    Location:
    Israel
    Forex

    The info below will assist you to understand what Forex is. This will help you to advice to your Affiliates on what and how they can make money.
    Now, since eToro can also be effective to the gaming world there are more options for advertisement that the affiliate can work with.


    • What is Forex?
    • Forex Companies - The Leaders.
    • Best converting Regions.
    • Forex key words. – Excel doc. Attached
    • Methods that work.

    What is Forex?
    The market
    The currency trading (foreign exchange, Forex, FX) market is the biggest and fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars. The participants in this market are central and commercial banks, corporations, institutional investors, hedge funds, and private individuals like you.

    What happens in the market?
    Markets are places where goods are traded, and the same goes with Forex. In Forex markets, the “goods” are the currencies of various countries (as well as gold and silver). For example, you might buy euro with US dollars, or you might sell Japanese Yen for Canadian dollars. It’s as basic as trading one currency for another.
    Of course, you don’t have to purchase or sell actual, physical currency: you trade and work with your own base currency, and deal with any currency pair you wish to.

    “Leverage” is the Forex advantage
    The ratio of investment to actual value is called “leverage”. Using a $1,000 to buy a Forex contract with a $100,000 value is “leveraging” at a 1:100 ratio. The $1,000 is all you invest and all you risk, but the gains you can make may be many times greater.

    How does one profit in the Forex market?
    Obviously, buy low and sell high! The profit potential comes from the fluctuations (changes) in the currency exchange market. Unlike the stock market, where share are purchased, Forex trading does not require physical purchase of the currencies, but rather involves contracts for amount and exchange rate of currency pairs.
    The advantageous thing about the Forex market is that regular daily fluctuations – in the regular currency exchange markets, often around 1% - are multiplied by 100!generally offers trading ratios from 1:50 to 1:200).

    How risky is Forex trading?
    You cannot lose more than your initial investment (also called your “margin”). The profit you may make is unlimited, but you can never lose more than the margin. You are strongly advised to never risk more than you can afford to lose.

    What is Forex trading? What is a Forex deal?
    The investor's goal in Forex trading is to profit from foreign currency movements.
    More than 95% of all Forex trading performed today is for speculative purposes (e.g. to profit from currency movements). The rest belongs to hedging (managing business exposures to various currencies) and other activities.
    Forex trades (trading onboard internet platforms) are non-delivery trades: currencies are not physically traded, but rather there are currency contracts which are agreed upon and performed. Both parties to such contracts (the trader and the trading platform) undertake to fulfill their obligations: one side undertakes to sell the amount specified, and the other undertakes to buy it. As mentioned, over 95% of the market activity is for speculative purposes, so there is no intention on either side to actually perform the contract (the physical delivery of the currencies). Thus, the contract ends by offsetting it against an opposite position, resulting in the profit and loss of the parties involved.

    Components of a Forex deal
    A Forex deal is a contract agreed upon between the trader and the market-maker (i.e. the Trading Platform). The contract is comprised of the following components:
    • The currency pairs (which currency to buy; which currency to sell)
    • The principal amount (or "face", or "nominal": the amount of currency involved in the deal)
    • The rate (the agreed exchange rate between the two currencies).
    Time frame is also a factor in some deals, but this chapter focuses on Day-Trading (similar to “Spot” or “Current Time” trading), in which deals have a lifespan of no more than a single full day. Thus, time frame does not play into the equation. Note, however, that deals can be renewed (“rolled-over”) to the next day for a limited period of time.
    The Forex deal, in this context, is therefore an obligation to buy and sell a specified amount of a particular pair of currencies at a pre-determined exchange rate.
    Forex trading is always done in currency pairs. For example, imagine that the exchange rate of EUR/USD (euros to US dollars) on a certain day is 1.1999 (this number is also referred to as a “spot rate”, or just “rate”, for short). If an investor had bought 1,000 euros on that date, he would have paid 1,199.00 US dollars. If one year later, the Forex rate was 1.2222, the value of the euro has increased in relation to the US dollar. The investor could now sell the 1,000 euros in order to receive 1222.00 US dollars. The investor would then have USD 23.00 more than when he started a year earlier.
    However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a “risk-free” investment. Long-term US government bonds are considered to be a risk-free investment since there is virtually no chance of default - i.e. the US government is not likely to go bankrupt, or be unable or unwilling to pay its debts.
    Trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back that currency in order to lock in the profit. An open trade (also called an “open position”) is one in which a trader has bought or sold a particular currency pair, and has not yet sold or bought back the equivalent amount to complete the deal.
    It is estimated that around 95% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.

    Exchange rate
    Because currencies are traded in pairs and exchanged one against the other when traded, the rate at which they are exchanged is called the exchange rate. The majority of currencies are traded against the US dollar (USD), which is traded more than any other currency. The four currencies traded most frequently after the US dollar are the euro (EUR), the Japanese yen (JPY), the British pound sterling (GBP) and the Swiss franc (CHF). These five currencies make up the majority of the market and are called the major currencies or “the Majors”. Some sources also include the Australian dollar (AUD) within the group of major currencies.
    The first currency in the exchange pair is referred to as the base currency. The second currency is the counter currency or quote currency. The counter or quote currency is thus the numerator in the ratio, and the base currency is the denominator.
    The exchange rate tells a buyer how much of the counter or quote currency must be paid to obtain one unit of the base currency. The exchange rate also tells a seller how much is received in the counter or quote currency when selling one unit of the base currency. For example, an exchange rate for EUR/USD of 1.2083 specifies to the buyer of euros that 1.2083 USD must be paid to obtain 1 euro.

    Spreads
    It is the difference between BUY and SELL, or BID and ASK. In other words, this is the difference between the market maker's "selling" price (to its clients) and the price the market maker "buys" it from its clients.
    If an investor buys a currency and immediately sells it (and thus there is no change in the rate of exchange), the investor will lose money. The reason for this is “the spread”. At any given moment, the amount that will be received in the counter currency when selling a unit of base currency will be lower than the amount of counter currency which is required to purchase a unit of base currency. For instance, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015, representing a spread of 1,000 pips (percentage in points; one pip = 0.0001). Such a rate is much higher than the bid/ask currency rates that online Forex investors commonly encounter, such as 1.2015/1.2020, with a spread of 5 pips. In general, smaller spreads are better for Forex investors since they require a smaller movement in exchange rates in order to profit from a trade.

    Forex Companies - The Leaders.
    • Forex.com
    • Saxobank.com
    • FXCM.com
    • GFT.com
    • Easy-Forex.com
    • Marketiva.com
    • Soon – eToro 


    Best converting Regions

    Dubai
    Bahrain
    U.A.E (United Arab Emirates)
    U.S.A
    Pakistan
    Malaysia
    Scandinavia
    Germany
    Norway

    Advertise Methods that work.
    Unfortunately there are not much of ways to bring traffic that will cost less and that will convert the best.

    PPC – the keywords start from 10c up to $10 per click! This method does not work and in most chances the Affiliate will loss his money. If the Affiliate only work with PPC, let him, we want our affiliate to advertise in Google, it will deliver traffic.
     
  2. ironman2000

    ironman2000 New Member

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    Occupation:
    Affiliate Manager
    Location:
    Israel
    What is Forex Trading continued

    Website – If the Affiliate have website with good traffic, the best exposed location is in the front page and not inner pages. The banner should lead to a Landing Page that will give ether promotion or explanation.

    SEO – SEO affiliates will only need your help in costume creative’s, keywords and regions for targeted traffic.

    Offline Affiliates – the best and most effective way to bring traders, in this case, we can design business cards, and support with educational material.

    Campaigns – Affiliates who run campaigns will need creative’s with Landing pages.
    Those kinds of affiliates will need support 24x7 and we got to know where does they advertise so incase they bring good traffic we can always support them with more $$$.
     
  3. althea

    althea New Member

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    cool! great info you have their guys... im so enlightened and very pleased to read this topic. i gained a lot of knowledge about forex trading and its functionalities... thanks for the tip guys!
     
  4. corleone

    corleone New Member

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    From this information. I understand the basic principle for Forex Trading. I need more information to start involve in this business
     
  5. rely_73539

    rely_73539 New Member

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    Forex is an acronym for "foreign exchange," and involves trading pairs of currencies, i.e., buying one currency and selling the other in a single transaction. For example, USD/JPY is buy US dollar/sell Japanese yen. In this case, you expect the dollar to appreciate versus the yen, the yen to depreciate against the dollar, or both. The latter situation, of course, is ideal.
     
  6. gael

    gael New Member

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    I'm interested now with forex training but here in the Philippines, I dont know how to start especially I.m always here at my house.
     
  7. Smooth=1

    Smooth=1 New Member

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    where in the philippines?
     
  8. fasalm786

    fasalm786 New Member

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    Do you watch in despair as trade after trade goes bad, and your money slowly drains from your account? Does it seem that as soon as you place a trade the market miraculously goes against you as if “they knew”?

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  9. Stella

    Stella New Member

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    Hello,
    Thanks for your info . Its really help me to know about your forum because your forum is about Forex trading.
    Thankyou once again

    Thankyou,
    Stella:sweat:
     
  10. anute

    anute New Member

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    Hello! I'm really glad to found this forum because as I see it's a good place both for beginners and for professionals traders! thanks for your forum!
     
  11. Dantist

    Dantist New Member

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    Thank you, good article for beginnings traders.
     
  12. 3txseo

    3txseo New Member

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    Forex Affiliating is not so simple business to conduct. I always ask for prepaid campaigns or pay per click which i have my own counting solution.
     
  13. masterbroker

    masterbroker New Member

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    Thanks for sharing the above information, it's really very useful. It really help all those people who are new to farex trade.
     
  14. richemarks

    richemarks New Member

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    Best forex trading

    In this forum the starting things about the forex are explained very much and the forex trading companies list has been given by the forum is alos more gainful and so that everybody can able to follow this tips and guidence.And for the starter for the forex trading it will very useful and more gain to create profits..
     
  15. taylordaniel95

    taylordaniel95 New Member

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    Hello, pretty good information, I just join this forum and I´m very new to Fx, I started some months ago so if you have tips, recommendations, or advices to go for the right way would be great for me. I join in here just looking for experts or experienced people. Thanks:woot:
     
  16. daniels_co

    daniels_co New Member

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    very nice and intresting forum... really
     
    #16 daniels_co, Jan 26, 2009
    Last edited by a moderator: Jan 26, 2009
  17. herry_fxhope

    herry_fxhope New Member

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    thank you about your atricle and thanks again
     
  18. alessio

    alessio New Member

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    Find HERE something you did not know about Forex.
     
  19. Jacq Stone

    Jacq Stone New Member

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    It's a good introduction for those who want to learn Forex trading and for those who are newbies to these business. Currently, Forex trading is the largest and fasting growing financial market in the whole world. Equipped with the right tools, knowledge, strategies and discipline, you can make it in the market.


    Please feel free to come and visit our FB page for more latest news and updates that will help you guys to improve your decision making.

    http. www. facebook. com/pages/Ikofx/213186568697555



    forex broker
     
  20. hugo30

    hugo30 New Member

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    it's of course a tiny amount of information here. I'm not sure about regions and leaders, it seems wrong for me.
     
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