What is the Stock Market?
The definition of the stock market is simply the business of trading stocks for the financial aspect. Stock refers to a supply of money that a company has raised. Investors give the company this supply of money in order to help that company grow, therefore increasing the value of their stock and in turn making a profit.
The stock market is one of the more traditional ways to create a profit from an investment... even without having much knowledge about it. A person with little experience can make decent profits with no much effort with traditional investments, such as stocks or bonds.
There is always a risk that a company will go bankrupt at any time
There can be a lot of risk involved when trading large gains in short amounts of time. It can be difficult to develop a trading system that can provide a consistent 10 to 15% profit on a yearly basis.
The stock market is country specific, and deals only in business and currencies within that region. There are set business hours that typically follow the more traditional business day, and is closed on Holidays and weekends.
Let's check out the forex market for a change
The forex market, also known as the foreign exchange or the fx market, is the place where currencies are traded. It is the largest, most liquid market in the world with an average traded value of over 4 trillion per day and includes all of the forex currencies in the world. Compare that to the $25 billion per day that the New York Stock Exchange trades and you can easily see how enormous the forex market really is.
What exactly is traded on the forex market? It is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker and are always traded in pairs, EUR/USD or GBP/JPY. Think of it as buying a traditional 'share' in a particular country. Let's say you buy British Pound, you are essentially buying a share in the British economy as the price of the GBP is a direct reflection of what the market thinks about not only the current, but future health of the British economy.
Unlike the traditional stock market, the forex market is open 24 hours a day. At any time, somewhere around the world, a financial center is open for business and is exchanging currencies every hour of the day and night.
It follows the sun around the world, so you can trade late at night or early in the morning. Keep in mind that these additional hours also add additional risk for us since we aren't able to monitor our investments 24 hours every day. There are several safety options, such as limit that we will discuss in another chapter.
Forex Trading In Multiple Currencies
One of the most critical things that you must understand in forex trading is hour to correctly determine the value of multiple currencies.
Obviously not everyone will trade in US dollars.
But with so many variables, how can you tell a good buy or sell without complete understanding of the value of foreign currencies?
Your first step is to figure out the current exchange rate between the currencies in question.
Currency conversion is usually expressed in a ratio known as the cross rate. Normally you will see them listed in pairs in a xxx/yyy manner, with the xxx referred to as the 'base' currency (or home currency).
The base currency is usually always listed as a whole number, while the converted currency will be expressed with a decimal that is as close as possible to the base rate.
EXAMPLE: 1 US dollar = 0.61484 British Pound.
You'll notice that the base currency is almost always in single units (such as one dollar instead of ten). And since the whole number (often referred to as the 'big' figure) of the secondary currency almost never changes, it is usually only referred to at the decimal point.
Also with the consolidation of most of the European market using the Euro, many currencies such as franc or the lira have been eliminated, making trading currencies much less complicated.
It will take a bit of time, but once you get used to the base values of each currency, the changes will become more obvious to you, therefore making it easier and less confusing to monitor and you'll be making profitable trading decisions right along with the pros.
Please visit http://www.forexmoneysignal.com for more advice and support and also forex signal solutions
Article Source: http://EzineArticles.com/?expert=Roman_Sadowski
Foreign exchange ("Forex") trading is a complicated business. The foreign exchange trader must take into account (amongst other things) what may be called the "fundamental" factors of a country's economy (i.e. the qualitative factors that may have a bearing on its currency's exchange rate). So, what are these "fundamental" factors? They include political positions and developments (such as changes to a country's government's economic policy) and relevant decisions made by a country's central bank. They also include any relevant pieces of economic news affecting the country in question. The Forex trader needs to not only be aware of this information at an early stage, but to effectively "second guess" how the money markets will react to it. It would probably be unwise for traders (even those with considerable market experience) to ignore these fundamental elements and to just base their market decisions on technical analyses.
Approximately three trillion dollars is traded each day on the foreign exchange market (on those days that it is operating), making it the world's most liquid market. FX trading is vastly different to stock trading. (For example, in the Forex market, currencies are "paired" in that when one is bought, the other is sold, and vice versa.) As such, investors may find FX trading to be a useful means of diversifying their investment portfolios.
A number of factors make the Forex market unique (in addition to its liquidity, mentioned above). These include the fact that the market operates 24 hours a day, 6 days a week, and that traders in the market typically generate low profit margins (when compared with other markets).
The Forex market has changed quite dramatically since participation was opened up in the 1970's; now, it is not just the banks, but a range of institutions and investors (both large and small) that routinely participate in the market. If you do choose to operate in this market, you would be well advised to enroll in a reputable course to learn the nitty gritty of the complicated world of currency trading, find out about the various different ways that this could be done and to consistently apply Forex trading strategies that work.
The important factors that a Forex trader needs to consider when conducting a fundamental analysis of a country's economy include that country's GDP, employment rate, trade balance and most recent budget. Much of this information is publicly available on the Internet.
The results of a fundamental analysis could affect a trader's course of action in a number of ways. For example, a trader may use fundamental analysis to determine or predict the direction and extent to which a given country's official interest rate may change. Based on this analysis, the trader may sell the country's currency (if he/she predicts interest rates will fall), or buy the country's currency (if he/she predicts interest rates will rise). Indeed, large investors may take this process a step further by seeking to effectively influence the value of a country's currency. For example, such investors could fund industrial development in a country (when that country's currency is weak) and subsequently sell back that country's currency at a higher rate (when the currency is strong).
In an overall sense, if a Forex trader understands how to conduct a fundamental economic analysis, he or she will be in a much better position to know when to exit an "over inflated" economy before its financial "bubble" bursts.
Learn more about Forex trading for beginner, intermediate and advanced traders and grab some free ebooks and e-courses at http://www.savvyfinancialtraders.com
Article Source: http://EzineArticles.com/?expert=Daniel_Webb
The definition of the stock market is simply the business of trading stocks for the financial aspect. Stock refers to a supply of money that a company has raised. Investors give the company this supply of money in order to help that company grow, therefore increasing the value of their stock and in turn making a profit.
The stock market is one of the more traditional ways to create a profit from an investment... even without having much knowledge about it. A person with little experience can make decent profits with no much effort with traditional investments, such as stocks or bonds.
There is always a risk that a company will go bankrupt at any time
There can be a lot of risk involved when trading large gains in short amounts of time. It can be difficult to develop a trading system that can provide a consistent 10 to 15% profit on a yearly basis.
The stock market is country specific, and deals only in business and currencies within that region. There are set business hours that typically follow the more traditional business day, and is closed on Holidays and weekends.
Let's check out the forex market for a change
The forex market, also known as the foreign exchange or the fx market, is the place where currencies are traded. It is the largest, most liquid market in the world with an average traded value of over 4 trillion per day and includes all of the forex currencies in the world. Compare that to the $25 billion per day that the New York Stock Exchange trades and you can easily see how enormous the forex market really is.
What exactly is traded on the forex market? It is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker and are always traded in pairs, EUR/USD or GBP/JPY. Think of it as buying a traditional 'share' in a particular country. Let's say you buy British Pound, you are essentially buying a share in the British economy as the price of the GBP is a direct reflection of what the market thinks about not only the current, but future health of the British economy.
Unlike the traditional stock market, the forex market is open 24 hours a day. At any time, somewhere around the world, a financial center is open for business and is exchanging currencies every hour of the day and night.
It follows the sun around the world, so you can trade late at night or early in the morning. Keep in mind that these additional hours also add additional risk for us since we aren't able to monitor our investments 24 hours every day. There are several safety options, such as limit that we will discuss in another chapter.
Forex Trading In Multiple Currencies
One of the most critical things that you must understand in forex trading is hour to correctly determine the value of multiple currencies.
Obviously not everyone will trade in US dollars.
But with so many variables, how can you tell a good buy or sell without complete understanding of the value of foreign currencies?
Your first step is to figure out the current exchange rate between the currencies in question.
Currency conversion is usually expressed in a ratio known as the cross rate. Normally you will see them listed in pairs in a xxx/yyy manner, with the xxx referred to as the 'base' currency (or home currency).
The base currency is usually always listed as a whole number, while the converted currency will be expressed with a decimal that is as close as possible to the base rate.
EXAMPLE: 1 US dollar = 0.61484 British Pound.
You'll notice that the base currency is almost always in single units (such as one dollar instead of ten). And since the whole number (often referred to as the 'big' figure) of the secondary currency almost never changes, it is usually only referred to at the decimal point.
Also with the consolidation of most of the European market using the Euro, many currencies such as franc or the lira have been eliminated, making trading currencies much less complicated.
It will take a bit of time, but once you get used to the base values of each currency, the changes will become more obvious to you, therefore making it easier and less confusing to monitor and you'll be making profitable trading decisions right along with the pros.
Please visit http://www.forexmoneysignal.com for more advice and support and also forex signal solutions
Article Source: http://EzineArticles.com/?expert=Roman_Sadowski
Foreign exchange ("Forex") trading is a complicated business. The foreign exchange trader must take into account (amongst other things) what may be called the "fundamental" factors of a country's economy (i.e. the qualitative factors that may have a bearing on its currency's exchange rate). So, what are these "fundamental" factors? They include political positions and developments (such as changes to a country's government's economic policy) and relevant decisions made by a country's central bank. They also include any relevant pieces of economic news affecting the country in question. The Forex trader needs to not only be aware of this information at an early stage, but to effectively "second guess" how the money markets will react to it. It would probably be unwise for traders (even those with considerable market experience) to ignore these fundamental elements and to just base their market decisions on technical analyses.
Approximately three trillion dollars is traded each day on the foreign exchange market (on those days that it is operating), making it the world's most liquid market. FX trading is vastly different to stock trading. (For example, in the Forex market, currencies are "paired" in that when one is bought, the other is sold, and vice versa.) As such, investors may find FX trading to be a useful means of diversifying their investment portfolios.
A number of factors make the Forex market unique (in addition to its liquidity, mentioned above). These include the fact that the market operates 24 hours a day, 6 days a week, and that traders in the market typically generate low profit margins (when compared with other markets).
The Forex market has changed quite dramatically since participation was opened up in the 1970's; now, it is not just the banks, but a range of institutions and investors (both large and small) that routinely participate in the market. If you do choose to operate in this market, you would be well advised to enroll in a reputable course to learn the nitty gritty of the complicated world of currency trading, find out about the various different ways that this could be done and to consistently apply Forex trading strategies that work.
The important factors that a Forex trader needs to consider when conducting a fundamental analysis of a country's economy include that country's GDP, employment rate, trade balance and most recent budget. Much of this information is publicly available on the Internet.
The results of a fundamental analysis could affect a trader's course of action in a number of ways. For example, a trader may use fundamental analysis to determine or predict the direction and extent to which a given country's official interest rate may change. Based on this analysis, the trader may sell the country's currency (if he/she predicts interest rates will fall), or buy the country's currency (if he/she predicts interest rates will rise). Indeed, large investors may take this process a step further by seeking to effectively influence the value of a country's currency. For example, such investors could fund industrial development in a country (when that country's currency is weak) and subsequently sell back that country's currency at a higher rate (when the currency is strong).
In an overall sense, if a Forex trader understands how to conduct a fundamental economic analysis, he or she will be in a much better position to know when to exit an "over inflated" economy before its financial "bubble" bursts.
Learn more about Forex trading for beginner, intermediate and advanced traders and grab some free ebooks and e-courses at http://www.savvyfinancialtraders.com
Article Source: http://EzineArticles.com/?expert=Daniel_Webb
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