Percentage in Point

Percentage in Point

Interesting Facts about Forex Trading

Posted: 16 Jun 2010 06:42 AM PDT

Forex is abbreviation of "foreign exchange". The Forex trading market is the only market where currencies of nations are bought and sold round the clock. The Forex market was dominated by large institutions like banks and brokerage firms for several years. But from last few years, Forex market had experienced a major change because of growing numbers of private investors and traders.

Forex Trading Intresting facts

Here are some interesting facts about Forex trading:

  • According to Howard Abell, the Forex trading system is the system which gives the trader ability to control his or her emotional states instead of allowing him to control them. A Forex trading system is a disciplined method for organizing dynamic, ever-changing market phenomena.
  • Most liquid market in the world is Forex market, thus making is easy to trade most currencies.
  • There are no commissions on the Forex deals which you make, unlike equities or future traders.
  • Most common traded currencies on the Forex market are the US Dollar (USD), the Japanese Yen (JPY), the Euro (EUR), the British Pound (GPB), the Canadian Dollar (CAD), the Australian Dollar (AUD), and the Swiss Franc (CHF).
  • One of the most commonly traded currency pairs are the US Dollar and Japanese Yen, The US Dollar and the Euro, and the US Dollar and Swiss Franc.
  • Almost in 90% of all Forex transactions the US Dollar is involved.
  • There are ten financial institutions that account for almost 73% of the total Forex trading market volume. These top ten most active traders are the Deutsche Bank (17.0%), UBS (12.5%), Citigroup (7.5%), HSBC (6.4%), Barclays (5.9%), Merrill Lynch (5.7%), J.P. Morgan Chase (5.3%), Goldman Sachs (4.4%), ABN AMRO (4.2%), and Morgan Stanley (3.9%).
  • There are five major Forex trading centers, which are London, New York, Tokyo, Sydney, and Frankfurt.
  • The three major Forex trading countries are the United Kingdom (32.4%), the United States (18.2%), and Japan (7.6%).
  • Forex analysis is typically used by the currency market players as a meaning to predict currency price movements. There are two types of Forex analysis: fundamental and technical. In fundamental analysis economic and political factors, such as unemployment rates, interest rates, or inflation are used for predicting currency movements. In technical analysis reliable historical data is used for predicting these movements. According to technical analysts history repeats itself over and over again.
  • Some Forex traders depend on fundamental analysis and some depend on technical analysis. And many of successful Forex traders use both strategies. Because there is no one strategy or combination of strategies which is 100% certain.
  • Margin is referred to as the collateral needed to facilitate the Forex deal. Often there is a very small portion of the entire deal, such as 1% or 1:100. Always remember that margin is a "double-edged sword". If you will not use proper risk management tools like the stop-loss option, you can have major losses as well as gains. So it's strongly recommended that you take complete advantage of stop-loss and take profit options in your Forex trading.

There is a high level of risk in Forex trading on margins. It may not be suitable for all investors. The high degree of leverage can work in your favor and can work against you also. So when you decide to invest in foreign exchange you must carefully consider your investment objectives, level of experience, and risk appetite.
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