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| Factors Effecting Exchange Rates Posted: 10 Sep 2010 09:06 AM PDT There are many factors that effect the exchange rates. These few reasons have effect on the economy of the country. Exchange rates play a very important role in our todays world. Any up and down in there rates can have great affect on the people and economy as well as the investors who invest their money. In the trading of exchange rates great effect is faced by the economy. This is beacause if there is a high exchange rate then the country’s balance of trade can be lower and if there is a lower exchange rate then there are chances for the balance of trade to increase. There can be many reasons why the exchange rate is effected but few are mentioned below. Differentials in Inflation:Inflation leaves a great effect ont effecting the country’s economy as there is difference in th inflation of every country. A country which has a low inflation rate keeps a rising currency value and it’s purchasing power also increses as compared to the other countries. The countries which have high inflation always see there deprecition and then see the exchange rates of the countries they exchange with. It has been noticed that Germany, Japan, Switzerland and USA has low inflstion recently. Public Debt:Public debt is another reason why the echange rates are effected as the heavy debts on people leave the economy in bad state. Huge debts have a great effect on the domestic economy which results in the poor exchange rates. Large amount of debt has a great effect on the inflation and if the inflaiton rises the debt will be in action and will be serviced. Large amount of debt also stops the foreigners and the other investors to own securities or invest their money as they will be insecure as the country is already in debt. Political stability and Economic performance:When investing in nay country a person always seeks a country which is free from large debt and has a strong economy. Then only he will be satisfied and comfortable to invest his money in the particular country. If a country has strong economy and is secure then any one can easily invest their capital and money. This will be in favor of the country as the political and economic performance will improve. These are few reasons which have effect on the exchange rates. But if the government takes few steps then the economy of teh country can be improved.
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| A Fair Comparison of Forex & Equity Trading Posted: 10 Sep 2010 07:15 AM PDT Forex trading market is a profit making market and offers better opportunities and advantages than equity trading. Let's have a look on the advantages that are offered by forex trading market. 24 Hours Open MarketForex trading market is advantageous over equity trading as it is a 24 hours open market. That's the biggest advantage of forex trading market. It remains operational 5 days a week and it gives many things that equity trading doesn't give. Unlike forex trading, equity trading remains active only in regular business hours. Bigger Trading VolumeThe trading volume of forex market is higher than the equity trading market or the major stock exchange to 100 times. Moreover, a large number of traders buy and sell currencies due to the need of several countries that want to carry on the trade goods with each other.
Zero Commission & Transaction FeesUnlike equity trading, forex trading is a cost efficient trade in terms of both transactions charges and commissions. Majority of sites that are dealing with forex trading either do not charge any fee to its investors and traders or any commission. These sites provide them full access to all the important market information that is required for the trading purpose. Unlike forex market, the commission in equity trading ranges from $5 to $100 or even more per trade in full services brokers. Through Superior Liquidity the stability of PriceThere are always investors who are willing to buy and sell the currencies in forex trading and due to which the forex market possess higher trading volume that is 100 times more than the New York Stock Exchange. The price stability is also a big advantage of forex market that is due to the superior liquidity of the major currencies. But this advantage is not available in equity trading due to the lower volume of trade. Higher LeverageThere is a higher leverage offered by forex trading market that is higher than other major stock exchange trading markets. Due to the higher leverage (i.e., usually 100:1 leverage offered by forex dealers while 2:1 by equity dealers) allows the forex traders to trade the bigger sums of currency. This is also dependable on the types of forex brokers considered by the one for trading. Profit Generating PotentialThe forex market traders can trade on both upward as well as downward trends of the market, as they are provided with the facilities of buying and selling currencies. This feature makes the forex trading market more advantageous and effective over equity market, as in the equity market trading during downward trend of the market is a difficult task because of its certain market policies.
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