Determining the Exchange Rates in the Forex Markets – The Example of the Japanese Yen

The movement in the trade is easy to understand. All you need is a basic understanding of the importance of the forces of demand and supply which are there even in our daily lives.

This is illustrated here using Japan as a case point. Oil prices are a major factor influencing exchange rates in Japan. If the demand for this commodity goes up, the prices will also skyrocket. This makes related fuel products to also start retailing at proportionally high prices. Products such as gasoline and natural gas are examples of these related products.

This makes driving to and from town for work very expensive. As a result, your budget will be greatly affected. Large corporations are also affected in the same way. This ultimately forces the government to pay higher prices for oil imports. It should be noted that Japan get almost 100% of its oil needs from importation. It therefore must buy oil at the prevailing prices. The result of these actions is that oil plays a major role in the fluctuation of the exchange rate of the Japanese yen.

In the same way that Japan depends on imports of oil products to drive its electronics and motor industry, the same way it depends heavily on the export proceeds from these finished capital goods. It becomes expensive to run industries due to high cost of fuel, and it also becomes expensive to transport these goods to consumers. This forces computers and DVD players from Japan to retail at very high prices.

The effects of these high costs have…



by Kenneth I Ifeanyi

Determining the Exchange Rates in the Forex Markets – The Example of the Japanese Yen

The movement in the trade is easy to understand. All you need is a basic understanding of the importance of the forces of demand and supply which are there even in our daily lives.

This is illustrated here using Japan as a case point. Oil prices are a major factor influencing exchange rates in Japan. If the demand for this commodity goes up, the prices will also skyrocket. This makes related fuel products to also start retailing at proportionally high prices. Products such as gasoline and natural gas are examples of these related products.

This makes driving to and from town for work very expensive. As a result, your budget will be greatly affected. Large corporations are also affected in the same way. This absolutely forces the government to pay higher prices for oil imports. It should be noted that Japan get almost 100% of its oil needs from importation. It therefore must buy oil at the prevailing prices. The result of these actions is that oil plays a major role in the fluctuation of the exchange rate of the Japanese yen.

In the same way that Japan depends on imports of oil products to drive its electronics and motor industry, the same way it depends heavily on the export proceeds from these finished capital goods. It becomes expensive to run industries due to high cost of fuel, and it also becomes expensive to transport these goods to consumers. This forces computers and DVD players from Japan to retail at very high prices.

The effects of…



by Kenneth I Ifeanyi

Forex Foreign Exchange Rates – Getting Started In Forex Trading

You’ve heard about other people making a full time income from investing in the Forex but you’re just not sure if it is for you. If you’re in this position, we’ll take you on a quick tour of the concept of Forex foreign exchange rates, the benefits and the risk involved.

The Forex market revolves around the buying and selling of money – specifically the various currencies around the globe. The market is huge. To give you an idea of its size, the volume traded is 3 times that of the stock market and futures market combined.

When you start trading the Forex you simultaneously buy one currency and sell another currency. A Forex quote will look something like USD/EUR = 1.2. This can sometimes be a bit daunting to the beginner, but it essentially means that one US dollar can be sold for 1.2 Euros. The 2 currencies listed are known as currency pairs, and there are various pairs that are commonly quoted including USD/GBP (US dollar and British Pound), USD/CAD (US dollar and Canadian dollar), and USD/JAY (US dollar and Japanese Yen).

Trading the Forex has a number of benefits over the stock market. The first of these is the ability to trade 24 hours. Unlike the stock market, there is no physical location that the Forex is traded from. It is a global trading network that runs continuously. This means that you can trade at a time to suit you even if you have other commitments in your life.

Another benefit is the ability to be able to use leverage. This allows you to control…



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Small Business Guide to Online Foreign Exchange Payments

As a small business owner, knowing what to look for when choosing an online foreign exchange provider can be tricky, not to mention time consuming and likely scoring pretty low on your to-do list. However, taking an interest in your business’ foreign exchange (FX) requirements is important.

FX may be a by-product of your actual business, but if managed poorly it can put a dent in your bottom line. So what should you consider when choosing your online provider?

1. What rate are you getting?

Never be afraid to question your provider about the FX rates they quote you. Booking exchange rates online is a low cost business and this should be reflected in the exchange rates you receive.

All providers keep a “margin”. This is the difference between what they buy the currency, and where they sell it onto you. Ask what margin you’re receiving.

2. Fees

Most FX providers will charge a fee to transfer your money. Take the time to shop around though – as new players enter the provider marketplace, free transfers are becoming more commonplace.

It’s important to remember though, that a free transfer does not offset a bad exchange rate. Take the time to compare fees AND exchange rates.

3. Look for simplicity

Foreign exchange does not have to be complicated. Buying or selling foreign currency online should be a simple and fast process. A lot of websites have unnecessary bells and whistles to make them look good.

When researching an online provider, look for a site that allows you to complete…



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ITFX Reports on Possible BRICS Currency and Impact on EUR/USD in Forex Market

Hong Kong, China (PRWEB) October 30, 2011

If the International Monetary Fund’s (IMF) figures are to be believed, the United States is still the world’s number one economy, with a 2010 Gross Domestic Product (GDP) of close to $15 trillion, according to InvestTechFX. Surpassing that mind-boggling figure, however, is the combined 2010 GDP of the European Common Market (ECM). The IMF puts it at just under $17 trillion. InvestTechFX analyzes the effects on the Fx Trading market if and when a new common currency by BRICS is released.

Endless debate can be generated when economists differ on how to adjust the figures for inflation and whether to base them on official exchange rates or use a methodology that accounts for what can be purchased for the equivalent amount between compared currencies, known as Purchasing Power Parity However it is parsed, Fx traders can leave the bean counting to the economists and spend their energy in the more productive pursuit of forecasting future exchange rates between the currency pairs that comprise the Forex currency exchangemarket .

One development traders should have on their radar is the potential for a new confederation of countries and a new unified currency along the lines of the ECM and the euro. This potential alliance is known by the acronym, BRICS. BRICS stands for Brazil, Russia, India, China and most recently, South Africa. Combined, these five countries encompass one third of total world population, an important factor in economic ranking, since population is a valid resource. They also have a lot of land area, which means abundant natural resources, another critical economic criterion.

From a GDP perspective, three of the countries, China, Brazil and India, respectively represent the world’s second, eighth and 10 largest economies. Russia comes in at number 11. South Africa ranks 28th, but has been undergoing rapid expansion. InvestTech FX reports that these five countries have combined 2010 GDP of $11.3 trillion, close to that of the United States, if it is permissible to consider the almost $3.3 trillion gap a close one.

It is clear, according to InvestTechFX, that BRICS has a way to go to catch the ECM’s nearly $17 trillion, but the main point is that if the BRICS countries can form up and produce a common currency, the longtime status quo of dollar and euro dominance would face a legitimate challenge.

One obvious obstacle is that unlike the euro zone countries, the BRICS countries are dispersed around the world. This geographic scattering should not be lightly regarded. Then, there are the political considerations. It is under scrutiny whether China would be willing to let its currency value flowed freely against other currencies, instead of being artificially devalued as it is now to make Chinese industrial manufacturing exports attractive to other nations. History suggests that this would not be the case. One could reasonably conclude that this confederation would be no more unified than the United Nations. Centuries of nationalistic behavior will not be easy to overcome.

Finally, in what could be considered at least mildly ironic, the first meeting of the foreign ministers of the original four BRICS countries was held in New York. Less ironic, however, is the announcement in 2008 by BRICS nations that a new, diversified, stable and predictable global reserve currency was needed and would be sufficient to cause the dollar to decline in value against other major world currencies.

ITFX , Forex ECN firm, explains that assuming the BRICS nations could successively form a union and issue a currency based on the member countries’ combined GDP, the currency would rank a strong third place in the world. With the growth all the countries, with the exception of the more mature Russian economy, are experiencing, a new currency could soon challenge the United States dollar for second and could easily surpass the euro by the end of the decade, if not sooner.

Imagine the Forex market with the currency called BRICS for now, traded in BRICS/USD or BRICS/EUR pairs. Obviously, the EUR/USD would still be a major pair, but could quite possibly drop from the top traded pair to number three. This could further result in an additional drop in volume as Fx traders would possibly find better liquidity and lower volatility in the new pairs.

For the present moment, there is much that needs to fall in place before such a scenario could unfold, but the same barriers confronted the creation of the euro, of which the outcome is clear in present day.http://www.investtechfx.com.

Exchange Rates – Mode of Using Money in a Foreign Market

Exchange rate signifies the price at which one country would substitute a currency for another. In other words, it refers to the assessment of one country's money in relation to the money of a different country. Exchange rates are moreover identified by the names of foreign exchange rates as well as Forex rate.

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One comes across the exchange rate issue when one is dealing with cross country circumstances be it for tour, trade or any further cause. The end result remains the similar that all these are associated with money-related troubles. The central troubles involved are using the money, saving and additional such things. In other words, persons and trade houses wish to acquire the most excellent trade price which provides them value for their money.

As looking for an exchange rate, it is very important to verify the rates presented by banks, airports and credit card companies. These days, there are various websites offering services to an array of customers from a diversity of countries.

Prior to, getting in to the exchange rate field it is very important to have an understanding regarding the worth of one's money in replacement for other country's currency. Lots of people wait for the exchange rate values to go down and after that, they buy and perhaps save when the rate rises.

The exchange rates are generally determined by either floating rate or fixed rate. A fixed rate is the rate which is the representative rate for country's currency which is set by the nation's Central Bank. The floating method in contrast refers to the diverse levels of demand and supply for that currency on the classified market.

Exchange rates calculator is the best device to be on familiar terms with a country's currency in relation to other country's currency.

Foreign exchange market, in addition, recognized as FX or forex, is the biggest market in the world. As of the soaring requirement of the foreign exchange rates, there are number of sites accessible in the forex market which gives you an idea about the real time currency exchange rates

Forex Currency Trading System

The foreign exchange market (commonly known as forex or FX), is profitable only for those people who possess a great intellect and an ability to take risk. The FX market requires in-depth knowledge of the system and presents a fast-paced environment for the movement and manipulation of fortunes. It is one of the largest and most liquid financial markets in the world and provides a platform for trading between commercial, investment and central banks, trade speculators, multinational companies, and other financial institutions. All of these organizations possess and follow the best system possible, in order to meet their specific needs.

This trading is affected by various factors like global politics, local and national foreign affairs, and the change in import and export policies. A normal day begins for FX market on Monday and ends on Friday. Unlike other financial markets, it runs 24 hours a day for the entire business week. The complexity of the whole process can be easily understood by considering the various aspects of foreign denomination currencies, and the social and political influences affecting the global community, which constantly keep on changing every now and then. Hence, only the highly skilled and profitable investors in the market undertake this form of trading.

What in Currency Trading

The FX market facilitates trade, investment, and the transactions between currencies, such as US dollars, euros, pounds, etc. The retail FX market is purely a speculative one and in reality, no physical exchange of currencies ever takes place. The primary function of the FX market is to facilitate the exchange of one currency into another, for different organizations. The purpose of such organizations might range from trading for payroll, payment for costs of goods and services from foreign vendors, and merger or acquisition activity. However, these corporate needs form only about 20% of the market volume and rest of the purposes are speculative in nature, which are carried out by large financial institutions, funds or individuals. When currencies are traded against one another, each pair is represented in the form of X/Y. For example, EUR/USD refers to the price of the euro expressed in US dollars.

Key Components

  • Forex Charts: Forex charts, which might appear more like a series of crisscross lines for a layman, are actually comprehensive models of statistical information on countries, histories, national ties, foreign, and domestic events. These graphs can mark the difference between an intelligent speculator and ignorant investor. These charts help the investors to take a macro view towards global trading and develop a comprehensive plan for investment.
  • Forex Rates: These are the exchange rates which allow nations to exchange sums of money, for different purposes. If an individual wants to exchange money, he first needs to check the foreign exchange rates. These rates are dependent on the political and economical policies on local, regional, and international levels. These rates also provide an opportunity to gain tremendous profits by speculation.
  • Tade Speculation: Speculators have always been a part of major economic controversies, and their effect on currency devaluations and national economies recur regularly. However, they make a stabilizing influence on the market, despite the fact that they are considered to leave a negative impact on the market. Speculation is sometimes also termed as gambling, which often interferes with economic policies. There are also many contradictory views of economic scholars, who consider speculators as people who help the enforcement of international agreements, and anticipate the effects of basic economic laws. George Soros, is a famous billionaire who made a fortune by speculation.
  • Spot Transactions: A spot transaction is a one or two-day delivery transaction, which represents a direct exchange between two currencies and involves cash rather than a contract. The delivery time depends on the two currencies which are being exchanged during the transaction, and the rate of interest is taken as its current value.
  • Forward Transactions: In this kind of transaction, money transfer does not take place, until some pre-determined future date is decided by the buyer and seller. Suppose a firm wants to make payments to a vendor for the imports, it can choose a day and make the payments on it. The exchange rate is decided mutually by the broker and the buyer, and it remains same regardless of what the market rates are at the time of payment.

This form of trading is not conducted on a regulated exchange, because of which there are additional risks attached to it. The FX market was not always accessible to a regular trader, and its access was limited to banks, hedge funds, major currency dealers, and the high net-worth individuals. Later, some smaller financial institutions and the Internet, made it available at a retail level. Before stepping into this arena, it is important to plan an effective strategy to follow, which in turn will help to gain benefits from this system.

Disclaimer: This article is for reference purposes only and does not directly recommend any specific investment choices.

FOREX Analysis Site Makes Online Debut

(PRWEB) May 2, 2005

ForeignmarketWatch.com makes its online debut as a leading information site covering the Foreign Currency Exchange (FOREX) Market as well as global financial markets, including Japan, London, Euro-zone, and China.

ForeignmarketWatch.com was established to help currency traders, as well as investors, make more well-informed decisions. By combining technical analysis with fundamental analysis provided by the site, forex traders may have a potential advantage. Joshua M. Kunken, founder of ForeignmarketWatch.com, states: “We are pleased to provide our visitors with timely and relevant information that is useful for professional currency traders as well as equity investors alike. Currency fluctuation, as well as interest rates, affect nearly every type of investment. Keeping abreast of this information may help in hedging such risk.” Articles and featured analyses are arranged on the site in a clean and user-friendly format right alongside foreign exchange rates and other information.

Features of ForeignmarketWatch.com include up-to-date foreign exchange rates, global market indices, forex news, as well as analysis and commentary. Previous feature articles include commentary on China’s potential revaluation of the yuan (renminbi), the potential hike in interest rates by the US Federal Reserve, and the gradual rise in the value of the euro against the value of the US dollar. All major currency pairs are fair game: from EUR/USD, USD/JPY, GBP/USD, to several others.

ForeignmarketWatch.com also offers daily writeups of currency analysis and commentary on the major currency pairs in addition to a considerable amount of information for beginning currency traders, including a free newsletter. The free newsletter consists of a recap of the previous week’s events and economic indicators and their relation to the foreign exchange market.

ForeignmarketWatch.com welcomes beginners as well as seasoned currency traders alike. The site looks forward to strengthening its reputation as a leading foreign exchange (FOREX) information site with plenty of articles, analyses, and commentary for investors from all walks of life.

http://www.foreignmarketwatch.com

An Introduction to Forex Trading

In 1971, foreign exchange currency rates switched from being fixed to floating and a new market opened up. The currency conversion rates between two countries were now subject to the trading volume between them and their respective market dynamics. Since then, foreign trade and therefore, foreign currency exchange trade has grown by leaps and bounds, reaching a turnover of USD 3.2 trillion in 2007, with a 71% increase since 2004. This type of trade became a new business opportunity which exploited the volatility of the exchange rates for profit.

Today, the foreign exchange market is not only the biggest international trade market, but is also the longest running, operating 24 hours a day, except weekends. This makes it more sensitive to international events and therefore more responsive to market changes.

Learning forex trading is about learning how currencies are exchanged and it requires an in-depth knowledge of economic developments in the international markets, as well as domestic markets. The fundamentals are simple, but acquiring mastery over trading requires years of experience. Trading in this market is usually done on the phone and nowadays, largely on the Internet. You can trade from anywhere in the world. All you need is an Internet connection, a decent capital investment, and a willingness to learn. The cost of operation through the Internet is lower and also faster, compared to traditional methods.

Learning Trading

Trade in all forms is the buying and selling of goods. The principle on which it operates is ‘buy cheap, sell dear’. Forex trade is unique in the sense that there are no goods sold here, only currencies are swapped, one for the other. The principle of operation is the same though, ‘Buy a currency as cheaply as possible and sell it when it improves in value’ or ‘sell a currency at a price and buy it back cheaper when its value falls’. The former kind of transaction is called a ‘long position’ while the latter is called the ‘short position’.

There are many online brokerage companies that operate and provide the platform for trading currencies. Firstly, get in touch with the trading jargon. It takes a bit of time to learn, but once you get used to it, the operation is simple. The main thing is to understand the factors that affect the currency trading prices, which are the markets, central bank policies, and international trade. You could call the whole thing a very advanced form of betting. You make choices based on informed guesses and hope for the best. The choices need to be made through a deep understanding of how a particular currency is going to respond to market dynamics.

You could start out with a practice account, in which you do not actually trade, but get used to the procedure of online trading. Read charts, make calculations, and place virtual buy and sell orders, before you start doing it actually.

Another exercise you could do is follow and read the currency trade news in financial papers. They provide a daily quote and analysis of the exchange rates or you could get the live quotes online. Make your own virtual transactions, based on the data. Make a table of your virtual profits and losses. Once you start beating the markets confidently on a regular basis, make a real investment in the market.

Brokerage sites provide you with software programs and online tools for analysis and a forex account. You can start trading from the comfort of your home. Alternatively, you could enroll for training, which will give you the depth of knowledge and grasp of fundamental principles.

What you essentially do is trade between pairs of currencies which are listed in the order of their market value. Online trading is mostly ‘direct exchange’ of currencies, which holds USD 1.4 trillion of market share.

Types of Transactions

There are many ways in which forex transactions can occur, differing in volume and time of transaction. They are:

Swap: The most common type of transaction that happens in forex markets, swap is an exchange of currencies for a previously decided period of time, followed by reexchange by mutual agreement. These dealings do not happen by contracts. These transactions are most common in the market.

Spot: As the name suggests, spot transaction is an exchange of currencies done in the shortest time, usually 2 days and in cash. Interest rate is not applied in the transaction. It is a direct exchange transaction between two currencies. This is the second most common transaction after swap.

Forward: Forward transaction is an agreement between a buyer and seller to purchase or sell a currency at a predestined future date by mutual agreement. The set time period may vary from days to months. These types of transactions reduce volatility risks.

Future: This is another type of forward transaction, but with a formal structure decided in the market. The buying and selling date is set for, up to 3 months in the future and interest is inclusive in the price.

Option: A derivative type of transaction is option or FX option, as it is called. In it, the buyer and the seller agree upon a future date for exchanging currencies. Although, the seller has a right to sell at that predestined date, he has no obligation to do so. This is a more flexible option than ‘Forward’ or ‘Future’ transactions.

You have an option of getting your account managed by a professional brokerage company, but it is very important that you understand what transactions, the firm is making for you. Ultimately, it is your money and you have to be responsible for it. You could also start your own brokerage firm, once you think you have a good understanding of forex transactions and your success rate is higher.

One advantage of the direct exchange forex market is that liquidity is not a problem here. The market deals in liquid assets that is currency. Make sure that after you have invested in the markets, you have a backup plan and some savings other than these investments. Do not place all your eggs in the same basket. It is a hectic form of trade and you need to be in touch with the market pulse all day. Still, if you think you have got the patience and the tenacity to deal with volatile markets, you are in for some big bucks and this is a good career opportunity for you.

FAP Turbo Forex Robots: Advantages of Automated Algorithmic Trading

Trading on the Foreign Currency Exchange, a lot more commonly referred to as Forex, is defined as an over-the-counter global monetary marketplace for currency trading. This marketplace determines the relative values of worldwide currencies. The fundamental purpose of Forex would be to enable international investment and trade, essentially allowing companies to convert 1 monetary currency to yet another. Normally, a transaction consists of a party buying a set quantity of 1 currency with an equivalent quantity in yet another currency. Forex is unique in that it has a high liquidity because it constitutes a massive trading volume, has an extensive geographical dispersion, it operates continuously 24/5 24 hours each day Monday by way of Friday has a vast amount of aspects that can impact the exchange rates, as compared with other markets it has a low margin of relative profit and its exclusive simply because it uses leverage to enhance profit margins.

That being said, using Forex robots might be very advantageous. This is due to the fact, first and foremost, you don’t need to physically trade the program, which could be exceedingly time-consuming. In addition, automated trading utilizing a software remedy like FAP Turbo will enable you to take trades anytime day or night. This is particularly critical for performance-based systems where performance is increased when numerous trades are utilized, thereby opportunities for trading is maximized even at times when the trader might be sleeping or otherwise occupied. In addition, numerous systems could be traded including systems that rely on several indicators or, to be able to diversify risk, trade in shorter or longer time frames.

An additional benefit of automated trading is that robot trading is entirely unaffected by a traders psychology. Trading in this way also enables the development of new systems that have proven to be challenging for the average human to maintain up with an example becoming systems that utilize high-frequency trading utilizing tick data. Therefore, you can find no limitations concerning the ease of use or the practical human elements involved in designing an automated system.

In a lot more simplistic forms, top quality software for example the one by FAPTurbo makes it possible for for algorithmic trading. In effect, the computer software will enter trading orders and the algorithm will determine aspects of the trade itself such as quantity, price or timing. Algorithmic trading is used widely in investor driven institutional trading too as pension funds and mutual funds. Furthermore, it enables you to disperse large trades into numerous smaller, much more manageable, trades so that you can manage the ups and downs inherent in any marketplace.

Approaching emerging foreign exchange markets can be rather daunting. Now, you’ll find quite a few automated trading systems available that could assist you to maximize the performance of your trading portfolio. FAPTurbo is one such system which will allow you to take a hands-off approach but still get the maximum outcomes.