The Forex History

The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the world, with a daily average turnover of US$1.9 trillion — 30 times larger than the combined volume of all U.S. equity markets.
"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.
For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.
The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets

Large Round Figures

Many traders, from the individual speculator to the large fund will focus on the large round figures or round numbers when applying their analysis to the Forex market for a number of reasons. Option traders tend to select these price levels whether their exercising American, European, or Exotic options, as well as the placement of protective stop orders.

For that reason, the 'large round figure' such as 1.3100 or 1.3250 tend to carry a greater weight of importance. However this can be deceitful as the market often times will spill over to trade slightly above or below a price level of importance. For that reason we should naturally expect the ultimate highs and lows to rest at times slightly beyond these areas. For example, we can see the following (15-minute) chart, the EURUSD has recently found major turning points very close but not exactly on the 1.3100, 1.3200, and 1.3250 figures respectively. In fact notice, how each turning point was established within 15-pips of a figure. We should suspect the market as it approaches and fails to break beyond a large round figure, even if we cannot take the exact figure literally.

How to Calculate Rollover Interest?

In the Foreign Exchange Market or Forex market, Rollover is a method of stretching the arranged clearing date or what is known as the settlement date of an open position. Mostly, in common currency trades, trades ought to be completed in two business days and traders who wish to stretch their positions with no intention of settlement must close their positions before 5:00 in the afternoon Eastern Standard Time on the date of settlement day, plus re-opening of them the next trading day. This means by rolling over the position, this at the same time closes the existing positions at the daily close rate and again coming into a new opening rate at the next trading day. This precisely means that the trader is indirectly extending the settlement day by one more day.

This is also known as tomorrow next strategy, it is functional in forex due to many traders have no purpose of getting delivery of the currency they buy but instead they have the intention of getting profit from fluctuating exchange rates. Since rollovers shove out the settlement by another two trading days, it may cause a gain or a cost to the trader depending on the existing rates.

Apparently, Rollover is when you reinvest funds from a mature security into a new issue of the similar security or same security. You are transferring the holdings of one retirement plan to another without the agony of tax effects. Plus a charge is incurred by Forex investors who extend their positions on the following delivery date.

Rollover interest is the net effect of the money borrowed by an investor to purchase another currency and such interest is paid on the borrowed currency and earned on the purchased currency. To calculate this interest, you should get the short-term interest rates on both currencies, the existing exchange rate of the currency pair and the number of the currency pair purchased. For instance, an investor possesses 15,000 CAD/USD. The present rate is 0.9155, the short term interest rate on the Canadian dollar (base currency) is 4.50% plus the short term interest on the US dollar (quoted currency) is 3.75%, so the interest would be $33.66 [{15,000 x (4.50% - 3.75%)} / (365 x 0.9155)].

If on the contrary, the short term interest rate on the base currency is lower than the short term interest rate of the borrowed currency, the interest rate would result into a negative number which may reduce the value of the investor’s account. Such interest can be avoided by taking a closed position on the currency pair. If an option is about to expire is quite favorable to grip, you can either buy or sell the later expiring option. Always note the interest rate that is paid by a currency trader or he may received in the course of these forex trades is considered by the IRS as ordinary interest income or expense. For taxation, the trader of the currency should always keep track the interest received or paid, separate from regular trading gains or losses.

The Use of Requote in the Forex Market

The Forex market holds the largest financial market trading in the world. There are more than $3 trillion value trades per day. Did you know that everyone plays a vital role in the trade of currency? Being a citizen of your country that has a currency automatically makes you as an investor of your countries currency. You decide whether you will hold on with the currency of your country or you want to trade it to other foreign currency. Currency trading is done at the Foreign Exchange market otherwise known as Forex or simply FX market.

The Forex market operates in a global electronic network which consists of financial institutions, banks and Forex traders which all involved in buying and selling national currencies. Unlike the stock exchange, the Forex market does not have any central location instead it involves an inter-bank system of trading. The Forex market transactions are done in real time which operates 24 hours a day. With a colossal number of traders around the world, the Forex is the busiest trading market in the world. Trades are made over an electronic network worldwide or by telephone. Sydney, London, Tokyo, New York and Frankfurt are the main centers of trading.

During the earlier years of the Forex market, access to trading was only made available for large business institutions and banks but later was made available for individual Forex traders and money managers. Traditionally, access to the Forex market has been made available only to banks and other large financial institutions. However, with advances in technology over the years along with the industry's high leverage options, the Forex market is now available to money managers and individual Forex traders. This was made possible through the use of computers and internet connection. Currency trading is basically instantaneous buying and selling of one currency to another. Example of trade are; Euro – US Dollar, GB Pound – Japanese Yen. This process is called cross trading.

Another type of trading which can be done is in the spot market which involves the largest volume and the most important trading in the Forex market. These trades are done on the spot which means that it doesn’t take two banking days. There are many advantages in trading in the Forex market compared to other trading systems. The major advantage is that trades can be made 24 hours a day which allows traders to immediately decide and react on breaking news which greatly affects the market price. Another great advantage for investors is that trades which are done in the Forex market do not charge any commission. With the Forex market there are always opportunities to gain a profit. Currencies sometimes weaken and sometimes strengthen. When you trade currencies, they exactly work against each other. For example, if you think that the Euro will decline against the US Dollar or vice versa, you would sell your Euro and later buy Euro again at lower price to earn a profit.

However requotes occur which may lead to decrease of profit and even lose of your investment. Requotes happen when a broker quotes one price but then quotes another. Brokers might even fill your order at a different price commonly higher when you attempt to trade. So before investing your money, make sure to check the policy of the broker regarding requotes.

Rate of Change (ROC) and its Computation

Rate of Change or ROC is a technical indicator that measures the changes between the percentage compared to the most recent price and the price "n" periods in the past. It is also said that it monitors the momentum of the market. It estimates the market’s rate of change comparative to the previous trading intervals. In the highest level, the indicator might say a market is quite overbought. Valleys or troughs also points out an oversold market situation.

It can also stand alone as an essential indicator used by many technicians interested in market momentum. It has a horizontal median called equilibrium. It is this median that tells us everything we need to know about this type of rate. A few technicians in the market often use a very simple approach for the Rate of Change learning. It is concern with buy and sells signals based upon the zero line or the midpoint. This presumes oversold or overbought market conditions which pave the way of crossover. You may sell when the rate of change line go across from above to below on the other hand you may buy when the indicator intersect from below to above.

It trades with price changing amount during the exact time and match to it as an oscillator that shows the cyclical movement. It goes up along with the prices up-trending and it decreases when the prices go down. If prices go high, changes gives the according significant rate changing.

Mostly, it is best to use this indicator as an antecedent to change in market direction. One good thing to do is to establish extreme zones for the study, much like the Relative Strength Index or Stochastic. However, a good technical analyst must know how to tolerate the study in extreme bull and bear markets. It can generate many sham signals under those market conditions. In addition, the indicator is parallel to an oscillator when it comes to the market accelerating or decelerating.

To compute it, here’s a good example:

Period (10) - the number of bars, or interval, used to calculate the study using the value you specify, it may be computed as the change from the current price relative to the price from the number of specified intervals prior to the current price.

The general formula is as follows:

ROCt = (Pricet / Pricen) * 10000

ROCt is the rate value for the current period. Pricet is the current price. Pricen is the price you specify for the nth interval (open, high, low, close, midpoint or average).

Take the example below which use current price of 7485 and a 7440 price n intervals ago:

ROC = (7485 / 7440) * 10000 = 1.006 * 10000 = 10006

There is a tendency to loss in futures trading. Past results on the other hand are not analytical of future results.

It may also be calculated by using the following formula:

(Closing Price Today - Closing Price "n" Periods Ago) / Closing Price "n" Periods Ago

The Value of Trade Balance to Local Economy

The balance of trade also referred as trade balance, which sometimes is symbolized as NX, is the difference of the monetary value of imports and exports in one economy in a given period of time. The balance of trade is considered the biggest part of a country’s balance of payments.

Imports, domestic spending, foreign aid, and investment abroad are called debit items while credit items includes exports, foreign investments in domestic economy and foreign spending in domestic economy.

A trade surplus is a positive balance of trade which is consists of more exporting than importing. A trade deficit is the negative balance of trade or sometimes called a trade gap. The trade balance can sometimes be divided as services balance and goods balance just like in the United Kingdom which they use the terms invisible and visible balance.

The balance of trade is a part of current account which includes transactions that includes income derived from international investment and international aid. Thus, if the current account comes as a surplus then the nation’s international net asset increases also while deficit will decrease the international net asset.

A good trade surplus is achieved when a country exports products more than buying imported goods. A trade deficit is eventually experience as a result of the opposite of a trade surplus. The trade balance is alike to the difference of a country's output and the domestic demand. These factors may affect the trade balance: prices of goods manufactured, taxes and tariffs, trade agreements, business cycle (home or abroad), and exchange rates.

The trade balance is different in many business cycles. For instance, export growth like oil and industrial goods which improves when there is economic expansion.

In developed countries like; Japan, China and Germany usually run at trade surpluses in which they experience a higher savings rate. Around the world there are different natural resources which a country may have for instance, countries from the coastal regions are major producers of fish, Canada can be a major producer of lumber because of its huge forests while in the Middle East, has the most oil reserves.

International trade is important so in order to sustain the balance of trade. A country should be totally self sufficient without international trade. Through international trades, each country will have the opportunity to produce specialize goods efficiently. In relation, when a nation specializes in producing these goods, the total production increases instead of trying to be self sufficient. Nations will benefit from international trades and also meets their needs. Generally, nations will trade to other nations when they gain from the trade. But the gains are not usually equal in terms of benefits and profit.

Transaction cost and its Calculation

In economics, transaction costs are the rate acquired when making an economic exchange. This costs incurred when buying or selling securities or stocks. This is also referred as transaction fees. Transaction costs also comprise of brokers’ commissions ad spreads (difference between the price that the dealer paid for a security and the price it may be sold. This is what the broker or bank produce for being a middleman in a transaction.

For instance, most people when buying or selling a security or stock, pays a commission to their broker and that commission can be considered as the fee or transaction cost for doing that stock deal. When evaluating a potential transaction, it is crucial to think about these costs that might prove significant. Mostly, in financial markets, the initial cost for these transactions is commission which is paid to brokers upon trade execution. This costs becomes increasingly important the shorter the holding time of an investment.

Many market models disregard transactional costs, presumptuous instead those markets are non resistant. While this thought is invalid, for many applications such costs are low enough that they can be disregarded. The lesser the cost for a transaction, the more effective and competent a market is said to be. The Foreign exchange market and stock market have lower costs for such transactions of any major asset class.

It is considered to be much more cost- efficient to trade in Forex in terms of both commissions and transaction fees. An online website for example charges no fees or commissions and at the same time offer traders an access to all relevant market information and trading tools. On the contrary, online stock trade commission ranges from $7.95 - $ 29.95 per trade and up to $100 or more per trade with full service brokers.

Another thing to consider, which is an important point is the width of the bid / ask spread. Regardless of the deal size, foreign exchange dealing spreads are normally or common in 3-4 pips (anyway a pip is .0001 US cents) in the major currencies. Generally, the width of the spread in a foreign exchange market transaction is less than one tenth (1/10) that of a stock transaction, which could contain a .125 or one eight (1/8) wide spread.

Since transaction costs are paid via bid/ask spread, there has to be no charges to trade or hidden fees. There are instances that there would be extra charges asked by good brokers for some non compulsory services or access to particular reports. A smaller spread is visibly better. Since brokers are taking the other side of all the customer trades, brokers gain profit by making the spread between the bid and offer prices. You may find that find spreads vary by broker.

In order to be successful in trading on the foreign exchange market, you have to find a good broker.

Forex: Role of Interest Rate in Currency Markets

Interest rates play the foremost important role in moving the prices of currencies in the Forex market. As the institutions that set interest rates, central banks are therefore the most influential factors. Interest rates dictate flows of investment. Since the currencies are representations of a country’s economy, differences in interest rates affect the relative worth of currencies in relation to one another. When central banks change interest rates they cause the Forex market to experience movement and volatility. In the realm of Forex trading, accurate speculation of central banks’ actions can enhance the trader's chances for a successful trade.
An increase in interest rates encourages traders to invest within that market and causes the demand for the currency to rise. As demand rises, the currency becomes scarcer and consequently more valuable. Investors are drawn to the currency, causing it to appreciate, because they will gain a higher yield on their investments, as in the Jane example. In order to purchase the country's assets (stocks or bonds), Jane will have to convert her domestic currency to the target country's currency also increasing demand. Conversely, a fall in interest rates discourage investors from purchasing assets in that particular economy, as the return on their investment is now smaller. The economy's currency will depreciate as a result of the weaker demand.

Forex Advance

Whether you are a presently term online Forex trader or have been in the running for a long-term time, taking time to take currency trading or take less told about currency trading is ever a best received advantage. From the novice to the most advanced Forex traders, a little knowledge never hurt anyone; rather it has done quite the opposite! From books, to CD speeches, to online courses; you can determine more and more each day about the benefits of Forex trading and how to apply them to their full likely. Given sufficient noesis and time, you can get a good amount of money on the Forex foreign currency trading marketplace. Here are some simple hints for the long term and short term traders. Give yourself the top hand by using these points.

Forex Trading Strategy

If you are looking for a surefire way to profit from the foreign exchange market, you may be disappointed. However, if you study and learn the forex trading strategies used by many so called brokers and gurus. You will minimize the risk when playing with your own dollars.

Online Forex Trading

In order to make your Forex trading as productive as possible, you need to make the most of the information at your fingertips. Here you'll find the articles, tools and methods that are an indispensable inherent part of improving your Forex trading strategy.

These online Forex training guides were designed to help you improve your trading skills and expand your knowledge. Combined with our Forex trading software, which provides several real-time analysis tools such as charts and quotes, you will be able to establish yourself financially by utilizing short and long-term forex strategies.

Saudi Forex Reserves Reach $250 Billion

By some measures, Saudi Arabia’s reserves are the fastest growing in the world. The country’s reserves recently crossed the $250 Billion threshold, and are now growing at a pace equivalent to nearly 40% per year. The source of the reserves should be a mystery to no one: oil. Oil prices have surged over the last five years, bestowing a windfall of profits to the entire Middle East region. Plus, as summer gets underway, oil prices are sure to climb further, which will ensure continued growth in Saudi forex reserves. Fortunately for the US, the majority of the world’s oil contracts are settled in USD, which means the boom in oil prices has actually stabilized the USD, despite its contribution to the US trade deficit. In addition, Saudi Arabia is one of the world’s most reliable investors in US capital markets, which means Dollar bulls can breathe a cautious sigh of relief that reserve “diversification” will probably be given short shrift by the Sauds

US Dollar Strong in Monday Asian Trade

Reports from Tokyo indicate that the US dollar is holding steady in Asia as of Monday morning. After receiving promising reports from the west, recent fears about the US credit problems have alleviated and risky trades have resumed in Asia. Since then, the dollar has strengthened considerably. The Philippine Star reports:
The better US economic news slightly pared back market expectations that the US Federal Reserve will cut its benchmark interest rate next month, dealers said.

Promising Survey Strengthens Pound

Although the British pound suffered earlier in the week from a large Bank of England loan, the currency has been lifted due to a survey taken by UK manufacturers. The results of the survey, which inquired about their order books, showed that manufacturers were more successful this month than they've been in over a decade. Analysts did not expect such a promising report, as it proved that the UK is handling global credit problems better than most countries. According to Forbes:
The Confederation of British Industry revealed that a balance of +9 pct of firms polled reported that their order books were above normal in August - the highest level for more than 12 years.

Forex Trading - Foreign Exchange

FOREIGN EXCHANGE TRADING

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Pakistan: Gold price surges in local, Int’l markets

Slight increase in gold prices was recorded in local and international markets today. The gold on Thursday reached the price of Rs 33,500 per tola, up Rs 50 across the country including Karachi. Gold price reached Rs 28,714 with an addition of Rs 43. In international market, gold price increased by $1 per ounce and reached $1,055.

Chinas growth ups to 8.9 percent in 3Q

SHANGHAI: China's economy expanded a blistering 8.9 percent in the third quarter, fueled by lavish government stimulus spending that has helped the nation spearhead recovery from the global recession.

The world's third-largest economy expanded 8.9 percent from a year earlier, speeding up from 7.9 percent growth in the second quarter, the National Statistics Bureau said Thursday. Growth for the first nine months of the year was 7.7 percent and officials have said they expect the economy to at least reach the annual growth target of 8 percent.

China has countered the global downturn with a 4 trillion yuan ($586 billion) stimulus plan involving massive spending on infrastructure such as rail and roads to pump up the domestic economy as exports slumped.

Investment in factories, construction and other fixed assets rose by one third in January-September to a record 15.5 trillion yuan ($2.27 trillion).

"Investment played an important and positive role in maintaining relatively fast growth and reversing the slowdown," said Statistics Bureau spokesman Li Xiaochao. Meanwhile, domestic consumption such as consumer spending contributed nearly a third of the growth in economic activity, he said.

The mixture of liberal credit, strong government backing for massive public works and incentives for domestic industries like autos have enabled China's economy to quickly rebound while the U.S., Japan and Europe continue to flounder.

A mild rebound in orders from overseas markets is restoring some of the millions of jobs lost late last year when factories closed by the thousands as plunging global demand slammed exports.

Despite surging share and property prices, consumer prices fell, with inflation at negative 1.1 percent so far this year, the statistics bureau said.

"China's doing fine. They threw so much money at it that if it wasn't, it would be surprising," said Standard Chartered Bank economist Stephen Green.

"We'll see strong growth from China for the next six months, possibly another year," he said. "The problem is what happens after another year and a half. What will be the growth driver then."

China's economic stimulus plan remains on track, but greater efforts will be made to curb industrial overcapacity, promote new industries, maintain liquidity and lower unemployment, it said.

Industrial output rose 8.7 percent in the first three quarters of the year, and 12.4 percent in July-September — signaling accelerating demand, the statistics bureau said.

KSE ends lower; rupee weakens

Karachi Stock Exchange ended one percent down on Thursday but off day lows as investors sold shares amid worsening national security, dealers said.

The KSE's benchmark 100-share index fell 1.01 percent, or 93.78 points, to 9,154.00 on turnover of 161.25 million shares.

KSE has gained 56.07 percent this year after losing 58.3 percent last year.

"Before the close of today's session, the market recovered sharply amid support from local institutions," said Furqan Punjani, an analyst at Topline Securities.

Dealers said the fundamentals of the market were strong and investors are expecting strong corporate earnings to be announced in coming days, but confidence had dampened due to the worsening security situation.

Pakistan State Oil and MCB Bank are due to announce their results tomorrow for the quarter ended Sept. 30.

Dealers said investors were also worried that worsening security was forcing selling by foreign investors, who have been active buyers in the market in recent weeks.

In the currency market, the rupee ended the day at 83.28/29 to the dollar, compared with Wednesday's close of 83.23/34. Dealers said a worsening security situation can have a negative impact on the currency.

The rupee has been supported by remittances from Pakistanis working overseas, but dealers expect pressure from importers will weaken the currency.

World markets drop on China growth worries

LONDON: World stock markets fell sharply Thursday as investor optimism was dented by a broker downgrade of U.S. bank Wells Fargo and concerns about future Chinese economic growth.

In Europe, the FTSE 100 index of leading British shares was down 75.01 points, or 1.4 percent, at 5,182.84 while Germany's DAX fell 97.13 points, or 1.7 percent, to 5,736.36. The CAC-40 in France was 67.36 points, or 1.7 percent, lower at 3,805.86.

Earlier in Asia, markets tracked Wall Street lower after influential banking analyst Dick Bove downgraded Wells Fargo over concerns about its loan book.

"After a good earnings season for the banks so far this served to remind investors that we shouldn't be reaching for the Champagne bottles just yet as there are still lingering problems in our financial system," said Tom Salmon, a trader at Spreadex.

And though government figures showed that China grew by a year high of 8.9 percent in the third quarter of 2009, investors were worried that much of the growth stemmed from a domestic stimulus package that can't last forever. Exports and private investment continued to lag.

"Disappointment on the back of this numbers this morning was sufficient to bring risk appetite off the boil," said Jane Foley, research director at Forex.com.

The Chinese growth figures came after the country's Premier Wen Jiabao told a Cabinet meeting Wednesday that policy will focus on balancing economic growth while managing inflation — raising worries the government may cut back on its lavish stimulus efforts.

China has been the world's major driver through the recession and any suggestion that it won't be growing as fast in the months ahead could spook investors, especially if the global recovery is not as strong as many in the markets have been expecting.

The rally in stocks since March's lows have been predicated on hopes that the global economic recovery will be quicker and more substantial than valuations were implying. So far, most U.S. companies have reported better-than-expected earnings and painted a fairly rosy picture for the coming months, helping major indexes push back above the levels they were over a year ago before Lehman Brothers collapsed.
Many now think that the valuations could be too optimistic, especially if governments and central banks think their job is done and start withdrawing some of the stimulus measures they have enacted over the last year or so.
"There's no escaping the simple fact that stocks have been starting to look increasingly overbought for some time now.," said Ben Potter, research analyst at IG Markets. "As always the question is just how protracted any sell-off will be."
The sell-off is set to continue when Wall Street opens. Dow futures were 21 points, or 0.2 percent, lower to 9,880 while the broader Standard & Poor's 500 futures fell 3.5 points, or 0.3 percent, to 1,074.60. On Wednesday, the two main U.S. indexes fell around 1 percent.

Once again, the focus of attention in the markets will be on the latest batch of third-quarter U.S. corporate earnings. Among those due to report later are Amazon, American Express, AT&T and Merck.
Earlier in Asia, Japan's Nikkei 225 stock average fell 66.22, or 0.6 percent, to 10,267.17, and Hong Kong's Hang Seng dropped 107.59 points, or 0.5 percent, to 22,210.52.
In China, the Shanghai index lost 19.18 points, or 0.6 percent, to 3,051.41. South Korea's benchmark fell 1.4 percent, Australia's index was off 0.5 percent and India's market shed 1.2 percent.
Oil prices slipped to near $80 a barrel Thursday as a wobbly U.S. dollar steadied. Benchmark crude for December delivery fell $1.24 to $80.13 a barrel. The contract jumped $2.25 overnight after the dollar fell to a 14-month low against the euro.
The fall in stocks has provided the dollar with some relief Thursday. As investors grow more willing to take on risk, stocks have rallied and the dollar has dropped against the euro. Conversely, when shares have fallen, the dollar has tended to rise as it is widely considered a safe haven asset
The euro was down 0.1 percent at $1.4979 while the dollar rose 0.3 percent to 91.23 yen.

Pakistan: Forex reserves rise to $14.48bn

KARACHI: Foreign exchange reserves rose to $14.48 billion in the week that ended on Oct. 17 compared with $14.46 billion the previous week, the State Bank of Pakistan (SBP) said on Thursday.
Reserves held by the SBP were $10.91 billion, compared with $10.89 billion a week earlier, while those held by commercial banks were flat at $3.57 billion compared with a week earlier, the SBP said in a statement.
Foreign reserves hit a record high of $16.5 billion in October 2007 but fell steadily to $6.6 billion by November last year, largely because of a soaring import bill.
An International Monetary Fund (IMF) emergency loan package of $7.6 billion agreed in November helped avert a balance of payments crisis and shore up reserves.
The IMF, which increased the loan to $11.3 billion in July, has disbursed over $5 billion.

Use Of Forex Trading System

While several novel forex trading systems are dependent on difficult mathematical market analysis forms, a few of the most successful forex trading strategies are as well the simplest. One of these easy and very much successful strategies is trend trading, where you just observe which way the forex market is trending in and next you trade in that trend.
If you were trading the euro to dollar currency pair, the method that you could recognize the course of the trend is to start up the daily forex charts and cover an easy moving average on the chart. If the way of the moving average is high, next the pair is placed in an uptrend; if the moving average line is downward, there is a downtrend; and if the line is horizontal next there may possibly be no trend.
Trend trading is a verified method to make profits in the forex market as it is a recognized truth supported by decades of market investigation that currency pairs go in trends.
If the trend is on high next it creates logic to purchase, if the trend is downward next it creates logic to sell, and if there is no trend after that it may possibly not be a best time to trade. The most excellent method to obtain an exact sense of the on the whole trend is to glance at a long-term price chart like a daily, weekly, or monthly chart and observe which way the moving average line is pointing.

Forex - Dollar selling continues; euro breaks above 1.32 usd mark

LONDON (AFX) - Dollar selling continued into the afternoon, with the euro breaking through the 1.32 usd mark for the first time in over five weeksThe selling was sparked in Asian trade overnight after reports yesterday that the Korean central bank plans to diversify its reserves away from the US dollar. A spokesman for the Bank of Korea was quoted as saying in a report to parliament that as foreign exchange reserves increase, the central bank "will expand its investment into non-government papers, which carry relatively high yields, and diversify the currencies in which it invests"

EUR & CHF: Correlations in Cash and Futures

Currency markets continue to witness the highly negative correlations between the EUR/USD and USD/CHF exchange rates (one goes up, the other nearly always goes down and vice versa). A product of the dollar’s similar rate of change vis-a-vis the euro and the Swiss franc, this relation has continued to hold much before and after the September 11 attacks, when the Swiss franc’s safe haven status was firmly re-established. More importantly, an almost perfectly inverse relation between the EUR/USD and USD/CHF does not necessarily imply a similar performance of the dollar against the franc and the euro. As we have identified in previous studies, it took the US dollar 37 days to recover all of its losses incurred against the euro after September 11, breaking even on October 19, 2001. But it took the US dollar 103 days to properly recover all of its post September 11 losses against the Swiss franc, starting to gain on December 24, 2001. This suggests that while the dollar’s behavior against both currencies may be similar in direction, it is far from different in magnitude. The differential in magnitude explains the time lag of the dollar’s behavior vs the franc behind that of its performance against the euro.

Why Trade Currencies?

Forex is the world's largest market. With about 3.2 trillion US dollars in daily volume and 24-hour market action, we believe it is a true "step above" the equities market for the serious trader. Some key differences are:
Many firms don't charge commissions – you pay only the bid/ask spreads.
There's 24 hour trading – you dictate when to trade and how to trade.
You can trade on leverage, but this can magnify potential gains and losses.
You can focus on picking from a few currencies rather then from 5000 stocks.
Forex is accessible – you don’t need a lot of money to get started.

Example of a Forex Trade:

The EUR/USD rate represents the number of US Dollars one Euro can purchase. If you believe that the Euro will increase in value against the US Dollar, you will buy Euros with US Dollars. If the exchange rate rises, you will sell the Euros back, making a profit. Please keep in mind that forex trading involves a high risk of loss.

How Forex Works

The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events. These factors will influence whether you buy or sell a currency pair.

Currency trading is when you buy and sell currency on the foreign exchange (or "Forex") market with the intent to make money.