The short response is nothing. The retail FX market is strictly a speculative market. No real exchange of currencies ever occurs. All trades occur simply as computer entries and are netted out depending on selling price. For dollar-denominated accounts, all profits or losses are determined in dollars and recorded as such on the trader's account.
The main reason the FX market is out there is to facilitate the exchange of a single currency into another for worldwide companies who need to trade currencies constantly (for instance, for payroll, payment for costs of goods and services from foreign vendors, and merger and acquisition activity). However, these day-to-day corporate requirements comprise only about 20% of the market volume. Fully 80% of trades in the currency market are speculative in nature, put on by large financial institutions, multi-billion dollar hedge funds and even people that wish to express their opinions on the economic and geopolitical events of the day.
Concept Trading in Pairs
Mainly because currencies always trade in pairs, when a trader makes a trade they're always long one currency and short one other. For example, if a trader sells one standard lot (equivalent to 100,000 units) of EUR/USD, she would, in simple terms, have changed euros for dollars and would now be short euro and long dollars. To better understand this dynamic, let's utilize a real example. If you went into an electronics store and purchased a computer for $1,000, what would you be doing? You'd be trading your dollars for a computer. You would basically be short $1,000 and long 1 computer. The store would be long $1,000 but now short 1 computer in its inventory. Exactly the same principle is applicable to the FX market, with the exception that no physical exchange takes place. While all financial transactions are simply computer entries, the results are no less real.
Great Rewards in Currency Trading
The opportunities for unmatched returns and investment safety in the brave new world of foreign currency investing are second to none. In Foreign Currency Trading, financial executives Russell Wasendorf, Sr., and Russell Wasendorf, Jr., summarize foreign currency trading in basic words, and allow you to understand the risks, benefits, and operational specifications that you will need to take advantage of this market's huge potential. Look to Foreign Currency Trading for clear explanations on the mechanics of foreign exchange trading, in-depth discussion of all relevant foreign exchange rules and regulations, and a thorough glossary with literally hundreds of terms important to forex trading. With formerly imposing currency trading limitations having been struck down in recent court rulings, the world of foreign currency trading is an exciting and rapidly-expanding area.
The main reason the FX market is out there is to facilitate the exchange of a single currency into another for worldwide companies who need to trade currencies constantly (for instance, for payroll, payment for costs of goods and services from foreign vendors, and merger and acquisition activity). However, these day-to-day corporate requirements comprise only about 20% of the market volume. Fully 80% of trades in the currency market are speculative in nature, put on by large financial institutions, multi-billion dollar hedge funds and even people that wish to express their opinions on the economic and geopolitical events of the day.
Concept Trading in Pairs
Mainly because currencies always trade in pairs, when a trader makes a trade they're always long one currency and short one other. For example, if a trader sells one standard lot (equivalent to 100,000 units) of EUR/USD, she would, in simple terms, have changed euros for dollars and would now be short euro and long dollars. To better understand this dynamic, let's utilize a real example. If you went into an electronics store and purchased a computer for $1,000, what would you be doing? You'd be trading your dollars for a computer. You would basically be short $1,000 and long 1 computer. The store would be long $1,000 but now short 1 computer in its inventory. Exactly the same principle is applicable to the FX market, with the exception that no physical exchange takes place. While all financial transactions are simply computer entries, the results are no less real.
Great Rewards in Currency Trading
The opportunities for unmatched returns and investment safety in the brave new world of foreign currency investing are second to none. In Foreign Currency Trading, financial executives Russell Wasendorf, Sr., and Russell Wasendorf, Jr., summarize foreign currency trading in basic words, and allow you to understand the risks, benefits, and operational specifications that you will need to take advantage of this market's huge potential. Look to Foreign Currency Trading for clear explanations on the mechanics of foreign exchange trading, in-depth discussion of all relevant foreign exchange rules and regulations, and a thorough glossary with literally hundreds of terms important to forex trading. With formerly imposing currency trading limitations having been struck down in recent court rulings, the world of foreign currency trading is an exciting and rapidly-expanding area.
About the Author:
Learn more about Swiss Franc ETFs. Stop by Emory R David's site where you can find out all about exchange traded funds and what they can do for you.
0 comments:
Post a Comment