You can start playing the currency trading market with real market conditions immediately. Moreover, contrary to earlier thoughts, currency trading is not limited to just larger organizations and other large banks and financial institutions, but open to everyone who has enough expertise and determination to hard work. So you can easily imagine its importance in the trading world of today. For example, the New York Stock Exchange has a daily trading volume of approximately $50 billion. One thing is for sure that in orders of magnitude it is much larger than the bond or stock markets. Perhaps, in terms of trading volume, the currency exchange market is the world's largest market, with daily trading volumes in excess of $1.5 trillion US dollars (although the figures may differ, but this is just an approximation to show its importance). He held on to the currency until it gained value and, as soon as he realized the value might lessen, he sold the currency for another.Īlso referred to as foreign exchange, FX or Forex, the essence remains the same that currency trading is the exchange of one currency against another.
The jobless fresh graduate took a risk by buying Euros.
Etched in stone, all currency traders have but one motto: buy low and sell high. Even a dollar capital can snowball into thousands of dollars if you know when to buy and when to sell. Many people have found, just like this jobless fresh graduate, how simple it is to earn through currency trading. The tip-off was correct and in less than a month, the Euro's value slipped lower than its original value when this jobless fresh graduate first bought them. By December, he sold all his Euros, on a tip-off by an online friend that most of the European countries involved in the war in Iraq will be boycotted by those countries not in favor of the war. In April, he bought Euros to try out his luck in currency trading and to his surprise, the price of Euros soared by June and continued to soar until December. The Small Picture On the computer, a 21-year old jobless fresh graduate earned $10,000 in a few months. For profit, the bank will ask the South African company to buy the currency at a slightly higher price and pay the small Taiwan company using the current exchange rate. All the South African company would have to do is to go to a bank and pay that bank in whatever currency and that bank will transfer the amount to a bank in Taiwan which will pay in whatever currency the small company in Taiwan wants. Through computers, there is no longer any need to ship money. With the foreign exchange market, paying for goods and services rendered by one country to another is no longer difficult. In the old days, the company in South Africa would have a hard time paying for the marble as it not only would have to ship millions of South African money to Taiwan but it would also have to pay the small company in Taiwan in its own currency or else, the money will be useless.
The Big Picture A large company in South Africa ordered tons of marble from a small company from a province in Taiwan. Although the task of understanding what the foreign exchange market is, is overwhelming, it is not impossible. What makes foreign exchange even more problematic is that it has developed a jargon all on its own such that its terms are no longer what they mean in common parlance.
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