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    What Is Forex

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    pj eugenio
    Forex trading involves buying and selling currencies to profit from changes in foreign exchange rates. Individual speculators directly trade currencies hoping the exchange rate will move in their favor. For example, one may buy the Japanese Yen if it is strengthening against the US Dollar. The forex market is the largest financial market in the world, with a daily trading volume of approximately $3.2 trillion. It operates globally 24 hours a day from Monday to Friday.

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    What Is Forex

    Uploaded by

    pj eugenio
    54 views6 pages
    Forex trading involves buying and selling currencies to profit from changes in foreign exchange rates. Individual speculators directly trade currencies hoping the exchange rate will move in their favor. For example, one may buy the Japanese Yen if it is strengthening against the US Dollar. The forex market is the largest financial market in the world, with a daily trading volume of approximately $3.2 trillion. It operates globally 24 hours a day from Monday to Friday.

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    What is Forex

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    Forex trading involves buying and selling currencies to profit from changes in foreign exchange rates. Individual speculators directly trade currencies hoping the exchange rate will move in their favor. For example, one may buy the Japanese Yen if it is strengthening against the US Dollar. The forex market is the largest financial market in the world, with a daily trading volume of approximately $3.2 trillion. It operates globally 24 hours a day from Monday to Friday.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    54 views6 pages

    What Is Forex

    Uploaded by

    pj eugenio
    Forex trading involves buying and selling currencies to profit from changes in foreign exchange rates. Individual speculators directly trade currencies hoping the exchange rate will move in their favor. For example, one may buy the Japanese Yen if it is strengthening against the US Dollar. The forex market is the largest financial market in the world, with a daily trading volume of approximately $3.2 trillion. It operates globally 24 hours a day from Monday to Friday.

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    WHAT IS FOREX TRADING

    EURO/USD • FOREX trading is buying and selling


    of one currency against another.
    • Individuals speculators trade
    currencies directly in order to
    benefit from the movement in the
    Buying Rate Selling Rate foreign exchange rate.
    1.4920 1.4928
    For example:
    USD/YEN • If the Japanese Yen is
    strengthening, one may want to buy
    the Japanese Yen against the US
    Dollar, expecting the Japanese Yen
    to appreciate in value.
    Buying Rate Selling Rate • Similarly, if the Japanese Yen is
    weakening, one may sell the
    93.10 93.18 Japanese Yen against the US Dollar.
    WHO ARE THE FOREX
    MARKET PLAYERS
    • The largest
    traded market in
    the world.

    • Daily traded
    volume
    estimated USD
    3.2 trillion a day

    • Operates 24
    hours a day from
    Monday to
    Friday
    ADVANTAGES OF FOREX VS STOCK TRADING

    FOREX STOCK
    Two way market, can profit One way market, can profit
    from upward or a downward from
    market movement an upward market
    movement only
    Low capital outlay of 1% of High capital outlay of 100%
    100,000 contract value of full contract value

    No takers required at Takers required at all times


    anytime during the 24 hours during the short trading
    trading hours

    High liquidity with great More vulnerable to liquidity


    efficiency with huge risks, due to small
    international trading volume domestic trading volume
    of USD3.2 trillion a day
    THE TRADING REQUIREMENTS
    Currency Pair Contract Value Margin Requirement Trading Min. Price Movement Brokerage Fee
    Hours (value per pip)

    EUR/USD EURO 100,000 USD1000 24 hours 0.0001 USD 60/lot


    Per lot Fixed at USD 10/pip settlement
    GBP/USD GBP 100,000 USD1000 24 hours 0.0001 USD 60/lot
    Per lot Fixed at USD 10/pip settlement

    AUD/USD AUD 100,000 USD1000 24 hours 0.0001 USD 60/lot


    Per lot Fixed at USD 10/pip settlement

    USD/JPY USD 100,000 USD1000 24 hours 0.01 USD 60/lot


    Per lot Varies USD9-USD11/pip settlement

    USD/CHF USD 100,000 USD1000 24 hours 0.0001 USD 60/lot


    Per lot Varies USD8-USD10/pip settlement

    • The margin requirement to trade a currency pair is USD1000 per lot

    • Each pip movement carries a value of USD8 to USD11 depending our what
    currency pair

    For example: EUR/USD 1.4900 to 1.4901, movement of 0.0001 x


    100,000 = USD10/pip
    POTENTIAL RETURN AGAINST CAPITAL OUTLAY

    • Movement from 1.2574 to 1.3741 is 0.1167 (1167 pips) x US10 /pip = US$11,670

    • Trade taken: Bought 1 lot of EUR/USD at entry level 1.2574 and take profit at exit level 1.3741
    • Number of pips make for profit is 1167 x US$10/pip
    Ratio of Return
    • calculated at: Profit Return US$ 11,670/lot US$1 : US$11.67
    Capital Outlay US$ 1,000/lot 116.7% in 8 trading days
    POTENTIAL RETURN AGAINST
    CALCULATED RISK

    • Buy EUR/USD at entry level 1.2425, projecting profit level at 1.2715 = 290 pts x USD 10/pip

    • Calculated risk projected at cut loss level 1.2333 = 92 pips x USD 10/pip

    • Profit against Losses :


    Ris
    Potential Profit Ret

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