Like many other investments, forex trading carries a high level of risk and may not be suitable for all investors. Forex trading requires constant monitoring and an understanding of the relationship between currencies, as well as what factors influence the currencies' value. If you are a retail investor considering trading in this market, you need to understand fully the market and some of its unique features.
One final note before we begin. This program does not suggest that you should or should not trade in the retail off-exchange foreign currency market. You should make that decision after consulting with your financial advisor and considering your own financial situation and objectives.
This program should serve as just one element of your due diligence.
One final note before we begin. This program does not suggest that you should or should not trade in the retail off-exchange foreign currency market. You should make that decision after consulting with your financial advisor and considering your own financial situation and objectives.
This program should serve as just one element of your due diligence.
We have divided this program into six modules:
The fundamentals of foreign currency exchange rates; How foreign currencies are quoted and priced; How much it costs to trade foreign currencies; How to calculate profits and losses; How leverage works; and The risks of forex trading.
you can view module from http://www.nfa.futures.org
To help you understand the language of forex trading, we have developed a complete Forex Glossary of Terms. You can view this glossary at any time during the program by simply clicking on the “Glossary of Terms” button in the upper right portion of the screen.
The fundamentals of foreign currency exchange rates; How foreign currencies are quoted and priced; How much it costs to trade foreign currencies; How to calculate profits and losses; How leverage works; and The risks of forex trading.
you can view module from http://www.nfa.futures.org
To help you understand the language of forex trading, we have developed a complete Forex Glossary of Terms. You can view this glossary at any time during the program by simply clicking on the “Glossary of Terms” button in the upper right portion of the screen.
What are foreign currency exchange rates
Let’s start with a definition of foreign currency exchange rates. Simply put, foreign currency exchange rates are what it costs to exchange one country’s currency for another country’s currency. For example, if you go to England on vacation, you will have to pay for your hotel, meals, admissions fees, souvenirs and other expenses in British pounds. Since your money is all in US dollars, you will have to sell some of your dollars to buy British pounds. Let’s assume that you have decided to take a trip to England. Before you leave, you go to your bank and buy $1,000 worth of British pounds. If you get 565.83 British pounds (£565.83) for your $1,000, each dollar is worth .56583 British pounds. This is the exchange rate for converting dollars to pounds. After spending a few days in England, you realize that £565.83 won’t be enough to cover all of your expenses. So you go to a bank in England and buy another $1,000 worth of British pounds. This time, however, you get only £557.02 for your $1,000. The exchange rate for converting dollars to pounds has dropped from .56583 to .55702. This means that US dollars are worth less compared to the British pound than they were before you left on vacation. When you arrive home, you still have some British pounds left. So you go to your bank and use your remaining £100 to buy US dollars. If the bank gives you $179.31, each British pound is worth 1.7931 dollars. This is the exchange rate for converting pounds to dollars. But what if you were traveling to France? The currency used in France is the Euro. If you go to your bank and buy $1,000 worth of Euros with an exchange rate of 0.8064, how many Euros will you get? When you think you know the answer, click Next. Exchanging $1,000 for Euros with an exchange rate of 0.8064 means you will receive 806.40 Euros. Conversely, if you were living in France and planned a vacation in the United States, you would go to your bank to buy US dollars with Euros.
If the exchange rate was 1.2403, how many U.S. dollars would you get for your 1,000 Euros? When you think you know the answer, click You would receive $1,240.30 for your 1,000 Euros.
Theoretically, you can convert the exchange rate for buying a currency to the exchange rate for selling a currency, and vice versa, by dividing 1 by the known rate. For example, if the exchange rate for buying British pounds with US dollars is .56011, the exchange rate for buying US dollars with British pounds is 1.78536. In other words, one divided by .56011 equals 1.78536. Similarly, if the exchange rate for buying US dollars with British pounds is 1.78536, the exchange rate for buying British pounds with US dollars is .56011 (or one divided by 1.78536 equals .56011). This is how newspapers often report currency exchange rates.
You should know, however, that you will not receive the price quoted in the newspaper if you trade forex. That’s because banks and other market participants make money by selling the currency to customers for more than they paid to buy it and by buying the currency from customers for less than they will receive when they sell it. This difference is called a spread and we’ll talk more about spreads later in this program.
As you can see, currency exchange rates fluctuate. Retail customers who trade in the forex market hope to profit from those fluctuations
you can view all modules from Http://nfa.futures.org
If the exchange rate was 1.2403, how many U.S. dollars would you get for your 1,000 Euros? When you think you know the answer, click You would receive $1,240.30 for your 1,000 Euros.
Theoretically, you can convert the exchange rate for buying a currency to the exchange rate for selling a currency, and vice versa, by dividing 1 by the known rate. For example, if the exchange rate for buying British pounds with US dollars is .56011, the exchange rate for buying US dollars with British pounds is 1.78536. In other words, one divided by .56011 equals 1.78536. Similarly, if the exchange rate for buying US dollars with British pounds is 1.78536, the exchange rate for buying British pounds with US dollars is .56011 (or one divided by 1.78536 equals .56011). This is how newspapers often report currency exchange rates.
You should know, however, that you will not receive the price quoted in the newspaper if you trade forex. That’s because banks and other market participants make money by selling the currency to customers for more than they paid to buy it and by buying the currency from customers for less than they will receive when they sell it. This difference is called a spread and we’ll talk more about spreads later in this program.
As you can see, currency exchange rates fluctuate. Retail customers who trade in the forex market hope to profit from those fluctuations
you can view all modules from Http://nfa.futures.org
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