FOREX

What with the financial meltdown and the vagaries of the financial market, it is no surprise that the generation of today is trying to make as much money as it can, to save for the not-so-good days. The global financial scenario is throwing even established firms to the ground, so we know what the state of the common man is. One of the ways that is gaining popularity of late as one easy way of making money from the comfort of our homes, is forex trading. Since this depends on the world wide financial market and the individual economy of the nations, where their currencies undergo inflation or deflation, this is beginning to gather mass now. Forex trading is nothing but taking advantage of the differences in the currencies of different foreign money and making maximum advantage in the bargain. If you own a computer with an internet connection you can open a live forex account and participate in forex trading. Forex trading is a business of selling and buying foreign currency and making profit out of IT



TYPE OF FOREX TRADE:
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The Forex market is a highly volatile and liquid market with huge volumes of trade happening in a day
They are


1. Currency Band
2. Exchange Rate
3. Exchange Rate Regime
4. Fixed Exchange Rate
5. Floating Exchange Rate
6. Linked Exchange Rate

Currency Band :

This is nothing but the tolerance limit between a floating and fixed foreign change rate. The traders can choose a band limit within which they can set their currency to trade in. However, if they observe that the value of their currency is going above the set currency band, then they can switch over to fixed exchange rate.

Exchange Rate –

Exchange rate is a term used to define one currency’s worth in the eyes of the other currency. This is the most common term used in the Forex market and it is the most basic term as well. Traders should first understand the intricacies of the term exchange rate, the risks involved in it etc, before entering into trading.

Exchange Rate Regime –

Exchange rate Regime is closely related to the financial policy of a country. It is the way in which a country manages its currency based on the denominations of another country’s currency. Checks are kept in place, political and economic factors are kept under check to ensure that the currency of a particular country does not devalue.


Fixed Exchange Rate -

Fixed Exchange Rate is also called Pegged Exchange Rate. This is the process where a country’s currency is matched to another country’s currency, or to group of currencies or to a particular commodity. This helps in bringing one country’s currency in line with currencies of other nations, thereby leading to smooth transactions in the Forex market.


Floating Exchange Rate –

Here, a country’s currency is allowed to fluctuate according to the trends of the Forex market. There are no set conditions and the currency is not driven to ape another currency’s model. The advantage of floating exchange rate is that, one country’s adverse political condition will not affect another currency. However the demerit of this is that, there is no stability when currencies fluctuate with no limitations. This is the place where the central bank comes into play. The central bank regulates the fluctuations of a particular currency and ensures that no undue swinging is done.


Linked Exchange Rate –

As the name indicates, the linked exchange rate is the process where, one country’s currency is lined to another country’s currency to bring stability between both countries. The linked exchange rate mechanism proves to be quite handy in controlling undue fluctuations between currencies.



EARN WITH FOREX
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This is the high technology age where everybody is blessed with a computer and an internet connection. The era of information technology like the experts calls it. An age and period where man has discovered, invented and modified to convenience the findings of experts and scientists and this has gone to a great extent where now the same science and technology has gone to the verge of mastering mankind. Most people are looking at making the best of the technology available to them to do the best they can to enhance their lifestyles and provide better for their kith and kin. Online forex trading is proving to be an efficient quencher to the fire of passion that is seen in the public today to create alternate sources of income that can be done at their comfort and without disturbing their personal lives as well. In addition to a system that has internet connection, all people need is a current forex account to do this forex trading. Forex trading is nothing but buying and selling foreign currency online, done capably and efficiently and more importantly time consciously to enhance the inflow of cash thereby leading to a proportional direct increase in the net worth of the individual.





FOREX TRADING A GENERAL VIEW

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Forex trading is one of the safest methods of investing, because the investor gets the leverage of currencies, thereby reducing the probability of risk. However before venturing into Forex trading, it is better to get an idea as to how to invest, when is the best time to invest etc. There are many software programs which guide the investor to trade in the Forex market. These software programs gain a deep understanding of concepts of Forex trading, employ them in their programs and then give various trading signals to the investor, guiding them to invest accordingly. The Forex trading concepts employed by most of the software programs are: Fundamental Analysis Money Management Psychology Technical Analysis Fundamental Analysis – This analysis is where the manufacturers of the software program would take into effect the business news flash headlines, political climate, natural disasters if any, which can have an effect on the Forex market. Fundamental analysis always studies about the causes of the market movements. Money Management – The software programs focus on money management concepts because it is essential to know how much the investor can risk. It is important to know the affordability before entering into Forex trading. Psychology – Software programs provide trading signals, after giving consideration to the people’s sentiments. It is important to be on hold on one’s emotions before investing. It is indispensable to stay motivated and follow the stock market carefully before taking decisions. Investing on impulse should be avoided at any cost. Technical Analysis – Many software programs give importance to this. Technical analysis observes past trend of data and determines how it will perform in future. Software programs study the charts produced by Technical Analysis and provide trading signals to the investor accordingly. This studies the effects of stock market movements, as against fundamental analysis which studies the causes of the stock market movements.