Global Forex Trading Questions What is really bought and sold on the Forex currency market? Quite simply, "nothing" is the answer. The Forex market constitutes a purely speculative market with no physical exchange taking place, no hard cash to hold of currencies traded. The trades all exist notionally, purely as computer entries, netted out dependent on market price. In US dollar-denominated accounts, profits and losses get calculated in US dollars and recorded like so on a trader's account. The Foreign Exchange market exists primarily to facilitate exchange of one specified currency to another so multinational corporations needing to continually trade currencies (eg, for payroll, payments of costs for goods and services of foreign vendors, and mergers and acquisitions activities). However, corporate day-to-day needs only comprise about twenty percent of market volume. Eighty percent of currency market trades are speculative by nature, placed by multi-billion dollar enormous hedge funds, large financial institutions, and even individuals wishing to express their opinion on geopolitical and economic events occurring on the day. As currencies are always traded in pairs, when traders make a trade they are always long on one currency and, obviously therefore, short on the other. If a trader were to sell a standard lot (100,000 units) in EUR/USD, he or she would have, in essence, exchanged the euros for dollars now being "short" on euros and "long" on dollars. To illustrate the dynamic, let's look at a concrete example. In an electronics store you purchased a computer costing $1,000. You exchange your cash, $1,000, for a computer. Now, you are basically "short" on $1,000 cash and "long" on 1 computer. So, the store is now "long" on $1,000 cash but "short" on 1 computer in their inventory. This same principle applies in exactly the same way to the Forex market, except, of course, that no actual physical exchange ever takes place. Since the transactions simply appear as computer entries, don't be fooled, their consequences are certainly no less real to traders of Forex. Which currencies get traded? Some retail dealers do trade exotic currencies like the Thai baht and the Czech koruna, but the majority of dealers tend to trade the world's 7 most liquid currency pairings, the 4 majors being: EUR/USD (euro/dollar) GBP/USD (British pound/dollar) USD/JPY (dollar/Japanese yen) USD/CHF (dollar/Swiss franc) And 3 commodity pairs being: AUD/USD (Australian dollar/dollar) NZD/USD (New Zealand dollar/dollar USD/CAD (dollar/Canadian dollar) These seven currency pairs and their combination variations (like EUR/JPY, EUR/GBP and GBP/JPY) account for over 95% of all the speculative trading in Forex. With only 18 available pairs and crosses actively traded, the Forex market, compared to the stock market is most definitely more concentrated. |
好玩贺卡等你发，邮箱贺卡全新上线！
没有评论:
发表评论