Friday, April 26, 2013

Currency Trading overview

In indian market currencies have 4 pairs ie USDINR,GBPINR,JPYINR &EURINR..
In retail market currency trading is done through stock brokers or agent through online or offline.Traders or retail investers can place trades through their brokers who will  a corresponding trade on the inter-banking market place.Money traders buy and sell international currencies & earn , or lose, money based on changing exchange rates.Money trading occurs in several ways. One of the most common is a money market, which is similar to a stock exchange except that the things people buy and sell are currencies rather than ownership shares in corporations. As with stocks, the value of a currency depends on what the highest bidder is willing to pay for it. Because buyers must make offers in other currencies, this establishes an exchange rate, which is how much one currency is worth relative to another currency. Buying a currency, such as USD, can only result in a profit if, at some point in the future, another buyer is willing to pay more than you paid for your dollars with another currency.If companies in the United States are importing large quantities of products made in Europe, they will need to exchange their US Dollars for Euros to pay for the products. When this is done in very large quantity over a short period of time, it raises the demand for Euros and the value of the Euro versus the US Dollar increases

several things can be  impact the rate value of a currency. Faith in the governments that issue currencies is one key element. When political or financial instability grips a nation, its currency is likely to lose value relative to healthy economies elsewhere in the world. Inflation is another factor that controls money trading profits. Inflation occurs when a national government or reserve bank decides to print additional money. With more money in the economy, the value of each unit of currency falls. In comparison, the value of other currencies rises in that country, and investors make or lose money based on which currencies they held at the time of the shift.Currency trading can be very risky. Currencies tend to be very volatile compared to other markets. The real key to success with currency trading is to use conservative risk management. There are many components to effective currency risk management, but the bottom line is to use caution and have a trading plan.Currencies are traded by 
individual retail investors, financial institutions & corporations doing business. Retail investors and banks are trade to make profits and corporations usually trade in the normal course of the international business process.

1 comment:

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