Forex in Chennai

FOREX TRADING

CURRENCY TRADE:

A Currency Trade is the simultaneous buying of one currency and selling of another one. The Currency combination used in the trade is called a cross (for example: the euro/US Dollar, or the GB Pound/Japanese yen.). The most commonly traded currencies are the so-called “majors”. They are:EUR-USD, USD-JPY, USD-CHF & GBP-USD.

INTRODUCTION TO FOREX TRADING:

Foreign Exchange, Forex or just FX are all terms used to describe the trading of the world's many currencies. The Forex market is the largest market in the world, with trades amounting to more than USD 3 Trillion every day. Most Forex trading is speculative, with only a low percentage of market activity representing ‘governments and companies' fundamental currency conversion needs.

Unlike trading on the stock market, the Forex market is not conducted by a central exchange, but on the “Interbank” market, which is thought of as an OTC (Over The Counter) market. Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world. The main centers for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centers means that the Forex market is a 24-hour market.

Why FOREX TRADE?

*24 hour Trading

One of the major advantages of trading Forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). This gives you a unique opportunity to react instantly to breaking news that is affecting the markets.

*Superior Liquidity

The Forex market is so liquid that there are always buyers and sellers to trade with. The liquidity of this market especially that of the major currencies, helps ensure price stability and narrow spreads. The liquidity comes mainly from banks that provide liquidity to investors, companies, institutions and other currency market players.

* Low Transaction Costs

No commissions on trades. FX Solutions is compensated through a portion of the bid/ask spread.

*100:1 Leverage

Leverage (gearing) enables you to hold a position worth up to 100 times more than your margin deposit. For example, a USD 10,000 deposit can command positions of up to USD 1,000,000 through leverage. You can leverage the first USD 25,000 of your investment up to 100 times and additional collateral up to 50 times.

*Profit Potential in Falling Markets

Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. If the EUR-USD declines, for example, it is because the US dollar gets stronger against the euro and vice versa. So, if you think the EUR-USD will decline (that is, that the euro will weaken versus the dollar), you would sell EUR now and then later you buy euro back at a lower price. In case that the EUR-USD indeed declines, then you can take your profit. The opposite trading scenario would occur if the EUR-USD appreciates.

AN EXAMPLE FOR FOREX TRADING:

An investor has a margin deposit with Saxo Bank of USD 100,000.The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing. The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.

Day- 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.

Four days later, the dollar will actually rise to CHF 1.5745 and the
investor decides to take his profit.
Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The
investor sells at 1.5745.

Day- 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.

As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change.

The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.
These results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6%
profit on the deposit of USD 100, 00.

CONCLUSION:

The successful trader will choose this method & he will be very comfortable with it. If he adheres to the basic principles of money management and risk control, education and experience, coupled with emotional discipline will be all he needs for a successful career.

For more Details please Contact:

No:475, Anna Salai, Nandanam,

Chennai – 600 035, Tamil Nadu.

Ph: 044- 4398 2000 / 10/20.

Mob: 95000 20692.

Visit us at: www.hifindia.com