Converting Currency Online

What is Forex? Foreign Exchange Market, also known as ‘Forex‘ or ‘FX’ is the largest financial market in the world with a daily turnover of US $3. 2 trillion. The FOREX trading platform allows us to buy one currency and sell another. Currencies trade in pairs, like the US Dollar / Japanese Yen (USD/JPY).

There are two reasons to buy and sell currencies. About 5% of the daily turnover is generated by companies and governments that buy or sell products and services in a foreign country, or have to convert profits from foreign sales into domestic currency. The remaining 95% is represented by profit or speculative transactions.

How does FOREX work? Most traders focus on major currencies. In the present, over 85% of daily transactions involve trading this type of currencies including U. S. Dollar, Euro, Japanese Yen, British Pound, Canadian Dollar, Swiss Franc and Australian Dollar. Open 24 hours a day, FOREX trading begins in Sydney and moves around the globe. Investors can react immediately to currency fluctuations caused by economic, social and political events, whenever they occur.

FOREX market is considered an over-the-counter market, because transactions are conducted either by telephone or by electronic networks, having no central exchange.

It’s not difficult to read a foreign exchange quote if you keep in mind two things: the first currency listed is the base currency and the value of the base currency is always 1. U. S. Dollar (USD) is normally the essence of the FOREX market and currently it represents the base currency for quotes. For example, a quote of USD / JPY 120. 01 means that 1USD = 120. 01 JPY.

When using FOREX trading platform, often you’ll see a quote of 2 sides, namely the BID and the ASK. The BID is the price at which you can sell base currency (at the same time buying the counter currency). The ASK is the price at which you can BUY base currency (at the same time selling the counter-pair).

If you’re ready to invest money, you can start using FOREX trading platform anytime. FOREX market transactions should be treated carefully, because you can lose everything.

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In these unpredictable financial times, the value of currency is fluctuating more than ever before so it seems. How does a currency falling against others’ affect business, and people’s lives, in general? Let’s take a look at one example, the British pound, to see who wins – and who loses, as the pound falls against other major currencies.

Sterling has lost 20% of it’s value in the last year. The pound has fallen to a record low against the euro to 1.1499 euros. The two currencies could soon reach parity for the first time.

The two major reasons for sterling’s loss of value is firstly because as interest rates in the UK drop, investors elsewhere pull their money out to seek higher returns in other currencies. It’s the same as small investors seeking a higher return by moving their money out of one bank into another. With foreign investors though it’s often on a much larger scale. As that happens, the value of sterling spirals downwards. The second reason is that there is also a loss of confidence triggered by the Bank of England repeatedly slashing interest rates.

Who loses out then when the pound falls?

It’s bad for British tourists going abroad. They have to pay more for their foreign currency. If, for example, at one time they would have received 300 euros for £200, now they will only get 230 euros for the same £200 (using the rate quoted above). If they still want their 300 euros they would need to hand over £260.89, thus costing an extra £60.89. That’s not taking into consideration any commissions or other charges which might be payable.

It’s bad for importers because goods they buy abroad cost more. They have to hand over more in pounds to buy the products or services. The same goes for anyone in the UK who pays wages to someone abroad for any work done, if the agreement is that the employee will be paid in their own currency.

But, there are some winners in all of this.

Businesses that export their goods to Europe will be happy with this situation. If they are paid, say in euros, when they convert to sterling the value of that money will be higher than it was previously. An example of this was on the news recently, when the owner of a Company buying old taxis and refurbishing them to sell to Germany, Holland, Australia, the US etc was interviewed. His business is doing rather well, despite the shrinking UK market as the worsening economy deepens.

If a worker in the UK gets paid in foreign currency that’s also good. He will receive more in pounds when it is exchanged to sterling. It’s also good for foreign tourists coming to UK. They pay less for pounds, so it encourages them to come here, which of course all helps the UK economy. A high pound tends to deter some from visiting.

No doubt the speculators will win and lose in the currency markets, but for the ordinary person on the street whether they end up in one camp or the other will depend on a number of factors. Sadly, some companies may go bankrupt which will certainly affect their workers who have no control over the value of their country’s currency.

Related : Forex Knowledge

The rarity, beauty, and preciousness have always contributed to the value of gold. Due to its monetary standards, it is equally important for private citizens and national economies. Gold can be purchased in different forms such as coins, nuggets, jewellery, and bars. The coins, nuggets and jewellery are usually purchased due to its intrinsic beauty, whereas the purchase of bars is solely meant for the investment purpose.

Physical gold is the best mean for protecting the core portion of the portfolio from any nonlinear and unforeseen event. It acts as a buffer for your portfolio. It bears a very crucial insurance position on your financial future. It protects from nonlinearity, from sinister to geopolitical to weird. Moreover, it is always safe to own your resource in your own possession.

Gold is a very good mean of hedging against inflation and devaluation of currency. If you want to convert your money into a safer product, physical this metal bars are the best tangible option. The physical bars are produced and refined by the companies like Credit Suisse, Johnson, Monex, Kitco, Blanchard, Matthey and Engelhard. The genuine this metal bar has the name of the manufacturer, composition and weight stamped on it.

Gold is a precious metal, so purchasing these metal bars will be the matter of investing a big amount. You need to take care of all the pros and cons of the deal, before taking any decision. If you opt to buy physical these metal bars, you must have an understanding of the volatile gold prices, seen over the past years. The next important thing is the choice of the dealer. Always buy this metal bar from a certified, consistent and trustworthy dealer. You can purchase the gold bars from the gold market as well as through the internet.

Being a common man, you can identify and check the standard of the gold bar through the brand name of the goldsmith, gross weight in Troy ounces, purity percentage, and serial number of the bar. They are available with an average purity of 99.8 percent.

The gold bars are generally classified into two types. The classification is based on their respective manufacturing methods. Gold bars come in forms such as cast gold bars and minted gold bars. The cast gold bars are produced directly by transforming the molten gold into bars. The casting process is followed by the essential gold markings. The other type of bars is produced by cutting the gold blanks. The cutting process is then followed by stamping of gold with the name, weight and purity, through minting press.

Apart from the benefits, there are some minor drawbacks related to the purchase of the physical gold bars. The foremost issue is the protection and storage of gold bars. In case of the larger gold bars, it has to be stored in the bonded vaults, exclusively available for the protecting gold commodities. Moreover, the problem can be solved by investing in small bars instead of the larger ones.

Thus, putting money in physical gold is a wise investment. Seeing the rapid rise in the value of the gold, its value is predicted to be doubled in the next few years. So, you can definitely avail this sophisticated and safer mean of investment.

Thanks To : Finance

Viral Blogging. Link Bait. Tagged. Dugg.

If you don’t know what those words mean, don’t worry. They’re simply new terms for a timeless concept you likely already understand.

Publicity.

At their essence, these fancy digital terms are simply the new nomenclature for gaining attention. Getting press, as it was labeled in days now past, when intermediaries known collectively as “the media” decided who the public became aware of.

Online, the public now decides who gets publicity. What a concept, huh?

It’s been said time and time again that links are the currency of the web. Without links, your odds of achieving significant online traffic (either from other websites or search engines) without big ad bucks are slim to none.

It’s not enough anymore to just get people talking… they need to be linking. It’s more important these days that they spell your URL right, rather than your name.

It can be awfully lonely on the web when no one stops by.

If you’re trying to do business online, lonely equals poor. Whether you’re selling products, services or advertising, you need visitors who not only stop by, but return again and again. So it’s not enough anymore to just get people talking… they need to be linking.

Here’s four crucial elements to gaining web traffic today:

First of all, you need to be blogging. Search engines and other bloggers love the format, and it’s the key to attracting traffic. You’ve got to join the conversation and have something valuable to say before anyone will bother acknowledging you.

Secondly, you’ll need to learn some good old-fashioned publicity strategies. The timeless things that have worked offline can also work great online.

Third, you’ll need to examine how publicity strategies have been specifically applied online. Be careful about violating the often complex rules of “netiquette” that govern what is acceptable online.

Finally, you’ve got to make sure your focus is on your readers, and not yourself. Publicity just for the sake of your own self-interest has a way of backfiring, and online it can get really ugly.

Related : Buy Euro Forex Knowledge Converting Currency Online.com

Firstly lets talk about what investing in foreign exchange means. It does not mean buying foreign currency and keeping it up until it fairs well in value. Converting the money you have and holding it till it appreciates in value can take you only so far, usually you may gain about a few dollars over a period of an year by doing that. Then what does it mean? It means actively trading currency in a foreign currency market place or and exchange.

Before going into details, lets see how a FX market really works. In FX markets there is no concept of buying a currency, there is always an exchange of currencies, one being bought and the other being sold. Lets take this to a level that we are all comfortable with; You’d usually ‘buy dollars’, but what we actually do is exchange the local currency we have into USD at the current market rate. Lets assume the dollar is at 105 local currency units now, we’ll spend 210/= and buy 2US$ and will keep the dollars with us. If the dollar rises to 110/=, our investment has also appreciated. To make use of the appreciation, we have to re-sell the dollar at 110/= and we would have made a profit of 10/= on the transaction. Now look at this from a purely external point of view. Intially the investor gives out some currency to buy another sort. Then when the rate rises, he sells what he originally bought and buys back the depreciated currency. The difference in the rate he bought at and sold at, is his profit.

In a Forex market, you’ll trade something thats called a currency pair. This will look something like EUR/USD. If you buy this, you will actually exchange the USD that you have with Euros. When you’ve bought a currency pair, its called opening a position. But just because the Euro went up, you cant benefit from it. You have to convert it back to the original USD to compare the profit. So how would you do this? You have to exchange the EUR you have to USD, i.e. you close the position that you opened. Lets take an example: In current market the value of the EUR/USD is about 1.57 i.e. each Euro is worth 1.57 times the USD. Lets say you have 157 USD, you exchange this for a 100 EURs (i.e. you open a position by buying the EUR/USD pair). Tomorrow, the EUR/USD rate might turn out to be 1.5730, the EUR has gained slightly. Let say that you close the position now, you have 100 EURs which converts to 157.30 USD, you’ve gained 30 cents on your investment. See? pretty easy.

You may ask how this is any different to buying foreign currency and holding it till it goes up. The reason is because with a bank, you can only exchange the LKR with the majors (USD, EUR, JPY, GBP). Lets say the Dollar started appreciating against the GBP; you really cant do anything about it. (eg: USD is say 105/= and say GBP is somewhere around 200/=, you have LKR with you and all of a sudden USD starts going down all the way to 100/=. The effective rate of GBP/USD at the beginning was 1.9047 at the end of the event, the rate is 2.00. If you could trade the GBP/USD pair, you could have made a profit on this. But you cant cos you have only LKR. Well yes, you could convert the money to USD and then to GBP and wait till it goes up and … bit of a process yes?) In a Forex dealing place, the conversion will automatically done for you; You can deposit your money in USD and actually trade a pair like EUR/JPY.

Well what you’ve just read through is all a lie. But its an important lie to get introduced into dealing in Forex markets. To be fair, the above sums up the principle of a forex dealing place; It will help you to understand how the profit and loss taking really happens. But thats not how it operates.

Like everything else, forex rates are also based on the demand for the currency. And also like in most of the international markets, the currency rates are determined by large traders who do transactions worth several millions of dollars per trade. When you buy USD from a local bank, they sell you the dollars they’ve bought from the international market. This is exactly what a forex dealing exchange does. (i.e. This is what a forex dealing exchange for normal people like you and me does. I have no idea how exactly the bigger deals work out); they channel all the orders from their user base into dealing places for large banks.

We know that with an exchange place we will be trading currency pairs. The rate of the currency pair would typically be expressed in five numbers.

Eg:

GBP/USD = 1.9825

USD/JPY = 106.38

The smallest change possible for each pair is known as a pip. (i.e. for GBP/USD this is 0.0001, for USD/JPY this is 0.01)

In most exchanges, each lot of the traded currency is in lots of 10,000. Thus, if you buy 1 lot of GBP/USD at 1.9825, you are actually buying 10,000 GBP. The amount of USD you spent for this is 10,000*1.9825 = 19,825 USD. Let’s say you hold the currency pair till the rate goes up to 1.9830. You will close out the position by selling the GBP and buying the USD. Thus you will sell out 10,000 GBP and buy USD. This would yield 19,830 USD; the rate of the currency increased by 5 pips and your profit increased by 5$. If each lot was 100,000 units of the currency, then for the same 5 pip increase, the profit would be 50$. For any currency pair that looks like X/USD this is the case.

Let’s look at the USD/JPY pair now. Pair is at 106.38 and you buy it, i.e. you buy 10,000 USD by spending Japanese Yen. Now that’s a problem right? Cos you deposited the money in USD but definitely you don’t have any JPY. Not a problem. The exchange knows that what you’ll do is opening up a position and later closing it. Thus you’ll buy some USD spending the JPY you don’t have and buy back the JPY later. So the exchange will settle the net cash amount for you without bothering to look whether you have JPY or not. So lets say you buy the USD/JPY pair for 106.38, you buy 10,000 USD spending JPY. If you had JPY, what would be the worth of it? You’d spend 10,000*106.38 JPY to open the position. Now let’s say the currency pair rises to 106.48 and you close the position. What you’d technically do is to sell out the 10,000 USD and buy back the JPY. The amount of JPY that you’d receive would be 10,000*106.48. Thus your JPY worth has gone up by 1,000. If you convert this to USD, it would be a net gain worth 1,000/106.48 = 9.39$. What the exchange does is to pay out this 9.39$ to you. There is no need to convert your dollars to anything or whatever. Every one is happy.

Obviously, its not easy to calculate the gains or losses on a non USD denominated currency pair (like USD/JPY or AUD/EUR). Thus the brokers (the correct name for ‘exchanges’) publish lists of ‘pip costs’. It tells you how much of a gain or loss you’d make if the pair moved by one pip.

Now in this example we saw that the traded value of each pair is worth several thousands of dollars. Obviously a normal individual would not have access to that amount of money. This is where leverage comes in. The brokers let you play with money that is much more than what you have, this is known as leverage. Typically a forex broker would offer leverages from 50:1 to 200:1. What does this mean? This means that to do a trade worth 10,000$, with a 50:1 leverage, you need only 200$. With a 200:1 leverage, you can do the same trade for 50$.

This may look very lucrative, but it means that you are also at a large risk. Lets say you put 50$ for a 200:1 leveraged trade. The maximum loss you could make is 50$ (as the broker will not allow you to make a loss for more than what you have. If that becomes the case, a ‘margin call’ will fire and most probably your position will be automatically closed. This is done as a safety mechanism for the broker to not to have clients running large losses and not covering them.) To lose 50$, your currency pair needs to lose 50 pips. In the currency markets 50 pip move can happen in a matter of few hours. Now lets say you had a leverage of 50:1, then you would need 200$ to do the trade and even with a 50 pip loss, you’d still have 75% of your investments left. If you are dealing with large leverages, its necessary to have a large percentage of your deposit not allocated in a trade to make sure you don’t lose out on price spikes. (We’ll talk about this later on another topic where I plan to talk on how to play with currencies).

My Links : Buy Euro Forex Knowledge What is Forex

Large amounts of money can be made or lost with Foreign Exchange or Forex, as it is commonly known.

It is basically the buying of one currency and paying another currency for the purchase

In other words you are converting one currency to another and by buying and selling a pair of currencies at the right moment – you can either make a profit or a loss

There is usually a low margin of profit – high profits are usually due to trading with very large volumes of currencies

Forex is a global market and is the largest financial business in the world trading 24/7. It operates from Sunday evening to Friday evening

There are many market participants like various Banks, Pension Funds, many different commercial companies, Insurance Companies, large multinational corporations and of course, speculators. Anyone is welcome to trade Forex.

The daily global turnover is an astronomical amount of dollars

Forex is not a trade that can be learnt overnight. It takes a bit of practice in the beginning to get the confidence to start trading

There is a lot of training available online and there are many well authored books on the market to give you guidance and hints as well. You will find also find a lot of software available to teach you all you need to know about Forex.

You can get free training online, but many of the websites do require you to register and pay a fee. Training to make money is something that we all expect to pay for, so this is not a problem.

When online training is complete, prospective Forex traders are encouraged to first trade with imaginary money on “dummy” sites to gain confidence. Once they have practiced trading then they can start trading with real money

It is better in the beginning not to trade with capital that you can’t afford to lose.
Learn to trade what you see not what you think

Tags : Currency Trading Strategies Forex Knowledge