World Forex

The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies. [1]

The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

its trading volumes,
the extreme liquidity of the market,
its geographical dispersion,
its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
the variety of factors that affect exchange rates.
the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
the use of leverage
As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank for International Settlements,[2] average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:

$1.005 trillion in spot transactions
$362 billion in outright forwards
$1.714 trillion in foreign exchange swaps
$129 billion estimated gaps in reporting



Market size and liquidity

Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.Presently, the foreign exchange market is one of the largest and most liquid financial markets in the world. Traders include large banks, central banks, currency speculators, corporations, governments, and other financial institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. [2] Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.[3]

Of the $3.98 trillion daily global turnover, trading in London accounted for around $1.36 trillion, or 34.1% of the total, making London by far the global center for foreign exchange. In second and third places respectively, trading in New York accounted for 16.6%, and Tokyo accounted for 6.0%.[4] In addition to "traditional" turnover, $2.1 trillion was traded in derivatives.

Exchange-traded FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.

Several other developed countries also permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. Most emerging countries do not permit FX derivative products on their exchanges in view of prevalent controls on the capital accounts. However, a few select emerging countries (e.g., Korea, South Africa, India—[1]; [2]) have already successfully experimented with the currency futures exchanges, despite having some controls on the capital account.

FX futures volume has grown rapidly in recent years, and accounts for about 7% of the total foreign exchange market volume, according to The Wall Street Journal Europe (5/5/06, p. 20).

Top 10 currency traders [5]
% of overall volume, May 2009 Rank Name Market Share
1 Deutsche Bank 20.96%
2 UBS AG 14.58%
3 Barclays Capital 10.45%
4 Royal Bank of Scotland 8.19%
5 Citi 7.32%
6 JPMorgan 5.43%
7 HSBC 4.09%
8 Goldman Sachs 3.35%
9 Credit Suisse 3.05%
10 BNP Paribas 2.26%
Foreign exchange trading increased by 38% between April 2005 and April 2006 and has more than doubled since 2001. This is largely due to the growing importance of foreign exchange as an asset class and an increase in fund management assets, particularly of hedge funds and pension funds. The diverse selection of execution venues have made it easier for retail traders to trade in the foreign exchange market. In 2006, retail traders constituted over 2% of the whole FX market volumes with an average daily trade volume of over US$50-60 billion (see retail trading platforms).[6] Because foreign exchange is an OTC market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading centre is the UK, primarily London, which according to IFSL estimates has increased its share of global turnover in traditional transactions from 31.3% in April 2004 to 34.1% in April 2007. The ten most active traders account for almost 80% of trading volume, according to the 2008 Euromoney FX survey.[3] These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually 0–3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203 on a retail broker. Minimum trading size for most deals is usually 100,000 units of base currency, which is a standard "lot".

These spreads might not apply to retail customers at banks, which will routinely mark up the difference to say 1.2100/1.2300 for transfers, or say 1.2000/1.2400 for banknotes or travelers' checks. Spot prices at market makers vary, but on EUR/USD are usually no more than 3 pips wide (i.e., 0.0003). Competition is greatly increased with larger transactions, and pip spreads shrink on the major pairs to as little as 1 to 2 pips.


Market participants

Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.


Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.





Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.


Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.

The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank.[7] Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.


Hedge funds as speculators
About 70% to 90%[citation needed] of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.


Investment management firms
Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.


Retail foreign exchange brokers
There are two types of retail brokers offering the opportunity for speculative trading: retail foreign exchange brokers and market makers. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated by the CFTC and NFA might be subject to foreign exchange scams.[8][9] At present, the NFA and CFTC are imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone. It is not widely understood that retail brokers and market makers typically trade against their clients and frequently take the other side of their trades. This can often create a potential conflict of interest and give rise to some of the unpleasant experiences some traders have had. A move toward NDD (No Dealing Desk) and STP (Straight Through Processing) has helped to resolve some of these concerns and restore trader confidence, but caution is still advised in ensuring that all is as it is presented.


Non-bank Foreign Exchange Companies
Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account. Send Money Home offer an in-depth comparison into the services offered by all the major non-bank foreign exchange companies.

It is estimated that in the UK, 14% of currency transfers/payments[10] are made via Foreign Exchange Companies.[11] These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.


Money Transfer/Remittance Companies
Money transfer companies/remittance companies perform high-volume low-value transfers generally by economic migrants back to their home country. In 2007, the Aite Group estimated that there were $369 billion of remittances (an increase of 8% on the previous year). The four largest markets (India, China, Mexico and the Philippines) receive $95 billion. The largest and best known provider is Western Union with 345,000 agents globally.

Send Money Home is an international money transfer price comparison site that allows consumers access to a range of alternative products/ rates available when


Trading characteristics

There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currencies instruments are traded. This implies that there is not a single exchange rate but rather a number of different rates (prices), depending on what bank or market maker is trading, and where it is. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs instantaneously. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. A joint venture of the Chicago Mercantile Exchange and Reuters, called Fxmarketspace opened in 2007 and aspired but failed to the role of a central market clearing mechanism.

The main trading center is London, but New York, Tokyo, Hong Kong and Singapore are all important centers as well. Banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends.

Fluctuations in exchange rates are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in gross domestic product (GDP) growth, inflation (purchasing power parity theory), interest rates (interest rate parity, Domestic Fisher effect, International Fisher effect), budget and trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers' order flow.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXXYYY or YYY/XXX, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX is expressed (called base currency). For instance, EURUSD or USD/EUR is the price of the euro expressed in US dollars, as in 1 euro = 1.5465 dollar. Out of convention, the first currency in the pair, the "base" currency, was the stronger currency at the creation of the pair. The second currency, counter currency or "term" currency, was the weaker currency at the creation of the pair. Currencies are occasionally incorrectly quoted with the pairs inverted e.g. EUR/USD but this is incorrect. The "/" acts the same as the divide mathematical operator and derives the actual exchange rate. e.g. an amount of $140,000 equates to €100,000. $140,000/€100,000 = $/€ = USD/EUR = a rate of 1.4 hence EURUSD or USD/EUR. See Exchange_rate

The factors affecting XXX will affect both XXXYYY and XXXZZZ. This causes positive currency correlation between XXXYYY and XXXZZZ.

On the spot market, according to the BIS study, the most heavily traded products were:

EURUSD: 27%
USDJPY: 13%
GBPUSD (also called cable): 12%
and the US currency was involved in 86.3% of transactions, followed by the euro (37.0%), the yen (17.0%), and sterling (15.0%) (see table). Volume percentages for all individual currencies should add up to 200%, as each transaction involves two currencies.

Trading in the euro has grown considerably since the currency's creation in January 1999, and how long the foreign exchange market will remain dollar-centered is open to debate. Until recently, trading the euro versus a non-European currency ZZZ would have usually involved two trades: EURUSD and USDZZZ. The exception to this is EURJPY, which is an established traded currency pair in the interbank spot market. As the dollar's value has eroded during 2008, interest in using the euro as reference currency for prices in commodities (such as oil), as well as a larger component of foreign reserves by banks, has increased dramatically. Transactions in the currencies of commodity-producing countries, such as AUD, NZD, CAD, have also increased.


Determinants of FX Rates
See also: exchange rates
The following theories explain the fluctuations in FX rates in a floating exchange rate regime (In a fixed exchange rate regime, FX rates are decided by its government):

(a) International parity conditions viz; purchasing power parity, interest rate parity, Domestic Fisher effect, International Fisher effect. Though to some extent the above theories provide logical explanation for the fluctuations in exchange rates, yet these theories falter as they are based on challengeable assumptions [e.g., free flow of goods, services and capital] which seldom hold true in the real world.

(b) Balance of payments model (see exchange rate). This model, however, focuses largely on tradable goods and services, ignoring the increasing role of global capital flows. It failed to provide any explanation for continuous appreciation of dollar during 1980s and most part of 1990s in face of soaring US current account deficit.

(c) Asset market model (see exchange rate) views currencies as an important asset class for constructing investment portfolios. Assets prices are influenced mostly by people’s willingness to hold the existing quantities of assets, which in turn depends on their expectations on the future worth of these assets. The asset market model of exchange rate determination states that “the exchange rate between two currencies represents the price that just balances the relative supplies of, and demand for, assets denominated in those currencies.”

None of the models developed so far succeed to explain FX rates levels and volatility in the longer time frames. For shorter time frames (less than a few days) algorithm can be devised to predict prices. Large and small institutions and professional individual traders have made consistent profits from it. It is understood from above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of demand and supply. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.

Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories: economic factors, political conditions and market psychology.


Economic factors
These include: (a)economic policy, disseminated by government agencies and central banks, (b)economic conditions, generally revealed through economic reports, and other economic indicators.

Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).
Economic conditions include:
Government budget deficits or surpluses
The market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.
Balance of trade levels and trends
The trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.
Inflation levels and trends
Typically a currency will lose value if there is a high level of inflation in the country or if inflation levels are perceived to be rising [. This is because inflation erodes purchasing power, thus demand, for that particular currency. However, a currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.
Economic growth and health
Reports such as GDP, employment levels, retail sales, capacity utilization and others, detail the levels of a country's economic growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.
Productivity of an economy
Increasing productivity in an economy should positively influence the value of its currency. Its effects are more prominent if the increase is in the traded sector [3].

Political conditions
Internal, regional, and international political conditions and events can have a profound effect on currency markets.

All exchange rates are susceptible to political instability and anticipations about the new ruling party. Political upheaval and instability can have a negative impact on a nation's economy. For example, destabilization of coalition governments in India, Pakistan and Thailand can negatively affect the value of their currencies. Similarly, in a country experiencing financial difficulties, the rise of a political faction that is perceived to be fiscally responsible can have the opposite effect. Also, events in one country in a region may spur positive or negative interest in a neighboring country and, in the process, affect its currency.


Market psychology
Market psychology and trader perceptions influence the foreign exchange market in a variety of ways:

Flights to quality
Unsettling international events can lead to a "flight to quality," with investors seeking a "safe haven." There will be a greater demand, thus a higher price, for currencies perceived as stronger over their relatively weaker counterparts. The Swiss franc has been a traditional safe haven during times of political or economic uncertainty.[12]
Long-term trends
Currency markets often move in visible long-term trends. Although currencies do not have an annual growing season like physical commodities, business cycles do make themselves felt. Cycle analysis looks at longer-term price trends that may rise from economic or political trends. [13]
"Buy the rumor, sell the fact"
This market truism can apply to many currency situations. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. This may also be referred to as a market being "oversold" or "overbought".[14] To buy the rumor or sell the fact can also be an example of the cognitive bias known as anchoring, when investors focus too much on the relevance of outside events to currency prices.
Economic numbers
While economic numbers can certainly reflect economic policy, some reports and numbers take on a talisman-like effect: the number itself becomes important to market psychology and may have an immediate impact on short-term market moves. "What to watch" can change over time. In recent years, for example, money supply, employment, trade balance figures and inflation numbers have all taken turns in the spotlight.
Technical trading considerations
As in other markets, the accumulated price movements in a currency pair such as EUR/USD can form apparent patterns that traders may attempt to use. Many traders study price charts in order to identify such patterns.[15]

Algorithmic trading in foreign exchange
Electronic trading is growing in the FX market, and algorithmic trading is becoming much more common. According to financial consultancy Celent estimates, by 2008 up to 25% of all trades by volume will be executed using algorithm, up from about 18% in 2005.[citation needed]

An algorithmic trader needs to be mindful of potential fraud by the broker. Part of the weekly algorithm should include a check to see if the amount of transaction errors when the trader is losing money occurs in the same proportion as when the trader would have made money.


Financial instruments

Spot
A spot transaction is a two-day delivery transaction (except in the case of trades between the US Dollar, Canadian Dollar, Turkish Lira and Russian Ruble, which settle the next business day), as opposed to the futures contracts, which are usually three months. This trade represents a “direct exchange” between two currencies, has the shortest time frame, involves cash rather than a contract; and interest is not included in the agreed-upon transaction. The data for this study come from the spot market. Spot transactions has the second largest turnover by volume after Swap transactions among all FX transactions in the Global FX market. NNM


Forward
See also: forward contract
One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be a one day, a few days, months or years. Usually the date is decided by both parties.


Future
Main article: currency future
Foreign currency futures are exchange traded forward transactions with standard contract sizes and maturity dates — for example, $1000 for next November at an agreed rate [4],[5]. Futures are standardized and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts.


Swap
Main article: foreign exchange swap
The most common type of forward transaction is the currency swap. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange.


Option
Main article: foreign exchange option
A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. The FX options market is the deepest, largest and most liquid market for options of any kind in the world..


Exchange-Traded Fund
Main article: exchange-traded fund
Exchange-traded funds (or ETFs) are open ended investment companies that can be traded at any time throughout the course of the day. Typically, ETFs try to replicate a stock market index such as the S&P 500 (e.g., SPY), but recently they are now replicating investments in the currency markets with the ETF increasing in value when the US Dollar weakens versus a specific currency, such as the Euro. Certain of these funds track the price movements of world currencies versus the US Dollar, and increase in value directly counter to the US Dollar, allowing for speculation in the US Dollar for US and US Dollar denominated investors and speculators.


Speculation
Controversy about currency speculators and their effect on currency devaluations and national economies recurs regularly. Nevertheless, economists including Milton Friedman have argued that speculators ultimately are a stabilizing influence on the market and perform the important function of providing a market for hedgers and transferring risk from those people who don't wish to bear it, to those who do.[16] Other economists such as Joseph Stiglitz consider this argument to be based more on politics and a free market philosophy than on economics.[17]

Large hedge funds and other well capitalized "position traders" are the main professional speculators. According to some economists, individual traders could act as "noise traders" and have a more destabilizing role than larger and better informed actors [18].

Currency speculation is considered a highly suspect activity in many countries.[where?] While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not; according to this view, it is simply gambling that often interferes with economic policy. For example, in 1992, currency speculation forced the Central Bank of Sweden to raise interest rates for a few days to 500% per annum, and later to devalue the krona.[19] Former Malaysian Prime Minister Mahathir Mohamad is one well known proponent of this view. He blamed the devaluation of the Malaysian ringgit in 1997 on George Soros and other speculators.

Gregory J. Millman reports on an opposing view, comparing speculators to "vigilantes" who simply help "enforce" international agreements and anticipate the effects of basic economic "laws" in order to profit.[20]

In this view, countries may develop unsustainable financial bubbles or otherwise mishandle their national economies, and foreign exchange speculators allegedly made the inevitable collapse happen sooner. A relatively quick collapse might even be preferable to continued economic mishandling. Mahathir Mohamad and other critics of speculation are viewed as trying to deflect the blame from themselves for having caused the unsustainable economic conditions. Given that Malaysia recovered quickly after imposing currency controls directly against International Monetary Fund advice, this view is open to doubt.

Open process: payment with physical or equal in size and that are not likin a reverse transaction closed with another operation. Buying Price: Processor is the price of a currency can make the purchase. Buying / Selling Spread: Buying and selling is the difference between prices and market liquidity is a criterion. Usually means high liquidity, low spreads. Home Currency: The currency is used in the accounting records of the investor. These units are usually U.S. dollars in forex market but British Pound Sterling, Euro and Australian dollar also can be used. Supply: The processor is ready to make the sales price. European Central Bank: The European Monetary Union is the central bank. Bear Market: The market conditions prices are depreciated. Bull Market: appreciation of prices that are market conditions. Broker: Processor of the purchase - sale transaction with an intermediary organization or are interested. Some brokers demand a commission for these services. Budget Deficit: Processing of payments for, or have a negative balance situation. Cable: British Pound / U.S. Dollar rate used is the slang word. Cross Currency: U.S. dollar is set up between the currency does not contain both. Fencing (Hedge): a previously opened with the aim to reduce the risk of transactions later opened a new means or several transactions. For Winning: is the increase in the price of a currency. Support Level: Purchase transactions can be expected is a price level. Resistance Levels: Sales transactions can be expected is a price level. Currency Risk: Currency Rates are talking about a change in the opposite way. Economic Indicators: Economic life status, showing the changes that occur are statistical series. These examples include: the unemployment level, the gross national product, inflation, retail sales and the like. Inflation: the increase in the prices of consumption goods because of reduced purchasing power of the market cause the condition. Federal Central Bank: The U.S. is the central bank. Forex / FX Market: Bench in the markets at the same time the currency has been received and another one is the process of the sale. The U.S. dollar against most of the Forex market are priced. Daily Transactions: On the same day in the open and closed are used for transactions. Al Profit (Take Profit): On the process of closing a predetermined price in order to profit with the order. Short Position: Market price declines in profit from operations are available. Commission: Broker by the per transaction fee is requested. Liquidity: Price stability will be a small impact or no impact to not allow processing of large amounts of market condition. Margin: The capital required to make a transaction. Margin Call: Broker or dealer to the customer by the customer against the performance of a process oriented to ensure the additional funding is requested. As an alternative to this process, one or more customers have the option to turn off the process is. Central Bank: A country's monetary policy is guided official or semi-official organization. For example, the Federal Central Bank, the United States is the central bank. Money: Government in accordance with the law or the Central Bank offered to the market any type of money. Pip: Exchange market value of any establishment to play the smallest unit is the name given. Pip values vary for different pairs. Pip value, for example, EUR / USD, GBP / USD and USD / CHF 0.0001 and the USD / JPY for the 0.01 dir. Market Maker: Price makes the presentation and offered prices to make buying or selling ready-dealer. Sale price: Processors in a currency they can sell is the price. Limited Order (Limit Order) or those from a particular price or price of gold to make purchases from a particular price or to sell at the price given for the order. Spot Price: Current, the current market price. Spot transactions are generally completed within two business days. Spread: The difference between purchase and sale price. Stop Order: or those of a certain price to market price of gold or of a certain price or to purchase it at the price given order. Technical Analysis: Charts, price trends, and volume indicators, with the help of market data to analyze whether, in the future may be estimated is the process of market movements. Fundamental analysis: future movements of financial markets with the aim to estimate the economic and political analysis of the information is. Bench-Top Market: Stock issued to all transactions made outside the general name. Trade Balance: A country's total exports and total imports is the value of the difference between. Long Position: have not previously made purchases from a currency from the drop process. Often the main currency is expressed by, for example, long dollars (short Swiss Franc) ... Futures Contract: Contract by today and the determined at a later date, the negotiated price from a standardized quality and quantities of goods or the obligation to sell securities and buy into the contract. The difference between the Agreement-term foreign currency futures, futures market under the terms of the transactions only term foreign exchange transactions over the counter transactions in the markets is. Allocation of Assets: Risk management with the aim to make the transaction of funds is allocated to different markets. Stop Loss (Stop Loss): Loss of small as possible in order to keep the process open and to close the orders of a particular price is

Technical analysis is another method used tahminlemede price. Estimates of future price movements for the past prices and market movements to be observed. Technical analysis, estimation of future market movements of the market for graphics, price trends and volume data will be kept in mind is the process of investigation. Technical analysts or market data only focus on price movements. Prices of basic data already in the real technicians all reflected in the works with the assumption and therefore focuses only on market movements. Unlike fundamental analysts, as set out in the past significant price movements in future possible action tahminlemeye works. Graphics, technical analyst is the most basic help. Most commonly used types of graphs ahre bar-graphs. Each bar for a pre-determined time intervals (usually daily) between the highest and lowest prices rising vertically from a line occurs. Below trend in market conditions and moving again in determining price movements that occur frequently used technical analysis tools you will find an entry. GRAPHICS There are three types most commonly used graphic: Linear graph: linear graph, for a particular set of past price movements over time to changes in the graphical representation. Graph is formed by merging of daily closing prices. Bar Graph: Bar Graph, the required performance of a particular set of time intervals (eg every 30 min) is shown with the help of dikeysel rods. Each bar for that time period, opening, closing, highest and lowest (AKYD) information is available on four separate prices stated. Candle chart: bar chart graph of the candles and the difference is similar at both ends of AKYD price with the help of the wick is specified. Closing price is higher than the opening price of dark-colored candles, as if it is lower than is indicated hollow. SUPPORT AND

RESISTANCE LEVELS Another point to consider is the technical analyst support and resistance levels that are. This is the underlying idea of the level of market support and resistance levels on the work to be traded under the others. Support level, to the bottom of the market in that price levels will be difficult to indicate a level. If the price below a certain level to try multiple times if it did not show down to the level of support level is indicated by placing a horizontal line. Resistance level of the market exceeds a certain price level will be difficult to indicate a level. If the price above a certain level to try multiple times if it did not show the output level of resistance level is indicated by placing a horizontal line. If the resistance or support levels are broken while prices are expected to follow that direction. This level of investigation and graphic support and resistance levels can not be broken in the past to be taken into consideration is determined.

MOVING AVERAGE Games Moving averages are used for monitoring of price trends is another method. Simple moving average is an average of prices in the past. 10-day moving average, within the last 10 days closing price is calculated by dividing the collection and 10. The other day the old and the new day's closing price is subtracted from the average price on average are taken into consideration. Thus the average moves. Moving averages, market entry and exit rather than in terms of the determination is a mechanical approach. Market entry and exit levels for determination of the moving average is added usually on the bar graph. If the market is closed on the moving average, it is generally perceived as a buying signal. Below the moving average is off the market if the same approach as a signal that the sales are accepted. Some processors that buy or sell signal to be perceived as changing the direction of the moving average line are waiting. Moving average line accuracy and the number of trading signals depends on the selected time interval. 5-day moving average line will be more sensitive and more than 20-day trading signal will. If the average is very sensitive processors themselves doing too many procedures can find. On the other hand, if the average is not sensitive enough, processors buy / sell signals too late and missed some opportunities farkedeceklerinden faced with the risk will remain. Usually, the moving average used properly in terms of processor techniques are valuable tools. TREND LINE Trend line, although trends also help identify potential support and resistance areas are. Trend line, the price of instruments being processed in at least two peak flow or sub-point is a straight line connecting. Between these two points should not break any price trend line. In this way, a trend line, price or the lowest point of this hill and broke the back of the resistance and support areas can not determine. Trend lines longer becomes more reliable, especially in the prices several times a trend line, but worth it in case they come back. Long-time trend line break in the case of a reverse trend is likely to occur means. Nevertheless, there is no guarantee such a situation would occur. The trend will change direction even if there appear any indication, the future prices used in determining what level it can come to is no method. BINARY (TRIPLE) BOTTOM AND BILATERAL (TRIPLE) of TEPE FORMATION Already formed a strong market if the price movement of the lower limit testing, you will often find support from the lower price. If this is the lower limit is not exceeded and that double bottom formation is observed in the future may be indicative of a move to a higher level. Likewise, the lower limit to be tested three times with which we can mention the formation of three deep. The opposite way, if two or three times the market long-term flow within a price which comes back from the highest point of this double or triple the hill formation is observed, and this in the future, significant price decline may be indicative of. Formation of double or triple dip, "sell-stop" waiting for orders are the appropriate level. Sell-stop orders that are waiting just below the bottom level are placed in the price. Similarly, double or triple top formation also "buy-stop" waiting for orders are the appropriate level. Buy-stop orders are placed immediately above the top of the price. Iterations Market quickly move in a certain direction, it sometimes when they realize their profit processors, markets may be withdrawn. Repeat this event started back at the price and is usually called the market for processors in position to repeat itself before re-creates the appropriate level. Iterations generally the same size, 50% and 38.1% rates (Fibonaccio Rates) processors are among the most unpopular than that.

Fundamental analysis, trends that may occur in the future with the aim to predict the macro and micro economic theory is used on the market. TRADE

BALANCE
Trade balance, imports and exports of a country have made is the difference between. A positive trade balance, imports more than exports in the case is seen to be. A negative trade balance of the imported goods to be exported nor more than is seen in the case. The changes in the trade balance and import and export trends for forex piyasalarıdaki because they are very important indicators, forex market, closely followed by. Data on imports and exports in terms of overall economic activity and competitiveness of the country's only significant trends göstergelerdir.İhracattaki show not only about the strength of economic activity abroad also gives important information. Import-related data while the power is an indicator of domestic economic activity. Has a significant trade deficit, a country, usually due to profit from sales will have a weak currency. However, this strong and long-term financial investments could be balanced by currents.

CURRENT ACCOUNT

Current Account; constitutes the most important part of international trade data. Purchased goods and services, sales, interest payments and unilateral transfers contains information about the most extensive. Balance Current Account in this are discussed. Generally, the current account deficits that cause currency depreciation.

CONSUMER PRICE INDEX (CPI)
Consumer Price Index (CPI), purchased by consumers within a predetermined basket of goods and services is the average price. CPI inflation is calculated on a monthly basis for about a very important indicator is followed closely. CPI is the most important indicator because consumer spending enflayon two-thirds of economic activity constituted a portion. High CPI data in the short term interest rates generally rise and this reason that in the short term it will cause the currency strengthen. However, long-term inflation data, it reduces confidence in the currency depreciation causes.

DURABLE GOODS ORDERS and CONSUMPTION
Durable Goods Orders, now and for the future of national producers who placed orders for durable goods is an important indicator. Monthly percentage changes in this order shows the percentage changes. Durable Goods Orders, most industrial production is done on the orders of the trends for the manufacturing sector is the most important indicators. Rising orders and stronger economic activity means that the currency appreciation to help in the short term that may cause short-term interest rates to increase.

GAYRİSAYFİ NATIONAL PRODUCT (GMÜ)

Gross National Product, is available about the total economic activity is the most comprehensive data. All goods and services produced in a country is an indicator of market value. Gross national product data every three months, and describes the most important indicators of economic activity in terms of power that will be closely monitored for. Gross national product is described as three-fold: 1) estimate reported (first), 2) preliminary report (first revision), 3) the last report (the second and final revision). These corrections usually creates a major impact on the market. A high-level gross national product data is usually an increase in interest rates brings the expectation that the simultaneous increase in inflation estimates to the currency as it reduces the confidence with condition, at least for the near future for that currency is a positive impact. GMÜ data externally, in terms of total GMÜ each component within the measurement of price changes used in the price index data also describes GMÜ. GMÜ price index, CPI data are used in conjunction with another key inflation measure is the data. Unlike the CPI price index GMÜ a particular basket of goods and services have the advantage not to be limited. Changes or new features and gidişhatındaki consumption of goods and services to market entry in these price indices will find a place for themselves.

HOUSING START

and Housing Start data, the session started on monthly basis for the construction of the unit (single ailelik or very ailelik) is a metric. As a marker for the overall economy about gidişhat are monitored very closely. High construction activity is usually associated with high economic activity and confidence. This, at least for the near future, strengthening the currency as a precursor of short-term interest rate increase is perceived.

EMPLOYMENT DATA
Other economic indicators in the employment data as the phrase is most important. Usually the first Friday of every month is open. Involves all sectors in the economy, economy, provides a comprehensive overview. Different industry categories separately to keep track of trends in job creation is better handled in bulk, because the data underlying industry trends can hide significant deviations. Employment data, excluding agriculture and public enterprises are paid, how many people is that criteria. This paid monthly changes in the number of how many jobs created or lost WAS in terms of observance is an indicator of economic activity and is a very important indicator is very closely monitored. Large increases in employment data, with strong economic activity is interpreted as an indicator of and eventually, at least supportive for the currency in the short term it will show an effect of the interest rate increase may lead.

PRODUCER PRICE INDEX (PPI)
Producer price index is a measure of monthly change in wholesale prices and raw material, industry and the production phase is divided into. PPI data, a measure of the change in producer prices because inflation is an important indicator of the manufacturer is under a lot about the consumer price index inflation mostly affects. Typically in high-value PPI therefore a higher consumer price inflation and this will result in an increase in short-term interest rates can cause. A significant currency, as inflation pressures that have a negative impact on the trust, although usually short-term, high interest rates that impact has been supportive for the currency.

FOREX FOREIGN EXCHANGE TRADING GOLD

glance In our country, our people in the finance sector investment as a tool that they use the main tools that we look a majority of workers to the officers (of course in the hands of 3-5 cents something to keep managed) by trades in the private sector relatively well will be considered on duty in and take the employees, descent patrimony put into rental income which, in various sectors or production firms serving until everyone has the money in the hands of enazından operate or maintain the value of first pads to keep the six currencies, gold bracelet republic took storage, (usually under a number of women is the choice) trades and the employers' position people, mainly high-level tasks, which paid the number one choice for the majority çalışanlarımızında bargain is. This above investments Zikri last six bags of gold for foreign exchange, and to say nothing much yoktur.Çünkü purpose rather than merely making money hand to protect the value of çalışmaktır.İçlerinde rise and fall followed by trying to get together to sell Although workers in general, for small capital deal worth a return is not . Another purpose of our group, and the actual investment by araçlarıdan trade to earn money, and the first two groups are compared to the accumulation of capital in excess of trades, working in üstdüzey task, having rental income for owners and companies that currently the number one favorite is the stock market. Burda order to separate the groups we work with all the savings available for investment instruments was evaluated in terms of the first group because of insufficient capital available for any of the return of vehicles entering olmaz.İkinci group has provided investment capital adequacy is for owners of gold exchange options such as return on the stock market can provide. As a result, the first and second groups for all earnings allowing the strength was examined at any time be able to buy and sell, sell into the open offer, the opportunity to hedge in terms of, above all the investment tools more convenient and capital requirements in terms of 300-500 dollars in savings due to leverage, even a few times that your With a month to earn the opportunity to give direction on forex cross rates in the interbank foreign exchange market operations to arbitrage is the most logical and rational choices. Compared to the stock market an incredible opportunity for him to sunar.Yüksek leverage ratio, capable of selling into the open with both sides taking positions in the hedge and to keep sales and buying positions, spot gold silver işlemlerinide on the same platform that it perform a variety of raw materials to make trade dollars imkanıda eklenebilir.Kısaca 300-500 Keep million dollars in capital accumulation than that offered investors the opportunity to earn up to everyone now that the world's most active, process the amount of 3 trillion dollars daily in terms of finding the most intense and largest volume market. Compared to the stock market to be manipulated is impossible because of the size of the transaction volume, market their own internal dynamics of political development in line with the economic works. As a result of technological developments in the globalized world that we have achieved in the forex market, money market investors with the absence of any major who are interested can not be considered small.