Live Forex Rates Tools and Winning at Foreign Exchange

If you are ready to dive in the foreign exchange market, good forex rates charting is a must. Our previous post on getting started with forex trading gave an overview of foreign exchange trading.  Now let’s dig deeper.

Why do people trade currency?

forex rates

Learn what drives Forex Rates and how to trade.

To conduct foreign business and trade, currency must be exchanged at some point. As an example diamonds in Antwerp, Belgium are sold in Euros. If you live in the US and want to buy them you must either exchange your dollars for Euros.  Or the diamond seller must take your dollars and exchange them for Euros later. Hence the necessity for a financial marketplace to allow currency to be exchanged. The Forex market is a highly liquid marketplace as mentioned. Up to $5 Billion USD per day is traded.

Take a look at this  Forex Trader Chart

Currency is traded over computer networks rather than a centralized marketplace. The advent of electronic trading on the individual scale now makes forex trading possible to the masses of people not just large financial institutions. Notice the forex chart changes pretty much 24 hours a day because the major countries and financial institutions such as Hong Kong, London, and New York are in different time zones. For five and a half days a week around the clock trade transactions occur in the forex market.

When most people refer to the Forex daytrading market they are talking about the spot market.

The Spot Market – Where Live Forex Happens

Currency either bought or sold at the existing current price happens on the spot market. Compare this to buying a stock at the exact stock price at a given moment in time on one of the stock exchanges.  Once a trade or spot deal is executed each party receives the specified amount of the currency desired for the settled price. Similar to stock brokerage settlement, it takes a couple of days for the transaction to finalize. However, the currency price for each party is reflected as of the time of the spot deal.

Forex Futures Market – A Matter of Contracts

When you think of the forex futures (or forwards) market, think of a contract between two parties to exchange a certain currency in the future at specified price, date, and other terms. This market is more complicated and is regulated for example in the US. The nature of the contracts require a mediary to settle the currency trade at the specified time in the future. Since forex rates fluctuate many large multinational financial institutions and corporations use the futures forex market to hedge against large exchange rate changes caused by inflation or other factors. In the same way airlines might create futures contracts for fuel at a specified price in the future to hedge against rising gas prices. We will discuss more about the futures market in the next post in the series.

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