Forex and Currencies Explained

Canadian Exchanges (a little history)

The Montreal Stock Exchange

The Montreal Stock Exchange was the first Canadian stock market.  It received its charter in 1874 and remained the largest exchange in Canada until after World War I.  By 1910, more than 2.1 million shares were being traded annually.  The Montreal Stock Exchange, like the U.S. Stock exchanges felt the effects of the great depression.  Gradually, though, they were able to pull out of the market crash of 1929, growing slowly.  Their next large decline came in October, 1987 when another stock market panic occurred.  In 1974, the Montreal Stock Exchange merged with the Canadian Stock market Exchange, earlier known as the Montreal Curb Market.

The Toronto Stock Exchange (TSX)

Another exchange on the Canadian Stock Market is The Toronto Exchange (TSE) which was formed in 1852  It was formerly the Association of Brokers, a group of Toronto businessmen. In 1997 the Toronto Exchange closed its trading floor to become the second largest stock exchange to convert to an electronic trading environment. 

The Toronto Stock Exchange is now the largest stock exchange in Canada. It lists more than 1,300 companies that are being traded electronically. The Toronto Stock Exchange lists almost half of the global public energy companies, over half of public mining companies, and ranks #2 in the world in number of technology companies.  In the last year, the owner and operator of the Toronto Stock Exchange has been making appearances in the United States, raising awareness of their stock exchange and noting the reasons more and more US companies are listing in their market.  Several US companies already listed with the Toronto Stock Exchange talked about the impact those listings have had on their profit margin.  More oil and gas companies are listed on the TSX than any other stock exchange in the world.   By 2007, there were over 10 billion shares of gas and oil stocks traded in the TSX.

Sector indices in the Toronto Stock Exchange list energy markets, information technology, financial services, industrials, health care industries, gold, mining and real estate, among many others.  Trading hours for the Toronto Stock Exchange is 9:30am to 4:00pm Monday through Friday. Settlement for any trades occurs on the third day after purchase. Also, there is an after-market session from 4:15pm to 5:00pm ET Monday through Friday.  Canada, the United States and European companies are listed on the TSX.

The Canadian stock market continues to grow.  As of 2007, there were nearly 4,000 companies listed on the TSX with combined capital of $2.2 trillion dollars. The Canadian dollar is the currency of Canada (CAD).  Their symbol is the $ or C$.  Their central bank is the Bank of Canada.  The slang for the American dollar, of course, is the buck.  The Canadian dollar was first called “the loonie,” because of the picture of a common loon bird on the back of the coins.  Later, when the two dollar coin was introduced, it was called the “toonie” in slang terms. The Canadian Stock market offers another investment option for consideration.

Global Economic Calendar

If you’re interested in the Foreign Exchange Market, you will certainly want to take a look at the FOREX Economic Calendar online.  This is a monthly grouping of economic events that affect what happens in the economy, industrial market and companies.  These events often preclude a very notable change that may require a change in trading strategy. FOREX traders, especially, would be wise to compare market prediction with real time economic indicators such as the FOREX CALENDAR. 

What Information does it include?

For FOREX traders, the FOREX CALENDAR offers information that currency traders should be aware of when planning strategies.  This system has proven itself through many lucrative FOREX trades that were completed within moments before or very soon after very important economic bulletins.  Study and understanding of these economic indicators is the best way to begin learning the FOREX trading market.

In FOREX trading there are currency pairs, that is, the exchange rate of a certain currency over another currency.  The most traded currency pairs are

Euro/USD (Euro/US Dollar)                                      

USD/JPY (US Dollar/Yen)

GPD/USD (Pound/US Dollar)                                                ISD/CHF (US Dollar/Swiss Franc)

USD/CAD (US Dollar/Canadian Dollar)                    

AUD/US (Aussie/US Dollar)

The currency listed first, for example, EURO is known as the base currency, and the second currency (USD) is the quote currency. If the quote of EURO/USD is , for example, 1.2545/48 or 1.2545/8 the bid price for the transaction would be $1.2545 and the price the broker is willing to sell at (ask price) is $1.2548 The largest percentage of overall volume in the FOREX market is generated by these currency pairs.

Because the full amount of the deposit traded is not required in FOREX margin trading, this may be the reason for its popularity among investors.  A margin deposit is all that is required, with the rest being granted by the broker.  An example of this margin type of trade would be if a broker allows a 100:1 leverage, a 1% deposit would be required by the investor.  The problem though, is that when the balance of the accounts falls below the 1% deposited, the broker sells off all your trades.  As you can see, there is a lot of risk involved in currency trading.

Learn as much as possible before trading

Before starting to trade in the FOREX market, do make it a goal to learn everything you possibly can to aid you in making a success of your venture. Besides the FOREX calendar, there is a tremendous amount of information online.  There are books specifically written for the FOREX market, from getting started, to Day Trading in the currency market, and trading in the global currency market.  Other books are available that teach the fundamentals of understanding economic indicators, very valuable information when trading in the FOREX market.  A few of the Key economic indicators are Existing Home Sales, the Gross Domestic Product, Automobile and Truck Sales reports,, Jobless Claims, and the Retail Sales Report

Is Value Investing a good strategy?

The dictionary defines VALUE as “something regarded as desirable”, and the “rate at which a commodity is potentially exchangeable.”  This definition is a pretty good analogy of Value Investing.  In other terms, it is described as getting the most profit by spending the least amount of money.  Anyone who knows anything at all about the stock market has heard of Warren Buffett.  Mr. Buffett is the largest stockholder and Chairman of Berkshire-Hathaway Corporation, and has been the most successful value investor in over 50 years.  Mr. Buffett is the second richest man in the world.  He still resides in the same $31,500 house that he bought in 1957.  He has no flamboyant ideology about owning big new cars.  Mr. Buffett drives an old model Lincoln Town car.

Buffett began to show his inclination and talent toward business dealings in 1941, when he was eleven years old, he made his first stock purchase, 6 shares of Cities Services preferred stock.  His success has snowballed over that 68 years, with the purchase of more stock, more companies, (he owns Geico Insurance Co outright today).

HOW CAN I DETERMINE A VALUE INVESTMENT?

Buying stocks at a fraction of their intrinsic value has been the underlying source of amassing a fortune by individuals such as Warren Buffett and some others.   It takes talent to look at stocks in a rocky market and pick the ones that have fallen far below their actual worth as stocks to invest in.  That is not to say that one should just arbitrarily choose a stock just because it has just tanked, hoping for a huge rebound.  Some stocks really aren’t worth anymore than their lowest price.  Learning to use analytical judgment to pick the stocks that have fallen in value because of a management mistake or some other unfortunate crisis is a learning process.

The ones to choose are the businesses with large returns on equity, having little, if any debt.  Under valuation is usually found in larger rather than smaller companies.  Has the company managed to have a good overall record; is their management efficient?  Good management is one of the most important factors in the success of a company.  Once you have determined that the setback of the business is temporary and their management performance has been stellar in recent years, you may be ready to pen a check to purchase the company’s stock.  But wait, before doing so, be sure that you have the capital to wait for the company to rebound from its problems.  If you believe there is the slightest possibility that you will need the cash before the company’s intrinsic value has gone back up, don’t buy the stock.  It is even possible that the company’s stock may fall once again, before it turns around.  Be wise in the selection of your value stocks.  They are a wise investment, when chosen for the right reasons.

Choosing wisely is very important

FOREX trading is a pretty complicated way to invest.  That’s why it is so important to choose a Foreign Exchange broker that is honest and ethical.  Find out who some of his clients are and see if they give him a good recommendation.  This is job One!  It is a good idea to choose a broker that is a Futures Commission Merchant (FCM). There is an extended Foreign Exchange brokers’ list online to begin your search, i.e., for example, forex-brokers.com.

Why Use a Broker for FOREX trading?

For one thing, the FOREX broker can familiarize you with the various terms related to FOREX trading.  Let’s look at a few that your broker will discuss with you:

SPREADS

Just to offer a simple definition, a spread is the difference between the price that is asked (your purchase price) and, the bid price (the price you get when you sell the currency).  And then, the spread is the way that the broker makes his money….the larger the spread the less profit for you.  This is one of the reasons many investors decide to try and trade in the FOREX on their own.  There is a gauge known as a spread cost calculator that will show you just how much money the spreads are costing you.

Because of the differences in spread policies among FOREX brokers, it is even more difficult to choose the right broker.  One might advertise that they offer fixed spreads, but be careful, read the fine print.  And even though being FIXED sounds like a better deal, the costs are a lot higher than variable spreads.  Also, the spreads vary from client to client, depending on the amount of their investment.  A larger investor receives the better or tighter spread.  Some brokers offer the same spread to all their clients regardless of their investment.

PIPS

Your broker will also discuss pipettes with you.  There are a certain number of pips in a spread.  Pips allow the broker to adjust rates in order to increase the profitability of his client by narrowing the spreads.  Your broker will explain how the difference in spread costs can make all the difference in your profitability as a currency investor.

There is Risk Involved in FOREX trading

Beware of schemes that promise large returns with little risk.  That is why it is so important to thoroughly check out a foreign exchange broker before you engage his services.  There are currently a large number of firms who have set up their companies so that they are not subject to regulatory requirements that FOREX brokers are.  Deciding to deal with that type of company will put you at higher risk to lose large amounts of money in FOREX trading.  Be vigilant in your choice of a Foreign Exchange broker or unregulated firm.  It is best not to invest with a firm that has side-stepped the regulatory requirements.

Is Stock Market Chart Information Helpful?

There are so many stock market charts to access through the day.  Some are easier to understand and therefore, are more helpful, particularly to the novice investor.  There is a FOREX trading weekly forecast, which predicts how the currency trading will go a day ahead of the opening market.  One such stock market chart, VectorVest analyzes and ranks over 13,500 stocks in a day.  It is said to be 95% correct, but there is a signup charge of $9.95.”Chart of the Day” is a free email newsletter which shows a variety of financial markets as well as indicators. There are charts relative to the U. S. Economy, the gold market, real estate, as well as other useful indicators.

There is a streaming ticker tape online at CNBC all during the trading day that gives up to the minute stock prices.  The companies on their charts are according to the stock symbol of the company and tick across according to the most recent stocks traded.  This is an up and down trend, having been mostly down in recent months.  If you happen to trade through an online stock broker, any stock symbol can be entered into the space provided to get the most recent trading price of the stock.  One or two online market traders offer a simulator on which, before actually investing real money into a trade, an investor can simulate the desired trade in real time.

Learning to Read the Charts and Graphs

Take the necessary time to understand the information on the stock charts and graphs.  If necessary, have a financial stock professional walk you through the best way to read the trends and indications conveyed to assist you in becoming a better investor.

Quick Information is Key

Effective, efficient and rapid information is essential to the serious stock market trader.  If information slows to a snail’s pace, or stops, companies and investors can lose tremendous amounts of money.  That’s why stock market charts are so essential to stock market investors.  MoneyCentral.msn.com has a graph which shows the Dow, the NASDAQ and the S&P 500 together on one chart, each indicated by a separate color, and changes in real time during the day.  Their website can shows a complete list of up-to-the-minute positions in the World Markets, i.e., Nikkei (Tokyo), the FTSE 100 in London, the DAX in Frankfurt, Germany, and the TSX (Toronto).   Up-to- date currency rates are also listed for those investors of the Foreign Exchange Markets.  The commodities market, i.e. gold, silver, and crude sweet oil are shown in real time.  Armed with the information garnered from these various charts and website indicators, it is possible to take advantage of great buys as they arise.  These are great for the investor who chooses to invest without a stock broker.  Those who do invest in the various markets with a professional stock broker, providing they have chosen a broker wisely, can rest assured that their best interest is being taken into consideration during the trading day to capture the smart buys.

Are you a disciplined individual? According to expert Forex traders, the only ones who succeed in the Forex market are those people who stay disciplined despite their success or failure. Automated Forex trading has changed the way traders make their transactions. If you’re a savvy Forex trader, you can definitely benefit from using these automated systems.

For beginners in the Forex trade, be warned that most of the trading systems sold or offered online are considered junk and useless. Oftentimes, these systems provide tested simulations and cleverly hyped marketing strategies that do not work. By using ‘junk’ trading systems, you can lose your investment.

There are simple trading systems offered online which can yield higher returns when used properly and consistently. The simpler the automated trading system, the easier it is to use; you see, complicated systems do not guarantee success at all times so be very careful when choosing the appropriate Forex system.

For example, if you think that a certain currency is going to maintain four weeks high standing, buy it. If you have a low-standing currency, you can sell it before the price goes down further. This system is also called breakout wherein all your moves within the Forex market is based on the highs and lows. Soon, you will be able to penetrate the market’s big trends.

Big trends usually last for several weeks, months, or even years. Take a look at the Forex chart and study it. The whole system is automatic and the rules are quite objective. This system is also known as a Forex robot and it can operate fifteen minutes everyday. The creator of this Forex robot was Richard Donchian, a Forex trader.

If you want a simple system, the Forex robot may work for you. Traders who prefer complex trading systems often expect more from this system and so they would rather opt for another system which can meet their expectations. The Forex robot is not fussy and it can help you in identifying the top picks and the bottom picks.

Successful Forex traders spend enough time and effort to make informed trading decisions. As a wise trader, you should not rush things. Allow the system to work. Don’t believe in the myth that complex and expensive systems are more efficient. If you’re serious in Forex trading, you can earn lots of profits with minimal effort.

Observe today’s market trends. If you think that the Forex robot will work for you, considering the existing trends in the Forex market, you can use it because it is logical, very simple, and continuously works. The automated trading system can be obtained for free online just case you want to see how it works. If you think that the Forex robot is another junk like all other systems, check its background. Try to review ratings and testimonials to find out more about this excellent and efficient system.

The modern world is very different from that of long ago. Many of today’s basic tasks are now handled automatically. If you want an automated Forex system, you can make use of the Forex robot. Hurry and look for this system online; if you want, you can also check Richard Donchian to find more info about it. You will greatly benefit from this system over the long run. Don’t overexert yourself in studying the Forex market because with the aid of the automated system, you can go a long way.

Forex market trading is trading money, currencies worldwide. Most all countries around the world are involved in the forex trading market, where money is bought and sold, based on the value of that currency at the time. As some currencies are not worth much, it is not going to be traded heavily, as the currency is worth more, additional brokers and bankers are going to choose to invest in that market at that time.

Forex trading does take place daily, where almost two trillion dollars are moved every day – that is a huge amount of money. Think about how many millions it does take to bring about a total of a trillion and then consider that this is done on a daily basis – if you want to get involved in where the money is, forex trading is one ’setting’ where money is exchanging hands daily.

The currencies that are traded on the forex markets are going to be those from every country around the world. Every currency has it own three-letter symbol that will represent that country and the currency that is being traded. For example, the Japanese yen is the JPY and the United Stated dollar is USD. The British pound is the GBP and the Euro is the EUR. You can trade within many currencies in one day, or you can trade to a different currency every day. Most all trades through a broker or those any company are going to require some type of fee so you want to be sure about the trade you are making before making too many trades which are going to involve many fees.

Trades between markets and countries are going to happen every day. Some of the most heavily trades occur between the Euro and the US dollar, and then the US dollar and the Japanese yen, and then of the other most often seen trades is between the British pound and the US dollar. The trades happen all day, all night, and thought out various markets. As one country opens trading for the day another is closing. The time zones across the world affect how the trading takes place and when the markets are open.

When you are making a transaction from one market to another, involving one currency to another you will notice the symbols are used to explain the transactions.  All transactions are going to look something like this EURzzz/USDzzz the zzz is to represent the percentages of trading for the percentage of the transaction. Other instances could look like this AUSzzz/USD and so on. When reading and reviewing your forex statements and online information you will understand it all much better if you are to remember these symbols of the currencies that are involved.

Beginners in the Forex market need all the help they can get. You can’t possibly make it big in the Forex market if you don’t know much about Forex trading. There are lots of online tools that you can make use in order to learn more about this fast-changing market. You can find software programs, trading systems, trend indicators, signal generators, trading courses, and even Forex trading eBooks. Perhaps you’ve already tried all the other online tools expect eBook; the reason may be because you’re not very much interested in reading. You’re probably unaware that you can learn a lot of things from reading. Did you know that there are effective Forex eBooks online which you can get for free? When reading eBooks, you should also understand the things that you’re reading and that is called comprehension.

The problem with most traders is that they tend to read blindly; they lack comprehension. The Forex market has lots of unforgiving paths where you can lose huge investments. If you don’t want to end up with the 90% unsuccessful Forex traders in the world, you need to read good trading eBooks now.  

Trading eBooks are usually written by experienced and knowledgeable Forex traders who are willing to share their secrets to beginners. New traders tend to have lots of questions like how much should they invest, where they should start investing, when they should get out of the trade, etc. Some online Forex trading tools charge fees but why should you even pay fees when you can get free trading eBooks?

Investing in the Forex market involves a lot of risks. If you want to be prepared for this kind of situation, you will need a trading eBook. Through these eBooks, you can handle various kinds of situations suitably. By getting the right eBook, you will be given an opportunity to understand everything you need to know about the Forex market.

What are the things that you can learn from these trading eBooks? Well, there are so many things to learn like Forex quotes, currency pairs, pips, execution, bids, dealing desk, and many other things.

Once you’ve read and understood the trading eBook, you will know that the trading sessions start after an order is placed. Basic orders can include market order, limit entry, stop entry, etc. These orders are used in various applications and you need to learn when to use them. eBooks can provide you with simple introductions about these orders so that you won’t have any difficulty in trading.

Aside from the Forex trading info mentioned earlier, you will also learn about trading types. These are the strategies being used by traders such as short and long positions. You will also learn about carry trading, scalping, swing and trend trading, and many others. These types of trading can be used depending on the conditions in the Forex market. 

So you see you can learn a lot of things from reading trading eBooks. Take your time in reading a good eBook. Search the internet for helpful eBooks written by expert reputable Forex traders. You can even check reviews and ratings of various trading eBooks so that you can pick the best one. Reading may take some time especially if you try to understand the contents of the eBook but it’s really worthy. Get your free Forex trading eBooks now.

Where it began

Let’s look at a little FOREX trading history through the ages.  Although currency, mostly paper certificates, has been around in one form or another since the days of Babylon, the usage of coins as a form of currency was begun in the Middle East.  Not much was going on in the foreign exchange markets between those days and World War I.  This all changed, however, after World War I, when there was an exceptional increase in speculation in the market.  However, following the great depression in 1931 there was a tremendous slowdown in FOREX trading.  From that year until 1973, there was little or no interest in that market.

Since 1973, supply and demand has caused a great increase in the interest due to many industrialized nations currencies freely flowing.  Speed of information and price volatility increased throughout the 1970’s.  The trading volume on the FOREX market has increased from 10 billion a day to 2 trillion a day in a mere 40 years, and , today, has become one of the most dynamic markets of its kind.

And now

A great number of day traders had previously traded primarily in stocks and futures.  But the FOREX trading market has become more liquid and offers greater opportunity for fast paced trading and the flexibility of round-the-clock trading, five days a week, 24 hours a day in the US, Europe and Asia.  This allows for quick response to news from other parts of the world, no matter what your location.  FOREX trading is very popular with speculators.  Those interested may trade in both a Bear and a Bull Market.

Those choosing to trade in the FOREX market have the convenience of access to online, real time, quotes.  There is also a global indices chart.  Online, there is also a global foreign exchange update daily posted by the Bank of Nova Scotia.  Having access to so much information and market commentary is a great boon for dedicated FOREX investors.  However, the FOREX trading market is not for everyone.  It is complicated and there is potential for great losses without having the education to make informed decisions in your trades. 

Make sound choices

Regardless of the investing vehicle you decide to pursue, keep a sensible amount of capital intact liquid, particularly in this difficult economic crisis.  Building a nest egg will be much harder in the years ahead, which implies caution in how and with whom you invest.  More important in these times, is not so much to produce additional wealth, as it is to hold onto what you now have left, in anticipation of worse conditions ahead.  It’s better to be safe than sorry.  The history of FOREX trading is lengthy and has been lucrative.  However, it is risky, so proceed with caution.

Is there a safe stock to buy in this economy?

It takes an optimist to use the word “safe” in this tanking stock market.  Those who have been making money in the stock market over the last several years, say, since the early nineties, are now finding that the stocks that were growing and showing great profits are the same ones that are now dropping fast.  It seems that the more the financial analysts speak about the declining stock market, the worse it gets.  And, of course, most everyone knew that when the new administration was sworn in, there would be pessimists who didn’t vote for the party and their negative comments cause the downturn in the stock market to be even greater.

Aside from the extremely wealthy, the billions of dollars that have been lost in the stock market during this recession have hit the American consumer’s financial picture pretty hard.  Some of the more bullish who watch the stock market can see real buys in some of the technology stocks that have plummeted in recent months.  What a great time to buy, just as an example, Apple stock.  Their new low is an opportunity for buying and holding on until this whole recession thing begins to improve, probably in the 4^th quarter of 2009.  Their I Phone is sure to bring sales back up again and prove to be a “boon” for those who can buy the stock at its low point, while the public lacks confidence in the market.  Additionally, health and energy companies stand to stage a comeback. 

Should you Hold or Fold with the stocks that you own?

Many of the stocks that have performed so well over the last 15 or so years will undoubtedly bounce back, at least in part, as the recession eases.  Holding onto some of the stocks that have served you well, particularly from the standpoint of good dividends, is a smart move in this stock market debacle.  And, too, buying a few more shares of this particular stock, while it’s at a low price, will prove a smart investment in a year or so. 

In the case of stocks in your portfolio that have shown lower than expected earnings and show little or no signs of improvement for the future, eliminate those shares from your portfolio.  Sell them before the price drops any further.

Investors, who have enough capital to afford to take the risk, will even borrow money to take advantage of great stock market deals.  In some cases, growth can run as much as ten or fifteen times investment.  This is a form of financial leverage, but is not recommended for the average investor, since picking the wrong stock could be financially devastating.

In making money in the stock market, timing is everything.  Keep a close watch on the Dow Jones Average and the Nasdaq.  At the present time, the numbers are more often down than up, and the trend has a great deal to do with what’s happening in Washington, DC, as much as on Wall Street.