Today I’m going to be talking about the EU referendum,I mean this is the single biggest marketing event has been on everyone’s lips it’s been on the media. it’s just been everywhere for for the past couple of months now so you know I think as traders it’s very important that we break this down and we look at how the EU referendum is going to affect financial markets now always as usual must tell you guys that this is not advise to trade any particular instruments you know this is purely an impartial look on the reasons of the referendum and how and why that may affect financial markets.
We’re going to focusing on understanding the forex currency quote.
Now to do that we have to know about what are the axle major currencies in the market there are basically seven major currencies. they are:
1. EUR/USD: Euro versus U.S. dollar
2. USD/JPY: U.S. dollar versus Japanese yen
3. GBP/USD: Great Britain pound versus U.S. dollar
4. AUD/USD: Australian dollar versus U.S. dollar
5. USD/CHF: U.S. dollar versus Swiss franc
6. USD/CAD: U.S. dollar versus Canadian dollar
7. NZD/USD: New Zealand dollar versus U.S. dollar
Alright 90% of all forex trade basically involves the US dollar.These currencies are deemed the most liquid.
Lets talk about popular a currencies in that is the euro
and the dollar typically you’ll see that really as
EUR/USD that is the euro & dollar and remember a currency pair is trading one for the other where we have a based currency and a counter currency or the quote currency.Reading Forex quotes is very easy once you get the hang of it, because it only has two components: the base currency and the counter or quote currency. When the dollar is the base currency, the quote as telling you I think it’s worth it another currency.The currency to the left of the forward slash is known as “the base currency” while the currency on the right is termed the quote or counter currency. The base currency ALWAYS has a value of 1.
The position of a currency in the quote is strictly determined and standard. For the Euro and U.S. Dollar pair, it is EUR/USD and never USD/EUR.
Quote the most recent market price of a financial instrument in which a buyer and a seller agree to transact at a special price, usually known as the exchange rate was traded.
Currency quotations appear in pairs. A Forex quote is usually given as EUR/USD = 1.4230. This means: 1 U.S. dollar equals 1.4230 euro, the same goes tocryptocurrencies like bitcoin, check the bitcoin trading bot review for more information.
Forex price quoted to four or five decimal places. Having a pricing that goes to the fifth decimal place has several advantages, such as:
Reduced difference between the bid and asking price, which translates in smaller transaction costs.
Better liquidity and improved execution for the trader.
Higher accuracy in price execution.
In the case of the Japanese yen, the situation is slightly different when compared to other currency pairs. A yen pair is usually given as USD/JPY = 118.43. This means: 1 U.S. dollar is equivalent to 118.43 Japanese yen.
There are two types of quotes: 1. Direct quote: Price of a foreign currency is denominated in certain units of the national currency.
2. Indirect quote: Price of the national currency is denominated in certain units of the foreign currency. For example, USD/JPY is a direct quote for Japan.
Today We will look into What is forex broker is and what services they bring it to you. A broker as an individual or a firm otherwise known as the middleman, prime responsibility of a broker is to bring sellers and buyers together that for brokers the third person facilitator, between the buyer and seller that job is to act as an intermediary by arranging transactions by aggregating price feeds in quotes from multiple banks traders institutions and other parties that connected to the market.
Through all of these prices coming in from buyers and sellers , it just brokers job to match all of these parties at by connecting them to one another in the market through the connection the first make between the parties the participants have option to buy and sell given financial instrument in exchange for the brokers services small commission for trade is charged.
Forex market place where buyers and sellers meet in different currencies. Most of the time, they can be miles apart. For transactions to take place should be a mechanism that will facilitate them. This is where the broker comes in the picture. Essentially acting as an intermediary between the various traders who are actively engaging the market.
Primary Function: They are a very important link between the people and the Forex market are
For example, one of the most basic, to say you are a seller and you need a buyer of a particular currency for the transaction. By going to a broker you will be sure to be matched with a buyer and as a result of the completion of the exchange rate of your choice. In other words, forex broker as an intermediary between the various traders who are actively engaging the market operates. The primary function of forex broker, but not the only one.
Liquidity Provider : The role of liquidity provider, a broker provides customers with a permanent price range, for example, buy and / or sell order. This creates more price stability, guarantee transactions, while all make sure that you, the buyer or seller, unable to find a face for your transaction at any time.Brokers work to make profits by facilitating speculation in the volatile Forex Market. The means by which brokers make money is called spread i.e. the difference between the Bid and Ask prices for a currency pair, and by charging commission on transactions of certain types of accounts.
What is Forex? The term “Forex” stands for foreign exchange and it can be defined as the exchange or currency trading. And Is the relative value one currency versus another.
Let’s imagine right now that we’re not talking about Metatrader are where are the foreign exchange itself we’re talking about vacation time and we’re planning to go take a vacation you let’s say that you live in the United States and you’re planning to go take a vacation to Switzerland that means that you’re gonna have to convert some spending money. Right ?
So you gonna be converting some dollars into francs
this is the symbol for Swiss francs (CHF) And (USD) this is a dollar compared to the francs. this is the mutation you would see when you talk about a Forex pair like as (USD/CHF ).well what is the exchange rate for the dollar-franc , well Let’s say it’s a 1.2049 . What that means is? it that means it costs 1.2049 francs to buy a dollar. So
that it’s pretty simple exchange rates they’re typically carried out to the fourth or fifth decimal place when you’re getting a really good pricing so you get all the way out here to the fifth decimal place.
Market participants can buy and sell currencies from almost every country against another.All foreign exchange transactions involve two currencies, for example EUR / USD (euro / dollar) pair. Their exchange rates fluctuate constantly, and this is at the very heart of fluctuating exchange transactions.
If you think the Euro is rising against the United States dollar, then you will EUR / USD buying. Conversely, if you think its value will depreciate, then you’ll EUR / USD to sell. This sums up the basic mechanism for exchange trading.Forex trading involves everything from simple currency transactions that tourists often make when traveling, to the multi-billion dollar transactions executed by large corporations, financial institutions, and governments.
WHAT IS A LOT? A standard lot size of 1,000 units of currency. Account holders can however place trades of different sizes, so long as they are in increments of 1,000 units like, 2,000, 3,000, 15,000, 112,000 etc.
WHAT IS A PIP? A pip is the unit you count profit or loss in. Most currency pairs, except Japanese yen pairs, are quoted to four decimal places. This fourth spot after the decimal point (at one 100th of a cent) is typically what one watches to count “pips”. Every point that place in the quote moves is 1 pip of movement. For example, if the EUR/USD rises from 1.4022 to 1.4027, the EUR/USD has risen 5 pips.
WHAT IS LEVERAGE/MARGIN? As mentioned before, all trades are executed using borrowed money. This allows you to take advantage of leverage. Leverage of 400:1 allows you to trade with $1,000 in the market by setting aside only $2.50 as a security deposit. This means that you can take advantage of even the smallest movements in currencies by controlling more money in the market than you have in your account. On the other hand, leverage can significantly increase your losses. Trading foreign exchange with any level of leverage may not be suitable for all investors.
The specific amount that you are required to put aside to hold a position is referred to as your margin requirement. Margin can be thought of as a good faith deposit required to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit.