Forex Pairs

Before I deliberate on Forex Quotes, let me first update you on forex pairs and forex symbols. Let us not delve further into the history of how the currency pairs have evolved and standardized in the forex trading system.

Forex Symbols: There are seven most active currencies on the forex trading markets, besides number of other currencies that are traded sporadically.

1. US Dollar – USD
2. European currency – EURO
3. Japanese Yen – JPY
4. British Sterling Pound – GBP
5. Swiss Franc – CHF
6. Australian Dollar – AUD
7. Canadian Dollar – CAD

Forex Pairs: The term Forex pair may sound intriguing to those of you who are used to stock trading. Why forex in pairs? Well, even in stock trading, indirectly you are trading a pair. When you buy a stock, you are selling your money and vice versa. Similarly when you are trading forex you are buying once currency and selling the other currency. EURO/USD, USD/JPY, GBP/USD and USD/CHF are the most traded forex pairs that churn out the bulk of the daily trillion dollars turn over in global forex trading.

On any forex trading platform, you will find that almost half of the screen is occupied by flashing figures of forex quotes. Dealing rates is the alternate term often prescribed for forex quotes. Prima-Facie you may feel that it is very easy to read forex quotes. However if you are a novice, you may land up with a buy trade instead of a desired sell trade. I would suggest that you must thoroughly understand how the forex rates are quoted on the forex trading platforms.

Let us study an example of USD/JPY. There are essentially two aspects. The first aspect relates to the exchange rate and the second aspect relates to the forex quote as appearing on the screen of forex trading broker.

* The forex quote USD/JPY = 108.09 is in reality the exchange rate. Here in this quote, the first currency USD is termed as the base currency and the second currency JPY is termed as the quote currency. Thus for buying one unit of the base currency you have to pay 108.09 units of quote currency.
* If you see the forex quote for USD/JPY on the online forex trading software, you will find two separate quotes. USD/JPY Sell =108.07 and USD/JPY Buy=108.10. Offline forex trading brokers will quote USD/JPY = 108.10/108.07. The first price is the bid price and the second price is the ask price. Does it not sound confusing? Well, it is, but till the time you get used to the system. Here is where the concept of bid/ask spread comes into picture.

Advantages of Forex

Most of you must have often heard the term Forex or Fx. Forex is nothing but foreign exchange or international currency exchange. Simply speaking, if you are an American, then British Sterling Pound or European Euro or any other currency is a foreign exchange for you.

Huge amounts of Forex change hands in the global trade and commerce. Besides the international business transactions, forex has also established a firm foothold in the investment portfolio of large number of people. You may wonder how you can invest in forex. Is it like investment in stocks and bonds? Is it suitable to a layman like me? Well, according to me it is neither easy nor difficult. You must give it a try, provided you are willing to learn forex trading.

Let me tell you one astounding feature of forex markets. Rates of international currencies fluctuate tremendously depending upon the country specific factors. To realize the true potential of how the vast scale fluctuation or volatility in the forex rates can help you in reaping huge benefits, you must partake in online forex trading.

Let me first brief you on the Advantages of Forex Trading:

* Liquidity: Global forex trading witnesses a daily turn over of few trillion US dollars.
* Market Availability: Forex trading is a round the clock market place. Forex market wakes up with Sidney, moving around globally as each market comes to life. Tokyo wakes up next, then London and finally US.
* Low Trading Costs: Like all the other markets, forex trading requires an intermediary called as a forex broker. However unlike other markets, the forex trading brokers do not charge any commissions for executing your trade. On the contrary the forex trading brokers make a small profit from bid/ask spread on the currency pair.
* Small Capital and High Leverage: You do not need to deploy huge capital amounts as the exposure or leverage ratios are high of the order of 200:1. Most of the forex brokers allow you to start with a capital as low as 100 USD.

Fx Trading Tournament

Forex or Fx as is fondly known in the global foreign exchange trading community, could probably rank as the most fancied investment avenue. I am sure that a popular search engine would yield millions of results for forex or fx. What does it imply? It simply means that a lot has been written on the subject of Fx trading and I don’t intend to bore you any more with stuff like basics of forex, introduction to forex and fundamentals of forex.

I am going to write something about Fx trading tournaments. Have you ever heard of it? Well, unlikely, as it is probably a new idea. I am inclined to say that it is indeed an innovative approach to forex training. Carry on further with a short FAQ on Fx Trading Tournaments.

What does it mean?
Fx trading tournament has nothing to do with any of your favorite sports. Fx trading tournament or alternatively Fx championship is an innovative opportunity offered by few forex brokers to forex investors to test their trading skills. Essenially, it is an event where large numbers of forex traders participate in online foreign currency trading at one common forex platform

Construction of CandlestickConstruction of Candlestick

Chart is the most essential element for any technical analyst. There are various methods of plotting the charts. Candlestick charting is one of the most favored techniques for visual analysis. Candlestick charting was first developed by Japanese and hence the name Japanese Candlestick chart has become very famous.

As a matter of fact, this method of charting captured the attention of Wall Street traders much later. Japanese were using this technique for tracking the price movement of agricultural commodities. For all the practical purposes when a technical analyst refers to Candlestick charts, it essentially implies Japanese Candlestick chart.

Construction of Candlestick charts (refer drawing):

japanese-candlestick
Like bar chart, construction of candlestick charts is also very easy. Let us try to understand how it is done.

* Each candlestick line represents the activity for a fixed period that could be an hour or a day or a week or a month. It shows the prices at opening, high price, low price and closing price. OHLC is a frequently used acronym for open high low close.
* Main body or real body is either filled in (black or red) or hollow (white or green) and
* It represents the price range between the opening and closing prices. Black and white colors were used as per the traditional methods when the charts were drawn manually. However, in most of the latest computer aided charting red and green colors are used.
* If the opening price is higher than the closing price then the main body is filled.
* If the closing price is higher than the opening price then the main body is hollow.
* The thin lines above and below the main body are called as shadows or wick. Shadows represent the high and low prices for the particular period.

Patterns of Japanese

Comparison between a standard bar chart and a Japanese Candlestick chart:

* Scaling is same.
* Overall shape is same.
* Both the charts can be used in conjunction to study other technical analysis tools such as moving averages, oscillators and other methods.
* Range of high and low is same for each period.
* Different types of patterns develop in both the charts that can help to identify the market trend.
* There is only one difference. How the opening and closing prices are displayed.


Advantages of Japanese Candlestick chart over the standard bar chart:

* Visual analysis is much easier and hence the traders can read the price action much faster.
* Comprehension of market sentiments can be done in a better way.
* Many traders believe that the Japanese Candlestick charts provide a better depth of information over the traditional bar charts.
* Traders find it easy and quick to analyze the trend reversal, trend continuation and other patterns. Identifying the pattern is usually considered as one of the most difficult part of technical analysis.

Patterns of Japanese Candlestick chart:

Candlesticks can take variety of shapes depending upon the relationship of OHLC. Shape of each Candlestick represents different interpretations such as extremely bullish, extremely bearish, bullish, bearish, neutral, turning period and end of the trend. Besides the shapes of individual Candlestick, various patterns develop on the Candlestick chart. Major patterns are Bullish Reversal, Bearish reversal and Continuation.