Being the main force driving the global economic market, currency is no doubt an essential element for a country. However, in order for all the countries with different currencies to trade with one another, a system of exchange rate between their currencies is needed; this system, is formally known as foreign exchange or currency exchange.
In the early days, the system of currency exchange is supported solely by the gold amount held in the vault of a country. However, this system is no longer appropriate now due to inflation and hence, the value of one’s currency nowadays is determined through the market forces alone. In order to determine the value of a currency’s exchange rate, two main types of system is used which is floating currency and pegged currency.
For floating exchange rate, its value is determined by the supply and demand of the global market where the supply and demand is bound by all these factors such as foreign investment, inflation and ratios of import and export. Normally, this system is adopted by most of the advance countries like for example UK, US and Canada. All of these countries have a similarity where their market is well developed and stable in economic terms. These countries choose to practice this system due to the reason where floating exchange rate is proven to be much more efficient compared to the pegged exchange rate. The reason behind this is because for floating exchange rate, the market itself will re-adjust the exchange rate real-time in order to portray the actual inflation and other economic forces. However, every system has its own flaw and so does the floating exchange rate system. For instance, if a country suffers from economic instability due to various reasons such as political issues, a floating exchange rate system will certainly discourage investment due to the high risk of suffering from inflationary disaster or sudden slump in exchange rate.
Another form of exchange rate is known as pegged exchange rate. This is a system where the value of the exchange rate is fixed by the government of a country and not the supply and demand of the market. This system is called pegged exchange rate because the value of a country’s currency is fixed to another country’s currency. As a result, the value of the pegged currency will not fluctuate unlike the floating currency. The working principle behind this system is slightly complicated where the government of a country will fixed the exchange rate of their currency and when there is a demand for a certain currency resulting a rise in the exchange rate, the government will have to release enough of that currency into the market in order to meet that demand. However, there is a fatal flaw in this system where if the pegged exchange rate is not controlled properly, panics may arise within the country and as a result of that, people will be rushing to exchange their money into a more stable currency. When that happens, the sudden overflow of that country’s currency into the market will decrease the value of their exchange rate and in the end, their currency will be worthless. Due to this reason, only those under-developed or developing countries will practice this method as a form to control the inflation rate.
However, the truth is, most of the countries do not fully practice the floating exchange rate or the pegged exchange rate method in reality. Instead, they use a hybrid system known as floating peg. Floating peg is the combination of the two main systems where one country will normally fixed their exchange rate to the US Dollars and after that, they will constantly review their peg rate in order to stay in line with the actual market value.
The Foreign exchange market, or commonly known as FOREX, is the largest and most prolific financial market because each day, more than 1 trillion worth of currency exchange takes place between investors, speculators and countries. From this, we can deduce that the actual mechanism behind the world of foreign exchange is far more complicated than what we may already know, and that, the information mentioned earlier is just the tip of an iceberg.
Tuesday, 8 June 2010
what is a stock investors average income?
basically i want to open a mini account in forex and have $2,000 to put into it. if i am an above average trader, how much will my income be by the end of the month if i trade about 2 hours a day
-$2000
You will lose everything. If it were that easy, everyone would do it. Just put your money somewhere “safer” like a mutual fund.
Any anyone that tells you that you can make 20%/month is probably trying to sell you something.
-$2000
You will lose everything. If it were that easy, everyone would do it. Just put your money somewhere “safer” like a mutual fund.
Any anyone that tells you that you can make 20%/month is probably trying to sell you something.
what is a stock investors average income?
basically i want to open a mini account in forex and have $2,000 to put into it. if i am an above average trader, how much will my income be by the end of the month if i trade about 2 hours a day
-$2000
You will lose everything. If it were that easy, everyone would do it. Just put your money somewhere “safer” like a mutual fund.
Any anyone that tells you that you can make 20%/month is probably trying to sell you something.
-$2000
You will lose everything. If it were that easy, everyone would do it. Just put your money somewhere “safer” like a mutual fund.
Any anyone that tells you that you can make 20%/month is probably trying to sell you something.
FOREX-Dollar slips broadly after G20 draft statement
* Dollar slips broadly after G20 draft communique
* G20: Economic stimulus to stay in place for now
* Sterling takes a hit, falls to 4-mth low vs dollar
(Adds comment, updates throughout; previous TOKYO)
By Naomi Tajitsu
LONDON, Sept 25 (Reuters) – The dollar slipped on Friday after a draft communique from Group of 20 leaders said economic stimulus measures would remain in place for now, suggesting that interest rates, including U.S. ones, would remain low.
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Sterling hit multi-month lows against the dollar, euro and yen as traders continued to dump the UK currency a day after the Bank of England Governor Mervyn King highlighted the benefits to the UK economy from a weaker pound. Leaders from world’s rich and developing nations in Pittsburgh pledged to keep emergency economic supports in place until a durable recovery is secured, and to work together when the time comes to remove them, a draft communique obtained by Reuters showed on Friday. [ID:nN25480100]…
Analysts said the communique suggested that a recovery in the U.S. economy would take more time, keeping U.S. rates near zero. This would keep demand for the low-yielding U.S. currency low, even as ongoing weakness in the global economy keeps risk demand in check.
“The (G20) is making clear that stimulus will stay in place until a recovery is sustainable,” said Michael Klawitter, senior currency strategist at Commerzbank in Frankfurt, adding that this suggested that interest rates, including those for the dollar, would remain low for a while yet.
“The cyclical argument has not changed to favour the dollar.”
The dollar erased gains made earlier in the day, when it had rallied in the aftermath of an announcement on Thursday by major central banks that they would jointly scale back massive injections of the U.S. currency.
By 0742 GMT, the euro EUR= was up 0.2 percent on the day at $1.4685, recovering from a fall to as low as $1.4614 earlier in the day. The European currency hit a one-year peak of $1.4845 on Wednesday on trading platform EBS.
Traders said Asian central banks had been buyers around $1.4620, putting a floor above Monday’s lows around $1.4610.
The dollar was down 0.8 percent against the yen JPY= at 90.60 yen, near the day’s low of 90.53 yen.
Higher-yielding currencies such as the Australian and New Zealand dollars also recovered losses against the greenback after the draft G20 communique.
* G20: Economic stimulus to stay in place for now
* Sterling takes a hit, falls to 4-mth low vs dollar
(Adds comment, updates throughout; previous TOKYO)
By Naomi Tajitsu
LONDON, Sept 25 (Reuters) – The dollar slipped on Friday after a draft communique from Group of 20 leaders said economic stimulus measures would remain in place for now, suggesting that interest rates, including U.S. ones, would remain low.
Easy AdSense by Unreal
Sterling hit multi-month lows against the dollar, euro and yen as traders continued to dump the UK currency a day after the Bank of England Governor Mervyn King highlighted the benefits to the UK economy from a weaker pound. Leaders from world’s rich and developing nations in Pittsburgh pledged to keep emergency economic supports in place until a durable recovery is secured, and to work together when the time comes to remove them, a draft communique obtained by Reuters showed on Friday. [ID:nN25480100]…
Analysts said the communique suggested that a recovery in the U.S. economy would take more time, keeping U.S. rates near zero. This would keep demand for the low-yielding U.S. currency low, even as ongoing weakness in the global economy keeps risk demand in check.
“The (G20) is making clear that stimulus will stay in place until a recovery is sustainable,” said Michael Klawitter, senior currency strategist at Commerzbank in Frankfurt, adding that this suggested that interest rates, including those for the dollar, would remain low for a while yet.
“The cyclical argument has not changed to favour the dollar.”
The dollar erased gains made earlier in the day, when it had rallied in the aftermath of an announcement on Thursday by major central banks that they would jointly scale back massive injections of the U.S. currency.
By 0742 GMT, the euro EUR= was up 0.2 percent on the day at $1.4685, recovering from a fall to as low as $1.4614 earlier in the day. The European currency hit a one-year peak of $1.4845 on Wednesday on trading platform EBS.
Traders said Asian central banks had been buyers around $1.4620, putting a floor above Monday’s lows around $1.4610.
The dollar was down 0.8 percent against the yen JPY= at 90.60 yen, near the day’s low of 90.53 yen.
Higher-yielding currencies such as the Australian and New Zealand dollars also recovered losses against the greenback after the draft G20 communique.
Tuesday, 1 June 2010
Remove Some Advertising
I have remove some advertising. In the beginning, they are there because they are flasy, full of colours with attractive animation. Someone decided to comment that my blogs is full of advertising.
Ok, it is remove. Now I see my blog as empty. Its dark with just text. Any idea to improve the looks of my blog?
Ok, it is remove. Now I see my blog as empty. Its dark with just text. Any idea to improve the looks of my blog?
Ranging Market
For the past 2 weeks, forex has enter the ranging mode. Ive been busy with work since I have a day time job. Merdeka celebration is coming and I am going to be extra busy. Next week I am going to KL.
As for forex, this week is not so good for me. All my technical is correct just that being unlucky sometimes. My position of long GU and GJ both hit SL on the last dip. I can never imagine it can go down that much. Thanks for EG, I manage to cover my lost and made a little profit.
Back to technical analysis, GJ has made it top at 244.06 and there is a reversal sign. GU it seems has not reached it top. There is some room to go before a reversal can be considered. Look for formation of double top and watch out for its strength. Im not going to give signal since I do not have time to trade. If I do enter the market it would be touch and go or thru stop order with sl (which is very difficult to judge).
Happy trading, may profit be with you always.
As for forex, this week is not so good for me. All my technical is correct just that being unlucky sometimes. My position of long GU and GJ both hit SL on the last dip. I can never imagine it can go down that much. Thanks for EG, I manage to cover my lost and made a little profit.
Back to technical analysis, GJ has made it top at 244.06 and there is a reversal sign. GU it seems has not reached it top. There is some room to go before a reversal can be considered. Look for formation of double top and watch out for its strength. Im not going to give signal since I do not have time to trade. If I do enter the market it would be touch and go or thru stop order with sl (which is very difficult to judge).
Happy trading, may profit be with you always.
Thursday, 27 May 2010
INTERNET PROBLEM
Having trouble log in into blogger account lately. Forex is not going anyway at the moment. Up and down it is still at the same level.
Currently I am watching for a certain level in GbpUsd. 1.4650 is the level I am waiting for. Believe it or not, I have not traded this week. Today GU nearly hit my stop order. I am still waiting
Currently I am watching for a certain level in GbpUsd. 1.4650 is the level I am waiting for. Believe it or not, I have not traded this week. Today GU nearly hit my stop order. I am still waiting
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