Seeking investor forex

Bid and offer Exchange rates in practice are quoted as two-way rates. Of course, the opposite is true for the person investor asks for a quotation. The difference between the purchase and the sale rates is called "spread". Such spreads vary in size according to market volatility Basis points or pips A investor exchange rate usually consists of an integer part and 4 decimal points or decimal points when expressed per units like e.

Thus the decimals are expressed either at 10th thousands or hundreds. Each such or is called basis point or pip. Instead, let us use a more descriptive approach. A spot rate is the exchange rate which is valid for a transaction purchase of currency A and sale of currency B that must be concluded within the next two working days. Thus the value date i. For Thursday it is Monday weekend days are not counted On the other hand, a forward transaction regards a deal which is concluded today and actual effect will take place on a fixed future date In the next paragraph we describe the relationship between a spot and a forward rate Interest rates, swap rates and forward rates Many people, even in investor financial sector think that a forward rate is investor expectation or forecast of a future foreign exchange movement.

This is a forex mistake. Actually, a forward rate is nothing else but a mirror of the currently prevailing spot rate, allowing for the interest rate differential between the two currencies and the time period at the expiration of which the actual transaction will be forex. So the spot rate is adjusted by the so called swap rate to give the forward rate.

For the unsophisticated investor it is enough to say that the swap rate is there to compensate the low interest currency holder for the time period involved in a forward transaction. The best way to explain these strange sounding terms is an example. We shall keep the simplistic approach and will not get involved here with FX rate spreads and interes rate seeking. This means that forex these 30 days A will earn interest on the marks he keeps until delivery and B will earn interest on the dollars for the same reason.

The forward rate must allow for the compensation of A so that on balance no party is better or worse off. It is evident that bank B has to compensate investor A through the forward rate, i.

A will pay a lower price for the dollars he is buying forward to equalise the difference of marks. Through a formula we can reach the swap rate This is subtracted from and the forward rate prevails. Indeed, the investor will finally deliver 149,750 marks to receive 100,000 dollars The need for a forward market The actual need for the existence of a foreign market is not speculation, although as we explain in another article see Why get involved in the foreign exchange market today there is no clear-cut line between hedging and speculating.

However, there are a couple of characteristic categories of people who use the forward market in order to cover for time lags. The first group includes exporters and importers. As receipts and payments do not usually coincide seeking, these people buy forward the currency that they will have to pay and sell forward the currency that they will receive.

In this way they overcome undesirable market fluctuations and take care of future cash flows. The second group consists of people who use the forward market to preserve the value and nature of their assets without speculating against future trends.

These operators use both the spot and forward market through swaps, which are explained below Swaps A swap transaction not to be confused with the swap rate is a double-leg deal, in which one buys seeking currency X selling currency Y and simultaneously sells forward currency X buying currency Y. Let us give an example to show the rational of such a transaction.

Assume that an American investor has a future receipt in Dmarks. In addition, assume that he thinks that German bonds are presently a good investment. So he has dollar assets but does not hold cash in marks In plain words he needs marks right now and cannot wait for the future receipt marks to forex.

One solution would be to sell dollars and buy marks in the spot market. However, suppose he does not wish in a foreign exchange adventure for he cannot forecast the exchange value of the future receipt. In this case he sells dollars against marks spot getting his marks and buying his bonds Simultaneously he buys dollars forward against marks matching the value date of the receipt. Upon expiration of the forward period, the investor cashes the receipt, pays back the marks that he owes and gets his original dollars Hence he has been able to overcome the time lag problem FX market and Money forex The last issue to be discussed in this brief walk is the non-difference between two markets that are the flip side of each other.

We have already mentioned earlier that a swap rate is basically based on interest rate differentials. We have also explained in the previous paragraph the nature of a swap transaction The investor who uses marks bought in the forward market to buy German bonds has another option. The only advantage going though the foreign exchange market rather than through the money market is simplicity i.

Founded inforex was the original forex seeking and is still the place where forex traders around the globe come looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts.

In addition, there is a seeking brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help investor a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading Forex News The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading.

There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. Investor is open to forex traders of forex levels of experience to view but only experienced currency trading professionals can post Currency Trading Currency trading charts are updated daily using the forex trading ranges seeking in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.

Data for these currency trading pairs dating back to January 1, can be downloaded to an Excel spreadsheet Forex Trading Forex chart points are in a currency trading table that includes; latest fx trading high-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs.

You can look on the forex forum for updates when one of the fx trading tools is updated FX Forex Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. There are seeking ways to express such a rate. Among the major currencies it is investor British sterling which is quoted the other way i.

The American way of quoting rates uses the opposite direction, that is it expresses the dollar amount that can be exchanged for one unit of foreign currency. So when we see for example the Dmark at this means that one mark can be exchanged for dollars or the same at cents.

Such spreads vary in size according to market volatility Rate direction and currency direction One needs to keep very clear in mind the idea of market direction. First of all, in the foreign extern market it is a mistake to say that the market is going up or down. In the stock market one can use this expression as seeking either go up or go down.

However, in the FX market a rate as we said defines the parity of two currencies, hence at any time one goes upso the other goes down. Therefore we can talk about the dollar going up or down but not about the forex doing so. Another issue that often confuses people even traders and bankers is the difference between a currency moving up and its rate going up.

We have to explain this in more detail as any misunderstanding can lead to painful surprises when trading in the real market. In other words one needs more marks at to exchange for one dollar Basis points or pips Seeking foreign exchange rate usually consists investor an integer part and 4 decimal points investor decimal points when investor per units like e.

November employment data is the major economic event today. ADP private payroll data released this week suggest the the street estimates may be correct.

ADP is not always a reliable indicator of NFP Odds are the data will not change Fed intentions to raise rates. Monthly Job statistics and inflation are the top items on seeking the FOMC monetary bases its policy decisions. Some are touting the vote as indirect referendum on the Euro.

If these reforms are defeated, the Renzi government could fall. The ECB has assured markets that it has the capacity to buy Italian government bonds temporarily if needed The U. Presidential vote recount is another uncertainty. Green Party candidate Jill Stein, with Clinton help, is supporting recounts in Wisconsin, Michigan and Pennsylvania. Odds in favor a reversal of the Trump victory are very slim.

Some say Stein is doing this for personal reasons John M. In additional to its real time forex forumthere are also Member Forums available for more in depth forex trading discussions.