Mon 20 Feb 2006
Foreign Currency Exchange means the buying of one currency and selling another at the same time. The currencies of the world are on a floating exchange rate, and are always traded in pairs. Four major currency pairs are usually used for investment purposes:Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc ( EUR/USD, USD/JPY, GBP/USD, and USD/CHF ). Many factors depend on currency exchange rates, specially politics. No dividends are paid on currencies and the profits come from well known “buy low - sell high”.
Using history and technical analysis you can choose one currency against another and you may exchange that second currency for the first one and stay in it. In the case everything goes as planned, some time later you may make the opposite deal - exchange this first currency back for that other - and collect profits.
Transactions on the FOREX market are fulfilled by dealers at major banks or FOREX brokerage companies. FOREX is the world wide market and active 24 hours. Clients may place take-profit and stop-loss orders with brokers for overnight execution.
Price movements on the FOREX market are very smooth and without gaps that you face almost every morning on the stock market. The daily turnover on the FOREX market is about $1.2 trillion.