Foreign exchange market is different from the stock market
The foreign exchange market is also known as the FX market, and the forex market. Trading that takes place between two counties with different currencies is the basis for the fx market and the background of the trading in this market. The forex market is over thirty years old, established in the early 1970’s. The forex market is one that is not based on any one business or investing in any one business, but the trading and selling of currencies.
The difference between the stock market and the forex market is the vast trading that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. The amount is much higher than the money traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries. The
What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast for any investor from any country.
The difference between the stock market and the forex market is that the forex market is global, worldwide. The stock market is something that takes place only within a country. The stock market is based on businesses and products that are within a country, and the forex market takes that a step further to include any country.
The stock market has set business hours. Generally, this is going to follow the business day, and will be closed on banking holidays and weekends. The forex market is one that is open generally twenty four hours a day because the vast number of countries that are involved in forex trading, buying and selling are located in so many different times zones. As one market is opening, another countries market is closing. This is the continual method of how the forex market trading occurs.
The stock market in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market and the forex market.
Forex Trading – should you invest?
Forex trading is all about putting your money into other currencies, so you can gain the interest for the night, for time period or the difference in trading money all around. Forex trading does involve other assets along with money, but because you are investing in other countries and in other businesses that are dealing in other currencies the basis for the money you make or lose will be based on the trading of money.
Constant trading is done in the forex markets as time zones will vary and the markets will open in one country while another is near closing. What happens in one market will have an effect on the other countries forex markets, but it is not always bad or good, sometimes the margins of trading are near each other.
A forex market will be present when two countries are involved in trading, and when money is traded for goods, services or a combination of these things. Currency is the money that trades hands, from one to another. Often times, a bank is going to be the source of forex trading, as millions of dollars are traded daily. There is nearly two trillion dollars traded daily on the forex market. Should you get involved in forex trading? If you are already involved in the stock market, you have some idea of what forex trading really is all about.
The stock market involves buying shares of a company, and you watch how that company does, waiting for a bigger return. In the forex markets, you are purchasing items or products, or goods, and you are paying money for them. As you do this, you are gaining or losing as the currency exchange differs daily from country to country. To better prepare you for the forex markets you can learn about trading and purchasing online using free ‘game’ like software.
You will log on and create an account. Entering information about what you are interested in and what you want to do. The ‘game’ will allow you to make purchases and trades, involving different currencies, so you can then see first hand what a gain or loss will be like. As you continue on with this fake account you will see first hand how to make decisions based on what you know, which means you will have to read about the market changes or you will have to take a brokers information at value and play from there.
If you, as an individual want to be involved in forex trading, you must get involved through broker, or a financial institution. Individuals are also known as spectators, even if you are investing money because the amount of money you are investing is minimal compared to the millions of dollars that are invested by governments and by banks at any given time. This does not mean you can’t get involved. Your broker or investment advisor will be able to tell you more about how you can be involved in forex trading. In the US, there are many regulations and laws in regards to who can handle forex trading for US citizens so if you are searching the internet for a broker, be sure you read the print, and the information about where the company is located and if it is legal for you to do business with that company.
Practicing in the Forex Market
So you want to learn about the Forex market, and trading internationally but you are risking your personal wealth if you jump in before knowing all about how trading takes place. Online, you will find many games and simulations while learning the methods involved in forex market trading. The forex markets include countries from around the world, where all countries involved are using different currencies, and when faced against each other are worth more or less than the original valued currencies that are being traded. The forex markets are used to build wealth in, for governments, banks, and brokers, and for many countries.
To get started in learning about forex trading, you will need to locate the forex trading software, education-learning system you want to use. As you find the games, as they are called, you will enter information about yourself, about what you are interested in learning and then you will download software to your computer. In following the ‘game’, you will learn how to make and lose money in the forex market. This type of game is going to make you more aware of what happens daily, how the markets open and close, and how different the various countries currencies really are.
You will open an online ‘account’ using the gaming system. You will then be able to read the news, find and compare markets, and you will be able to make ‘fake’ trades so you can watch your money build or be eaten away in losses. As you learn the system, using it a few times a week, you are going to be more prepared, more educated and you will be ready to use the forex trades to make money. Of course, you may still need the aid of broker or a company to make your transactions happen but you will better understand the process, what will happen, and what calls you may want to make when you read about the news, the markets, and the currencies in other countries.
The forex market is also referred to as the FX market. If you are interested in joining the millions who are making money in the forex markets, you want to ensure you are dealing with a reputable banker or company involved in forex trading. With the spur of interest in the forex markets, there are many types of companies that are popping out on the Internet appearing to be genuine forex trading companies but in reality, they are not. Forex trading can be completed through a broker, a company that deals in the funds, and from within your own country. For example, the US has many regulations and laws regarding forex trading and what companies are permitted to work with the public dealing with international trading and markets.
The World Wide Forex market
Forex is a trading ‘method’ also known as FX or and foreign market exchange. Those involved in the foreign exchange markets are some of the largest companies and banks from around the world, trading in currencies from various countries to create a balance as some are going to gain money and others are going to lose money. The basics of forex are similar to that of the stock market found in any country, but on a much larger, grand scale, that involves people, currencies and trades from around the world, in just about any country.
Different currency rates happen and change every day. What the value of the dollar may be one day could be higher or lower the next. The trading on the forex market is one that you have to watch closely or if you are investing huge amounts of money, you could lose large amounts of money. The main trading areas for forex, happens in Tokyo, in London and in New York, but there are also many other locations around the world where forex trading does take place.
The most heavily traded currencies are those that include (in no particular order) the Australian dollar, the Swiss franc, the British pound sterling, the Japanese yen, the Eurozone eruo, and the United States dollar. You can trade any one currency against another and you can trade from that currency to another currency to build up additional money and interest daily.
The areas where forex trading is taking place will open and close, and the next will open and close. This is seen also in the stock exchanges from around the world, as different time zones are processing order and trading during different time frames. The results of any forex trading in one country could have results and differences in what happens in additional forex markets as the countries take turns opening and closing with the time zones. Exchange rates are going to vary from forex trade to forex trade, and if you are a broker, or if you are learning about the forex markets you want to know what the rates are on a given day before making any trades.
The stock market Is generally based on products, prices, and other factors within businesses that will change the price of stocks. If someone knows what is going to happened before the general public, it is often known as inside trading, using business secrets to buy stocks and make money – which by the way is illegal. There is very little, if any at all inside information in the forex trading markets. The monetary trades, buys and sells are all a part of the forex market but very little is based on business secrets, but more on the value of the economy, the currency and such of a country at that time.
Every currency that is traded on the forex market does have a three letter code associated with that currency so there is no misunderstanding about which currency or which country one is investing with at the time. The eruo is the EUR and the US dollar is known as the USD. The British pound is the GBP and the Japanese yen is known as the JPY. If you are interested in contacting a broker and becoming involved in the forex markets you can find many online where you can review the company information and transactions before processing and becoming involved in the forex markets.
The Buttonwood Agreement – The forerunner to the NYSE
When we think of the current New York Stock Exchange, images come to mind of the Big Board, ticker tape and incredible amounts of stress. But it didn’t always use to be that way. There was a time when a group of men met under a shady tree in the spring to found what would become one of the most powerful and well known exchanges in the world.
The story of the Buttonwood Agreement actually goes back even further than 1792. Two years earlier, then Secretary of the Treasury Alexander Hamilton (pre-duel) issued a then staggering amount of $80 million in war bonds to help pay for the rising costs of the Revolutionary War. It would be these bonds that would play a key role in the founding of the Buttonwood Agreement.
A major reason for the founding of the Buttonwood Agreement was that securities trading in New York City at that time was a bit disorganized. Auctioneers would deal in commodity trading, land speculation and foreign currency exchange, but the Buttonwood Agreement sought to organize and streamline the trading so that it could be done in one place.
Two years later, on May 17, 1792, a group of 24 prominent New York City business men met outside of 68 Wall Street in lower Manhattan and put together the Buttonwood Agreement. With a simple two-sentence contract, they formed the New York Stock & Exchange Board and the first securities to be traded were those very war bonds that Alexander Hamilton had issued two years prior. The first company to be listed on the new exchange was the bank of New York. The original home for the new stock & exchange board would be the Tontine Coffee House, which was owned by Hugh Smith, one of the 24 founding members. Other founding members included well known New York business men such as Charles McEvers Jr, John Bush, Alexander Zuntz and Ephraim Hart.
In 1817, the adopted name of the New York Stock & Exchange Board was formally adopted, as well as a comprehensive constitution and bylaws, and later in 1863, this name was shortened to the name we know today, the New York Stock Exchange.
It’s amazing to consider that the billions of dollars that trade hands every day on the floor of the New York Stock Exchange started as a group of business men looking to organize colonial American commodity trading under a tree. But it’s true, and their legacy is felt every single day and it will continue to be felt for as long as the NYSE stands.
The Bull & The Bear
The world of investing is filled with colourful jargon and phrases that may seem strange if you don’t know what they mean. A great example of this is a “Bull market” and a “Bear market.” These two terms refer to market trends. A Bull market means that the market is headed up and it’s time to make money. A Bear market means that stocks are headed down and it’s time to be careful. But where do these terms come from? That is a question that is harder to answer than you think. There doesn’t seem to be any consensus of the origins of these terms, but there are some solid leads.
Some link the origin of Bear and Bull to a book written in the 1700’s called Every Man His Own Broker by Thomas Mortimer. The book describes the tendencies of some investors and links them to bears and bulls. The bull, as described in the book, was someone who might purchase huge amounts of stock with little or no money at all and hope to sell the stock for a profit before the time to pay for it came due.
A bear, on the other hand, sold stock or property that he didn’t even own yet, and then would be forced to scramble to find a way to obtain the goods before he was due to deliver it.
There are some interpretations of the phrases which are much more logical. When a bull attacks, he will use his horns and swipe up to cause damage, while a bear will attack you with his paws and swipe downward.
There is also a group that believes the use of the terms dates back to bear trappers and the practice of bear skin salesmen selling skins they didn’t have yet at a particular price, hoping the skinners would come to sell their kill for a lower price, so that the salesmen could take home the difference. And since a one-time staging of bull and bear fights was popular, the term bull was given to anyone who didn’t practice this.
One final possible origin is related to the ways the animals charge, with bulls moving at high speed forward and bears moving slowing and cautiously.
While the origins of the bear and bull market may never be known, the stories surrounding them are just as colourful and fun as the terms themselves.
The 1987 Stock Market Correction
The events of October 19, 1987, at the time, were looked upon as a full-fledged stock market crash. In retrospect, no depression or even a recession was sparked by this dramatic fall in prices, but the event is historic nonetheless. One of the aspects that makes it so memorable is the fact that to this day, no one really knows what caused it. There are many different theories as to the reason of the correction, but its all speculation.
The ’87 correction, known now as Black Monday was the first ever global stock market crash. The final numbers are staggering, with the Hong Kong stock exchange losing over 45 percent of its value, the Australian stock market losing almost 42 percent of its value, the UK lost over 26 percent, while the New York Stock Exchange lost 22.6 percent.
The October 1987 fall ended up being the second biggest single day percentage drop in the history of the stock market. The biggest one day decline happened in 1914 when the Dow Jones lost just over 24 percent. This drop was attributed to the fact that the market had been closed for four months due to World War I prior to that day. The biggest point loss in history was the first day of trading after the attacks of September 11th, when the Dow lost over 680 points.
Starting in mid-August of that year, the Dow began to correct itself. A series of 100+ point drops plagued the market over the next two months, but the drops were always followed by recoveries. Even days before the October 19 drop, there had been a major dip, and the next day, stocks were back up. It wasn’t until the Black Monday collapse that stocks went down and stayed there.
Possible causes for the crash are usually broken down into a few different categories, including market psychology, illiquidity, overvaluation and program trading. Other possible causes for the correction are attributed to a major storm in the UK which happened on the previous Friday. The storm did not allow traders in the UK to finish their days work and this caused many in the US and around the world (especially in Hong Kong where the crash first started to happen) to sell.
While time has shown the events of October 1987 weren’t quite as bad as some had feared, dramatic market corrections are a part of investing and while they can be terrifying when they happen, they shouldn’t take a savvy investor by surprise.
The 1920 Bombing of Wall Street
When most people think of terrorist attacks in New York City, images of September 11th instantly spring to mind. But that wasn’t the first major attack in New York’s history. The World Trade Centre was attacked earlier in 1993 with a bomb in the building’s basement. But there was yet another terrorist attack in New York, this one right on Wall Street that attempted to shut down the New York Stock Exchange for good.
On September, 16th, 1920, a wagon full of explosives was detonated at “The Corner” of Wall and Broad streets. A man was seen fleeing the wagon moments before it exploded, but no one thought to stop him. A few seconds later, a large explosion ripped through the square, leaving behind it a scene of unfathomable destruction.
Once the smoke had cleared, 39 people had been killed. This ranked as the most deaths from a terrorist attack in New York history until the events of 9/11. Hundreds of people were injured not only by the initial explosion but by bits of iron shrapnel that had been placed inside the wagon so that the maximum possible amount of damage would be done.
A bell rang out in the New York Stock Exchange just after noon on the 16th signalling a stoppage of trading for that day. It was the first time trading had ever been stopped because of violence. A decision had to be made by the governors of the NYSE about whether to open the next day. And much like during 9/11, those that ran the NYSE decided to go ahead with business the very next day.
The 1920 bombing could have had a major historical impact had a few different things happened. A young stockbroker named Joseph Kennedy was on Wall Street that day, and had he been any closer to the blast which knocked him to the ground, America’s political history would look very, very different.
The tragic postscript to the story is that no one was ever caught, arrested, charged or convicted of the bombing. Many people associated with the anarchy movement that was present at the time were suspected and many people were interviewed, but no one ever caught.
For many, the events of 9/11 were a stark reminder of the fact that terrorism is simply part of living. Most figured that the attacks in 1993 and then in 2001 were New York’s first brushes with terror, but a look at the history books shows that New York has stood strong through terror in the past and it will do the same in the future.
Securities Exchange commission
The United States Securites and Exchange Commission was founded in 1934 in response to the great stock market crash of 1929. Congress created the SEC in the hopes that it would serve as an independent and non-partisan agency that would help regulate the dealing of securities in the USA. Thanks to the crash of 1929, Congress also enacted many new securities laws that the SEC was created to enforce.
The main job of the SEC is to enforce a series of laws, most of them enacted from 1933-1940 that help protect investors of securities and the economy as a whole. Congress has given the SEC the right to bring civil cases against companies that they feel have committed a series of crimes, such as insider trading, fraud, or companies that have given false information. The SEC also works hand-in-hand with local police, the FBI or the CIA in pursuing criminal charges when the proper laws have been broken.
One of the ways that the SEC gathers information about various companies so that it can see if any of them have broken the law is be requiring that publicly held companies submit reports four times a year and then an annual report, as well, showing their financial numbers. The companies also file reports with the SEC that outline how the business did that year and how it expects to do in the future.
These reports are absolutely vital to investors when trying to figure out which company to invest in. The capital markets are notorious for upheaval and these reports are essential for investors who are trying to figure out which companies are safe to invest in and which ones aren’t.
The SEC allows anyone to read these reports and they are available via an online system to read at any time. The SEX also uses this same system so that individual investors may file complaints against a company that they feel might be breaking the law. This allows every day citizens the chance to call attention to a possibly crooked company.
A recent pop culture reference to the SEC came from the now-defunct television show Arrested Development, when the pilot episode featured the SEC boarding a yacht to confiscate documents related to the Bluth family business.
The SEC is a vital government agency that helps companies walk the straight and narrow and helps individual investors make educated decisions about the right companies to invest in. If you’re thinking about investing in the capitals market, a visit to the SEC online system is an absolute must.
Want to learn forex? There are lots of ways.
It isn’t hard to learn forex, but it does take time and dedication. The principles involved are fairly easy from a mathematical standpoint, and the basic way that the system works is straightforward enough once it’s been explained to you. But the details and nuances of the market can make it daunting.
The first step as you set out to learn forex should be to do some basic reading on how the foreign exchange market works. The foreign exchange Wikipedia article is good basic reading, and there are plenty of Web sites that offer overviews to help you learn the fundamentals.
Plenty of books have been written on the topic, some of which will help you and some of which just want your money. Try the public library first: Books are free, and if they’re in the library, they were probably published by legitimate publishing houses with legitimate editors and researchers. The information will be more reliable than something you get from a Web site where a guy wants you to buy his e-book.
After that, you have a number of options, all of which will help in different ways. You can make your choice depending on what your own learning process is usually like, whether you’re a visual learner or prefer written instruction, for example.
There are many forex seminars held in major cities, sometimes for free. In these, experienced traders offer tips and strategies to new traders trying to learn forex for the first time.
There are also online courses available, which you can take at your own pace over the course of several weeks. These almost always cost money, and the quality varies. (Remember, you usually get what you pay for.) Some of these courses come from brokers who want you to learn the system so you can start trading with their companies, so it’s in their own best interest to train you well.
You should also consider a demo account, which can help you practice through a realistic simulation of currency trading. You get the full experience of trading without any of the financial risk.
Many firms also offer mini forex accounts, which are real accounts with real money, only with much smaller amounts. For example, instead of a minimum starting investment of $1,000, the minimum might be only $100. This lets you learn forex through actual hands-on practice, but with a risk that is much smaller than usual. You can quickly see if you’re cut out for trading or if it’s just not in your constitution to handle the emotional roller coaster.
Once you learn, forex can be fun and exciting, not to mention financially lucrative. It is necessary to learn, though, and not just jump in blindly.
Forex System 