Introduction of foreign exchange 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 . 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. 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. 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. However, the truth is, most of the countries do not fully practice the floating exchange rate or the pegged exchange rate method in reality. 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.

Forex Trading history

The FX market is an inter-bank or inter-dealer network first established in 1971 when many of the world’s major currencies moved towards floating exchange rates. It is considered an over-the-counter (OTC) market, meaning that transactions are not conducted on an exchange like some equity stock markets such as the New York Stock Exchange (NYSE) or the Chicago Options Board Exchange (CBOE) where options and futures are traded. OTC trades exist as agreements made between two parties that agree to trade via telephone or electronic network.
As FX trading has evolved, several locations have emerged as market leaders. Because these trading centers cover most of the major time zones, FX trading is a true 24-hour market that operates five days a week. For example, as a trader in New York, you have access to the FX market starting Sunday evening when the market opens in Sydney for the start of the trading week. The FX market has become the world’s largest financial market, and it is not uncommon to see over $3 trillion US traded each day. By contrast, the NYSE— the world’s largest equity market with daily trading volumes in the $60 to $80 billion dollar range—is positively dwarfed when compared to the FX market. Even when combining the US bond and equity markets, total daily volumes still do not come close to the values traded on the currency market.

Introducing Broker and Questions about it

What is an Introducing Broker (IB)? An Introducing Broker is an individual or company who introduces a party to CMS Forex, enabling that party to trade the Forex market.
Is an IB a CMS Forex employee? An IB is not an employee of CMS Forex and has no connection with CMS Forex other than as a contracting party with CMS Forex under the Introducing Broker Agreement or deed.
What is the IB compensation process? IBs will receive compensation at the beginning of the month based on his introduced clients’ total round turn lots traded in the last month.
Can an IB trade on behalf of his clients? An IB can manage his clients’ accounts and trade on behalf of his clients through the Limited Power of Attorney.
How does an IB manage his/her Forex business with CMS? A password-protected online IB business report will be provided to the IB, which gives the IB the ability to monitor his clients or customer trading activities and calculate their IB rebates 24 hours a day.
Do I have to pass any brokerage exams or register with specific financial regulatory organizations to become an IB? If you plan to operate your IB operation in the USA clients who reside in the USA, you must register as an IB with the NFA. If you intend to manage the accounts of US clients, you will need to register with the NFA as an IB and a CTA. Both IB and CTA registrations with the NFA require passing the Series 3 examination.

FXCM Now Brings No Dealing Desk Forex Trading to the Nordic Region

With this expansion, FXCM will strive to be the premier forex provider for the Nordic region. Accessing highly competitive prices from relationships with some of the world’s largest banks, and as a premier “No Dealing Desk” or agency execution forex firm focusing on the Nordic countries, FXCM offers clients no dealer intervention. Through FXCM’s UK entity, the FXCM Nordic Desk will provide a variety of currency trading products, services, education, and is developing a CFD product to launch in 2009. FXCM aims to deliver the best forex trading technology, resources, and 24/7 customer service through its multiple trading platforms, including: FXCM Trading Station II, MetaTrader 4, and Forex System Selector. Benefits of Trading with FXCM • No Dealing Desk Execution • Spreads as low as 1 pip • Easy to use Platform―fully customizable look and feel with integrated charts • Customer service in local languages • Regulated in six international jurisdictions: U.S., UK, Canada, Hong Kong, France, and Australia Contact our Nordic Desk by e-mail at Nordic@fxcm.com for more information. FXCM focuses on retail and institutional forex services as well as white-label partnerships. Forex Capital Markets is one of the Largest Forex Dealer Members • More than 125,000 live accounts are traded on FXCM trading platforms • As of January 2009, an average of $500 billion in notional volume is traded each month on FXCM trading platforms • As of January 2009, in excess of $600 million in customer funds trading on platforms offered by FXCM Leveraged foreign exchange trading carries a high level of risk, and may not be suitable for all investors.

Automated Forex Trading Software

Forex, the market where currency pairs are bought and sold, is the most liquid market in the world. Traders who aim to benefit from favorable exchange rate movements, trade round the clock, since the forex market operates 24 hours a day, five days a week. 'Forex trading tips,Forex signals, that refer to the indicators both leading and lagging, which are used by traders for the purpose of identifying appropriate time frames for buying and selling currencies, were dealt with in the article.For the purpose of ensuring profitable forex trades, one needs to be able to interpret the leading and lagging indicators. Since interpreting signals is not a particularly easy task, especially since leading and lagging indicators tend to produce conflicting results, forex signal systems, both manual and automated, caught on in a big way. Automated forex signal systems, that did not require the presence of the trader to execute trades, took precedence over Mechanical forex signal systems, since the latter required the trader to be present, for the purpose of buying and selling, based on the signals received, and thus was not totally effective in removing the human element. Automated forex signal systems also known as forex automatic trading robots, are based on computer programs. Forex robot systems are designed by professional forex money managers who use past performance and trends to simulate results that may reflect the actual trading environment. They are based on hindsight which, as we all know, is 20/20. An account may not achieve profits similar to those shown, since past performance is not indicative of future results.