Featured Article :

Forex

As far as the freedom from any external control and free competition are concerned, FOREX is a perfect market. It is
also the biggest liquid financial market. According to various assessments, money masses in the market constitute from
1 to 1.5 trillion US dollars a day. (It is impossible to determine an absolutely exact number because trading is not
centralized on an exchange.) Transactions are conducted all over the world via telecommunications 24 hours a day from
00:00 GMT on Monday to 10:00 pm GMT on Friday. Practically in every time zone (that is, in Frankfurt-on-Main,
London, New York, Tokyo, Hong Kong, etc.) there are dealers who will quote currencies.
FOREX is a more objective market, because if some of its participants would like to change prices, for some
manipulative purpose, they would have to operate with tens of billions dollars. That is why any influence by a single
participants in the market is practically out of the question. The superior liquidity allows the traders to open and/or close
positions within a few seconds. The time of keeping a position is arbitrary and has no limits: from several seconds to
many years. It depends only on your trading strategies. Although the daily fluctuations of currencies are rather
insignificant, you may use the credit lines, that are accessible even to currency speculators with small capitals ($ 1,000 -
5,000), where the profit may be impressive. (You can learn more about it in the section: The main principles of trading.)

The idea of marginal trading stems from the fact that in FOREX speculative interests can be satisfied without a real
money supply. This decreases overhead expenses for transferring money and gives an opportunity to open positions
with a small account in US dollars, buying and selling a lot of other currencies. That is, on can conduct transactions very
quickly, getting a big profit, when the exchange rates go up or down. Many speculative transactions in the international
financial markets are made on the principles of marginal trading.
Margin trading is trading with a borrowed capital. Marginal trading in an exchange market uses lots. 1 lot equals
approximately $100,000, but to open it it is necessary to have only from 0.5% to 4% of the sum.
For example, you have analyzed the situation in the market and come to the conclusion that the pound will go up against
the dollar. You open 1 lot for buying the pound (GBP) with the margin 1% (1:1000 leverage) at the price of 1.49889 and
wait for the exchange rate to go up. Some time later your expectations become true. You close the position at 1.5050
and earn 61 pips (about $ 405).
Everyday fluctuations of currencies constitute about 100 to 150 pips, giving FX traders an opportunity to make money
on these changes.
In FOREX, it's not obligatory to buy some currency first in order to sell it later. It's possible to open positions for buying
and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit such as $
2000, for working in the FOREX market, and grant a leverage of 1:100. That is, opening the position at $100,000, a
trader invests $1,000 and receives $99.000 as a credit. The major currencies traded in FOREX, are Euro (EUR),
Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD).

In order to assess the situation in the market a trader has to be able to use fundamental and/or technical analysis, as
well as to make decisions in the constantly changing current of information about political and economic character. Most
small and medium players in financial markets use technical analysis. Technical analysis presupposes that all the
information about the market and its further fluctuations is contained in the price chain. Any factor, that has some
influence on the price, be it economic, political or psychological, has already been considered by the market and
included in the price. The initial data for a technical analysis are prices: the highest and the lowest prices, the price of
opening and closing within a certain period of time, and the volume of transactions.
A technical analysis is founded on three suppositions:
•        Movement of the market considers everything;
•        Movement of prices is purposeful;
•        History repeats itself.
That is, technical analysis is a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.
A number of technical indicators have been installed into the PRO-CHARTS trading system. Analyzing the indicators one
can come to the conclusion about further movements of the quoted currencies. For a more detailed description of the
indicators, analyzing price charts and volumes of trading,
Fundamental analysis is an analysis of current situations in the country of the currency, such as its economy, political
events, and rumors. The country's economy depends on the rate of inflation and unemployment, on the interest rate of
its Central Bank, and on tax policy. Political stability also influences the exchange rate. Policy of the Central Bank has a
special role, as concentrated interventions or refusal from them greatly influence the exchange rate.
At the same time one should not consider fundamental analysis just as an analysis of the economic situation in the
country itself. A far bigger role in the FOREX market belongs to the expectations of the market participants and their
assessment of these expectations. Various prognoses and bulletins, issued by the participants, have a strong influence
on the expectations. Very often an effect of the so-called self-filfilling prophecy occurs when market players raise or
lower the exchange rates according to the prognosis. But a deep and thorough fundamental analysis is available only
for big banks with a staff of professional analysts and constant access to a wide field of information.
In spite of these different approaches, both forms of analyses complement one another. Traders who act on the basis of
a fundamental analysis, have to consider some technical characteristics of the market (the main rates of support, such
as resistance and resale), and supporters of the technical approach to the market must track the main news (interest
rates, important political events).

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