Daily Review 17/12/2009
USD Dollar (USD)
The Dollar gained massively across the board on the day the Federal Reserve decided to leave rates as expected at 0.25%. The Dollar rose after the announcement and continued its gaining after Asia markets opened. Earlier, the Building Permits came out 0.58M better than expected 0.57M. CPI came out unchanged as expected at 0.4%. Wall Street finished mix after being unable to hold in the positive side. Stocks turned to the negative after the statement of the FED about monetary policy. The Dow Jones fell 0.10% and NASDAQ rose by 0.28%. Crude Oil kept gaining for the second day closing at 72.77$ a barrel after the oil inventories showed a 3.7M drop. Gold (XAU) gained also closing at 1137$ an ounce. Today, the Initial Jobless Claims expected at 470K vs. 474K previously. The Philadelphia Fed Manufacturing Index expected at 16 vs. 16.7 previously.
EURO (EUR)
The Euro fell against the Dollar and the Pound, breaking through the 1.4500 and 1.4400 support levels, after the CPI came out 0.5% worse than expected 0.6%. The breakdown of this level could bring the pair to fresh new lows. Manufacturing PMI came out 51.6 better than expected 51.5. Overall, EUR/USD traded with a low of 1.4379 and a high of 1.4590. Today, the Italian Unemployment Rate expected 7.7% vs. 7.4% previously.
EUR/USD – Last: 1.4410
|
Resistance |
1.4500 |
1.4600 |
1.4675 |
|
Support |
1.4345 |
1.4300 |
1.4235 |
British Pound (GBP)
The Cable was the best performer among majors. GBP/USD momentarily broke above 1.6370 and rose to 1.6404, reaching a one-week high but then pulled back, breaking below the 1.6300 support level, reaching lows of 1.6230. Claimant Count Change came out -6.3K better than the expected 14K. Overall, GBP/USD traded with a low of 1.6230 and a high of 1.6409. Today, the Retail Sales expected at 0.5% vs. 0.4% previously. The CBI DTS expected at 16 vs. 13 previously.
GBP/USD – Last: 1.6275
|
Resistance |
1.6425 |
1.6475 |
1.6525 |
|
Support |
1.6275 |
1.6210 |
1.6170 |
Japanese Yen (JPY)
The Yen fell against the Pound and the Dollar. The Dollar reached a one-week high against the Yen as the Federal Reserve said deterioration in the labor market is abating while it will keep its low rate for an extended period. Overall, USD/JPY traded with a low of 89.37 and a high of 89.96. Today, the interest rate decision of The Bank of Japan (BOJ) expected unchanged at 0.1%.
USD/JPY-Last: 89.65
|
Resistance |
89.95 |
90.40 |
90.75 |
|
Support |
89.30 |
88.75 |
88.35 |
Canadian Dollar (CAD)
The Canadian currency gained as crude oil and stocks rose. It was little changed after policy makers in the nation and the U.S. made commitments to keep interest rates at historic lows. The Manufacturing Sales came out 2% better than expected 0.5%. Overall, USD/CAD traded with a low of 1.0570 and a high of 1.0641. Today, The Core CPI expected unchanged at 0.1%. The Foreign Securities Purchases expected at 10B vs. 13.59B previously.
USD/CAD – Last: 1.0615
|
Resistance |
1.0640 |
1.0670 |
1.0700 |
|
Support |
1.0570 |
1.0550 |
1.0515 |
Research by http://www.ufxbank.com
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GoLearn Forex Analysis 16/12/2009
Review Key Support and Resistance Levels for USD by GoLearn Forex
Key Support & Resistance (S/R) Levels:
As the Greenback continues to rally heading into the end of the year we thought it would be a good time to review a couple key S/R levels. Traders generate S/R based on a number of factors. One key factor is based on the tenor of the chart the trader is using. A trader using a tick or minute chart will be less concerned about S/R generated from a 4 hour chart that is 100+ pips from the current handle. However, that same trader will want to know where the longer term S/R levels sit. If price moves towards those points he can integrate them into his trading strategies thereby profiting and or avoiding losses.
GBP/USD:
The Cable is currently sitting below its 100 day MA which generates an already negative bias. A candle body below 1.6198 would generate the next Short entry point Near term profit taking would be the 200 day MA. If the 200 day MA is breached we would target the low of this range bound period near 1.5683 which also represents the Fibonacci 38.2% Retrace level. The 38.2% Retrace level was generated from the Sterlings turn around in January of this year.
AUD/USD:
The Aussie has shown great resilience and for good reason. The RBA had taken a hawkish stance on rates as it was amongst the first to raise rates. The Australian economy is in relatively good shape. Additionally, the AUD is a commodity currency and it has ridden the commodity rally. Currently the AUD is sitting just below the 50 day MA. A candle body appearing below .8944 equal to the Fibonacci 76.4% Retrace level, which also coincides with recent support levels would trigger a near term Short entry. We would increase the Short position with a close below the 100 day MA, currently holding at .8834. A long signal would be generated with a close well above near term resistance at .9325.
With the EUR taking a sharp nose dive yesterday it prompts us to look at recent relative price levels on the G-7. The EUR/USD is the most commonly traded pair in the world. The price of the EUR has broad implications on the relative value of other G-7 currencies. Although the below data can be shown graphically it is easier to view price differentials in a table. If the EUR is a leading indicator of relative value then the CAD, AUD, and GBP may be in for a minor drop.
Historical
Date EUR CAD AUD NZD JPY GBP
2009-10-02 1.4576 1.0797 0.8652 0.7160 89.8050 1.5946
2009-10-01 1.4545 1.0839 0.8697 0.7149 89.6050 1.5955
2009-09-30 1.4640 1.0695 0.8828 0.7232 89.7050 1.5982
2009-09-29 1.4587 1.0846 0.8703 0.7143 90.0885 1.5961
Current
Date EUR CAD AUD NZD JPY GBP
2009-12-15 1.4533 1.0611 0.9067 0.7224 89.6355 1.6272
US Producer Prices Climb by GoLearn Forex
Global Equity Markets were mixed on Tuesday as Dubai continues to sort out its debt repayment obligations. In the U.S Producer Prices climbed 1.8% which was more than double expectations. This caused stocks to retreat as it may engage the U.S Fed to raise rates out of necessity instead of a planned withdrawal from its current quantitative easing policies. The DJIA slid 49.05 points to close at 10,452. Ahead of the rate decision today traders have consolidated positions as markets may move drastically depending on what language the Fed uses.
There are a number of other economic data releases on the docket for today. Oil traders will be watching Crude Oil Inventory figures. CPI data as well as Housing Starts and Building Permits will also be on the wire today. In the U.K Jobless Claims will print although no major changes are expected. GDP in Australia has already printed slightly below expectations.
The Greenback continued to advance against its G-10 counterparts with the AUD giving up 1.15% for the day. The DXY closed above the 100 day MA to 76.961 helping to legitimizing the recent rally. Gold and Oil were essentially unchanged finishing the U.S session at 1.125.20 and 70.69 respectively.
Upcoming Forex Events for December 16, 2009
EUR CPI (YoY) Forecast 8.00% Previous 7.80%
USD Core CPI (MoM) Forecast 0.20% Previous 0.20%
USD CPI (MoM) Forecast 0.40% Previous 0.30%
USD Interest Rate Decision Forecast 0.25% Previous 0.25%
Analysis by http://www.golearnforex.net
Important Forex Trading Strategy That will Function Efficiently
In this article we are going to learn about the minute forex trading approach that can be added in your list of forex trading approaches. It functions in the right way, if used in the right way. The time when one should use this forex indicator at the closing of the fifteen minutes bar, the timing should be around midnight for Greenwich Mean Time. One should use the USD/ GBP pair of currency.
It is a step-by-step procedure that can be followed in the following sequence:
• Give consideration to the end rate of the initial fifteen minutes bar chart after the passing of the midnight with the help of the USD/ GBP currency pair.
• Then you can opt to go for a purchase order by making use of the fifty points that needs to be greater as compared to the sell order and the close order utilizing the fifty points that needs to be under the close.
• These 2 placements have to be ordered with the help of a twenty point stop loss orders and a twenty point limit order so as to make gains.
• As the trades get sparked off, it is desirable to terminate another one.
You need to have an expectation of about seventy four pips each month by making use of this trading approach. However it is not so high, but gives a thought of when you are adding it to another one, what are the potentials to gain by the ending of the month. When you are utilizing the short stop distance, it is indeed possible for you to order the bigger sizes of trade. It is desirable to utilize most of your capital up to about fifteen thousand dollars and you can enter using twenty dollars per pip. In this case, the amount earned would be about ten percent of the capital invested.
If you attempt to use this minute forex trading approach by using the twenty, thirty or forty target points, the twenty target points will give you 960 points, 30 target points will give 780 and 40 will finally give 960. Generally it is referred to execute the trade using twenty points as it is a reliable preference.
However, it is also recommended to involve the automated trading robot in the list of tools for forex trading. However, most of them are not so profitable, but using a single forex robot on which you can completely rely upon is Lvybot. It is highly reliable. The winning rate of Lvybot forex robot is about ninety five percent, hence one can expect to gain more profits by using more trades that would traded by such robots.
This is one of the important forex trading approaches that give guaranteed results.
How to Make Money with Automated System of Forex Trading
A number of years back, when forex was traded by monitoring the computer screen 24-hours a day, the situation has changed completely now. However, forex trading is not as easier as thought. Apart from stock trading, nowadays currency trading is gaining a lot of popularity. The methods involved in both these kinds of trade are not varied, too much. Furthermore, you can even enjoy some good advantages from forex trading. One of the easiest ways that will aid you in forex trade is making use of the automated trading systems in forex.
The key for making success in this moneymaking venture may not every time work efficiently, but it will always work in a smart way and this is an essential factor to assure that you will achieve your defined goal. The smart way referred to forex trading in this context is to make use of the automated trading strategies.
An automated forex trading strategy is software that is designed particularly to foresee the movements of forex trading, may be increasing or decreasing. Once you know this, it is expected you will be able to make profitable decisions. It not only gives prediction, but also trades for you. Once you enter into this method of trading, you are only supposed to begin the program and produce money from your forex trade. This program is automated and hence it can give you continued services throughout the day depending on the news establishments.
There are a number of such automated trading systems available; however they differ from one another significantly in their usage as well as benefits. People have verified these different systems in order to acquire knowledge on what the system offers you. The system can be defined as the best, if it can pass 2 tests that are the live trades and the back tests to ensure that it functions in a better way for you. If for instance, they pass any one test, say the back tests, then they are definitely not guaranteed and an assured system to deliver good performance in case of lives trades. Hence, you have to look for a trading system that can pass both the tests effectively.
They do have adequate trading knowledge; however, they are able to produce some gains, as the automated system will do the entire work for them. They only have to install the software, which can be done in a period of ten minutes only. And then, the system is ready to make profits for them automatically.
With this system, there is no need to foresee the market trends as it takes the guesswork automatically. In order to initiate the trade, you have to keep about fifty dollars in your account. Once your account is full with the minimum requirement, you can begin to accumulate the profits from the system.
How to Minimize the Forex Trading Risks
It is always better to learn how to manage the risks and make a successive forex trade overall. The novice traders will be able to experience the benefits of using an automated forex trading system in such cases.
As it is not possible to avoid losing entirely, you are supposed to look for the various ways in order to minimize your risks as possible in your forex trade. Low risks signify less losing trades and small losses if occurred are prone to occur to anyone residing on the planet. Below given are some simple tips that will assist you in lowering your overall risks while trading in forex:
• Know the amount that you are willing to risk- Have given a thought to this ever. You should be indeed aware of the amount that you would be risking on all the trades. A number of traders are not even bothered to give a thought to this and it finally results in taking wrong decisions, great losses and worse stop loss rates.
• It is advisable to place a stop loss order- if a person is carrying on a trade without the stop loss orders, then it is indeed the worst trade, I would suggest that would definitely drown you. Conducting a trade without the stop orders is indeed nothing else than madness. It is true that you might get fluently through it for some time, however after sometime you are liable to face an aching loss that will clear off all your account. It is like the onset of tsunami and heads your path.
• Size your positions- one should never place a lot of possible risk on a single position. Every trade that you create might lose at least two percent of your account. You can regulate this with the leverage, stop loss and lot sizes.
• Verify any novel ways that you come across, purchase or it is best to test them on the demonstration account. Ensure that you are aware of its functioning. Then only you should start trading only small amounts at first with it. I am repeating again see that it functions for you and then only invent big amounts in it. Keep on checking the outcomes frequently.
• Leverage can cut you in both ways- as we all know that placing a trade with two hundred against one, leverage seems to be the best way to save you. However, remember that leverage is a sword with double edges. If you make a winning game, you will indeed enjoy a winning lottery. And if you lose, then it will wipe off everything from your account leaving nothing behind. You can minimize your risk in forex trading by maintaining the leverage level to a proper level, say ten is to one.
Daily Review 16/12/2009
USD Dollar (USD)
The Dollar gained versus 15 of the 16 majors as Industrial Production rose by 0.8% versus 0.6% expected signaling U.S economy is expanding. The FOMC is still expected to keep the Interest Rate today at 0.25% but more economists expect a rate increase to 0.5% until June 2010. PPI came out stronger with 1.8% versus 0.8% expected and TIC Long Term Purchases came out weaker with 20.7B versus 38.3B prior. NASDAQ and Dow Jones declined by -0.50% and -0.47% respectively as wholesale inflation raised concerns the Fed will be forced to raise interest rates. Crude gained by 0.17% closing at 70.81$ a barrel ending a 9 day declining streak. Gold (XAU) gained by 0.29% closing at 1125.70$ an ounce. Today, Building Permits are expected with 0.58M versus 0.55M prior. CPI is expected with 0.4% versus 0.3% prior and Core CPI is expected with 0.1% versus 0.2% prior. Investors are waiting for the FOMC Interest Rate decision that is expected to remain at 0.25%.
EURO (EUR)
The Euro fell versus the Dollar and the Pound after weaker French CPI results, which triggered the Euro\’s decline. German ZEW Economic Sentiment came out 50.4 slightly better than 50.1 expected but ZEW Economic Sentiment came out weaker with 48 versus 50.9 expected. More countries in the Euro zone show signs the recession is still alive. Greece is struggling with its debt and Austria nationalized Hypo Bank. Overall, EUR/USD traded with a low of 1.4503 and a high of 1.4659. Today, German and French Manufacturing PMI are expected slightly stronger. CPI and Core CPI are expected unchanged with 0.6% and 1.2% accordingly.
EUR/USD – Last: 1.4535
|
Resistance |
1.4575 |
1.4625 |
1.4685 |
|
Support |
1.4500 |
1.4445 |
1.4410 |
British Pound (GBP)
The Pound weakened versus the Dollar but gained versus the Euro after CPI came out 1.9% versus 1.8% expected. The CPI figures show inflation is advancing and the U.K won\’t be able to keep interest rates at their record lows. Overall, GBP/USD traded with a low of 1.6205 and a high of 1.6319. Today, Claimant Count Change is expected with 13.9K versus 12.9K and MPC Member Miles will speak in London.
GBP/USD – Last: 1.6275
|
Resistance |
1.6315 |
1.6350 |
1.6380 |
|
Support |
1.6210 |
1.6160 |
1.6105 |
Japanese Yen (JPY)
The Yen dropped versus the Dollar and the Euro as a near US interest rate increase seems likely in the upcoming year. Overall, USD/JPY traded with a low of 88.61 and a high of 89.95 and EUR/JPY traded with a low of 129.54 and a high of 130.73. No economic data expected today in Japan.
USD/JPY-Last: 89.65
|
Resistance |
89.95 |
90.40 |
90.75 |
|
Support |
89.30 |
88.75 |
88.35 |
Canadian Dollar (CAD)
The Canadian Dollar followed the trend and fell against the Dollar but gained versus most other majors as Crude prices rose slightly ending its 9 day decline. Leading Index came out better with 1.3% versus 0.6% and Labor Productivity came out weaker with -0.2% versus -0.4% expected. Overall, USD/CAD traded with a low of 1.0552 and a high of 1.0611. Today, Manufacturing Sales is expected with 1% versus 1.4% prior.
USD/CAD – Last: 1.0615
|
Resistance |
1.0670 |
1.0700 |
1.0750 |
|
Support |
1.0580 |
1.0550 |
1.0515 |
Research by http://www.ufxbank.com
GoLearn Forex analysis 15/12/2009
NZD Beginning to Falter by GoLearn Forex
NZD/USD:
The New Zealand Dollar is starting to falter and like most of its G-10 counterparts it is holding at pivotal levels against the Greenback. One slip either way may send the currency tumbling or ready to resume its advance on the Dollar. We have mentioned the Kiwi in the past as we feel it may yield the biggest percentage loss when the Dollar does finally rally.
In the graph below we see the formation of a downward sloping Triangle beginning to emerge. The Kiwi has been riding the 50 day SMA as support on its path to .7600. You can observe that NZD peaked in late October but after 3 attempts it has failed to break the October high.
Short term support has been holding near .7100 represented by the bottom leg of the triangle. As the hypotenuse converges on near term support the more likely it is that a breakout will occur in the direction of the slope. We have also diagrammed a pattern we use often to identify trend and that is a step pattern whereby there are lower high’s and lower lows (or vice versa as the case maybe). Typically we like to see more obvious lower lows than what the Kiwi has shown us thus far.
The NZD is currently sitting below its 50 day MA, which we mentioned prior, represented support for the NZD’s move over the last 9 months. During the Dollar’s rally last week the Kiwi was able to bounce off of the 100 day MA but was not able to bounce back above the 50 SMA. As price action moves into the wedge of the triangle it may force price below the 100 SMA.
For good measure we added a Fibonacci Retrace starting back in March when the Kiwi dipped below .50 running through its most recent high in October when the NZD struck .7635. This data range produces the 23.6% Fibo Retrace at a handle of .6988. To trigger a strong short signal the Kiwi would need to take out the 100 day MA, near term support (the base leg of the triangle), and the Fibo 23.6% level, as we then target a .6500 handle. In order to resume a Long NZD position at this point the NZD would need to break north of the hypotenuse, the 50 day MA, and near term resistance at .7525.
Abu Dhabi Sending Financial Aid for Dubai World by GoLearn Forex
World Equity Markets gained some ground Monday amid assurances from Abu Dhabi that they would provide $10 billion in immediate financial aid to ensure Dubai World meets its $4.1 billion debt obligation due yesterday. The DJIA closed a shade above 10,500 after picking up 29.55 points.
The Greenback gave up a little ground yesterday as the DXY was down marginally to 75.352. Gold advanced slightly to 1,126.70 as the dollar showed some weakness. Oil was unchanged as it continued to hold below $70 a barrel.
In the U.K CPI data is set to print today. The Euro-zone’s Current Sentiment/Survey will publish today. In the U.S a number of economic releases are slated for today; Crude Oil Inventories, Gasoline Inventories, Total Net TIC Flows, Empire Manufacturing Index, and lastly PPI figures will print. In light of the Dollar’s recent rally expect that traders will be watching these numbers very carefully ahead of tomorrow’s FOMC rate decision.
Upcoming Forex Events for December 15, 2009
EUR German ZEW Economic Sentiment Forecast 50.20 Previous 51.10
CAD Leading Indicators (MoM) Forecast 0.60% Previous 0.70%
USD TIC Net Long-Term Transactions Forecast 43.00B Previous 40.70B
AUD GDP (QoQ) Forecast 0.40% Previous 0.60%
Daily Review 15/12/2009
USD Dollar (USD)
The Dollar weakened slightly versus the majors as the Dollar rally took a relief. NASDAQ and Dow Jones gained by 0.99% and 0.28% respectively as Dubai\’s bailout calmed investor fears. Crude weakened for the 9th straight day lowering by -0.43% closing at 69.57$ a barrel. Gold (XAU) gained by 0.54% closing at 1123.30$ an ounce. Today, PPI is expected with 0.8% versus 0.3% prior. Industrial Production is expected with 0.6% versus 0.1% prior. TIC Long Term Purchases is expected with 38.3B versus 40.7B prior.
EURO (EUR)
The Euro gained slightly versus the Dollar as Dubai World\’s bailout eased banks concerns of major write downs. Industrial Production came out as expected with -0.6%. Overall, EUR/USD traded with a low of 1.4607 and with a high of 1.4685. Today, German ZEW Economic Sentiment is expected weaker with 50.1 versus 51.1 prior.
EUR/USD – Last: 1.4655
|
Resistance |
1.4685 |
1.4775 |
1.4825 |
|
Support |
1.4585 |
1.4535 |
1.4470 |
British Pound (GBP)
The Pound gained slightly versus the Dollar but is still unable to break above or below the 1.6350 and 1.62 range. RICS House Price Balance came out weaker with 35% versus 39% forecast. Overall, GBP/USD traded with a low of 1.6188 and a high of 1.6324. Today, CPI is expected with 1.8% versus 1.5% prior.
GBP/USD – Last: 1.6300
|
Resistance |
1.6340 |
1.6380 |
1.6425 |
|
Support |
1.6250 |
1.6190 |
1.6150 |
Japanese Yen (JPY)
The Yen gained versus the Dollar and other majors after Tanken Manufacturing Index came out stronger than expected. The Yen is set to replace the Dollar in the Carry Trading as borrowing costs in Japan became almost as cheap as U.S loans. Overall, USD/JPY traded with a low of 88.32 and a high of 89.29 and EUR/JPY traded with a low of 129.18 and a high of 130.64. Today, Tertiary Industry Activity is expected with 0.5% versus -0.5% prior.
USD/JPY-Last: 88.75
|
Resistance |
89.00 |
89.25 |
89.85 |
|
Support |
88.35 |
88.00 |
87.40 |
Canadian Dollar (CAD)
The Canadian Dollar remained unchanged versus the Dollar as no major news was released and Crude prices were merely changed. Overall, USD/CAD traded with a low of 1.0484 and a high of 1.0623. Today, Leading Index is expected with 0.6% versus 0.7% prior and Labor Productivity is expected with -0.4% versus 0.0% prior.
USD/CAD – Last: 1.0580
|
Resistance |
1.0635 |
1.0670 |
1.0700 |
|
Support |
1.0550 |
1.0515 |
1.0480 |
Research by http://www.ufxbank.com
How to be prepared for the Forex Market
One can study Forex Trading at the School of Pipsology and soon can rake in pips. This proves that the learning of Forex Trading is made very simple and much easier. The education of Forex Trading is indeed made very simple by the people who have had their fill of self-educating about the Forex Trading before becoming the successful Forex Traders. The main objective of the School of Pipsology is to educate the beginners who do not have any idea about what Forex Trading is basically all about. The school was mainly developed having the newcomers in mind, who are just trying to sort out the odds and ends of the Forex Trading. There are various levels of grades in the School of Pipsology and these levels are listed out in this article through which the Forex Traders are educated.
The first level is the Kindergarten level, at which the beginners are educated about the types of trading and the types of charts used for the analysis of the Forex Market. During the end of this level, the student would have learnt to analyze the market basics such as economy and the price movements in the Forex Market by using the charts.
The 1st grade level, the student will be focused on reading the candlestick charts in a way to read the market behavior. At this point, the student would have known how to extract the buying or selling activities of the bulls and the bears.
In the 2nd grade, the student is familiarized with the support and resistance levels. That is nothing but the technique of reading the upper limit which is known as the resistance. The resistance is the highest point before an upward turns in the opposite direction. The other parameter is the support which is where the downward movement of the market switches to the opposite direction. Along with these two parameters, the student will also learn about plotting the trend lines and channels.
Then the student is educated about the Fibonacci retracement and extension levels in the 3rd grade of the school. This level is used as the profit taking level. The student will know how the traders watch these levels in order to place their buy and sell orders.
The main objective of the 4th grade is to teach the student about the moving averages. The two types of moving averages taught to the students are the simple and exponential moving averages.
The 5th grade level will take the students through the most common chart indicators, one by one. These chart indicators are used in analyzing the market indices.
These levels of grades are just the basic education that one needs to know to excel in the trading business. And these are all taught to the newcomers at the School of Pipsology where education about the Forex Trading is provided.
Introduction about different financial markets
Presently, there are different types of financial markets such as futures market, foreign exchange market, option market, gold market, stock market and interest market. Foreign exchange market is the good place for trading foreign exchange currency. It is also the best place for the transaction of all foreign currency. People pay one type of currency when doing trading business, however when earns another type of currency receive the commodity. It means that when they are setting account, business people pay and receive various currencies.
Hence, they should convert currencies, which they received into the currencies, which they can purchase commodities. With this same, when purchasing a foreign currency, a company should make use of the concerned currency of a country to make payment; hence it requires converting the domestic currency. Exchange rate of currencies can fluctuate according to the demand as well as supply between two currencies. Forex traders purchase one type of currency in an exchange rate, however up casts this currency in another more beneficial exchange rate, he might obtain. Speculation has occupied the entire Forex market.
Because of the fluctuation between two trading currencies, those companies own foreign asset, when these companies convert the properties into cost country currencies. If the worth of a foreign asset based on foreign currencies remained unchanged, if he exchange rate changes. If converting this property worth according to the domestic currency then there can be gain and loss. The company can eradicate such hidden risk through hedging. It carries a foreign currency trading, loss, its transaction result that is produced by the exchange rate change.
As an worldwide capital speculation market, the history of Forex trading market is much short as compared to stock, gold and interest market. However, it is developing in a surprising speed. Today, the Forex trading market everyday trading volume has amounted to 15o billion United States dollars. Its scale has gone far beyond the stock as well as other finance commodity trading markets; it becomes the worlds’ largest sole finance trading market and the speculation market.
Since the birth of the forex trading market, the fluctuation of the exchange rate of Forex trading market becomes large. In the month of September 1985, 1 United States dollar exchanged 220 Japanese yen; however in the may 1986, 1 United States dollar can exchange 160 Japanese yen in 8 months. Recently, the foreign exchange market wave amplitude has been larger. On September 8, 1992, one pound exchanged 2.0100 United States dollars. On November 10, one pound is exchanged 1.5080 United States dollars. In two months, the pound has exchanged United States Dollar exchange rate to fall almost 5,000 devalued 25%. Presently the fluctuation of the exchange rate of the Forex trading market can enlarge unceasingly. On September 16, 1992 the pond has exchanged United States dollars from 1.8755 to fall into 1.7850