Forex Investment and Currency Trading

Most online forex brokers provide real-time mark-to-market calculations showing your margin balance. Mark-to-market is the calculation that shows your unrealized P&L based on where you could close your open positions in the market at that instant. Depending on your broker’s trading platform, if you’re long, the calculation will typically be based on where you could sell at that moment. If you’re short, the price used will be where you can buy at that moment. Your margin balance is the sum of your initial margin deposit, your unrealized P&L, and your realized P&L.
Realized P&L is what you get when you close [...]

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Buying and selling simultaneously
The biggest mental hurdle facing newcomers to currencies, especially traders familiar with other markets, is getting their head around the idea that each currency trade consists of a simultaneous purchase and sale. In the stock market, for instance, if you buy 100 shares of Google, it’s pretty clear that you now own 100 shares and hope to see the price go up. When you want to exit that position, you simply sell what you bought earlier. Easy, right?
But in currencies, the purchase of one currency involves the simultaneous sale of another currency. This is the exchange in [...]

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Cross currency pairs represent entirely new sets of routinely fluctuating currency pairs that offer another universe of trading opportunities beyond the primary USD pairs. Developments in the currency market are not always a simple bet on what’s happening to the U.S. dollar. Crosses are the other half of the story, and their significance appears to be increasing dramatically as a result of electronic trading. Years ago, if you wanted a price in a cross pair, a human would have to push the buttons on a calculator to come up with the cross quote. Today’s streaming price technology means that cross [...]

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The forex market is regularly referred to as the largest financial market in the world based on trading volumes. But this massive market was unknown and unavailable to most individual traders and investors until the start of this decade. That leaves a lot of people in the dark when it comes to exactly what the currency market is: how it’s organized, who’s trading it, and why.
The Interbank Market is “The Market”
When people talk about the “currency market” or “foreign exchange market”, they’re referring to the inter-bank market, whether they realize it or not. The interbank market is where the really [...]

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Oil
A lot of misinformation exists about the supposed relationship between oil and the USD or other currencies, such as CAD or JPY. The idea is that, because some countries are oil producers, their currencies are positively (or negatively) affected by increases (or decreases) in the price of oil. If the country is an importer of oil (and which countries aren’t today?), the theory goes, its currency will be hurt (or helped) by higher (or lower) oil prices.
Correlation studies show no appreciable relationships to that effect, especially in the short run, which is where most currency trading is focused. When there [...]

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