Participants
in the FOREX market
Work and earn money on the FOREX any person who has such a desire.
In order to better understand the whole picture of the market, you
need to know who did it sells and what impact have on the changing
market situation, major players.
In addition to private investors in the FOREX
market professionals earn:
• central banks
• banks, market makers
•
exporting companies
• Insurance companies
• Corporate investors
• investment and hedge funds
• intermediary
companies providing market access to individuals and companies
That's big banks could have major impact on the
market because they can buy or sell currencies very large volumes.
They also create the basic liquidity and
cash flows. It is therefore very important news of the market are
considered to be those that are directly relevant to the policy of
central banks of various countries and major international banks.
Central banks
- the largest market participants who do not impose any formal
restrictions on the movement of prices. However, they perform a
regulatory role, determining the level of fixed interest rates.
Banks conduct open market operations to
repurchase or sell securities, expressing their wishes to the
participants of the market and giving an assessment of the
situation.
Also in special cases, they reserve
the right to direct foreign exchange intervention (purchase or sale
of the national currency to prevent its further reduction in price
or price increase).
Market
makers (literally - those who make the market) - it's banks,
independently quoted currency to other market participants.
Right to determine the quotes they received under the
agreement to adhere to a set of international standards.
The stability of services provided by
market market makers, as well as a set of laws and rules developed
by regulatory agencies (eg, FSA in the UK, whose work in turn is
regulated by the Bank of England), plus a conditional "code of
honor", created by the same market makers, ensure smooth operation
of the market
FOREX.
Exporting companies,
conducting foreign exchange transactions in the market, do not
intend to directly profit from these transactions, the use of
international mechanisms for exchanging currencies in order to
fulfill its core business activities.
Insurance companies
are
engaged in hedging (insurance transactions by way of market risk),
risk-profile transactions. For example, a company importing products
from Germany, bears the risks associated with the possible rise of
the euro, and can compensate for these risks by buying euros in
pre-calculated volume in relation to any other currency.
Investment funds,
corporate
and private investors seeking profit from operations by buying and
selling of currency, due to price differences at different times,
and intermediary companies that provide them with access (yield) on
the market, obtaining market quotations from market makers.
Private investors
are to place
and manage their accounts on the FOREX market or use for this
purpose the services of professional mediators.
Evaluation of
profits and risks
The calculation of profits and risks of
transactions: some examples
Current results on the uncovered deals and already committed for
gain or loss will always be accurately reflected in the trading
terminal on your PC or PDA. Therefore, you can usually limited to
about (prikidochnym) calculation of potential profits and risks of
each transaction in order to properly calculate its possible
consequences. Operates a simple rule of thumb: on
most currency pairs to trade 1 standard lot of the "cost" of 1 point
is about $ 10. Hence, if, opening a transaction, we expect a profit
of 100 points and sell 2 units, it can be estimated to calculate our
profit potential as follows: 2 lots x 100 points x $ 10 = $ 2000.
Using the same simple enough reception can be assessed and the risk
of loss in this transaction. If opening the deal, we are putting a
protective stop-loss at 40 pips from the opening price, then the
risk will be the following value: 2 lots x 40 pips x $ 10 = $ 800.
Risk can be reduced by trading 1 lot. In this case, the maximum
possible loss is: 1 lot x 40 pips x $ 10 = $ 400. And with very
little trading volume of 0.1 Lot risk is quite low: 0,1 lot x 40
pips x $ 10 = $ 40. But, of course, reducing risk, the trader
reduces the time and your profits.
Rule of "10 dollars" acts exactly for such popular currency pairs
like EUR / USD and GBP / USD: 1 point for 1 lot is here exactly $
10. In fact, it is always true for any currency pair in which the
dollar is worth a second, and if the size of 1 lot of 100,000 units
of the first currency. In this example, the size of 1 lot equals
100,000 euros and 100,000 pounds respectively.
But for the pair AUD / USD (Australian dollar / US
dollar) each item is estimated to be 1.5 times more expensive and
not worth $ 10 and $ 15, since a standard lot is equal to 150,000
Australian dollars ("Aussie") and not 100 000 .
And 150 000 units equal to 1 lot on pairs USD / CHF (dollar / Swiss
franc) and the USD / CAD (U.S. dollar / Canadian dollar).
But the calculation of the cost of the item on
this pair is somewhat more complicated, as all pairs in which the
U.S. ranks first in the pair. Generally, the
result of any transaction can be calculated by the formula:
Profit / Loss = lot size x number of lots x (sale price - purchase
price).
But it is important that the result of this calculation is not
measured in dollars, as expressed in the second currency. For
example, the movement of 50 points for the pair USD / CAD to the
following result. If the volume of 1 lot was opened by the
transaction for the purchase of 1.0600, and after some time the deal
was closed at 1.0650, the result of the transaction: 150 000 x 1 x
(1.0650 - 1.0600) = 750 Canadian dollars. To recalculate the results
in more familiar to us American dollars, which are conducted and
usually all the calculations in the trading program, we have now
received 750 Canadian dollars divided by the current quote USD / CAD
at the time of closing of the transaction, ie 1.0650. We get: 750:
1.0650 = $ 704.23. In an effort to determine the average cost of an
item, divide the result by 50 points and get that 1 point of "cost"
$ 14.08. However, the cost of 1 point will always be different,
since the exchange rate USD / CAD fluctuates constantly. If the
Canadian dollar rises in price, each item will cost more. If
"Canadian", by contrast, falls, then the item in some degree
impaired. The same effect is observed for
any other currency pair in which the second position is not the U.S.
dollar.
The same applies to the pairs involving the
Japanese yen, which is always in a pair of second, but the price of
an item on the yen is usually hovering around $ 9.11, that is all
around the same $ 10.
Exactly the same
payment system works for the cross rates: currency pairs that do not
involve the U.S. dollar. The result will always get a second
currency, then the need to recalculate it in U.S. dollars. Specify
the cost of 1 point on a particular currency pair you can always see
"Terms of trade" or a consultant in the office.
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